ENTREPRENEURSHIP

Business Plan is a detailed and integrated written document that describes the various activities
involved in opening and operating a new entrepreneurial venture.

Major Parts of a Business Plan:

1. Introduction
2. Executive Summary
3. Environmental Analysis
4. Business Description
5. Marketing Plan
6. Organizational Plan
7. Production Plan
8. Operation Plan
9. Financial Plan
10. Appendix

MARKETING PLAN

- Details how the proposed business will sell its product to the target consumers.

Market size – the size of the arena where the entrepreneur’s business will play.

Market share –it refers to the plotting and calculation of the competitors’ market share to
determine the remaining portion for the new venture.

Customer requirements – are specific features and characteristics that the customers need from a
product or service.

Market segmentation – the process of grouping similar or homogenous customers according to

demographic, psychographic, geographic and behavior to determine the best segment that the
company will serve.

Demographic Segmentation

- the process of grouping customers according to relevant socioeconomic variables for the
business. Socioeconomic variables include income range and social class, occupation, gender
and are, religion and ethnicity.

Psychographic Segmentation

- the process of grouping customers according to their perceptions, way of life, motivations, and
inclinations.

Geographic Segmentation

- grouping customers according to their location.

Behavioral Segmentation
- is the process of grouping the customers according to their actions. These behaviors are
instigated by occasions, desired benefits, loyalty, and usage of products or availment of services.

 Marketing Mix Elements (7Ps)

1. Product – any physical good, service or idea that is created by an entrepreneur or an
innovator in serving the needs of the customers and addressing their existing problems.

Classification of Products
1. Consumer products – are intended for consumer market or end users who purchase
for their personal consumption or family consumption.
2. Industrial products – are intended for business market who purchase products for
further processing or for their own business use.

Product Branding

Brand refers to the identity of the company, of a product, of a service, or of an entrepreneur

himself or herself.
-it is a symbol of promise or assurance from the entrepreneur that what it purports to
customers will happen.
-refers to the name, design, color, symbol, quality, features or combination of these
elements that make the product separate and distinct from similar products of competitors. It
has two elements – the brand name and the brand logo.

Approaches to Branding

a. Umbrella Brand Approach

- all products of the business carry the same brand name.

b. House Brand Approach

-every product of the same business has a separate brand name that distinguishes it
from the rest of the company’s products.

2. Price – refers to the amount of money charged by product or service providers to the market
in exchange for their products or service.

Introductory Pricing Strategies

i. Penetration Pricing strategy – involves setting low initial price for new products
offered in the market. The objective is to be able to enter the market
immediately.
 ii. Market Skimming Pricing strategy – involves setting high initial price for a
product or services offered, and after a definite period of time, companies
either lower the price of the offering or maintain its price.

3. Place – refers to a location or medium of transaction. It also covers the product distribution
and the whole business logistics.

Distribution Strategies Used by Companies

1.Intensive Distribution. Firms place products in as many outlets as possible. This makes
the products accessible and available to all consumers anytime, anywhere.

2. Selective Distribution. Products are distributed in a limited number of outlets.

Companies develop close business relationship with selected channels.

3. Exclusive Distribution. An outlet, is given exclusive rights to carry manufacturer’s

products within a specific territory.

4. Promotion – refers to the mode of conveying the presence and attributes of the product to
the target consumers.

Promotional Tools:

i. Advertising. This is a type of communication that influences the behavior of a

customer to choose the product or service of the entrepreneur over the
competitors. The entrepreneur can advertise through the following:
- -Television –regular channels, cable TV
- Radio – AM and FM radio
- Internet – e-mails, websites blogs, social media, search engines, podcats
- Mobile phones – text messages, mobile applications, mobile internet
- Print – newspaper, magazines, flyers, directories, signage, posters
- Out-of-home – billboards, buses, bus stops, trains, train stations, taxis,
street advertisements
ii. Personal Selling. This involves a salesperson who has personal or direct contact
with the prospective consumers.
iii. Sales Promotion. These are short-term promotional gimmicks wherein practical
incentives and appealing activities are incorporated to entice the customers to
buy the product or avail of the service. These are called “below-the-line”
promotions. Examples of sales promotions in the Philippines are:
- Sales discounts or discount coupons
- Raffles
- Contests and games
- Promo items
- Product or service bundles
- Trade fairs or exhibits (e.g., wedding expo)
- Sample distributions or free taste/free trials
- Premiums (e.g., free toys for fast food meals)
- Point-of-purchase promotions (e.g., display strands in grocery stores)
 - Advertising specialties (e.g., pens, notebooks, umbrellas, bags,
calendars)
- Rewards (e.g., rewards cards)

iv. Public Relations. These are image-building initiatives of the entrepreneur to

make the name of the business reputable to stakeholders, such as the target
customers, government agencies, business partners, media, and the public.
Examples of PR strategies are:
o Press conferences
o Launching events
o String media relations through press kits
o Social responsibility events (e.g. charitable or community
events)
o Lobbying (e.g. good relationships with government officials)
o Web public relations (e.g. blogs, social media, e-mails, word-of-
mouth)

5. People – refers to the individual employees or workers who are directly involved in the
production, marketing, and sale of the product or service. Hence, the entrepreneur must be sure
to hire the right person for the position.

6. Process – is a step-by-step procedure or activity workflow that the entrepreneur or

employees follow to effectively and efficiently serve customers. Its components include input,
throughput and output.

Internal Process - back-office operations like preprocessing, processing, and

postprocessing wherein employees or machines process customers’ requests without
necessarily being seen by the customer.

External Process – the actual serving where the customers are part of the process.

7. Packaging – is how the product or service is presented to the customers. It is the overall
identification (look and feel) of the product or service.

- packaging preserves the shelf life of the product or service.

Product Packaging

- refers to the process of making the wrapper, covering, or container of a product or the product
package.

Product Package
- the container used by the company to protect, promote, and transport its product.

Label
 - is part of the product package that contains information about the product that target what
consumers need to know.

Levels of Packaging

i. Primary package – is the product’s immediate container.

ii. Secondary package – refers to another package that protects the primary package.
iii. Tertiary package – is the bigger package that totally supports the product for safety
transport or product shipment.

ORGANIZATIONAL PLAN

 Form of Business Organization

Sole Proprietorship –
Partnership –
Corporation –
Cooperative –

 Liability of the Owner/Owners

- describes the extent of the owners’ financial obligations with the creditors.

Types:

1. Limited liability. It means that the liability of the owner is only up to the extent of his/her
financial contributions to the business.
2. Unlimited liability. It means that the creditor can run after the personal property of the owner in
the event that the business fails to fully settle its financial obligation during business dissolution.

 Organizational Structure

Organizational Structure – shows and defines the hierarchy of the different positions in the
organization and the interrelationships of the different offices and departments.

Organizational Chart – depicts the flow of communication within the organization, and the line and
staff authority that must be observed and executed.

 Roles and responsibilities

To verify if a position is really necessary, the entrepreneur must devise a detailed job description
and job qualifications of the future employee. Manpower is one of the higher costs of operating a
business but is also the most instrumental to its success. Having the right people encompasses a
myriad of advantages.

Job Description - enumerates the duties and responsibilities of the potential employee,
including the scope, limitations, and terms and conditions of employment.
 Duties - clearly describe the job that the employee will assume with allowance for
flexibility. Duties are usually high level description only.

Responsibilities and Accountabilities - must be communicated well to the employee so

that he or she knows what to expect with the job.

Work schedule - the specific days and working hours must be written so that the
employee will be able to align the work schedule with his or her personal
schedule.

Employee Qualifications

Educational Background- this gives the entrepreneur an idea on the degree of the
candidate’s knowledge of the basic things.

Work experience- this will tell him or her what to expect from the applicant and what he
or she can potentially contribute to the business based on his or her past
positions and experiences.

Specific Skill or Knowledge- this one is important especially on technical jobs that
require high proficiency.

 Compensation and Benefit Range

- details the potential salary and benefits that the employee will get.

PRODUCTION PLAN

It presents or describes activities related to the production of goods.

 Production Schedule
- Presents the total number of goods to be produced and the expected time to produce them.
- The factors that influence the number of goods to be produced are:
1. Demand for the product
2. Availability of resources
3. Capacity of the plant
 Production Process
- It refers to the different processes or stages involved in the in the production of goods. The
description of the following must be included:
1. Exact processing procedure
2. Materials, parts, or ingredients required
3. Expected time to process the product
 Processing Plant and Equipment
- This section describes the manufacturing plant, the machinery and equipment, and the
various tools to be used in the production of goods, including their respective estimated
costs.
 - It also talks about the location of the processing plant and the reason for the selection of
the site, the layout of the processing plant and the factory building.

Layout - pertains to the utilization plan of the building area, and includes the proposed location
of the indoor machinery and equipment, working areas, passageways and ventilation and
lighting.

1. Product-type Layout
- machines and equipment are arranged according to the sequence in which they are used in
the manufacture of a product.

2. Process-type layout
- -machines and equipment performing similar functions are grouped together.

 Sources of Materials
- The possible sources of raw materials and manufacturing supplies must be described in
terms of the following:
1. Proximity of the source to the processing plant
2. Payment terms and conditions
3. Discounts and damages
4. Terms of shipment
  Production Cost
- This section shows the estimated cost of production. Three elements must be properly
described and accounted for and these are:
1. Labor
2. Direct materials
3. Factory overhead

OPERATION PLAN

It outlines the various activities, from the acquisition of raw materials to the delivery of the
products to the target consumers.

 Evaluation of Suppliers
- The new basic entrepreneurial concept of quality management is that control starts from
the suppliers of raw materials.
- The business must conduct a critical evaluation of the suppliers of raw materials and
establish harmonious working relationships with them to reduce the threats they posed.

 Materials Requisition and Receiving Procedure

- It explains the procedures in requisitioning raw materials and other manufacturing supplies
and process of receiving them. It covers the following areas:
1. Basis of receiving the raw materials
2. Comparison of the order and receipt
3. Quality of materials received

 Storage and Inventory Control System

- It describes how the business stores finished and protects its inventory against possible
theft and losses. This section deals with the following:
1. Owning or renting a warehouse
2. Management of the warehouse
3. Procedures in the transfer of goods
4. Control of inventory in the warehouse
 Shipment System and Control
- The sales contract and shipping documents must be properly approved before the product
is shipped to the customers. It includes the following:
1. Approval of shipping and sales documents
2. Terms of shipment
3. Manner of shipping the product
4. Other terms and condition like sales contract