Before you turn your brilliant ideas to a real-life business, you will need a strong business plan – a document explaining the scope of your operations together with your strategies and tactics to make your business profitable.

In crafting your business plan, there are different business planning terminologies and metrics you must learn painstakingly. These concepts will serve as the backbone of your survival. Moreover, this will help build intelligent discussions with your business partners or reputable investors that might be interested to team up with you.

Marketing Plan

Some entrepreneurs refer to marketing plan as their battle plan. This is where your strategies and tactics are carefully crafted to capture customers, trample competition, and exceed your sales forecast.

The essentials of a marketing plan include 5Ps – Product, Place, Promotions, Price, and People. Make sure these segments are properly covered if you want to make a functional marketing plan.

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SWOT Analysis

SWOT stands for strength, weaknesses, opportunities, and threats. The basic idea behind SWOT is to test how well you know yourself, your competitors, and your playing field or market.

Strengths and Weaknesses are related to your internal organization as well as to your leading competitors. As a small business, the important thing is to know the areas where you can attack your competitor and avoid situations where the chance of victory is nil..

On the other hand, Opportunities and Threats are strongly used to understand the impact of political, economic, technological trends in changing the market dynamics.

For instance, the rise of mobile devices and text messaging rendered pagers obsolete. Pager companies failed to realize the future of communication. The same is true with typewriters. They failed to see the proliferation of computers and stuck with their existing products, a fatal mistake they learned after a few years.

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Return on Investment (ROI)

The bottom line of every business is to recover initial expenses and make profit in the shortest possible time. ROI monitors the profitability of your business by dividing your annual revenues by your investment. Higher ROI is a very good indicator of business growth.

Measuring ROI is a standard practice small and big businesses worldwide. If you want to check your ROI, visit Marketing Today and input the required data for automatic computation.

Payback Period

This financial term projects the time needed to recover your initial investments to your business. For a small business, it is better to repay investments in the least possible time given its limited resources.

However, payback period does not consider the time value of money. The value of your $200 today might be equivalent to $100 in the next 5 years. Always consider this aspect when discussing payback period with your business partners or banks if you are asking for loans.

Payback period indicates the feasibility of your business. If you fail to get your desired payback period, it means you have to validate your assumptions, forecasts, and decide if it is still wise to continue with the business.

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