Business Plan

A business plan is a formal written description of your business future by defining your goals, strategies to meet
the goals, and the timeframe for the achievement of those goals. Is it necessary for you, as an entrepreneur, to write
your own business plan? As cited by Edralin (2016), the Department of Trade and Industry through the Bureau of Small
and Medium Enterprise Development mentioned the following reasons of writing a business plan.

1. Minimize or remove risk of losing money. Investment on poorly researched business that may result to financial
instability should be avoided. You must see all sides of the venture before letting go of any resources.

2. Avoid costly mistakes. Unplanned decisions may result to negative outcomes that may hurt the business.

3. Anticipate the financial requirements. Futuristic view of the increase or decrease of demand on the given
product/service will prepare you in meeting business obligations.

4. Organize the activities beforehand. Thinking in advance, you must look at the near and distant future. Contingency
plans must be present for anticipated concerns that may arise.

5. Assess actual performance against set goals. Having a clear goal will help you achieve your target in terms of sales,
revenues or even expenses.

6. Apply for financing from lending institutions. There are cases that financial assistance from other people or
organization is needed to start a business. A good business plan may encourage investors to entrust you their resources
but remember to be wise whenever you are lending money and make sure to use the money for its intended purpose
for the growth of the business.

Parts of a Business Plan

I. Executive Summary

II. Management and Organization

III. Product/Service Plan

IV. Market Plan

V. Financial Plan

Let us discuss the individual parts and its contents.

I. Executive Summary

• This part can be found at the beginning of the plan but is the last to be accomplished since this synthesizes the whole
plan. This contains a brief introduction and summarizes everything that is relevant and important to the prospect
business audience.

These are the information needed to guide you:

 description of your proposed business and business model

 description of the market opportunity you want to capture or market problem the business solves
 reasons why this is an attractive business opportunity
 key distinctions or differentiators of your business versus competitors
 overview of the sales, marketing, and operations strategy and plan
 description of your executive planning timeline
 overview of the projected financials containing revenues, cost, profits, and assumptions of your business

II. Management and Organization

This part includes all the basic information of your business. This also describes the workflow (organizational structure;
the background, experience and role of each) of your business from the highest position up to the lowest.

These are the information needed to guide you:

 Company Name, Logo, and Address

 Vision and Mission Statements
  Key Personnel
 Organizational Chart
 Ownership Capitalization, Compensation, and Incentives
 External Management Support

III. Product/Service Plan

This part describes the highlight of the product or service offered to the customers so that they will be encouraged to
patronize your product or service. It also explains how the products or services will be accepted and carried by the
distribution channels.

These are the information needed to guide you:

 Purpose of your Product or Service

 Product's/Service's Unique Features
 Material Requirements and Sources of Supply
 Processing Equipment that will be Used to Manufacture the Product or Render the Service
 Production or Service Process and Controls
 Distribution Logistics
 Regulatory and Other Compliance Issues

IV. Market Plan

This includes your business strategies, the target market, value proposition of your product or services that may increase
the company sales (Chen, 2019).

These are the information needed to guide you:

 Market Analysis
 Marketing and Sales Strategies
 Product or Service Characteristics
 Pricing Policy
 Sales Projection

Market Analysis

This includes the process of how you divide the total market into smaller groups seeking similar needs and wants
(market segmentation) and the characteristic analysis of the business in relation to internal and external factors. (SWOT
Analysis)

An example of market segmentation is shown below.

Food is a physiological need, but the cravings depend on each consumer. Chicken wings offered by The Wing Hub
of Limay even come in different flavors. Consumers who crave for samgyupsal may turn to Super Boink of Balanga City
while those who want to have a taste of Vietnamese food would probably go to Loleng's Hu Tieu-An in Morong.

SWOT Analysis, on the other hand, is a popular tool to evaluate the internal environment pioneered by George Albert
Smith Jr. and Ronald Christensen, two Harvard business professors (Aduana, 2016). SWOT stands for Strengths,
Weaknesses, Opportunities and Threats.

Strengths refer to strong attributes or capabilities of the business that provide great advantage in exploiting the business
opportunity. Weaknesses are poor attributes or deficiencies that give disadvantage to the business. Both strengths and
weaknesses are considered internal origins, meaning they are attributes inside the business venture.

On the other hand, opportunities are business situations that must be exploited due to their potential in terms of profit
and growth. Threats are possible external factors that may harm the business. Both opportunities and threats are
outside origins and are attributes outside the business.

Marketing and sales strategies

These are also known as the product PUSH. These have three key characteristics that allow to perform marketing
function of persuading customers to buy right away. (Go, 2010)

1. Temporary - Sales promotions are conducted at short periods creating a sense of urgency on the part of the
customers.

2. Better value - Sales promotions are used to create short-term differentiation by offering a better product value.

3. Beneficial-Sales promotions promote growth sometimes even at artificial level.

Product/Service Characteristics

This includes value proposition of the product/service. Value proposition answers the question, why should your
customers buy from you and not from other similar businesses? These contain the convincing reasons that buyers
should see that will make them purchase your products/services.

BDO: "We find ways". Before this pandemic, while other banks operate from 8AM-3PM Mondays to Fridays, BDO offers
services until 6PM and even operates during weekends fulfilling their promise of "finding ways" for the customers.

Pricing Policy

This part specifies the price of the product/service. It must be noted that quality and price cannot be separated in
marketing (Aduana, 2016). You must be careful in setting the price of your product/service considering the costs of
production, competitors' pricing, and customers' perception.

Filipinos are generally price conscious. We tend to check the price tag of a product first before whether to buy or not to
buy a commodity. "SALE" and "PROMO" tags are consumer magnets. In cases wherein the prices of the product cannot
be decreased, the entrepreneur should be able to give emphasis on the benefits of his/her product to convince the
customer of its value.

Sales Projection

This is also called sales forecast or the prediction of the amount of revenue your company expects to earn at some point
in the future. This shows the quantity of product sold or service rendered and its corresponding amount within a given
period.

V. Financial Plan

This is a document containing your current financial situation as an entrepreneur and long-term monetary goals, as well
as tactics to attain those objectives. You may create a financial plan on your own or with the assistance of someone who
is knowledgeable about handling finances such as certified financial planner.

These are the information needed to guide you:

 Start-up costs requirements - These are expenses that you will be needing during the course of creating a new
business.
 Financial projections - These are estimates of your future profits and expenses.
 Break-even analysis - This is a financial tool that will help you determine at what stage (or period) your company
will start gaining profit.
 Budget - This includes the amount needed for business operations as well as sources of such funds (equal shares
or through a creditor).