G12- ENTREP

ENTREPRENEUR - is an individual who creates a new business, bearing most of the risks and enjoying most of
the rewards.
The process of setting up a business is known as entrepreneurship.
Small Business- it refers to a company that operates on a smaller scale, often with a local or regional focus. It
may offer products or services and aims for stability and consistent growth.
Business Plan - Serves several important purposes in the world of business. It is a formal written document that
outlines a company's goals, strategies, and the steps it will take to achieve those goals.

KEY PURPOSES OF A BUSINESS PLAN:

1. Guiding the Business – a business plan provides a roadmap for the company. It helps business owners
and managers clarify their business vision, set specific goals, and define the steps required to achieve
those goals. It acts as a guide that keeps the business on track.
2. Securing Funding - Business plans are often required when seeking external funding, such as loans from
banks or investments from venture capitalists. Potential investors or lenders want to see a well-
thought-out plan that demonstrates how their money will be used and how it will generate returns.
3. Setting of Objectives and Metrics - Business plans set clear objectives and key performance indicators
(KPIs) that allow the business to measure its progress and success. They provide a basis for performance
evaluation and adjustment of strategies if needed.
4. Risk assessment and Mitigation - Business plans force entrepreneurs to consider potential risks and
challenges their business might face. By identifying these risks, they can develop strategies to mitigate
them and increase the chances of success.
5. Communication Tool - A business plan is a communication tool both internally and externally. It helps
employees understand the company's goals and strategies. Externally, it conveys the company's mission
and vision to stakeholders, customers, suppliers, and the public.
6. Operational Guidance - Business plans detail the day-to-day operations of the business, including the
production process, marketing strategies, sales tactics, and customer service plans. This provides clarity
to everyone involved in the business.
7. Exit Strategy - In some cases, a business plan outlines the exit strategy for the founders or investors. It
describes how they plan to monetize or sell the business in the future.
8. Legal and Regulatory Compliance - A business plan can help ensure that the company complies with legal
and regulatory requirements specific to its industry. This can be important for licensing, permits, and
maintaining good standing.
BUSINESS CONCEPT
The business concept is the core idea or foundation upon which a business is built. It encapsulates the
unique value proposition or the problem the business intends to solve in the market.
KEY ELEMENTS:
a. PRODUCT or SERVICES - What product or services will the business offer?
b. TARGET AUDIENCE - Who are the intended customers or target market?
c. VALUE PROPOSITION - What makes the product or service unique or better than alternatives?
d. MARKET NEED - What problem or need does the business address?
BUSINESS MODEL
The business model is the framework that outlines how a company intends to create, deliver, and capture
value. It encompasses the strategy for generating revenue, the structure of the organization, and the way it
operates in the market.

KEY ELEMENTS:
a. Revenue Streams - How will the business make money?
b. Cost Structure -What are the main cost components of the business?
c. Value Chain - How does the company create and deliver its product or service?
d. Customer Segments - Who are the different customer groups the business serves?
e. Channels - How does the company reach and interact with its customers?

CONTENTS OF A BUSINESS PLAN

The Business Goals: Vision, Mission, Objectives, and Performance Targets

The business goals show the future and long-term prospects of the enterprise. It is composed of the
vision, mission, objectives, key result areas, and performance indicators of the enterprise.

Executive summary contains everything that is relevant and important to the business audience.
It is a synthesis of the entire plan. It must contain the major argumentations of the business
proponent on why the business will work and succeed. It should provide the business plan
audience all the arguments on why they should participate in the business venture.

The executive summary should then introduce and highlight the good qualities of:

1. the business proponents and their partners.

2. the enterprise organization and its capabilities.
3. the technology providers and their expertise and experience; and
4. the suppliers and all the major service providers.

It should likewise describe the products/services of the enterprise, their features, and attributes,
and why they are the right ones to deliver to the customers.

The Executive Summary should then proceed to discuss and justify the Enterprise Strategy and
Enterprise Delivery System. The Enterprise Strategy builds and develops the game plan for
attaining competitiveness. The Enterprise Delivery System is the entire process of converting
input (resources) into output and these output into outcomes.

It should then render all the major institutional, market, operations, and organizational strategies
previously cited into financial strategies and forecasts. Investment requirements should be
presented along with the summaries of the projected income statements, balance sheets, cash
flows, and funds flow, and their analyses and conclusions. Yields and returns, along with risks
and contingency measures, should round up this section.

Executive Summary should also contain a section on the environmental and regulatory
compliance of the proposed business, as well as the more proactive programs to become a more
responsible corporate citizen.

Finally, the Executive Summary should present the capital structure of the proposed business and
show how this structure will respond to the investment programs and financial forecasts of the
enterprise. However, the Executive Summary can only be written last to capture the findings and
insights of the other parts, but for presentation purposes, it is placed in the first part of the
business plan.

The Business Proponents

The third section of the business plan contains information about the business proponents or
stakeholders.

There are four types of stakeholders:

1. Resource mobilizers and financial backers
2. Technology providers and applicators
3. Governance and top management
4. Operating and support team

If the business plan readers are the resource providers, then they will want to know who else
are on board to share the burden of raising money to see the whole thing through.
If the business plan readers are the technology providers, they will want to know if there will
be sufficient funds to pay for the technology.

If the business plan readers are the governance and top management team, then they will want
to know what strategies and performance indicators are being proposed.

If the business plan readers are the implementing, operating, and support teams, they will
want to know what programs, activities, tasks, and resources would be in place.

The Target Customers and the Main Value Proposition

The fourth section of the business plan is the Target Customers and the Main Value Proposition.
The business proponent must be very precise about the target audience or target customers.
Target Customers must be of sufficient size, sufficient paying capacity, and have sufficient
interest to purchase the products being offered by the enterprise. The Main Value Proposition is
the unique selling proposition of the enterprise.

Knowing where the target customers are exactly concentrated, the business plan should then
pinpoint what the customers buy, how they buy, when they buy, where they buy, and what
convinces them to buy. This information should then be used to justify the exact locations and
marketing channels to be employed by the enterprise.

Market Demand and Supply, Industry Dynamics, and Macro

Environmental Factors
The fifth section of the business plan is the market demand and supply, the industry dynamics,
and the macro-environmental forces affecting the business of the enterprise.
It is normal for enterprises to actually expand their product offerings to include the other
segments of a bigger market. The business proponent should examine all the opportunities in this
bigger market in order to determine what exactly influences this bigger market.

The business plan should estimate the total market supply and demand for the product offerings
of the enterprise. The business plan should then determine the major critical factors that
influence this market demand and supply.

Once these critical factors or variables are determined, the business plan should then forecast the
future demand and supply. If these physical factors are expected to remain the same, then most
likely, the future forecast will follow the past, trends. If not, the future estimate of demand and
supply should be revised according to the new variables influencing the demand and supply.

The market analysis and forecasting exercise should lead to a quantification of the current and
prospective size of the market. Both the current and potential consumptions should then be
dissected.

The business plan should discuss the relevant industry dynamics:

 Who are the competing enterprises in the industry and what are their comparative
advantages and disadvantages? What business models and strategies are they
employing?
  Who are the suppliers in the industry and what are their capabilities and bargaining
power?
 What are the channels of distribution being used by the industry? How effective are
these channels?

Both the industry players and the market are affected by the macro environment, which includes
the social, political, economic, ecological, and technological (SPEET) forces. The business plan
should discuss the major trends and changing patterns in the macro-environment, which would
have significant impacts on the relevant industry and the behavior of consumers.

 Social environment includes the demographics and cultural dimensions that govern the
relevant entrepreneurial behavior. The structure, social status, and dynamics of the
population at large, as well as the people’s beliefs, tastes, mores, customs, and
traditions dictate the major parameters of market behavior.

 Political environment defines the governance system of the country or the local area
of business. It includes all the laws, rules, and regulations on allowable and
disallowable business practices.

 Economic environment is mainly driven by supply and demand forces. It is the same
factor that drives the interest and foreign exchange rates to fluctuate with the movement
of the market forces.

 Ecological environment includes all natural resources and the ecosystem that defines
the habitat of man, animals, plants, and minerals.

 Technological environment makes or breaks competing participants in any industry.

New scientific and technological discoveries often lead to the launch and
commercialization of new products with superior attributes or to rendering the old ones
obsolete.

Product/Service Offering: Description, Evolution, and

Justification
The sixth section of the business plan is the product/service offerings that should contain a
description, evolution, and justification of the product/service offerings.

The products/services must be described by highlighting the features and attributes that would
most appeal to the target customers. The business plan should also prove that the
products/services would be accepted and carried by the distribution channels.

Enterprise Strategy and Enterprise Delivery System

The business plan should expound on the Enterprise Strategy (ES) by mapping the competitive
landscape and by situating the enterprise and its competitors as to their strategies and chosen
positionings.

The business plan should then show how the Enterprise Delivery System (EDS) would enable
the business to implement the Enterprise Strategy.

The Enterprise Delivery System starts from the Input (resources mobilized), proceeds to the
Throughput (the transformation process where input are converted to output), and produces the
Output (the products/services). The Output are then marketed to the customers (in the case of
goods) or experienced by the customers (in the case of services). Customer satisfaction level,
profits generated, and the performance of people from the transaction are the Outcomes of the
EDS.

Enterprise Delivery System

The EDS involves the harnessing of human, money, and physical resources from well-selected
sources.

These resources become the input (money, men, machines, materials, methods, and
management) which the Operations unit within the EDS (i.e., the manufacturing or service
delivery personnel) will convert or transform into output.

The output will then be delivered to the customers through the Marketing unit of the EDS. The
products/services of the enterprise are positioned to meet the requirements of the selected market
segment by choosing the right packaging, pricing, promotions, people for selling and
distribution, and places or locations where the targeted customers can best be found.

The Operations and Marketing units are supported by the Finance, Administration, and Human
Resource Management units, which oversee the flow of money, the procurement and
maintenance of machinery and materials, and ensure the proper deployment and development of
people.

The EDS serves as the enabler of the Enterprise Strategy. The business plan must demonstrate
how the EDS and the ES tandem lead to the attainment of the desired enterprise outcomes.

These business outcomes should reasonably include:

 high customer satisfaction levels.

 high sales volume, market share, and market reach.
 high financial returns; and
 high people performance, productivity, and morale levels.

Financial Forecasts: (Expected Returns, Risks, and

Contingencies)
The eighth section of the business plan is the financial forecast including the financial returns,
the financial risks, and the financial contingencies.

The business plan must translate everything that we have discussed so far into financial forecasts
and outcomes.

From the financial forecasts, the business plan should then calculate the expected returns from
the business.

The important return calculations are the following:

(1) expected return on sales.

(2) expected return on assets or investments; and

(3) expected return on stockholders’ equity.

The business plan should also calculate the long-term returns, using the time value of money.
This means estimating the internal rate of return and the expected net present value.

The business plan should then evaluate both the business risks and the financial risks involved.

Environmental and Regulatory Compliance

The ninth part of the business plan is composed of the environmental and regulatory
compliance.

The business plan must articulate the laws, rules, and regulations governing the business, and the
industry that the enterprise is in. It should ascertain that all the necessary permits, licenses, and
authority to use proprietary intellectual capital had either been secured or would be secured.

The business plan should also assure the reader that all the necessary local government
ordinances and barangay ethics would be followed by the enterprise.

Capital Structure and Financial Offering: (Returns and

Benefits to Investors, Financiers, and Partners)
The tenth section of the business plan contains the capital structure and financial
offerings of the enterprise including some discussions on who are the investors, the financiers,
and the partners of the enterprise.

Finally, the business plan must appeal to its target audience. It must highlight for them the
main features of the business plan that they are looking for.