BUSINESS PLAN

HISRICH AND PETERS

written document prepared by the entrepreneur that
describes all the relevant external and internal
elements involved in starting a new venture. It is an
integration of functional plans such as marketing,
finance, manufacturing and human resources. It also
addresses both short-term and long-term decision-
making for the for the first three years of operation.
DAVID E. GUMPERT'S
A business plan is selling document that conveys the
excitement and promise of your business to any
potential backers or stakeholders.
OTHER DEFINITION FROM BOOKS
OF ENTREPRENEURSHIP
It is thinking ahead of objectives, strategies, financing,
production, marketing, profit prospects and growth
possibilities.

-should be realistic

-attainment of goals and the ways to accomplish

such goals
 PRINCIPLES OF PLANNING

01 Planning must be
realistic 03 Planning must be
flexible

02 Planning must be
based on felt needs 04 Planning must
be start with
simple projects
Stages of Business Planning
Professor Philip Kotler
Unplanned Stage
At the start of the business, the owner-
manager is busy looking for funds,
customers, materials and equipment.
His entire attention is devoted to the
daily operations of his business in his
intense desire to survive.
Budgeting system stage
The owner-manager realizes the need to
develop and use a budgeting system.
Estimated income is made to facilitate
the orderly function of the growing
enterprise
Annual Planning stage Strategic planning stage
The owner-manager drafts an annual As the business enterprise becomes
plan. bigger, a long-range planning is
needed.
A. Top-down planning
-provides the goals and let the
employee comply with it
B. Bottom-up planning
-encourages his employees to
participate in planning the goals and
strategies
Criteria of Effective Planning
The plan should state clearly its objectives.

The plan should provide measures for a satisfactory

accomplishment of the objectives in terms of quantity, quality,
time and cost.

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

The plan should indicate the department or unit will be involved

in accomplishing the objectives.
Criteria of Effective Planning
The plan should indicate the time which should be allowed for
each activity.

The plan should specify the required resources and their

corresponding costs.

The plan should designate the officers who will be held

accountable for the accomplishment of the objectives.
 Components of
Business Planning
Characteristics of a Sound
Business Planning
 Purpose of Business Plan

Project general picture of the business project

Serve as a guide in implementing the business or project

Serve as a major input to investment decisions or major expenditures

Serve as reference or guide to policy formulation and development

Serve as guide for operational matters

 Purpose of Business Plan

Serve as reference for a bank loan or financing purposes

Determine/estimate the detailed technical and financial requirements

Serve as an overall guide for the proponent or entrepreneur

 DAVID GUMPERT
believed that business plan is a selling point. With a
business plan, you sell the entire company as a
package.

Reasons for doing a business plan:

1. Sell yourself as a business
2. Obtain a bank financing
3. Obtain investment funds
4. Arrange strategic alliance
5. Obtain large contracts
6. Attract key employees
7. Complete mergers and acquisition
8. Motivate and focus your management team
 Steps in
Business Plan

-Do you have the necessary funds?

-Do you have a skillss or management experience?
-Does the government provide financial and
technical assistance?
Are raw materials available?
Are you interested in such business?
Do you have good human relations?
 Steps in
Business Plan

-Is there a good demand for your product?

-How many competitors are there in the market?
-What is your estimated share in the market?
-Who are your customers?
-Are they interested in existing products or services?
-Is it possible for you to offer better quality or a lower
price?
-Is there a reasonable profit?
 Steps in
Business Plan

-Is it near your perspective customers?

-Are there facilities like electricity, water,
transportation and communication?
-Is the place clean, decent and peaceful?
-Do you have a good alternative in case the best
location is expensive?
-Is it accessible to raw materials and other supplies?
 Steps in
Business Plan

-What are your objectives?

-How much money do you need?
-How will you spend the money?
-Where will you get the money?
-What are your expenses?
-How soon can you recover your money or
investment?
 Steps in
Business Plan

-Is it economical to rent or buy production

equipment?
-Can you ensure or improve the product design or
quality?
-Can your production facilities meet demand?
-Do you have inventory control?
-Do you have proper scheduling of production?
 Steps in
Business Plan

-What type of business organization is most suitable?

-Do you know the corresponding laws, policies, and
requirements of your business organization?
-Who will be the officers and employees of your
enterprise?
What are the duties and responsibilities?
 Steps in
Business Plan

-What are your goals and objectives?

-What are your strategies?
-Do you have business policies for your customers?
-Do you have a human resources development for
your employees?
-What is your program for social responsibility?
Importance of Business Planning
1.Planning can eliminate business risk

2.Planning can minimize cost of

production

3.Planning can detect the weaknesses

of the business operations
Principles of Planning
1. Make it neat
2. Make it grammatically correct
3. Make it honest
4. Write in layman's language
5. Do not over emphasize your
product or your business
Components of Business Plan
Cover sheet

listing with the following:

1. name of business
2. name/s of the proponents
3. address
4. contact number
5. e-mail and websites address

Note: Next page should provide table of contents

Components of Business Plan

Executive Summary

summarizes the plan an states the

objectives of the business.

prepared after the business plan is

written
Components of Business Plan
Vision
what you want to accomplish in the
long-term

Mission
general statement of how you will
achieve the vision

Goals
statement of what needs to be
accomplished to achieve the mission
Components of Business Plan
Company Description
Divided in two parts

a. short explanation of the industry

-present the current situation and the
outlook for the future. Information must be
provided regarding the various markets
within the industry, as well as new
products or developments that could
affect the business
Components of Business Plan
Company Description
b. description of the business

-industry sector where business falls into (retail, manufacturing, education, etc

-whether the business is new or established

-ownership status of the business (sole proprietorship, partnership or corporation)

-information on who the customers are

-information on the size of the market

-information on how the products or service is distributed.

Components of Business Plan
SWOT Analysis
an organized method of assessing a firm’s strengths and
weaknesses and the opportunities and threats in the external
environment that confront or will confront the firm

acronym of strengths, weaknesses, opportunities and threats

i. SWOT
ii. Competitor Analysis
-Strengths and Weaknesses of Identified Competitors
Components of Business Plan
Business Model
Components of Business Plan
Business Model

1. Value Propositions
a. What is the Product/Service? What customer’s problem does
it solve? Where does your business/product/service fits in the
value chain?
b. One sentence that best describes the business
c. Example: K-café is a social enterprise promoting livelihood of
Los Baños mothers by selling Kalinga-based products and
helping the community improve their health and increase
income.
Components of Business Plan
Business Model
2. Customer Segments
a. Who will be your customers? Are they another business or
people?
i. Their needs that the products/services are trying to
solve
ii. What are the characteristics of the people who are
looking for my value proposition?
iii. What are the characteristics of those businesses?
b. Market size
i. Estimated number or size of the target market
Components of Business Plan
Business Model

3. Customer Relationships
a. How will the business interact with its customers?

4. Channels
a. avenues through which your customer comes into contact
with your business and becomes part of your sales cycle e.g.
b. how will the customer segment know the value proposition?
Components of Business Plan
Business Model

5. Key Activities – what are the important activities that your

business
undertakes to achieve the value proposition for your customers?

6. Key Resources - practical resources are needed to achieve the

key
activities (actions) of the business e.g. office space, equipment,
people,
transportation
Components of Business Plan
Business Model
7. Key Partners – external companies/suppliers and other partners
i.e.
funding agency, if applicable, you may need to achieve your key
activities and deliver value to the customer

8. Cost Structure – monetary costs of operating as a business

9. Revenue Streams – the financial gain and revenue model that

will be applied to the value proposition e.g. fee for service, fixed
rate, pay per product, subscription
Components of Business Plan
Components of Business Plan
Marketing Plan
Marketing Strategies

FOUR P's

Product

-good or service that a company offers to customers.

Components of Business Plan
Marketing Plan
Price

factors to be considered:

1. Customers perception of value in the firm’s kind of business.

2. Costs involved such as overhead, storage, financing,
production, and distribution
3. Profit objectives of the firm
Components of Business Plan
Pricing
1. Cost plus pricing
-covers all costs, variable and fixed, plus an extra increment to deliver

2. Demand pricing
-is a method of pricing where the firm sets prices based on buyer desires. The
range acceptable to the target market is determined.

3. Competitive pricing
-calls for price-setting on the basis of prices charged by competitors.

4. Markup pricing
-is a form of cost-oriented pricing in which the firm sets prices by adding per unit
merchandise costs, operating expenses and desired profit.
Components of Business Plan
Promotion

1. Advertising aspects
2. Packaging
3. Public relations
4. Sales promotions
5. Personal sales
Components of Business Plan
Place

determine where they should sell a product and how to deliver

the product to the market
Components of Business Plan
Management Plan
-describe the form of ownership (i.e Sole proprietorship, partnership,
corporation, cooperative)
-Organization chart -useful tool to indicate the hierarchy/levels of authority
Four areas:
a. marketing
b. production
c. finance
d. administration
-describes the duties and responsibilities of all those involved in the enterprise,
the required qualifications for the tasks, corresponding salaries and benefits,
and the number of personnel required.
-present the pre-operating activities through a Gantt chart
Components of Business Plan
Production Plan
-Product specification
-Production Process
-List of machineries and equipment
-List of raw materials and supplies
-Location and Layout
-Waste disposal method
-Production schedule
-Man power requirements
Components of Business Plan
Financial Plan
-Total Project Cost compose of the following:
a. Total fixed assets- i.e building, land, and equipment used in the
business
b. working capital- amount of funds need to pay for expenses,
such as materials and supplies, labor, and utilities needed for
production within a relatively short period
c. pre-operating expenses-i.e registration fees and fees paid to
consultant or researcher who prepared the feasibility study
Components of Business Plan
Financial Plan
Income Statement
-details regarding sales and expenses incurred or will be incurred by the
business as of a given date

Balance Sheet
-details of what business owns and its value. It presents the equity
contributions of owners and liabilities to creditors
ASSETS=LIABILITIES+OWNER'S EQUITY

Cash Flow Statement

-detail the projected cash expenses and disbursement for a given period
Components of Business Plan
Financial Plan
Financial Analysis
-consists if computations of profitability, liquidity, and marketability (if
applicable) of the enterprise based on the information from the income
statement and balance sheet

profitability, liquidity, and marketability

-indicators of how "fit" or "sickly" an enterprise is.
BEP in Units= Fixed Cost/ Contribution Margin per unit
= 93,000/ 493
BEP in Units=188.6409 or 189 units

BEP in Peso=Fixed Costs/CM Ratio

=93,000/.447949419
BEP in Peso= 207,612.7260 or 207,613

CM ratio=Contribution Margin/Sales
=131,070/292,600
CM ratio=.447949419

Contribution Margin per unit=Selling Price per unit-Variable cost per unit
=1,100-607
Contribution Margin per unit=493
Components of Business Plan
Source of financing
-indicate where funds for the business will come from.
THANK YOU