Writing a business plan: market analysis
Those who drew up a business plan for an enterprise probably want to know how successful their ideas are, how they are correctly implemented. In order to find out how this strategy will work, it is necessary to analyze the business plan of the enterprise.
What is an expert assessment of a business plan
Development of such a document as a business plan from scratch is a laborious and complicated procedure. The use of standard plans, which are full of the markets for consulting services, presupposes carrying out correction in accordance with real circumstances.
The purpose of evaluating a business plan is to calculate the market value of the provided document. During the examination, specialists should:
- review all components of the business plan,
- identify planning flaws,
- give advice on how to eliminate them,
- provide recommendations for the earliest possible work in accordance with this document.
The best option is considered to be the development of a business plan by one company, and conducting expert events by another. This is a somewhat costly approach, which nevertheless guarantees optimization efficiency in the implementation of the plan.
If the business plan received positive ratings, then the document has the ability to move forward quickly. And the ideas set forth in it guarantee high levels of product sales or high profitability of the business.
If a business plan was created according to an individual assignment, then its expert assessment will help determine how much has changed:
- market conditions since the creation of this document,
- how the realities of the political or economic situation in the country have changed,
- what changes have the market conditions undergone ...
An examination by a third-party organization makes sense from the point of view of assessing its cost today.
Analysis of the business plan of the enterprise
This procedure can be carried out with high quality not only in a large enterprise, but also in small companies and firms. The work with ready-made documents provided by the consulting services market, despite some similarities in the work of firms or enterprises of the same industry, may have regional differences. This specificity is characterized by:
Often readers ask me the question: how much does it cost to develop a competent business plan? And, often, having learned the size of the amount (about 50-120 thousand rubles), they abandon the idea of ordering the creation of a document to order, preferring either to sketch out the milestones of their future actions to organize a business for themselves, or to act according to the situation, not only without having a clear idea about what market analysis is, but even what exactly they will do in a week, a month, a year.
The amount for many aspiring entrepreneurs, especially now, when economic forecasts for 2021 are very disappointing, is really overwhelming. It is for such categories of businessmen that I decided to create a series of articles on how you can write a business plan yourself.
Continuing to cover the topic of writing a business plan, which was started in these articles: "How to write a cover page of a business plan", "Description of a company in a business plan", "Description of services and products in a business plan ", I present to the readers the following topic -" Market analysis in a business plan. " You can see the full structure of the document at this link. back to contents ↑
What this section is about
It often happens that, being fired up with the idea of creating a business, many novice businessmen simply have no idea about the niche of the business world in which they are trying to occupy. While the study of the target consumer market, analysis of its directions, the conditions for entering this market for a new company, the situation in general, trends for development, and many other factors affecting the successful operation of the company require careful study.
Of course, for a professional marketer, this part of creating a business plan will not cause any particular difficulties, but what should a person who has a vague idea of the very specifics of the business do? Correctly! Search for the necessary materials on your own, and try to collect the big picture from what you find. Therefore, I decided to cite in the article as many illustrative examples that are encountered in real life, for a better understanding of the issue. back to contents ↑
In this subsection, you need to provide as much current information as possible about the situation in the market in which you intend to work, show what the main trends are present in this industry, what is the picture of its development in the short-term and long term.
If a business plan is being prepared for obtaining investments in credit institutions or from individuals, then you need to explain to your potential investors your ultimate goals of organizing the company, not only to show the scale of the market that you are going to conquer (this can be separately taken region, country as a whole, or interaction with foreign partners), but also in the following sections to justify the reality of their plans. If you are writing a document for personal use, such a market analysis will help you see the real picture of the market, and assess your strengths and capabilities in implementing your plans.
It is necessary to analyze the state of the market today, to show the dynamics of prices over the past few years (usually this is a 5-year period) to give the opinion of authoritative, recognized experts on the possibility of developing this area. Describe in detail how your product or service will fit into the overall market structure, what impact future changes in this market will have on your business, and what measures will be taken in this regard to maintain the stable operation of the company.
The ____ market for the production of ____ goods and / or the provision of services ____ is currently one of the most actively developing and most promising industries working in this direction. At the end of ____, the market volume amounted to ____ rubles, which is ____% more than in the previous year. Detailed dynamics of prices on the market for the last 5 years is presented in Table #_ of Appendix #_.
Research and analysis of the sales market conducted by marketing companies, independent analytical centers, reflected in the reports of companies already operating in this area, enterprises conducting similar activities, show that in the next __ years a significant increase in the existing market is predicted by __%. According to moderate estimates of specialists, the minimum volume of the industry will be ____ rubles.
How much detail should you write about the state of the market? After all, such a study can take more than one hundred typewritten pages! Here you need to take into account that the volume of such analysis directly depends on the level of your future enterprise, its size and expected prospects.
Product description and analysis in the business plan
The product in the business plan should be described in as much detail as possible, reflecting the following components:
- General characteristics of the product (technical and economic characteristics, transportation and storage conditions, the possibility of modernization, manufacturability, etc.);
- Description of technology, business processes;
- Availability of licenses, certificates, intellectual property rights (trade mark, patent, know-how);
- Cost analysis depending on production volumes;
- Scalability ;
- Competitive advantages of the product, its Unique Selling Proposition (USP).
This section provides a direct description of the product, the market analysis has already been carried out at the previous stage. The reader should not delve into the description of chemical reactions and complex processes.
What is USP and how to use it
Today it is difficult to surprise a consumer with something. Acting within the framework of the Unique Selling Proposition concept, you can differentiate yourself from competitors. True, any advantages in the 21st century will not last long.
To create a product uniqueness, the following conditions must be met simultaneously:
- Offer customers real, understandable benefits;
- The competitor cannot or does not have time to guarantee similar preferences;
- The offer is so skillfully formulated, what can attract the masses.
This is the structure of an effective USP. Its main advantage is rationality. Such a promotion strategy will quickly convert potential customers into real buyers.
Formula for making a correct USP
How to start a business | How to write a business plan | Market Analysis (January)
When writing a business plan, the main focus of the "Market Analysis" section is a thorough study of the target market, the people to whom you intend to sell your goods or services.
The first step is to identify your target market. Even if you are only going to sell a service in your city, you are not selling that service to everyone who lives there. You need to know for sure that people who might be interested in buying your product or service are like how many of them are.
Then you need to make some predictions about your target market in terms of how many of your products or services they can buy and how they might be affected by trends and policies.
How to write a business plan: market analysis
As always, when you write a business plan, research is key. Before writing the Market Analysis section of your business plan, use these general conditions to start your research:
Target Market Age What age range do I feed with my products / services? Children? Adults? Pensioners? Gen X? Millennials? Genders Am I targeting men, women or both genders? Marital Status Are my target clients married or single? Family What is their family structure (number of children, extended family, etc.)? Location Where do they live? Am I looking to sell locally? Regionally, nationally? Education How well educated are they? Income What is their income? Occupation What do they do for life? Religion Are they members of a particular religious group? Language Are they members of a particular language group? Lifestyle What is their lifestyle? Motivation What motivates them? SizeWhat is the size of the target market?
But don't stop here. To determine your target market, you need to ask specific questions that are directly related to your products or services. For example, if you are planning to sell computer-related services, you need to know things like the number of computing devices your prospect owns. If you are planning to sell garden furniture and accessories, you need to know what kind of garden furniture or accessories your potential customers have bought in the past, and how often.
Target Market Predictions
- How much of your target market has previously used a product like yours?
- How much of your product or service can your target market buy? (Measure this in terms of gross sales and / or in products / services sold.)
- How much of your target market could be repeat customers?
- How demographic shifts might affect your target market ?
- How might economic events affect your target market (for example, closing a local factory or opening a local retail store)?
- How might your target market be affected by more significant socio-economic trends?
- How might government policies (such as new regulations or changes in taxes) affect your target market?
Writing a market analysis section of a business plan
After you have all this information, you will write your market analysis in a few short paragraphs. Use appropriate headings for each paragraph. If you have multiple target markets, you can specify the number.
The structure of a business plan involves analyzing: · the enterprise and its organizational and legal form, the actual or expected location of its position in the market, · products and services that the enterprise plans to provide to consumers, as well as the production plan; · The plan of management and control, the required number of personnel and a brief description of the leaders; · Description of the industry and its development trends; · The marketing section of the business plan, in which it is necessary to analyze target markets, competition, as well as sales, advertising and pricing issues; · Forecast of the financial capital required for the implementation of the project and a description of how these funds will be spent; · Description of the team of business plan developers and personal participation of the head (or manager) of the enterprise in the project. To visually analyze the information, you can present graphs, diagrams, photographs, etc. in a business plan.
When writing a business plan, it is important to analyze the boundaries of an investment project, i.e. give a clear definition of what should be included in the project. If a project analysis is carried out, which consists in the creation of a new production, then all the costs of construction and equipment of production are included in the project at actual costs. When an investment project is implemented at an existing production facility, it is necessary to analyze the project taking into account the financial condition of the enterprise. If you carefully analyze the structures of business plans of an industrial enterprise used in Russian and foreign practice, you will notice that they are essentially the same and can differ only in the form of presentation and location of parts.
The structure of a business plan for an industrial enterprise usually includes the following sections. 1. Summary. 2. Memorandum of Confidentiality. 3. Analysis of the enterprise and industry. 4. Description of products. 5. Marketing section. 6. Investment plan. 7. Production plan. 8. Organizational plan. 9. Financial plan and analysis of project performance indicators. 10. Risk analysis (sensitivity analysis) of the project. 11. Conclusions. 12. Applications.
The structure of the business plan of the enterprise and the degree of detailing of the information contained in it are determined mainly by the need to analyze in the business plan the significance of the investment project, the specifics, the scale of the enterprise and the scope of its activities, as well as the size of the intended market, the presence competitors and growth prospects of the enterprise.
A business plan begins with a title page, which indicates: the name of the enterprise - the initiator of the project, its name, as well as the authors of the project, the time and place of preparation of the business plan.
The summary is a summary of the essence of the investment project. It should be short (1-2 pages) and contain a description of the key points that should allow decision-makers to analyze the results of the business plan, and form their attitude towards the proposed project. For this purpose, the structure of the summary of the business plan is as follows: · full name, address and telephone number of the enterprise initiating the project; · Description of the enterprise, its specifics; · Brief information about the management personnel and their share in the capital of the enterprise; · The purpose of writing a business plan; · The goals of the enterprise; · A brief description of the market conditions; · The essence of the proposed project (the activities of the enterprise to achieve the goal); · Results of the project implementation; · Risk factors of the project; · The total cost of the project and the need for financing with a description of the loan conditions, guarantees for the return of the loan; · The amount of funds that the initiator invests in the project.
The confidentiality memorandum (1 page) is drawn up in order to warn persons admitted to familiarize themselves with the business plan about the confidentiality of the information it contains. Often, business plans are classified as secrets that limit the range of potential readers. This section also indicates the developers of the project and their qualifications.
Enterprise and Industry Analysis