Introduction to Business Plan Preparation PDF

Introduction to Business Plan Preparation Learning Outcomes: 1. Define business plan 2. Specify the specific section of business plan. 3. Identify the information included in the Introduction section of the business plan What is a Business plan? Business Plan It is a detailed and integrat...

Introduction to Business Plan Preparation Learning Outcomes: 1. Define business plan 2. Specify the specific section of business plan. 3. Identify the information included in the Introduction section of the business plan What is a Business plan? Business Plan It is a detailed and integrated written document that describes the various activities involved in opening and operating a new entrepreneurial venture. It is prepared using a scientific approach. It is the road map of the new business for it provides a clear direction and light to an uncertain business endeavor. Feasibility study A detailed analysis that considers all of the critical aspects of a proposed project in order to determine the likelihood of it succeeding. Forerunner of business plan. Major parts of the business plan 1.Introduction 6. Production plan 2.Executive summary 7. Operation plan 3.Environmental analysis 8. Marketing plan 4.Business description 9. Financial plan 5.Organizational plan 10. Appendix Introduction presents the general perspective of the business it may consist of one to two page it includes, among and others, the following section: A. Proposed name of the business B. Address of the business C. Name of the owner or owners D. Description of the business E. Location of the business F. Funding requirement and source Introduction A. Proposed name of the business - the formulation and drafting of the proposed business name is not as simple as it sounds. It is a delicate and important entrepreneurial task. Remember that the name of a business may exist in the market for many year. Careful and in depth planning is of prime importance. The proposed business name must: ❏ reflect the business identity and image ❏Promote the philosophical values and culture that the business values the most ❏profess the brand identity of the product ❏attract or influence the target consumers. Introduction B. Address of the business It this important that the address of the business is correctly written because all business correspondence are mailed to the business address. Raw materials and other manufacturers are shipped by the by the seller to the designated business address. Nowadays it is also necessary for the business to have an email address to facilitate electronic communication between the business and the customers, suppliers, creditors, and other significant parties. Introduction Name of the owner or owners Classification of business ventures according to FORM: ❖Sole proprietorship ❖Partnership ❖Corporate Introduction Classification of business ventures according to FORM: ❖Sole proprietorship - type of business owned and manage by a single person. Characteristics of Sole Proprietorship: It is easy to form and manage It is a simple business operation. It has a limited pool of resources. Its growth is limited. The owner has unlimited liability. Introduction Classification of business ventures according to FORM: ❖Partnership - a formal arrangement by two or more parties to manage and operate a business and share its profits. The owners are usually called PARTNERS. Profits and losses are divided among partners. Partners are held personally liable for the partnership’s liabilities in the event that the partnership does not have the ability to settle its financial obligations Introduction Classification of business ventures according to FORM: ❖Partnership The life of the partnership is easily dissolved for the following reasons: 1. Death of one of the partners 2. Admission of a new partner in an existing partnership 3. Personal insolvency of one of the partners. 4. Permanent withdrawal of the investment of a partner Introduction Classification of business ventures according to FORM: ❖Corporation - formed by at least five but not more than fifteen persons. It has a distinct personality speparate from the owners. Incorporators - refers to the persons originally formed the corporation. Introduction Classification of business ventures according to FORM: ❖Classification of Corporation: Stock Corporation - when they are authorized to issue share of stocks to stockholders. Non-Stock Corporation - when they are not authorized to issue share of stocks to stockholders. Domestic Corporation - organized under the laws of the Philippines Foreign Corporation - organized under the laws of the foreign country but has the authority to operate in the Philippines Description of the Business A brief description of the business must include information about the type of the product or service that the business intends to produce or provide. D. Description of the Business Nature of Business: Merchandising - engage in buying and selling of products or goods Service - provide service to the customer either in professional or non- professional. Manufacturing - engage in buying raw materials and supplies to be processe into finished products. Hybrid - produce and sell goods and at the same time provide service to the customer. Agriculture - engage in the production of agricultural goods and animals Special Corporation - may include cooperatives, joint ventures, and non- profit organization. D. Description of the Business Size of the business Micro-sized business: less than 10 employees Small-sized business: 10-49 employees Medium business: 50-249 employees Large-sized business: more than 250 employees Introduction F. Location of the Business - the basic entrepreneurial consideration is the place that proposed business in a strategic location that will assure competitive advantage. The following factors should be considered when deciding on the location of the proposed business: ❏Proximity to the target market ❏Distance from the sources of raw materials labor and utilities ❏Availability and cost of Transportation ❏Peace and order situation ❏Presence of the direct competitors ❏Geographic and climatic conditions Introduction G. Funding Requirement and Source The estimated total initial cost of the business venture must be clearly indicate. It should include the projective breakdown or allocation of the total cost, e.g., how much will be for building fixtures, equipment, supplies, and working capital. This section also presents the source or sources of funds. The initial cost of investment may be provided solely by the owner/s or partly by the owners and creditors. The estimated period to settle the funding source provided by the creditors must be also be mentioned. Major Parts of Business Plan 1.Introduction a. Proposed name of the 2.Executive summary business 3.Environmental analysis b. Address of the business 4.Business description c. Name of the owners 5.Organizational plan d. Description of the business 6.Production plan e. Location of the business 7.Operation plan f. Funding requirement 8.Marketing plan 9.Financial plan 10.Appendix Major Parts of Business Plan 1.Introduction a. Vision, Mission, Goals and 2.Executive summary Objectives 3.Environmental analysis b. Business Model Adopted 4.Business description c. Business and Product 5.Organizational plan Positions 6.Production plan d. Wealth improvement Approaches 7.Operation plan 8.Marketing plan e. Parties supporting the business 9.Financial plan 10.Appendix  Executive summary ❑Vision, Mission, Goals and Objectives Vision, mission, goals and objectives (VMGO) of the business must be clearly stated and easily understood. Vision Statement - describe what the company wants to achieve and where it wants to go in the future. It determines the course of direction of the company and identifies which markets, technologies, products, or customers to focus on. Mission Statement - describes a company’s reason for its existence. It answers the question the question why the company exist. Goals are specific accomplishments or action plans that the company wishes to achieve within a period of time. Objectives are similar to goals but they are more measurable and are achievable within a short period of time  Executive summary ❑Parties Supporting the Business this is the last section of executive summary is the description of parties that strongly support the business. The parties that have a direct relationship with the business are as follows: consumers creditors suppliers employees and staff Major Parts of Business Plan 1.Introduction a. Vision, Mission, Goals and 2.Executive summary Objectives 3.Environmental analysis b. Business Model Adopted 4.Business description c. Business and Product 5.Organizational plan Positions 6.Production plan d. Wealth improvement Approaches 7.Operation plan 8.Marketing plan e. Parties supporting the business 9.Financial plan 10.Appendix Major Parts of Business Plan 1.Introduction a. PESTEL analysis 2.Executive summary b. Environmental Forces 3.Environmental analysis Matrix 4.Business description c. SWOT model 5.Organizational plan d. Forces of competitive model 6.Production plan e. Competitive forces matrix 7.Operation plan 8.Marketing plan 9.Financial plan 10.Appendix  Environmental analysis It is a strategic tool that help determine the external and internal factors affecting the performance of the business It is the heart of the business plan Areas of environmental Analysis Global analysis - describe the the global business situation to provide enough knowledge about the global perspective or horizon of the business. Societal Analysis - tells how the environment forces affect the proposed business and how great their effects are Industry Analysis - focus mainly on the customer and competitors  Environmental analysis Environmental scanning refers to the gathering, critical evaluation and utilization of information on events and activities and their relationships with the physical, societal and industry environments.  Environmental analysis Importance of Environmental scanning ✓It clearly portrays the trends, activities, and developments happening in every environmental layer including the interralated relationships between the forces in environement. ✓It identifies the expected threats and opportunities existing in the environment. ✓It points out the possible factors that will determine the success of the entrepreneurial venture. ✓It helps define the future path of the business. ✓It assists in the formulation of the most appropriate entrepreneurial strategies.  Environmental analysis Societal Environment Scanning Approach 1. PESTEL Analysis 2. Environmental forces matrix  Environmental analysis Societal Environment Scanning Approach 1. PESTEL Analysis - a tabular framework of the trends and development in the different forces in the external environment. Political Forces Economic Sociological Technological Ecological Legal Forces Forces Forces Forces Forces Instability of High interest Low level of Readily Abundant of Frequently the Philippine rates given by education available raw materials changed tax Government commercial among public Internet and laws banks school social media graduates  Environmental analysis Industry Environment Scanning Approach 1. SWOT Model 2. Forces of competition model 3. Competitive forces matrix *The primary objective in scanning the industry environment is to determine the strategic position of the business. Environmental analysis Industry Environment Scanning Approach 1. SWOT Model Environmental analysis Industry Environment Scanning Approach