LESSON 2

THE BUSINESS PLAN


At the end of this module,
you are expected to: 1.
Recognize a potential market
(TLE_ICTAN11/12PC-Ia-1
 a. identify the different sources of business opportunities;
 b. analyze the market need;
 c. determine the possible product/s or service/s that will meet
the market need;
 d. define a business plan;
 e. determine the importance and parts of a business plan.
ODD MAN-OUT
Analyze the following set of words.Identify which does not belong to the group.
1.STEM ABM ICT HUMSS

2.LAMAO OMRION ABUCAY BAGAC

3.JANUARY FEBRUARY MARCH MAY

4.SQUARE RECTANGLE PENTAGON RHOMBUS

5.TINAPA KILAWIN BAGNET KASUY

  1. What was your basis in choosing the “odd man-out” in each
Answer the set of words?

following  2.What is common among the remaining words in each group?

 3.How are you going to apply the same concept in deciding on
questions: your own business venture?
Market refers to a group of people or organizations that has an
interest on a product or service (satisfying their needs and wants),
has resources and, permitted by law and other regulations to
purchase the given product or service
Macro Environmental Sources of Opportunities
This refers to the big (external) forces that affect the area, the
industry, and the market which the enterprise belongs to.
1. Socio Cultural Environment This includes the demographic and cultural factors including beliefs, tastes,
customs and traditions.
a. Social forces – These are elements of the society resulting from human interactions that can influence the thoughts,
behaviors, attitude, actions, and even the beliefs and customs of the people. This may include values, traditions, literacy
level or consumer psychology. Feminism, the advocacy of gender equality that supports giving women significant tasks in
the community. Subsequently, some religious groups which follow certain doctrines such as nonconsumption of blood or
pork may affect the customers’ purchase of products.
b. Cultural forces – These basically refer to the integrated characteristics of a group of people or ethnic group in a
particular society. Cultural diversity is clearly manifested in the Philippines due to the presence of different ethnic groups
with different languages and traditions. A certain practice of one group might be unacceptable with another group.
2. Political Environment This depicts the governance system of an area or the local region of the business
enterprise. It includes but not limited to laws, rules, and regulations that control their business practices along with
permits, approvals, and licenses required to manage a business.
3. Economic Environment This is characterized by the income level of a region which in turn dictates the
purchasing power of the customers. Competitiveness of its industries and enterprises also defines this type of
environment.
4. Ecological Environment

This includes living and non-living things around us. A growing environmental awareness for taking care of our planet
and prolonging of lives opens opportunities for business. Drives for a clean and green earth and healthier living gives
birth to ideas such as air filters, energy saving devices and the likes.

A. Climate This refers to the average weather in a particular area over a long period of time. Philippines as a tropical-
maritime country has a climate characterized by relatively high temperature, high humidity and abundant rainfall visited
by several typhoons in a year.

B. Physical Resources These include tangible items that are necessary and available for a business to function.
C. Wildlife This pertains to flora (plants) and fauna (animals). Wildlife preservation must also be taken into
consideration during opportunity seeking. Continuous cutting of trees and hunting animals cause imbalance in the
ecosystem
 5. Technological Environment
One of the nightmares of entrepreneurs is to be left behind
by the newest trends and technological discoveries that will make
their own products obsolete. Thus, technological offerings for the
improvement of their own ventures is unavoidable for them. From
upgrading of systems, processes or new equipment integrated in
your product, it will surely be a blast
 A Business plan
is a formal written description of your business
future by defining your goals, strategies to meet
the goals, and the timeframe for the achievement
of those goals. Is it necessary for you, as an
entrepreneur, to write your own business plan?
As cited by Edralin (2016), the Department of
Trade and Industry through the Bureau of Small
and Medium Enterprise Development. following
reasons of writing a business plan.
  1. Minimize or remove risk of losing money. Investment on poorly researched
business that may result to financial instability should be avoided. You must see
all sides of the venture before letting go of any resources.
 2. Avoid costly mistakes. Unplanned decisions may result to negative outcomes
that may hurt the business.
 3. Anticipate the financial requirements. Futuristic view of the increase or
decrease of demand on the given product/service will prepare you in meeting

Reasons of business obligations.

writing a
 4. Organize the activities beforehand. Thinking in advance, you must look at the
near and distant future. Contingency plans must be present for anticipated

business plan.
concerns that may arise.
 5. Assess actual performance against set goals. Having a clear goal will help you
achieve your target in terms of sales, revenues or even expenses
 6. Apply for financing from lending institutions. There are cases that financial
assistance from other people or organization is needed to start a business. A good
business plan may encourage investors to entrust you their resources but
remember to be wise whenever you are lending money and make sure to use the
money for its intended purpose for the growth of the business.
 I. Executive Summary
II. Management and
Parts of a Business Organization
Plan
III. Product/Service Plan
IV. Market Plan
V. Financial Plan
  This part can be found at the beginning of the plan but is the last to be
accomplished since this synthesizes the whole plan. This contains a brief
introduction and summarizes everything that is relevant and important to
the prospect business audience.
 These are the information needed to guide you:
  description of your proposed business and business model

I. Executive   description of the market opportunity you want to capture or market

problem the business solves

Summary   reasons why this is an attractive business opportunity

  key distinctions or differentiators of your business versus competitors
  overview of the sales, marketing, and operations strategy and plan
  description of your executive planning timeline
  overview of the projected financials containing revenues, cost, profits,
and assumptions of your business
  This part includes all the basic information of your business.
This also describes the workflow (organizational structure; the
background, experience and role of each) of your business from
the highest position up to the lowest.

II. Management  These are the information needed to guide you:

and   Company Name, Logo, and Address 16

Organization   Vision and Mission Statements

  Key Personnel  Organizational Chart
  Ownership Capitalization, Compensation, and Incentives
  External Management Support
  This part describes the highlight of the product or service offered
to the customers so that they will be encouraged to patronize your
product or service. It also explains how the products or services
will be accepted and carried by the distribution channels.
 These are the information needed to guide you

III.   Purpose of your Product or Service

  Product’s/Service’s Unique Features
Product/Service   Material Requirements and Sources of Supply
Plan   Processing Equipment that will be Used to Manufacture the
Product or Render the Service
  Production or Service Process and Controls
  Distribution Logistics
  Regulatory and Other Compliance Issues
  This includes your business strategies, the target market, value
proposition of your product or services that may increase the
company sales (Chen, 2019). These are the information needed
to guide you:
  Market Analysis
IV. Market Plan   Marketing and Sales Strategies 17
  Product or Service Characteristics
  Pricing Policy
  Sales Projection
Market Analysis This includes the process of how you divide the total market into smaller groups seeking similar needs
and wants (market segmentation) and the characteristic analysis of the business in relation to internal and external factors.
(SWOT Analysis)

Strengths refer to strong attributes or capabilities of the business that provide great advantage in exploiting the business
opportunity.

Weaknesses are poor attributes or deficiencies that give disadvantage to the business. Both strengths and weaknesses are
considered internal origins, meaning they are attributes inside the business venture. On the other hand,

Opportunities are business situations that must be exploited due to their potential in terms of profit and growth.

Threats are possible external factors that may harm the business. Both opportunities 18 and threats are outside origins and are
attributes outside the business.
Marketing and sales strategies

These are also known as the product PUSH. These have three key characteristics that
allow to perform marketing function of persuading customers to buy right away. (Go, 2010)
1. Temporary – Sales promotions are conducted at short periods creating a sense of urgency
on the part of the customers.
2. Better value – Sales promotions are used to create short-term differentiation by offering a
better product value
3. Beneficial – Sales promotions promote growth sometimes even at artificial level.

7-11 stores offer promotional sales, such as “Buy1-Take1” of products at

particular period. At the same time, they offer Cliqq Rewards to loyal customers by getting
Cliqq points in every purchase which in turn can be exchanged to free or discounted items.
Product/Service Characteristics
This includes value proposition of the product/service. Value proposition answers the question,
why should your customers buy from you Strengths Weaknesses Opportunities Threats

 Reasonable Price of Products

 Wide Variety of Cakes and Cupcakes
 Homemade
 Products are for delivery with minimal delivery fees.  New in the Industry
 No Reputation yet  Growing population of customers online
 Other Bakeshops
 Other online food businesses 19 and not from other similar businesses?

These contain the convincing reasons that buyers should see that will make them purchase your
products/services. BDO: “We find ways”. Before this pandemic, while other banks operate from
8AM-3PM Mondays to Fridays, BDO offers services until 6PM and even operates during weekends
fulfilling their promise of “finding ways” for the customers
Pricing Policy

This part specifies the price of the product/service. It must be noted that quality
and price cannot be separated in marketing (Aduana, 2016). You must be
careful in setting the price of your product/service considering the costs of
production, competitors’ pricing, and customers’ perception. Filipinos are
generally price conscious. We tend to check the price tag of a product first
before whether to buy or not to buy a commodity. “SALE” and “PROMO” tags
are consumer magnets. In cases wherein the prices of the product cannot be
decreased, the entrepreneur should be able to give emphasis on the benefits of
his/her product to convince the customer of its value.
Sales Projection

This is also called sales forecast or the prediction of the amount of revenue
your company expects to earn at some point in the future. This shows the
quantity of product sold or service rendered and its corresponding amount
within a given period
  This is a document containing your current financial situation as an
entrepreneur and long-term monetary goals, as well as tactics to attain those
objectives. You may create a financial plan on your own or with the
assistance of someone who is knowledgeable about handling finances such as
certified financial planner.

 These are the information needed to guide you:

V. Financial   Start-up costs requirements – These are expenses that you will be needing
during the course of creating a new business. 20

Plan   Financial projections – These are estimates of your future profits and
expenses.

  Break-even analysis – This is a financial tool that will help you determine
at what stage (or period) your company will start gaining profit.

  Budget – This includes the amount needed for business operations as well
as sources of such funds (equal shares or through a creditor).
THANK YOU