Business Plan Development

Developing a Business Plan

• Entrepreneurs formalize attempts to exploit opportunities via a business plan after assessing them.
• A business plan's importance for various users is emphasized
• Major sections of a business plan will be described
• Guidelines on how to present a business plan to relevant stakeholders will be given

Business Plan

• It is a document describing the external and internal elements involved in starting a venture, or expanding an existing business, in a dynamic setting.
• It is a guide for short-term and medium-term decision-making and managerial action.
• Functional plans integrated: Marketing (advertisement and promotion), Manufacturing (production and development), Finance (budget, income, and expenses), and Human Resource Management (manpower)

Importance of a Business Plan

• Determines the viability of a proposed or existing business in its target market.
• It guides resource mobilization.
• It helps to obtain financing.

Users of a Business Plan

• The users are: entrepreneurs, lenders, and investors

Significance to the Entrepreneur

• It's a roadmap for managing the business.
• The plan identifies necessary resources for operation and growth.
• It enables entrepreneurs to foresee potential business risks.

Importance to the Lender

• Lenders use the plan to assess the entrepreneur's ability to meet debt and interest obligations.
• Offers insight into collateral or tangible assets securing the loan.

Importance to the Investor

• Aids investors in assessing the acceptability of projected returns.
• Gives details of the character of the entrepreneur and the team's capabilities.

Preparing a Business Plan

• Sources of information: National Government Agencies, City or Municipal Offices, and Industry Associations.

Information Needs for Major Sections

• The needs are market, operations, and financial information

Market Information Needs

• Includes general environmental and specific industry trends, local market conditions, market potential, and demographic/psychographic profiles.

Operations Information Needs

• Includes location, manufacturing/service operations, required equipment/furniture, space, labor, raw materials, potential suppliers, and utilities.

Operations Questions

• Key questions to address: Where will it be built? Is it accessible? What products/services will be offered? What is the cost? Skills and other requirements for operations? What materials are needed and who are the potential suppliers? What utilities will be used?

Financial Information Needs

• Encompasses rental rates, equipment and utility costs, personnel and distribution costs, insurance, and registration/license fees.

Financial Questions

• What are the sources of income/revenue? What are the expenditures for the operations? How to forecast sales? How much are the materials that will be used? How much is the compensation for employees? How much are the utilities? Is there insurance for the business? How much is the processing fee for getting licenses and business permits?

Major Sections of a Business Plan

• Includes these parts: Introductory Page, Executive Summary, Environmental and Industry Analysis, Description of the Business, Production, Operations, Marketing, Organizational, and Financial Plans, Risk Assessment, Timetable/Milestone, and Appendices.

Introductory Page Elements

• It must have the business Name and Address, names and addresses of owners/entrepreneurs, the nature of the business, statement of financing needed, and a confidentiality statement (optional).

Executive Summary

• Highlights of the business plan, condensed into two or three pages.

Analysis of Environment & Industry

• Includes sociocultural, technological, economic, and politico-legal conditions.
• Includes supply, demand, and competition.

Business Description

• It's about the products/services, business size, mission statement and core values, location of assets, and background of owners/entrepreneurs.

Production Plan Elements

• Includes manufacturing process, physical plant, machinery/equipment, raw material suppliers, and future capital equipment needs.

Operations Plan

• The plan describes the company’s operation and the flow of the orders for goods and services.

Marketing Plan Components

• Includes pricing, distribution, promotion, and sales forecast.

Sales Forecast

• It indicates when to produce more and when to produce less and helps maximize profit, considering business's lean and peak months.
• Examples include increased demand for juice drinks in summer and pastries during Christmas.

Organizational Plan

• The plan reflects the form of ownership, shareholders or partners, organizational chart/lines of authority, background, and responsibilities of the management team.

Financial Plan Aspects

• Includes assumptions, pro forma balance sheet and income statement, cash flow projections, sources/uses of funds, and breakeven analysis.

Risk Assessment

• The assessment includes potential internal or external risks, strategies for prevention/minimization, responses to risks, and SWOT Analysis.

Timetable/Milestones

• Includes formal registration, completion of product/service design and prototypes, hiring, agreements with suppliers/distributors, production, and initial orders/deliveries.

Appendices

• Includes market research data, financial projections, CVs of the management team, supplier price lists, and competitor profiles.