Developing a Business Plan: Notes
Identifying Entrepreneurial Opportunity
Learning Outcomes
- Identify the market problem to be solved.
- Give solutions to the problem.
- Analyze the market need.
Pre-Learning Activity: Jollibee Example
- Tony Tan Caktiong started with an ice cream parlor.
- He converted it into a fast-food restaurant called Jollibee.
- Starting capital: P350,000.00. Opened two branches in Cubao and Quiapo.
- Served hamburgers, fried chicken, and spaghetti when customers sought more than ice cream.
- Jollibee excelled by understanding the Filipino market.
The Concept of Business Planning
Business Plan
- A written document describing:
- The nature of the business.
- Sales and marketing strategy.
- Financial background, including a projected profit and loss statement.
- A blueprint of a step-by-step process.
- A formal written expression of the entrepreneurial vision, describing the strategy and operations of the proposed venture.
Business Concept
- An idea for a business that includes:
- Service or product.
- Target demographic.
- A unique selling proposition for competitive advantage.
Objective or Importance of Business Plan
- To give direction to the vision formulated by the entrepreneur.
- To objectively evaluate the prospects of the business.
- To monitor progress after implementing the business plan.
- To persuade others to join the business.
- To seek loans from financial institutions.
- To visualize the concept in terms of market availability, organizational, operational, and financial feasibility.
- To guide the entrepreneur in the actual implementation of the plan.
- To identify actual strengths and weaknesses of the plan.
- To identify challenges in terms of opportunities and threats from external markets.
- To clarify ideas and identify gaps in management information about their business, competitors, and the market.
- To identify the resources required to implement the plan.
- To document ownership arrangements, future prospects, and projected growth of the business venture.
Business Plan Process
- Idea generation
- Environmental scanning
- Feasibility analysis
- Business plan creation
- Project report preparation
- Evaluation, control, and review
Idea Generation
- First step in the business plan process.
- Differentiates an entrepreneur from a typical businessperson.
- Sources of new ideas:
- Consumers/customers
- Existing companies
- Research and development
- Employees
- Dealers and retailers
Environmental Scanning
- Analyzing the external and internal environments that affect the business idea.
- External environment includes:
- Socio-cultural appraisal
- Technological appraisal
- Economic appraisal
- Demographic appraisal
- Government appraisal
Internal Environment
- Raw materials
- Production/Operation
- Finance
- Market
- Human resources
Feasibility Analysis
- Conducting detailed analysis of every aspect relevant to the business.
- Determining the credibility of the business.
- Includes:
- Market analysis
- Technical and operational analysis
- Material availability
- Material requirement planning
- Plant location
- Plant capacity
- Machinery and equipment
Plans
- Marketing Plan
- Production Plan/Operational Plan
- Organizational Plan
- Financial Plan
The Market
- Existing Customers
- Prospects
- Target Market Users
Steps Involved in Market Research
- Defining purpose and objective
- Gathering data from secondary sources
- Gathering data from primary sources
- Analyzing and interpreting the result
Market Plan
- A plan that describes market conditions and strategies for distributing, pricing, and promoting products/services.
- Industry Analysis: Provides information about the national and local market.
Characteristics/Importance of Market Plan
- It should provide a strategy for accomplishing the company's mission and goals.
- It must provide for the use of existing resources and the allocation of equipment, financial resources, and human resources.
- It should provide for continuity, ensuring each annual marketing plan meets long-term goals and objectives.
- It should be simple and specific, providing a clear roadmap for market strategy.
- It should focus on criteria to be evaluated to assess the market success of the company.
Steps in Preparing a Market Plan
- Defining Business Situation: Understanding past and present business achievements.
- Defining Target Market: Identifying the group of potential customers toward which the venture aims its market plan.
- Considering Strengths and Weaknesses:
- Strengths: Core areas where the company is specialized and has experience.
- Weaknesses: Areas like limited space for equipment and operations.
- Establishing Goals and Objectives: Marketing goals should be clear and specific.
- Defining Market Strategy and Action Program: Outlining specific activities to meet the venture's business plan objectives and goals.
Project Report Preparation
- A written document describing the step-by-step strategies involved in starting and running a business.
Evaluation, Control and Review
- Monitoring and reviewing strategies and policies to stay competitive in the dynamic market environment.
Business Plan Drivers
- Clear Vision of Purpose
- The desired direction for the business venture.
- A long-term perspective.
- Satisfy Real Customer Needs & Serve Real Customers
- Exceptional customer service leading to loyalty, repeat purchases, and customer retention.
- Differentiate from Competitors
- Positioning unique differentiating factors.
- Continuously improving to sustain a leadership position.
- Resource Focus, Organization & Commitment to Satisfy Customer Needs
- Optimally utilizing resources to maximize value added and satisfy customer needs.
Identifying Market Needs
- What products/services does your target market need/want?
- Identify the market problem to deliver a suitable product and service to the target customer.
Solving Market Problems
- Don't focus only on innovation and the competition.
- Don't focus only on customers.
- Don't focus only on revenue.
- Title Page
- Name of the Business
- Owner/Owners
- Contact Details (Addresses, Phone & Email, etc.)
- Executive Summary
- Business Ideas & Goals – Overview of the Business
- Marketing
- Products & Services Being Sold
- Operations
- Business Location & Staff
- Finances
- Breakeven Period, Finance required
Activity
- Formulate a Survey Questionnaire for Market Research.