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ENTREPRENEURSHIP| UNIT 1 DEVELOPING A BUSINESS PLAN GROUP 2 FACTORS TO CONSIDER OF A NEW ENTREPRENEUR ENVIRONMENTAL 1. KNOW YOUR PRODUCT OR SERVICE. SCANNING First, you must bel...

ENTREPRENEURSHIP| UNIT 1 DEVELOPING A BUSINESS PLAN GROUP 2 FACTORS TO CONSIDER OF A NEW ENTREPRENEUR ENVIRONMENTAL 1. KNOW YOUR PRODUCT OR SERVICE. SCANNING First, you must believe on the product or service that you will 1. BUSINESS LOCATION FOR SMALL offer to your customer. ENTREPRENEURS. 2. ANALYZE THE MARKET POTENTIALS A RETAIL OUTLET WOULD NEED A SITE THAT IS The customer base will determine the success of your business venture. CONVENIENT TO PROSPECTIVE CUSTOMERS IN 3. DETERMINE THE MARKETING STRATEGY TERMS OF PARKING SPACE OR AVAILABILITY OF A unique product or service needs effective distribution strategy to get customer into the basket of demand potential. TRANSPORTATION. 4. KNOW THE COMPETITORS 2. LOCATION FOR SMALL INDUSTRIAL In launching a product with existing competitors you must PLANT OR MANUFACTURING FACILITIES know their strengths and weaknesses. ENVIRONMENTAL FACTORS IN LOCATING A 5. DO NOT SET ON YOUR LAURELS The landscape of business is continuously changing. Your MANUFACTURING PLANT OR INDUSTRIAL initial success in your business activities needs more proactive analysis for expansion and growth and overcome possible FACILITIES NEED TO BE STUDIED CAREFULLY AS competitions. PLANT LOCATION IS A GREAT FACTOR IN THE INVESTMENT OF FUNDS.  SWOT ANALYSIS SWOT ANALYSIS is an entrepreneurial tool in determining e. Expertise and Technical Skills of the Management Team - A good product is the making of a well conceived idea of the management team. the profitability of the business operation.. 1. PRODUCT STRENGTH IN THE MARKET 2. CHARACTERISTICS OF WEAK PRODUCTS MUST HAVE FOLLOWING AND WEAK MANAGEMENT a. Available Technology in Product Processing - Technology is an important component in producing the product as the economies of scale determines the price index. a. Poor Quality and High Price - The entrepreneur should not launch a poor product in the market as it will surely fail b. The Source of Raw Materials must be Abundant to advance in the sales and profit. and at Lower Price - The constant supply of raw materials is an important factor in the production of the b. Product Design and Appeal - Product design should product. appeal to customers demand. c. Skilled Workers must be Available - Technology must c. Production Cost - Production Cost is the price have the component of skilled workers that shall operate determinants. the machineries and other equipment. d. Supply and Demand - Intermittent supply on the d. Capital Investment in Machinery and Operating market will make customers shift to other products. Expenditures - A starting venture may have little investment in terms of machinery and equipment but e. Weak Product Management - Weak management is starting with small capital should generate profitable created when people at the top of the organization fail to operation. sustain a vigorous effort for expansion and growth when management sets on his initial laurels and ventured.  4. TREATS TO PRODUCT PROFITABILITY 3. SUSTAINABLE PRODUCT OPPORTUNITIES AND MARKET EXPANSION a. Entrance of Competition - The entrance of IN THE MARKET many competitors in the marketplace will definitely give problem to the entrepreneur. b. The supply of raw materials will be limited as a. Product Demand - Product demand is the greatest other competitors will be getting the same opportunity of the entrepreneur. suppliers. c. The Emergence of Leftwing Labor Unions - b. Presence of Poor Quality in the Market - The presence of Many companies close shops with the advent of poor quality product in the market place is and opportunity for labor unions with leftist philosophy as they want the entrepreneur. more wages and benefits that the company could not give. c. Government Policies and Support - The government support to local entrepreneur is an opportunity for greater expansion. BASIC PHASES OF BUSINESS PLAN Marketing and Distribution Study - Shall d. Liberal Credit Terms and Interest Rates - Liberal credit deal with product demand analysis. terms by banks and other government institutions will generate Production and Technology Study - Refer to expansion for the local entrepreneurs. the need in making the product or service. Financial Management - Aspect refers to the capital investment and sources of funding the operation of the business.  C. Supply Analysis GENERAL FORMAT OF A 1. Source of Product Supply. a. Foreign Suppliers COMPREHENSIVE b. Local Suppliers 2. Factor Analysis of the Past and Future Supply Chain BUSINESS PLAN D. Competitive Analysis I. Introduction 2. Selling Price - This refers to the selling price of the product. The introduction contains the rationale and the background of 3. Competitions - It refers to the competing product in the markets the study undertaken. as to its quality. II. Project Summary 4. Distribution and Cost of Transportation - it refers to the A. Name of the Firm transfer or movements of products. 5. Channel of Product Distribution - This refers to the means of B. Business Location reaching the target market. C. Brief Description of the Business 6. General Competitive Practice - It is the analysis of how 1. Brief history or how the business was organized. competitors distribute the product to existing end users. 2. Highlights of the findings in every phase of the business E. Program Analysis of Marketing Strategies study. 1. Geographic Segmentation Strategy - this refers to the place of III. Management and Personnel Components target market and the approaches. IV. Marketing Studies 2. Psychographic Strategy - this refers to educational background A. Market Profile - This refers to the market segmentation for and the lifestyle of target market. the distribution of the product or service. 3. Demographic Segmentation Strategy - this refers to the target market as sex, age, income. B. Demand Analysis 4. Pricing Strategy - this has something to do with the price index Projected consumption in the first year of operation, then of any pricing strategy that will attract customers. five years and ten years operation. 5. Channel of Distribution - the choices could be retailers, Major segment users of the product and their locations. wholesalers, dealership, etc. 6. Promotion and Advertising - media network, personal selling, billboard, or any media penetration strategy.  GENERAL FORMAT OF A COMPREHENSIVE BUSINESS PLAN VI. FINANCIAL V. PRODUCTION STUDIES A. For New Business Venture A. Product Specification - It tells about the product or 1. Total Project Cost - This has to do with the entrepreneur. service that the entrepreneur will offer to its target market. 2. Capital Investments Required. B. Production Process - It is the detailed layout of the 3. Pre-operating cash flow and its relation to time table. production process as the products goes into the production 4. Supporting Schedules in the Financial Statements and line indicating the flow process. Income. C. Plant Rated Capacity - This refers to the volume of a. Collection Period production per shift per day or a monthly basis considering b. Inventory Levels target market consumption. c. Payments for Expenses D. Machinery and Equipment - It involves the kind of d. Production Costing, Administrative Expense and etc. machine to be used , its sources, spare parts, etc. 5. Projected Financial Estimates showing return on E. Plant Location - A drawing or plant location and the investments vicinity map as to its accessibility to supply or raw materials. B. For Existing Project F. Building and Facilities - It must describe the type of 1. Audited Financial Statement building that will be constructed. a. Balance Sheet G. Raw Materials - It deals with the raw material b. Income Statement requirements and its specification, etc. c. Cash Flow H. Power Supply and Utilities - Utilities refer to the supply of 2. Fixed Assets, Capital Investments, etc. electricity, water, and its availability in the processing of the 3. Tax Assessment, Liabilities, etc. product. 4. Financial Trends and Ratio Analysis 5. Financial Cost for Administrative expenses I. Production Cost - This refers to the direct labor and 6. Financial Projection for the Next Five Years administrative cost in the processing the products. 7. Financial Analysis for Return of Investment, etc.  MICRO BUSINESS PLAN The major objective of business plan is to assess, examine LESSON 1.1 and analyze the viability or feasibility of the study. IDENTIFY THE MARKET PROBLEM A. Executive Summary - Synopsis of your business plan so ideally, this part should be written last in order to Identify the Market Problem include all the necessary information and target points of 1. Existing customers are the people who have already the document. purchased. B. Marketing Plan - Push or Pull, you must be able to tell 2. Target market users are the people in your target how fast or slow your product will move in the market, market. whether it would make use of a push or pull strategy or 3. Prospects are the people who have not yet purchased both. your product. Tips in Identifying Market Problem C. Operations Plan - Ernesto Pineda, director of the UP, 1. Focusing only on innovation and the competition Institute of Small Scale Industries, defines the operations 2. Focusing only on customers plan as the company’s expected sales for the coming year 3. Focusing only on revenue and the costs of running the business in general. How to evaluate market problems? D. Financial Plan - According to Dr. Ferreria, “Your 1. Consider if the market problem is urgent, if yes, financial plan must show how much money is needed to consider necessary actions. generate sales; how mush is going to be spent on a 2. Evaluate if the market problem is pervasive or easily particular item; and how much will be borrowed and diffused. paid.” 3. Determine if the buyers will pay.  PROBLEM-SOLVING RESEARCH PROBLEM-IDENTIFICATION RESEARCH 1. Distribution Research - determining on how to transfer the product from the manufacturer. 1. Brand Image - is the impression in the 2. Market Segmentation - grouping consumers’ mind of a brand’s total customers by similar characteristics or similar. personality. 2. Market Characteristics - describes 3. Pricing Research - determining the ideal attributes of the buyers in making decision. price for the product. 3. Market Potential - is the estimated maximum total sales revenue of all suppliers of a product. 4. Product Research - testing the new or 4. Market Share - is a percentage of total revised products. sales volume in a market captured. 5. Promotional Research - determining the best research in the area.