Addi

ti
onalHandout
sforTopi
c4

TheSear
chf
orBusi
nessI
dea
Anewbusi nessv entureisconf r
ontedwiththeimmedi ateconcer nofgai
ningat
l
eastaf oothol
dint hemar ketitdesir
estoserve.Anestabli
shedbusi ness,however,has
adifferentconcern-itmustgr ow orat l
eastmaintai
ni t
scompet it
ivestance.I
nbot h
cases,t her
ei s a need t o adaptnew sound busi ness ideas.Thi s coul
d mean
i
mpr ovementst opr oductsorser vicesoffer
ed,orinthewaycust omer sareser
v ed,or
somei nnovati
onindoi ngbusi ness.
Thepr
oductorser
viceof
fer
ingmaybei
mpr
ovedi
nter
msof
:
1.Per
for
mance-l
i
ket
hechai
rthatcancar
rymor
ewei
ght
;
2.Mai nt
enancecost
-li
ket
hecarbat
ter
ythatr
equi
resl
essser
vici
ngt
hancompet
ing
brands;
3.Acquisi
ti
oncost
-li
kethel
atestl
ow-
pri
cedmodelofacer
tai
nbr
andofcel
l
phone
comparedtocompet
it
ion.
Improvementofservi
cetocust
omersmaymeanfast
erdel
iv
eryorpr
omptaftersal
es
ser
vicewhenr equi
red.Ani
nnovat
ioni
ndoi
ngbusi
nesscoul
dmeantransact
ionsare
ent
ertained24hour
saday.
Whati
sabusi
nessi
dea?
Entrepr
eneur sspendtimeandmoneyexpl oit
ingbusinessideas.Thehighrateof
fai
l
urei nnewv enturebusi
nesses,howev er,indi
cat esaconcomi t
antfai
lur
eont hepar t
ofentrepreneurst oadaptschemest hatwillwor k.Apparentl
y ,t
hebusinessideast hey
adaptedar enotsound.Abusi nessideamaybedef i
nedast heeconomicoppor t
unity
whichiswi thi
nt hereachoftheentrepreneurandwhi chwillprovi
dehim withadesirable
val
ue.Anent r
epr eneurwhoiswellgroundedi ntheconceptofsoundbusi nessideawi l
l
beablet osavet ime,eff
ort
,andmoneyi npursuinghi sgoals.
Whenanaspi
ri
ngentrepr
eneurisconf
ront
edwi t
habusi
nessidea,
itistohisbest
i
nterestto det
ermi
ne ti
s soundness.He should do i
tbef
ore commi t
ting hi
mself
f
inancial
l
yandother
wise.
Anysuccessfulventur
estart
edwiththeadapt i
onofasoundbusi nessidea.For
i
nstance,befor
et headventofparceldel
iv
eryservices,peopl
ehadtocont endwiththe
ver
ypoorser vi
cer enderedbythepostof f
ice.Compl ai
ntsaboutdel
ayeddeliver
yand
l
ostpar cel
shav ebecomecommon.Thesi t
uati
onwasr ipeforabusinesssoluti
on.
Ent
erprisi
ngpersonali
ti
esrecogni
zedtheeconomi copportuni
tyandadapt
edabusi ness
i
deat oservethepeopl ebett
er.ThesuccessofDHL,FEDEX,andLBCpr ovesthatthe
busi
nessi
deat
heyadapt
edi
sasoundone.
Theproduct
ionofbot
tl
edmi
ner
alwat
eri
sanot
herexampl
eofabusi
nessi
dea
t
hatwaspr
ovensound.
Pr
ocedur
einDet
ermi
ningt
heBestBusi
nessI
dea
Businessideasmaybegener at
edbyany oneconnect
edwiththef i
rm,butiti
s
veryi
mpor tantthatthemostappl
icabl
eideatot hef
ir
m’sobject
ivesandresourcesi
s
chosen.Assuch,apr ocedur
emustbeadapted.Thestepsintheproposedprocedur
e
areasf ol
l
ows:
1.pr
epar
ati
onoft
hel
i
stofbusi
nessi
deas;
2.scr
eeni
ngoft
hel
i
stedi
deas;
and
3.f
inal
sel
ect
ion.
Met
hodsofSear
chi
ngf
orI
deas
Ther
ear
etwogener
almet
hodsofgener
ati
ngbusi
nessi
deas.Theyar
easf
oll
ows:
1.unant
ici
pat
edmeans;
and
2.del
i
ber
atesear
ch.
Unant
ici
pat
edMeans
Whent
heent
repreneurf
indsbusi
nessi
deaswi
thoutser
iousef
fort
,themet
hodi
s
r
efer
redt
oasunant
ici
patedmeans.Incl
udedi
nthi
smeansarethefol
lowi
ng:
1.t
heper
son’
swor
k;
2.t
heper
son’
shobbi
es;
3.t
heper
son’
sacquai
ntances;
and
4.achanceev
entencount
eredbyt
heper
son.
Del
iber
ateSear
ch
A disadvantageofunant
ici
pat
edmeansi nideagenerati
oni sthediff
icul
tyof
ascertai
ningtheexactdatewhenthei
deaswil
lcomepouringin.Tooffsett
hisprobl
em,
adeliberatesearchfori
deasi
smade.Thist
ypeofideagenerat
iontakesthefor
m ofthe
fol
lowing:
1.usi
ngsear
chquest
ions;
and
2.i
deapr
ompt
ing.
Busi
nessi
deasmaybescr
eenedwi
tht
heuseoft
hef
oll
owi
ngcr
it
eri
a:
 1.mar
ketf
easi
bil
i
ty;
2.t
echni
cal
feasi
bil
i
ty;
3.f
inanci
ngf
easi
bil
i
ty;
and
4.f
inanci
alf
easi
bil
i
ty.
Mar
ketFeasi
bil
i
ty
Abusi
nessi
deamustpassthetestofmar
ketfeasi
bil
i
ty.Thi
smeanst
hatt
her
e
mustbesomeposi
ti
vei
ndi
cat
ionaboutthefol
l
owi
ng:
1.st
abl
eandsuf
fi
cientdemand;
and
2.pot
ent
ial
compet
it
ivest
rengt
hoft
hef
ir
m.
Stabl
eandSuffi
cientDemand.Abusi nessideawil
lnotlastifthereisinsuf
fi
cient
demandf orwhatev
erpr oductorservi
cet hatiscontemplated.Demandt hatremai n
const
antorshowssignsofgr owt
ht hr
oughoutlongperiodsindicat
est heprobabil
it
yof
marketf
easibi
l
ity
.Demandmustal sobel argeenought ojusti
fythei nvest
mentst hat
wil
lbeneededbytheventure.
Competi
tiv
eSt r
ength.Thebusinessideamustbesucht hatthev entur
ecan
eff
ecti
vel
ycompet ewi
thcurrentorpot
enti
alcompeti
tors.Thecompet i
tiv
est r
engthof
thecompeti
tor
smustbedet er
minedinter
msofpr oductoffer
ings,pr
ices,di
stri
buti
on
methods,pr
omotionmethods,andot
hers.
Thepr
oposedbusi
nessi
deamustbest
rongenought
owi
thst
andcompet
it
ion.
Techni
cal
Feasi
bil
i
ty
Busi
nessideasof
tenti
mesappeareasyt
oexecute,buti
tisnotreall
ysowhen
conv
erti
ngthem i
ntor
ealpr
oduct
sorservi
ceswi
tht
herequir
edquali
tyorquanti
ty.
Anythi
ng can go wrong int heattemptt o assemblet he needed r
esour ces.
Dif
ficul
ties maybe encountered int he procurementofmat eri
als and manpower .
Productiondif
fi
cul
tiescoul
dtaket heform ofunst abl
esupplyofmat eri
als,
unreli
ableor
fl
uctuati
ngpowersuppl y,andot her
s.Nevertheless,techni
calconcernssuchast hose
mustf i
rstbeclear
edbeforesubjecti
ngthebusi nessideatofurt
herconsiderat
ion.
Fi
nanci
ngFeasi
bil
i
ty
Oneoft hefactor
snecessaryi
ndet ermini
ngwhetherabusi
nessideashouldbe
consi
deredornoti sf i
nanci
ng.Thismeanst hatther
emustbesuf fi
cientfundst o
fi
nanceoperat
ions.Theproposedownersoft hevent
uremusthavesuf
fi
cientcapi
talor
i
finsuf
fi
cient
,mustbeofgoodcr edi
tstandinginthecommunit
y.I
ngeneral
,thesources
offi
nancingi
ncludethefol
l
owing:
 1.t
hepr
oposedowner
’ssav
ings;
2.r
elat
ivesandf
ri
ends;
and
3.f
inanci
ngi
nst
it
uti
onsl
i
kebanks.

Fi
nanci
alFeasi
bil
i
ty
The purpose ofentr
epreneur
shipisto provi
de a sour
ce ofi ncome tothe
ent
repr
eneur.Thiswil
lnotbepossibl
eift
hevent
urewi l
lnotbepr
ofit
able.Anybusi
ness
i
deathatcannotprov
idesomeindicat
ionofpr
ofi
tabi
li
tymustbescreenedout.
Prof
iti
stheresul
tofthefinanci
alf
easi
bil
i
tyofthebusinessidea.Fi
nancial
feasi
bil
it
ymaybedet ermi
nedthr
oughananal y
sisoft
hef i
nanci
alprospect
soft he
proposedbusi
nessi
dea.
Whati
saBusi
nessPl
an
Thebusinessplani
sadocumentt hathel
pst hesmal
lbusi
nessownerdet
ermi
ne
whatresourcesareneeded to achi
evetheobj ecti
vesofthefir
m,and prov
idesa
st
andardagainstwhi
chtoeval
uateresul
ts.
Thebusinessplani sasortofabusi nessbluepri
ntanditkeepstheent
repreneur
ontheri
ghttr
ack.Itgivesasenseofpur poset othebusiness.I
talsopr
ovi
desguidance,
i
nfl
uence,andleadership,aswellascommuni cati
ngideasaboutgoalsandthemeans
ofachi
evi
ngthem topar tner
s,associ
ates,employees,andothers.
Pur
posesofaBusi
nessPl
an
Abusi
nesspl
ani
swr
it
tenf
ort
womai
npur
poses.Theyar
ethef
oll
owi
ng:
1.t
oser
veasmanagement
’sgui
dedur
ingt
hel
i
fet
imeoft
hebusi
ness;
and
2.t
oful
fi
ll
ther
equi
rementf
orsecur
ingl
ender
sandi
nvest
ors.
ThePl
anasaGui
de
I
nthecourseofwr i
ti
ngt hebusi
nessplan,thesmal lbusi
nessoperator(
SBO)is
aff
or dedsuffi
cientti
met oconsi derallfact
orsr el
evanttooperati
ngt hebusiness.
Throughanal y
sesoft heenvi
ronmentandder ivat
ionofwhatcanbeexpect edhappen,
decisionsaboutvari
ousaspectsofbusinessoperati
onscanbeconsideredinadvance.
Asper iodicobj
ect
ivesareaccompli
shedoneatat i
me,thebusi
nessplanserve
as a usefult oolforcompar i
ng whatwas planned agai
nstwhatwas achi ev
ed.
Di
screpancieswi l
lpr
ovi
det hebasesfori
mplement
ingchangesormaki
ngadjustments
i
nthebusinesspl an.
 Theti
metablei
ndi
cat
edinperf
ormi
ngt
hevar
iousaspect
sofoper
ati
onsi
sal
soa
v
eryuseful
guidefort
hemanagementoft
hef
ir
m.
ATool
forSecur
ingFunds
Whent heSBO needsi nit
ialoradditi
onalf undi
ngf orhi
sbusinessventur
e,the
busi
nessplanisahandymeansf orconv i
ncinglendersandinvest
ors.I
nmanycases,
thebusi
nessplanindi
catesthatthepr oponentSBOi sfull
yawareofwhathei sgett
ing
i
nto.Lenderswillbemor ecomf or
tabletoseev ari
ousdocument sthati
ndicat
et he
borr
owercan r epay t
he loan.Such document ati
on takes t
he form off i
nancial
proj
ect
ionswhichareusual
lyincl
udedi nthebusinessplan.
Thebusi
nesspl
anwil
lser
veasameansofpr
ovidi
ngsomeassur
ancet
hatt
he
i
nvest
orwil
lpl
acehisf
undsi
nawort
hwhi
l
einv
est
ment.
Rev
isi
ngt
hePl
an
A business pl
an is pr
epared i
n consi
derati
on ofthe curr
entand expect
ed
si
tuati
ons.I
ntheprocessofimplementi
ngtheplan,however
,theexpect
eddev
elopment
orchangesintheenvi
ronmentmaynothappenf ul
lyorevenpart
ial
l
y.
I
nthatcase,thebusi
nessplanorpor
ti
onsofi
tmaynol
ongerber
elev
ant
.When
t
hathappens,
revi
sionofthebusi
nesspl
anisinor
der
.
Theimpl i
cati
onisthatevenwithabusinessplan,theSBOmustst ri
vetobewell
i
nformed aboutwhati shappeni ng t
o hi
sbusi nessand t otheindustrywherehis
businessbel ongs.Necessarystepsmustbeunder takent oadj
ustt ochanges.For
i
nstance,i
ft heusualsourceoflaborhasbecomeunr eli
able,t
hecorrespondi
ngport
ion
ofthebusinesspl anmustberevised.
Par
tsoft
heBusi
nessPl
an
The cont
ents ofthe busi
ness pl
an wi
l
ldepend upon t
he pur
pose.Usual
l
y,
howev
er,t
heycontai
nt hefol
l
owing:
1.Ti
tt
lepageandcont
ent
s;
2.execut
ivesummar
y;
3.descr
ipt
ionoft
hebusi
ness;
4.descr
ipt
ionoft
hepr
oductorser
vice;
5.mar
ketst
rat
egi
es;
6.anal
ysi
soft
hecompet
it
ion;
7.oper
ati
onsandmanagement
;
 8.f
inanci
aldat
a;and
9.suppor
ti
ngdocument
s.

Sour
ce:Medina,
Rober
t 3rdedi
o( ti
on)
.Ent
repr
eneur
shi
pandSmal
lBusi
nessManagement
.
Sampaloc,
Manil
a