Writing a Business Plan

Adapted from Mae Ann A. Balbino Course Facilitator: DESIRIE D. OGDAMIN

Objectives:
At the end of the lesson, you should be able to:

• Define Business Plan

• Analyze Business Plan Contents
• Create business plans for your respective IGPs.

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What is …. ?
Feasibility Study
• A Feasibility Study is a controlled process for
identifying problems and opportunities,
determining objectives, describing situations,
defining successful outcomes and assessing the
range of costs and benefits associated with several
alternatives for solving a problem.
Business Plan
• A Business Plan details how to go about setting up
and running a business. Thus, you go through the
different processes of organizing and managing a
business. It includes your goals for going into the
business, the methods and strategies you intend to
use to attain your desired goals, and your financial
projections.
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The need for the business plan…

Why Prepare a Business Plan? Characteristics of a Good Business Plan?

1. Looking Ahead 1. Implementable
2. Roadmap 2. Clear
3. Performance Gauge 3. Objective
4. Pre-requisite to Financing 4. Consistent

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I. Executive Summary
II. General Company
Description/ The IGP Profile
III. Marketing Plan
IV. Production Plan
V. Management (and/or Business Plan
Organizational) Plan The Components
VI. Financial Plan

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 Describe what business you will be in and what
you will do.
 State the vision and mission statements, and
company goals and objectives (SMART).
 Describe your industry.
 Describe your most important company strengths
and core competencies.

Section I. IGP Profile

1.1 Brief description of the project
1.2. Vision, Mission, Goals and Objectives of the
IGP
1.3 SWOT Analysis
I.The Business Profile
“Knowing what you are and where you
want to be”

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Section I: IGP Profile
This portion describes the business and the internal and external factors that affect its operations. It also shows the
VMGO of the IGP which serve as the overarching aspiration of its existence.

Vision
• The vision statement is a short, succinct, and
inspiring statement of what the organization wants
to become and achieve at some point in the future.
The company’s vision is stated in a very broad
manner without specifying the means that will be
used to achieve desired results.
Mission
• The mission statement, on the other hand,
describes how the organization plans to achieve
the vision. It is a concise statement of a business
strategy and developed from the customer’s
perspective.

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Section I: IGP Profile
This portion describes the business and the internal and external factors that affect its operations. It also shows the
VMGO of the IGP which serve as the overarching aspiration of its existence.

Objectives SWOT Analysis

• Financial Objectives • Strengths
• Marketing Objectives • Weaknesses
• Opportunities
• Threats

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I. The Target Market
II. The Marketing Mix (4Ps)
II.1 Product
II. 2. Price
II. 3 Place
II. 4 Promotions

Section 2: Marketing Plan

2.1 Description of the Product
2.2 Comparison of the Product with Its
Competitors
2.3 Location
2.4 Market Area
2.5 Main Customers
2.6 Total Demand
2.7 Market Share
II. Marketing Plan
2.8 Selling Price
2.9 Sales Forecast "The aim of marketing is to know and
2.10 Promotional Measures understand the customer so well the product
2.11 Marketing Strategy or service fits him and sells itself." - Peter
2.12 Marketing Budget Drucker

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Section II: The Marketing Plan
The Target Market

Defining the Target Market Market Segmentation

• The target market is specific group of • Dividing a market into definable and
potential customers toward which measurable groups for purposes of
the venture aims its marketing plan. targeting marketing strategy.

1) Business-to-business markets involves selling of products 2) Consumer markets

or services to another business. involve sales to
• Usually aims at selling a large volume in one transaction. households for
• Involves a more direct channel of distribution. personal
Use trade magazine advertising, direct sales, and trade consumption.
shows.

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Who is your target market?

Guide Questions:
Within the market area, to whom will the business sell
its products?
What share or percent of this market can be captured by
the business?

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The Marketing Mix
PRODUCT, PRICE, PLACE, PROMOTIONS
A product is something made in a factory; a brand is something that is bought
by the customer. A product can be copied by a competitor; a brand is unique. A
product can be quickly outdated; a successful brand is timeless.

PRODUCT Product Strategy

• May consider more than the physical
characteristics.
• Involves packaging, brand name, price,
warranty, image, service, delivery time,
features, style, and even the Web site.
• The market for the product and the specific needs it
will address.
• The product’s key differentiators or unique selling
proposition.
• The company’s business goals for the product.

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The Marketing Mix
PRODUCT, PRICE, PLACE, PROMOTIONS

"Price is what you pay. Value is what you get." - Warren Buffett

Price Factors to Consider:

• Costs - Material costs, labor costs, • The degree of competitive pressure
cost of goods from suppliers, labor • The availability of sufficient supply
and overhead expenses, etc. • Seasonal or cyclical changes in demand
• Margins or markups - Expected to • Distribution costs
cover overhead costs and some • The product’s life-cycle stage
profit. • Changes in production costs
• Competition • Prevailing economic conditions
• Customer services provided by the seller
• The amount of promotion
• The market’s buying power
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The Marketing Mix
PRODUCT, PRICE, PLACE, PROMOTIONS

Place/ Distribution
• Provides utility to the
consumer.
• Must also be consistent
with other marketing
mix variables.

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The Marketing Mix
PRODUCT, PRICE, PLACE, PROMOTIONS

Promotions Internet Marketing

• To inform potential consumers about the
product’s availability or to educate the
consumer.
• Methods include print, radio, or television
advertising, Internet, direct mail, trade
magazines, or newspapers.
• The entrepreneur should be considering
both costs and effectiveness of the
medium in meeting the market objectives.
• Allows the firm to increase its presence and
brand equity in the marketplace.
• Allows the company to cultivate new
customers.
• Can improve customer service and lower
costs by allowing customers to serve
themselves.

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Marketing Budget

Budgeting Implementation
• Costs should be reasonably clear. • Use Gantt Chart for the Marketing Activities
• Assumptions, if necessary,
should be clearly stated.
• Useful in preparing the financial
plan.

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Guide Questions for the Marketing Plan Section
Guide Questions:
1.1 What is the product?
1.2 How does it compare in quality and price with its
competitors?
1.3 Where will be the business be located?
Section 2: Marketing Plan 1.4 What geographical areas will be covered by the project?
1.1 Description of the Product 1.5 Within the market area, to whom will the business sell its
1.2 Comparison of the Product with Its Competitors products?
1.3 Location 1.6 Is it possible to estimate how much of the product is
1.4 Market Area currently being sold?
1.5 Main Customers 1.7 What share or percent of this market can be captured by
1.6 Total Demand the business?
1.7 Market Share 1.8 What is the selling price of the product?
1.8 Selling Price 1.9 How much of the product will be sold?
1.9 Sales Forecast 1.10 What promotional measures will be used to sell the
1.10 Promotional Measures product?
1.11 Marketing Strategy 1.11 What marketing strategy is needed to ensure that sales
1.12 Marketing Budget forecasts are achieved?
1.12 How much do you need to promote and distribute your
product?

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Workshop 1: Defining your business and Crafting your marketing plan

IGP Profile Section 1: Marketing Plan

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Section 2: Production/ Operation Plan

2.1 Process Planning

2.2 Operations Layout
2.3 Production Planning
2.4 Material Planning
2.5 Machine and Equipment Planning
2.6 Manpower Planning
2.7 Overheads Requirement
2.8 Location Plan
2.9 Business and Operations Hours
2.10 License, Permits and Regulations
II.Production/OperationPlan
Required
2.11 Operations Budget
2.12 Implementation Schedule

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 This section will demonstrate
the operational aspect of the
business that is crucial in
transforming the business input
into output
 The operations plan will ensure
the business is able to produce III. Operation Plan
the product or to provide the
services that the business had
planned in the marketing plan

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III. OPERATION PLAN
PROCESS PLANNING

PROCESS PLANNING
 identification of the step-by-step
processes from beginning to end
in making the product or in
providing the services
 This can be illustrated using a
process flow chart.

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III. OPERATION PLAN
OPERATIONS LAYOUT

 Illustrate the layout of the operations  There are three types of layout:
 Layout refers to the arrangement of machine,
equipment, workers and other facilities used in the o Layout based on process
operations o Layout based on product
 The layout must be design in such a way that the
production of goods and services can be done
o Layout based on marketing
smoothly and efficiently

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III. OPERATION PLAN
OPERATIONS LAYOUT

Layout based on product

 This type of layout is suitable for a
business that has product focus or
continuous flow production
 The design of this layout is made
according to the sequence of activities
to product the product
 Example of a business that have this
kind of layout is a food processing
factory

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III. OPERATION PLAN
OPERATIONS LAYOUT

Layout based on process

 This layout is suitable for a business that
produce several products using similar
processes
 This type of layout is design based on the
similarity of processes where by machine
and equipment that perform similar
function will be grouped together
 Example of business with this type of layout
is a steel workshop and a tailor store.

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III. OPERATION PLAN
OPERATIONS LAYOUT

o Layout based on marketing Layout Based on Marketing

 This layout is designed with an intention to
maximized the area available to display goods
 Examples of layout based on marketing can
be observed in the retail business such as
book store or departmental store

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III. OPERATION PLAN
PRODUCTION PLANNING

 It is important to make sure that the business is

able to produce output or to provide services that
is enough to fulfill the expected market demand or
sales
 This can be achieved by having a good production
planning
 In production planning, the business will
determine how much output to produce for a
certain period of time such as in a day, a week or a
month

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III. OPERATION PLAN
MATERIAL PLANNING

 Material planning is done to  Material planning involved four

determine the type and amount steps:
of raw materials needed for the o Identify and list down the raw
production materials required
o Prepare the Bills of Materials
o Calculate the quantity of raw
material required
o Identify the suppliers of raw
materials
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III. OPERATION PLAN
MATERIALS PLANNING

Step 1: Identify and list down the raw materials

required
 Usually in manufacturing business, the raw  In case of retail business, the raw materials is
materials used is easily identified known as goods. The business need to estimate
 the amount of initial goods to be purchased to
For example, to manufacture pencils, raw
start the business operation
materials needed are hollow wood, lead, eraser,
metal band, paint, glue and packaging box

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  Example: To produce a unit of
III. OPERATION PLAN pencil, the bills of materials is as
MATERIALS PLANNING follows:

Step 2: Prepare the Bill of Materials

 The bills of materials will contain a complete list of
materials, parts or components and the amount
needed to produce a unit of product
 To prepare the bill of material, the entrepreneur
must understand the design of the product
 This bill of material is important information for
purchasing activities

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III. OPERATION PLAN
MACHINE & EQUIPMENT PLANNING

Steps to determine machine and equipment Factors to be considered in purchasing

requirement:
1. List out all machine and equipment required
base on the process flow chart or process
plan
2. Determine the amount of machine and
equipment required based on the venture
capacity requirement
3. Identify the suppliers that are reliable in
term of price and after sale services
machine and equipment
• Price
• Quality and reliability
• Availability of spare parts
• Break down maintenance facility
• Technology & user friendly
• Supplier reputation
• After sale services

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III. OPERATION PLAN
MANPOWER PLANNING

Steps to determine the amount of direct Formula To Calculate the amount of direct labor
required
labor required by the venture:
Determine the planned rate of production per day for
the particular section of job
Determine the standard time for a worker to produce
one unit of product or to complete a particular job
Determine workers productive hours:
Working hours per day – rest time or workers idling time
Calculate the amount of direct labor required

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III. OPERATION PLAN
OVERHEAD REQUIREMENT

 Determine the overheads that are required in the

operations
 Overheads refers to requirements other than
direct raw materials and direct labour
 Examples of overheads are indirect labour costs,
indirect material, insurance, maintenance and
utilities

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III. OPERATION PLAN
LOCATION PLAN

LOCATION PLAN BUSINESS and Operation Hours

The entrepreneur has to make
decision which premise is the best for
the business to operate
Choice of location is important
because it will affect:
Sales revenue
Business operation cost
Long term investment

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III. OPERATION PLAN
LICENSE, PERMITS and REGULATIONS

OPERATIONS BUDGET
 Find out and list down all the license/permits/
regulations that are required to operate the
business
 Identify which agency is responsible to approve the
particular license/permit
 For example, a restaurant among others will need
the following license/permit/regulations:
o License for signboard
o Permits for workers
o Health and safety certificate for the workers

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III. OPERATION PLAN
OPERATIONS BUDGET

Fixed Asset Expenditure

 The business need to estimate the budget for o Refers to the investment on
the operations activities
long term assets used in the
 The operations budget can be categorized
into:
operations to produce the
• Fixed asset expenditure
product or services
• Monthly expenses o Examples are the purchase of
• Other expenses machines and equipment
 This operation budget is important because it
will be one of the input to prepare the
financial plan

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III. OPERATION PLAN
OPERATIONS BUDGET

•Monthly Expenses •Other Expenses

o Refers to the payment made o These are expenses that are
every month in the operations made and could not be
department categorized as fixed asset
o Examples are wages for expenditure or monthly
workers and raw materials expenses
purchased o Examples are deposits and
insurance
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III. OPERATION PLAN
IMPLEMENTATION SCHEDULE
 Implementation scheduling involves sequencing
and allotting time to all project activities
 To prepare implementation schedule,
entrepreneurs has to decide how long each activity
and compute the requirement on people and other
resources
 Scheduling normally use Gantt Chart which is a
planning chart used to schedule resources and
allocate time
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The Importance of Project Scheduling
• Project scheduling serves several purposes:
1. It shows the relationship of each activity
to others and to the whole project
2. It identifies the precedence relationship
among activities
3. It encourages the setting of realistic
time and cost estimate for each activity
4. It helps make better use of people,
money and material by identifying
critical bottlenecks in the project
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Gantt Chart

Activities January February March April May June

Incorporation of business
Application for permits and licenses
Searching for business premise
Renovation of promise
Procurement of machines
Recruitment of labors
Installation of machines

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Guide Questions:
Guide Questions:
2.1 What is the production process?
2.2 What buildings and machinery (fixed
assets) are needed and what will be their
cost?
2.3 What is the useful life of the building and
machinery?
2.4 How will maintenance be done and are
spare parts available locally?
2.5 When and where can the machinery be
obtained? 2.6 How much capacity will be
used?
2.7 What are the plans for using spare
capacity?
2.8 When and how will the machinery be paid
for?
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2.9 Where will the factory be located and how
will the factory be arranged?
2.10 How much raw materials are required?
2.11 How much will the raw materials cost?
2.12 What are the sources of raw materials?
Are they available throughout the year?
2.13 How many direct and indirect labour are
needed and what skills should they have?
2.14 What will be the cost of labour?
2.15 Are workers available throughout the
year? If not, what effect will this have on
production?
2.16 How will the workers be motivated?
2.17 What factory overhead expenses are
involved?
2.18 What is the production cost per unit?
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ThankYou

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