Montessori Professional College of Asia

Marikina Branch

A.Y 2019-2020

Chapter 1
WRITTEN
REPORT
FOR
ENTREPRENEURSHIP

Group 1

Hasmin Balean

Mikaella Fortin

Angeline Petalcorin

Iraleen Villarin
CHAPTER1: PLANNING THE ENTERPRISE

1.1 WHAT IS A BUSINESS PLAN FOR?

A business plan is also a road map that provides directions so a
business can plan its future and helps it avoid bumps in the road. The time
you spend making your business plan thorough and accurate, and keeping
it up-to-date, is an investment that pays big dividends in the long term.

Your business plan should conform to generally accepted guidelines

regarding form and content. Each section should include specific elements
and address relevant questions that the people who read your plan will
most likely ask. ©

A business plan is a document that summarizes the operational and

financial objectives of a business and contains the detailed plans and
budgets showing how the objectives are to be realized. It is the road map to
the success of your business. For anyone starting a business, it's a vital
first step.

A business plan has two primary purposes. First, and foremost, it

should be used to help run your company with a more cohesive vision. It is
your roadmap. By truly analyzing your plan for marketing, sales,
manufacturing, website design, etc., you greatly improve your chances for
success.

The second purpose of a business plan tends to be the reason most

clients request plan advice from SCORE. That is, a financial institution or
other lender will not invest in your company unless you can demonstrate
that you have a roadmap to success. Banks want to mitigate their risk of
default and private investors, such as Angel’s, want a realistic forecast for
when they will be reaping a return on their capital. ©
©
1.2 CONTENTS OF THE BUSINESS PLAN
The Business Concept and the Business Model

What is a business model?

A business model is a framework for how a company creates value.

Ultimately, it distills the potential of an organization down to its essence and
provides a framework for success and overcoming challenges.

A business model captures the fundamental assumptions and any

key learning about a new venture. For example, it might enumerate the
company’s core value proposition, targeting customers, key resources, and
assumed revenue streams. ©

What is a business concept?

An idea for a business that includes basic information such as the service
or product, the target demographic, and a unique selling proposition that
gives a company an advantage over competitors. A business concept may
involve a new product or simply a novel approach to marketing or delivering
an existing product. Once a concept is developed, it is incorporated into a
business plan. ©

The Business goals : Vision, Mission, Objectives, and

performance targets

Vision Statement

A vision statement is created as a compelling verbal image and forms

a mental picture of the future. It should define what we seek to become as
an organization, yet describe something that is realistic. The vision should
generate human energy and engagement. In other words, it should provide
direction and focus for the organization.

To develop a vision statement, ask yourself these questions:

What is your dream or vision of the future?

What is the loftiest picture you can imagine?

 Then, convince others of the value of that vision. Express it in a way
that aligns with their best interests. Encourage them to buy into your
purpose for the organization. Keep the statement brief and memorable.
Use it to focus your activities.

Mission Statement

Your mission is the business reason for your organization’s

existence. It is an element of the charter. It doesn’t describe a specific
outcome and contains no time limit or measurement. The mission
statement provides the basis for setting your goals and is used to allocate
resources.

A typical mission statement format might be:

To provide (product) to (customers) for (reason) in (marketplace).

To define your mission, begin by describing why your organization exists.

Identify your scope of products and services. Identify your customers and
the audience for your offerings. Then, write a brief and succinct mission
statement.

Values Statement

Values are the beliefs behind your vision and mission. A worthy vision
is guided by worthy values. Values give dignity and direction to your
mission. They are the moral compass and expected behaviors during your
vision quest. A values statement may include elements like:

Integrity in all our actions

Commitment to employees

Quality of our products

Protection of environment

Innovative business ideas

Continual learning

What do you hold dear and inviolate? What core values guide your
activities? Express these values for an improved work environment and to
allow the organization to prosper.
Strategy Development

A strategy is a statement of your approach to achieving your goals.

Your vision, mission, and values play an important role in developing your
business strategy. They provide the framework for generating and
screening strategic options. They provide an organizational identity and
understanding of business directions.

The business strategy can be viewed as how you will use your
mission to achieve your vision. Strategies are critical to the success of an
organization because this is where you begin outlining the plans and
actions to accomplish your goals.

Goals and Objectives

Goals are conditions to be achieved in the future. They must be

defined consistent with your vision, mission, and strategic directions. Goals
guide your decisions and actions. However, they usually do not involve
measurable results, and therefore, do not change as often as objectives.

Objectives are focused on critical issues and milestones. They

describe the activities and targets to achieve your goals. They identify the
dates for completing the activities. They are measurable in terms of being
achieved, or not. For example, a general goal might be to reduce waste.
The specific objective might be to reduce waste from 5% to 3% by the end
of 2017. ©

The executive summary

An executive summary of a business plan is an overview. Its purpose
is to summarize the key points of a document for its readers, saving them
time and preparing them for the upcoming content.

Think of the executive summary as an advance organizer for the

reader. Above all else, it must be clear and concise. But it also has to
entice the reader to read the rest of the business plan.

This is why the executive summary is often called the most important
part of the business plan. If it doesn’t capture the reader's attention, the
plan will be set aside unread - a disaster if you've written your business
plan as part of an attempt to get money to start your new business. (Getting
startup money is not the only reason to write a business plan; there are
other just-as-important reasons.) ©
©

Contents of an Executive Summary

-Should introduce and highlight the good qualities of:
the business proponents and their partners;
the enterprise organization and its capabilities;
the technology providers and their expertise and experience; and
the suppliers and all the major service providers.
-Should likewise describe the products/services of the enterprise, their
features and attributes, and why they are the right ones to deliver to the
customers
-Should then proceed to discuss and justify the Enterprise Strategy and
Enterprise Delivery System
-Should also contain a section on the environmental and regulatory
compliance of the proposed business, as well as the more proactive
programs to become a more responsible corporate citizen
-Should present the capital structure of the proposed business and show
how this structure will respond to the investment programs and financial
forecasts of the enterprise.©
The Business Proponents

The third section of the business plan contains information about the
business proponents or stakeholders.
Proponents: a person who puts forward a proposition or proposal
Four Types of Stakeholders
Resource mobilizers and financial backers
Technology providers and applicators
Governance and top management
Operating and support team
If the business plan readers are the resource providers, then they will want
to know who else are on the board to share the burden of raising money to
see the whole thing through.
If the business plan readers are the technology providers, they will want to
know if there will be sufficient funds to pay for the technology.
If the business plan readers are the governance and top management
team, ten they will want to know what to know what strategies and
performance indicators are being proposed.
If the business plan readers are the implementing, operating, and support
teams, they will want to know what programs, activities, tasks, and
resources would be in place. ©

The Target Customers and the Main Value Proposition

What Is a Value Proposition?

A value proposition refers to the value a company promises to deliver

to customers should they choose to buy their product. A value proposition
is also a declaration of intent or a statement that introduces a company's
brand to consumers by telling them what the company stands for, how it
operates, and why it deserves their business.

A value proposition can be presented as a business or marketing

statement that a company uses to summarize why a consumer should buy
a product or use a service. This statement, if worded compellingly,
convinces a potential consumer that one particular product or service the
company offers will add more value or better solve a problem for them than
other similar offerings will. ©
Market Demand and Supply Industry Dynamics and Macro
Environmental Factors

Market demand and supply

If the physical factors are expected to remain the same, then most likely,
the future forecast will follow the past trends. If NOT, the future forecast
should be revised according to the new variables influencing the demand
and supply.

Market analysis and forecasting exercise

Should lead to a quantification of the current and prospective size of the

market. Both the current and potential consumptions should then be
dissected.

The business plan should discuss the relevant INDUSTRY DYNAMICS

- who are the competing enterprises in the industry and what are their adv
and disadv?

- who are the suppliers in the industry and what are their capabilities and
bargaining power?

- what are the channels of distribution being used by the industry? How
effective are these channels?

Macro Environment

Which includes the SOCIAL, POLITICAL, ECONOMIC, ECOLOGICAL, and

TECHNOLOGICAL (SPEET)

Social Environment

Includes the demographics and cultural dimensions that govern

entrepreneurial behavior

Structure, social status and dynamics of the population at large

Beliefs, tastes, mores costumes, Traditions

Political Environment

Defines the governance system of the country or the local are of the
business.
Includes all the laws, Rules, Regulations on allowable and disallowable
business practices.

Economic environment

Is mainly driven by supply and demand forces.

Sale factor that drives the interest and foreign exchange rates to fluctuate
with the movement of the market forces

Ecological environment

Includes all natural resources and the ecosystem that defines the habitat of
man, animals, plants, and minerals.

Technological environment

Makes or breaks competing participants in any industry. ©

PRODUCT/SERVISE OFFERING: DESCRIPTION,

EVOLUTION, AND JUSTIFICATION

A Product Offering represents what is externally presented to the

market for the market’s use. A Product Offering can be assembled from a
reusable Product Specification (sometimes referred to as a product spec).

In practical terms, a Product Offering represents tangible and

intangible goods and services that are made available for a certain price to
the market. A Product Offering may represent a single indivisible Simple
Offering based on a single product specification, or may be a Bundled
Offering, created by combining Simple Offerings and other Bundled
Offerings.

The Tele Management Forum Information Framework defines a

Product Offering as the presentation of one or more Product Specifications
to the marketplace for sale, rental, or lease for a Product Offering Price. A
Product Offering may target one or more Market Segments, be included in
one or more Product Catalog, presented in support of one or more Product
Strategies, and made available in one or more Places. Product Offering
may represent a simple offering of a single Product Specification or could
represent a bundling of one or more other Product Offering. ©
ENTERPRISE STRATEGY AND ENTERPRISE
DELIVERY SYSTEM

ENTERPRISE SYSTEM

The overall combination of computer hardware and software that a

business uses to organize and run its operations. For example, an
integrated enterprise system will generally handle more than one operation
for a company to facilitate its business and management reporting needs.

ENTERPRISE STRATEGY

Enterprise strategy, or corporate strategy as it is also known, is the

broadest form of strategy within a business. Enterprise strategy deals with
the issues that affect the firm as a whole. It is typically developed at a high
level within the firm, by the board of directors or the top management team.
Understanding enterprise strategy is simple if you familiarize yourself with
the basic elements. ©

Financial Forecast: Expected Returns, Risks, and

Contingencies
Guide
Write a business plan: step-by-step
Financial forecasts for your business plan
As part of your plan you will need to provide a set of financial projections
which translate what you have said about your business into numbers.
You will need to look carefully at:
how much capital you need if you are seeking external funding
the security you can offer lenders
how you plan to repay any borrowings
sources of revenue and income
You may also want to include your personal finances as part of the plan at
this stage.
©
Financial planning
Your forecasts should run for the next three to five years and their level of
sophistication should reflect the sophistication of your business. However,
the first 12 months' forecasts should have the most detail associated with
them.
Include the assumptions behind your projection with your figures, both in
terms of costs and revenues so investors can clearly see the thinking
behind the numbers.
What your forecasts should include
Sales forecast - the amount of money you expect to raise from sales - see
forecast and plan your sales.
Cash flow statements - your cash balance and monthly cash flow patterns
for at least the first 12 to 18 months - see cash flow management.
Profit and loss forecast - a statement of the trading position of the business:
the level of profit you expect to make, given your projected sales and the
costs of providing goods and services and your overheads.
For financial forecast examples, download a spreadsheet containing cash
flow forecast, profit and loss forecast and sales forecast templates.

Risk analysis
Alongside your financial forecasts it is good practice to show that you have
reviewed the risks your business could be faced with, and that you have
looked at contingencies and insurance to cover these. Risks can include:
competitor action
commercial issues - sales, prices, deliveries
operations - IT, technology or production failure
staff - skills, availability and costs
fire or flood

©
Environmental and Regulatory Compliance
The role of regulation in entrepreneurial ecosystems
As explained in the first article in this series, an entrepreneurial ecosystem
is a conceptualization of an environment in which the right combinations of
elements help to foster economic growth through enterprise and innovation.
One of these elements is the regulatory framework in which this
entrepreneurial activity is able to take place.
The following diagram illustrates the main regulatory issues that
impact on a business throughout its lifecycle. It commences with how easy
it is to start-up a new business venture and also how easily the new owners
can employ workers. Other key issues relate to the compliance costs of
securing premises and having all the necessary utilities and License
secured. ©

Capital Structure and Financial Offering: Returns and

Benefits to Investor, Financers, and Partners

Business people use the term structure in quite a few different ways.
The terms "governance," "business," and "legal," are all associated with
their own "structures" for instance. These refer to aspects of the company
set up and operation.
Two other similar terms describe the nature of the company's financial
position: Financial structure and capital structure.

Both structures concern the "Liabilities + Equities" side of the Balance

sheet equation:
Assets = Liabilities + Equities.
Financial structure refers to the balance between all of the company's
liabilities and its equities. It thus concerns the entire "Liabilities + Equities"
side of the Balance sheet.
Capital structure, by contrast, refers to the balance between equities
and long-term liabilities. Short-term liabilities do not contribute to capital
structure.
For comparing the firm's debt to its equities, financial structure is,
therefore, more sensitive than the capital structure to short-term liabilities.
"Financial structure" reflects the status of working capital and cash flow,
salaries payable, accounts payable, and taxes payable. The Capital
structure does not.
Capital structure, on the other hand, refers to the makeup of the
company's underlying value. Here, capital structure focuses on the balance
between funding from equities and financing from long-term debt. The
presumption is that firms use funds from both sources to acquire income-
producing assets. Capital structure is also known as capitalization.©