DEVELOPING A BUSINESS PLAN

Reporters:JINKEE B. MALLAREDIELYN P. HIJOSACLEO A. ALAYON

WHAT IS PLANNING? it is thinking ahead of objectives,

strategies, financing, production, marketing, profit aspects and growth

possibilities. However, business planning should be realistic. It is based

on available resources and is responsive to the needs of the community. This chapter presents the fundamental principles of planning, criteria of

effective planning, steps, components and importance of business planning.

PLANNING is…..

what to do

how to do it

when to do it

what to expect in the future

- involves the attainment of goals. A time frame is needed is attaining the goals. Starting

the business is not the end 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. Business planning is a continuous

process until consumer satisfaction is maximized and sustained.

PRINCIPLES OF PLANNING

* Planning must be realistic

based on available resources : human, financial, and physical

resources. If these are not enough, then it would

be impossible to implement successfully the project. Any planning which is not supported by adequate

resources is likely to fail. 

* Planning must be based on felt needs

the objectives of the entrepreneur should fit the

needs of the people in a community. Such needs can

be known through observations, personal

interviews and questionnaires.

* Planning must be flexible

resources, needs and economic conditions 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 enterprises 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 projects as he acquires more resources

and management experiences.

STAGES OF BUSINESS PLANNING

 

UNPLANNED STAGE

- looking for funds, customers, materials and equipment. He has

no time in planning. His entire attention is devoted to the daily operations of his business in his

intense desire to survive.

BUDGETING-SYSTEM STAGE

- the owner-manager realizes the need to develop and use a

budgeting system. Estimated incomes from sales and

expected expenditures are made. This is done facilitate the orderly functions of the growing

enterprise.

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 goals and let the employees comply with them. In the case of bottom

up approach he encourages his employees to participate in planning the

goals and strategies of the enterprise. The first approach in planning is autocratic

while the other one is democratic.

STRATEGIC PLANNING STAGE

- as the business enterprises becomes bigger, a long-range planning is needed.

This is a three-or five year plan. Such plan has flexibility to able to adjust to changing

conditions. An executive of the Xerox Corporations claims that some of their

plans are being revised every day of the year. At this stage, planning develops into

more strategic character. 

CRITERIA OF EFFECTIVE PLANNING

1. The plan should state clearly its objectives.2. The plan should provide measures for a satisfactory accomplishment of the objectives in terms in quantity, quality, time and cost.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 involves in accomplishing the objectives.

5. The plan should indicate the time which should be allowed for each activity. It may be necessary to establish a target data for completing the activity.6. The plan should specify the required resources and their corresponding. 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 ( Strength, Weaknesses, Opportunities and Threats)

The chances of a product or service can be evaluated through the SWOT analysis

  2. OBJECTIVES There should be specific

and realistic.

3. STRATEGIES These are ways are

stated in the financial, production, marketing and organizational plans of the enterprises.

  4. TIME FRAME   In business, time is gold.

For this reason, an entrepreneur must be efficient in time management.

CHARACTERISTICS OF 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

1. What is unique about my products/service? 2. Who are my competitors?3. How will my customers buy?4. What is my share in the market?5. Who are my customers and where are they

located?6. What is market potential?7. Where will I put my business? 8. How big should be my plant or place of

business be?

OBTAINING THE FACTS FOR A BUSINESS PLAN

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 be business be?16. How financially healthy will I be?17. What is my break-even point?

OUTLINE OF A BUSINESS

PLAN

OUTLINE OF A BUSINESS PLAN

* Cover Sheet *Business Goals*Strategies*Table of Contents

Section One: THE BUSINESS 

A. Description of Business

B. Product/ServiceC. MarketD. Location of

BusinessE. Competition

F. ManagementG. PersonnelH. Application and

Expected Effect of Loan ( If Needed)

I. Summary

Section Two: FINACIAL DATA

A. Sources and Applications of FundingB. Capital Equipments ListC. Balance SheetD. Break- Even AnalysisE. Income Projections (Profit and Loss

Statements)1. Five Year summary2. Detail by month for first year3. Detail by quarter for second,

third, fourth and fifth years.4. Notes to explanation

Section Two: FINACIAL DATA

F. Cash Flow Projection1. Detail by month for first year2. Detail by quarter for second, third,

fourth and fifth years 3. Notes to explanationG. Deviation AnalysisH. Historical Financial Reports for Existing

Business1. Balance Sheets for past five years2. Income statements foe past five

years.3. Tax Return

SECTION THREE: Supporting Documents

Personnel resumes, personal balance sheets, cost of living budget, credit, reports, letters of reference, job descriptions, letters of intent, copies of leases, contracts, legal documents and anything else relevant to the plan.

 

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

location4. Prepare a financial plan5. Prepare a production plan6. Prepare an organizational

plan7. Prepare a management

plan

The Importance of Business Plan

Putting up a business is not a game of chance. It is not a win or loss activity. However, there are always risks in business. Some of these can be avoided. Others cannot be avoided like natural calamities, but their effects can be minimized.

 

PLANNING CAN BE 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 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. The various resources or inputs are also indicated to support the strategies. If the goals and objectives have not been accomplished according to time frame, there is something wrong with 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 strength and weaknesses 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.

SUMMARY* Planning is thinking ahead. It decides what to do; how to do

it; when to do it; what to expect in the future.* The principles of planning are : it must be realistic, based on

felt needs, it must be flexible; and it must be a simple project at the start.

* Stages of business planning are: unplanned stage, budgeting-system stage, annual planning stage, and strategic planning stage.

* Planning to be effective should have the following features: clear objectives; measurability, policy guidelines, time frame, required resources and costs, responsible personnel and implementing office.

* Components of business planning are SWOT, objectives, strategies and time frame

*A sound business plan must be objective, clear, logical and simple flexible, stable and complete and integrated.

    

-The End-

THANK YOU!Jinkee B. Mallare

Dielyn P. Hijosa Cleo A. Alayon

GOD BLESS!!!