Business Plan

• Planning

  Thinking and looking ahead
• For every goal, personal or business, there are several ways of reaching it. The success of attaining such a goal primarily depends on good planning
• Planning


  The first function of management. Without it, the other functions are most likely not in order
• Planning


  The process of establishing objectives and appropriate courses of action before taking action
• Planning


  The basic process of choosing goals, and determining the ways of realizing them, taking into our consideration available resources, including time
• Types of Plans

  • Strategic Plan
  • Tactical Plan
  • Operating Plan
• Strategic Plan


  • Focused on the entire business operations
  • Prepares the business enterprise for its operations in the future
  • Predicts the external business environment
  • Implements the corporate mission
• Tactical Plan

  • A series of tactical plans constitute a strategic plan
  • Division managers are involved in tactical planning which is shorter in time frames-usually one year or less
  • They plan what to do, how to do it, and who will do it
• Operating Plan


  • Provides the specifics as to how the strategic plan will be attained
  • Managers use operating plans to accomplish their job responsibilities
• Single-use Plan


  Applicable to activities that do not repeat. Once the activity is finished, the plan is no longer needed
• Single-use Plans

  • Program - a set of activities towards an objective
  • Budget - provides funds indicating their sources, and their corresponding expenditures
• Ongoing Plan


  Used for continuing situations, problems, and activities which are similar and consistent
• Ongoing Plans

  • Policy - which is a guideline for making decisions
  • Procedure - which are step-by-step instructions for performing an activity or task
  • Rule - which is a specific plan for controlling human behavior at work
• Principles of Planning

  • Must be realistic
  • Must be based on felt needs
  • Must be flexible
  • Must be democratic
  • Must start with simple projects
  • Must include social responsibility
• Basic Steps in Planning

  1. Establish objectives

  2. Evaluate the environment

  3. Determine the best alternative strategy

  4. Implement the action plan

  5. Evaluation of results
• Barriers to Successful Planning

  • Incompetence in planning
  • Lack of dedication
  • Incomplete and inaccurate information
  • Short-sightedness
  • Dependence on the planning department
• Quantitative Planning Tools


  Numerical data in which sufficient information is available to determine relationships between variables
• Qualitative Planning Tools


  Do not use numbers like arithmetic or mathematics. These are based on expert judgment, opinion, or experiences
• Qualitative Planning Tools


  • Delphi technique
  • Brainstorming
  • Quality circle
  • Management by objective (MBO)
• Data for a Business Plan

  • What is unique about my product or service?
  • Who are my competitors?
  • How will my customers buy?
  • What is my share in the market?
  • What is the market potential?
  • Who are my customers and where are they located?
  • Where will I put up my business?
  • How big should my plant be or where should my place of business be?
  • What equipment will I need and what size?
  • How will I create customers?
  • What personnel do I need?
  • How will I organize my enterprise?
  • What kind of records do I need?
  • How much capital do I need?
  • How profitable will the business be?
• Outline of a Business Plan

  • Cover Sheet
  • SECTION ONE: THE BUSINESS
  • SECTION TWO: FINANCIAL DATA
  • SECTION THREE: SUPPORTING DOCUMENTS
• Steps in Business Planning

  1. Evaluate your personal resources and interests, and the resources of the community

  2. Analyze your market

  3. Choose a proper business location

  4. Prepare a financial plan

  5. Prepare a production plan

  6. Prepare an organizational plan
• 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?
  • Is it possible for you to offer a better quality or a lower price?
  • Is there a reasonable profit?
• Choose a proper business location

  1. Is it near your prospective customers?

  2. Are there facilities like electricity, water, transportation, and communication?

  3. Is the place clean, decent, and peaceful?

  4. Do you have good alternatives in case the best location is expensive?

  5. Is it accessible to raw materials and other supplies?
• Prepare a financial plan

  1. What are your objectives?

  2. How much money do you need?

  3. How will you spend the money?

  4. Where will you get the money?

  5. What are your expenses?

  6. How soon can you recover your money or investment?
• Prepare a production plan

  1. Is it more economical to rent to or buy production equipment?

  2. Can you ensure or improve your product design or quality?

  3. Can your production facilities meet demand?

  4. Do you have inventory control?

  5. Do you have proper scheduling of production?
• Prepare an organizational plan

  1. What type of business organization is most suitable?

  2. Do you know the corresponding laws, policies, and requirements of your business organization?

  3. Are you aware of the advantages and disadvantages of each type of business organization?

  4. Who will be the officers and employees of your enterprise? What are their duties and responsibilities?
• Prepare a management plan

  1. What are your goals and objectives?

  2. What are your strategies?

  3. Do you have business policies for your customers?

  4. Do you have human resources development for your employees?

  5. What is your program of social responsibility?
• Putting up a business is not a game of chance. It is not a win or lose activity. However, there are always risks in business. Some of these can be avoided. Others like natural calamities, cannot be avoided but their effects can be minimized.
• Planning can eliminate business risks

  • It carefully studies the competence, interest, and resources of the entrepreneur against the needs of consumers, together with the presence of competitors. Through marketing research or a feasibility study, the entrepreneur can determine whether it is profitable to set up a certain kind of business or not.
• 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. This results in economy and efficiency. Without planning, production inputs are wasted more often than not.
• 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. The various resources or inputs are also indicated to support the strategies. If the goals and objectives have not been accomplished according to the time frame, there is something wrong with the operation. The entrepreneur can then reevaluate his planning.
• Successful planning is highly dependent on adequate and accurate information. This is much needed in knowing the needs of consumers, and the strengths and weakness of competitors. Such data give the entrepreneur the ability to make the right goals and effective strategies. In addition, any entrepreneur who follows the principles of planning is most likely to succeed in his business.
• Decision making


  A process of choosing intelligently from among alternatives
• Define the problem

  The root cause of the problem must be identified. A problem has several symptoms or effects.
• Gather data about the problem

  Research for the real cause or causes of the problem.
• Organize and analyze the data

  Through this, the real cause or causes of the problem can be made clear and specific. This enables entrepreneurs to formulate alternative solutions.
• Develop alternative solutions

  There are several possible alternative solutions. At least, these prevent managers from solving their problems too quickly or prematurely.
• Analyze the alternatives


  Each alternative must be evaluated in terms of the goals and resources of the organization. In short, the alternative must be implementable and effective in solving the problem.
• Select the best alternative


  The best alternative is one that has the most advantages in terms of costs or profits. Peter Drucker stated the four criteria of selecting the best alternative: Presence of risk, Economy of effort, Time factor, Availability of resources