BUSINESS PLAN By Elieser E N Moroa DTI

BUSINESS PLAN By: Elieser E. N. Moroña, DTI Region 5

STEPS IN STARTING A BUSINESS Self Analysis Consider other Factors Product/Service ID Secure Financing Determine Financial Requirements Write Business Plan Choose Location Secure Registration & Permits Hire & Train Personnel START

What is a Business Plan? an operational plan that defines actions what to do as well as how and when to do it. Many entrepreneurs use their business plan for the critical start-up and expansion so that they will stay both on target and within the budget. It consists of establishing goals for the business and completing the procedures to reach these goals.

In developing the plan, you should first ask yourself these questions: 1. What would I like the business to become a year from now? 2. What changes are taking place in the business and how should I prepare for it? 3. How can I attain my goals? 4. What timetable should I follow in accomplishing the plan?

Importance of a Business Plan • Serves as : - Blueprint /Roadmap for building an enterprise - Vehicle for describing the goals in business: (why goals are economically and technologically feasible) • Means to: – Delineate individual responsibilities – Project sales, expenses, and cash flows - Explain to employees what is expected of them Improve company performance Assists managers in decision making Plan for new product development Raises capital for a a business or securing capital

What is an Effective Business Plan • Rigorous standards in evaluation of B. P. because of many business risks involved; • Critical to understand how the plan is read by the investors Turn on investors? Turn off investors? • Know-basis of investors evaluation Fact: Only A and A+ plans are acceptable

Thus, a B. P. is not merely a report that is proposed and then forgotten and left on the shelf to collect dust. q Rather, it is a working document that entrepreneurs should use (weekly or monthly basis) to ensure continuity or success in business

The preparation of a B. P. makes a better entrepreneur and ensures business success

General format of a Business Plan I. INTRODUCTION II. SUMMARY OF THE BUSINESS PLAN III. PROPONENT, MGT. & PERSONNEL IV. MARKET FEASIBILITY V. PRODUCTION VI. FINANCIAL FEASIBILITY DETAILED FORMAT

Basic Steps to Follow in Business Planning 1 2 3 4 State Your Objectives 5 Identify Your Competitor s 9 ID Material Rqmt & Supply Source Describe Your Business 6 Consider Your Pricing Policy 10 ID Equipment & Process to Use Describe Your Product or Services 7 Determine Your Marketing Methods 11 Prepare Sales Forecast Determine Your Key Personnel 12 Identify Your Potential Markets 8 13 Prepare Budget Set Your Plan to Work

1. How do you put a giraffe into a refrigerator? THE CORRECT ANSWER IS: Open the refrigerator, put in the giraffe and close the door. This question tests whether you tend to do simple things in an overly complicated way. 2. How do you put an elephant into a refrigerator? WRONG ANSWER: Open the refrigerator, put in the elephant and close the refrigerator. CORRECT ANSWER: Open the refrigerator, take out the giraffe, put in the elephant and close the door. This tests your ability to think through the repercussions of your actions.

3. The Lion King is hosting an animal conference. All the animals attended except one. Which animal did not attend? THE CORRECT ANSWER IS: The elephant is in the refrigerator. This tests your memory. OK, even if you did not answer the first three questions correctly you still have one more chance to show your abilities. 4. There is a river you must cross. But it is inhabited by 5. crocodiles. How do you manage to cross it? THE CORRECT ANSWER IS: You swim across. All the crocodiles are attending the Animal Meeting. This tests whether you learn quickly from your mistakes. According to Andersen Consulting Worldwide, around 90% of the professionals they tested got all questions wrong. But many pre-schoolers got several correct answers. Anderson Consulting says “this conclusively disproves theory that most professionals have the brains of a four year old”.

Henry Ford: “ Coming together is a beginning, staying together is progress, and working together is success. ” - THANK YOU -

2 a. Come-Up with Business Idea Factors to consider…. . INTERNAL FACTORS EXTERNAL ü Personal interest government support ü Knowledge/talent & assistance ü Training/work experience tax incentives ü Other considerations like financing income, employment growth rate business

2 b. Choosing the Line of Business Product Industries Manufactured products intended either for mass market or individual customers demand. Examples are garments, toys, shoes, canned goods, (for mass market); precision instruments for industrial use, made to order furniture (as specialized products) Sub Contracting Industries Manufacture of product components or parts for other bigger companies. Bigger companies find it faster & cheaper to sub contract. Drawback is if small company is totally dependent on one big principal or contracting company Process Industries Manufactured products intended either for mass market or individual customers demand. Examples are garments, toys, shoes, canned goods, (for mass market); precision instruments for industrial use, made to order furniture (as specialized products) Service Industries Service enterprises include repair and maintenance shops, printing & machine shops, food catering, Beauty parlors, dress and tailoring shops, recreation estabs. (like bowling alleys and billiard halls), and entertainment enterprises (such as theaters, disco and pub house). Retail & trading is one of the most common type of service business

BUSINESS PLAN OUTLINE Executive Summary I. Description of the Business A. Type of Business B. Status of Business C. Profitability Potential D. Business Days/Hours E. Uniqueness of Business F. Contract Terms II. Description of Market A. Demographics B. Size C. Market Share D. Potential Growth E. Satisfying Market F. Competitive Pricing G. Pricing Determination H. Advantages III. Description of Competition A. Five Nearest Competitors B. Comparison C. Competition Sales Trends D. Similarities & Dissimilarities E. Strengths &/or Weaknesses F. Insights IV. Location of the Business A. Address B. Physical Features C. Leased or Owned D. Terms E. Neighborhood F. Zoning G. Other Businesses H. Location Considerations

BUSINESS PLAN OUTLINE, cont’d. V. Description of Management A. Background B. Management Experience C. Education D. Personal Data E. Operational Experience In This Business F. Management Experience In This Business G. Reporting Responsibilities H. Salaries I. Other Resources J. Financial Information VI. Personnel A. Five Year Projection B. Skills C. Labor Pool D. Full/Part Time E. Wages F. Competitiveness G. Training VII. Business History A. Balance Sheets -- 3 Years B. Income Statements -- 3 Years C. Tax Returns D. Sales Trends E. Explain Trends VIII. Financial Data A. Source & Uses of Funds (Listing of funds by major category) B. Capital Expense B 1. Capital Equipment List B 2. Renovations B 3. Inventory B 4 Working Capital

BUSINESS PLAN OUTLINE, cont’d. C. Pro-Forma Balance Sheet 3 Years Current Asserts Fixed Assets Current Liabilities Fixed Liabilities Net Worth D. Pro-Forma Cash Flow First Year -- Detail by Month Notes of Explanation E. Pro-Forma Cash Flow Three Year Summary Notes of Explanation F. Income Projections Three Year Summary Notes of Explanation G. Financial Analyais Break-even Analysis R O I Payback Period Profit Margin Ratio

How to Turn On Investors/Banks/ Clients It must demonstrate the ff. features: 1. A clear definition of the business - VMG what business are you in? what is the product or service ; what is the industry; who, where, what is the target market Investors will always look for something extra 2. What is the industry – should have growth potential /corridor syndrome / riding the growth curve/ innovative products