CHAPTER 3 DEVELOPING A BUSINESS PLAN “a business plan does not guarantee the results you want to accomplish, but it is still a step closer to making things work in advantage,” " LEARNING OUTCOMES Discuss the factors that should be studied before venturing a new business; . Explain the importance of environmental scanning; Explain the importance of selecting the proper business location; Discuss the important role of SWOT analysis before starting the business; . Discuss the importance of a business plan before business formation; Give the different phases of a business plan; and Prepare a comprehensive business plan. ‘The entrepreneurs are not discouraged with the constraints along the causes of our economic malady. It should be turned into positive note and new solutions must be made to make them different from other individuals. There are lots of opportunities entrepreneurs who are hardworking, creative and resourceful. Business opportunities are wide open for people who would like to invest their money into gainful business activities. They need to find out this new venture that interests them and how they can harness their technical knowledge of the trade. ‘The search for business opportunity should start with the individual entrepreneur. He has to find out the skills and talent for that particular type of business activity. His talent and skills are the beginning of his great investment in the trade, He must have the passion for independence and willingness to work hard and long to keep up with his dream of being an entrepreneur. Before venturing into the field of business, the new entrepreneur should look into the following factors: 1. Know your product or service. First, one must believe on the product or service that one will offer to the customer, If it is a new idea or concept, then one must be able to convince that have a unique product that would satisfy customers’ needs and wants. Customers want to try new products but it must be better than those existing in the market. 43 Scanned with CamScanner‘x enrnepnencusiat MANAGEMENT ials. et potential . a. Amalyze the market P ine the success of one, business venture, i of growth and success, The tomer base WE more chances < The cus jotential, the ‘and figure out how to satisfy these the market s and wants a Me, 4 . Tre wee must EO es d watheir buying habits, income, and social 7 tomers needs. He analyze status. marketing strategy: act or service needs effective distribution strategy to get Het of demand potential. Continuous supply determines t have access to the product when they need it, rowth feveloped that would answer customers’ demand. The customers ae pe make suggestions as to product quality and availability as they are the kings and queens of the entrepreneur. 3, Determine the ‘A unique prod tomer into the bas! cue goth. customers US 4, Know the competitors. In launching a product with existing competitors, one must know their strengths and weaknesses. Develop new product and marketing strategy and tum their weaknesses as new opportunity for the product. Continuous innovation and research would mean better quality products or service. Make things better and serve the customers with loyalty and dedication and it will make a great difference. 5. Donotset on your laurels. The landscape of business is continuously changing. Your initial success in your business activities needs more proactive analysig for expansion and growth and overcome possible competitions. Develop advertising and promotion strategy to penetrate the wider market. Develop budget for expansion and diversification either horizontally or vertically. Get new resources and develop new materials. Invest in research projects that will enhance the quality of your products. ENVIRONMENTAL SCANNING The environment of business is vast with opportunities and the entrepreneur must have a greater look into this potential as well as the conditions prevailing in the community. The entrepreneur's ultimate objective in diving into the business world is to make profit. Investment in money and effort should generate financial gain for the entrepreneur. To generate income for his product or service he must be able to ~ deliver customer satisfaction. gs 44 Scanned with CamScannerENTREPRENEURIAL MANAGEMENT The following factors are contributory to the development of customer catisfaction: pusiness Location for Small Entrepreneurs * “~ Kretail outlet would need a site that is convenient to Prospective customers jn terms of parking space or availability of ‘transportation. A restaurant or an entertainment center would need ample parking area where customers would not worry on where to leave their cars while enjoying their stay. The same could be true with a grocery store. : In choosing the location, the following factors must be looked into by the entrepreneur: a. Rent and Space — the cost of rent is a rey c ; -gular monthly expense and it must be sustained with the possible income that will be peel It is the operating cost that will be added to the price of the product or service. The price input must be competitive enough with those in the same location. b, Terms of Lease Agreement — The term of lease must be studied carefully as some owners of space might take advantage of lessee. The owners increase the rent of the space when the business condition becomes favourable and then take over the business. c. Type of Goods or Merchandise - A convenient store is located where there are pedestrians passing by. They need quick and easy access to the store and would not spend a lot of time to purchase their goods. 4. Income Level of Prospective Customer -‘The type of pedestrians and the income level of customer must be taken in to account. A good barber shop or a beauty salon with facilities of air conditioning units and other amenities need to be located in the community with higher income bracket. e. Prospective Sales Volume - High density sales volume need to be located in shopping areas: where customers converse to buy essential goods. Lower sales volume could be located in the community or secondary areas like subdivisions or the BARANGAY. f. Municipal or City Ordinances including taxes and fees - The location must not violate city or municipal ordinances and the taxes and fees must be reasonable for the owners of business. Excessive taxation will not encourage the growth of business in the area. § Location of the Areas - The area must be free from floods and other calamities that will endanger the business. It must be free from fire hazards or other environmental factors that will disturb the operation of the business. 45 Scanned with CamScanner[ENTREPRENEURIAL MANAGEMENT ing Facilities 2. Location for Small Industrial Plant or Manufacturing : . Local inlocatinga manufacturing plant or industrial facilitie, Environmental factorsin plant location is a great factor in the investment oy need to be studied careful in the long run. The industrial facility must be suitable t, funds and its profitability i sae cy ti the kind of operation. It must comply with g to pollution and environmental laws. ‘The following are important factors to consider: a. Land Area - The contour of the land, its size, to the plant site. It must be free from floc hazards that will disturb operation. The as must be reasonable as expenses to start-up money. The assessed value is also a factor and shape must be suitable ods or other environmental sessed value of the property of operation requires a lot of in the payment of taxes, 5. Facilities for Expansion ~ The land area must have ample space for plant expansion and provisions for parking facilities for customers and employees. Anticipation of growth and expansion in plant facilities should be considered as additional site in the future may create a problem, be put in place to comply with environmental + laws. . 4. Building and Other Utilities — The building must be within the “estrictions code of the municipality or city. The utilities like cartes: and other employees’ facilities must be put in place in compliance with . Plant Site Accessibili t.4 ty ~ The plant site must service transport for its employees and valued highways or expressways to provide ease in in the transport of raw mater systems are added cost that be accessible to public or customers. It must be near travel time and reduce cost tials and finish product, Delay in transport must be avoided, ATS (SWOT) irepreneutial tool in determining the profitability STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THRE, SWOT ANALYSIS is an eni of the business operation. Opportunities carries with it some tisk involved and this Should be looked into carefully. The strengths and weaknesce are internal factors to an Scanned with CamScannerENTREPRENEURIAL MANAGEMENT the: entrepreneur while the opportunities and threats are external factors, ‘The entrepreneur must look at how strong he is to « ‘i. oe ombat the on his side and this needs strong determination to succeed with ies ing hours and advanced thinki need long working inced thinking to overcome the possil Panning and environmental analysis is needed to keep Sauna ete fide of profitability. Investment in money and effort should turn the tide of reoft to the side ofthe entrepreneur and this needs careful study and analysis. ‘The product must be evaluated along the following areas: 4, Product strength in the market must have the following: a, Available Technology. in Product Processing - ‘Technology is an important component in producing the product as the economies of scale determines the price index. The more products are produced, the lower the price it can be offered to the market. Technology, on the other hand, improves product quality and customers want those items with techni improves items with technical b. The Source of Raw Materials must be Abundant and at Lower Price -The constant supply of raw materials is an important factor in the production ofthe product: Cheap raw materials that are processed into good products would be able to penetrate the market as its price could be competitive. Continuous production will eliminate distribution disruption hence, maximum supply to the target market. c. Skilled Workers must be Available—Technology musthave the component ofskilled workers that shall operate the machineries and other equipment. They may need training in machine operation as quality products also come from skilled workers. Worker's efficiency and productivity must be looked into as they are lifeblood of any production line. 4. Capital Investmentin Machinery and Operating Expenditures—A starting venture may have little investment in terms of machinery and equipment but starting with small capital should generate profitable operation. As the-enterprise expand its market base investment in operating capital should expand to meet the growing demand of the customer. : e. ‘Expertise and Technical Skills of the Management Team ~ A good product is the making of well-conceive idea of the management team. Improvements in product quality is a continuing procéss and it must be the management objective to get customers patronage. Customers seek better products and the taste for quality changes over time. Scanned with CamScanner[ENTREPRENEURIAL MANAGEMENT 2. Characteristics of Weak 4. Rp Weak Product Management - Weak mana; Products and Weak Management ity and High Price ~ The entrepreneur should not launch Poor Quality fae varket as it will surely fail to advance in the saley or Leas {snot wise to invest in the production of poor products, The and profit. t see to it that product has undergone customer taste mus ‘ cnePreptance before it gets into the production line, an ign and Appeal ~ Product design should appeal to custo eset ee design of the product is the making of péople wide tecicl expertise in handling the customer wants in terms of features Aistc designs are conceptualized and approved by the possible us Product appeal in terms of color and features are important ingredients for customer patronage. Production Cost~ Production costs theprice determinant. Entrepreneur cannot make maximum profitability on products whose production es cannot survive market competition, Production cost may be attributed high labor cost and the availability of cheap raw materials, + Supply and Demand ~ Intermittent supply to the market will make customers shift to other products: The supply chain management must be put in place to make the products available to valued customers, The supply chain management must be able to capture the widest market possible to sustain product development, igement is created when people at the top of the organization fail to sustaina ‘Vigorous effort for expansion and growth when management sets on his initial laurels and ventared on vices and other extra activities that will lose his total investment. Some People, who acquire money, became too complacent and forgot all about expanding thereby competition gets them out of the market place, 3. Sustainable Product Opportunities in the Market: a. = Product Demand ~ Product demand is the greatest opportunity of an entrepreneur. Demand is the essence of profit and this must be sustained by the entrepreneur before wide competition appeared in the market Place. The absence of other products will expand production operation and thereby, generate opportunities to expand into other ventures of vertical and horizontal expansion. Presence of Poor Quality in the Market - The presence of poor quality product in the market place is an opportunity for the entrepreneur. The alternative is on the side of the entrepreneur to supply the market with quality product and sustain patronage. The product must be superior in quality and the price must be reasonable compared with that ofthe competitor Scanned with CamScannerENTREPRENEURIAL MANAGEMENT Government Policies and Support - The entrepreneur is an opportunity for greater aaa Support to local should support the local entrepreneur in terms of taxes a i government incentives. Regulating on the importation of foreign prodine ore local products are available is one important government ney will sustain economic growth of the local enterprise. ent program that c d. Liberal Credit Terms and Interest Rates - Liberal credi and other government institutions wil pnerae expences entrepreneurs. Banks and financing institutions serve as cout of business in their expansion program. Credit terms given by suppliers of raw materials and other production inputs are opportunities the growth of the business. 2 4, Treats to Product Profitability and Market Expansion: a. Entrance of Competition - The entrance of man} tors i market place will definitely give problem to eattgpeseies Coupedhen will reduce profitability as the price has to be competitive with those in the market place. When profit drops, expansion will be limited and innovation will drain the opportunity for growth. Advertising and promotion cost has to be sustained in order for the product to get patronage. b. The supply of raw materials will be limited as other competitors will be getting the same suppliers. As demand for raw materials become competitive in prices, production inputs go higher and this will affect product pricing. Increased production cost means changes in product price. c. The Emergence of Leftwing Labour Unions—Many companies close shops with the adventof labour unions with leftist philosophy as they wantmore wages and benefits that the company could not give. Company strikes and lockouts are deterrent to the expansion and company’s growth. Most entrepreneurs would try to avoid Unions if possible, as leftist elements usually come into the picture that will afect the opportunities of business growth and expansion. ‘The Presence of Double Taxation ~The government already imposed a lot of taxes to the entrepreneur. Honest businessmen could not profit in their operations as there are lots of taxes that the government would like to collect. Still related are the unfavourable treatment given by the tax collectors to businessmen that they have to put in grease money for a little favor, Taxes are collected by the government and another tax by unofficial tax collectors. 4 BR 49 Scanned with CamScannerINAGEMENT ' ENTREPRENEURIAL MA in the Area of Business Operation ~ Peace and order a, rider in as growth. Criminality and Killings would rig, of rating competitors by those riding in tandem syndrome away investors. Ki {nto business. Hold up gangs and robbery Syndicates scares people t0 pina growth. Coupled with this problem jg the axe not g004 '9 tracted by the leftist elements. If one does not pay revolutionary t@ tax surely business will go into flames. These are some the ee the expansion of business in the countryside, greater e. Peace and O! components The Cost of Power Supply — Cost of production increases with the cog : f utilities like current and water. The government private partnershj in the operation of power and water utilities has increased the cost of power by about 400 percent. This contributed to increased production cost and pose threat to our competitiveness in the world market. Powe, and water utilities should be regulated by the government in order tg sustain growth in our industries. The Entrepreneur should look deeper into the following areas: 1. The Management Team Management must be able to set the direction of the enterprise with a cleat MISSION and VISION as the guiding tool for its plans and programs, Plans and programs are tentative activities that will make a definite’ step towards the accomplishments of target objectives. Objectives set into motion the goals of the enterprise to profitability. The technical and manpower complements are important factors in the success of the business. The entrepreneur cannot do the task alone as he needs people with the same outlook ani id perseverance as he has, especially at the early stage of the business. They must work hard, persistent and must focus on the vision and mission of the business, Manpower complement may need some training and. indoctrination of company’s operation. Motivated employees will perform better and they need t0 be looked into by top management. They must know the management philosophy: They must be involved in the planning process to get their utmost cooperation in thé undertaking the enterprise activities, The management must introduce new technology to make ‘work easier forthe working team, Technology in the workp! lace is a motivating factor for the employee to produce more products or better servi ‘ce. Product quality is improved a customers will always look for quality as vital component in continuous patronag? Scanned with CamScannerENTREPRENEURIAL MANAGEMENT 2, The Production Process Product specifications inust be maintained according to product standards that are acceptable to customers. Product quality is now the name of the game in. business. Customers are now aware of product quality and:they must be able to get their money’s worth. The physical properties must be attractive and mechanical or electronic component must appeal to customers demand. The management must look into cheap available raw materials in the production of goods. Good quality materials should not be sacrificed in terms of price as poor quality will affect the production of quality products. Quality and price must be looked into carefully by the management. Production schedule must be made together with product specifications, Work schedules must be followed to save on energy and time, Production capacity mustbe followed according to target production so that delayed in shipment could be avoided. The rated daily production and monthly plant output must be put in graph and charts for easy reference. Production rejects must beat minimum level. Inventory reports must be available and warehousing activities are supervised accordingly. For service industries like restaurants, hotels, beauty salon, barber shops or even water stations, the customers must be served with dignity and smile. Front line production crew must have the personality that will attract customers. They must possess pleasing personality, clean in looks, and proper attire. The place must have an ambiance of cleanliness and the service must be prompt and must follow an approved procedure. 3. The Marketing Program The marketing program needs demand analysis for the last 5 years as to the major users of the product. A new product would need customer view point before it is launched into the market. Product samples may be necessary at the initial stage so that customers’ tastes and preferences could be considered before mass production. The demographic profile of the target customer must be taken into account as the success of the product deperids on the target customer. The target market must be specified accordingly and their needs and wants must be satisfied. Customers would like to have a lot of choices yet when they like the product we turn them into regular customers. Product competitiveness is determined by quality and price. A demand and supply analysis must be conducted through marketing research. Marketing research will determine the true picture of the market demand and the product competitors. This has to be looked into carefully by the entrepreneur as the success of the product depends greatly on the market size and its demand. 51 Scanned with CamScanner[ENTREPRENEURIAL MANAGEMENT ir ¢ demand needs channels of distribution. The channels of ST be mesured in terms of the capability of = ee to handle the product. It must reach the consumer atthe time they need i and the Price that is affordable to them. Various channel of distribution in the prevailing market condition should be studied carefully as itis the lifeblood of customers’ wants and needs. 4, The Financial Management Venturing into a business needs financial resources. Money is needed to finance the activities of business. Whatever capital is available determines the king of business operation. Many small entrepreneurs start with limited capital but they were able to make business empire as they knew how to invest their money in profitable operation. Savings and wise investments are characteristics cof successful business entrepreneur. ‘Then intemal source of capital will come from the savings and assets of the starting entrepreneur. Liquid assets in cash or in banks are the usual starting point. Real properties and personal properties may be put in as guarantee for loans that may be used for operating expenses. : Banks are external sources of funds. They are willing to help businessmen with clear vision and good business acumen back up by good feasibility studies Bank loans must have reasonable interest rates that it could be paid at reasonable period tntil the company would be able to operate on its own funds. Real properties are usually accepted by banks as loan guarantee. Other sources of funds are partnership and stock options. While funds could source from other people, the entrepreneur must look into the controlling management of the business. Careful choice of partners or investors must be looked into as he may lose control of his projected venture with the interference of the other partners in the business. Some partnership disbands after a few years causing business collapse. THE IDENTIFICATION OF BUSINESS OPPORTUNITY The entrepreneur's desire to establish his business is a visible idea yet it must come into a test whether it is a viable business option. It needs a careful analysis of opportunity evaluation. The entrepreneur who fails to evaluate his noble idet because of his eagerness to plunge into the business world often discovers later that he has more problems to solve and at times abandons the idea after spending his time and money. 52 Scanned with CamScanneree ee «following steps will help the prospective entrepreneur evaluate the idea business: ee pefore going into 4, The Starting Point of Conceiving the Idea of the Type of Business Conceiving a new product is a process of innovation and when this come ty, the product must be different from an existing product. New product needs customer evaluation and this process needs exposure to the target market as to its ‘economic value. This new product must satisfy customers’ needs and wants. itneeds market exposure and public acceptance before it could take off the ground. jnto a reali find a new approach to win customer on his side Jar to what is existing in the community. The new i arte must be able to present a new altemative or different approach for him to vert He must know the strengths and weaknesses of his competitor and thereby jem of promotion and advertising such as product discounts, cash devise anew syst devise ats, raffles, and other package of prizes. Emphasis should also focus on good customer service. ‘The entrepreneur must if the product or service is simi 2, The Technical Feasibility and Time Frame ‘An idea is not only concentrated on one entrepreneur, ‘The entrepreneur might have conceived an idea that is also in the mind of other person. The case of tallular phone is a concrete example. Many companies tried the venture but the leader in the industry is still NOKIA. Others begin to follow and strong competition emerged in the process but the leading brand has taken off the ground before others followed tailing behind. ‘The new product must have its technical feasibility and the time to launch ahead before others take the idea. The the product must be immediately done to take entrepreneur must analyze the market demand and how he will be able to meet this demand on time. He must be able to determine the risk involved in the new venture and the investments in terms of money and time. The new product needs testing as to its technical capability to, satisfy customers’ needs and wants. Some customers prefer branded products, those that are produced by big names in the industry. Filipino innovalo’s and inventors find itatfeult to convince the local consumers that their product is good or better than those imported, hence many are selling their idea to foreign investors. food chain is crowded with growing, __ In the food industry, the growing fast senior citizens who have money to buy yet they have not discovered their need for health foods with less cholesterol. A good restaurant or fast food with fish and vegetables and some wellness program may do the trick for this demographic sector. This may work wonders in some developing urban sectors outside Metro Manila as it works wonders in some known restaurant in the metropolis. 53 Scanned with CamScannerENTREPRENEURIAL MANAGEMENT TIPS IN CHOOSING THE BUSINESS NAME 1. Easy to recall or remember - The business name must be understandable so it jg easily stored in the memory. 2. Pleasant meaning creates pleasant feelings — It produces positive or favorably feeling upon saying or mentioning to the public. 3. Easy to pronounce - The business name must be cited as freely as it can be. 4, Easy to spell - The business name must be simple. Words that are used in everyday communication will be an advantage. 5. Related to the product - The business name must describe the product. jt represents the features of the product. ORGANIZING THE BUSINESS ENTERPRISE The prospective entrepreneurs before going into.the intricate field of the business world should first go into deep analysis of their personal and social attitudes. It is not enough that you have the capital and resources to go into business as it involves not only material assets but personal values and characteristics. Before venturing into the field of business, it is wise to develop entrepreneurial studies that will help determine the feasibility of the project. Some entrepreneurs failed because they are “plain copy cats” in putting the business because the neighbour Juan makes money going into a Mini-grocery. The entrepreneur must first evaluate his personal interest, experience in the chosen field: the technical and human skills as these are vital component in the success of the business. Business forecasting and planning skill is another vital component that must be addressed before making investments. Careful Preparation is an essential factor in setting the enterprise into motion. Investments in money and effort may got waste without adequate preparation and careful planning, The loss of money and time must be prevented. 54 Scanned with CamScannerENTREPRENEURIAL MANAGEMENT . EVENT FORMATION PROCESS FoR ENTREPRENEURS ‘The analysis of the following steps will benefit the entreprene into the field of business: renefit the entrepreneur before going 4, The Change in Life Path The entrepreneur must conceive the idea that going into business would mean a great change in his lifestyle and working hours. He must be able to take responsibility and lead others. He must be able to take the driver's seat of the ‘ness in planning, organizing, directing and controlling he ness nF opees urderisdisear trolling not only the people but The entrepreneur must have the experience or a workin, 1 I a ig knowledge of how the business should run according to his plans and programs, He must beable be assertive for results and responds to situations affecting the business. He must be adaptable to changes when needed but firm in his decisions, 2, The Desirability of the Business Concept The desirability of the business concept is usually born by the experience of the entrepreneur from his previous employment or exposure. The take-off the business comes from the idea generated for the prospected income. The business idea is not sound economically unless the expected profit will not be sufficient to pay for the time, effort and capital investment of the entrepreneur. ‘The entrepreneur must be able to calculate in financial terms the pay off in terms of capital investments and the estimated income that will be generated. 3. The Feasibility of Implementation The business project must be feasible whether itis an entirely new venture or an expansion. It must be able to produce or sell products or services for an attractive rate of return of investments to the entrepreneur. It requires intensive planning and analysis of the market conditions prevailing in the community. ‘The project study will determine the market condition. of the business environment in terms of the product penetration and the competitive advantage the business will be able to offer. It should be able to put in the basic management system in terms of marketing, production, financing the enterprise, and the other important component of business operation. 4. Forming the Business Enterprise ‘The business form has to be studied according to the availability of capital investment that will go into the operation of the enterprise. The entrepreneur should also look into his personal capability of running the business either alone or with a Partner, Scanned with CamScannerNog Rey ENTREPRENEURIAL MANAGEMENT i of business shoul take into account the Fisk inv ete son that wil be miplemented in its total operation, ‘he end the management system ihe availeble manpower who will’ Work wink him in Higkdheeardoie pee ae siness as he cannot operate alone. He needs Othep Pope aren can ee ca in eo a ein enthusiasin ople whom he coul ist a wari ad pase, 5. Stability of Business Income and Profit i e are tant factors that encourage ay Business Income are two impor \ tre oe oe the stability of the business become possible. An aggressive ieee: wotild like to expand his business operation to generate more Profit, Money is the greatest factor in the operation of the en it business operation could not take off. The important savings of the entrepreneur must be put in wise investments free from excessive tisk. Business risk can be Prevented or avoided if properly planned and conceptualized, terprise that without BUSINESS PLAN An entrepreneur must see for himself the kind of management control and how the business will be able to generate his Projected profitable investment. He ses the wide open market of opportunities and the Possible problems before he cither new or an expansion must undertake a careful planning of the Project which will serve as guide in the implementation, i In creating OF searching to business opportunities, following factors: ne must consider the The needs of the society Availability of capital resources Business inclination Clientele Availability of raw materials Human Resources Nature of product or service Scanned with CamScannerENTREPRENEURIAL MANAGEMENT. asic PHASES OF BUSINESS PLAN 1 Management Structure and Component * “It is designing the form of ownership of the business which at the outset is known to the investors. It shall also define the organizational structure of the organization and the operational system that must be put in place. It shall defi the duties and responsibilities of the people in the organizational structure. Mana; em " Should ofganize different operating departments and delegate corresponding authority. 4, Marketing and Distribution System The Marketing and Distribution Study shall deal with analysis. It should show the competitive product advantage cis cate el orservice and designing the marketing program of the enterprise. It should analyze market share and system of promotion, distribution, advertising media and other marketing mix strategies to ascertain product market acceptance and patronage. 3, Production and Technology Production and Technology Studies refer to the need in making the product or service. This refers to the machineries, plant location, and other technical aspect in the making of the product. It shall describe the physical layout of the building and the equipment that will be used in production. For services, it shall specify the equipment that will be used and the manpower needed to render the activity. 4, Financial Management The Financial Management aspect refers to the capital investment and sources of funding the operation of the business. It shall show financial projections over a period of one year and five years program and shall determine the rate of return on investments. It must be able to show the return on equity and break even. sales as well as pricing sensitivity test. Scanned with CamScannerENTREPRENEURIAL MANAGEMENT GENERAL FORMAT OF A COMPREHENSIVE BUSINESS PLAN I, INTRODUCTION The introduction contains the rationale and the background of the sty undertake, It should include the importance ofthe project and the propena! background and their desire to establish the business. 1 TI. PROJECT SUMMARY A. Name of the Firm } B. Business Location C. Brief Description of the Business 1. Brief history or how the business was organized, 2. Highlights of the findings in every phase of the business study, i TILMANAGEMENT AND PERSONNEL COMPONENTS IV. MARKETING STUDIES ; A. Market Profile — This refers to the market segmentation for the distribution of the product or service. The stud ly must cover the possible users of the Product and how to reach the parti icular market segments, B. Demand Analysis 1. Projected consumption in the first year of operation, Ten years operation, then Five years and 2. Major segment users of the product and their location, C. Supply Analysis 1. Source of Product Supply. a. Foreign Suppliers b. Local Suppliers 2. Factor Analysis of the Past and Future Supply Chain, . D. Competitive Analysis J. Selling Price - This refers to the selling price of the product, 2, Competitions ~ It refers to the competing, product in the markets as to its quality and market acceptability. 58 3: Distribution and Cost of Transportation — It refers to the transfer of movements of products from the producer to the ultimate user. The usage of different vehicles and ways to transport the product should be easily defined. Scanned with CamScannerENTREPRENEURIAL MANAGEMENT 4, Channel of Product Distributions ~ A me mes 2an of reaching the t or itis the method or strategy to penetrate a partials at a nts. General Competitive Practice ~ It is 1 is the i distribute the product to existing end eed of how competitors Program Analysis of Marketing Strategies 1. Geagraphic Segmentation Strategy ~This : refers to the pl and the approaches to penetrate the market ce 2, Psychographic Strategy ~ The educati : ae lucational background and the lifestyle of 4. Demographic Segmentation Strat Q sgy ~ It means the target market ; spe eone andthe cher personal actors ofthe get cee | Pricing Strategy ~ This has something to do with the price i : pricing strategy that will attract customers. erase ae _ Channel of Distribution ~ The choices could be retail ye retail dealership, franchise, or direct marketing. reales, wholesales, 6. Promotion and Advertising - Media network, personal selling, billboard, or any media penetration strategy. ‘ o y. PRODUCTION ‘A. Product Specification — It tells about the product or service that the entrepreneur will offer to its target market. It is an elaborate presentation of the properties of the products and the benefits related therein. It is the service that will be offered to the target consumer. : he detailed layout of the production processas the, duction line indicating the flow process, materials product will be B. Production Process —Itis products goes into the pros and equipment to be used and normal time table’that the finished. C. Plant Rated Capacity - This refers to the volume of production per shift per day or a monthly basis considering target market consumption. It must also make projections for five years forecast and the technical factors involved. D. Machinery and Equipment — It involves the kind of machine to be used, its sources, spare parts, working guarantees, rated capacity Pet day, and the cost estimates involved in its purchase. ant location and the vicinity imap as to its als, and the transport of finished product E. Plant Location - A drawing oF pl tus factors for employees accessibility to supply or raw mater to the market. It must show advantages and other pl and other services. Scanned with CamScannerENTREPRENEURIAL MANAGEMENT i f building that win a describe the type 0 h 7 Fala a ee ok the building plan, electrical plans, drainage, ang constructed ot must contain the cost estimates involved and the total floo, other utilities. plan. i i i ts and j ~ It deals with the raw material requirement = ee mee ae cost and terms of payment, availability and the Pie lane term supply. It must also show alternative suppliers of othe, pos: sources. and Utilities ~ Utilities refer to the supply of electricity, 2 Coe OTe alabitity in the processing of the product. It also has to de with environmental disposal of waste and compliance: with government fequirements. Drainage system has to comply with sanitary requirements imposed by municipal and national laws. 1. Production Cost ~ This refers to the direct labor and administrative cost in the processing the products. Unit cost must be computed as basis for pricing and marketing strategies. VI. FINANCIAL STUDIES 60 A. For New Business Venture 1. Total Project Cost - This has to do with the entrepreneur fixed cost and the working capital in the operation of the business. 2. Capital Investments Required, 5. Pre-operating cash flow and itszelation to time table financial projections for the first year of operation, for the five year operation in projected balance sheets and income statements. 4. Supporting Schedules in the Financial Statements and Income. a. Collection Period for Projected Sales or Revenue b. Inventory Levels © Payments for Purchases and Expenses d. Production Costing, Administrative Expense and Cost of Sales and other Projected Financial Expenses, 5. Projected Financial Estimates showing return on investments, return on equity, break-even analysis, price analysis, B. For Existing Project 1. Audited Financial Statement — a. Balance Sheet b. Income Statement ¢. Cash Flow last 3 years Scanned with CamScannerENTREPRENEURIAL MANAGEMENT . Fixed Assets, Capital Investments, Depreciation u sed in Capi Tax Assessment, Liabilities, and other Payables acs . Financial Trends and Ratio Analysis, SREY . Financial Cost for Administrative expenses, Producti i Expense. duction and Selling . Financial Projection for the Next Five Years 7. Financial Analysis for Return n of Invest . even Analysis, Production Volume and Pree Anca, of Equity, Break MICRO BUSINESS PLAN The major objective of business plan is to assess, exami i jor 0 ; , examine and anal viability or feasibility of the study. Business plan is the ticket to eatcass blueprint to success and document details what i and how exactly you want to achieve them. It is , : ; your road map to your bi according to Elizabeth Manuel, Chief ofthe Trade Business Management Divicien of the government run Philippine Trade Training Center. (p. 18 Entrepreneur book. Ultimate Guide to Starting Your Own Business 2011 copyright) : Validate your business concept, instead of doing a business plan outright, Identify the business SWOT, business planning begins before it has materialized on paper. Have clear goals, your end goal must be clear to you and your team. Evaluate not only the business idea but also your capacity to handle and nurture it. A. Executive Summary Synopsis of your business plan so ideally, this part should be written last in order to include all the necessary information and target points of the document. You must possess the ability to predict the financial path of your venture in correlation to the present economy. If your external analysis tells you what you can and cannot do, your internal analysis tells you what you are able or not able to do. B. Marketing Plan Push or pull, you must be able to tell how fast or slow your product will move in the market, whether it would make use of a push or puil strategy or both. The push strategy tells how I will move my products to the marketplace, while the pull strategy tells how I will make customers ask for my product. The pull strategy promises, the push strategy outlines what makes the business stay. 61 Scanned with CamScanner[ENTREPRENEURIAL MANAGEMENT C. Operations Plan ; P, Insitute of Small Scale Industries, defing, aahenthae eee reece sales for the coming year and th: be Soe business in general. It keeps track of the business Performance eeercene down tits purchase, Determining the number of people to hin to keep your perspective business running smoothly is also a must. Managing your inventory and computing the production costs are crucial at this point $0 you en project possible profit. According to Dr. Alejandro Ferreria, entrepreneur and faculty member of Ateneo Graduate School of Business, “Your main concerns in your operation: Plan are the key areas of quality, delivery and productivity, both in keeping ang improving,” This section of the business plan provides the competencies necessary to get things done. D. Financial Plan According to Dr. Ferreria, needed to generate sales; how much is will be borrowed and paid.” “Your financial plan must show how much money is Soing to be spent on a particular item; and how much The income statement describes your company’s ability to generate cash by computing for sales and expenses. The balance sheet shows your financial condition by accounting for your assets (cash, receiv, equipment, property, investments) and liabiliti and bonds, notes and mortgage payables.) ables, inventory, es (accounts payable, salaries, taxes, Although your business plan does not guarantee you the results you want to achieve, it's still a step closer to mak ing things work in your favor. After all, any business venture is a risk and any entrepreneur must be teady for a series of trial and error tests, 62 Scanned with CamScanner