NAME: _________________________________ COURSE & YEAR: __________

GEE 102 The Entrepreneurial Mind

CHAPTER II DEVELOPMENT OF BUSINESS PLAN AND STRATEGIES
LESSON 1: How to Write a Business Plan

At the end of this lesson, you should be able to:

a. explain the key elements of the business plan,
b. understand the concept of potential market, and
c. discuss the proposed solution in terms of product and service.

OVERVIEW
What is a Business Plan?
The business plan is a written document prepared by the entrepreneur that describes all the
relevant external and internal elements involved in starting a new venture. It is often an integration of
functional plans such as marketing, finance, manufacturing, and human resources.

Who should write the business plan?

The business plan should be prepared by the entrepreneur; however, he or she may consult
with many other sources in its preparation. Lawyers, accountants, marketing consultants, and
engineers are useful in the preparation of the plan.
Three perspectives that should be considered in preparing a business plan:
 Perspective of an Entrepreneur
 Marketing perspective
 Perspective of an Investor

Writing the Business Plan

It should be comprehensive enough to give any potential investor a complete picture and
understanding of the new venture, and it should help the entrepreneur clarify his or her thinking about
the business.

Outline of a Business Plan

I. Introductory Page
II. Industry Analysis
III. Description of Venture
IV. Production Plan
V. Operations Plan
VI. Marketing Plan
VII. Organizational Plan
VIII. Assessment of Risk
IX. Financial Plan
X. Appendix
Introductory Page

The introductory page should contain the following:

Three perspectives that should be considered in preparing a business plan:
 The name and address of the company
 The name of the entrepreneur(s), contact number, email address, and website address if
available.
 Brief description of the company and the nature of the business

Executive Summary
This section of the business plan is prepared after the total plan is written. About two to three
pages in length, the executive summary should stimulate the interest of the potential investor.
Executive summary should answer the questions:
 What is the business concept or model?
 How is this business concept or model unique?
 Who are the individuals starting this business?
 How they will make money and how much?

Environmental and Industry Analysis

Examples of these environmental factors are:

 Economy. The entrepreneur should consider trends in the GNP, unemployment by
geographic area, disposable income, and so on.
 Culture. An evaluation of cultural changes may consider shifts in the population by
demographics.
 Technology. Technological development will require the entrepreneur to make careful short
term marketing decisions.
 Legal Concerns. The entrepreneur should be prepared for any future legislation that may
affect the product or service, channel of distribution, price, or promotion strategy.
 Industry demand. Demand as it relates to the industry is often available from published
sources.
 Competition. Most entrepreneurs generally face potential threats from larger corporations.

Description of Venture

The description of venture should be detailed in this section of the business plan. This will
enable the investor to ascertain the size and scope of the business.
Describing the venture:
 What is the mission of the new venture?
 Why will you be successful in this venture?
 What is your product(s) and/or service(s)?
 Where will the business be located?
 Why is this building and location right for your business?
Production Plan

If the new venture is a manufacturing operation, a production plan is necessary. This plan
should describe the complete manufacturing process.
Production Plan should describe the:
 physical plant layout;
 machinery and equipment needed to perform the manufacturing operations;
 raw materials and suppliers’ names, addresses, and terms;
 costs of manufacturing; and
 any future capital equipment needs.

Operations Plan

This section goes beyond the manufacturing process (when the new venture involved
manufacturing) and describes the flow of goods and services from production to the customer. A non-
manufacturer such as a retailer or service provider would also need this section in the business plan to
explain the chronological steps in completing a business transaction.
It might include:
 inventory or storage of manufactured products;
 shipping;
 inventory control procedures; and
 customer support services.

Marketing Plan

The marketing plan is an important part of the business plan since it describes how the
product(s) and/or service(s) will be distributed, priced, and promoted. Marketing research evidence to
support any of the critical marketing decision strategies as well as for forecasting sales should be
described in this section. Specific forecasts for a product(s) and/or service(s) are indicated to project
profitability of the venture.

Organizational Plan

The organizational plan is the part of the business plan that describes the venture’s form of
ownership, that is, proprietorship, partnership, or corporation. If the venture is a partnership, the terms
of the partnership should be included. If the venture is a corporation, it is important to deal the shares
of stock authorized and share options, as well as the names, addresses, and resumes of the directors
and officers of the corporation.

Assessment of Risk

Every new venture will be faced with some potential hazards, given its particular industry and
competitive environment. It is important that the entrepreneur make an assessment of risk in the
following manner. The entrepreneur should:
 indicate potential risks to the new venture;
  be a discussion of what might happen if these risks become reality; and
 discuss the strategy that will be employed to prevent, minimize, or respond to the risks
should they occur.
Financial Plan

It determines the potential investment commitment needed for the new venture and indicates
whether the business plan is economically feasible. Financial planning is the process of estimating the
capital required and determining its competition. It is the process of framing financial policies in relation
to procurement, investment and administration of funds of an enterprise.

Appendix

The appendix of the business plan generally contains any backup material that is not necessary
in the text of the document. Reference to any of the documents in the appendix should be made in the
plan itself.

LET’S CONNECT

ACTIVITY 1 TRUE OR FALSE

Directions: On the space provided before each item, write TRUE if the given statement is true, and
FALSE if it is not.

______ 1. When you are planning of putting up a business you have to consider its location.
______ 2. The kind of machines and equipment you need to acquire will not depend on the level of
technology used in operations.
______ 3. Wrong decisions may not result to the loss of the enterprise.
______ 4. Do not buy equipment from reliable supplier.
______ 5. It is not necessary to train a newly hired employee.
______ 6. Outputs includes materials, manpower, machinery money and the like.
______ 7. If you do not plan and schedule your production properly, you will waste and loss
production cost.
______ 8. The formula for productivity is equals to input over output.
______ 9. Raw materials should be available anytime for production.
______ 10. Before operating the business, entrepreneur must complied with government regulations
and policies.

ACTIVITY 2 ESSAY
Directions: In not less than 100 words, write a short essay based on what is being asked.
This task is worth 10 points.

1. Why is it necessary for an entrepreneur to create a feasible business plan?

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