The business plan

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The business plan

• Prepared by Mrs. Belen Apostol

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The Business Plan

• Potential investors are not likely to consider
  investing in a new venture until the business
  plan has been completed
• The business plan helps the entrepreneur maintain
  perspective as to what
  needs to be accomplished.

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Organizing the Enterprise, Planning the Enterprise

• Entrepreneurs use planning and organizing to
  outline goals and define how the organization
  will accomplish business tasks. They may use a
  systematic plan broken down into steps or develop
  a generalized approach for achieving goals
  through various functions or processes.

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Organizing the Enterprise, Planning the Enterprise

• Strong planning and organization techniques
  ensure the enterprise stays focused on its goals
  and objectives.
• Proper planning and organization management can
  also help the business remain flexible and adjust
  to changes in the economic environment.

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Concept of a Business Plan

• A business plan is a written document prepared by
  the entrepreneur that describes all the relevant
  external and internal elements involved in
  starting a new venture. It is often an
  integration of functional plans such as
  marketing, finance, manufacturing, and human
  resources.

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Components of Business Planning

• 1. Sales and Marketing
• Any sales and marketing decision made must be
  based on a realistic sales estimate over the
  period.
• 2. "Igniting Operations
• Operational decisions cover Production,
  Engineering, Distribution, Human Resources, and
  Information Communication and Technology.
• 3. Technology
• The use of Technology can generate a
  significant market advantage that
  competitors find difficult to match.

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Characteristics of a Sound Business Plan

• 1. A business plan should be detailed. In listing
  products and services for example, it should not
  stop by just enumerating them, it should include
  the descriptions and scope of the products and
  services.
• 2. It should include a market research that
  identifies competitors, the share of the market
  and the range of the products produced. By
  learning how competitors conduct their
  operations, tricks of the
  trade in the business may be
  learned
  and entered to be used as a basis to
  excel.

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Characteristics of a Sound Business Plan

• 3. It needs to have a list of everything needed
  which comprises the equipment, technology, raw
  materials, financial and other resources needed
  when starting and running a business venture.
  Having all these listed will give an idea on how
  much capital is needed before the start-up and
  how much money should made in a day to make the
  business survive.

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Characteristics of a Sound Business Plan

• 4. It also needs to be written in formal format
  and style since a business plan is something that
  have to be presented to business partners,
  financial firms and banks. Refrain from using
  slang in any part of the plan
• 5. A business plan should be error free. This
  is important because the business plan defines
  the business person.

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Why do we need a Business Plan

• 1. A business plan is an effective tool for
  defining the existing realities. It prompts
  to analyze the business project or the existing
  situation objectively and critically, define a
  focus and set realistic goals. It may also
  constitute the basis for control and evaluation.

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Why do we need a Business Plan

• 2. A good business plan will reveal weaknesses
  or omissions in planning. Because good business
  plans require a guesstimate of risk calculation,
  it helps to reduce risks.

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Why do we need a Business Plan

• 3. It provides a valuable communication tool
  presented in an organized, credible manner, which
  allows lenders, outside directors, investors,
  banks and employees to obtain a complex view of
  your business. Even if, in some cases, a business
  plan format is not officially required when
  applying for a loan, although most lenders will
  ask for one, the very existence of a plan
  constitutes a plus, a step forward in obtaining
  the loan.

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Obtaining the facts for a Business Plan

• A business plan gives an insight into the
  entrepreneur's ability to define and develop
  policies for the essential areas of the business.
  This business document will map out the entire
  process by considering all the possible factors.

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Obtaining the facts for a Business Plan

• Fundamental factors that is needed in creating a
  business plan
• 1. Consultants and Backing Type When starting to
  create a business plan, one must decide who will
  be reviewing it as this could help form a great
  plan.
• 2. Business Plan Outline Outlining the plan for
  the business is the second most vital point once
  it has targeted its audience. The target audience
  will determine the structure of your document..

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Obtaining the facts for a Business Plan

• Fundamental factors that is needed in creating a
  business plan
• 3. Research and Information Collection Once
  decided on the financial investment and its
  sources, it is time to make a research. The
  approach from the work experience of the
  entrepreneur and observation will help to
  research the market and the product. Published
  information from library, internet and paid
  database services will inform the entrepreneur on
  the market growth, overall industry outlook and
  customer requirements. Field research will help
  in covering interviews with customers, suppliers,
  competitors, and industry experts.

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Obtaining the facts for a Business Plan

• Fundamental factors that is needed in creating a
  business plan
• 4. Collection Files sum up all experiences,
  interviews, and research in files for the plan
  analysis.
• 5. General Industry Overview have a general
  understanding of the industry and the knowledge
  about the various strategies and services that
  apply in developing the business.

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Obtaining the facts for a Business Plan

• Fundamental factors that is needed in creating a
  business plan
• 6. Analysis Once data is collected, analyze the
  process of building an aggressive profile, a
  comprehensive plan and consider the risks
  involved with it.
• 7. Executive Summary When all the segments of
  the business plan is thoroughly completed write
  an executive summary highlighting the key points
  and including the loan repayment methods and
  return on investments.

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Obtaining the facts for a Business Plan

• 8. Review and Editing a well-written business
  plan opens the doors to success. It will become a
  road map to success, which guides the
  entrepreneur in the right direction. Therefore,
  make sure that it has been proofread and checked
  for a number of times before giving a final copy.

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Outline of a Business Plan

• The Executive Summary
• The Executive Summary provides a concise synopsis
  of the business plan, and highlights the key
  points raised within. The Executive Summary must
  communicate to the prospective investor the size
  and scope of the market opportunity, the
  ventures business and profitability model, and
  how the resources/skills/strategic positioning of
  the Companys management team make it uniquely
  qualified to execute the plan. The Executive
  Summary must be compelling, easy-to-read, and no
  longer than 2-4 pages.

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Outline of a Business Plan

• The Industry
• This section evaluates the playing field in which
  the company will be competing, and includes
  well-structured answers to key market research
  questions such as the following
• What are the sizes of the target market segments?
  What are the trends for the industry as a whole?
  With what other industries do your services
  compete?

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Outline of a Business Plan

• Market Analysis
• This section assesses the customer segment(s)
  that the company serves. In this section, the
  company must convey the needs of its target
  customers. It must then show how its products and
  services satisfy these needs to an extent that
  the customer will pay for them.

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Outline of a Business Plan

• Competitive Analysis
• An investigation of direct and indirect
  competitors, with an assessment of their
  competitive advantage and an analysis of how it
  will overcome any entry barriers to the chosen
  market.

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Outline of a Business Plan

• Marketing Plan
• A detailed explanation of the sales strategy,
  pricing plan, proposed advertising and promotion
  activities, and product or service's benefits.

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Outline of a Business Plan

• Management Plan
• An outline of the business's legal structure and
  management resources, including the internal
  management team, external management resources,
  and human resources needs.
• The Management Team section demonstrates that the
  company has the required human resources to be
  successful. The business plan must answer
  questions including
• Who are the key management personnel and what are
  their backgrounds? What management additions will
  be required to make the business a success?
• Who are the other investors and/or shareholders,
  if any?
• Who comprises the Board of Directors and/or Board
  of Advisors?
• Who are the professional advisors (e.g., lawyer,
  accounting firm)?

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Outline of a Business Plan

• Operating Plan
• A description of the business's physical
  location, facilities and equipment, kinds of
  employees needed, inventory requirements and
  suppliers, and any other applicable operating
  details, such as a description of the
  manufacturing process.
• These sections detail the internal strategies for
  building the venture from concept to reality, and
  include answers to the following questions
• What functions will be required to run the
  business?
• What milestones must be reached before the
  venture can be launched?
• How will quality be controlled?

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Outline of a Business Plan

• Financial Plan
• A description of the funding requirements,
  detailed financial statements, and a financial
  statement analysis.

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Outline of a Business Plan

• Appendices and Exhibits
• Any additional information that will help
  establish the credibility of the business idea,
  such as marketing studies, photographs of the
  product, and/or contracts or other legal
  agreements pertinent to the business.
• The Appendix is used to support the rest of the
  business plan. Every business plan should have a
  full set of financial projections in the
  Appendix, with the summary of these financials in
  the Executive Summary and the Financial Plan.
  Other documentation that could appear in the
  Appendix includes technical drawings, partnership
  and/or customer letters, expanded competitor
  reviews and/or customer lists.

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Market Plan

• The marketing plan details the strategy for
  penetrating the target markets. Key components
  include the following
• A description of the companys desired strategic
  positioning
• Detailed descriptions of the companys product
  and service offerings and potential product
  extensions
• Descriptions of the companys desired image and
  branding strategy
• Descriptions of the companys promotional
  strategies
• An overview of the companys pricing strategies
• A description of current and potential strategic
  marketing partnerships/ alliances

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Production Plan

• A production plan is that portion of the
  intermediate-range business plan that the
  manufacturing / operations department is
  responsible for developing. The plan states in
  general terms the total amount of output that the
  manufacturing department is responsible to
  produce for each period in the planning horizon.

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Production Plan

• The output is usually expressed in terms of pesos
  or other units of measurement (e.g. tons, liters,
  kgs.) or units of the aggregate product (this
  refers to the weighted average of all the
  products in the company). The production plan is
  the authorization of the manufacturing department
  to produce the items at a rate consistent with
  the company's overall corporate plan.

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Production Plan

• This production plan needs to be translated into
  a master production schedule so as to schedule
  the items for completion promptly, according to
  promised delivery dates to avoid the overloading
  or under loading of the production facility and
  so that production capacity is efficiently
  utilized and low production costs result.

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Organizational Plan

• An organizational plan is basically a to do
  list for an organization. It lists out the plan
  of work, programs and organizational growth over
  a period of time. The tasks involved, who is
  responsible for them, and when theyll be done.
• An organizational plan helps to
• Set priorities for work
• Make sure tasks get done on time
• Focus on one thing at a time
• Share work among staff, board members
  volunteers
• Make goals clear to investors
• Get a handle on big projects by breaking them
  down
• See the big picture of what an organization is
  doing.

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Financial Plan

• The Financial Plan involves the development of
  the companys revenue and profitability model. It
  includes detailed explanations of the key
  assumptions used in building the model,
  sensitivity analysis on key revenue and cost
  variables, and description of comparable
  valuations for existing companies with similar
  business models.

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Financial Plan

• In addition, the financial plan assesses the
  amount of capital the firm needs, the proposed
  use of these funds, and the expected future
  earnings. It includes Projected Income
  Statements, Balance Sheets and Cash Flow
  Statements, broken out quarterly for the first
  two years, and annually for years 1-5.
  Importantly, all of the assumptions and
  projections in the financial plan must flow from
  and be supported by the descriptions and
  explanations offered in the other sections of the
  plan. The Financial Plan is where the
  entrepreneur communicates how he/she plans to
  monetize the overall vision for the new
  venture.

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Organizing the Enterprise

• Common structural and operating components and
  all businesses include a series of jobs to be
  done and a specific overall purpose. Each
  organization must develop the most appropriate
  organizational structure -- the specification of
  the jobs to be done in the ways in which they
  relate to one another.

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Organizing the Enterprise

• Firms prepare organization charts to clarify
  structure and to show employees were they fit
  into a firm's operations. Each box represents a
  job, and solid lines define the chain of command,
  or reporting relationships. The charts of large
  firms are complex and include individuals and
  many levels. Because size prevents them from
  charting every manager, they may create single
  organization charts for overall corporate
  structure and separate charts for divisions.

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Choosing Your Own Role in the Business

• Your role within your business organization is of
  crucial importance to investors because you may
  very well make the difference between the success
  or failure of your business.
• You should be able to describe exactly what part
  you will play in managing your business how you
  are going to compensate for your own weaknesses,
  such as lack of experience in certain areas or
  lack of knowledge.

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Choosing Your Own Role in the Business

• When you detail your role in your business, you
  describe your weak areas with respect to your
  role and outline how you plan to maximize your
  strengths and keep your own shortfalls at bay.
• To confirm your qualifications, you need to
  establish your involvement in the overall,
  long-term planning for the company and establish
  your involvement in the day-to-day running of the
  company.
• Establish your qualifications, including your
  education background and your business
  experience.

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Choosing Your Own Role in the Business

• If you have industry specific experience, you
  should detail that as well.
• If you don't have much experience in the industry
  you will be operating in, then you need to
  provide some insight as to how you are going to
  acquire the necessary knowledge to operate
  successfully.

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Choosing Your Own Role in the Business

• If you will not be involved in the day to day
  functions of your business, you need to establish
  who will be taking on the responsibility as a
  general manager.
• It is important to the security of your deal that
  you provide investors with sufficient information
  to be confident in the person (whether it is you
  or someone else) who will be managing the
  business and monitoring its performance.

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Choosing People to Work With You

• Identifying the Skills Your Business Needs But
  Lacks
• The best way to find the right people for your
  business is by indentifying the jobs that need to
  be done, and then working out what type of person
  is needed to do them.
• Make a list of jobs that need to be filled now
  and in the future. 
• Next to each item, note whether you or someone
  else will need to do that job.
• Group tasks for specific roles and then create
  job specs accordingly.
• Include a detailed list of responsibilities, and
  any qualifications or experience required for
  that role.

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Choosing People to Work With You

• Finding the Right Applicants
• A good way to find employees is by
  recommendation.
• Trade publications are also a good bet if you are
  looking for a specific skill set and there are
  now many online websites that allow you to easily
  post job advertisements as well.

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Choosing People to Work With You

• Interviewing a Potential Employee
• When you interview a candidate for a job, make
  sure to prepare a list of questions in advance.
• This should include questions relating to their
  experience, suitability, and attitude towards
  work.
• Ask them how they would deal with various
  scenarios relevant to the potential role in your
  business.

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Choosing People to Work With You

• Choosing the Right Candidate
• Finding the right type of employee isnt just
  about finding someone with the right skill set.
• You need to enjoy their company considering how
  much time you will be spending with them.
• Many entrepreneurs go into business with people
  they dont particularly like or get on with
  because they think the potential candidate is
  impressive. 
• Working with someone who winds you up, no matter
  how good their credentials, is not a recipe for
  your own motivation or business success!

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Choosing People to Work With You

• Go With Your Instinct
• Go with your gut.
• If you instinctively believe someone wont be a
  good fit, then youre probably right.
• Try Before You Hire
• An interview or discussion wont always reveal
  whether someone is suitable
• Some people are good at interviews but not on the
  job
• Always try working with someone before you hire
  them full-time.

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Choosing the Legal Form of Your Business

• Each type of business is best for a specific
  purpose or situation, relating to taxes,
  liability, and your ability to control the
  profits and losses of the business.
• Sole Proprietorship
• A sole proprietorship is a business operated by
  one individual the business is considered part
  of the individual, not a separate entity.
• The business profits and losses are included on
  the individual's personal tax return, and the
  individual retains personal liability for the
  business debts and lawsuits.

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Choosing the Legal Form of Your Business

• Partnership
• A partnership is a business entity with two or
  more individuals who share the risk and benefits
  of business.
• A partnership may include general partners, who
  bear the liability for partnership debts and for
  actions of the partnership.
• It may also include limited partners who are
  merely investors and who do not share in the
  day-to-day operations of the business and who do
  not share in liability.

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Choosing the Legal Form of Your Business

• Corporation
• A corporation is an entity which is separate from
  its owners.
• The corporation is formed under the laws of the
  state in which it is operating, with Articles of
  Incorporation.

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Choosing the Legal Form of Your Business

• Cooperative
• A cooperative is an organization composed of
  individuals or businesses that have banded
  together to reap the benefits of belonging to a
  large organization.
• Cooperatives are not organized for profit but to
  make its members individually profitable or save
  money.

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The Option Not to Register

• There is no option not to register for a certain
  business since setting up a business in the
  Philippines, as in other countries, will require
  the business owner to register with several
  government agencies.
• For a company to be legitimate it must have
  records in different government agencies such as
• Department of Trade and Industry (DTI),
• Securities and Exchange Commission (SEC),
• Bureau of Internal Revenue (BIR),
• Social Security System (SSS),
• Philippine Health Insurance Corporation
  (PhilHealth)
• Home Development Mutual Fund (usually referred to
  as Pag-IBIG).

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The Option Not to Register

• The company must also obtain various clearances
  from local government and sanitation agencies.
• Once these registrations are done, an
  entrepreneur is ready to launch the business in
  the Philippines and may start hiring employees
  and accepting customers.

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How to Register Your Business

• How to Register Your Business In The Philippines
• There are a number of government agencies you
  must register with in addition to opening a bank
  account when starting a business in the
  Philippines and hiring employees. 
• It is essential to register your business to
  avoid any legal problems once business operations
  begin.

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How to Register Your Business

• How to Register Your Business In The Philippines
• Depending on the structure of your business, your
  first step is to get a certificate of
  registration for your business name in one of
  these agencies
• Department of Trade and Industry (DTI) for
  single proprietorship
• Securities and Exchange Commission (SEC) for
  partnerships or corporations
• Cooperative Development Authority (CDA) for
  cooperatives

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How to Register Your Business

• How to Register Your Business In The Philippines
• After getting your certificate of registration,
  you will need to visit the following offices
• Homeowners Association for businesses inside
  villages and subdivisions, you need to get a
  homeowners clearance
• Barangay Hall secure a barangay clearance to
  operate your business
• Local Government Unit (LGU) visit the
  municipality or city hall office and process your
  business permit
• Bureau of Internal Revenue (BIR) apply for a
  business taxpayer identification number (TIN),
  register your books of accounts, point-of-sales
  (POS) machines and receipts

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How to Register Your Business

• How to Register Your Business In The Philippines
• At this point, you may now legally start your
  business operations, but youll need to then
  register your employees (which may include
  yourself) to the following agencies
• Social Security System (SSS) secure an SSS
  number for yourself and your employees
• Department of Labor and Employment (DOLE) for
  businesses with five workers or more, register
  your business with DOLE
• Home Development Mutual Fund (HDMF) as required
  by RA 7742, SSS members earning at least P4,000 a
  month must be registered with HDMF. This agency
  administers the Pag-Ibig Fund.
• Philippine Health Insurance Corp. (PhilHealth)
  all employers of are required to register their
  employees to this agency as stated in the New
  National Health Insurance Act (RA 7875 / RA
  9241). PhilHealth manages and administers the
  government health care system.

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Other Registering Agencies

• Furthermore, there are certain businesses that
  are required to secure a special clearance,
  permit or license from selected government
  agencies as follows
• Animals, animal products, animal facilities,
  veterinary drugs registration certificate from
  the Bureau of Animal Industry
• Aquatic animals, importation, fishpond lease
  agreement permit from the Bureau of Fisheries
  and Aquatic Resources (DA-BFAR)
• Fertilizer products, pesticide products
  registration certificate from the Fertilizer and
  Pesticide Authority (DA-FPA)

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Other Registering Agencies

• Fiber, fiber products processing and trading
  registration certificate and commodity clearance
  from the Fiber Development Authority (DA-FIDA)
• Film and television production and distribution
  registration certificate from the Movie
  Television Review and Classification Board
  (MTRCB)
• Firearms, ammunition and explosives permit from
  the Firearms and Explosives Division of the
  Philippine National Police (FED-PNP)

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Other Registering Agencies

• Food, chemicals, health related business
  registration certificate from the Bureau of Food
  and Drugs, Department of Health (DoH-BFAD)
• Flour, corn and grains related business
  operations and license from the National Food
  Authority (DA-NFA)
• Pawnshop, lending and finance related businesses
  registration certificate from the Central Bank of
  the Philippines, Department of Finance (DoF-BSP)
• Plants and plant products nursery accreditation,
  registration, seed and phytosanitary certificates
  from the Bureau of Plant Industry (DA-BPI)

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Other Registering Agencies

• Recruitment or placement agency for foreign
  employment registration certificate from the
  Philippine Overseas Employment Administration,
  Department of Labor (DOLE-POEA)
• Recruitment or placement agency for local
  employment registration certificate from the
  Bureau of Local Employment (DOLE-BLE)
• Schools, technical-vocational and other
  educational institutions registration,
  accreditation and permits from the Department of
  Education (DepEd), Commission on Higher Education
  (CHEd) or from the Technical Education Skills
  Development Authority (DOLE-TESDA)

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Other Registering Agencies

• Security agency business permit from the
  Philippine National Police, Department of
  Interior Local Government (DILG-PNP)
• Meat plant and slaughterhouse operations
  accreditation and registration certificate from
  the National Meat Inspection Commission (DA-NMIC)
• Mining, quarrying, logging, waste management and
  related businesses permit from the Department of
  Environment and Natural Resources (DENR)

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Other Registering Agencies

• Motor vehicles, automotive heavy equipment,
  engineering, electronics, electrical, office
  data equipments, medical industrial equipment,
  appliances devices accreditation license from
  the Bureau of Trade Regulation and Consumer
  Protection (DTI-BTRCP)
• Real estate projects register with the Housing
  and Land Use Regulatory Board (HLURB)
• Sugar, muscovado, sugar-based products and
  related businesses registration certificate from
  the Sugar Regulatory Administration (DA-SRA)

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Other Registering Agencies

• Telecom business license from the National
  Telecommunication Commission, Department of
  Transportation Communication (DOTC-NTC)
• Tourism-related projects registration and
  accreditation certificate from the Department of
  Tourism (DOT)
• Transportation permits from the Land Transport
  Franchise Regulatory Board (DOTC-LTFRB) or
  Maritime Industry Authority (DOTC-MARINA)
• Video production, sales and rental accreditation
  from the Optical Media Board, Office of the
  President (OPOMB)