Business Plan PDF

# The Business Plan ## The Macro Environment The macro environment includes social, political, economic, ecological, and technological (SPEET) forces. The business plan should discuss major trends and changing patterns in the behaviour of consumers. ### Social Environment The social environment...

# The Business Plan ## The Macro Environment The macro environment includes social, political, economic, ecological, and technological (SPEET) forces. The business plan should discuss major trends and changing patterns in the behaviour of consumers. ### Social Environment The social environment includes demographics, cultural dimensions, and the structure, social status, and dynamics of the population at large. The people's beliefs, tastes, mores, customs, and traditions dictate the major parameters of market behavior. ### Political Environment The political environment defines the governance system of the country or the local area of business. It includes all the laws, rules, and regulations on allowable and disallowable business practices. ### Economic Environment The economic environment is mainly driven by supply and demand forces. It drives interest and foreign exchange rates. ### Ecological Environment The ecological environment includes all natural resources, the ecosystem, and the habitat of man, animals, plants, and minerals. ### Technological Environment The technological environment defines competing participants in any industry. New scientific and technological discoveries often lead to new product launches and commercialization of products with superior attributes, or rendering old products obsolete. ## Product/Service Offering: Description, Evolution, and Justification The sixth section of the business plan is the product/service offerings, which should contain a description, evolution, and justification of the product/service offerings. The products/services must be described by highlighting the features and attributes that would most appeal to target customers. The business plan should also prove that the products/services would be accepted and carried by the distribution channels. ## Enterprise Strategy and Enterprise Delivery System The business plan should expound on the Enterprise Strategy (ES) by mapping the competitive landscape and by situating the enterprise and its competitors as to their strategies and chosen positionings. The business plan should then show how the Enterprise Delivery System (EDS) would enable the business to implement the Enterprise Strategy. The Enterprise Delivery System starts from the **Input** (resources mobilized), proceeds to the **Throughput** (the transformation process where input are converted to output), and produces the **Output** (the products/services). The Output are then marketed to the customers (in the case of goods) or experienced by the customers (in the case of services). Customer satisfaction level, profits generated, and the performance of people from the transaction are the **Outcomes** of the EDS. - **Output** refers to the goods and services that the company creates. ## The Target Customers and the Main Value Proposition The fourth section of the business plan is the Target Customers and the Main Value Proposition. The business proponent must be very precise about the target audience or target customers. The Target Customers must be of sufficient size, have sufficient paying capacity, and have sufficient interest to purchase the products being offered by the enterprise. The Main Value Proposition is the unique selling proposition of the enterprise. Knowing where the target customers are exactly concentrated, the business plan should then pinpoint what the customers buy, how they buy, when they buy, where they buy, and what convinces them to buy. This information should then be used to justify the exact locations and marketing channels to be employed by the enterprise. ## Market Demand and Supply, Industry Dynamics, and Macro-Environmental Factors The fifth section of the business plan is the market demand and supply, the industry dynamics, and the macro-environmental forces affecting the business of the enterprise. It is normal for enterprises to expand their product offerings to include the other segments of a bigger market. The business proponent should examine all the opportunities in this bigger market in order to determine what exactly influences this bigger market. The business plan should estimate the total market supply and demand for the product offerings of the enterprise. The business plan should then determine the major critical factors that influence this market demand and supply. Once these critical factors or variables are determined, the business plan should then forecast the future demand and supply. If these physical factors are expected to remain the same, then most likely, the future forecast will follow the past trends. If not, the future estimate of demand and supply should be revised according to the new variables influencing the demand and supply. The market analysis and forecasting exercise should lead to a quantification of the current and prospective size of the market. Both the current and potential consumptions should then be dissected. The business plan should discuss the relevant industry dynamics: * Who are the competing enterprises in the industry and what are their comparative advantages and disadvantages? What business models and strategies are they employing? * Who are the suppliers in the industry and what are their capabilities and bargaining power? * What are the channels of distribution being used by the industry? How effective are these channels? ## The Business Proponents The third section of the business plan contains information about the business proponents or stakeholders. There are four types of stakeholders: 1. Resource mobilizers and financial backers 2. Technology providers and applicators 3. Governance and top management 4. Operating and support team ## The Executive Summary The executive summary contains everything that is relevant and important to the business audience. It is a synthesis of the entire plan. It must contain the major argumentations of the business proponent on why the business will work and succeed. It should provide the business plan audience all the arguments on why they should participate in the business venture. The executive summary should then introduce and highlight the good qualities of: 1. The business proponents and their partners 2. The enterprise organization and its capabilities ## Objectives Objectives must be more specific than the vision and mission statements. They should be measurable, achievable, and time-bound. For Double Happiness, their stated objectives are: 1. To establish a strong market presence in Central Luzon 2. To earn good financial returns for its owners 3. To delight customers with high quality food and services 4. To make Double Happiness a happy and rewarding place to work in. The objectives should then be translated into key result areas or KRAS. KRAS are the qualitative manifestations that the objectives are being achieved. In the case of Double Happiness, the key result areas for each of the objectives are as follows: | **Objectives** | **Key Result Areas** | | ----------- | ----------- | | To establish a strong market presence in Central Luzon | 1a. Number of food outlets in major bus terminals in Central Luzon 1b. Sales volume attained 1c. Market share in Central Luzon | | To earn good financial returns for its owners | 2a. Amount of net profits realized for the next five years 2b. Return on equity (ROE) 2c. Return on assets (ROA) or return on investment (ROI) 2d. Return on sales (ROS) | | To delight customers with high quality food and services | 3a. Growth in sales per outlet 3b. Percentage of repeat customers 3c. Number of customer commendations or complaints 3d. Awards and recognition given by the community or the government for excellent service 3e. Customer survey rating to ascertain customers' degree of delight | | To make Double Happiness a happy and rewarding place to work in | 4a. Compensation and benefits of managers and workers are above industry rates. 4b. Management and employee turnover 4c. Number of job applicants compared to other similar establishments | In turn, the key result areas must be rendered into quantified performance measurements, otherwise called performance indicators. These performance indicators or Pls serve as the aspirational scorecard of the enterprise managers and the motivational results of the investors. However, the Pls must actually be credible to the business audience. ## The Business Goals: Vision, Mission, Objectives, and Performance Targets The business goals show the future and long-term prospects of the enterprise. It is composed of the vision, mission, objectives, key result areas, and performance indicators of the enterprise. To illustrate, let us examine the vision of Double Happiness. Double Happiness is an eatery in a bus terminal. It has three outlets located at bus terminals in Central Luzon. The vision of Double Happiness is "to establish a commanding presence and market leadership as a food chain servicing major bus terminals in Central Luzon within the next five years." The Business Goals are communicated by articulating the basic purpose of setting up the enterprise in a mission statement. Needless to say, all business enterprises are established for the purpose of making money for its investors. For Double Happiness, its mission statement is "to provide quality food and passenger convenience services that would generate sufficient profits for the stockholders and improve the lives of its employees." The vision and the mission statements must then be translated into measurable end results, more popularly called objectives. - **Product** refers to the goods and services that the company creates. - **Market** refers to consumers and businesses that are willing to purchase the company's goods and services. - **Home** refers to the business location(s). In the business plan, it would be good to have an idea of what they should contain. ## The Business Concept and the Business Model A business concept contains the essence of the enterprise in a concise but powerful manner. It stresses the value of the product offering to the target customers who would most likely buy it. The product concept must then be translated into a business model. A business model is a formula on how the enterprise exactly plans to make money out of the business. There are four areas of moneymaking which the business model must address: 1. How will the business raise revenues? What critical factors will cause the revenues to materialize? 2. What will be the costs of the enterprise products and other costs of doing business? How will these costs be managed to ensure comfortable profits? What critical factors will drive the costs? How can these factors be controlled? 3. What will be the major investments of the enterprise? Why will these investments give the enterprise a competitive edge? 4. How will the enterprise finance the investments? How will the enterprise fund its growth?