Entrepreneurship Lesson 2 Flashcards
is a document that defines in detail a company’s objectives and how it plans to achieve its goals.
business plan
Reasons in Making a Business Plan
- Vision
2.Opportunity Assessment - Financing
- Market Assessment
- Implementing the Plan
- Outside Failure
Business Failure
- poor cash flow control
- lack of managerial experience, training, skills
- undercapitalization
- inventory control problems
- trade idea competition
- Poor site location
- unidentified target market
- pricing strategy
- inadequate long-term plan
- inadequate financial control
Basic components of a business plan can be organized as follows
- providing a description of the business
- choosing the best marketing strategy
- identifying the management plan, and;
- Analyzing the finances needed to start the business and make it successful
is the entire size of the market for a product at a specific time. It represents the upper limits of the market for a product. It is usually measured either by sales value or sales volume.
Market Potential
Elements in Determining Market Potential
- Market size
- Market growth rate
- Profitability
- Competition
- Product and Consumer type
The first and most important factor to consider while determining market potential is the market size of your product; it is the total market sales potential of all companies put together.
Market size
you have to forecast based on the differences between product line extensions and a completely new concept in the market.
Market growth rate
to understand the market potential; If the business is going to give low profitability, then the volumes need to be high
Profitability
You need to know and understand the competition in an industry to determine the market potential for the product you are going to launch. If the industry has high competition, the entry barriers are going to be high and at the same time, establishing yourself will require deep pockets.
Competition
Is the product a repeat buying product or one time sale only? In the above examples, Soap and shampoo is a repeat buying product. But once you buy a refrigerator, it is doubtful, you will need another for the next 10 years. So in your whole lifetime, you will buy 8-10 refrigerators at the max.
Product and Consumer type
Calculation of profitability to determine Market Potential can use 4 elements:
- return of investment (ROI)
- return on sales (ROS)
- return on net assets (RONA)
- return on capital employed (ROCE)
The part of business plan
- Excecutive Summary
- Company Description
- Products/Services description
- Market Analysis
- Strategy & Implementation
- Organization and Management team
- Financial plan and projections
the first section should be a concise overview of your business plan. It should be short, and must be well written. Your goal is to draw readers in so they want to learn more about your company.
Excecutive Summary
this high-level of your business should explain who you are, how you operate and what your goals are.
Company Description
