INTRODUCTION TO BUSINESS PLAN PREPARATION

LEARNING OUTCOMES:
1. Define business plan.
2. Specify the different sections of the business plan.
3. Identify the information included in the Introduction section of the business plan.

THE NEED FOR A BUSINESS PLAN

The business plan is prepared using a scientific approach in determining possible

business situations considering the different perspectives of people who are interested in the
business. Though the perspective of the entrepreneur has the major influence on the business
plan, he or she nonetheless must still consider the views of the customers, creditors and even the
employees and staff. He or she must gather sufficient and relevant information to support any
perception or conclusion.
However, there is another written document that must be prepared and is of equal
importance as the business plan. This the feasibility study which serves as the forerunner of the
business plan.
The business plan is actually the roadmap of the new business. It is the roadmap of the
entrepreneur. However, strong advocates of the business plan consider that it is the only single
written document that must be prepared before opening a new business or expanding an existing
business. It is only the business plan that provides a clear direction and light to an uncertain
business endeavor.
In general, two major tests are conducted every time a new business idea, is created namely, the
test of possibility and the test of feasibility. The test of possibility on the new business idea,
should have positive results, so that the next test, which is the test of feasibility or viability, can
be conducted. The primary objective of the feasibility study is to determine whether the proposed
business is feasible or not in all areas. If the outcome of the feasibility study is positive, then the
entrepreneur prepares the business plan.
Business plan is defined as a detailed and integrated written document that describes the
various activities involve in opening and operating a new entrepreneurial venture. In case the
business project is relatively large in terms of financing or funding requirements, the
entrepreneur usually seeks the assistance of consultants. In this book, however, the concept of
the business plan preparation is more applicable to a small business that the learner is expected to
open as the major final requirement of the course in entrepreneurship.
MAJOR PARTS OF THE BUSINESS PLAN
Though there are no universally accepted standard format or structure of the business
plan, this book adopts the following format for the major parts of the business plan:
1. Introduction
2. Executive Summary
3. Environmental Analysis
4. Business Description
5. Organizational Plan
6. Production Plan
7. Operational Plan
8. Marketing Plan
9. Financial Plan
10. Appendix

Introduction
The introduction presents the general perspective of the business. It may consist of one to
two pages. It includes, among others, the following sections:
1. Proposed name of he business
2. Address of the business
3. Name of the owner or owners
4. Description of the business
5. Location of the business
6. Funding requirement and source
In the case the consulting team prepares the business plan for prospective owners or
investor, the section is added as the last section.

Proposed Name of the Business

The formulation and drafting of the proposed business name is not as simple as it sounds.
It is delicate and important entrepreneurial task. Remember that the name of the business may
exist in the market for many years. Careful and in-depth planning is of prime importance.
The proposed business name must:
1. Reflect the business identity and image.
2. Promote the philosophical values and culture that the business values the most.
3. Profess the brand identity of the products.
4. Attract or influence the target consumers.
Address of the Business
It is important that the address of the business is correctly written because all business
correspondence are mailed to the business address. Raw materials and other manufacturing
supplies are also shipped by the seller to the designated business address.
Nowadays, it is also necessary for the business to have an email address to facilitate
electronic communication between the business and the customers, suppliers, creditors. And
other significant parties.

Name of the Owner

The name of the owner must be properly stated. In a sole proprietorship, there is only one
owner. In case the venture is partnership, the names of the partners, including the extent of their
liabilities, must be indicated. For example, if a partner’s contribution takes the form of a service,
a description like industrial partner must be properly mentioned.
For business ventures that will operate as a corporate entity, the names, nationalities, and
address of the incorporators must be given. Incorporators, are persons who originally formed
the corporation.

Description of the Business

The brief description of as business must include information about the type of product or
service that the business intends to produce or provide. It may include a brief information about
the ultimate mission, vision and objective of a business. The other products or services That the
business plans to produce or provide must also be mentioned in the description of the business.

Location of the Business

There are no rigid rules in the selection of the business location several variables affect
the selection of the business location. The basic entrepreneurial consideration is to place the
proposed business in a strategic location that will assure competitive advantage.
The following factors must be considered when deciding on the location of the proposed
business:
1. Proximity to the target consumers.
2. Distance from the source of raw materials, labor, and utilities.
3. Availability and cost of transportation.
4. Peace and order situation.
5. Presence of direct competitors.
 6. The geographic and climatic conditions.

Funding Requirement and Source

The estimated total initials cost of the business venture must be clearly indicated. It
should include the projected breakdown or allocation of the total cost, e.g., how much will be for
building, fixtures, equipment, supplies, and working capital. This section also presents the source
or sources of funds. The initial cost of the investment may be provided solely by the owner/s or
partly by the owners and creditors. The estimated period to settle the funding source provided by
creditors must also be mentioned.