Entrepreneurship Notes 7 Activity 7 Develop a Feasibility Study

COURSE OUTCOME
This course file will help you how to conduct a Business Plan.

SPECIFIC LEARNING OUTCOMES

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

1. Explain the concept of Feasibility Study and Business Plan

2. Develop a Feasibility Study /Business Plan
Let's warm up!
Instruction: Below is a picture of the Philippine Business Trends for 2022. As
future business entrepreneurs, what are your INSIGHTS on this trend?

Source: Market Research Philippines

Encode your output following the required format:

1. Paper size : A4
2. Font Size and font style: 12, Book Antiqua
3. Double space
4. Margin: 1' on all sides
5. Compose of Introduction, Body, Conclusion, Recommendation, and
References
6. Refer to the attached rubrics for your reference.

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 Insights Rubric
Criteria 5 4 3 2
Focus & There is one There is one clear, There is one topic. The topic and
Details clear, well- well-focused topic. The main ideas are main ideas are
focused topic. The main ideas are somewhat dear. not clear.
The main ideas dear but are not well
are clear and are supported by
well supported detailed
by detailed and information.
accurate
information.
Organization The introduction The introduction The introduction There is no
is inviting, states states the main topic states the main dear
the main topic, and provides an topic. A introduction,
and provides overview of the conclusion is structure, or
an overview of paper. A conclusion included. conclusion.
the paper. is included.
Information is
relevant and
presented in a
logical order.
The conclusion
is strong.
Voice The purpose of The purpose of The purpose of The purpose of
writing is very writing is somewhat writing is writing is
clear, and there dear, and there is somewhat clear, unclear.
is strong some evidence of and there is
evidence of attention to the evidence of
attention to the audience. The attention to the
audience. The author's knowledge audience. The
author's and/or experience author's
extensive with the topic is/are knowledge
knowledge evident. and/or experience
and/or with the topic
experience with is/are limited.
the topic is/are
evident.
Word Choice Uses vivid Uses vivid words Uses words that Uses a limited
words and and phrases. The communicate vocabulary.
phrases. The choice and dearly, but the Jargon or
choice and placement of words writing lacks cliches may be
placement of are inaccurate at variety. present and
words seem times and/or seem detract from
accurate, overdone. the meaning.
natural, and not
forced.

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 Sentence All sentences are Most sentences are Most sentences are Sentences
Structure. well constructed well constructed and well constructed, sound
Grammar, and have varied have varied but they have a awkward, are
Mechanics. & structure and structure and length. similar structure distractingly
Spelling length. The The author makes a and/or length. repetitive, or
author makes no few errors in The author makes are difficult to
errors in grammar, several errors in understand.
grammar, mechanics, and/or grammar, The author
mechanics, spelling, but they do mechanics, and/or makes
and/or spelling. not interfere with spelling that numerous
understanding. interfere with errors in
understanding. grammar,
mechanics,
and/or spelling
that interfere
with
understanding.

INTRODUCTION
Venturing into a new business or doing any form of innovation in a
business organization demands or necessitates a plan. A business plan that is
well-researched and well-done is by itself an insurance against the illusive
success that every entrepreneur is looking forward to.

Preparing a business plan is not easy. It is a well-written, honest-to-

goodness document prepared by the entrepreneur that will convince the
investor to invest, or it is a tool to sell your business story to financial
resources and should be recognized. It is the direction and guide of the
entrepreneur as to what is to be done and how to do it. It details what is to be
achieved over a certain period.
ORGANIZING THE ENTERPRISE, PLANNING THE ENTERPRISE
Concept of a Business Plan

Authors Hisrich and Peters'

definition of a Business
Plan
It is a written document
prepared by the entrepreneur
that describes all the relevant
external and internal elements
involved in starting a new
venture. It integrates functional
plans such as marketing,
Source: dreamstime.com finance, manufacturing, and
human
resources. It also addresses short-term and long-
term decision-making for the first three years
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of

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operation. The business plan also takes care of the concerns of the potential
investors in the business project, the suppliers, the funding requirements, and
all required to commence the business and hopefully make it a successful
business venture.
David E. Gumpert's concept and definition of a Business Plan
A business plan is a document that convincingly demonstrates the
ability of a business to sell its products or services to make a satisfactory profit
and be attractive to potential backers. A better definition: A business plan is a
selling document that conveys the excitement and promise of your business to
any potential backers or stakeholders.
Other definition of a Business Plan from the books of Entrepreneurship
It is thinking ahead of objectives, strategies, financing, production,
marketing, profit prospects, and growth possibilities. However, business
planning should be realistic. This means planning is based on the available
resources and is responsive to the community's needs. It is also:
What to do

Planning How to do it

When to do it

What to expect in the

future

Business planning involves the attainment of goals and the ways to

accomplish such goals.

Principles of Planning
Here are some principles of planning which have general applications,
particularly for micro and small business:

1. Planning must be realistic

2. Planning must be based on felt needs
3. Planning must be flexible
4. Planning must start with simple projects.
STAGES OF BUSINESS PLANNING (by PROFESSOR PHILIP KOTLER)
1. Unplanned stage
2. Budgeting system stage
3. Annual Planning stage
4. Strategic Planning stage.

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CRITERIA OF EFFECTIVE PLANNING
1. The plan should state clearly its objectives. A clear statement is
necessary so that those who will be involved in the execution of the
plan will understand, accept, and support it.
2. The plan should provide measures for a satisfactory accomplishment of
the objectives in terms of quantity, quality, time, and cost.
3. The plan should state the policies that guide people in attaining the
objectives.
4. The plan should indicate what department or unit would be involved in
accomplishing the objectives. It may or may not spell out the required
work procedures.
5. The plan should indicate the time which should be allowed for each
activity. It may be necessary to establish target data for completing the
activity.
6. The plan should specify the required resources and their corresponding
costs.
7. The plan should designate the officers who will be held accountable for
the accomplishments of the objectives.
COMPONENTS OF BUSINESS PLANNING
1. SWOT
2. OBJECTIVES
3. STRATEGIES
4. TIME FRAME

Characteristics of a Sound Business Plan

1. Objective
2. Clear
3. Logical and Simple
4. Flexible
5. Stable
6. Complete and Integrated
WHY DO WE NEED A BUSINESS PLAN
There are several reasons why a written business plan necessary:

1. To project a general picture of the business project;

2. To serve as a guide in implementing the business or project;
3. To serve as a major input to investment decisions or major expenditures;
4. To serve as a reference or guide to policy formulation and development;
5. To serve as a guide for operational matters;
6. To serve as a reference for a bank loan or financing purposes;

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 7. To determine/estimate the detailed technical and financial
requirements; and
8. To serve as an overall guide for the proponent or entrepreneur.

David Gumpert believed that a business plan is a selling point. With a

business plan, you sell the entire company as a package. He cited the following
reasons for doing a business plan as follows:

1. To sell yourself as a business;

2. To obtain bank financing;
3. To obtain investment funds;
4. To arrange strategic alliance;
5. To obtain large contracts;
6. To attract key employees;
7. To complete mergers and acquisitions; and
8. To motivate and focus your management team.
Obtaining the facts for a business plan

Here are questionnaires to get the necessary data:

1. What is unique about my product/services?

2. Who are my competitors?
3. How will my customers buy?
4. What is my share in the market?
5. What is the market potential?
6. Who are my customers, and where are they located?
7. Where will I put my business?
8. How big should be my plant or place of business?
9. What equipment will I need, and what size?
10. How will I treat customers?
11. What personnel do I need?
12. How will I organize my enterprise?
13. What kind of records do I need?
14. How profitable will the business be?
15. How financially healthy will I be?
16. What is my break-even point?

OUTLINE OF A BUSINESS PLAN

As a general rule, however, the business plan format should have at
least four major components: The marketing plan, the technical plan, the
financial plan, and the organizational plan.
Sample Format
(from Hisrich and Peters)

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I. Introductory Page
A. Name and Address of Business
B. Names and addresses of the principals
C. Nature of Business
D. Statement of financing needs
E. Statement of confidentiality report
II. Executive Summary
III. Industry Analysis
A. Future outlook and trends
B. Analysis of Competitors
C. Market Segmentation
D. Industry Forecasts
IV. Description of Venture
A. Products (s)
B. Services (s)
C. Size of Business
D. Office equipment and personnel
E. Background of entrepreneurs
F. Business model canvass
V. Production Plan
A. Manufacturing Process (amount subcontracted)
B. Physical Plant
C. Machinery and Equipment
D. Names of suppliers of raw materials
VI. Marketing Plan
A. Pricing
B. Distribution
C. Promotion
D. Product of Forecast
E. Controls
VII. Organizational Plan
A. Form of Ownership
B. Identification of partners or principal shareholders
C. Authority of principals
D. Management-team background
E. Roles and responsibilities of members of the organization

VIII. Financial Plan

A. Pro forms income statement
B. Cash flows projections
C. Pro porma balance sheet
D. Break-even analysis
E. Sources and application of funds

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 IX. Appendix (contains backup materials)
A. Letters
B. Market research data
C. Leases or contracts
D. Price list from suppliers
STEPS IN BUSINESS PLANNING
1. Evaluate your personal resources and interest and the resources of
the community.
 Do you have the necessary funds?
 Do you have skills or management experience?
 Does the government provide financial and technical assistance?
 Are raw materials available?
 Are you interested in such a business?
 Do you have good human relations?

2. Analyze your market.

 Is there a good demand for your product?
 How many competitors are there in the market?
 What is your estimated share in the market?
 Who are your customers?
 Are they interested in existing products or services?
 Is it possible for you to offer better quality or a lower price?
 Is there a reasonable profit?
3. Choose a proper business location.
 Is it near your prospective customers?
 Are there facilities like electricity, water, transportation, and
communication?
 Is the place clean, decent, and peaceful?
 Do you have a good alternative in case the best location is expensive?
 Is it accessible to raw materials and other supplies?
4. Prepare a Financial Plan.
 What are your objectives?
 How much money do you need?
 How will you spend the money?
 Where will you get the money?
 What are your expenses?
 How soon can you recover your money or investment?
5. Prepare a production plan.
 Is it economical to rent or buy production equipment?
 Can you ensure or improve the product design or quality?
 Can your production facilities meet demand?

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  Do you have inventory control?
 Do you have proper scheduling of production?
6. Prepare an organizational plan.
 What type of business organization is most suitable?
 Do you know your business organization's corresponding laws,
policies, and requirements?
 Who will be the officers and employees of your enterprises?
 What are their duties and responsibilities?
7. Prepare a management plan.
 What are the goals and objectives?
 What are your strategies?
 Do you have business policies for your customers?
 Do you have human resource development for your employees?
 What is your program for social responsibility?
Importance of Business Planning
1. Planning can eliminate business risk.
2. Planning can minimize the cost of production.
3. Planning can detect the weaknesses of business operations.

Major Assessment:

Instruction: Think of a product or a service and develop a business plan. Follow

the Sample format above and prepare for the Oral Presentation.

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 Oral Presentation Rubrics
Product or Service:
Group
Members:

Trait/Score 4 3 2 1 SCORE
Organization Presents Presents The audience The audience
information in information in has difficulty cannot
a logical, a logical following the understand the
interesting sequence that presentation presentation
sequence that which audience because the because there is
which audience can follow. subject jumps no sequence of
can follow. around. information.
Knowledge Demonstrates The Demonstrations Does not have a
full knowledge demonstration are grasp of
(more than is at ease with uncomfortable information;
required) by expected with the subject
answering all answers to all information cannot answer
questions with questions but and are able to questions about
explanations fails to answer only the subject.
and elaborate. rudimentary
elaboration. questions.
Mechanics The The The The
presentation presentation presentation presentation
has no has no more has three has four or
misspellings or than two misspellings more spelling
grammatical misspellings and/or errors and/or
errors. and/or grammatical grammatical
grammatical errors. errors.
errors.
Eye Contact Maintains eye Maintains eye Occasionally Reads all of the
contact with the contact most of uses eye slides with no
audience, the time but contact, but still eye contact.
seldom frequently reads most of
returning to returns to the slides.
notes. notes.
Elocution A student uses The student's The student is Students
a clear voice voice is clear low and mumble
and correct, and incorrectly incorrectly
precise pronounces pronounces pronounce
pronunciation most words terms. terms and
of terms so that correctly. Most Audience speak too
all audience audience members have quietly for
members can members can difficulty Students in the
hear the hear the hearing the back of the
presentation. presentation. presentation. room to hear.
Poise Student Student makes Student Tension and
displays a minor mistakes displays mild nervousness
relaxed, self- but quickly tension; has are obvious;
confident recovers from trouble subject has
nature, with no them; displays recovering trouble
mistakes. little or no from mistakes. recovering
tension. from mistakes.

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Enthusiasm Student Student Student shows Student shows
demonstrates a occasionally some negativity absolutely no
strong, positive shows positive toward topic interest in topic
feeling about feelings about presented. presented.
topic during topic.
entire
presentation.
Total Points:

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