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Introduction To Business Planchapter6

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Erika MONIS
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64 views16 pages

Introduction To Business Planchapter6

Uploaded by

Erika MONIS
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Introduction to business plan

Chapter 6
• The entrepreneur must be very clear about the
purpose in establishing the enterprise.
• The enterprise must state its mission statement clearly
for:
 The sake of customers being wooed;
 The investors who need to know what they are getting
into;
 The financiers evaluating the enterprise; and
 The government functionaries who must regulate the
activities of industries and businesses.

A very clear purpose


• The entrepreneur must choose a very fitting name for
the enterprise. A good name identifies the company
very well.

Not by any other name


• The entrepreneur must establish an enterprise on the
basis of a very exciting business concept leading to a
grand vision.

A very compelling vision


• Angel investors provide capital to entrepreneur
knowing that there are risks involved.
• Angel investors may come in the form of senior
relatives, close friends, and professional equity
investors.
• Angel industrial partners are people who can
contribute their expertise, experience, technology,
contacts, and good character that will enable the
enterprise to succeed.

A company of angels
• Having a very good business plan is a wise thing to do
in order to chart the course of the business properly
and to focus the efforts of the entrepreneur.

A very good business plan


• The purpose of the business
plan are:
1. Entice partners, investors, and bankers to
fund a business venture.
2. Communicate what the enterprise is all
about, what market it wants to serve.
3. Show what financial return it could muster.

A very good business plan


• The business plan should contain important
information about the following:
 The business it self;
 The organizers;
 The management and technical people;
 The financial structure;
 Its market potential;
 Its target market;
 Its projected sales, expenses, and profits; and
 Its probable risks.

A very good business plan


• The business plan should begin with the business concept and
the vision for the enterprise for the next three to five years.
• The business plan should contain the an executive summary of
the following:
• 1. The organizers and the key people behind the business and why these
people have the resources, talents, skills, and technology to achieve success;
• 2. The market being targeted and why there is enough market potential to
justify the business;
• 3. The product or services to be offered and why they are right or the
market.
• 4. How the business will be operated and organized, including all
outsourcing, subcontracting, franchising, and licensing agreements;

A very good business plan


• 5. The investment capital required for the business
and what exactly it would be used for;
• 6. The technology, the technical expertise, the
equipment, and materials suppliers to be utilized.
• 7. The capital structure (short and long term debt,
stockholders’ equity) of the business;
• 8. The operating budget, financial projections
(income statement, balance sheet, cash flow), and
return on investment prospects; and
• 9. the risks in the business and the contingency
measures to counteract them.

A very good business plan


• The business plan must be able to estimate the capital required by
the enterprise. The capital required would be dictated by the
investment in the assets of the enterprise
• The assets are composed of the following:
1. The current assets which are short-lived assets. They are
composed of cash, inventory, accounts receivables, and other
current assets.
2. The long-lived or fixed assets. The are composed of property,
plant, and equipment.
3. The other assets. They are composed of organizational and pre-
operating expenses.

Organizing and
structuring the enterprise
• The assets of the entrepreneur are financed by its liabilities.
• These liabilities are composed of: (1) current liabilities such as
suppliers’ credit and other short-term credit; (2) long term debt;
and (3) owner’s equity,
• Capital structure of the enterprise is the way the financial package
is designed.
• Sole proprietorship is the simplest and easiest enterprise to
organized
In sole proprietorship there is no distinction between the owner
and the enterprise.

Organizing and structuring


the enterprise
In sole proprietorship, the entrepreneur is personally answerable and
obligated to fulfil all the terms and conditions of any business contract that he
or she enters into.
The sole proprietorship is mandated by law to register the business with
proper authorities.
Clearances that must be obtained:
 Barangay clearance
 Fire safety clearance
 Certificate of electrical inspection
 Certificate of occupancy
 Department of Trade and Industry (DTI) certificate
 Lease contract if space is leased.
 Locational clearance
Organizing and
structuring the enterprise
• Partnership, two or more persons bind themselves into a contract to
contribute money, property, and expertise in a common venture with the
intention of dividing the profits among themselves.
A partnership is vested with its own legal personality quite distinct and
separate from its individual members.
A minimum of two can constitute a partnership.
There are two types of partnership based on the liability of the partners:
general partnership and limited partnership.
General partnership consists of partners who are liable individually and
collectively to all those who have claims against them.
Limited partnership consists of partners who have limited liabilities while
others in the partnership have unlimited liabilities.

Organizing and structuring


the enterprise
In a partnership, the decision of one partner is binding to all
the other partners.
In order to form a partnership, a binding contract must be
signed by all of the partners.
The partnership should obtain to all the required
government clearances, permits, and licenses. It should get:
 A bank certificate to deposit on the money contributions of
the partners; and
 The approval for its partnership name from the Department
of Trade and Industry.

Organizing and structuring


the enterprise

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