Business Plan - Entrepreneurship Guide PDF

The Business Plan ----------------- -A business plan is a written description of the business that you will establish in the future. -A business plan can be written before or during the first few years of the enterprise. -This is to guide the entrepreneur on which strategies would be most benefic...

The Business Plan ----------------- -A business plan is a written description of the business that you will establish in the future. -A business plan can be written before or during the first few years of the enterprise. -This is to guide the entrepreneur on which strategies would be most beneficial for the enterprise to take. Why prepare a business plan? ---------------------------- -The business plan is the blueprint of your proposed business. -To test the feasibility of your business idea. -To give your new business the best chance of success. -To secure funding. -To make business planning more effective. -To attract investors. Three Factors of a Good Business Plan ------------------------------------- 1.It's realistic 1.It's specific 3.It's followed through Identifying Customer Needs -------------------------- -Identifying customer needs is the method of determining what a client needs from a product. -Customer needs are non-technical, and they reflect the customers' perception of the merchandise, not the particular style or specifications, though oftentimes they\'re closely connected. Identifying Customer Needs -------------------------- 1.Gather raw data 2.Interpreting data 3.Organizing the data 4.Reflect the process 5.Attractive Quality 6.One-Dimensional Quality 7.Must-Be Quality 8.Indifferent Quality 9.Reverse Quality What is an Entrepreneur? ------------------------ Someone who creates and runs a business is called Entrepreneur. The capacity and willingness to develop, organize and manage business venture to make profit -When an entrepreneur starts a new business, risk is involved. Risk is the chance of losing something. -Because employees work for someone and entrepreneur work for themselves, entrepreneur risk more than employees -Survey of DTI SME's ??? -To gain a sense of business is like is by investigating an internship or apprenticeship Why Be an Entrepreneur? ----------------------- The biggest reward of becoming an entrepreneur is the personal satisfaction that comes from having the freedom to make your own business decisions and then act on them. -Making Your Own Rules. -Doing Work You Enjoy. -Create Greater Wealth -Helping Your Community Risks of Being An Entrepreneur ------------------------------ [Potential Business Failure] -- Success of business rests on you [Unexpected Obstacles] -- Problems happen [Financial Insecurity] -- may not always able to pay yourself [Long Hours and Hard work] -- work a lot of extra hours -- -- -- -- -- -- +-----------------------+-----------------------+-----------------------+ | \- Unchanging | SKILLS | | +=======================+=======================+=======================+ | - Something to | | | | avoid | | | | | | | | - | | | +-----------------------+-----------------------+-----------------------+ | | | | +-----------------------+-----------------------+-----------------------+ | | | Identify areas for | | | | improvement | +-----------------------+-----------------------+-----------------------+ | | | | +-----------------------+-----------------------+-----------------------+ CORE Competencies of an Entrepreneur ------------------------------------ An entrepreneur born or made? Common Characteristics: risk seeking, assertiveness and with vision The characteristics can only be used as yardstick, but entrepreneur behavior can be **learned and developed** Based on empirical studies, reveal that entrepreneurial behavior is the result of: 1. **Personal competencies :** creativity, determination, integrity, tenacity, emotional balance and self-criticism. 2. **Interpersonal competencies:** communication, engagement, delegation and respect 3. **Business competencies:** business vision, resource management, networking and negotiating skills What is Marketing? ------------------ -Is the study and management of exchange relationship. -The business process of identifying, anticipating, and satisfying customers' need and wants, because the marketing is used to attract customers. **[-Market potentia]**l -- is the entire size of the market for a product at a specific time. It represents the upper limits of the market for a product How to develop Unique Selling Preposition ----------------------------------------- Each customer is unique and wants something different \--To make product standout is creating a product that is UNIQUE -Start-up business must use different resources to construct specific advantage over competitors **[-Unique]** is the process of making the product different from others and make it more attractive to the intended target market. How to develop Unique Selling Preposition ----------------------------------------- -Uniqueness is due to buyers perceiving a difference, because of uniqueness maybe functional aspect of product or service. -Uniqueness can be seen from the positioning of the company -Start-up must be able to find out the uniqueness of it's product/service company in relation to its rivals Unique Selling Preposition -------------------------- -It is a promised of value to be delivered. -A business or marketing statement that summaries why a consumer should buy a product or use a service. -This statement should convince a potential customer that one particular product or service will add value or better solve problem than other similar offering. Profitability ------------- - ability of the business to earn profit. - A profit is what left of the revenue a business generated after it pays all the expense directly related to the generation of the revenue, such as producing a product of the business activities. Viability of a Business ----------------------- -A business is able to survive when its viable because it continues to make a profit year after year. -The longer the company can stay profitable, the better its viability -A business demonstrates its viability by making profit every year of its existence. MARKETING MIX ============= -The marketing mix simply refers to a mode, means, or tool used by the entrepreneur to position the product in the target market segment to efficiently and effectively deliver it to the consumers and to convince them about the benefits that they will derive from buying the product. -A marketing mix is a special tool used in the implementation of any business, which is made up of seven distinct but interconnected variables. -The marketing mix is also known as the "P's in Marketing". Cost of Making the Product -------------------------- -The term cost in this lesson simply refers to the amount spent by the manufacturer in view of the expected future benefits. -The manufacturing cost includes the direct materials, direct labor, and factory overhead. -The basic rule is that the entrepreneur should not set a price lower than the cost involved in making the product. -The entrepreneur must know the cost of manufacturing the product in setting the price. **[-Direct labo]r** refers to the wages paid to the workers who are directly involved in manufacturing the product. **[Factory overhead]** includes indirect materials and labor and other expenses like the cost of light, water, fuel, or machinery maintenance. These three elements must be present in all instances in the process of determining the cost of the product. Publicity --------- -Publicity is another way of promoting the product or service to the target consumers through media coverage. -Members of media are usually informed through a formal statement or press release about a particular event where the product or service will be presented or endorsed by some well-known personalities. PRODUCT ======= -A product refers to any item that is produced to satisfy the needs and demands of a certain group of people. It has a life cycle that revolves around its growth, maturity, and after-sales performance -Product refers to the tangible or intangible service offered by the business to the target consumers. -Information about consumers' tastes, preferences, perceptions, and priorities has significant contribution to the design of the product. -A product that cannot meet the needs of the consumers will not stay long in the market. Product Classifications [Tangibles] ----------------------------------------------- Tangible products are those items that have actual physical presence. The benefits of these products can be evaluated based on visual comparisons. **EXAMPLE**:cash,buildings,furniture,vehicles,computers and gadgets. [Intangibles] ------------------------- Intangible products are those items that have no physical presence and can only be felt indirectly. **EXAMPLE:**copyright,trademark,patent,logo,franchises and insurance etc. Stages in the Development of a Product [Strategy Development] ------------------------------------------------------------------------- Businesses often decide on effective strategies prior to the creation of a new product. [Generation of Ideas] --------------------------------- The ideas or concepts in developing a new product may come from various sources and not only from the upper management itself. [Screening and Evaluation] -------------------------------------- All ideas generated must go through proper evaluation wherein their feasibility is being determined. There are also ideas that do not resonate well with the core objectives of the business. [Business Analysis] ------------------------------- During this phase, the ideas thrown in become subject to a more rigorous analysis. Other factors, such as profit projections, risks involved, and consumer feedback, are likewise taken into consideration. [Product Development] --------------------------------- It is during this stage that the product is introduced to the market. The production department will be tasked to produce and deliver the product to various intermediaries, and the marketing department will be tasked to take care of the branding of the product. [Market Testing] ---------------------------- Businesses adopt different approaches to testing the new product. In most situations, test marketing involves the introduction of the new product to a small market. If such launching were successful, then it would be introduced to larger market size. [Commercialization] ------------------------------- If the outcome of the previous test marketing were successful, the business would introduce the product to a larger market, either locally or internationally. Type of Product --------------- **[Industrial products]** are used as raw materials of other manufacturing entity. These products usually have higher prices compared to consumer products. **[Consumer products]** are used and consumed by individual consumers. These products may be further classified into convenience product, shopping product, and highly-priced product. PLACE ===== -a location in any business process where the aspects of management, product storage, logistics, processing of orders, and inventory control are being made available. -The term PLACE in the marketing mix simply refers to the place where the target consumers are. -The basic entrepreneurial concept relative to place in the marketing mix is very simple and straightforward, that is, put your business where your consumers are willing to buy the product. Distribution Channels --------------------- A **distribution channel** contains a set of interdependent organizations that are involved in the process of making a product or service available to the end consumers. Types of Distribution Channels [Direct distribution] ---------------------------------------------------------------- In this type of distribution channel, the manufacturer or producer directly distributes the product to the end consumer. [Indirect distribution ] ------------------------------------ Any business using an indirect distribution channel will always employ selling through an intermediary. Generally, the business will sell its products to a wholesaler who further reaches out to a retailer to target more consumers. [Dual distribution] ------------------------------- The dual distribution channel involves a combination of direct and indirect selling strategies. Businesses may opt to sell their products directly to the end consumers, and they may also reach out to several intermediaries at the same time. [Reverse channels] ------------------------------ The reverse channel has a different course---from the end consumer, next to the intermediary, down to the beneficiary or user. In this kind of distribution channel, the consumers will be using goods for recycling and repurposing. **[Intermediaries]** are the middlemen who play a vital role in the distribution of products to the market**.** Types of Intermediary [Wholesaler] ---------------------------------------------- A wholesaler is engaged in the buying and handling of goods in bulk or large quantities, which are subsequently sold to retailers in various areas. [Retailer] ---------------------- Individuals engaged in retailing typically purchase goods at a low price, which are then resold to earn a profit. [Distributor] ------------------------- The primary role of a distributor is to obtain products from the manufacturer itself and distribute it to various retailers and other endpoint locations. [Agent] ------------------- The core service of an agent typically revolves around bringing buyers and sellers together towards a negotiation process. In most cases, agents earn money through commissions and fees paid for their services. Distribution Strategies Intensive distribution ---------------------------------------------- In this kind of distribution strategy, products are distributed to as many retail outlets as possible. Low-priced products such as gums, candies, and other basic supplies are oftentimes distributed using this approach. Selective distribution ---------------------- Luxuries and other products that are upscale in nature are primarily distributed through selected channels. Exclusive distribution ---------------------- When products are being sold to only one specific retailer, the exclusive distribution strategy is being employed. With this strategy, the retailer has exclusive rights to sell the products of a business. PRICE ===== -Pricing is the only revenue-generating element in the marketing mix. That is why it is firmly linked with the revenue streams of any business. -The concept of pricing relative to the marketing mix can be viewed from two opposing perspectives, namely, the perspective of the entrepreneur who produces the product and the opposing perspective of the consumers who ultimately buy the product. **[Product pricing]** is significant in any business model because it signifies the capability of an entrepreneur to assess the value that consumers see towards the products and services offered. **[A pricing strategy]** pertains to the method of setting the best and accurate price for a specific product or service. Five Common Pricing Strategies [Cost-plus Pricing] -------------------------------------------------------------- A cost-plus pricing strategy primarily focuses on the total costs attributed to producing the product of service. It is otherwise known as a mark-up pricing strategy because businesses increase the prices of their products before they are sold again to the end consumers. [Competitive pricing] --------------------------------- A competition-based pricing strategy pays attention to the prices currently existing in the market. This strategy focuses on the prices set by the competitors in the industry as its point of reference. [Value-based pricing] --------------------------------- This pricing strategy is used by businesses that focus on the consumers' responses towards a product or service offered. [Price skimming] ---------------------------- Price skimming is a strategy used by businesses when introducing new products or services to the market. This pricing strategy is executed by setting high prices for new products and services. [Penetration pricing] --------------------------------- In contrast to price skimming, the main objective of a penetration pricing strategy is to obtain market share. Products and services by businesses are typically offered at low prices, effectively drawing out the competition in the market. Categories of Pricing Issues [Buyer-seller interactivity] --------------------------------------------------------------------- The amounts displayed in stores are not even the actual prices that buyers have to pay. Rather, prices have to be first negotiated during an interaction between the seller and the buyer. [Price discrimination] ---------------------------------- When a product is sold at different prices to different consumers, it is called price discrimination. From the perspective of any business, price discrimination may present several advantages, most especially profit maximization. [Price format] -------------------------- This pricing issue involves how a price is expressed to the market. Businesses adopt the practice of pricing a product a cent or two below the round number (Php 99.99 or Php 199.99), which has the psychological effect of lowering the leftmost digit. [Opportunistic pricing] ----------------------------------- Well-known businesses and some luxury brands may have the opportunity of charging a hefty price to their products. Opportunistic pricing is oftentimes used to drive competitors out of the industry based on efficiency. PROMOTION ========= -In marketing mix, the term promotion refers to the mode of conveying the presence and attributes of the product to the target consumers. -Its primary aim is to attract the customers' attention, as well as provide useful information about the product to build interest and loyalty. Five Main Components of Promotional Mix [Advertising] ----------------------------------------------------------------- This promotional method is used to create awareness and deliver information to the target audience. Traditional forms of media include television, newspapers, magazines, and billboards. [Personal Selling] ------------------------------ One of the effective ways to persuade potential customers is through personal selling. Generally, this method is adopted by salespersons in managing personal customer relationships. [Sales Promotions] ------------------------------ Sales promotions include both media and non-media tactics used to increase the demand towards the products and/or services offered by any business. [Public Relations and Sponsorships] ----------------------------------------------- To maintain a sustainable relationship between the business and its customers, public relations tactics are executed. This component of the promotional mix is used for attaining long-term effects. [Direct Marketing] ------------------------------ Direct marketing allows any business to communicate freely with its customers. Marketing techniques such as mobile messaging, distribution of flyers or catalogs, and outdoor advertising are a few examples of direct marketing. Promotional Marketing in the Digital Era [Social Media Marketing] ----------------------------------------------------------------------------- Many businesses are utilizing different social media platforms to communicate their products and services to their target audience. [Content Marketing] ------------------------------- Content can be presented in various formats, including blogs, e-books, how-tos, online articles, forums, and so forth. This promotional strategy aims to attract new and potential customers by creating and sharing valuable information. **[Affiliate Marketing]** Affiliate marketing takes into account the presence of third parties who are responsible for giving commissions or rewards to their affiliates. [Email Marketing] ----------------------------- Email marketing is a relatively low-cost promotional strategy that aims to build brand and customer loyalty. [Search Engine Optimization (SEO)] ---------------------------------------------- Search engine optimization (SEO) is an umbrella term for the different methods used in increasing the visibility of a website or blog online. It considers different kinds of search, including image search, news search, and video search. PEOPLE ====== -"People" is regarded as a primary key toward a successful implementation of marketing strategies of any business. -People play a vital role in service delivery as well as in customer relationship retention. -These people are relied on by the business to design, develop, manufacture, and produce products to the end consumers. Recruitment Methods ------------------- 1. **[Internal recruitment]** Internal recruitment is the process of filling vacant employment positions by the employees who are already working within the business premises. [Promotions] ------------------------ It aims to shift any employee from a lower position to a higher one with more responsibilities attached, remuneration, and ranking privilege. [Transfers] ----------------------- It involves the shifting of an employee from one department to another, depending on the qualifications of the position involved. [ Employee Referrals] --------------------------------- With this approach, current employees may refer people who they think are suitable or fit for the job. This is adopted by most businesses, for it saves cost and time compared to hiring people from various external sources. [ External Recruitment] ----------------------------------- This type of recruitment refers to the hiring of employees outside the business. Applicants seeking opportunities have no connection with the internal affairs of the business. [ Employment Agencies] ---------------------------------- Employment agencies are typically run by public, private, and government sectors. These sectors maintain a database where vital information of qualified candidates are stored and kept. [Advertisements] ---------------------------- Recruiting through advertisements is very popular and much preferred by a lot of employers. Job vacancies are thoroughly described and announced through different print and electronic media. [ Walk-ins] ----------------------- This direct form of external recruitment is done when prospective candidates are invited to apply for any job vacancy. In this case, a definite date, time, and venue of the interview are given to the candidates without the need to submit their applications in advance. Motivated Workforce ------------------- **-**Motivation pertains to a person's direction to behave or act in life. In the entrepreneurial aspect, managing motivation is a critical aspect of the success of any business. -Employers must motivate their employees by setting an example and identifying what the employees really desire. [Acknowledge any employee's achievement.] ----------------------------------------------------- Every individual wants to be recognized for something that he or she has remarkably done or made. A simple act of acknowledgment from the higher-ups will mean a lot to any employee. [Offer employee rewards. ] -------------------------------------- Always remember that employees will stay in business if they have a reason to. Starting an incentive program will keep them motivated and will help them stay focused. Proper Customer Service ----------------------- -It must be remembered that a great business is one that provides excellent customer service. -To be able to give this kind of service, a group of high-caliber employees must be present to answer or resolve the queries of the customers and to make sure that they are getting their money\'s worth. Training and Development ------------------------ -Training and development primarily deals with the acquisition of know-how, techniques, and strategies needed in performing a specific work. -This is one of the essential aspects of human resource management as it helps in enhancing the existing skills of an employee. Benefits of Training and Development ------------------------------------ 1. **[Resolves any weaknesses]** A training and development program may help to instill in the employees the required skills and knowledge needed for a specific job. Through this, businesses will be able to resolve any weak points existing among their employees. [Boosts employee satisfaction ] ------------------------------------------- When a business invests in its employees, it signifies that they are highly valued and looked up to. Besides, a training and development program results in a supportive workplace. [Increases work productivity ] ------------------------------------------ The productivity of an employee generally increases when a business executes training programs. In most scenarios, there would also be an increase in efficiency that will lead to the success of any project. PACKAGING ========= -Packaging can make or break the success and growth of a business, so it is important to innovate packaging that fulfills its essential functions. -The only way for consumers to notice any product is through store displays, shelves, point-of-purchase displays, and product packaging. -A great deal of making purchase decisions is allotted to color testing and psychological manipulation. -Some consumers are easily influenced by the external features of a product. -This is precisely the role of packaging in marketing---it can be used as a tool to encourage or persuade consumers to purchase a product. Elements of Product Packaging ----------------------------- 1. **[Visual elements]** During the process of package designing, it must be remembered that consumers assess product packaging in their own different ways. One major component of this element is graphics, which include image layout and typography. [ Color combinations ] ---------------------------------- Color is a key element of design because it is an important consideration in brand awareness and recognition. An excellent color combination has the ability to make a product stand out from the competition. [ Informational elements] ------------------------------------- The inclusion of necessary product information is also important in product packaging. This has to be communicated to the consumers to help them in making the right purchase decision. Functions of Packaging ---------------------- 1. **[Protection ]** One of the main reasons why a product is always wrapped or bottled is to protect it from external and environmental factors. Packaging performs a big role, most especially in the logistics aspect. [Information ] -------------------------- The packaging must contain essential pieces of information about the product, such as nutrition content, usage directions, ingredients, and storage instructions. [Convenience ] -------------------------- Part of the normal operations of a business is to store, transport, and distribute its products to the end consumers. [Security ] ----------------------- A product that is sealed perfectly has higher chances of being bought by a consumer. To make sure that products are stored in excellent condition, packaging must be taken into consideration. Packaging as a Marketing Tool ----------------------------- -Product packaging can serve as a useful tool in the marketing strategies of a business. -A good packaging strategy will enable the business to persuade the consumers to buy the product. [ Brand recognition ] --------------------------------- The proper combination of color themes and well-designed graphics in product packaging is deemed to be effective in keeping a product in the limelight. [ Product Identification] ------------------------------------- Sticking to packaging that represents the main colors of a brand will help the customers identify the product when shopping at their favorite store. POSITIONING =========== -Product positioning pertains to the basic marketing tool that businesses use to improve sales by targeting a product to a particular group of people. **-**Through product positioning, a product is able to occupy a unique spot in the minds of the consumers that will help them in making a final purchase decision. -First off, there must be a clear perception of what a consumer needs to be able to formulate a proper product positioning. -Second, determine a unique selling proposition to be able to send a clear message to the consumers as to why they should purchase a specific product rather than those of the competitors. -Lastly, develop a value proposition that will completely answer the needs and demands of the consumers toward a product. Segmentation, Targeting, and Positioning (STP) Model ---------------------------------------------------- SEGMENTATION ============ -To properly position a product in the market, market segmentation helps in classifying groups of people based on common characteristics and preferences. -Consumers can be segmented according to the following factors: 1.Demographic 2.Geographic 3.Psychographic 4.Behavioral TARGETING ========= -After properly segmenting the intended audience, the next step is to decide which segments to focus on by taking into consideration their potential and commercial attractiveness. -In order to target the best customer segments, try to conduct a PEST analysis that will help in assessing any political, economic, sociocultural, or technological barriers that can affect the strategy of a business. Four Elements of Product Positioning 1. Vision and mission 2. Product category 3. Customer pain points 4. Product differentiation Product Positioning Statement ----------------------------- -A product positioning statement is a statement that is strategically used by businesses to instill into the minds of the target market a positive image of their products and services. -A well-crafted product positioning statement must be able to describe the intended audience of a product and the crucial reasons why customers should choose it over all others. It is a statement that makes the product different from its competitors.