THE BUSINESS PLAN Prepared by: Mrs. Belen Apostol.

THE BUSINESS PLAN

Prepared by: Mrs. Belen Apostol

The Business Plan

o Potential investors are not likely to consider investing in a new venture until the business plan has been completed

o The business plan helps the entrepreneur maintain perspective as to what needs to be accomplished.

Organizing the Enterprise, Planning the Enterprise Entrepreneurs use planning and

organizing to outline goals and define how the organization will accomplish business tasks. They may use a systematic plan broken down into steps or develop a generalized approach for achieving goals through various functions or processes.

Organizing the Enterprise, Planning the Enterprise

Strong planning and organization techniques ensure the enterprise stays focused on its goals and objectives.

Proper planning and organization management can also help the business remain flexible and adjust to changes in the economic environment.

Concept of a Business Plan

A business plan is a written document prepared by the entrepreneur that describes all the relevant external and internal elements involved in starting a new venture. It is often an integration of functional plans such as marketing, finance, manufacturing, and human resources.

Components of Business Planning

1. Sales and Marketing Any sales and marketing decision made must be

based on a realistic sales estimate over the period. 2. "Igniting Operations”

Operational decisions cover Production, Engineering, Distribution, Human Resources, and Information Communication and Technology.

3. Technology The use of Technology can generate a

significant market advantage that competitors find difficult to match.

Characteristics of a Sound Business Plan1. A business plan should be detailed. In listing products

and services for example, it should not stop by just enumerating them, it should include the descriptions and scope of the products and services.

2. It should include a market research that identifies competitors, the share of the market and the range of the products produced. By learning how competitors conduct their operations, tricks of the trade in the business may be learned and entered to be used as a basis to excel.

Characteristics of a Sound Business Plan3. It needs to have a list of everything

needed which comprises the equipment, technology, raw materials, financial and other resources needed when starting and running a business venture. Having all these listed will give an idea on how much capital is needed before the start-up and how much money should made in a day to make the business survive.

Characteristics of a Sound Business Plan4. It also needs to be written in formal

format and style since a business plan is something that have to be presented to business partners, financial firms and banks. Refrain from using slang in any part of the plan

5. A business plan should be error – free. This is important because the business plan defines the business person.

Why do we need a Business Plan

1. A business plan is an effective tool for defining the existing realities. It prompts to analyze the business project or the existing situation objectively and critically, define a focus and set realistic goals. It may also constitute the basis for control and evaluation.


2. A good business plan will reveal weaknesses or omissions in planning. Because good business plans require a guesstimate of risk calculation, it helps to reduce risks.


3. It provides a valuable communication tool presented in an organized, credible manner, which allows lenders, outside directors, investors, banks and employees to obtain a complex view of your business. Even if, in some cases, a business plan format is not officially required when applying for a loan, although most lenders will ask for one, the very existence of a plan constitutes a plus, a step forward in obtaining the loan.

Obtaining the facts for a Business Plan

A business plan gives an insight into the entrepreneur's ability to define and develop policies for the essential areas of the business. This business document will map out the entire process by considering all the possible factors.

Obtaining the facts for a Business PlanFundamental factors that is needed in

creating a business plan: 1. Consultants and Backing Type: When

starting to create a business plan, one must decide who will be reviewing it as this could help form a great plan.

2. Business Plan Outline: Outlining the plan for the business is the second most vital point once it has targeted its audience. The target audience will determine the structure of your document..

Obtaining the facts for a Business PlanFundamental factors that is needed in creating a

business plan:

3. Research and Information Collection: Once decided on the financial investment and its sources, it is time to make a research. The approach from the work experience of the entrepreneur and observation will help to research the market and the product. Published information from library, internet and paid database services will inform the entrepreneur on the market growth, overall industry outlook and customer requirements. Field research will help in covering interviews with customers, suppliers, competitors, and industry experts.

Obtaining the facts for a Business PlanFundamental factors that is needed in

creating a business plan: 4. Collection Files: sum up all experiences,

interviews, and research in files for the plan analysis.

5. General Industry Overview: have a general understanding of the industry and the knowledge about the various strategies and services that apply in developing the business.

Obtaining the facts for a Business PlanFundamental factors that is needed in creating

a business plan: 6. Analysis: Once data is collected, analyze the

process of building an aggressive profile, a comprehensive plan and consider the risks involved with it.

7. Executive Summary: When all the segments of the business plan is thoroughly completed write an executive summary highlighting the key points and including the loan repayment methods and return on investments.

Obtaining the facts for a Business Plan

8. Review and Editing: a well-written business plan opens the doors to success. It will become a road map to success, which guides the entrepreneur in the right direction. Therefore, make sure that it has been proofread and checked for a number of times before giving a final copy.

Outline of a Business Plan

The Executive Summary The Executive Summary provides a concise synopsis of

the business plan, and highlights the key points raised within. The Executive Summary must communicate to the prospective investor the size and scope of the market opportunity, the venture’s business and profitability model, and how the resources/skills/strategic positioning of the Company’s management team make it uniquely qualified to execute the plan. The Executive Summary must be compelling, easy-to-read, and no longer than 2-4 pages.


The IndustryThis section evaluates the playing field in which

the company will be competing, and includes well-structured answers to key market research questions such as the following:

What are the sizes of the target market segments? What are the trends for the industry as a whole? With what other industries do your services compete?


Market Analysis This section assesses the customer

segment(s) that the company serves. In this section, the company must convey the needs of its target customers. It must then show how its products and services satisfy these needs to an extent that the customer will pay for them.


Competitive Analysis An investigation of direct and indirect

competitors, with an assessment of their competitive advantage and an analysis of how it will overcome any entry barriers to the chosen market.


Marketing Plan A detailed explanation of the sales

strategy, pricing plan, proposed advertising and promotion activities, and product or service's benefits.

Outline of a Business Plan Management Plan An outline of the business's legal structure and management

resources, including the internal management team, external management resources, and human resources needs.

The Management Team section demonstrates that the company has the required human resources to be successful. The business plan must answer questions including:

Who are the key management personnel and what are their backgrounds? What management additions will be required to make the business a success?

Who are the other investors and/or shareholders, if any? Who comprises the Board of Directors and/or Board of Advisors? Who are the professional advisors (e.g., lawyer, accounting firm)?


Operating Plan A description of the business's physical location, facilities and

equipment, kinds of employees needed, inventory requirements and suppliers, and any other applicable operating details, such as a description of the manufacturing process.

These sections detail the internal strategies for building the venture from concept to reality, and include answers to the following questions:

What functions will be required to run the business? What milestones must be reached before the venture can be

launched? How will quality be controlled?


Financial Plan A description of the funding

requirements, detailed financial statements, and a financial statement analysis.


Appendices and Exhibits Any additional information that will help establish the

credibility of the business idea, such as marketing studies, photographs of the product, and/or contracts or other legal agreements pertinent to the business.

The Appendix is used to support the rest of the business plan. Every business plan should have a full set of financial projections in the Appendix, with the summary of these financials in the Executive Summary and the Financial Plan. Other documentation that could appear in the Appendix includes technical drawings, partnership and/or customer letters, expanded competitor reviews and/or customer lists.

Market Plan

The marketing plan details the strategy for penetrating the target markets. Key components include the following:

A description of the company’s desired strategic positioning Detailed descriptions of the company’s product and service

offerings and potential product extensions Descriptions of the company’s desired image and branding

strategy Descriptions of the company’s promotional strategies An overview of the company’s pricing strategies A description of current and potential strategic marketing

partnerships/ alliances

Production Plan

A production plan is that portion of the intermediate-range business plan that the manufacturing / operations department is responsible for developing. The plan states in general terms the total amount of output that the manufacturing department is responsible to produce for each period in the planning horizon.

Production Plan

The output is usually expressed in terms of pesos or other units of measurement (e.g. tons, liters, kgs.) or units of the aggregate product (this refers to the weighted average of all the products in the company). The production plan is the authorization of the manufacturing department to produce the items at a rate consistent with the company's overall corporate plan.

Production Plan

This production plan needs to be translated into a master production schedule so as to schedule the items for completion promptly, according to promised delivery dates; to avoid the overloading or under loading of the production facility; and so that production capacity is efficiently utilized and low production costs result.

Organizational Plan

An organizational plan is basically a “to do” list for an organization. It lists out the plan of work, programs and organizational growth over a period of time. The tasks involved, who is responsible for them, and when they’ll be done.

An organizational plan helps to: Set priorities for work Make sure tasks get done on time Focus on one thing at a time Share work among staff, board members & volunteers Make goals clear to investors Get a handle on big projects by breaking them down See the big picture of what an organization is doing.

Financial Plan

The Financial Plan involves the development of the company’s revenue and profitability model. It includes detailed explanations of the key assumptions used in building the model, sensitivity analysis on key revenue and cost variables, and description of comparable valuations for existing companies with similar business models.

Financial Plan

In addition, the financial plan assesses the amount of capital the firm needs, the proposed use of these funds, and the expected future earnings. It includes Projected Income Statements, Balance Sheets and Cash Flow Statements, broken out quarterly for the first two years, and annually for years 1-5. Importantly, all of the assumptions and projections in the financial plan must flow from and be supported by the descriptions and explanations offered in the other sections of the plan. The Financial Plan is where the entrepreneur communicates how he/she plans to “monetize” the overall vision for the new venture.

Organizing the Enterprise

Common structural and operating components and all businesses include a series of jobs to be done and a specific overall purpose. Each organization must develop the most appropriate organizational structure -- the specification of the jobs to be done in the ways in which they relate to one another.

Organizing the Enterprise

Firms prepare organization charts to clarify structure and to show employees were they fit into a firm's operations. Each box represents a job, and solid lines define the chain of command, or reporting relationships. The charts of large firms are complex and include individuals and many levels. Because size prevents them from charting every manager, they may create single organization charts for overall corporate structure and separate charts for divisions.

Choosing Your Own Role in the Business

Your role within your business organization is of crucial importance to investors because you may very well make the difference between the success or failure of your business.

You should be able to describe exactly what part you will play in managing your business how you are going to compensate for your own weaknesses, such as lack of experience in certain areas or lack of knowledge.


When you detail your role in your business, you describe your weak areas with respect to your role and outline how you plan to maximize your strengths and keep your own shortfalls at bay.

To confirm your qualifications, you need to establish your involvement in the overall, long-term planning for the company and establish your involvement in the day-to-day running of the company.

Establish your qualifications, including your education background and your business experience.


If you have industry specific experience, you should detail that as well.

If you don't have much experience in the industry you will be operating in, then you need to provide some insight as to how you are going to acquire the necessary knowledge to operate successfully.


If you will not be involved in the day to day functions of your business, you need to establish who will be taking on the responsibility as a general manager.

It is important to the security of your deal that you provide investors with sufficient information to be confident in the person (whether it is you or someone else) who will be managing the business and monitoring its performance.

Choosing People to Work With You

Identifying the Skills Your Business Needs But Lacks The best way to find the right people for your business is by

indentifying the jobs that need to be done, and then working out what type of person is needed to do them.

1. Make a list of jobs that need to be filled now and in the future.

2. Next to each item, note whether you or someone else will need to do that job.

3. Group tasks for specific roles and then create job specs accordingly.

4. Include a detailed list of responsibilities, and any qualifications or experience required for that role.


Finding the Right Applicants A good way to find employees is by

recommendation. Trade publications are also a good bet if you are

looking for a specific skill set and there are now many online websites that allow you to easily post job advertisements as well.


Interviewing a Potential Employee When you interview a candidate for a job, make

sure to prepare a list of questions in advance. This should include questions relating to their

experience, suitability, and attitude towards work.

Ask them how they would deal with various scenarios relevant to the potential role in your business.


Choosing the Right Candidate Finding the right type of employee isn’t just about

finding someone with the right skill set. You need to enjoy their company considering how

much time you will be spending with them. Many entrepreneurs go into business with people

they don’t particularly like or get on with because they think the potential candidate is impressive.

Working with someone who winds you up, no matter how good their credentials, is not a recipe for your own motivation or business success!


Go With Your Instinct Go with your gut. If you instinctively believe someone won’t be a good fit,

then you’re probably right. Try Before You Hire

An interview or discussion won’t always reveal whether someone is suitable

Some people are good at interviews but not on the job

Always try working with someone before you hire them full-time.

Choosing the Legal Form of Your Business

Each type of business is best for a specific purpose or situation, relating to taxes, liability, and your ability to control the profits and losses of the business.

Sole Proprietorship A sole proprietorship is a business operated by one

individual; the business is considered part of the individual, not a separate entity.

The business profits and losses are included on the individual's personal tax return, and the individual retains personal liability for the business debts and lawsuits.


Partnership A partnership is a business entity with two or

more individuals who share the risk and benefits of business.

A partnership may include general partners, who bear the liability for partnership debts and for actions of the partnership.

It may also include limited partners who are merely investors and who do not share in the day-to-day operations of the business and who do not share in liability.


Corporation A corporation is an entity which is

separate from its owners. The corporation is formed under the

laws of the state in which it is operating, with Articles of Incorporation.


Cooperative A cooperative is an organization composed

of individuals or businesses that have banded together to reap the benefits of belonging to a large organization.

Cooperatives are not organized for profit but to make its members individually profitable or save money.

The Option Not to Register

There is no option not to register for a certain business since setting up a business in the Philippines, as in other countries, will require the business owner to register with several government agencies.

For a company to be legitimate it must have records in different government agencies such as:

Department of Trade and Industry (DTI), Securities and Exchange Commission (SEC), Bureau of Internal Revenue (BIR), Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth) Home Development Mutual Fund (usually referred to as Pag-IBIG).

The Option Not to Register

The company must also obtain various clearances from local government and sanitation agencies.

Once these registrations are done, an entrepreneur is ready to launch the business in the Philippines and may start hiring employees and accepting customers.

How to Register Your Business

How to Register Your Business In The Philippines There are a number of government agencies

you must register with in addition to opening a bank account when starting a business in the Philippines and hiring employees.

It is essential to register your business to avoid any legal problems once business operations begin.


How to Register Your Business In The Philippines

Depending on the structure of your business, your first step is to get a certificate of registration for your business name in one of these agencies: Department of Trade and Industry (DTI) – for

single proprietorship Securities and Exchange Commission (SEC) – for

partnerships or corporations Cooperative Development Authority (CDA) – for

cooperatives


How to Register Your Business In The Philippines

After getting your certificate of registration, you will need to visit the following offices:

Homeowners Association – for businesses inside villages and subdivisions, you need to get a homeowner’s clearance

Barangay Hall – secure a barangay clearance to operate your business

Local Government Unit (LGU) – visit the municipality or city hall office and process your business permit

Bureau of Internal Revenue (BIR) – apply for a business taxpayer identification number (TIN), register your books of accounts, point-of-sales (POS) machines and receipts


How to Register Your Business In The Philippines At this point, you may now legally start your business operations,

but you’ll need to then register your employees (which may include yourself) to the following agencies:

Social Security System (SSS) – secure an SSS number for yourself and your employees

Department of Labor and Employment (DOLE) – for businesses with five workers or more, register your business with DOLE

Home Development Mutual Fund (HDMF) – as required by RA 7742, SSS members earning at least P4,000 a month must be registered with HDMF. This agency administers the Pag-Ibig Fund.

Philippine Health Insurance Corp. (PhilHealth) – all employers of are required to register their employees to this agency as stated in the New National Health Insurance Act (RA 7875 / RA 9241). PhilHealth manages and administers the government health care system.

Other Registering Agencies

Furthermore, there are certain businesses that are required to secure a special clearance, permit or license from selected government agencies as follows: Animals, animal products, animal facilities, veterinary

drugs: registration certificate from the Bureau of Animal Industry

Aquatic animals, importation, fishpond lease agreement: permit from the Bureau of Fisheries and Aquatic Resources (DA-BFAR)

Fertilizer products, pesticide products: registration certificate from the Fertilizer and Pesticide Authority (DA-FPA)


Fiber, fiber products processing and trading: registration certificate and commodity clearance from the Fiber Development Authority (DA-FIDA)

Film and television production and distribution: registration certificate from the Movie & Television Review and Classification Board (MTRCB)

Firearms, ammunition and explosives: permit from the Firearms and Explosives Division of the Philippine National Police (FED-PNP)


Food, chemicals, health related business: registration certificate from the Bureau of Food and Drugs, Department of Health (DoH-BFAD)

Flour, corn and grains related business: operations and license from the National Food Authority (DA-NFA)

Pawnshop, lending and finance related businesses: registration certificate from the Central Bank of the Philippines, Department of Finance (DoF-BSP)

Plants and plant products: nursery accreditation, registration, seed and phytosanitary certificates from the Bureau of Plant Industry (DA-BPI)


Recruitment or placement agency for foreign employment: registration certificate from the Philippine Overseas Employment Administration, Department of Labor (DOLE-POEA)

Recruitment or placement agency for local employment: registration certificate from the Bureau of Local Employment (DOLE-BLE)

Schools, technical-vocational and other educational institutions: registration, accreditation and permits from the Department of Education (DepEd), Commission on Higher Education (CHEd) or from the Technical Education Skills Development Authority (DOLE-TESDA)


Security agency business: permit from the Philippine National Police, Department of Interior & Local Government (DILG-PNP)

Meat plant and slaughterhouse operations: accreditation and registration certificate from the National Meat Inspection Commission (DA-NMIC)

Mining, quarrying, logging, waste management and related businesses: permit from the Department of Environment and Natural Resources (DENR)


Motor vehicles, automotive & heavy equipment, engineering, electronics, electrical, office & data equipments, medical & industrial equipment, appliances & devices: accreditation license from the Bureau of Trade Regulation and Consumer Protection (DTI-BTRCP)

Real estate projects: register with the Housing and Land Use Regulatory Board (HLURB)

Sugar, muscovado, sugar-based products and related businesses: registration certificate from the Sugar Regulatory Administration (DA-SRA)


Telecom business: license from the National Telecommunication Commission, Department of Transportation & Communication (DOTC-NTC)

Tourism-related projects: registration and accreditation certificate from the Department of Tourism (DOT)

Transportation: permits from the Land Transport Franchise & Regulatory Board (DOTC-LTFRB) or Maritime Industry Authority (DOTC-MARINA)

Video production, sales and rental: accreditation from the Optical Media Board, Office of the President (OPOMB)

THE BUSINESS PLAN Prepared by: Mrs. Belen Apostol.

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Transcript of THE BUSINESS PLAN Prepared by: Mrs. Belen Apostol.