Marketing Essentials

Chapter 35: Developing a Business Plan

Chapter Summaries

Section 35.1

• The business plan is a proposal that outlines a strategy to turn a business idea into a reality. It needs to convince investors and lenders that the business idea is profitable, identify procedures necessary to legally establish the business, and work as a management tool to identify the steps necessary to operate a profitable business.
• The four components of a business plan are the description and analysis of the proposed business, the organizational plan, marketing plan, and the financial plan.
• External factors can affect a business’s success. These factors include the geographics, demographics, and economics of the trading area, the competition, the target market, and the business location.

Section 35.2

• The organization and marketing plan section of a business plan outlines how the business will be organized and how it will be promoted.
• Investors and lenders want to see financial information about a business before they commit to making an investment. The financial plan should include sources of capital for the business and its projected income and expenses.
• Financing for businesses includes equity capital from sources such as personal savings and shareholders, and debt capital from sources such as banks and credit unions.