"Any business plan won't survive its first encounter with reality. The reality will always be different.

It will
never be the plan." by Jeff Bezos, the man behind Amazon, an online shopping company.

Your business plan will serve as your guide only, it doesn't guarantee you that you will achieve your
goals in an instant. Starting up a business is not a smooth sailing because you will encounter a lot of
problems and difficulties along the way and there are things that we can't control that may affect our
business, like disasters and calamities. Just like what happened during this pandemic, entrepreneurs didn't
predict and anticipate that this situation will happen in the future that's why many are not prepared.
Because of these unexpected situations, business plan will always be subjected for revisions and
improvements. You need to prepare a contingency plan for you to be equipped and ready for unexpected
situations. Our expectations will always be different from the reality. What have you planned may be
opposite to what will happen in the future.

Users of Business Plan:

 Entrepreneurs - navigational course; it will serve as your guide or roadmap that will give you a
sense of direction.
 Cautious Financers - these are the financial companies; they use the business plan to decide
whether they will approve your loan or not; or whether they will invest in your business or not.
 All the members of the organization should know the business plan; you need to discuss
everything in each functional area; they may differ in their assigned task but they are all heading in
the same goal or vision.

Parts of the Business Plan

 Why do you exist in this market? Why do you need this product? It deals with the purpose of your
business.
 What to expect in your business? What will you offer on the market? What is your product or
service?
 Who is your target market? Who are your competitors?
 How will you make it happen? What is your strategy to attain your goals?
 Where? The placement, location or distribution of your business. Check if it’s viable.
 When is the best time to launch or to start up your business? Is your offering aligned with the
current need of the people? Is your product timely or seasonal?
 How much capital do you need? Do you have enough money to start up your business? Or will you
be needing somebody like investors and lenders? With this, you need to start on working with your
feasibility study in order to persuade your investors to invest on your new business.
 Idea - this is where it all started. After having this idea, ask yourself if what action will you do next.

I. Business Description
o It talks about your product, what will you offer to the market?
o If you're offering a product that is already existing in the market, you need to add
something new or different.
o What is the reason of your business existence in the market?
o What is your mission and vision?
o It gives an overview or background of your product or business.
II. Market Analysis
o This is different from marketing plan.
o You need to analyze here your target market or customer.
 oMarket Characteristics - you need to know your customers; market segmentation
(know your customers' demographics and preferences)
o Target Customer Profile – profiling
III. Competitor Assessment

You need to use SWOT Analysis in assessing your competitors. Research about your direct
competitor, make use of the Internet or pass by their area.

IV. Marketing Plan

a. Products and Services - your business can offer the combination of these two just like what
Jollibee do, they are food business, they offer food and drinks and also delivery services and party.
b. Pricing - your mark-up, selling rate and costing to know if your business is profitable. You
also need to consider the discounts that you give and the free delivery you offer.
c. Distribution - placement of your product on the market. Will you use delivery van or rider?
d. Promotion - advertisement, awareness of your product, promotional tools.

V. Operating Plan
a. Ownership and Management - organizational chart
b. Resources and Production - where will you get your raw materials and ingredients from the
market or direct to the supplier?
c. Legal Issues - government requirements that you need in establishing your business like BIR

VI. Financial Plan

 This where you will apply all the learnings you get from FABM 1&2.
 Pro-forma.
 Follow the SMART.
VII. Executive Summary

The overview of your entire business plan and should briefly highlight the most important
parts of the plan.

Purpose of the Business Plan

1. To what expect can you give on your business; set your goals and mission; see the bigger picture or
your vision for your business
2. Start with idea and then give it a try to make it happen; you'll be needing a business plan to ensure
that you will not miss out anything
3. You need to be futuristic and should be able to handle everything with focus and commitment;
discouragement is subject to failure
4. Stakeholders are investors as well; your business plan will be your instrument or tool to persuade
your target investors to invest in your business

Choosing a Product

 how to choose the right product to offer

 how will you be different from your competitors? what will be your strategy?
 your product must align on the current trend or problem
 you need to put a twist
 You need to be committed and if you have passion on what you're doing, it will be more likely to
succeed.
 Have a never-die spirit and keep on trying despite of all the barriers and difficulties.
 Analyzation with yourself, is your product acceptable to the market?
Analyze the product or service from the customer's point of view:
(2) Is there any benefit or improvement in consuming the product you're offering, ex. basic needs and
aesthetics
(3) Customer / Market Segmentation

Bottom-line questions about the product:

(1) Essential needs? Current Trend? Price demand? Adaptability of pricing, it should be based on the
current trend
(2) If your product is not a basic need, you need to think about it over again
(3) Price should depend on the volume of the demand. Check if it's a reasonable price. Are you capable to
pay all your expenses and advertisement?

Series of additional questions:

(2) Advantage of your product on the existing one in the market
(3) Clearly state your difference and advantage to your competitors
(4) You need to consider the price of your competitors because most of the customers are price conscious.
If you're offering a high-quality product in a cheaper price, you will be able to cater and attract the loyal
customers of your competitors. All you need to do is find a supplier who will supply your products needed in
a lower price so that it will still be profitable. How will you minimize the cost?
(5) Visionary; Can you imagine your business on top of your competitors or as a no. 1 supplier in the
industry? Possible supplier of bigger industries? Eyeing for bigger picture.

All your answers should be POSITIVE. Looking forward on profit you'll generate. Think twice. Consult on
other business owners and seek for their advice.

What's on your mind?

Entrepreneurs take advantage of this current situation as an opportunity to online sell which means
pandemic is just an instrument or drive for them to pursue online selling. Online shopping is due to
innovation and creativity of the people. They utilize the assets they have like gadgets and internet to earn
money. That's why establishing your business in this time doesn't require to have a physical store, you only
need to choose where to sell your products. Which platform will you use? But as a customer, we should
support our local sellers. In choosing the right product to sell, notice first what's missing on the market or
have an environmental scanning and then, choose a product based on the current trend or needs of the
people. Online sellers are considered as moderate risk takers because rather than buying massive volumes
before selling, they take the order first before buying to ensure that there is no excess. Monitoring finances
is also one of the crucial parts of online selling because most payments are being transacted through online
means or cashless. How customers are being invited? Sellers encourage us to buy from them by giving
incentives such as voucher, promo and discount. Just like what SM is doing, their strategy to invite more
customers to spend large amount is giving freebies and advantage card. SM Call to Deliver is the
innovation of SM or contingency plan amidst this pandemic.
 Business Finance (Cont.)

IV. Financial Statement Analysis

An important measure in evaluating the past, current and projected performance of the company by
using financial ratios.

V. Financial Ratios

 Profitability - ability of the company to generate revenues

 Solvency - ability of the company to pay long-term debts
 Efficiency - how efficient the business is
 Liquidity Coverage - if the business is capable of paying short-term obligations

1. Profitability Ratios
o It shows how the business is able to generate revenues.

Return on Equity (ROE)

 Return (or kita) of the business from all of its investments
 Acceptable return on equity: 15% or more

Return on Assets (ROA)

 It shows how effective the company is in utilizing assets in generating sales and profits.
 Acceptable return on assets: 5% and above

Gross Profit Margin (GPM)

 It shows how much the business is earning after deducting costs of goods sold.
 It only considers the Cost of Sales - all the incurred expenses in manufacturing the goods sold
(such as labor, raw materials and manufacturing overhead like electricity)
 GPM = Gross Profit / Net Sales
 Acceptable GPM: 5% and above
 High GPM - the company were able to produce more goods in a short period of time and at the
same time, earn more.
 If the company has a lower than 5% GPM, they need to identify the factor why the GPM is low like
high labor (salary during overtime), high price of raw materials (change supplier or increase the
price you offer), or high manufacturing overhead (continues use of electricity for machines and
equipment)

Operating Profit Margin (OPM)

 It shows the percentage of sales after covering the cost of goods sold in operating expenses.
 Considers both operating expenses and cost of sales.
 Operating Expenses - expenses not related in production of product such as rent, inventory cost,
marketing of product / promotions, insurance expenses, etc.
 Higher OPM - it means the business is doing well in managing costs. The lesser the cost, the higher
the profit.
 Acceptable OPM: 5% and above

Net Profit Margin (NPM)

 It considers all expenses and costs such as taxes, interest expense, operating expenses and cost of
sales
 It reveals the company's ability to generate earnings after all expenses and taxes.
 Bottom line of all the profit margins
 Indicator if the company is earning or not
 Provides the final picture of how profitable a company is after deducting all of the expenses
  Acceptable OPM: 5% and above
2. Liquidity Ratios
o This is what investors and creditors mostly check and pay attention because they prefer those
company who has a liquidity ratio of 1 flat.
o If the value of liquidity ratio is exactly one, the company is healthy, and so the company is
capable to pay all its obligations or debts.

Current Ratio

 Marketable securities (Current Asset)- bonds that are expected to exchange or converted into cash
within a year.
 If the current asset is less than 1, it means you need to convert into cash your other current assets
(such as inventories and receivables) immediately.

Acid-test Ratio or Quick Asset Ratio

 It does not include inventories

 Acceptable Liquidity Ratio: 1
 RESEARCH PROJECT (SUPPLEMENTARY VIDEO)

When writing a business plan, your detailed company description should follow the executive
summary. While you touched on the basics in the summary, this section should go into further details of
your products or services and your company structure.

How to Write a Company Description for your Business Plan?

The company description of your business plan should include:

 Company Name - the official name of your business has registered in the state where you do
business.
 Type of Business Structure – sole proprietorship, LLC, partnership, or corporation.
 Ownership / Management Team – names of the key people behind the company.
 Location – where is the company headquarter.
 Company History – when was the business started, what inspired you to start the business, what
does your company fulfill.
 Mission Statement – a clear statement that represents the purpose of your company.
 Products / Services and Target Market – a brief overview of what you plan to sell and to whom.
 Objectives – an outline of what you want to accomplish in the immediate future based on the data
in the rest of the business plan as well future growth goals.
 Vision Statement – a statement about how you envision the future of the company.

Do not assume that anyone who will be reading your business plan knows anything about your
business. You will need to include a number of specific pieces of information that will help the reader to
understand exactly how you have set up the business. A good business description will make your work
a lot easier as you travel the road to start in your business. When you write a formal plan with the hope of
qualifying for a business loan or attracting investors, you need to let them know that you know what you're
doing. But aside from all of the paperwork and jumping through the hoops others setup for you, I believe
that the most important reason to write an in-depth business description is to understand who your
potential customers are. Your business description primarily must meet the expectations that your
customers have when they walk through your doors; get inside their heads, what do they want, if they're
looking for something specific you can bet there is something else related to it that they want as well,
understand them, offer them what they want and then break it down what will take to provide it. The
description of your business should leave the reader with a clear understanding of exactly what you have
set up and how you not only served others in the past. However, also how you plan to continue expand or
change your business in the future. It is therefore important that you use clear language and details that
will paint a picture in the mind of the reader. While also inspiring that person to want to know more about
your business because of the interest that they have developed during the reading.

How to Write Business Description? Pre-requisites:

1. Start with the basic information.  Decide the name of your
 Who – founder business.
 What – nature of your business  Decide the nature of your
 Where – location of your business business (food and drinks,
 When – date of your business started apparel or clothing, services
2. Explain the things that you are going to offer in your and other products).
business.
3. Talk about what you specialize in or your best things
to offer. Business Description
4. Tell a quick relatable story about why you started
your business.  It informs the people about your
5. Give us a glimpse into your future goals. business. It gives them a
glimpse of your business.
 MARKET ANALYSIS

(1) Complete the three steps of analyzing your market

(2) Identify sources of market research and;
(3) Develop an initial draft of your market analysis

 Before launching any venture, you need to assess its likelihood or success. Market Analysis
produces a snapshot of your market where and to whom you'll offer your products and services.
 The people you'll be needing: you with a business idea, your competitor with a different idea, your
product or service, your supplier, your prospect and your customer.
 Your notes will be a valuable resource as you plan and grow your business, reviewing it all over
again will stimulate fresh insights and creative solutions and by inviting others as a basis for
discussion and brainstorming, you can benefit from their ideas too.
 Regardless of your product or service, a sale has to happen for your business to exist. The best
way to determine where to get a sale is marketing. The marketing plan is an essential part of your
business plan, it has two parts: (1) market analysis and (2) market strategy and promotion.
 Three-step process of market analysis producing a snapshot of your market, where and to whom
you'll offer your services.
 The three steps of market analysis are defining your business idea, identifying your target
markets, and evaluating your competition.
 Entrepreneurs usually have an image of the type of business they want to own. Without a clear
picture, it's impossible to plan the logistics of running a successful business.
 The description of your business idea is often called the vision. An example of clear vision is the
one used by FedEx “to deliver my news the next day” or Macintosh “to bring technology to non-
technical everyday people”.
 Express your vision in customer terms, you could say we want to be the restaurant that most people
tell their friends about, this implies a whole code of behavior to deliver superior satisfaction with
every meal served.
 A realistic vision provides continuing focus, and is communicated through your marketing
activities. Ultimately, it means generating enough sales through satisfying customer needs to realize
a profit. To do this you need to clearly define the business you're really in.