DEVELOPING A

BUSINESS
PLAN
Objectives: Recognize a potential
market.

“Business plan does not

guarantee the results you
want to accomplish but it’s
still a step closer to making
things work in advantage”
 There are lots of opportunities for
entrepreneurs who are hardworking,
creative and resourceful, and would
like to take the calculated risk.
Business opportunities are wide open
for people who would like to invest
their money into gainful business
activities. They need to find out this
new venture that interests them and
how they can harness their technical
knowledge of the trade.
 FACTORS TO
CONSIDER
OF A NEW
ENTREPRENEUR
1. Know your Product or Service

 First
you must believe on the
product or service that you will
offer to your customer.
2. Analyze the Market Potentials

 The customer base will determine

the success of your business
venture. The wider the market
potential, the more chances
growth and success.
3. Determine the Marketing
Strategies

A unique product or service needs

effective distribution strategy to
get customer into the basket of
demand potential.
4. Know the Competitors

 In
launching a product with
existing competitors you must
know their strengths and
weaknesses. Develop new product
and marketing strategy and turn
their weaknesses as a new
opportunity for your product.
5. Do not set on your Laurels

 The landscape of business is

continuously changing. Your
initial success in your business
activities needs more proactive
analysis for expansion and growth
and overcome possible
competitors.
ENVIRONMENTAL
SCANNING
 The environment of business is
vast with opportunities and the
entrepreneur must have a greater
look into this potential as well as
the conditions prevailing in the
community.
The following factors are
contributory to the
development of customer
satisfaction:
1. Business Location for Small
Entrepreneurs
A retail outlet would need a site
that is convenient to prospective
customers in terms of parking
space or availability of
transportation.
 In choosing the location, the following
factors must be look into by the
entrepreneurs
a. Rent and Space – the cost of rent is a
regular monthly expense and it must be
sustained with the possible income that will
be generated.

b. Terms of Lease Agreement – the term

lease must be studied carefully as some
owners of space might take advantage of
lessee.
c. Type of Goods or Merchandise – a
convenient store is located where there are
pedestrians passing by.

d.Income Level of Prospective Customer

- the type of pedestrians and the income level
of customer must be taken into account.

e. Prospective Sales Value – high density

sales volume need to be located in shopping
area where customers conversed to buy
essential goods.
f. Municipal or City Ordinances
including taxes and fees – the location
must not violate city or municipal ordinances
and the taxes and fees must be reasonable
for the owners of business.

g. Location of the Areas – the area must be

free from floods and other calamities that will
endanger the business.
2. Location for Small Industrial Plant
or Manufacturing Facilities

 Environmental factors in locating a

manufacturing plant or individual
facilities need to be sustained
carefully as plant location is a great in
the investment of funds and its
profitability in the long run.
The following are important factors
to consider:
a. Land Area – the contour of the land, its
size, and shape must be suitable to the
plant site. It must be free from floods or
other environmental hazards that will
disturb operation.

b. Facilities for Expansion – the land are

must have ample space for plant expansion
and provisions for parking facilities for
customers and employees.
c. Power and Utilities – availability of power supply
and the cost of electricity involve in the operation are
great factors in the production of goods.

d. Building and Other Utilities – the building

must be within the restrictions code of the
municipality or city.

e. Plant Site Accessibility – the plant site must be

accessible to public or service transport for its
employees and valued customers.
STRENGTH, WEAKNESSES
OPPORTUNITIES AND
THREATS (SWOT)
SWOT ANALYSIS
 Entrepreneurial tool in determining the
profitability of the business operation.
 Strengths / weaknesses (internal

factors)
 Opportunities / threats (external

factors)
The product must be evaluated along the
following areas:

1. Product strength in the Market must

have the following:
a. Available technology in product processing
b. The source of Raw Materials must be
abundant and at lowest price.
c. Skilled workers must be available
d. Capital Investment in Machinery /
Operating Expenditures
e. Expertise and Technical Skills of the
Management Team
2. Characteristics of Weak Products /
Weak Management:

a. Poor Quality and High Price

b. Product Design and Appeal
c. Production Cost
d. Supply and Demand
e. Weak Product Management
3. Sustainable Product Opportunities
in the Market:

a. Product Demand
b. Presence of Poor Quality in the
Market
c. Government Policies and Support
d. Liberal Credit Terms and Interest
Rates
4. Treats to Product Profitability and
Market Expansion

a. Entrance of Competition
b. The Supply of Raw Materials will be
limited
c. The Emergence of Leftwing Labor
Unions
BUSINESS PLAN
 The following steps in the business
formation have been done by
entrepreneurs that applied a more
scientific study of the business
conditions. A business project either new
or an expansion must undertake a
careful planning of the project which will
serve as guide in the implementation.
In creating or searching to business
opportunities, one must consider the
following factors:

1. The needs of the society

2. Availability of capital resources
3. Business inclination
4. Clientele
5. Availability of raw materials
6. Human Resources
7. Nature of Product or service
Basic Phases of Business Plan

1. Marketing and Distribution Study

- deal with product demand analysis. It
should show the competitive product
advantage over existing product or service
and designing the marketing market program
of the enterprise.
2. Production and Technology Study
- refers to the need in making the
product or services.

3. Financial Management
-refers to the capital investment and
sources of funding the operation of the
business.
 General Format of a Comprehensive
Business Plan

I. INTRODUCTION
II. PROJECT SUMMARY
a. Name of the firm
b. Business Location
c. Brief Description of the Business
1. Brief History
2. Highlights of the findings
III. MANAGEMENT / PERSONNEL COMPONENTS
IV. MARKETING STUDIES
a. Market Profile
b. Demand Analysis
1. Projected Consumption in 1st year
operation
2. Major Segment Users / Location
c. Supply Analysis
1. Source of Product Supply
a. Foreign Supplies
b. Local Supplies
E. Program Analysis of Marketing Strategies

1. Geographic Segmentation Strategy

2. Psychographic Strategy
3. Demographic Segmentation Strategy
4. Pricing Strategy
5. Channel of Distribution
6. Promotion and Advertising
VI. PRODUCTION
a. Product Specification
b. Production Process
c. Plant Rated Capacity
d. Machinery and Equipment
e. Plant Location
f. Building and Facilities
g. Raw Materials
h. Power Supply and Utilities
i. Production Cost
VI. FINANCIAL STUDIES
A. For New Business Venture
1. Total Project Cost
2. Capital Investments Required
3. Pre-operating cash flow and its
relation to time table
4. Supporting Schedules in the
Financial Statements and Income
5. Project Financial Estimates
B. For Existing Project
1. Audited Financial Statement – last 3 days
a. Balance Sheet
b. Income Statement
c. Cash Flow

2. Fixe Asset, Capital Investments,

Depreciation used in Capital Assets

3. Tax Assessment, Liabilities, and

other Payables
4. Financial Trends and Ratio Analysis
5. Financial Cost for Administrative
expenses, Production and Selling
Expense.
6. Financial Projection for the Next Five
Years.
7. Financial Analysis for Return of
Investment, Return of Equity, Break even
Analysis, Production Volume and Price
Analysis.
MICRO BUSINESS PLAN

 The major objectives of business plan is

to assess, examine and analyze the
viability or feasibility of the study.
Business plan is ticket to success.
A. Executive Summary

 Synopsis of your business plan so

ideally, this part should be written last in
order to include all the necessary
information and target points of the
document.
B. Marketing Plan

 Push or pull, you must be able to tell

how fast or slow your product will move
in the market, whether it would make
use of a push or pull strategy or both.
C. Operations Plan
 Ernesto Pineda, director of the UP,
Institute of Small Scale Industries,
defines the operations plan as the
company’s expected sales for the coming
year and the costs of running the
business in general.
D. Financial Plan
 According to Dr. Ferreria, “Your financial
plan must show how much money is
needed to generate sales; how much is
going to be spent on a particular item;
and how much will be borrowed and
paid”
 The Presence of Double Taxations –
Honest businessmen could not profit in
their operations as there are lots of taxes
that the government would like to collect.
 Peace
and Order in the Area of Business
Operation – components of business
growth.
 The Cost of Power Supply – cost of
production increases with the cost of
utilities like current and water.
Identify the Market Problem

“Never give in-never, never, never, never, in

nothing great or small , large or petty, never
give in except to convictions of honor and
good sense. Never yield to force; never yield
to the apparently overwhelming might of the
enemy.”

-Winston Churchill, British Prime Minister

Identify the Market Problem
1. Existing customers are the people who
have already purchased the product you
are selling.
2. Target market users are the people in
your target market who are not
currently looking for a solution.
3. Prospects are the people who have not
yet purchased your product but have an
intention to buy.
Tips in identifying Market Problem

1. Focusing only on innovation and the

competition
2. Focusing only on customers
3. Focusing only on revenue
How to evaluate market problem?

1. Consider if the market problem is urgent, if

yes, consider actions by identifying
alternative courses of action (ACA) then
enumerating their advantages and
disadvantages.
2. Evaluate if the market problem is pervasive
or easily diffused, if yes think for a
temporary solution.
3. Determine if the buyers will pay to have this
problem solved.
Problem-Identification Research

1. Brand Image
2. Market Characteristics
3. Market Potential
4. Market Share
Problem-Solving Research

1. Distribution Research
2. Market Segmentation
3. Pricing Research
4. Product Research
5. Promotional Research