BUSINESS PLAN

1. BUSINESS PLAN By: Elieser E.N. Moroña, DTI Region 5

2. STEPS IN STARTING A BUSINESS Consider other Factors Product/Service ID Self Analysis Determine Financial Requirements Write Business Plan Secure Financing Secure Registration & Permits Hire & Train Personnel Choose Location START

3. What is a Business Plan? an operational plan that defines actions what to do as well as how and when to do it.  Many entrepreneurs use their business plan for the  critical start-up and expansion so that they will stay both on target and within the budget. It consists of establishing goals for the business and completing the procedures to reach these goals.

4. In developing the plan, you should first ask yourself these questions: • What would I like the business to become a year from now? • What changes are taking place in the business and how should I prepare for it? • How can I attain my goals? • What timetable should I follow in accomplishing the plan?

5. Importance of a Business Plan • Serves as : - Blueprint /Roadmap for building an enterprise - Vehicle for describing the goals in business: (why goals are economically and technologically feasible) • Means to: • Delineate individual responsibilities • Project sales, expenses, and cash flows - Explain to employees what is expected of them - Improve company performance - Assists managers in decision making - Plan for new product development - Raises capital for a a business or securing capital

6. What is an Effective Business Plan • Rigorous standards in evaluation of B. P. because of many business risks involved; • Critical to understand how the plan is read by the investors Turn on investors? Turn off investors? • Know-basis of investors evaluation Fact: Only A and A+ plans are acceptable

7. Thus, a B. P. is not merely a report that is proposed and then forgotten and left on the shelf to collect dust. Rather, it is a working document that entrepreneurs should use (weekly or monthly basis) to ensure continuity or success in business

8. The preparation of a B. P.makes a better entrepreneur and ensures business success

9. General format of a Business Plan I.  INTRODUCTION II.  SUMMARY OF THE BUSINESS PLAN III.  PROPONENT, MGT. & PERSONNEL IV.  MARKET FEASIBILITY V.   PRODUCTION VI.  FINANCIAL FEASIBILITY DETAILED FORMAT

10. Basic Steps to Follow in Business Planning ID Material Rqmt & Supply Source 5 9 1 Identify Your Competitors State Your Objectives 2 6 10 Consider Your Pricing Policy ID Equipment & Process to Use Describe Your Business Determine Your Marketing Methods 7 11 3 Describe Your Product or Services Prepare Sales Forecast 13 4 8 Determine Your Key Personnel Identify Your Potential Markets 12 Prepare Budget Set Your Plan to Work

11. QUIZ 1.  How do you put a giraffe into a refrigerator? THE CORRECT ANSWER IS:Open the refrigerator, put in the giraffe and close the door. This question tests whether you tend to do simple things in an overly complicated way. 2. How do you put an elephant into a refrigerator? WRONG ANSWER: Open the refrigerator, put in the elephant and close the refrigerator. CORRECT ANSWER: Open the refrigerator, take out the giraffe, put in the elephant and close the door.This tests your ability to think through the repercussions of your actions.

12. 3.    The Lion King is hosting an animal conference. All the animals attended except one. Which animal did not attend? THE CORRECT ANSWER IS: The elephant. The elephant is in the refrigerator. This tests your memory. OK, even if you did not answer the first three questions correctly you still have one more chance to show your abilities. • There is a river you must cross. But it is inhabited by crocodiles. How do you manage to cross it? THE CORRECT ANSWER IS:You swim across. All the crocodiles are attending the Animal Meeting. This tests whether you learn quickly from your mistakes. According to Andersen Consulting Worldwide, around 90% of the professionals they tested got all questions wrong. But many pre-schoolers got several correct answers. Anderson Consulting says “this conclusively disproves the theory that most professionals have the brains of a four year old”.

13. “ Coming together is a beginning, staying together is progress,and working together is success.” Henry Ford: - THANK YOU -

14. 2a. Come-Up with Business Idea Factors to consider….. INTERNAL FACTORS EXTERNAL FACTORS • Personal interest  government support • Knowledge/talent & assistance • Training/work experience  tax incentives • Other considerations like  financing income, employment  business growth rate service, etc  other factors

15. 2a. Come-Up with Business Idea Factors to consider….. INTERNAL FACTORS EXTERNAL FACTORS • Personal interest  government support • Knowledge/talent & assistance • Training/work experience  tax incentives • Other considerations like  financing income, employment  business growth rate service, etc  other factors

16. 2b. Choosing the Line of Business Product Industries Process Industries Manufactured products intended either for mass market or individual customers demand. Examples are garments, toys, shoes, canned goods, (for mass market); precision instruments for industrial use, made to order furniture (as specialized products) Manufactured products intended either for mass market or individual customers demand. Examples are garments, toys, shoes, canned goods, (for mass market); precision instruments for industrial use, made to order furniture (as specialized products) Service Industries Sub Contracting Industries Service enterprises include repair and maintenance shops, printing & machine shops, food catering, Beauty parlors, dress and tailoring shops, recreation estabs. (like bowling alleys and billiard halls), and entertainment enterprises (such as theaters, disco and pub house). Retail & trading is one of the most common type of service business Manufacture of product components or parts for other bigger companies. Bigger companies find it faster & cheaper to sub contract. Drawback is if small company is totally dependent on one big principal or contracting company

17. BUSINESS PLAN OUTLINE Executive Summary I. Description of the Business A. Type of Business B. Status of Business C. Profitability Potential D. Business Days/Hours E. Uniqueness of Business F. Contract Terms II. Description of Market A. Demographics B. Size C. Market Share D. Potential Growth E. Satisfying Market F. Competitive Pricing G. Pricing Determination H. Advantages III. Description of Competition A. Five Nearest Competitors B. Comparison C. Competition Sales Trends D. Similarities & Dissimilarities E. Strengths &/or Weaknesses F. Insights IV. Location of the Business A. Address B. Physical Features C. Leased or Owned D. Terms E. Neighborhood F. Zoning G. Other Businesses H. Location Considerations

18. BUSINESS PLAN OUTLINE, cont’d. V. Description of Management A. BackgroundB. Management ExperienceC. EducationD. Personal DataE. Operational Experience In This BusinessF. Management Experience In This BusinessG. Reporting ResponsibilitiesH. SalariesI. Other ResourcesJ. Financial Information VI. Personnel A. Five Year Projection B. Skills C. Labor Pool D. Full/Part Time E. Wages F. Competitiveness G. Training VII. Business History A. Balance Sheets -- 3 Years B. Income Statements -- 3 Years C. Tax Returns D. Sales Trends E. Explain Trends VIII. Financial Data A. Source & Uses of Funds(Listing of funds by major category) B. Capital Expense B1. Capital Equipment List B2. Renovations B3. Inventory B4 Working Capital

19. BUSINESS PLAN OUTLINE, cont’d. C. Pro-Forma Balance Sheet 3 Years Current Asserts Fixed Assets Current Liabilities Fixed Liabilities Net Worth D. Pro-Forma Cash Flow First Year -- Detail by Month Notes of Explanation E. Pro-Forma Cash Flow Three Year Summary Notes of Explanation F. Income Projections Three Year Summary Notes of Explanation G. Financial Analyais Break-even Analysis R O I Payback Period Profit Margin Ratio

20. How to Turn On Investors/Banks/ Clients It must demonstrate the ff. features: 1. A clear definition of the business - VMG what business are you in? what is the product or service ; what is the industry; who, where, what is the target market Investors will always look for something extra 2. What is the industry – should have growth potential /corridor syndrome / riding the growth curve/ innovative products