Chapter 2: Entrepreneurial planning

Types of Human Activities

1. Economic Activities

Activities undertaken to earn money and livelihood. These include:

●​ Production
●​ Distribution
●​ Consumption of goods and services

Economic activities are driven by the motive of earning monetary gain.

2. Non-Economic Activities

Activities done out of love, care, emotion, patriotism, etc., and not for earning money.
These include:

●​ Helping family members

●​ Donating to charity
●​ Participating in social service

Types of Economic Activities

Economic activities are classified into three main types:

1. Profession

Definition:​
An occupation requiring specialized knowledge and training, undertaken to instruct,
guide, or advise others.

Examples:​
Doctors, Lawyers, Chartered Accountants, Company Secretaries.
2. Employment

Definition:​
An activity in which an individual works regularly for another person or organization
and receives remuneration(salary/wages) in return.

Example :​
Teacher, Clerk, Manager etc.

3. Business

Definition:​
Economic activities involving production and distribution of goods and services
undertaken for profit.

Example: ​
Shopkeeper, Trader, Manufacture​

Summary Table: Types of Economic Activity

Type Nature Example Key Feature

Profession Specialized Doctor, Lawyer, Requires expertise and

occupation Architect training

Employment Work for Teacher, Clerk, Manager Regular income and job
others security

Business Self-owned Shopkeeper, Trader, Risk involved and profit

venture Manufacturer motive
Types of Business Activities

1. Manufacturing

Definition:​
The process of converting raw materials into finished goods using labor, tools,
machines, and chemical/biological processing.

Examples:​
Automobiles, household appliances, clothing.

Economic Systems and Manufacturing:

●​ Free Market Economy: Focused on mass production for profit

●​ Collectivist Economy: Directed by the state
●​ Mixed Economy: Occurs under government regulation

2. Service

Definition:​
An intangible economic activity that does not result in ownership and is consumed
at the point of sale.

Examples:​
Banking, transport, insurance, postal services, healthcare.

Key Features:

●​ Non-transferable
●​ Requires presence of service provider and consumer
●​ Growing sector in the Indian economy

3) Trading

Definition:​
Trading refers to the buying, selling, or exchanging of goods and services for value.

Key aspects of trading:

●​ Process of exchanging goods/services

●​ Involves buying and selling
●​ Exchange may also be barter (one thing for another)
Business: Definition and Characteristics
Definition:​
Business refers to economic activities involving the continuous production and
distribution of goods and services with the primary objective of earning profit.

Key Characteristics of Business

1.​ Entrepreneur’s Presence​

There must be a person to take initiative for establishing a business and
undertake the risk associated with the same.​

2.​ Economic Activity​

Business must involve production/distribution of goods or services for profit.​

3.​ Production or Procurement​

A business either produces or procures goods/services to offer to
consumers. These may be:​

○​ Consumer goods
○​ Producer goods
○​ Services​

4.​ Sale or Exchange​

A business involves the sale or exchange of goods/services to satisfy human
needs for a price. If something is made or bought just for personal use, it is
not called a business.​

5.​ Regularity in Dealings​

A one-time transaction is not a business. It must be regular and continuous.​

6.​ Utility Creation​

Business creates various types of utility:
○​ Form Utility: Raw material → finished goods
○​ Place Utility: Production site → consumption site
○​ Time Utility: Stored and made available when needed​
 7.​ Profit Earning​
Profit is the main motive and reward of business activities.​

8.​ Uncertainty of Return​

There is no guarantee of earning profit or even recovering investment.​

9.​ Element of Risk​

Business is exposed to external risks beyond control.​
“Higher the risk, higher the profit.”

Forms of Business Organisation

Definition:

The legal structure or framework within which a business operates.​

It defines ownership, control, and responsibility.

Importance of Selecting a Suitable Form

●​ Affects the success and future of the enterprise

●​ Changing the form later is complex and costly

Classification of Enterprises
1. Private Sector Enterprises

Owned, controlled, and managed by private individuals for profit.

Types:

a) Sole Proprietorship​
b) Partnership​
c) Joint Hindu Family Business​
d) Co-operative Society​
e) Joint Stock Company
2. Public Sector Enterprises

Owned and operated by the Government with welfare as the primary objective.

Forms:

a) Departmental Undertakings​
b) Public Corporations​
c) Government Companies

3. Joint Sector Enterprises

A partnership between private sector and government.

●​ Management usually lies with the private sector

●​ Government is represented in the Board of Directors
●​ Resources are shared equally or jointly

Key Factors for Choosing a Business Form

An entrepreneur should consider:

1.​ Vision regarding size and nature of the business

2.​ Level of control desired
3.​ Willingness to deal with complexity/structure
4.​ Liability exposure
5.​ Taxation implications
6.​ Expected profit or loss
Three Broad Categories of Business Enterprises

1. Private Sector Enterprises

Owned and controlled by private individuals with a profit motive.

Common Forms:

●​ Sole Proprietorship
●​ Partnership
●​ Joint Hindu Family Business (HUF)
●​ Joint Stock Company
●​ Co-operative Society

2. Public Sector Enterprises

Owned and managed by the government, mainly for public welfare. Profits are
secondary.

Common Forms:

●​ Departmental Undertaking
●​ Public Corporation (Statutory Corporation)
●​ Government Company

3. Joint Sector Enterprises

A partnership between the government and private sector. Resources are usually
shared, and management is with the private sector, but the government has
representation on the Board of Directors.
Factors to Consider While Choosing a Form of Business

1.​ Vision of size and nature of business

2.​ Level of control desired
3.​ Amount of legal structure/formalities one is willing to manage
4.​ Liability exposure
5.​ Tax implications
6.​ Profit potential

Most Common Forms for Entrepreneurs

1.​ Sole Proprietorship

2.​ Partnership
3.​ Company

I. Sole Proprietorship (important )

Definition:

A form of business owned, managed, and controlled by one person only.

“The one-man control is the best in the world if that man is big enough to
manage everything.” – W.R. Basset

Key Characteristics:

1.​ Single ownership

2.​ Complete control by one person
3.​ Personal investment and borrowing if needed
4.​ No separate legal identity
5.​ Unlimited liability (personal assets may be used to pay debts)
6.​ Sole beneficiary of profits/losses
7.​ Easy to start and close
8.​ Limited scale and area of operation
Suitability:

Best when:

●​ Capital required is limited

●​ market is local
●​ Business secrecy/confidentiality is important
●​ Customized/personalized goods are sold
●​ Quick decision-making is required
●​ Venture size is small

II. Partnership (important)

“Two heads are better than one.”

The partnership form of business emerged to overcome the limitations of sole

proprietorship, such as:

●​ Limited capital
●​ Limited managerial ability
●​ Lack of continuity

Meaning

A partnership is an association of two or more persons who agree to carry on a

business jointly and share profits and losses.

●​ It can be formed through a written or oral agreement.

●​ Partners are called co-owners.
Characteristics of Partnership

1.​ Two or more persons

○​ Minimum: 2 persons​

○​ Maximum: 10 in banking, 20 in other businesses​

○​ Minor cannot form a partnership but can be admitted to benefits of an

existing firm.​
​

2.​ Agreement-based
○​ Created by a contract, not by status.​

○​ Can be oral or written, though written is preferred for legal clarity.​

3.​ Profit sharing

○​ Main goal: Earn and share profits.​

○​ Not applicable for charitable organizations.​

4.​ Unlimited liability

○​ Partners' personal assets may be used to pay off business debts.​

○​ Partners are liable:

■​ Individually (separately)
■​ Collectively (together)​

5.​ Implied authority

○​ Each partner can act on behalf of the firm in the ordinary course of
business.​

6.​ Mutual agency

○​ Each partner is both:
■​ A principal (representing self)
■​ An agent (representing others)​

○​ Partners are bound by each other’s acts.​

 7.​ Utmost good faith
○​ Partners must act honestly and keep transparent accounts.​

○​ Based on mutual trust.​

8.​ Restriction on transfer of share​

○​ A partner cannot transfer their share to outsiders without the consent of

other partners.​

9.​ Lack of continuity

○​ Partnership ends if a partner:
■​ Dies
■​ Becomes bankrupt
■​ Retires
■​ Becomes insane​

○​ Unless specified otherwise in the partnership deed.

Suitability of Partnership

Partnership is ideal when:

1.​ Capital & managerial needs are more than sole proprietorship.​

2.​ The enterprise is small or medium scale.​

3.​ There’s a need for direct contact with customers.

IV. Joint Hindu Family / HUF (Hindu Undivided Family)

Meaning:

A HUF is a unique Indian business form, found only in India, and governed by
Hindu Law. It is:

●​ Owned and managed by male members of a joint Hindu family.​

●​ Created by status (birth), not by contract.​

●​ A good way to save taxes legally.

Definition under Hindu Law:

“A family consisting of male members descended from a common ancestor,

including their wives and unmarried daughters.”

Two Schools of Law to Create a HUF:

School Where? Rule for Property Rights

Dayabhaga West Bengal, Son gets property after father's

Assam death

Mitakshara Rest of India Son gets right in property from

birth
Conditions for Existence:

1.​ Minimum 2 family members​

2.​ Must have some ancestral property

Features of HUF:

1.​ Creation by Status – Comes into existence by birth, not registration​

2.​ Membership by Birth – Male child becomes member automatically at birth​

3.​ Management by Karta –​

○​ Karta = Oldest male member​

○​ Has full control and powers​

○​ Others (called Coparceners) can't interfere in daily management​

4.​ Liability –
○​ Karta has unlimited liability​

○​ Coparceners have limited liability​

5.​ No Right to Inspect Accounts – Only Karta can see/handle financial records​

6.​ Minor Member – Even newborn male becomes a member​

7.​ Continuity – Does not end on death of members; continues with new births​

8.​ Implied Authority – Only Karta can bind the family in business decisions
V. Co-operative Organisation

Meaning:

A co-operative is a voluntary association of people formed for mutual help, not for
profit. It follows the principle:

“Each for all and all for each.”

Defined by the Co-operative Societies Act, 1912:

“Society formed to promote the economic interests of members, based on

co-operative principles.”

Features of Co-operative Organisations:

1.​ Voluntary Organisation​

○​ Anyone can join or leave freely​

○​ No force or pressure​

2.​ Democratic Management​

○​ Managed by a committee elected by members​

○​ Based on ‘one member, one vote’ (not based on money invested)​

3.​ Service Motive​

○​ Focus is on helping members, not earning profits​

4.​ Capital​

○​ Raised from members​

○​ Member can own up to 10% of share capital or ₹1,000​

○​ Fixed return: Max 9% dividend allowed

5. Government Control​

○​ Controlled by State and Central laws​

○​ Must submit reports to Registrar of Co-operatives​

6. Distribution of Surplus​

○​ Profit is shared based on member usage, not investment​

○​ After giving fixed dividend

Why Entrepreneurs Don’t Prefer It:

Entrepreneurs avoid this form because they:

●​ Want freedom and independence

●​ Like to take risks
●​ Want to be leaders
●​ Aim for big profits and market dominance
●​ Prefer flexibility and quick decisions

Final Thought: Choosing the Right Form

No business form is perfect. The right choice depends on:

1.​ Capital needed

2.​ My motherRisk level
3.​ Control required
4.​ Size of operations
5.​ Stability/continuity
6.​ Legal rules
7.​ Taxation
8.​ Confidentiality
9.​ Flexibility
10.​Type of business
What is a Business Plan?
A Business Plan is a formal document prepared by the entrepreneur that:

Describes the goals of the business​

Explains how the goals will be achieved​
Includes all internal and external factors involved in starting and running a new
venture

It includes:

●​ Business goals
●​ Reasons why those goals are achievable
●​ Strategies to reach those goals
●​ Background of the business/team

Purpose of a Business Plan:

1.​ Shows the feasibility (possibility) and viability (success chances) of the
business
2.​ Helps identify problems or obstacles
3.​ Evaluates the risk and potential success
4.​ Acts as a decision-making tool

What does it include?

●​ Resources needed
●​ How those resources will be used
●​ Strategy to execute the project
●​ Goals and milestones
●​ Profitability and market analysis
Who should write it?

●​ Ideally, the entrepreneur should write it​

●​ But they may take help from:

○​ Lawyers
○​ Accountants
○​ Marketing consultants
○​ Engineers
○​ Friends/mentors
○​ Financial institutions (banks, agencies)

They may consult experts depending on the area they lack skills in.

Importance of a Business Plan:

It is useful for:

●​ Entrepreneurs
●​ Investors
●​ Banks and financial institutions
●​ Customers and suppliers
●​ New team members

Why it is important:

a) Checks if the business idea is practical and profitable​

b) Helps plan for:

●​ Licenses
●​ Resources
●​ Legal issues​
​
a) Answers questions of investors, lenders, and advisors​
b) Helps in self-assessment​
c) Saves time and money if the idea is not worth pursuing​
d) Shows the 4 Cs of credit:
 ●​ Character (entrepreneur's history)
●​ Cash flow (ability to repay)
●​ Collateral (assets)
●​ Capital (own money invested)

Formats of a Business Plan

Business plans are made in different formats, depending on purpose:

Format Type What it Means

Elevator Pitch 2A short 3-minute summary of the business to

attract interest

Pitch Deck with Oral A slide show + talk to explain business and attract
Narrative discussion

Written Plan for A detailed, professional document for investors,

Stakeholders partners, banks, etc.

Internal Operational A detailed working plan for the business team only
Plan
Components of a Business Plan

Here are the main parts (in sequence):

1.​ Introductory Page – Basic details (name, address, contact)​

2.​ Business Venture – What is the business about​

3.​ Organisational Plan – Business structure, ownership, management​

4.​ Production Plan – Product creation, equipment, raw material​

5.​ Operational Plan – Day-to-day running, suppliers, location​

6.​ Human Resource Plan – Staff, hiring, roles​

7.​ Marketing Plan – Promotion, price, place, product​

8.​ Financial Plan – Budget, funding, profit-loss forecasts​

9.​ Appendix – Extra documents like charts, CVs, legal papers

Summary:

A Business Plan is the roadmap of the business.​

It helps explain what, why, and how the entrepreneur will build and run the
venture.

“Writing a business plan does not guarantee success, but it reduces the chance of
failure.”
I. Introductory Profile / General Introduction

This is the first page of the business plan, giving a summary of key information
about the business and the entrepreneur.

a) Entrepreneur’s Bio-data:

●​ Name and address of the owner/promoter​

●​ Educational qualifications​

●​ Work experience and skills​

●​ For Partnership: Names, number of partners, addresses, designations, etc.

b) Industry’s Profile:

●​ Name and address of the business/enterprise​

●​ Contact information: Phone, fax, email, website​

●​ Nature of business (manufacturing, trading, service, etc.)​

●​ Details of branches or sister concerns, if any

c) Constitution and Organisation:

●​ Legal structure of business: Sole proprietorship, partnership, private/public

company, etc.​

●​ Registration details (with govt. authorities, licenses)

d) Product Details:

●​ Utility of the product​

●​ Product range (types, variations)​

●​ Design of the product​

●​ USP – Unique Selling Proposition (what makes your product special)

II. Description of Business Venture

This section starts with a Mission Statement – what the entrepreneur wants to achieve
with the business.

It includes a detailed description of the project and covers the following:

a) Site:

●​ Location of the business​

●​ Whether land is owned or rented​

●​ If in an industrial area, get NOC from authorities if required

​
b) Physical Infrastructure:

i) Raw Material:

●​ Is it local (indigenous) or imported?​

●​ From where will it be sourced?

ii) Labour:

●​ What type of labour is needed?​

●​ Will training be required?​

●​ How many workers are required?

iii) Utilities:

Includes:

●​ Power, water, gas, electricity, fuel​

●​ Type of utility, load required, sources and quality​

●​ Quantity of fuel (coal, oil, etc.) needed and suppliers​

iv) Pollution Control:

●​ Sewage system​

●​ Water harvesting, waste disposal methods​

●​ Pollution control measures or equipment​

​

v) Transport & Communication:

●​ How will transportation and communication be handled?​

●​ What modes (road, rail, internet, etc.) will be used?​

●​ Any bottlenecks (problems)?

vi) Machinery & Equipment:

●​ List of machines needed​

●​ Their type, size, cost, capacity, and source of purchase

vii) Production Process:

●​ Description of how the product is made​

●​ Capacity of the plant (how much it can produce)​

●​ Technology used – local or imported​

●​ Number of shifts needed (1, 2, or 3 shifts)

Purpose of This Section:

To analyze feasibility of the idea — helps avoid wasting time and money on
something that may not work later.

III. Production Plan

This section explains how the product will be made. It is crucial because this is where
the conversion of raw materials into finished goods takes place using machinery,
manpower, and capital.

Depending on the Type of Venture:

a) No Manufacturing Involved

●​ Skip this section if it's a trading or service-based venture.

b) Partial Manufacturing (Outsourced/Subcontracted)

Include:

●​ Names & locations of subcontractors​

●​ Reasons for selecting them​

●​ Cost and time required​

 ●​ Contracts or agreements, if any​

●​ Mention what the entrepreneur will do vs. outsource

c) Complete Manufacturing (In-house)

Include details about:

●​ Plant layout (how the machines/workstations are arranged)​

●​ Machinery & equipment required​

●​ Raw materials (names of suppliers, terms & addresses)​

●​ Manufacturing costs ​

●​ Any future capital equipment needed

Objectives of the Production Plan:

As per Alford and Beatty:​

“Each step must be done at the right place, in the right way, and at the
right time with maximum efficiency.”

Elements of the Production Plan:

●​ Production schedule or budget

●​ Machinery and equipment required
●​ Manufacturing methods and processes
●​ Plant layout
●​ Time & motion study
●​ Manpower requirement
●​ Inventory requirement
IV. Operational Plan
This section answers:

"How will day-to-day operations take place?"

It ensures the smooth execution of what’s been planned in the Production Plan.​
​
An Operational Plan explains how the business will run day-to-day activities to
produce and deliver goods or services smoothly and efficiently.

Key Functions of the Operational Plan:

●​ Ensure flow of materials from raw to finished stage​

●​ Enable continuous production, reduce wastage​

●​ Coordinate between departments: engineering, production, marketing,

purchasing, inventory​

●​ Manage movement of goods from factory to consumer​

●​ Set up a system of quality control​

●​ Choose the most economical production policies

Operational Goals:

Operations must ensure:

●​ Quantity (How much to produce)

●​ Quality (Set standards)
●​ Time (Produce on time)
●​ Place (Right location)
●​ Cost (Control expenses)
Elements of the Operational Plan:
Routing

●​ The path raw materials will take from entry → production → final product​
​
Routing is the process of deciding the path raw materials follow from start to
finish during production.

Scheduling

●​ When each task should start and finish

●​ Decides how long each step should take

Dispatching

●​ This means starting production as per the plan.

●​ Involves issuing orders, instructions, and guidelines to staff.
●​ Ensures the execution of scheduled work.

Follow-Up

●​ Involves monitoring and evaluating ongoing work.

●​ Detects errors, delays, or defects.
●​ Helps in:
○​ Reviewing materials, WIP, and finished goods.
○​ Speeding up lagging departments.
○​ Suggesting remedial actions to remove obstacles.

Inspection
 ●​ It is the comparison of actual work with standards.
●​ Helps maintain quality control.
●​ May involve laboratories, testing methods, or specific inspection strategies.

Shipping

●​ This part explains the distribution process: how goods/services reach the
customer.​

●​ Covers:
○​ Steps in completing a business transaction
○​ Factors that influence shipping:​
a) Nature of venture​
b) Type of product/service​
c) Scale of operation​
d) Technology used

V. Organizational Plan
An Organizational Plan shows the structure and ownership of the business.

It explains who will do what, how tasks are divided, and how the business will be
managed and controlled.

Types of Business Categories:

a) Manufacturing – business which makes tangible goods​

b) Wholesale – buys in bulk from the manufacturers , sells to retailers​
c) Retail – sells to end/final consumers​
d) Service – provides intangible offerings (like expertise or time)
Why Organizational Plan is Important:

Different businesses face different:

●​ Startup procedures
●​ Legal constraints
●​ Financial needs
●​ Marketing strategies
●​ Risk & liability issues

Hence, choosing the correct legal form is essential.

Common Forms of Ownership:

●​ Sole proprietorship
●​ Partnership
●​ Joint Hindu Family Business
●​ Co-operative
●​ Corporation/Company

Each form affects:

●​ Taxes
●​ Liability
●​ Continuity
●​ Financing
●​ Ownership & control

Key Elements of the Organizational Plan:

●​ Chosen form of ownership

●​ Terms & conditions of the selected form
●​ Lines of authority & roles
●​ Names, designations, and resumes of members
●​ Stake/shares of members
●​ Roles & responsibilities of each member
●​ Procedure for conflict resolution
●​ Payment terms for members
 ●​ Voting rights & managerial control

Conclusion:

A well-designed organizational plan helps in:

●​ Identifying skills and roles needed

●​ Establishing the culture (attitude, behaviour, communication, etc.)
●​ Supporting long-term effectiveness and profitability.

VI. Financial Plan

A Financial Plan shows how much money is needed, where it will come from, and
how it will be used to run the business.

Why is Finance Important?

●​ Finance is crucial for starting an enterprise.​

●​ It helps the entrepreneur gather men, materials, machines, and methods to

produce goods/services.​

●​ Timely and sufficient funds ensure entrepreneurial success.

A Good Financial Plan Covers:

a) Financial requirements​
b) Sources of funds​
c) Assessment of:

●​ Revenue
●​ Costs
●​ Profits
●​ Cash flow
●​ Inventory
●​ Loans
Purpose of a Financial Plan:
Helps both entrepreneur and investors understand:

●​ How much funding is required

●​ Where the funds will come from
●​ How funds are used (disbursed)
●​ Cash availability
●​ Economic feasibility and revenue forecast

Investors usually expect 3 years of projected data.

Components of Financial Plan:

Proforma Investment Decisions:

Shows how the funds are invested in assets to get maximum return.

Includes investments in:

1.​ Land and building

2.​ Machinery and plant
3.​ Installation cost
4.​ Preliminary expenses
5.​ Margin for working capital
6.​ R&D (Research and Development)
7.​ Raw materials, cash level, etc.

Purpose: Helps estimate total finance required.

Proforma Financing Decisions:

Shows the sources of finance:

●​ Owner’s funds (equity, savings)

●​ Borrowed funds (loans, debentures)

Goal: Choose the best mix to:

●​ Minimize cost and risk

●​ Maximize profit and ROI

Pro Forma Income Statement:

A projection of profit or loss during the first year.

Formula:​
Projected Revenue – Projected Costs = Net Profit​

Forecasting Techniques used:

1.​ Market research

2.​ Industry sales data
3.​ Buyer surveys
4.​ Expert opinions
5.​ Similar startups
6.​ Trial experience

Use conservative estimates to build credibility.

Pro Forma Cash Flow:

Tracks cash movement (not profit).

Formula:​
Cash In – Cash Out = Net Cash Flow

●​ Sales on credit do not mean cash.

●​ Payments may be delayed.
Entrepreneurs use simple format: "Cash in – Cash out"​
Take a conservative approach with assumptions.

Pro Forma Balance Sheet:

Shows the financial position at the end of the first year.

Includes:

●​ Assets
●​ Liabilities
●​ Net worth

Useful for long-term business health checks.

Break-Even Point (BEP):

The point where Total Revenue = Total Cost​

(No profit, no loss)

BEP helps determine:

1.​ Minimum output to avoid loss

2.​ Effect of output on profit
3.​ Right selling price
4.​ Profitable options in production

Economic and Social Variables:

Reflects the social responsibility of the business.

Should mention benefits like:

1.​ Employment generation

2.​ Import substitution
3.​ Ancillarisation
 4.​ Export promotion
5.​ Local resource use
6.​ Area development

Even if not quantifiable, benefits must be explained

VII. Manpower Planning

Definition:

Manpower planning is the process of ensuring the availability of the right number
and kind of people with appropriate skills, at the right place and time, for the
enterprise's needs.

Importance of Manpower:

●​ Human resources are vital to the success of any enterprise.​

●​ Performance and productivity are directly proportional to the quality and

quantity of manpower.​

●​ Manpower planning builds a loyal, efficient, and dedicated workforce.

Key Questions in Manpower Planning:

What kind of people are required?

●​ Must possess qualifications, skills, knowledge, experience, and aptitude.

●​ Depends on the nature of business activity.
●​ Range of personnel may include:
○​ Managers
○​ Supervisors
○​ Administrators
 ○​ Engineers
○​ Technical staff
○​ Skilled and unskilled workers

How many people are required?

Factors influencing quantity:​

a) Total work to be done​
b) Average productivity per person​
c) Expected absenteeism​
d) Labour turnover rate​
e) Current workforce​
f) Future expansion or diversification plans

How will they be selected (procured)?

Focus on:

●​ Recruitment
●​ Selection
●​ Training

Goal: Right person, right job, right time

VIII. Marketing Plan

Definition:

The Marketing Plan outlines the strategy for distributing, pricing, and promoting the
product/service.

Importance:

It guides marketing objectives, strategies, and activities to help the new venture
operate and compete effectively in the marketplace.

3 Key Questions Answered by a Marketing Plan:

Where have we been?

●​ Background/history of the market

●​ Marketing strengths and weaknesses of the new venture
●​ Opportunities and threats in the market

Where do we want to go?

●​ This relates to the marketing goals and objectives for the next 12 months.

How do we get there?

Covers the implementation plan:

●​ Specific marketing strategy

●​ Timeline of actions
●​ Responsibility assignment and monitoring

Entrepreneurs must create a yearly marketing plan to adjust to changing business

environments.
Steps in Preparing the Marketing Plan

Importance:

Investors see the marketing plan as critical to success. It must be comprehensive

and detailed.

1) Business Situation Analysis

"Where have we been?"

●​ Focus on past performance (for existing business)​

●​ For new ventures, highlight:

○​ a) Entrepreneur’s profile
○​ b) Product development
○​ c) Customer need it satisfies
○​ d) Previous experience
○​ e) Planned market segmentation

2) Identify the Target Market

●​ Clearly define specific group of customers​

●​ Based on:
○​ a) Market research or industry analysis​

○​ b) Segmentation by:
■​ i) Consumer characteristics​
▪ Geographic (location)​
​
▪ Demographic (age, gender, etc.)​
​
▪ Psychographic (lifestyle, values)​
 ■​ ii) Buying situations​
▪ Usage, buying conditions, desired benefits​

○​ c) Choose segments to target​

○​ d) Develop 4 P’s: Product, Price, Place, Promotion

3) Conduct SWOT Analysis

Evaluate your:

●​ Strengths
●​ Weaknesses
●​ Opportunities
●​ Threats

Use this analysis to build realistic strategies.

4) Establish Goals

"Where do we want to go?"

●​ a) Set realistic, attainable objectives

●​ b) Quantify goals for measurability
●​ c) Set standards for qualitative goals
●​ d) Limit number of goals to avoid confusion

5) Define Marketing Strategy

"How do we get there?"

●​ Action plan based on the 4 P’s:

 ○​ a) Product
○​ b) Price
○​ c) Promotion
○​ d) Place (Distribution)

6) Implementation & Monitoring

●​ Plans must be followed through.

●​ Be flexible and ready to make adjustments.
●​ Track progress continuously.

IX. Assessment of Risk

Why Important?

Risk is inevitable in any business due to a competitive environment.

Steps:

1.​ Identify potential hazards

2.​ Develop alternatives to:
○​ Prevent
○​ Minimize
○​ Respond to risks

X. Appendix

Definition:

The Appendix contains supportive documents that are not included in the main text.
Common Contents:

a) Letters from customers, distributors​

b) Research data (primary/secondary)​
c) Contracts, agreements, price lists

These documents support claims made in the main plan.

Final Note:

Lack of effective planning often causes business failure.​

With expert guidance, intelligent planning is achievable and crucial for success.