LESSON 8

THE
ENTREPRENEURIAL
PROCESS
Second Part
BUSINESS PLANNING

Roque B. Cruz II, MBA



LESSON 8

THE
ENTREPRENEURIAL
PROCESS
Second Part
BUSINESS PLANNING

Roque B. Cruz II, MBA

Planning is a critical activity that has to be
undertaken by entrepreneurs who want to
succeed. Planning, in general, is very useful to
all business ventures because it:
Encourages systematic thinking ahead;
Allows for better coordination of business efforts;
Provides for the development of performance
standards for better control;
Serve to sharpen business’ objectives and policies; and
Renders the business better prepared for sudden
developments
WHAT IS A BUSINESS PLAN?
The first task is to conceive a
business idea then translate
the idea into a business plan

Is a written document prepared by the

entrepreneur that describes all the relevant
internal and external elements involved in
starting new venture.

It is often an integration of functional plans

such as marketing, finance, manufacturing,
and human resources.
The business plan is a detailed account
of what course of business is to
undertake complete with objectives and
goals; product description and target
clients; sales productions/targets; cost
and expense estimates; marketing and
promotional efforts; and investments
capital requirements.
A business plan is not something that is
prepared once to be rigidly followed. An
enterprise is always subject to changes
in the environment.
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.

To help determine whether to hire a consultant or

to make use of other resources, the entrepreneur
can make a skills assessment of his or her own
skills.
SKILLS ASSESSMENT
WHO READS THE BUSINESS PLAN?
The business plan may be read by employees,
investors, bankers, venture capitalists, suppliers,
customers, advisors, and consultants.

Since each of these groups reads the plan for

different purposes, the entrepreneur must be
prepared to address all their issues.

Who is expected to read the

plan can often affect its
actual content and focus.
WHAT IS THE DIFFERENCE BETWEEN
A BUSINESS PLAN AND
PROJECT FEASIBILITY STUDY?
 DIFFERENCE...
PROJECT FEASIBILITY
BUSINESS PLAN
STUDY (PFS)
It is prepared after project It is prepared to check if the
feasibility has been conducted. proposed business is feasible
or not.
It is a summary of PFS.
It is detailed than business
The purpose of writing and plan.
doing a business plan is to help
the entrepreneur raise the PFS reveals the profit
needed start up from investors. potential of a business idea
and opportunity to the
entrepreneur.
THREE PERSPECTIVES THAT SHOULD BE
CONSIDERED IN PREPARING THE
BUSINESS PLAN.

Perspective of the Entrepreneur

Marketing Perspective

Investors’ Perspective
 VALUE OF BUSINESS PLAN
The business plan is valuable to the entrepreneur,
potential investors, or new personnel, who are trying to
familiarize themselves with the venture, its goals and
objectives. The business plan is important to these
people because:

A. It helps determine the viability of the venture in a

designed market.
B. It provides guidance to the entrepreneur in organizing
his or her planning activities.
C. It serves as an important tool in helping to obtain
financing.
A CAREFULLY THOUGHT OUT
BUSINESS PLAN:

Serves to ensure the entrepreneur that all relevant

questions have been considered.

Enables the entrepreneur to organize and initiate

his/her business operations in an orderly fashion;

Gives the entrepreneur more confidence in what

he/she will do;
A CAREFULLY THOUGHT OUT
BUSINESS PLAN:
Provides the general direction on where the business
will go tomorrow, a week, a month, a year or even
10 year hence;

Will be especially useful in decision making through

critical expansion and diversification periods;

Shows how much money is needed, what is needed

for and when, and for how long it will be required in
the business:
A CAREFULLY THOUGHT OUT
BUSINESS PLAN:

Can reduce the risk of failure arising from under

capitalization, early cash flow problems: excessive
and unplanned expenditures; and

Enables the entrepreneurs to set targets in time and

consequently compare with actual business
performance
A CAREFULLY THOUGHT OUT
BUSINESS PLAN:

Finally, it is important to bear in mind that the

business plan is indispensable in borrowing money
or persuading other investors to join in and be part
of a business venture. It is the entrepreneurs’ way of
selling the idea of his/her business viability.


WHAT ARE THE MAJOR AREAS OF

BUSINESS PLAN?
 I. INTRODUCTION
Situate the reader with the background information on
the idea in coming up with the proposed business.
Discuss the situation why you are interested to the
business idea. What needs or gaps will this business
cater.. Usually from general to specific information.
 II. EXECUTIVE SUMMARY
This component will feature the name of business, its
location, nature, the name(s)of the owner of the
business, brief description of the business, and the
objective(s) of the business.
 III. MARKETING PLAN
Includes product range; specifications; product mix;
projected demand; target market; competition; selling
strategy.
 IV. PRODUCTION PLAN
Should include the location and layout of the plant
facility; process; equipment required with description;
power requirement; utilities requirement; plant capacity;
raw materials sources; and land and building
requirements.
 V. ORGANIZATION AND
MANAGEMENT PLAN
Should include details on staffing complement – number
and required skills; place of business and form of
business organization. Also it should show a timetable
outlining the different points in time within which the
different phases of the project are to be carried out.
 VI. FINANCIAL PLAN
Must include calculation of initial investment
requirements; operating requirements and costs;
working capital estimate; projected sales and
production program; total project cost; project financing
sources; profitability at 100% capacity utilization;
breakeven analysis; projected Balance sheet, Income
Statement and Cash Flow Statement.
 VII. SOCIO-ECONOMIC STUDY
Business plan must include an analysis of the business
impact to the society and to its environment. What are
the good contributions of the business to the economic
and social lives of people in the area where the business
is located.
 MEASURING PLAN PROGRESS
Entrepreneurs should check the profit and loss
statement, cash flow projections, and information on
inventory, production, quality, sales, collection of
accounts receivable, and disbursements for the previous
month.

Inventory control
Production control
Quality control
Sales control
Disbursements
UPDATING THE PLAN

The most effective business plan can become out-of-

date if condition change.

If the change are likely to affect the business plan,

the entrepreneur should determine what revisions
are needed.

In this manner, the entrepreneur can maintain

reasonable targets and goals and keep the new
venture on a course that will increase probability of
success.
WHY SOME BUSINESS PLANS FAIL?
Goals set by the entrepreneur are unreasonable.
Goals are not measurable
The entrepreneur has not made a total commitment
to the business or to the family.
The entrepreneur has no experience in the planned
business.
The entrepreneur has no sense of potential threats or
weaknesses to the business.
No customer need was established for the proposed
product or service.
ASK ME A
QUESTION.


THANK YOU!!!

Sir Roque