UNIVERSITY OF THE PHILIPPINES

INSTITUTE FOR SMALL-SCALE INDUSTRIES

e-START

YOUR OWN

BUSINESS
Module 3. Planning for
Business Success

entrepreneurship.org.ph
STNETNOC FO ELBAT

Module 3. Planning for

Business Success

1
Introduction

2 Why Plan the Business?

4 Parts of the Business Plan

Summary
5 Special Points of Interest

Glossary
6

UNIVERSITY OF THE PHILIPPINES

INSTITUTE FOR SMALL-SCALE INDUSTRIES
 Module 3
Planning for Business Success

Resources Needed:
After studying this module, you will be able to: Computer
1. value the need for preparing a business plan prior to Adobe Reader
putting up the business; and Microsoft Office
2. enumerate the parts of a business plan Internet Connection

After finally deciding on what business to pursue, an ordinary person will rush
headlong: buy materials, hire people, and open shop even before studying the ins
and outs of the business. The wise entrepreneur, on the other hand, will not take the
plunge, just yet. He or she will first learn how to go about putting up the business.

A business plan is the most important––and yet often ignored––part of starting a

business. If an entrepreneur takes pains in preparing a good business plan, there will
be less room for costly errors and lapses in decision making. Writing a business plan
will compel the entrepreneur to think out his/her marketing strategies to ensure
inflow of revenues and at the same time, plan production and organizational moves
in advance to do away with unnecessary expenses.

The business plan serves as a roadmap to developing a successful business. While

no one can predict what can happen to your business’ future, a good business plan
will increase your chances of business success.

Module 3: Planning for Business Success 1

Why Plan the Business?

A business plan is a document that aims to establish whether or not a business idea will bring
in money that is greater than what it will cost to start and operate it. While most entrepreneurs
rely on mere gut feel and do not prepare or follow a business plan, it still pays to have one
especially if it is your first time to start a business.

You may be captivated by your idea. But beware! Not all ideas are doable. Some may look
brilliant but actually are not feasible or viable.

Therefore, no matter how good your idea may seem, you need to make a business plan for the
following reasons:

Reduce, if not eliminate, the risk of losing money on a poorly researched idea. Do not put
your life savings, loan, parents’ money, inheritance or retirement into a business that you
have not carefully studied. Shouldn’t you first find out where your money is going before
you let go of it? This way you reduce, if not remove, the possibility of losing your money on
some activity that you should not have gotten into in the first place. Preparing a business
plan will enable you to assess the prospects of a business idea before parting with your
money.

Avoid costly mistakes. You have to study your prospective business and all the nitty-gritty
that comes with it. Deciding on what type of equipment or machine to use for your
business is one thing, but determining how many units you are going to acquire is another.
Having too much or too little of something may be bad for your business, as there are costs
involved. Too many idle machines will lead to unproductive spaces in your work area. On
the other hand, having insufficient number of machines means you are underutilizing your
production capacity, which will lead to a shortage of your goods or undelivered service
jobs and therefore, lost opportunities.

Every spur-of-the moment or careless decision you make for the business entails cost that
you might not be able to recover. It is never advisable to engage in a trial and error or in a
hit-or-miss activity. You can actually save on costly mistakes by looking carefully at the
details of the business in advance and determining your actual requirements.

2 Module 3: Planning for Business Success

 Anticipate your financial requirements. Forewarned is forearmed. It is good to anticipate
increases in the demand for your product or service so you can prepare for them. With a
business plan you can plan for the lean months to ensure that you are able to meet your
business’ financial obligations. Likewise, the business plan will also prepare you for the
peak seasons so that you can maximize your production capacity and avoid losing any
business opportunity.

Organize your activities beforehand. The business plan will help you prepare your
strategies and adjust them based on the market conditions. Ordinarily, without a business
plan, you are likely to resort to costly trial and error decisions.

Assess actual performance against set goals. One of the biggest advantages of having a
business plan is the opportunity to compare actual performance against what has been
planned. Without it, it would be impossible for you to determine if you have achieved your
goal or whether there was any significant improvement.

Meet requirements of lending institutions. Banks and lending institutions require

prospective borrowers to submit a business plan when they apply for a business loan. If
you have a well-prepared business plan that is feasible, you shouldn’t have difficulty
convincing a bank or a prospective partner to lend you the needed funds or invest in your
business.

Do you now realize the benefits of preparing a business plan? Are you convinced that it is
necessary to write a business plan for your intended business? This module merely serves as
an overview to business planning. You will learn the details in the succeeding modules. For
now, we shall limit discussions to the basic parts or components of a business plan.

Module 3: Planning for Business Success 3

Parts of a Business Plan

What does a business plan look like? There is no standard format for a business plan. The
components are presented below.

Introduction or Executive Summary. Just like the preface or foreword of a book, the
introduction or executive summary of a business plan gives a general background of the
contents. It also states the name of the person planning to put up the business, the form
of ownership, the business address, type of project (whether manufacturing, trade or
service), objectives or goals of the business, and the total project cost.

Marketing Aspect. This generally refers to the product or service that the business will
offer. In addition, to providing details about the product or service to be offered, this part
of the business plan also describes the target market, the pricing and promotional
strategies.

You’ll learn more about the marketing aspect of the business plan when you come to the
next module.

Operational or Technical Aspect. This component deals with how the product is made or
the service is completed; the type and number of materials and equipment and the number
of people needed to make the product or complete the service; the arrangement and
location of machines, work stations, and storage areas; quality control and waste disposal
systems; and other things related to producing the product or completing the service.

You’ll learn more about the technical aspect of the business plan when you come to Week
4: Doing Business (Modules 7 to 9).

Organizational Aspect. This part of the business plan deals with putting the business
together. It basically involves determining personnel requirements, acquiring the
machines and equipment, and registering the enterprise.

You’ll have more about the organizational aspect of the business plan when you reach
Week 5: Getting Organized (Modules 10 to 12).

Financial Aspect. This section provides all information related to business finances: from
capital requirements to profits, and assets and liabilities.

You’ll learn more about the financial aspect of the business plan when you reach the last
part of this course (Modules 13 to 17).

4 Module 3: Planning for Business Success

You’ll appreciate the business plan better when you complete the online worksheets that come
with this material. You’ll also have your e-tutors on standby to guide you in each step.

Summary

This module briefly introduced the idea of business planning to you and why it is important to
prepare a business plan.

The different components of a business plan will be discussed extensively in the modules that
follow. The next modules of the 1st week of the e-SYOB course will be devoted to marketing.
The 2nd week will focus on the technical or production aspects of a business, followed by the
organizational aspects. The modules for the 3rd week will complete the picture where
discussions will focus on the financial aspect of setting up a business.

Special points of interest

Planning for Business Success

How to Write a Business Plan

https://www.entrepreneur.com/article/247575

Prepare a business plan for growth

https://www.infoentrepreneurs.org/en/guides/prepare-a-business-plan-for-growth/

How To Write a Business Plan To Start Your Own Business

https://www.youtube.com/watch?v=Fqch5OrUPvA

Copyright 2012, 2020 by UP ISSI

All Rights Reserved

Module 3: Planning for Business Success 5

GLOSSARY

Assets Items that a business owns; it includes cash and items that are
convertible to cash.

Business Opportunity A good position, chance, or prospect to earn more income.

Business Plan A document that describes in detail how a new enterprise will
manage the marketing, production, organization and finances of its
business to achieve its primary goal of profitability.

Executive Summary It is the overview of the main points of a plan or proposal.

Feasible A business proposal is said to be feasible if it can be carried out and

can bring in profits.

Lean Months Periods in the year when revenue streams of the business are low.

Liabilities Refer to all debts and obligations owed by the business to outside
creditors, vendors, or banks.

Market Conditions Characteristics of a market, such as the number of competitors,

level or intensity of competitiveness, and the market's growth rate.

Peak Seasons Seasons or periods of the year when the business is busiest or having
its highest sales or revenues.

Preface A preliminary statement in a book by its author or editor, setting

forth its purpose and scope, expressing acknowledgement of
assistance from others, etc.

Quality Control A procedure or set of procedures intended to ensure that a

manufactured product or performed service adheres to a defined
set of quality criteria or meets the requirements of the client or
customer.

Target Market A group of customers that the business has decided to aim its
marketing efforts and ultimately its products or services.

Total Project Cost The sum of fixed capital investment, pre-operating expenses, working
capital, and contingency.

6 Module 3: Planning for Business Success