Entrepreneurial Business Plan Reviewer PDF

1. Parts of the Business Plan: A. Executive Summary – seen first but completed last B. Study Background – contains the following: 1. business logo 2. vision 3. mission 4. objectives 5. value proposition C. Macroenvironmental and Microenvironmental analysis...

1. Parts of the Business Plan: A. Executive Summary – seen first but completed last B. Study Background – contains the following: 1. business logo 2. vision 3. mission 4. objectives 5. value proposition C. Macroenvironmental and Microenvironmental analysis Macroenvironmental Factors: 1. Socio-Cultural 2. Technological 3. Economic 4. Ecological 5. Political 6. Legal 7. Ethical 8. Demographic Microenvironmental Factors 1. Consumer preferences, interests, and perception 2. Competitors 3. Unexpected opportunities from customers 4. Talents, hobbies, skills and expertise 5. Irritants in the marketplace such as deterrents, problems, complaints and delays. 6. Location D. Marketing Plan - It ignites the customers to be informed, be persuaded, and be reminded to buy a product or avail of a service. E. Operational or Production Plan - a written document which shows the conversion process which takes place in a business – from input to a desirable output. 3 elements of Manufacturing: 1. Input 2. Process 3. Output 4M’s of Operation – 4 elements that underpin business operations a. Manpower – The entrepreneurs need the expertise of qualified employees that can handle operational functions, so that they can focus on the strategic and management functions of the business. The greatest challenge for all entrepreneurs is to constantly motivate and keep high performing employees. The following are strategies for talent management: 1. Providing employees with nonmonetary benefits such as medical coverage, different types of leaves, decent and notable job titles. 2. Providing transparency and fairness in employee performance evaluation. 3. Providing benefits such as annual trips, scholarships and other work-life balance programs. b. Machine – can be described as the “best friend” of manpower in producing goods and offering services to generate service c. Materials There are 3 options in material requisitioning:  1. Manufacturing own products 2. Outsourcing - the process of appointing a third-party manufacturer to do the manufacturing operations of the business 3. Purchasing own product d. Methods - describes how an entrepreneur would run the company from every aspect, including manufacturing products, offering services, distributing products and services, organizing the logistics of product delivery, and maintaining inventories F. Financial Plan – states the following: a. starting capital b. revenue forecast - an educated and calculated guess about how much money your company or business will bring in in the upcoming years 2. According to Don Deebalak in his article “Developing a Great Business Model”, the entrepreneur must adapt the dynamics of traffic lights in developing the business model. A. Green Lights - It draws attention to the positive indicators that might help entrepreneurs develop profitable business plans. 1. Target high value customers A high value customer is: a. Someone who is easy to find. b. Someone who is willing to pay the price. c. Someone who is easy to persuade with the least promotional effort. d. Someone who can join the bandwagon of customers that can generate substantial amount of revenues 2. Offers product or service with great value 3. Offers products or service with reasonable profits B. Red Lights - negative signals that entrepreneurs should be wary of 1. Satisfying the customers becomes costly and irrational 2. Being a market leader is difficult to sustain 3. Return on investment (ROI) takes too long and too small 3.Seling Strategies: a. Cold calls – seller calls a random person who has no relationship with the business yet but is considered a potential customer b. Consultative selling – a dialog process between the buyer and the seller as to how the buyer’s problems can be solved c. Direct selling – the independent direct seller goes directly to the customer’s place and present the products/service. d. Persuasive selling – positioning the product/service as rare, limited or recommended by experts 4. Presenting the product – educating the customer about the product’s features and benefits Types of Sales Presentations: a. Stimulus response - offering the customer a compelling proposition that triggers them to initiate purchase. b. Formula selling – follows a standardized selling approach or based on a formula c. Canned presentation – is a sales presentation memorized by the presenter. d. Need presentation – is a question-and-answer presentation with the aim of understanding the exact needs and wants of the customers Entrepreneurs need to achieve reasonable profits and one of the best ways to achieve this is to decrease operational costs. In order to achieve this, a business must keep its records religiously. Keeping records religiously is important for every entrepreneur because they serve as basis of entrepreneurs for making future decisions. In order to do this, entrepreneurs must hire accountants because they know how to follow and apply the generally accepted accounting principles. 5.Accounting - the process of analyzing, classifying, recording, summarizing, verifying, interpreting and communicating financial information 5 Major Types of Accounts: 1. Assets – property or economic resources that are expected to provide a future benefit to a business Classifications: A. Current Assets – short-term economic resources that are expected to be converted into cash within one year a. Cash – coins, currencies, checks and other cash items readily available for use in the operation of the business b. Marketable securities – stocks purchased by the enterprises to be held only for a short span of time or short duration c. Trade and Other Receivables d. Inventories – assets held for sale e. Unused supplies – supplies remained unused at the end of the accounting period f. Prepaid Expenses – item or service that has been paid for but has not been used or consumed g. Allowance for Doubtful accounts – portion of accounts receivable that is estimated to be uncollectible at the end of the accounting period h. Accumulated depreciation – expired cost of property, plant and equipment B. Non-current assets – long term assets that a company expects to hold longer than twelve months a. Long-Term Investments – asset held for accretion of wealth through capital distribution b. Property Plant and Equipment – tangible assets held for use in the production or supply of goods and services c. Intangible Assets – long-lived assets without any physical characteristics and whose value lies in the rights, privileges and competitive advantages which they give the owners Examples: Franchise, Patent, Copyright, Brand Name, Goodwill 2. Liabilities – economic resources owed to others Classifications: A. Current Liabilities – obligations due within one year of the balance sheet’s date and will require a cash payment or will need to be renewed a. Trade and Other Payables Accounts Payable – amount of money owed by the business to creditors or suppliers Notes Payable - amount of money owed by the business to creditors or suppliers evidenced by promissory notes  Loan Payable – obligations owed to banks for money borrowed and for use by the business Deferred or Unearned Revenue – cash collected by the business in advanced for service or good that is yet to be rendered or delivered eg. Rent collected in advance b. Accrued Expense – amount owed to others for expenses already incurred but not yet paid Utilities Payable – obligations owed to utilities companies for the use of electricity, water and telephone facilities Salaries Payable – amounts due as compensation for services rendered by employees B. Non-current Liabilities a. Mortgage Payable – obligations owed to financial institutions and are collateralled by some fixed assets of the business b. Bonds payable – certificate of indebtedness under the seal of a corporation 3. Owner’s Equity or Capital – residual interest in the assets of the business after deducting its liabilities Some Sources of Capital: a. Personal Savings b. Stakeholders c. Banks or financial institutions 4. Revenue/Income – increase in resources resulting from performance of service or selling of goods A. Sales - operating revenues earned by a company by selling their products or services Selling Price = Cost + Mark-up/Profit B. Service Revenues – revenues earned in performing services for a customer or client C. Professsional Fees - earnings derived in the practice of profession for professional services rendered 5. Expenses – decrease in resources resulting from the operations of the business A. Selling and Administrative Expenses: a. Salaries or Wages Expense – amount incurred or paid for the services rendered by the employees and workers in the business. b. Advertising Expenses - payments made in the promotion of business merchandise, goods and/or services. c. Supplies Expenses - office related materials used by the business. d. Rent Expense - amount incurred/pa id for the use of space for the office, store and or factory area e. Insurance Expense – is the expired portion o f premiums paid on insurance coverage. f. Utilities Expense- amount incurred for the use of electricity, water and telephone facilities. g. Taxes and license expenses - taxes, licenses and other fees paid or incurred. h. Freight-In or Transportation Expense – refers to the amount paid to transport goods or merchandise purchased from supplier to the buyer  B. Cost of Sales or Cost of Goods Sold- this represents the direct costs related to the manufacturing or purchasing of a good that is sold to a customer 5. Types of Financial Statements Used by a Company: 1. Statement of Financial Position or Balance Sheet – contains Assets, Liabilities & Equity 2. Statement of Comprehensive Income or Income Statement – contains Revenue/Income & Expenses 3. Statement of Changes in Owner’s Equity – shows the changes in capital or owner’s equity as a result of additional investment or withdrawal by the owners 4. Statement of Cash Flows – summarizes the cash activities by the business by classifying cash inflows and cash outflows into operating, investing and financing activities