DEVELOPING A

BUSINESS
PLAN
 PLANNING IN PLAIN AND SIMPLE LANGUAGE IS THINKING
AHEAD. IN BUSINESS, IT IS THE THINKING AHEAD OF
OBJECTIVES, STRATEGIES, FINANCING, PRODUCTION,
MARKETING, PROFIT PROSPECTS, AND GROWTH POSSIBILITIES.
HOWEVER, BUSINESS PLANNINGSHOULD BE REALISTIC.
THIS MEANS PLANNING IS BASED ON AVAILABLE RESOURCES
AND IS RESPONSIVETO THE NEEDS OF THE COMMUNITY.
OTHERWISE, PLANNING IS NO DIFFERENT FROM DREAMING.
NOT A FEW BUSINESS AND GOVERNMENT PROJECTS FAIL
BECAUSE THEIR OBJECTIVES DO NOT MUCH THEIR
RESOURCES.
BUSINESS PLANNING EXPLAINED
BUSINESS PLANNING EXPALINED:
• WHAT TO DO.
• HOW TO DO IT.
• WHEN TO DO IT.
• WHAT TO EXPECT IN THE FUTURE.
 BUSINESS PLANNING INVOLVES ATTAINMENT OF
GOALS, AND THE WAY OF ACCOMPLISH SUCH GOALS. A
TIME FRAME IS NEEDED TO ATTAINING THE GOALS.
STARTING THE BUSINESS OF BUSINESS PLANNING.
ULTIMATELY, IT IS THE CONSUMER SATISFACTION THAT
REQUIRES PLANNING. THIS SHOULD BE PROPERLY
PLANNED BECAUSE CONSUMER SATISFACTION MEANS
BUSINESS STABILITY AND GROWTH. IN FINANCIAL
LANGUAGE, CONSUMER SATISFACTION IS PROFIT. THUS,
BUSINESS PLANNING IS A CONTINUOUS PROCESS UNTIL
CONSUMER SATISFACTION IS MAXIMIZED SUSTAINED.
PRINCIPLE OF PLANNING
• PLANNING MUST BE REALISTIC.
IT MUST BE BASED ON AVAILABLE RESOURCES-HUMAN, FINANCIAL
AND PHYSICAL RESOURCES.
• PLANNING MUST BE BASED ON FELT NEEDS.
THE OBJECTIVE OF THE ENTREPRENEUR SHOULD FIT THE NEEDS OF
THE PEOPLE IN A COMMUNITY.
• PLANNING MUST BE FLEXIBLE.
RESOURCES, NEEDS AND ECONOMIC CONDITION CHANGE. PLANNING
SHOULD BE ADJUSTED TO SUCH CHANGES TO BE EFFECTIVE AND RELEVANT.
• PLANNING MUST START WITH SIMPLE PROJECTS.
IN THE PHILIPPINES, MANY PEOPLE ARE POOR AND HAVE NO BUSINESS
EXPERIENCES. THE MOST APPROPRIATE PROJECT FOR THEM IS THE MICRO
BUSINESS. THIS REQUIRES VERY SIMPLE MANAGEMENT AND TECHNOLOGY. IT
ALSO NEEDS SIMPLE AND FEW RESOURCES IN TERMS OF FUNDS, MATERIALS
AND EQUIPMENT. SUCH SIMPLE BUSINESS ENTERPRISE HAS A GREATER
POSSIBILITY OF SUCCESS. MORE IMPORTANTLY, IT PROVIDES A GOOD
TRAINING EXPERIENCE FOR OPERATING A BUSINESS. LATER ON, THE
OPERATOR CAN ENGAGE IN BIGGER BUSINESS PROJECTS AS BE ACQUIRES
MORE RESOURCES AND MANAGEMENT EXPERIENCE.
STAGES OF BUSINESS PLANNING
PROFESSOR PHILIP KOTLER, AUTHOR OF MARKETING MANAGEMENT,
SAID THAT THERE ARE FOUR STAGES OF BUSINESS PLANNING.
1. UNPLANNED STAGE. AT THE START OF THE BUSINESS THE OWNER-
MANAGER IS BUSY LOOKING FOR FUNDS, CUSTOMERS, MATERIALS, AND
EQUIPMENT. HE HAS NO TIME FOR PLANNING.
2. BUDGETING-SYSTEM STAGE. EVENTUALLY, THE OWNER-MANAGER
REALIZE THE NEED TO DEVELOP AND USE A BUDGETING SYSTEM.
ESTIMATED INCOMES FROM SALES AND EXPECTED EXPENDITURES ARE
MADE.
C. ANNUAL PLANNING STAGE. THE OWNER-MANAGER DRAFTS
AN ANNUAL PLAN. HE CAN USE EITHER THE TOP-DOWN
PLANNING OR BOTTOM-UP PLANNING. IN TOP-DOWN
APPROACH, THE OWNER-MANAGER PROVIDES THE GOAL AND
LET THE EMPLOYEES COMPLY WITH THEM. IN THE CASE OF THE
BOTTOM-UP APPROACH, HE ENCOURAGE HIS EMPLOYEES TO
PARTICIPATE IN PLANNING THE GOALS AND STRATEGIES AND
THE ENTERPRISE.
D. STRATEGIC PLANNING STAGE. AS THE BUSINESS ENTERPRISE
BECOMES BIGGER, A LONG RANGE, PLANNING IS NEEDED. THUS
IS A THREE OR FIVE YEARS PLAN. SUCH PLAN HAS FLEXIBILITY
TO ABLE TO ADJUSTTO CHANGING CONDITIONS.
CRITERIA OF EFFECTIVE PLANNING
1. THE PLAN SHOULD STATE CLEARLY ITS OBJECTIVES. SUCH
CLEAR STATEMENT IS NECESSARY SO THAT THOSE WHO WILL
BE INVOLVE IN THE EXECUTION OF THE PLAN WILL
UNDERSTAND, BELIEVE, ACCEPT AND SUPPORT IT.
2. THE PLAN SHOULD PROVIDE MEASURES FOR A SATISFACTORY
ACCOMPLISHMENT OF THE OBJECTIVE IN TERMS OF QUANTITY,
QUALITY, TIME AND COST. THESE HELP IN DELEGATING
RESPONSIBILITY IN MEASURING RESULTS.
3. THE PLAN SHOULD STATE THE POLICIES WHICH SHOULD GUIDE
PEOPLE IN ATTAINING THE OBJECTIVES.
4. THE PLAN SHOULD INDICATE WHAT DEPARTMENT OR UNIT WILL BE
INVOLVED IN ACCOMPLISHING THE OBJECTIVES. IT MAY OR MAY NOT
SPELL OUT THE PROCEDURES FOR PERFORMING THE REQUIRED
WORK.
5. THE PLAN SHOULD INDICATE THE TIME WHICH SHOULD ALLOWED
FOR EACH ACTIVITY. IT MAYBE NECESSARY TO ESTABLISH THE
TARGET DATA FOR COMPLETING THE ACTIVITY.
6. THE PLAN SHOULD SPECIFY THE REQUIRED RESOURCES AND THEIR
CORRESPONDING COSTS.
7. THE PLAN SHOULD DESIGNATE THE OFFICERS WHO WILL BE HELD
ACCOUNTABLE FOR THE ACCOMPLISHMENT OF THE OBJECTIVES.
SUFFICIENT AUTHORITY SHOULD BE DELEGATED TO SUCH
OFFICERS/EXECUTIVES.
COMPONENTS OF BUSINESS PLANNING
1. SWOT. THE CHANCES OF A PRODUCT OR SERVICE CAN BE
EVALUATED THROUGH THE SWOT ANALYSIS. EVERY PRODUCT
OR SERVICE HAS ITS OWN STRENGTH, WEAKNESSES,
OPPORTUNITIES AND THREATS.
2. OBJECTIVES. THESE SHOULD BE SPECIFIC AND REALISTIC.
SUCH OBJECTIVES CAN BE DAILY, WEEKLY, MONTHLY, AND
YEARLY.
3. STRATEGIES. THESE ARE WAYS OF ACCOMPLISHING THE
OBJECTIVES. SUCH WAYS ARE STATED IN THE FINANCIAL,
PRODUCTION, MARKETING AND ORGANIZATIONAL PLANS OF
THE ENTERPRISE.
4. TIME FRAME. IN BUSINESS, TIME IS GOLD. FOR THIS REASON,
AN ENTREPRENEUR MUST BE EFFICIENT IN TIME MANAGEMENT.
EVERY ACTIVITY HAS ITS OWN TIME SCHEDULE. ACTIVITIES
WHICH ARE COMPLETED ON TIME SAVE MONEY.
CHARACTERISTICS O A SOUND BUSINESS PLAN
1. OBJECTIVE
2. CLEAR
3. LOGICAL AND SIMPLE
4. FLEXIBLE
5. STABLE
6. COMPLETE AND INTEGRATED
OBTAINING THE FACTS FOR A BUSINESS PLAN
FACTS ABOUT THE PROSPECTIVE BUSINESS CAN BE OBTAINED
FROM RESEARCH SURVEYS, GOVERNMENTS AGENCIES,
ACCOUNTANTS, BANKERS AND LAWYERS.
1. WHAT IS UNIQUE ABOUT MY PRODUCT/SERVICE?
2. WHO ARE MY COMPETITORS?
3. HOW WILL MY CUSTOMERS BUY?
4. WHAT IS MY SHARE IN THE MARKET?
5. WHAT IS THE MARKET POTENTIAL?
6. WHO ARE MY CUSTOMERS AND WHERE THEY LOCATED?
7. WHERE WILL I PUT UP MY BUSINESS?
8. HOW BIG SHOULD BE MY PLANT OR PLACE OF BUSINESS BE?
9. WHAT EQUIPMENT WILL I NEED AND WHAT SIZE?
10. HOW WILL I CREATE CUSTOMERS?
11. WHAT PERSONNEL DO I NEED?
12. HOW WILL I ORGANIZE MY ENTERPRISE?
13. WHAT KIND OF RECORDS DO I NEED?
14. HOW MUCH CAPITAL DO I NEED?
15. HOW PROFITABLE WILL THE BUSINESS BE?
16. HOW FINANCIALLY HEALTHY WILL I BE?
17. WHAT IS MY BREAK EVEN POINT?
OUTLINE OF A BUSINESS PLAN
• COVER SHEET: NAME OF BUSINESS, NAMES OF PRINCIPALS,
ADDRESS AND PHONE NUMBER.
• BUSINESS GOALS
• STRATEGIES
• TABLE OF CONTENTS
SECTION 1: THE BUSINESS
A. DESCRIPTION OF BUSINESS
B. PRODUCT/SERVICE
C. MARKET
D. LOCATION OF BUSINESS
E. COMPETITION
F. MANAGEMENT
G. PERSONNEL
H. APPLICATION AND EXPECTED EFFECT OF LOAN (IF NEEDED)
I. SUMMARY
SECTION 2: FINANCIAL DATA
A. SOURCES OF APPLICATION OF FUNDING
B. CAPITAL EQUIPMENT LIST
C. BALANCE SHEET
D. BREAK-EVEN ANALYSIS
E. INCOME PROJECTIONS (PROFIT AND LOSS STATEMENT)
1. FIVE-YEAR SUMMARY
2. DETAIL BY MONTH FOR FIRST YEAR
3. DETAIL BY QUARTER FOR SECOND, THIRD, FORTH, AND FIFTH
YEARS
4. NOTES OF EXPLANATION
F. CASH FLOW PROJECTION
1. DETAIL BY MONTH FOR FIRST YEAR
2. DETAIL BY QUARTER FOR SECOND, THIRD, FORTH AND
FIFTH YEARS.
3. NOTES OF EXPLANATION
G. DEVIATION ANALYSIS
H. HISTORICAL FINANCIAL REPORTS FOR EXISTING BUSINESS
1. BALANCE SHEETS FOR PAST FIVE YEARS
2. INCOME STATEMENTS FOR PAST FIVE YEARS
3. TAX RETURNS
SECTION 3: SUPPORTING DOCUMENTS
PERSONAL RESUMES, PERSONAL BALANCE SHEET, COST OF
LIVING BUDGET, CREDIT REPORT LETTER OF REFERENCE, JOB
DESCRIPTIONS, LETTERS OF INTENT, COPIES LEASES, CONTRACTS,
LEGAL DOCUMENTS, AND RELEVANT TO THE PLAN.
STEPS IN BUSINESS PLANNING
1. EVALUATE YOUR RESOURCES AND INTERESTS, AND THE
SOURCES OF THE COMMUNITY.
DO YOU HAVE THE NECESSARY FUNDS?
DO YOU HAVE THE SKILLS OR MANAGEMENT EXPERIENCE?
DOES THE GOVERNMENT PROVIDE FINANCIAL AND TECHNICAL
ASSISTANCE?
 ARE RAW MATERIALS AVAILABLE?
ARE YOU INTERESTED IN SUCH BUSINESS?
DO YOU HAVE GOOD HUMAN RELATIONS?
2. ANALYZE YOUR MARKET
IS THERE A GOOD DEMAND FOR YOUR PRODUCT OR SERVICE?
HOW MANY COMPETITORS ARE THERE IN THE MARKET?
WHAT IS YOUR ESTIMATED SHARE IN THE MARKET?
WHO ARE YOUR CUSTOMERS?
ARE THEY INTERESTED IN THE EXISTING PRODUCT OR SERVICE?
IT IS POSSIBLE FOR YOU TO OFFER A BETTER QUALITY OF A
LOWER PRICE?
IS THERE A REASONABLE PROFIT?
3. CHOOSE A PROPER BUSINESS LOCATION
IS IT NEAR YOUR PROSPECTIVE CUSTOMERS?
ARE THERE FACILITIES LIKE ELECTRICITY, WATER,
TRANSPORTATION AND COMMUNICATION?
IS THE PLACE CLEAN, DESCENT AND PEACEFUL?
DO YOU HAVE GOOD ALTERNATIVES INCASE THE BEST LOCATION
IS EXPENSIVE?
IS IT ACCESSIBLE TO RAW MATERIALS AND OTHER SUPPLIES?
4. PREPARE A FINANCIAL PLANNING
WHAT ARE YOUR OBJECTIVES?
HOW MUCH MONEY DO YOU NEED?
HOW WILL YOU SPEND THE MONEY?
WHERE WILL YOU GET THE MONEY?
WHAT ARE YOUR EXPENSES?
HOW SOON CAN YOU RECOVER YOUR MONEY OR INVESTMENT?
5. PREPARE A PRODUCTION PLAN
IS IT MORE ECONOMICAL TO RENT OR BUY A PRODUCTION
EQUIPMENT?
CAN YOU ENSURE OR IMPROVE YOUR PRODUCT DESIGN OR
QUALITY?
CAN YOUR PRODUCTION FACILITIES MEET DEMAND?
DO YOU HAVE INVENTORY CONTROL?
DO YOU PROPER SCHEDULING OR PRODUCTION?
6. PREPARE AN ORGANIZATIONAL PLAN
WHAT TYPE OF BUSINESS ORAGNIZATION IS MOST SUITABLE?
DO YOU KNOW THE CORRESPONDING LAWS, POLICIES AND
REQUIREMENTS OF YOUR BUSINESS ORGANIZATION?
ARE YOU AWARE OF THE ADVANTAGES AND THE DISADVANTAGES
OF EACH TYPE OF BUSINESS ORGANIZATION?
WHO WILL BE THE OFFICER AND EMPLOYEES OF YOUR
ENTERPRISE?
WHAT ARE THEIR DUTIES AND RESPONSIBILITIES?
7. PREPARE A MANAGEMENT PLAN
WHAT ARE YOUR GOALS AND OBJECTIVES?
WHAT ARE YOUR STRATEGIES?
DO YOU HAVE BUSINESS POLICIES OF YOUR CUSTOMERS?
DO YOU HAVE HUMAN RESOURCES DEVELOPMENT FOR YOUR
EMPLOYEES?
WHAT IS YOUR PROGRAM OF SOCIAL RESPONSIBILITY?
THE IMPORTANCE OF BUSINESS PLANNING
PUTTING UP A BUSINESS IS NOT A GAME OF CHANCE. IT IS
NOT A WIN OR LOST AN ACTIVITY . HOWEVER, THERE ARE
ALWAYS RISK IN BUSINESS.
PLANNING CAN ELIMINATE BUSINESS RISKS BECAUSE IT
CAREFULLY STUDIES THE COMPETENCE, INTEREST AND
RESOURCES OF THE ENTREPRENEUR AGAINST THE NEEDS OF
CONSUMERS, TOGETHER WITH THE PRESENCE OF THE
COMPETITORS.
PLANNING CAN MINIMIZE COSTS OF PRODUCTION. THE
RESOURCES OF PRODUCTION SUCH AS MONEY, MATERIALS,
MACHINES AND MANPOWER ARE PROPERLY USED AND
SCHEDULED ACCORDING TO PLAN. THE ENTREPRENEUR
MONITORS AND CONTROLS EVERY ASPECT OF THE BUSINESS
OPERATIONS TO PREVENT UNNECESSARY WASTES.
PLANNING CAN DETECT THE WEAKNESSES OF THE BUSINESS
OPERATIONS. IN PLANNING GOALS AND OBJECTIVES ARE
FORMULATED. ALTERNATIVE STRATEGIES ARE DESIGNED ON
HOW TO ATTAIN THE OBJECTIVES AND GOALS.
 THANK YOU
FOR LISTENING!