Week 5_ The Business Plan.pptx.pdf

THE BUSINESS PLAN ENTREPRENEURSHIP IN TOURISM AND HOSPITALITY ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited Learning Objectives Explain why a business plan is important to its users; and Identify the elements/information needed in preparing a business...

THE BUSINESS PLAN ENTREPRENEURSHIP IN TOURISM AND HOSPITALITY ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited Learning Objectives Explain why a business plan is important to its users; and Identify the elements/information needed in preparing a business plan. ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  THE BUSINESS PLAN A business plan is a written document describing a company's core business activities, objectives, and how it plans to achieve its goals. It describes the various internal and external elements involved in starting a business or in expanding an existing venture amidst a dynamic business environment. Source: Adam Hayes. (2021). Retrieved from https://www.investopedia.com/terms/b/business-plan.asp ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited IMPORTANCE OF A BUSINESS PLAN A business plan is important because: ▪ It helps determine whether a proposed or existing business venture is viable given its target market. ▪ It guides the entrepreneur in mobilizing the resources needed by the business. ▪ It serves as a tool in helping get financing for the business. ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  Value of the Business Plan to Selected Users User Importance Serves as a road map for managing the business Entrepreneur Identifies the resources needed to operate and grow the business Allows the entrepreneur to anticipate potential business risks ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  Value of the Business Plan to Selected Users User Importance Allows the lender to assess the capability of the Lender entrepreneur to meet debt and interest payments Provides information about collateral and tangible assets that can be secured for the loan ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  Value of the Business Plan to Selected Users User Importance Allows the investor to gauge whether projected returns are Investor acceptable Provides information about the character of the entrepreneur and about the capability of the venture’s management team ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  Value of the Business Plan to Selected Users Users Importance Entrepreneur ∙ Serves as a road map for managing the business ∙ Identifies the resources needed to operate and grow the business ∙ Allow the entrepreneur to anticipate potential business risks Lender ∙ Allows the lender to assess the capability of the entrepreneur to meet debt and interest payments ∙ Provides information about collateral and tangible assets that can be secured for the loan Investor ∙ Allows the investor to gauge whether projected returns are acceptable ∙ Provides information about the character of the entrepreneur and about the capability of the venture’s management team ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  TYPICAL CONTENT OF A BUSINESS PLAN I. Executive Summary Highlights of the business plan II. Company Description Business name and location Nature of business Mission statement Products and services Legal status and ownership ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  TYPICAL CONTENT OF A BUSINESS PLAN III. Industry analysis Industry size and structure Nature of participants Industry trends Conditions of the general environment Conditions of the specific environment (supply-demand, competition/ competitive analysis) ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  PESTEL ANALYSIS PESTEL Analysis is a strategic framework used to evaluate the external environment of a business by breaking down the opportunities and risks into Political, Economic, Social, Technological, Environmental, and Legal factors. It is used by marketers to analyse and monitor the macro-environmental (external marketing environment) factors that have an impact on an organisation. https://corporatefinanceinstitute.com/resources/knowledge/strategy/pestel-analysis/ https://www.professionalacademy.com/blogs/marketing-theories-pestel-analysis/ ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited COMPETITIVE ANALYSIS Competitive Analysis is the process of evaluating your competitors’ companies, products, and marketing strategies. To make your analysis truly useful, it’s important to: o Pick the right competitors to analyze o Know which aspects of your competitors’ business are worth analyzing o Know where to look for the data o Understand how you can use the insights to improve your own business. ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  COMPETITIVE ANALYSIS The entrepreneur can get hold of the relevant information by visiting competitors’ websites, company catalogs, flyers, interviewing customers, suppliers, or distributors, and through other sources like newspaper, magazines, and the Internet. Online databases can also be helpful such as Euromonitor, Marketline Advantage, and Orbis. ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  COMPETITIVE ANALYSIS After scanning the information from different sources, the entrepreneur can summarize these by filling out a table (see example below). At a glance, this will show the various marketing strategies utilized by competitors, which the entrepreneur could adopt or improve upon, depending on the needs and wants of his target market. ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  COMPETITIVE ANALYSIS Once the strategies have been summarized, the entrepreneur can now proceed to identify his competitors’ strengths (or benchmarks that must be met or surpasses) and weaknesses (or gaps in the execution of the strategy that must be avoided). ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  TYPICAL CONTENT OF A BUSINESS PLAN IV. Marketing Plan Target Market Overall marketing strategy Product Pricing Distribution Promotion ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  TYPICAL CONTENT OF A BUSINESS PLAN V. Organizational Plan Form of ownership Principal shareholders or partners Company structure/ Organizational chart Background of the management team Roles & responsibilities of the management team ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  TYPICAL CONTENT OF A BUSINESS PLAN VI. Operations Plan Processes Machinery and equipment Suppliers Logistics/ Flow of orders for goods and services Space and labor requirements ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  TYPICAL CONTENT OF A BUSINESS PLAN VII. Financial Projections Sources of funds Assumptions Pro forma income statement Pro forma balance sheet Cash flow projections Break-even and ratio analyses ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  TYPICAL CONTENT OF A BUSINESS PLAN VIII. Timetable Formal registration of the business Completion of product/service design Completion of prototypes Hiring of initial personnel Reaching agreements with suppliers and distributors Actual production Initial orders, sales and deliveries ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  TYPICAL CONTENT OF A BUSINESS PLAN IX. Appendices Market research data Detailed financial projections Curriculum vitae of the management team Price lists from suppliers Profile of competitors ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited  WHY DO SOME BUSINESS PLANS FAIL? ▪ Document is sloppy and looks unprofessional ▪ Executive summary is non-coherent ▪ Unclear on why people would want to buy the product or service ▪ Unclear on whether the product can be readily produced ▪ Sales and financial projections are unreasonably optimistic ▪ Inadequate description of the qualifications and experience of the management team ▪ Inadequate assessment of the potential threats to the business ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited Thank you. Book References: Areola, E.M.Q., Manzano, R.G., and Trinidad III, F.V. (2021). Entrepreneurship in Tourism and Hospitality. Rex Book Store, Inc. Habaradas, R.B. & Tullao, T.S. (2018). Pathways to Entrepreneurship. Phoenix Publishing House. Marcelo, J.S. and Samson, G.M. (2022). Entrepreneurship in Tourism and Hospitality. Mindshapers Co., Inc. ALIAC PROPERTY Unauthorized Reproduction & Dissemination is prohibited