1. PLANNING THE ENTERPRISE
CHAPTER 1

2. BUSINESS PLAN
Guides the entrepreneurs throughout the process of their business venture.
Used by new enterprises who need to convince prospective investors about the soundness and potential of their business.
Used to convey the capabilities and competencies of their owners and managers.
Must also be able to ‘sell’ the proponent and the business proposition to this audience.

3. BUSINESS PLAN Prefeasibility Study Similar to:
A preliminary study undertaken to determine, analyze, and select the best business scenarios.
Feasibility Study
An engineering study based on work and engineering analysis, which presents information to determine whether or not the project should be advanced to be final engineering and construction stage.

4. BUSINESS PLAN Written:
during the first few years of the enterprise in order to guide the entrepreneur on which strategies would be most beneficial for the enterprise to take.
focused on bringing the enterprise to a higher level of growth, a period where the enterprise has already reached its peak and would want to enter into another endeavor by recreating and re-establishing itself.

5. Masters of a Business Plan
It serves the entrepreneurs who must set a navigation course.
It serves investors and cautious financiers.
It serves the managers and staff of the organization so that they will know the strategies and programs of the enterprise.

6. Format of a Business Plan
Introduction
The Business Concept and the Business Model
The Business Goals: Vision, Objectives, and Performance Targets
The Business Offering and Justification
Executive Summary
The Business Proponents: Organizers with their Capabilities and Contributions
The Target Customers and the Main Value Proposition to the Customer
The Market, Market Justification based on the Industry Dynamics and the Macro Environmental Factors Affecting the Opportunities and Threats in the Market, the Size, Potential and Realistic Share of the Market
The product and Service Offerings
The Enterprise Strategy and Enterprise Delivery Systems: Business Competitiveness
The Financial Forecasts and Expected Returns, Risks and Contingencies
Environmental and Regulatory Compliance
The Capital Structure and Financial Offering: Returns and Benefits to Investors, Financiers, and Business Partners

7. 10 CONTENTS OF A BUSINESS PLAN

8. 1. The Business Concept and the Business Model
- contains the essence of the enterprise in a concise but powerful manner.
stresses the value of the product offering to the target market customers who would likely buy it.
Business Model
Translation of product concept
a formula on how the enterprise exactly plans to make the money out of the business.

9. 4 AREAS IN MONEYMAKING How will the business raise revenue.
Critical factors that will cause the revenues to materialize.
2. COST
Costs of the enterprise products and other costs of doing business.
How will these costs be managed to ensure comfortable profits.
Critical factors that drive the costs.
How can these factors be controlled.

10. 4 AREAS IN MONEYMAKING 3. INVESTMENTS
What will be the major investments of the enterprise.
What will these investments give the enterprise a competitive edge.
4. FINANCE
How will the enterprise finance the investments.
How will the enterprise fund its growth.

11. 1. The Business Goals: Vision, Mission, Objectives, and Performance Targets
A desired result that a person or a system envisions, plans and commits to achieve.
communicated by articulating the basic purpose of setting up the enterprise in a mission statement.
VISSION
A foresight – the capacity to envisage future market trends and plan accordingly.
MISSION
A written declaration of an organization’s core purpose and focus that should be accomplished.
OBJECTIVES
A specific result that a person or system aims to achieve within a time frame and with available resources.
Should be measurable, achievable, and time-bound.
PERFORMANCE TARGETS
The expected or predicted success level of an individual, company or organization.

12. To illustrate, let us examine Double Happiness
To illustrate, let us examine Double Happiness. Double Happiness is an eatery in a bus terminal. It has three outlets located at bus terminals in Central Luzon.

13. The vision of Double Happiness is: “to establish a commanding presence and market leadership as a food chain servicing major bus terminals in Central Luzon within the next five years.”

14. The mission of Double Happiness is: “to provide quality food and passenger convenience services that would generate sufficient profits for the stockholders and improve its employees.”

15. The vision and the mission statements are then translated into measurable end results, more popularly called objectives.

16. Double Happiness objectives are:
To establish a strong market presence in Central Luzon;
To earn good financial returns for its owners;
To delight customers with high quality food services; and
To make Double Happiness a happy and rewarding place to work in.

17. The objectives should be translated into performance targets:
Key Result Areas (KRAs)
KRAs are the qualitative manifestations that the objectives are being achieved.
Performance Indicators (PIs)
The key result that is rendered into quantified performance measurements.
serve as the aspirational scorecard of the enterprise managers and the motivational results of the investors.

18. Objectives Key Result Areas
1. To establish strong market presence in Central Luzon
1a. Number of food in major bus terminals in Central Luzon
1b. Sales volume attained
1c. Market share in Central Luzon
2. To earn good financial returns for its owners
2a. Amount of next t five years
2b. Return on equity (ROE)
2c. Return on assets (ROA) or return on investment (ROI)
2d. Return on sales (ROS)

19. Objectives Key Result Areas
3. To delight customers with high quality food and services
3a. Growth in sales per outlet
3b. Percentage of repeat customers
3c. Number of customer commendations or complaints
3d. Awards and recognition given by the community or the government for excellent service
3e. Customer survey rating customer’s degree of delight.

20. Objectives Key Result Areas
4. To make Double Happiness a happy and rewarding place to work in.
4a. Compensation and benefits of managers and workers are above industry rates.
4b. Management and employee turnover.
4c. Number of job applicants compared to other similar establishments.

21. Performance Indicators
Key Result Areas
Performance Indicators
2014
(Now)
2015
(One Year Later)
2016
(Five Years Later)
1a. Number of food outlets in major bus terminals in Central Luzon 3 5 20
1b. Sales volume attained
7 million pesos
13 million pesos
60 million pesos
1c. Market share in Central Luzon 2% 3%
12%

22. Performance Indicators
Key Result Areas
Performance Indicators
2014
(Now)
2015
(One Year Later)
2016
(Five Years Later)
2a. Amount of net profits realized for the next five years
1 million pesos
2 million pesos
10 million pesos
2b. Return on equity (ROE)
30%
40%
60%
2c. Return on assets (ROA) or return on investment on sales (ROS)
15%
20%
2d. Return on sales (ROS)
14%
16%

23. Performance Indicators
Key Result Areas
Performance Indicators
2014
(Now)
2015
(One Year Later)
2016
(Five Years Later)
3a. Growth in sales per outlet
20%
3b. Percentage of repeat customers
30%
40%
50%
3c. Number of customer commendations; number of customer complaints
4 out of 20
1 out of 20
6 out of 20
1 of 50
10 out of 10
1 out of 100

24. 3e. Customer survey rating to ascertain customers’ degree of delight
Key Result Areas
Performance Indicators
2014
(Now)
2015
(One Year Later)
2016
(Five Years Later)
3d. awards and recognition given by the community or the government for excellent service
None
One try to Bulacan Chamber
Two by Central Luzon Provinces
3e. Customer survey rating to ascertain customers’ degree of delight
3.5
(on a scale of 3 to 5) 4
(on a scale of 1 to 5)
4.5

25. Performance Indicators
Key Result Areas
Performance Indicators
2014
(Now)
2015
(One Year Later)
2016
(Five Years Later)
4a. Compensation and benefits of managers and workers are above industry rates
Same as industry
50% above Industry
15% above the Industry
4b. Management and employee turnover
3 out of 10 per year
2 out of 10 per year
1 out of 10 per year

26. Performance Indicators
Key Result Areas
Performance Indicators
2014
(Now)
2015
(One Year Later)
2016
(Five Years Later)
4c. Number of job applicants compared to other similar establishments
10% more job applicants
20% more job applicants
30% more job applicants

27. 2. THE EXECUTIVE SUMMARY
contains everything that is relevant and important to the business audience
a synthesis of the entire plan. It must contain the major argumentations of the business proponent on why the business will work and succeed.
provide the business plan audience all the arguments on why they should participate in the business venture.

28. 2. THE EXECUTIVE SUMMARY
discuss and justify the Enterprise Strategy and Enterprise Delivery System.
render all the major institutional, market, operations, and organizational strategies previously cited into financial strategies and forecasts.
Investment requirements should be presented along with the summaries of the projected income statements, balance sheets, cash flows, and fund flow, and their analyses and conclusions. Yields and returns, along with risks and contingency measures, should round up this section.

29. 2. THE EXECUTIVE SUMMARY
contain a section on the environmental and regulatory compliance of the proposed business, as well as the more proactive programs to become more responsible corporate citizen.
present the capital structure of the proposed business and show how this structure will respond to the investment programs and financial forecasts of the enterprise.
can only be written last in order to capture the findings and insights of the other parts, but for presentation purposes, it is placed in the first of the business plan.

30. The Executive Summary introduce and highlights the good qualities of:
The business proponents and their partners;
The enterprise organization and its capabilities.
The technology providers and their expertise and experience; and
The suppliers and all the major service providers.

31. 3. The Business Proponents
4 TYPES OF STAKEHOLDERS:
1. Resource mobilizers and financial backers
If the business plan readers are the resource providers, then they will want to know who else on board to share the burden of raising money to see the whole thing through.

32. 3. The Business Proponents
4 TYPES OF STAKEHOLDERS:
2. Technology providers and applicators
If the business plan readers are the technology providers, they will want to know if there will be sufficient funds to pay for the technology.

33. 3. The Business Proponents
4 TYPES OF STAKEHOLDERS:
3. Governance and top management
If the business plan readers are the governance and top management team, then they will want to know what strategies and performance indicators are being proposed.

34. 3. The Business Proponents
4 TYPES OF STAKEHOLDERS:
4. Operating and support team
If the business plan readers are the implementing, operating, and support teams, they will want to know what programs, activities, tasks, and resources would be in place.

35. 4. The Target Customers and the Main Value Proposition
must be of sufficient size, sufficient paying capacity, and have sufficient interest to purchase the products being offered by the enterprise.
Main Value Proposition
is the unique selling proposition of the enterprise.

36. Business plan pinpoints what the customers buy:
how they buy
when they buy
where they buy
what convinces them to buy
This information should then be used to justify the exact locations and marketing channels to be employed by the enterprise.

37. 5. Market Demand and Supply, Industry Dynamics, and Macro Environmental Factors

38. MARKET DEMAND AND SUPPLY
The business plan should:
estimate the total market supply and demand for the product offering of the enterprise.
determine the major critical factors that influence this market demand and supply.
then forecast the future demand and supply.

39. MARKET DEMAND AND SUPPLY
If these physical factors are:
expected to remain the same, then most likely, the future forecast will follow the past trends.
If not, the future estimate of demand and supply should be revised according to the new variables influencing the demand and supply.

40. MARKET DEMAND AND SUPPLY
The market analysis and forecasting exercise should lead to a quantification of the current and prospective size of the market. Both the current and potential consumptions should then be dissected.

41. INDUSTRY DYNAMICS
The business plan should discuss the relevant industry dynamics:
The competing enterprises in the industry and their comparative advantages and disadvantages. The business models and strategies they are employing.
The suppliers in the industry and their capabilities and bargaining power.
The channels of distribution being used by the industry. The effectiveness of these channel?

42. Macro Environmental Factors
Both the industry players and the market are affected by the macro environment, which includes the social, political, economic, ecological, and technological (SPEET) forces.

43. Macro Environmental Factors
Social environment
includes the demographics and cultural dimensions that govern the relevant entrepreneurial behavior. The structure, social status, and dynamics of the population at large, as well as the people’s beliefs, tastes, mores, customs, and traditions dictate the major parameters of the market behavior.

44. Macro Environmental Factors
Political environment
defines the governance system of the country or the local area of business. It includes all the laws, rules and regulations on allowable and disallowable business practices.

45. Macro Environmental Factors
Economic environment
is mainly driven by supply and demand forces. It is the same factor that drives the interest and foreign exchange rates to fluctuate with the mo0vement of the market forces.

46. Macro Environmental Factors
Ecological environment
includes all the resources and ecosystem that defines the habitat of man, animals, plants, and minerals.

47. Macro Environmental Factors
Technological environment
makes or breaks competing participants in any industry. New scientific and technological discoveries often lead to the launch and commercialization of new products with superior attributes or to rendering the old ones obsolete.

48. 6. Product/Service Offering: Description, Evolution, and Justification
The product, services must be described by highlighting the features and attributes that would most appeal to the target customers. The business plan should also prove that the products/services would be accepted and carried by the distribution channels.

49. 7. Enterprise Strategy and Enterprise Delivery System
by mapping the competitive landscape and by situating the enterprise and its competitors as to their strategies and chosen positioning.
ENTERPRISE DELIVERY SYSTEM
serves as the enabler of the Enterprise Strategy.
implements the Enterprise Strategy

50. Enterprise Delivery System
Starts from the Input (resources mobilized)
Proceeds to the Throughput (the transformation process where input are converted to output)
Produces the Output (the products/services)
The Outputs are the marketed to the customers (in the case of goods) or experienced by the customers (in the case of services).
Outcomes of the EDS are the customers’ satisfaction level, profits generated, and performance of the people from the transaction.

51. Input
Throughput
Output
Marketing
Desired Outcomes
Harnessing of human, money and physical resources
Resources mobilized
Money
Men
Machines
Methods
Management
Conversion of input into output and the transformation within the factory or service shop
Goods produced or services delivered
Positioning
Product
Packaging
Place
People
Promotion
Price
Customer satisfied
Sales volume attained
Profits generated
People performance

52. 8. Financial Forecasts: Expected Returns, Risks, and Contingencies
From the financial forecasts, the business plan should then calculate the expected returns from the business. The important return calculators are the following
expected return of sales;
expected return on assets or investments; and
expected return on stockholders’ equity.
The business plan should also calculate the long-term return, using the time value of money. This means the internal rate or value.
The business plan should then evaluate both the business and the financial risks involved.

53. 9. Environmental and Regulatory Compliance
The business plan must articulate the laws, rules, and regulations governing the business, and the industry that the enterprise is in. It should ascertain that all the necessary permits, license and authority to use proprietary intellectual capital had either been secured or would definitely be secured.
The business plan should also assure that all the necessary local government ordinances and barangay ethics would be followed by the enterprise.

54. 10. Capital Structure and Financial Offering: Returns and Benefits to Investors, Financiers, and Partners
discussions on:
who are the investors
the financiers
the partners of the enterprise
Finally, the business plan must appeal to its target audience. It must highlight for them the main features of the business plan that they are looking for.