BUSINESS PLAN – Is a written document or codified text prepared by entrepreneurs.
It
contains pertinent information about the business venture. Planning, in layman’s words, is
thinking ahead. In business, it is thinking about objectives, strategies, financing, production,
marketing, profit prospects and growth possibilities ahead of time.
BUSINESS PLAN – Involves the attainment of goals and the way to accomplish such goals
under a given time. It is a written document prepared by the entrepreneur, describing all the
relevant information concerning the business. It is an integration of functional plans, such as
operations, marketing, finance, manufacture and human resources among others. It is the guide
or road map of an entrepreneur to business success. It is the process of setting up goals for a
particular business endeavor and making ways to achieve these by deciding in advance what to
do, how to do it and when to do it.
PRINCIPLES OF PLANNING
1. Planning must be realistic
2. Planning must be based on felt needs
3. Planning must be flexible
4. Planning must start with a simple project
STAGES OF BUSINESS PLANNING
1. UNPLANNED STAGE – At the beginning of the business, the owner-manager has no
time for planning and must concentrate his time in looking for funds, customers,
materials, equipment and daily operations of the business in order to survive.
2. BUDGETTING-SYSTEM STAGE – The owner-manager’s estimated income from sales
and expected expenditures are made to facilitate the orderly functions of a growing
enterprise.
3. ANNUAL PLANNING STAGE – Either a top-down or bottom-up annual plan is
prepared. If the owner-manager provides the goals to be complied by the employees, it is
a top-down planning approach which is autocratic. In the case of a bottom-up approach,
employees are encouraged to participate in planning the goals and stratjegies of the
enterprise. This is democratc in nature.
4. STRATEGIC PLANNING STAGE –A long-range plan is needed as the enterprise
becomes bigger. Usually a three to five-year plan has flexibility to adjust to changing
conditions.
CRITERIA OF EFFECTIVE PLANNING
1. Stage clearly its objectives so that those who are involved in the implemtnation of the
plan will understand, believe, accept and support it.
2. Provide measures for a satisfactory accomplishment of the objectives in terms of
quantity, quality, time and cost that would help in delegating responsibility and
measuring results.
3. State the policies which will guide people in attaining the objectives
4. Indicate what department or unit will be involved in accomplishing the objectives
5. Indicate the time frame for each activity
6. Specify the required resources and their corresponding costs
7. Designate the person who is accountable for the accomplishment of the objectives.
COMPONENTS OF A BUSINESS PLAN
1. SWOT – Meaning Strengths, Weaknesses, Opportunities and Threats
2. OBJECTIVES – Should be specific and realistic. These can be daily, weekly, monthly or
yearly. Environmental factors, sich as peace and order, power supply and government
policies affecting business activities, should be considered in formulating business
objectives.
3. STRATEGIES – Ways of accomplishing the objectives are stated in the financial,
production, marketing and organization plans of the business venture.
4. TIME FRAME – Since time is gold, every activity ahs it own time schedule to save
money.
TYPES OF BUSINESS PLANNING
1. PROFIT-MAKING BUSINESS PLANNING – Is all the general business planning that
must be done to start and run a successful business.
2. BUSINESS CONTINGENCY PLANNING – Is a proposed implementation plan to deal
with some new emergency, event or information.
BENEFITS OF BUSINESS PLANNING
1. Minimize, if not eliminate, business risks
2. Minimize costs of production
3. Detect the weaknesses of the business operations
TIPS IN PREPARING A GOOD BUSINESS PLAN
1. Prepare an objectively brief and concise plan
2. Prepare a clear, simple and honest plan
3. Always address using their person pronouns
4. Always consider failures and challenges
5. Concentrate on one business only
6. Emphasize the target customers
7. Make sure the plan is neat and well organized
8. Capture the reader’s interest
BASIC STEPS IN PREPARING A BUSINESS PLAN
1. Make an evaluation of your personal resources and interests, as well as available raw
materials and specialized technical skills in your community. Try to answer the
following questions.
Are you interested in the business?
Do you have sufficient funds?
Do you possess management skills?
Do you have good personal relations with other people?
2. Study your market
a. Identify your customers’ profile
Who will be your prospective customers?
What products or services will you offer? These refer to the needs of the people
Is there a good demand for your product or service?
What products have higher demand?
What is unique about your product/services?
b. Determine the size of the market.
How many potential customers exist within your business area?
How much should they be spending on your product or service?
Can this market be expanded? How?
What is the market potential?
What will be your share in the market?
How will you create customers?
c. Assess the Competition
Who are your competitors? How may are they?
How much is your estimated share in the market?
d. Estimate your sales.
Could you possible offer a better quality product or service at a lower price?
Is there a reasonable profit?
How will your customers buy?
e. Study how your market will behave in the future
Entrepreneurs have to look at market trends. Forecasting is the process of
anticipating the future market behavior.
What products have high demand?
Do customers prefer quantity and quality goods?
3. Select a location for your business
Is the location clean, decent and peaceful?
Are there customers in the place?
Are facilities such as electricity, water, transportation and communication available?
Is the place accessible to suppliers of raw materials and other supplies?
Do you have a good alternative in case the place is too expensive?
Where do customers prefer to buy the products? In malls or on sidewalks?
4. Prepare a Production Plan
Determine whether to by or lease the production equipment
Can your production scheme meet the market demand
Do you have proper scheduling of production?
5. Prepare an Organizational Plan
Determine the form of organization your business will take
How will you organize the enterprise?
What personnel do you need?
Know all the legal requirements in starting a business
Write down all the jobs to be done in your business,
Estimate the number of people to be employed for each position
Set salaries for the position of the jobs based on the salry rates in other enterprises
engaged in the same line of business.
6. Prepare a Financial Plan
Determine how much money will be needed to start the business
Estimate all earnings and expense items
Decide where the money for the business will come from
Estimate the assets of the business as well as the money you will invest as capital.
How profitable will the business be?
7. Prepare a Management Plan
State your goals and objectives
What are your strategies in accomplishing the goals and objectives
Specify the business policies for your customers
Identify the human resource development for the employees
Do you have programs for socialresponsibility
