Business Planning 

Travelling with a map is a useful tool in order for you to visit places you want to
visit; it is also the same with putting up a business. A Business Plan is an effective and
versatile tool for you to put up an effective business. It is somewhat called as a
“Businessman’s best friend” for which in today’s global and competitive
environment, it is essential to do proper planning in entering the business world. A
business plan helps you to evaluate the viability of your business idea in a SMART
way – specific, measurable, attainable, realistic and time bound. It provides you a
plan that will assist you in running your business and improves the probability of
success. Moreover, it serves as a “selling tool” and provides basis on you financial
proposal. 
 
Why do you need a Business Plan?
Here are some of the reasons why do you need a business plan:
1. Because you are starting a new business; 
2. Because you are innovative a new product or services; 
3. Because you are looking for a business partner; 
4. Because you want that financing companies or the government itself finance your
business; 
5. Because you want to manage your business better; and 
6. Because you want to measure actual performance compared to what is planned. 
 
How to develop a Business Plan? 
A business plan starts with planning. Planning means “thinking ahead”. In
business, it is thinking ahead of objectives, strategies, financing, production,
marketing, profit prospects, and growth possibilities. It is concern with questions
like:
1. What to do? 
2. How to do it? 
3. When to do it? 
4. What to expect in the future? 
Planning should be realistic. It is based on the available resources and is
responsive to the need of the community. Some businesses and government projects
fail because their objectives do not match their resources. Business Planning involves
the attainment of goals, and the way to accomplish such goals. Hence, a time frame
is needed in attaining the goals. Starting the business is not the end of business
 planning. Ultimately, it is the consumer satisfaction that requires planning. This
should be properly planned because consumer satisfaction means business stability
and growth. In financial language, consumer satisfaction is profit. Thus, business
planning is a continuous process until consumer satisfaction is maximized and
sustained.
 
Principles of Planning
1. Planning must be realistic. – It must be based on available resources – human,
financial and physical resources.
2. Planning must be based on felt needs. – The objectives of the entrepreneur should fit
the needs of the people in a community. Such needs can be known through
observations, personal interviews and questionnaires.
3. Planning must be flexible. – Resources, needs and economic conditions change.
Planning should be adjusted to such changes to be effective and relevant.
4. Planning must start with simple projects. – The most appropriate project for poor
people with no business experiences is the micro business. This would require very
simple management and technology. It also needs simple and few resources in terms
of funds, materials and equipment.
 
Criteria of Effective Planning
1. The plan should state clearly its objectives.
2. The plan should provide measures for a satisfactory accomplishment of the objectives
in terms of quantity, quality, time and cost.
3. The plan should state the policies, which should guide people in attaining the
objectives.
4. The plan should indicate what department or unit will be involved in accomplishing
the objectives.
5. The plan should indicate the time, which should be allowed for each activity.
6. The plan should specify the required resources and their corresponding costs.
7. The plan should designate the officers who will be held accountable for the
accomplishment of the objectives.
 
 
Components of Business Planning
1. SWOT – The chances of a product or service can be evaluated through the SWOT
analyses. Every product or service has its own strength, weakness, opportunity and
 threat. Planning should include the improvement of the product/service in order to
survive competition.
2. Objectives – These should be specific and realistic. Such objectives can be daily,
weekly, monthly and yearly. Example: 10% increase in sales after 6 months of
operations. Environmental factors should be considered in formulating business
objectives. Peace and order, power supply and government policies affect business
activities.
3. Strategies – These are ways of accomplishing the objectives. Such ways are stated in
the financial, production, marketing and organizational plans of the enterprise.
Example: In the objective of increasing sales by 10% after 6 months of operations,
one way of attaining it is through advertising, another way is to improve customer
relations. It can also be done by reducing the selling price.
4. Time frame – In business, time is gold. For this reason, an entrepreneur must be
efficient in time management. Every activity has its own time schedule. Activities
which are completed on time save money.
 
Characteristics of a Sound Business Plan
1. Objective 
2. Clear 
3. Logical and simple 
4. Flexible 
5. Stable 
6. Complete and integrated 
Questions to Consider in Obtaining Facts for a Business Plan 
1. What is unique about my product/service? 
2. Who are my competitors? 
3. How will my customers buy? 
4. What is my share in the market? 
5. What is the market potential? 
6. Who are my customers and where are they located? 
7. Where will I put up my business? 
8. How big should be my plant or place of business be? 
9. What equipment will I need and what size? 
10. How will I create customers? 
11. What personnel do I need? 
12. How will I organize my enterprise? 
13. What kind of records do I need? 
14. How much capital do I need? 
15. How profitable will the business be? 
16. How financially healthy will I be? 
17. What is my break-even point? 
 
Steps in Business Planning: 
1. Evaluate your personal resources & interests & the resources of the community. -
Check if you have the necessary funds, skills or management experience, availability
of raw materials, government financial & technical assistance, and your interests in
the business and good human relations or interpersonal skills essential to the success
of the chosen field of business. 
2. Analyze your market. – Check if there is a good demand for your product or service,
the number of competitors in the market, your estimated share in the market, who
are your customers and will they be interested in your product or service; If it’s
possible for your to offer better quality or a lower price or if the business would give
you reasonable profit. 
3. Choose proper business location. – Is it near your prospective customers? Are there
the necessary facilities such as electricity, water, transportation and communication?
Other alternatives should the chosen location is expensive? Is it accessible to raw
materials and other supplies? 
4. Prepare a financial plan. – Identify your objectives, how much money do you need,
how will you spend it, your sources of funds, possible expenses as well as the return
of your investments (ROI). 
5. Prepare a production plan. – Check if it is more economical to rent or buy production
equipment, if you can ensure or improve your product design or quality, if your
production facilities meet the demands, if you have inventory control and you have a
proper scheduling of production. 
6. Prepare an organizational plan. – Check what type of business organization is most
suitable and be aware of its corresponding laws, policies, and requirements; what
could be the advantages and disadvantages of each type of business organization
and who will be the officers and employees of your enterprise and their duties and
responsibilities. 
7. Prepare a management plan. – Identify your goals and objectives, strategies, business
policies for your customers. Do you have human resource development for your
employees? What is your program of social responsibility? 
8. Prepare a socio – economic plan – identify the contribution and help of your company
to the community and to the environment. 
 
Importance of Business Planning: 
1. It can eliminate business risks. – Business plans carefully studied the competence,
interest and resources of the entrepreneur against the needs of the needs of
consumers, together with the presence of competitors. 
2. It can minimize costs of production. – The resources of production such as money,
materials, machines and manpower are properly used and scheduled according to
plan. 
3. It can detect the weaknesses of the business operations. – Since plans and objectives
are formulated in business planning, alternative strategies can be designed. 
 
Business Planning Format 
Chapter I. Introduction 
• Background of the Study – in this portion, the nature of the company must be discuss
(trends, issues and reasons why putting up a business) 
• Company Logo – in this portion, the logo of the company must be presented together
with the interpretation of each symbol, character, words, etc. used. 
• Vision and Mission – in this portion, SMART (specific, measurable, attainable, realistic
and time – bound) idea must be considered. Vision statement discusses the dreams
of the company of what it wants to become. Vision Statement should cover the
company itself, the employees working on it, and its community. Mission Statement
must support the vision statement. It is almost the same with the vision statement
but it is more concrete and action – oriented.