Lesson 4: Developing a Business Plan Flashcards by angie lina

What are the Factors to Consider of a New Entrepreneur

Know your product or
service
Analyze the Market
Potentials
Determine the Marketing
strategy
Know the competitors

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You must be confident that your product/service will sell in the market

Know your product/service

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The wider the market potential, the
more chances of growth and success

Analyze the Market Potential

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A unique product or service needs effective distribution strategy to get customer into the basket of demand potential

Determine the Marketing strategy

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In launching a product with existing competitors, you must know their strengths and weaknesses.

Know the competitors

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Defined as detailed and
integrated written document that
describes the various activities
involved in opening and operating
a new entrepreneurial venture.
- It is a formal statement of a set of
business goals.
- The roadmap of the new business
and of the entrepreneur.

Business Plan

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Focus of a business plan

externally focused
internally focused

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plans target goals that are
important to external stakeholders, particularly
financial stakeholders. They typically have detailed
information about the organization or team
attempting to reach the goals.

externally focused

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business plan target
intermediate goals required to reach the external
goals. They may cover the development of a new
product, a new service, a new IT system, a
restructuring of finance, or the refurbishing of a
factory.

internally focused

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major information source in making critical decision whether to go or not to go into the business.
forerunner of the business plan
primary objective is to determine whether the proposed business is feasible or not in all areas

feasibility study

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conducted before decision to proceed
provides investigative function

Feasibility Study

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prepared AFTER a decision to process
provides a PLANNING function

Business Plan

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Types of Business plan

Dehydrated plan
Comprehensive plan

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short form of a business plan that presents only the most important issues and projections

dehydrated plan

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full business plan that provides an in-depth analysis of the critical factors that will determine a firm’s success or failure, along with all the underlying assumptions

Comprehensive Plan

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Why make a business plan?

❑ Guide throughout the business process
❑ Convince prospective investors
❑ Convey capabilities and competencies of
owners/managers
❑ For navigational purposes (entrepreneur)
❑ Financing purposes (investors/financiers)
❑ Mechanics purposes (managers and staff)
❑ The business plan is valuable to the
entrepreneur, potential investors, or even new
personnel, who are trying to familiarize
themselves with the venture, its goal, and
objectives.
❑ It provides guidance to the entrepreneur in
organizing his/her planning activities.
❑ It serves as an important tool in helping to obtain
financing.

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Who writes the business plan?

prepared by the entrepreneur
consult w/ other sources such as lawyer, accountants, marketing consultants, engineers

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who reads the business plan?

employees
investors
bankers
venture capitalists
suppliers
customers
advisors
consultants

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Simplified Business Plan

1)Introduction
2)Executive Summary
3)Marketing Plan
4)Operational Plan
5)Financial Plan
6)Appendix

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In paragraph
form stating
salient details
about the
business

Introduction

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Name of Business
Proponent(s)
(owners )
Location
Capital
Return on
Investment
Vision
Mission
Goals
Objectives

Executive Summary

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Describes user benefits of the product/service and the type of market that exists
- 7PS in Marketing

Marketing Plan

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Firm’s organizational structure and the backgrounds and qualifications of key personnel
4 Ms of Production

Operational Plan

Projects the company’s financial position based on well-substantiated assumptions and explains of how the figures have been determined

Financial Plan

supplementary materials and attachments to expand the reader's understanding of the plan

Appendix

Presents the general perspective of the business. It includes the following sections: 1. Proposed name of the 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

Introduction

1. Reflect business identity and image 2. Promote the philosophical values and culture that the business values the most 3. Profess the brand identity of the product, and 4. Attract or influence the target consumers

Proposed Name of the Business

➢ It must state the correct business address. ➢ Necessary to have an email address to facilitate electronic communication.

Address of the Business

➢ The name of the owner must be properly stated.

Name of the owner or owners

➢ A brief description of the 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 objectives of the business.

Description of the business

The basic entrepreneurial consideration is to place the proposed business in a strategic location that will assure competitive advantage.

Location of the Business

Factors to consider when deciding location of the proposed business

1. Proximity to the target consumers 2. Distance from the sources of raw materials, labor, utilities 3. Availability and cost of transportation 4. Peace and order situation 5. Presence of direct competitors 6. The geographic and climatic conditions

➢ This section also presents the source or sources of funds. The initial cost of the investment may be provided solely by the owner or owners or partly by the owner and creditors. ➢ The estimated period to settle the funding source provided by creditors must also be mentioned.

Funding requirement and source

- It point out the overall highlights of the business plan as well as a bird’s-eye view of its sections. - It must be written in simple language that can be easily understood and at the same time attract the attention and influence the decision of the reader.

Executive Summary

Sections of Executive Summary

1. Vision, mission, goals and objectives of the business 2. Business model 3. Business and product position 4. Wealth improvement approaches 5. Parties supporting the business

╸ The business plan must depict the fundamental characteristics, nature, philosophical values, identity, and image of the business. ╸ The VMGO must be clearly stated and easily understood.

Vision, mission, goals, and objectives

ability to see something that you dreamed

Vision

A task that you need to do

Mission

something to achieve

Goal

Based on facts rather than opinion

Objective

- Defines the perspective of the business in terms of its structure, production, operation and financial activities that will lead to the achievement of the VGMO. - There is no standard model that will exactly fit all types of business because they have different strengths and weaknesses, infrastructures, network, and value propositions.

Business model

The business and product position will help determine how the business defines its course and the process of accumulating wealth. It tells the size of the market and target market share of the business and product.

Business and product position

This section of the executive summary describes the methodologies or approaches that will be taken by the business in order to: 1. Maintain a competitive advantage 2. Position the business in the market 3. Improve the market share, and 4. Maximize the utilization of resources.

Wealth improvement approaches

The last section of the executive summary is a description of the parties that strongly support the business. The parties that have a direct relationship with the business are as follows : 1. Consumers 2. Creditors 3. Suppliers 4. Employees and staff

Parties supporting the business

Details how the proposed business will sell its product to the target consumers.  It may consist of some or all of the following important sections: the 7P’s 1. Product 2. Place 3. Price 4. Promotion 5. People 6. Packaging 7. positioning

Marketing Plan

Sections of Operational Plan

1. Organizational Structure 2. Production Plan 3. Operation Plan

Is a major section of the business plan that outlines the various activities, from the acquisition of raw materials to the delivery of the products to the target consumers

Operational Plan

- The organization section sets up the hierarchy of the people involved in your business. It’s often set up in a chart form. - It includes form of the business organization, liability of the owners, roles and responsibilities, job description, salary requirements

Organizational Structure

- Focuses on ensuring a smooth flow of actual production work activities. - It includes production schedule, production process, equipment required, materials and sources of materials, estimated production cost.

Production Plan

Areas that the operational plan commonly covers

1. Evaluation of suppliers 2. Purchase procedures 3. Storage and Inventory control 4. Sales Procedures

- The last major section of the business plan. - It accumulates and describes all the data expressed in monetary units from the other sections of the business plan

FInancial Plan

- Simply collates and describes the various sets of information derived from other sections of the business plan.

Financial Plan

Financial plan is composed of?

1. Start up cost 2. Expenses 3. Manufacturing cost 4. Selling price 5. Projected financial statement 6. Projected schedule of division of profit or loss

Supplementary materials and attachments to expand the readers understanding of the business plan.

Appendix

Appendix includes...

1. Resume of the key investors, personnel and owners/manager 2. Documentation 3. Survey Questionnaire 4. Prototyping result and documentation 5. Photographs of product, facilities, and buildings 6. Pertinent published research/research studies 7. Signed contracts of sale