Business Plan: A Tool for the Entrepreneur PDF

BUSINESS PLAN: A TOOL FOR THE ENTREPRENEUR What is a BUSINESS PLAN? Is a document containing “a written summary of proposed venture, its operational and financial details and its manager’s skills and abilities”. What i...

BUSINESS PLAN: A TOOL FOR THE ENTREPRENEUR What is a BUSINESS PLAN? Is a document containing “a written summary of proposed venture, its operational and financial details and its manager’s skills and abilities”. What is a BUSINESS PLAN? It also considering the management functions which includes the following: PLANNING, ORGANIZING, DIRECTING, STAFFING, CONTROLLING and EVALUATING.  BUSINESS PLAN A good business plan is imperative in ordered to succeed in the playing field. A written or codified text containing pertinent information about the venture. It shows the ventures different attributes and supposed character. Designed to give its readers the clear picture of the venture is. A proof that adequate research and analysis have been given to the venture.  As a TOOL for the Entrepreneur It an effective tool for the entrepreneur. It should be treated as part of the business operations. It serves as guide in running or operating the venture. The development of the business plan allows the entrepreneur to discover what new and additional information are needed about the venture.  PURPOSE OF THE BUSINESS PLAN 1. To help the firm’s management. 2. To attract potential investors. 3. To serve as a legal document with which funds are raised.  PURPOSE OF THE BUSINESS PLAN A carefully laid out business plan will eliminate problems. Execution becomes easier when there is business plan. For the business to acquire funds to finance the operations, the business plan provides the basis for it. The business plan indicates the reasons for borrowing and how will be repaid. As an integral part of a fund-raising agreement, it provides legal basis on how the funds raised will be used. THE ROLE OF THE BUSINESS PLAN 1. IT COMMUNICATES TO PEOPLE. 2. IT PERMITS CONSTANT CHANGE. 3. IT IS A CALL TO ACTION. THE ROLE OF THE BUSINESS PLAN IT COMMUNICATES TO PEOPLE. It is “packaged” to bring about the interesting features of the business. It is designed to relate to all major players of the business - investors, customers, and employee.  THE ROLE OF THE BUSINESS PLAN IT PERMITS CONSTANT CHANGE. It serves as guide for the entrepreneur to constantly re-check his ideas and concepts relevant to changing business/market conditions. Provides entrepreneur with organized data from which he could research for new information. The entrepreneur will see what is around him so he can better move beyond uncertainties. THE ROLE OF THE BUSINESS PLAN IT IS A CALL TO ACTION. A good business plan which is done in good presentation will attract potential people to be a part of the business endeavor. A power tool in arousing entrepreneurial interest to those will read it. What Should the BUSINESS PLAN Contain? It should contain KEY ELEMENTS needed to produce results notably to influence investors to join the business and customers to patronize it. It must show relevance to existing conditions. A sufficient research and should present sound analysis from the data obtained. It should be like a MAP. As a map, it will tell you what to expect and what alternative routes you can take to arrive at your intended destination.  OFFICIAL OUTLINE OF BUSINESS PLAN For the purpose of uniformity, it should be like this: (Adopted from: Areola & Siggaoat, 2017) COMPANY DESCRIPTION MISSION STATEMENT OF THE BUSINESS VISION STATEMENT OF THE BUSINESS COMPANY VALUES ORGANIZATIONAL STRUCTURE TARGET MARKET PLACE PRODUCT/SERVICE COMPETITIVE ANALYSIS PRICE S.W.O.T. ANALYSIS PROMOTION AND POSITIONING PROJECT COST FINANCIAL PROJECTION GANTT CHART CONSIDERATIONS IN A BUSINESS PLAN Business plans are done differently and are unique. It should be NOT done in exact way as the another. For that, it should have a systematic method for approaching a project. CONSIDERATIONS IN A BUSINESS PLAN Systematic method of creating a Business plans are: First step is the identification of the business opportunity. Second step is to conduct a personal inventory to determine if there is a good fit between the type of business opportunity. CONSIDERATIONS IN A BUSINESS PLAN A preliminary evaluation is done to gain more insight into what the prospective business can and cannot do. Its purpose is to identify what strategic factors are essential for the business to succeed. To recognize what strengths and weaknesses the business is likely to have, what opportunities to exploit, and what risks may jeopardize success. CONSIDERATIONS IN A BUSINESS PLAN STRATEGIC FACTORS to be considered are as follows: a. The need for certain size or type of target market segment. b. Availability of certain type or range of products. c. Dependence on a highly reliable source of supply. d. Required size, location or layout of physical facilities. e. Availability of essential service, e.g. water, electricity, telecommunications and transportations. f. An assured line of finance on reasonable terms. g. The need for highly skilled and experienced manpower. CONSIDERATIONS IN A BUSINESS PLAN UNCONTROLLABLE and CONTROLLABLE FACTORS can affect the operation of the business. Its important to identify them in advance to devise way to make them work in your favor. Two (2) types EXTERNAL (UNCONTROLLABLE FACTORS) that influences business plan. INTERNAL (CONTROLLABLE FACTORS) which gives form and substance to the business plan. CONSIDERATIONS IN A BUSINESS PLAN The EXTERNAL uncontrollable factors that influences business plan are: Competition, Economic and Financial conditions, Legal regulations and Political conditions, Social and Cultural trends and Technology. The INTERNAL controllable factors which gives form and substance to the business plan are: Purchasing , Production, Labor, Marketing and Finance. GUIDELINES FOR THE PREPARATION OF THE BUSINESS PLAN  The process of preparing a business plan also provides the chance to test the motivation, commitment and technical expertise of potential partners.  Guidelines in Preparation of a BUSINESS PLAN? The following are the guidelines in preparation of a Business Plan: THE INTRODUCTION THE INDUSTRY THE BUSINESS NAME THE MANAGEMENT THE MARKETING ENVIRONMENT THE PRODUCT OR SERVICE THE PRICE THE PROMOTION THE PHYSICAL EVIDENCE THE FINANCIAL FORECAST  THE INTRODUCTION Should state the OBJECTIVES of the plan or proposal as simply as possible. For the KEY EMPLOYEES of the business, introduction should be a BRIEF DESCRIPTION of how the plan is to implemented.  THE INTRODUCTION For the FINANCING PROPOSAL, the introduction should specify WHO is asking for finance, HOW MUCH money is required, the PURPOSE for which the funds will be used and HOW the funds will benefit the business. If the funds are in the form of EQUITY, indicate what RATE the investors are may expect. If the funds are to be BORROWED, indicate WHEN they will be REPAID.  THE INDUSTRY Must indicate the PRESENT STATUS and PROSPECTS for the industry in which the proposed business will operate. Any new products, markets and customers and any national. Regional or economic TRENDS that could have an impact to the venture must be DISCUSS.  THE BUSINESS NAME To give a NAME to the TYPE and KIND of business to establish is the FIRST thing to do. Consider the following in creating a business name. 1. EYE-CATCHING 2. SHORT AND CONCISE 3. EASY TO REMEMBER 4. RELATABLE  THE BUSINESS NAME To briefly describe what SORT of business you are in or intended to enter is the SECOND thing to do. Business organization; PROPRIETORSHIP, PARTNERSHIP and COMPANY/CORPORATION The main activities RETAILING, SERVICE, MANUFACTURING, WHOLESALING OR SOME COMBINATIONS. The LOCATION and the LAYOUT of the facilities must be described also.  THE BUSINESS REGISTRATION, PERMITS AND LICENSES All businesses, whether small, medium and large enterprise should have license and properly registered in government agencies prior to operation. DTI, SEC and BIR are some government institutions which businesses should contact to.  COMPANY OBJECTIVES, MISSION AND VISION Company objectives helps push the company towards continuous success and remains the standard even during times of struggle. It is the GOAL or OUTCOME that you want to attain. It should be S.M.A.R.T.: Specific, Measurable, Attainable, Realistic and Time-bound  COMPANY OBJECTIVES, MISSION AND VISION Vision Statement sums-up WHERE the owner/s see/s the business is going while Mission Statement asserts HOW a company will reach its destination. “where do we (the company) aim to be?” is the question that vision statement answered. “what do we do? What makes us different?” is the question that mission statement answered.  VISION STATEMENT It talks about the FUTURE. To be effective, vison statement should be free from AMBIGUITY. Should be REALISTIC ASPIRATION and aligned with the VALUES and CULTURE of your company.  GUIDELINES IN CREATING A VISION STATEMENT 1. Short and simple - not more that two (2) sentences. 2. Succinct and striking 3. Taylor-fit to your business 4. Avoid using words that open to interpretation 5. Motivating 6. Aligned to the values of the business  STEPS IN CREATING A VISION STATEMENT (Wright, 2019) 1. Define the concrete output of the business. 2. Express what sets you apart to achieve that outcome. 3. Apply some level of specificity. 4. Include relatable and realistic aspects.  MISSION STATEMENT It communicates the PRESENT heading to the FUTURE. Main function is INTERNAL in nature It lists the BROAD GOALS in which the company is FORMED. Tells others WHY the company EXISTS and WHAT makes it DIFFERENT.  GUIDELINES IN CREATING A MISSION STATEMENT 1. Should reflect the company’s SIGNIFICANCE to the clients, employees, and owners. 2. Also, can include the company’s SIGNIFICANCE to the community and the world. 3. Should be stated in a way that it INSPIRES people to work in the company. 4. Should be PLAUSIBLE. 5. Like the vision statement, it should be aligned to the values of the company. 6. Do not write an Essay. 7. Think LONG TERM.  STEPS IN CREATING A MISSION STATEMENT (Berry, 2017) 1. Start by thinking HOW to ENVISION customers wanting the product or service. WHY would they seek the company? HOW would they feel if they purchase? 2. DEFINE what you do for your customers. 3. EXPRESS what you do for your customers. 4. Include the PURPOSE of the business for its OWNERS. 5. REVIEW, EDIT, and REVISE your mission statement. THE MANAGEMENT  ORGANIZATIONAL STRUCTURE Defines the ROLE and FUNCTIONS of each employees. It shows the FORMAL SEGREGATION and COORDINATION of each departments. It depends on the TYPE and KIND of organization and the NATURE of business.  COMMON ORGANIZATIONAL STRUCTURES  ORGANIZATIONAL STRUCTURES (Kukreja, 2019) 1. LINE ORGANIZATION 2. LINE AND STAFF ORGANIZATION 3. FUNCTIONAL ORGANIZATION 4. DIVISIONAL ORGANIZATION 5. PROJECT ORGANIZATION 6. MATRIX ORGANIZATION  LINE ORGANIZATION Customary to small companies and SIMPLEST FORM; executive lack specialization.  LINE AND STAFF ORGANIZATION Applicable to large businesses; segregated two (2) types of staffs that are in general has ADVISORY function rather that COMMAND function.  FUNCTIONAL ORGANIZATION Permits a specialist in a give area to administer his command within a well-defined span of authority.  DIVISIONAL ORGANIZATION Also known as DEPARTMENTAL Organization which involves clustering of employees or functions with the same characteristics into one unit. A. Departmentalization by PRODUCT B. Departmentalization by CUSTOMERS C. Departmentalization by AREA D. Departmentalization by TIME  PROJECT ORGANIZATION A TEMPORARY organizational structure created for a specific project or over a limited period of time. After finishing the project, it will be immediately demolished. Can be used in PRODUCTION DEPARTMENTS, ENGINEERING, QUALITY CONTROL and MARKETING RESEAERCH.  MATRIX ORGANIZATION A combination of PROJECT and FUNCTIONAL structure and is formed to ADDRESS PROBLEMS that comes with project and functional structures. THANK YOU!