What is a Business Plan To put it simply, a business plan is a written statement of what you want to achieve in your business,

how you want to achieve it, what resources are at your disposal and which ones you might need to succeed. A well written business plan outlines the structure of your business, what you want to deliver, your target customer base, your potential for growth and the financial side of your operation. However, a business plan is not just an overview of your business today. It also gives you an insight into the future. It should become your inspiration as to where you are going with your business, given its full potential. It is a blueprint of what you want to achieve with your company and sets an initial road map of how you are going to get there. Naturally, a business plan will never be bullet proof against any economic, social, technological or any other changes that might happen in the future and affect your business growth. However, it should give you an indication as to what you are aiming for.

Start-Up Plan Start Up plan is the most common type of a business plan. It defines the structure and goals for a new business. It includes such elements as the information about the company, product or a service that will be delivered, goals and objectives for the company as well as the milestones for their implementation. The document outlines the management team and gives the financial overview as well as cash-flow projections for the first year of the new business. Internal Plan As the name suggests, internal plans are not intended for anyone outside of the company, banks or anyone else. They are developed to highlight important internal changes in the company, forecasts or detailed financial predictions and rarely involve long detailed texts as most recipients are already accustomed with the company. Operations Plan Operations plan is a form of internal plan and focuses on the implementation of key milestones identified to reach a specific business goal, deadlines and the people responsible for them.

Strategic Plan Strategic plan is also a form of an internal plan, however its focus is mainly on high-level options in the business and setting main strategic goals, without any detailed dates, milestones and other specifics. Growth Plan This type of a business plan focuses on a specific area of business and is usually used only internally, however, in a case of a large investment, it might be distributed to other parties also. The key idea behind a growth plan is to set the steps for growth or expansion of a business or its subset. Feasibility Plan This is a type of a start-up plan that usually includes a summary of a business, its mission statement, goals and a very basic market analysis as well as initial costs and other basic financial info. The goal for this plan is only to show whether or not the business idea is profitable and if the parties involved are interested in proceeding with it.

Outline of a Business Plan I. Introductory Page a. Name and address of Business b. Names and address of principals c. Nature of Business d. Statement of financing need e. Statement of confidentiality of report II. Executive Summary -2-3 pages summarizing the complete business plan III. Environmental and Industry Analysis a. Future outlook and trends b. Analysis of Competitors c. Market segmentation d. Industry and market forecasts

1.

2. 3. 4.

5. 6. 7. 8.

9.

10.
11. 12.

What are the major economic, technological and political trends on a national and international level? What are total industry sales over the past five years? What is anticipated growth in this industry? How many new firms have entered this industry in the past 3 years? What new products have been recently introduced in this industry? Who are the nearest competitors? How will your business operation be better than this? Are the sales of each of your major competitors growing, declining or steady? What are the strengths and weaknesses of your competitors? What trends are occurring in your specific market area? What is the profile of your customers? How does your customer profile differ from that of your competition?

IV. Description of Venture a. Product b. Service c. Size of Business d. Office equipment and Personnel e. Background of Entrepreneurs V. Production Plan a. Manufacturing Process b. Physical Plant c. Machinery and Equipment d. Names and suppliers of raw materials

1. 2. 3.

4.
5. 6.

7. 8.

9. 10. 11. 12. 13.

What is the mission of the new venture? What are your reasons for going into a business? Why will you be successful in this venture What the development work has been completed to date? What is your product and or service? Describe the product and or service , including patent copyright or trademark status Where is the business located? Is your building new? Old? In need of renovation? (state the costs if renovation is needed) Is the building leased or owned? (state the terms) Why is this building and location right for your business? What office equipment will be needed Will equipment be purchased or leased? What experience do you have or will you need to successfully implement the business plan?

1. 2. 3. 4. 5.

6.
7. 8. 9.

10.
11.

Will you be responsible for all or part of the manufacturing operation? If some manufacturing is subcontracted, who will be the subcontractors? (list down) Why were these subcontractors selected? What are the costs of the subcontracted manufacturing (include copies of contracts) What will be the layout of the production process? What are the equipment needed for manufacturing? What raw materials will be needed for manufacturing? What raw materials will be needed for manufacturing? Who are the suppliers of new materials and what are the appropriate costs? What are the cost of manufacturing the product/ What are the future capital equipment needs of the venture?

For Retail Operation or Service

1. 2. 3.

4.
5. 6.

From whom will the merchandise be purchased? How will the inventory control system operate? How are the storage needs of the venture and how will they be promoted? How will the goods flow to the customer? Chronologically, what are the steps in business transaction? What are the technology utilization requirements to service customers effectively?

VI. Operations Plan a. Description of companys operation b. Flow of Orders for goods and services c. Technology utilization VII. Marketing Plan a. Pricing b. Distribution c. Promotion d. Product Forecasts e. Controls

1. Defining the Purpose or Objectives a. Ask people what they think of the product or service, whether they would buy it. b. Collect background demographics and attitude of these individuals c. How much would potential customers be willing to pay for the product or service? d. Where would potential customers prefer to purchase the product or service? e. Where would the customer expect to hear about or learn about such a product or service? 2. Gathering Data from Secondary Sources obtain information that will assist the entrepreneur in making the best decision regarding the marketing of the product or services. 3. Gathering Information from Primary Sources data collection procedure a. Observation b. Networking c. Interviewing d. Focus groups e. Experimentation Most commonly used instrument questionnaire. 4. Analyzing and Interpreting Results - tabulation

Situation analysis o Background of Venture o Strength and weaknesses of venture o Market opportunities and threats o Competitor analysis Marketing objectives and goals Marketing strategy and action programs Budgets Controls

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Who are the users, where are they located, how much do they but, from whom do they buy and why/ How have promotion and advertising been employed and which approach has been most effective? What are the pricing changes in the market, who has initiated these changes, and why? What are the markets attitude concerning competitive products? What channels of distribution supply consumers, and how do they function? Who are the competitors, where are they located, what advantages/disadvantages do they have? What marketing techniques are used by most successful competitors? What are the overall objectives of the company for the next year and five years? What are the companys strength and weaknesses? What are ones production capabilities by product?

Economy Culture Technology Demand Legal Considerations Raw materials Competition

External Environment FEEDBACK

Entrepreneur Internal Environment

Market planning decisions

Marketing strategies directed to customers

Purchase decisions of Customers

Financial Resources Suppliers Goals and objectives Management team

VIII. Organizational Plan a. Form of Ownership b. Identification of partners or principal shareholders c. Authority of Principals d. Management team Background e. Roles and responsibilities of members of the organization IX. Assessment of Risk a. Evaluate weakness of Business b. New technologies c. Contingency Plans

1. 2.

3.
4. 5. 6. 7. 8. 9.

What is the form of ownership of the organization? If a partnership who are the partners and what are the terms of agreement? If incorporated, who are the principal shareholders and how much stock do they own? How many shares of boting and nonvoting stock have been issued and what type? Who are the members of the board of directors? Who has the check-signing authority or control? Who are the members of the management team and what are their backgrounds? What are the roles and responsibilities of each member of the management team? What are the salaries, bonuses, and other forms of payment for each member of the team?

X. Financial Plan a. Assumptions b. Pro forma income statement c. Cash flow projections d. Pro forma balance sheet e. Break-even analysis f. Sources and application of funds XI. Appendix a. Letters b. Market research data c. Leases and contracts d. Price lists from suppliers

Financial plan provides entrepreneur a complete picture of how much funds are coming into the organization, where funds are going, how much cash is available and the projected financial position of the firm. It provides the short-term basis for budgeting control and helps prevents one of the most common problems of new ventures lack of cash Before developing the pro forma income statements the entrepreneur should prepare operating and capital budgets these includes sales budget and operating budget for at least 3 months. Sales budget estimates the expected sales volume of sales by month. This includes projected sales, desired ending inventory available for sale less beginning inventory the Total production required. See Sample. Operating Budget after completing sales budget can then focus on operating costs. See sample.

Pro Forma Income Statement Projected net profit calculated from projected revenue minus projected costs and expenses. See sample. Pro Forma Cash Flow two methods Direct and Indirect the most popularly used is the indirect method Indirect objective is not to repeat what is in the income statement but to understand there are some adjustments that need to be made to the net income based on the fact that actual cash may or may not have actually been received or disbursed. See Sample. Pro Forma Balance sheet summarizes the projected assets, liabilities, and net worth of the new venture. See Sample. Break-even analysis volume of sales where the venture neither makes a profit nor incur loss. Pro Forma Sources and Applications of Funds summarizes all the projected sources of funds available to the venture and how funds will be disbursed.

Sample Manufacturing Budget for First Three Months

Jan Projected sales Desired ending inventory Available for Sale Less: beginning inventory Total production required 5000 10 5100 0 5100 Feb 8000 200 8200 100 8100 March 12000 300 12300 200 12100

Sample Operating Budget for the First Three Months (Php 0,000s) Expense Salaries Rent Utilities Jan 23.2 2 .9 Feb 23.2 2 .09 Mar 26.2 2 .09

Advertising
Selling expenses Insurance Payroll Taxes Depreciation Office expenses

13.5
1 2 2.1 1.2 1.5

13.5
1 2 2.1 1.2 1.5

17
1 2 2.1 1.2 1.5

Total expense

47.4

47.4

54.3