3. The Business Plan is
documented that helps the
small business owner
determine what resources
are needed to achieve the
objectives of the firm and
provides a standard against
which to evaluate results.
4. PURPOSES OF BUSINESS
PLAN
1.To serve as management
guide during the lifetime of the
business
2.To fulfill the requirement for
securing lenders and investors
5. THE PLAN GUIDE
The Small Business Operator
(SBO) is afforded sufficient time to
consider all factors relevant to operating
the business. As periodic objectives are
accomplished one at a time, the business
plan serves as a useful tool for comparing
what was planned against what is
achieved.
6. A TOOL FOR SECURING FUNDS
The business plan is a handy means
for convincing lenders and investors.
Lenders will be more comfortable to see
various documents that indicate the
borrower can repay the loan
7. REVISING THE PLAN
A business plan is prepared in
consideration of the current and
expected situations. The implication is
that even with a business plan, the SBO
must strive to be well informed about
what is happening to his business and to
the industry where his business belongs.
8. PARTS OF THE BUSINESS PLAN
1.Title page & contents
2.Executive summary
3.Description of business
4. the product or service
5.Market strategies
6.Analysis of the competition
7.Operations and management
8.Financial data
9.Supporting documents
9. TITLE PAGE & CONTENT
1.Name of the business
2.Name /Names of proponents
3.Address
4.Telephone number
5.E-mail & website address
6.The date
7.Name of the person who prepared the
business plan
10. THE EXECUTIVE SUMMARY
Is a portion of the business plan that
summarizes the plan & states the objectives
of the business.
1.The capital needs of the business
2.How the money will be used
3.What benefits will be the derived by the
business from the loan or investment.
4.In case of loan, how it will be repaid with
interest & in the case of outside investment,
how profits will be generated
11. DESCRIPTION OF THE
BUSINESS
1.A short explanation of the industry
2.A description of the business
In describing the industry, it is
important to present the current situation &
the outlook for the future. Information must
be provided regarding the various markets
within the industry as well as new products
or developments that could affect the
business.
12. STATEMENTS ABOUT THE
FOLLOWING WILL BE USEFUL IN
DESCRIBING THE BUSINESS:
1.The industry sector where the business
falls into
2.Whether the business is new or
established
3.The ownership status of the business
4.Information on who the costumers are
5.Information on size of the market
6.Information on how the product or
service is distributed.
13. DESCRIPTION OF THE PRODUCT OR
SERVICE
The product or service must be described
clearly in the plan. To achieve this, the following
must be presented:
1.The important features of the product or service,
such as the maintenance-fee feature of the product,
or the home delivery service for the products
ordered through the phone
2.A detailed description of how the product is used
3.What makes the product or service different from
others available in the market.
14. POSITIVE FACTORS THAT ARE WORTH
DESCRIBING ARE:
1.Superior organization of the company
2.The latest equipment that are currently used by the
company
3.The superior location of the company
4.The fair price of the product or service
5.The superior customer service offered by the
company
15. MARKET STRATEGIES:
1.Definition of the market
2.Determination of the market share
3.Positioning strategy
4.Pricing strategy
5.Distribution strategy
6.Promotion strategy
16. DEFINITION OF THE MARKET
The objective of market
definition is to determine which
part of the total potential market
will be served by the firm. Hence,
the market must be defined in
terms of size, demographics,
structure, growth prospects, trends
and sales potential.
18. DETERMINATION OF THE MARKET SHARE
The business plan will be more useful to reader,
especially lenders & investors, if the projected market
share of the firm is presented.
To determine the firm’s market share, the
following steps may be used:
1.Determine the number of prospects in the target
market.
2.Determine the number of times the product or service
is purchased by the target market
3.Figure out the potential annual purchase
4.Determine the percentage of potential annual purchase
that the firm can attain. (table 5)
19. No. of prospects in the target market 1,000 families
Frequency of purchase per year (average) 48 time
Total number of purchase per year 48,000
Average payment per purchase P1,000
Projected total industry sales per year P48,000,000
Percentage the firm can attend 58%
THE FIRM’S MARKET SHARE P24,000,000
21. Pricing Strategy
How the firm prices its
product or service is a very
important component of the
business plan.
1.The customer’s perception of
value in the firm’s kind business
2.The costs involved such as,
overhead, storage, financing,
production & distribution.
3.The profit objectives of the firm.
22. The firm’s price may be established
through any of the following methods:
1.Cost plus pricing- the method covers all cost,
variable & fixed, plus an extra increment to
deliver profit.
2.Demand Pricing- this is the method of pricing
where the firm sets prices based on buyer desires.
3.Competitive pricing- this method of pricing calls
for pricing setting on the basis of prices charged
by competitors
4.Market pricing- this is a form of cost-oriented
pricing in which the firm sets prices by adding per-
unit merchandise cost, operating expenses &
desired profits.
23. Producer
Ultimate
user Representative
ManufacturerOriginal Equipment
Manufacturer
Final Product
Manufacturer
End user
1. Direct sales
Channel
2. Original equipment
Manufacturer sales
channel
Wholesaler/
retailer
End user
3. Manufacturer’s
representative channel
If the plan is to
move goods
directly to the
ultimate users,
this is the most
effective channel.
the channel involves selling a
manufactured product to
another manufacturer who, in
turn, incorporates the same to
his product and which is later
sold as finish product to end
user.
they are wholesalers
employed by one or several
producers and paid on
commission according to
quality sold.
Distribution Strategy
Distribution refers to the process of moving goods & services
from the buyers.
Common distribution channels are the following:
24. Manufacturer
Wholesaler
Retailer
End User
4. Wholesaler channel 5. Broker Channel
Distributor/
Wholesaler
Broker
Retail/
End user
these are channel
member that sell to
retailers or other agents
for further distribution
through the channel until
they reach the final users.
they are distributors who
buy directly from
distributors or wholesaler &
sell to retailers or end users.
Common distribution channels
25. Retailer
Consumer
Company
Consumer
6. Retail Channel 7. Direct Mail Channel
they sell directly to
consumers.
these are printed
materials used in a
targeted campaign to
consumers. These are
sent directly to
consumers. These include
catalogs, letters, e-mail,
& other direct appeals
Common distribution channels
26. Promotion Strategy
How the company’s products or
services will be promoted is an important
component of the marketing strategy. The
promotion strategy must include the
following:
1.Advertising aspects
a. Advertising budget
b. Positioning message
c. First year media schedule
2.Packaging- which describes how the
company’s products will be package.
3.Public Relations- this will be a detailed
presentation of the publicity strategy of the
firm.
27. 4. Sales promotions- these are means
used to support the sales message like
special sales, coupons, contest premium
awards, trade-in, among others.
5. Personal Sales- these present the sales
strategy including…
a. Pricing procedure
b. Rules on returns & adjustments
c. Methods of sales representations
d. Generation of leads
e. Policies on costumer services
f. Compensation of salesmen
g. Responsibilities of the salesmen.
28. Analysis of the Competition
The Small Business Operator will find
it difficult to compete if his competitors are
unknown to him.
In competitive analysis, the following must be
determined:
1.The strengths and weakness of the firm’s
competitors
2.Strategies that will give the firm a
competitive advantage
3.Barriers that can be developed to prevent
competitors or would-be competitors from
exploiting the firm’s market
4.Any opportunity that can be exploited
29. Key assets & skills Our company Competitor A Competitor B
Superior Product Strength Weakness Strength
Good Business Location Weakness Strength weakness
Strong sales team Weakness Strength Strength
Strong financial capacity Strength weakness weakness
Table 6
A competitors of the strengths & weaknesses of competing firms
30. Operations & Management
How the firm will be operated on
a continuing basis is an important
component of the business plan. As such,
the plan must contain the following:
1.Organizational structure
2.Operating expense
3.Capital requirements
4.Cost of gold sold
31. Organizational Structural
A well-defined & realistic
organizational structure is an important
element of the business plan.
Generally, they will be concerned how the
firm is organized along the following
concerns:
1.Marketing
2.Production
3.Research & development
4.Management
5.Human resources
32. Operating Expense
Projections of operating expenses are
important aspects in the preparation of a business
plan. This is prerequisite in projecting financial
statements. Lenders & Investors are especially
interested in scrutinizing such statements.
Overhead, which may be fixed or variable, includes
the following:
1. Rent
2. Advertising & sales promotion
3. Supplies
4. Utilities
5. Packaging & shipping
6. maintenance & repair
7. Equipment leases
8. payroll
9. Payroll taxes & Benefits
10.Bad debts
11.Professional services
12.Insurance
13.Loan payments
14.Depreciation
15.travel
33. Capital Requirements
Are necessary items in operating
business. The business plan will not complete
unless a listing of capital equipment needed to
be purchased is drawn up.
Cost of Goods
Business which carry inventories like
those engaged in manufacturing & trading
must provide a list showing of goods.
These expenses include the following:
1.Material
2.Labor
3.Overhead
34. Financial Data
Financiers are most interested in
the financial aspects of the business plan.
To satisfy this requirement, the following
statements must be presented in the
business plan:
1.The income statement
2.The balance sheet
3.The cash flow statement
The Income Statement
The income statement
shows the income, & profits of a firm over
the period of time.
35. Gross Annual Sales P 12,000,000
Less:
food cost 4,800,000
Gross profit P 7, 200,000
Less:
Operating Cost
Rent 864
Salaries 1,920,000
Utilities, Insurance
Overhead 600,000
Owner Salary 2,400,000
Net Profit 5,784,000
P 1,416,000
MDM food shop
Projected income Statement
For the year ending Dec. 31,2012
36. The Balance Sheet
Is that type of financial statement
that shows the financial statement that
shows the financial condition of the
business as of a given date.
A summary of financial information
about the business is contained in the
balance sheet and are broken down into
three areas, namely:
1.Assets
2.Liabilities
3.Owner’s equity
37. The Assets
The assets portion of the balance
sheet lists the assets of the firm in order
of liquidity
1.Current Assets
a. Cash- which includes cash checking,
savings, & short-term investment
accounts
b. Accounts receivable- these refer to
income derived from credit
accounts
c. Inventory- this refers to inventory
of materials used to manufacture a
product not yet sold.
38. 2. Fixed Assets- These are durable
assets and will last more than one
year. These consist of the
following:
a. Capital & plant- this refers to
the book value of all capital
equipment & others such as
land & building, if owned by the
firm, less depreciation.
b. Investments- these are
investments accounts owned
by the company that con not be
converted to cash less than a
year.
39. The Liabilities
The liabilities portion of the balance sheet
is classified as current or long-term.
1.Accounts payable- these refer to all expenses
incurred by the business that are purchased on an
open account from suppliers & are due for payment.
2.Accrued liabilities- theses refer to operational
expenses that are not yet paid.
3.Taxes that are due and payable-
40. Long term liabilities are due in more than one year.
They are include the following:
1. Bonds payable- these are bonds due and payable
over one year
2. Mortgage payable- this refers to loans used for
the purchase of real estate and is repaid for a
period of over one year.
3. Notes payable- these are loans represented by a
written document which is payable for a period
over one year.
The Owner’s Equity
This section refers to how much the owner has in
the business.
41. Assets
Cash P 70,450
Accounts Receivable 2,406,130
Inventories 2,608,791
Prepaid Expenses 9,437
Not Fixed Assets 289,003
Total Assets P5,383,811
Liabilities & Owner’s Equity
Notes Payable P497,643
Accounts Payable 47665
Accrued Liabilities 112,164
Long term debt 2,638,737
Total Liabilities P3,296,209
Owner’s Equity P2,087,602
Total Liabilities & Owner’s Equity P5,383,811
Mikaela Manufacturing Enterprises
Projected Balance Sheet Statement
As of Dec. 31, 2012
42. The Cash Flow Statement
Is also a very useful tool
for business planners. It projects
what the business plan means in
terms of pesos. It is use for
operational planning and
estimates the amount of cash
inflows and outflows of the
business during a specified period
of time
43. Listed in a cash flow statement
1.Cash
2.Cash Sales
3.Recievables
4.Other income
5.Total Income
6.Materials or merchandise
7.Direct Labor
8.Overhead
9.Marketing Expenses
10.Research and Development Expenses
11.General and Administrative Expenses
12.Taxes
13.Capital
14.Loan Payments
15.Total Expenses
16.Cash Flow
17.Accumulative cash flow
44. Supporting Documents
The business [plan would be more meaningful if supporting
documents are included.
• The owners resume
• Contracts with supplier
• Contracts with customers and suppliers
• Letters of reference
• Letters of intent
• A copy of the firms list
• A copy of copyright or patent acquired, if applicable
• Tax returns for the past three years
