Business Planning

Travelling with a map is a useful tool in order for you to visit places you want to visit; it is also
the same with putting up a business. A Business Plan is an effective and versatile tool for you to put up
an effective business. It is somewhat called as a “Businessman’s best friend” for which in today’s global
and competitive environment, it is essential to do proper planning in entering the business world. A
business plan helps you to evaluate the viability of your business idea in a SMART way – specific,
measurable, attainable, realistic and time bound. It provides you a plan that will assist you in running
your business and improves the probability of success. Moreover, it serves as a “selling tool” and
provides basis on you financial proposal.

Why do you need a Business Plan?

Here are some of the reasons why do you need a business plan:

1. Because you are starting a new business;

2. Because you are innovative a new product or services;

3. Because you are looking for a business partner;

4. Because you want that financing companies or the government itself finance your business;

5. Because you want to manage your business better; and

6. Because you want to measure actual performance compared to what is planned.

How to develop a Business Plan?

A business plan starts with planning. Planning means “thinking ahead”. In business, it is thinking
ahead of objectives, strategies, financing, production, marketing, profit prospects, and growth
possibilities. It is concern with questions like:
1. What to do?

2. How to do it?

3. When to do it?
4. What to expect in the future?

Planning should be realistic. It is based on the available resources and is responsive to the need of
the community. Some businesses and government projects fail because their objectives do not match
their resources. Business Planning involves the attainment of goals, and the way to accomplish such
goals. Hence, a time frame is needed in attaining the goals. Starting the business is not the end of
business planning. Ultimately, it is the consumer satisfaction that requires planning. This should be
properly planned because consumer satisfaction means business stability and growth. In financial
language, consumer satisfaction is profit. Thus, business planning is a continuous process until consumer
satisfaction is maximized and sustained.

Principles of Planning

1. Planning must be realistic. – It must be based on available resources – human, financial and
physical resources.

2. Planning must be based on felt needs. – The objectives of the entrepreneur should fit the needs
of the people in a community. Such needs can be known through observations, personal
interviews and questionnaires.
 3. Planning must be flexible. – Resources, needs and economic conditions change. Planning should
be adjusted to such changes to be effective and relevant.

4. Planning must start with simple projects. – The most appropriate project for poor people with
no business experiences is the micro business. This would require very simple management and
technology. It also needs simple and few resources in terms of funds, materials and equipment.

Criteria of Effective Planning

1. The plan should state clearly its objectives.

2. The plan should provide measures for a satisfactory accomplishment of the objectives in terms
of quantity, quality, time and cost.

3. The plan should state the policies, which should guide people in attaining the objectives.

4. The plan should indicate what department or unit will be involved in accomplishing the
objectives.

5. The plan should indicate the time, which should be allowed for each activity.
6. The plan should specify the required resources and their corresponding costs.

7. The plan should designate the officers who will be held accountable for the accomplishment of
the objectives.

Components of Business Planning

1. SWOT – The chances of a product or service can be evaluated through the SWOT analyses. Every
product or service has its own strength, weakness, opportunity and threat. Planning should
include the improvement of the product/service in order to survive competition.

2. Objectives – These should be specific and realistic. Such objectives can be daily, weekly, monthly
and yearly. Example: 10% increase in sales after 6 months of operations. Environmental factors
should be considered in formulating business objectives. Peace and order, power supply and
government policies affect business activities.

3. Strategies – These are ways of accomplishing the objectives. Such ways are stated in the
financial, production, marketing and organizational plans of the enterprise. Example: In the
objective of increasing sales by 10% after 6 months of operations, one way of attaining it is
through advertising, another way is to improve customer relations. It can also be done by
reducing the selling price.

4. Time frame – In business, time is gold. For this reason, an entrepreneur must be efficient in time
management. Every activity has its own time schedule. Activities which are completed on time
save money.
Characteristics of a Sound Business Plan

1. Objective

2. Clear

3. Logical and simple

4. Flexible

5. Stable

6. Complete and integrated

Questions to Consider in Obtaining Facts for a Business Plan

1. What is unique about my product/service?

2. Who are my competitors?

3. How will my customers buy?

4. What is my share in the market?

5. What is the market potential?

6. Who are my customers and where are they located?

7. Where will I put up my business?

8. How big should be my plant or place of business be?

9. What equipment will I need and what size?

10. How will I create customers?

11. What personnel do I need?

12. How will I organize my enterprise?

13. What kind of records do I need?

14. How much capital do I need?

15. How profitable will the business be?

16. How financially healthy will I be?

17. What is my break-even point?

Steps in Business Planning:

1. Evaluate your personal resources & interests & the resources of the community. - Check if you
have the necessary funds, skills or management experience, availability of raw materials,
government financial & technical assistance, and your interests in the business and good human
relations or interpersonal skills essential to the success of the chosen field of business.

2. Analyze your market. – Check if there is a good demand for your product or service, the number
of competitors in the market, your estimated share in the market, who are your customers and
will they be interested in your product or service; If it’s possible for your to offer better quality
or a lower price or if the business would give you reasonable profit.

3. Choose proper business location. – Is it near your prospective customers? Are there the
necessary facilities such as electricity, water, transportation and communication? Other
 alternatives should the chosen location is expensive? Is it accessible to raw materials and other
supplies?

4. Prepare a financial plan. – Identify your objectives, how much money do you need, how will you
spend it, your sources of funds, possible expenses as well as the return of your investments
(ROI).

5. Prepare a production plan. – Check if it is more economical to rent or buy production

equipment, if you can ensure or improve your product design or quality, if your production
facilities meet the demands, if you have inventory control and you have a proper scheduling of
production.

6. Prepare an organizational plan. – Check what type of business organization is most suitable and
be aware of its corresponding laws, policies, and requirements; what could be the advantages
and disadvantages of each type of business organization and who will be the officers and
employees of your enterprise and their duties and responsibilities.

7. Prepare a management plan. – Identify your goals and objectives, strategies, business policies
for your customers. Do you have human resource development for your employees? What is
your program of social responsibility?

8. Prepare a socio – economic plan – identify the contribution and help of your company to the
community and to the environment.

Importance of Business Planning:

1. It can eliminate business risks. – Business plans carefully studied the competence, interest and
resources of the entrepreneur against the needs of the needs of consumers, together with the
presence of competitors.

2. It can minimize costs of production. – The resources of production such as money, materials,
machines and manpower are properly used and scheduled according to plan.

3. It can detect the weaknesses of the business operations. – Since plans and objectives are
formulated in business planning, alternative strategies can be designed.

Business Planning Format

Chapter I. Introduction

• Background of the Study – in this portion, the nature of the company must be discuss
(trends, issues and reasons why putting up a business)

• Company Logo – in this portion, the logo of the company must be presented together with
the interpretation of each symbol, character, words, etc. used.

• Vision and Mission – in this portion, SMART (specific, measurable, attainable, realistic and
time – bound) idea must be considered. Vision statement discusses the dreams of the
company of what it wants to become. Vision Statement should cover the company itself, the
employees working on it, and its community. Mission Statement must support the vision
statement. It is almost the same with the vision statement but it is more concrete and
action – oriented.