METRO BUSINESS COLLEGE

2OO Arnaiz Street, Avenue Pasay City

CHAPTER - 4

Subject: The Entrepreneurial Mind

Topic: The Business Plan
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
• Define what is a business plan is
• Explain why business plans are important to its users
• Identify the information needed in preparing a business plan
• Describe the major sections of a business plan
• Explain why some business plan fail
• Deliver an elevator pitch, using the content of an existing
business plan
INTRODUCTION
After recognizing and assessing opportunities, the entrepreneur
must formulate his/her attempt to exploit these opportunities in the form
of a business plan. In this chapter, we emphasize the importance of the
business plan for a variety of users. We then proceed to describe the
major sections of the business plan after identifying the information
needed for each section. We end by providing guidelines on how to
present a business plan to relevant stakeholders.
 WHAT IS A BUSINESS PLAN?
A business plan is a document that describes the various external
and internal elements involved in starting a business or in expanding an
existing venture, amidst a dynamic business environment.
Elaborating on the roadmap metaphor might allow us to better
appreciate the significance of a business plan. It integrates the different
functional plans such as marketing, manufacturing, finance, and human
resource management, taking into consideration the overall strategy of
the business.
Value of the Business Plan to Selected Users
User of Why the Business Plan is Important to This User
Business Plan
Entrepreneur • Serve as road map for managing the
business
• Identifies the resources needed to operate
and grow the business
• Allows the entrepreneur to anticipate potential
business risks
Lender • Allows the lender to assess whether the
entrepreneur will be able to meet debt and
interest payments
• Provides information about collateral or
tangible assets that can be secured for the
loan
Investor • Allows the investor to gauge whether
projected returns are acceptable
 • Provides information about the character of
the entrepreneur and about the capability of
the venture’s management team

Information Needs for Major Sections of the Business Plan

Market Information Operations Financial Information
Needs Information Needs Needs
• General • Location • Rental rates

environment • Manufacturing • Cost equipment

trends • Equipment • Cost utilities

• Specific industry • Space • Personnel cost

trends requirements • Distribution

• Local market • Labor costs

conditions requirements • Cost of

• Market potential • Raw materials insurance

• Demographic • Utilities • Registration

and licensed
fees

Market Information – a critical piece of information for any aspiring

entrepreneur is the potential market for his product or service.
Information About Operation – whether the business venture will be
viable also depends largely on the cost of sourcing and manufacturing
the product or of providing the service.
Financial Information – the financial section of the business plan will
require the entrepreneurs to include a list of all sources of revenue and
list of all possible expenditures for the first year of operation.
 Major Sections of a Business Plan
Major Section Typical Content
Introductory Page • Business name and address
• Name and address of business
owners/ entrepreneurs
• Nature of the business
• Statement of confidentiality of the
report (optional)
Executive Summary • Highlights of the business plan
summarized in two or three pages
Environment and • Conditions of the general
Industry Analysis environment
• Condition of the specific environment
Description of the • Product and services
Business • Size of the business
• Mission statement and core values
• Locations of the business and its
major physical assets
• Background of the business
owners/entrepreneurs
Production Plan • Manufacturing process
• Physical plant
• Machinery and equipment
• Supplier of raw materials
• Future capital equipment needs
Operation Plan • Description of the company’s
operations
 • Flow of orders for goods and
services
Marketing Plan • Pricing
• Distribution
• Promotion
• Sales forecasts
Financial Plan • Form of ownership
• Principal shareholders or partners
• Organizational chart/ lines of
authority
• Background of the management
team
• Roles and responsibilities of
management team
Assessment of Risk • Potential risks – internal or external
• Strategies for preventing or
minimizing risks
• Response to risk should they occur
Timetable/Milestone • Formal registration of the business
• Completion of prototypes
• Hiring of initial personnel
• Reaching agreements with supplier
and distributors
• Actual production
• Initial orders, sales, and deliveries
Appendices • Market research date
• Detailed financial projections
• Curriculum vitae of the management
team
 • Price lists from suppliers
• Profile of competitors

Why Do Some Business Plans Fail?

Potential investors are likely rejected a business plan that has the
following problems:
• Documents is sloppy and looks unprofessional
• Executive summary is not coherent and is too long
• Unclear on why people would want to buy the product or service
• Unclear on whether the product can be readily produced
• Sales and financial projections are unreasonably optimistic
• Inadequate description of the qualifications and experience of the
management team
• Inadequate assessment of the potential threats to the business.

HOW TO PRESENT A BUSINESS PLAN

Some guidelines that will help the entrepreneur when making the
presentation are as follows:

I.Tell a compelling story.

II.Exhibit confidence and professionalism.

III.Cover the basics.

IV.Adopt a cooperative attitude when answering questions.

 METRO BUSINESS COLLEGE
200 St. Arnaiz, Pasay City

Name of Learner: ___________________________

Grade & Section: ___________________________
Subject: The Entrepreneurial Mind

Submission of activities on ______________

QUESTION FOR DISCUSSION?

1. Given the uncertainty and dynamic nature of the business

environment, is a business plan necessary? Cite the reasons for
your answer.
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2. Why is it important for start-up businesses to come up with
monthly cash flow projections especially during the first year?
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