ENTREPRENEURSHIP

Module 1
INTRODUCTION TO BUSINESS PLAN PREPARATION

I. Title of Material/Introduction:
INTRODUCTION TO BUSINESS PLAN PREPARATION
This module covers the entrepreneurial activities that must be undertaken immediately prior
to the opening of small business and during the business operation.

II. Objectives:
At the end of this lesson, the learner should be able to implement the business plan.
Specifically, the learner must be able to:
1. Define business plan,
2. Specify the different sections of the business plan, and
3. Identify the information included in the Introduction section of the business plan.
4. Compare and contrast business plan and feasibility study
5. Give the importance of the business plan

III. Vocabulary List:

• Business - refers to the organized efforts and activities of individuals to produce and sell
goods and services for profit.
• Business Plan - is a detailed and integrated written document that describes the various
activities involved in opening and operating a new entrepreneurial venture.
• Entrepreneur – refers to a person who strongly advocates and correctly practices the
concepts and principles of entrepreneurship in operating and managing the self-owned
entrepreneurial venture.
• Entrepreneurship – is the art of observing correct practices in managing and operating a
self-owned, wealth-creating business enterprise by providing goods and services that are
valuable to the customers.
• Feasibility – the possibility that can be made, done, or achieved, or is reasonable.
• Corporation – is a legal entity created by individuals, stockholders, or shareholders, with
the purpose of operating for profit.

IV. Pre-Test: Multiple Choice. Write the letter of your answer.

1. Which of the following BEST described a business plan?
A. A gallery of photos that explains the location and construction of the business
B. A written plan that is a description of all the aspects of the business and includes the
business's goals
C. A collection of plans that are combined from different business and then analyzed and
compared to your business
D. A list of guidelines that tell successful business's how to run their company in order to
make a profit.
 2. What are the advantages of creating a business plan?
A. To secure financing
B. Allows the entrepreneur to focus on what they want to accomplish
C. To set better objectives and benchmarks
D. All of the above
3. Who should prepare the business plan?
A. Anyone B. Entrepreneur C. Someone on the business D. Stakeholder
4. What section of the business plan can we find the Proposed Name of the Business, Address
of the Business, Name of the Owner or Owners, Description of the Business, Location
of the Business, Funding Requirement and Source?
A. Introduction B. Organizational Plan C. Production Plan D. Operation Plan
5. Which of following is the LEAST factor to be considered when deciding on the location of the
proposed business?
A. Distance from the sources of raw materials, labor, and utilities
B. Peace and order situation
C. The geographic and climatic conditions
D. Proximity to the house of the owner of the business

V. Learning Activities:
1. Perform Activity #1 – FOUR PICS, ONE WORD!
2. Read the definition of a business plan and know the reasons why you need to prepare a
Business Plan for small business.
3. Read the comparison between Business Plan and Feasibility Study.
4. Identify the Major Parts of the Business Plan and be familiar of its content.

Activity #1 - FOUR PICS, ONE WORD!

What is/are the word/s being described by the group of four pictures?
1. 2.

3. 4.
 5. 6.

Based on the words that you have formed on the previous activity; how do we define a
Business Plan?

Take time to Read Young Entrepreneur

A business plan is also a road map that provides directions so a business can plan its future
and helps it avoid bumps in the road. It is the only single written document that must be
prepared before opening a new business or expanding an existing business. It provides a clear
direction to any uncertain business endeavor.
A business plan is a detailed and integrated written document that describes the various
activities involved in opening and operating a new entrepreneurial venture.

10 Reasons Why You Need to Prepare a Business Plan for Small Business
1. To help you with critical decisions
2. To iron out the kinks
3. To avoid the big mistakes
4. To prove the viability of the business
5. To set better objectives and benchmarks
6. To communicate objectives and benchmarks
7. To provide a guide for service providers
8. To secure financing
9. To better understand the broader landscape
10. To reduce risk

Guided Questions:
1. What are some of the tests that need to be conducted before putting up a business?
2. What is the difference between Business Plan and Feasibility Study?
3. Who should prepare a business plan?

There is another written document that must be prepared and is equal importance as the
business plan. This is the feasibility study which serves as the forerunner of the business plan.

Two Major Tests to be Conducted every time a New Business Idea is Created
1. Test of Possibility
2. Test of Feasibility

The test of possibility on the new business should have a positive result, so that the test of
feasibility or viability will be conducted.
Business Plan versus Feasibility Study

The primary objective of the feasibility study is to determine whether the proposed
business is feasible or not in all areas. If the outcome of the feasibility study is positive, then the
entrepreneur prepares the business plan.

The content and structure of the business plan are almost the same as those of the feasibility
study. The data shown in the feasibility study are the same set of data presented or used in the
business plan. Nonetheless, the business plan presents a more detailed discussion of how the
business will be undertaken and operated.

MAJOR PARTS OF THE BUSINESS PLAN

There is no universally accepted standard format or structure of the business plan.

1. Introduction
2. Executive Summary
3. Environmental Analysis
4. Business Description
5. Organizational Plan
6. Production Plan
7. Operation Plan
8. Marketing Plan
9. Financial Plan
10. Appendix

Introduction

The introduction presents the general perspective of the business. It may consist of one to
two pages. It includes, among others, the following sections:
1. Proposed Name of the Business
2. Address of the Business
3. Name of the Owner or Owners
4. Description of the Business
5. Location of the Business
6. Funding Requirement and Source

In case the consulting team prepares the business plan for prospective owners or investors,
the section Statement of Confidentiality is added as the last section.

Proposed Name of the Business

The formulation and drafting of the proposed business name is not as simple as it sounds. It
is a delicate and important entrepreneurial task. Remember that the name of the business may exist
in the market for the many years. Careful and in-depth planning is of prime importance.

The proposed business name must:

1. Reflect the business identify and image,
2. Promote the philosophical values and culture that the business values the most,
3. Profess the brand identity of the product, and
4. Attract or influence the target costumers
 At least three suggested trade names must be submitted to the department of Trade and
Industry for approval and registration.

Address of the Business

It is important that the address of the Business is correctly written because all business
correspondence is mailed to the business address. Raw materials and other manufacturing supplies
are also shipped by the seller to the designated business address.

Nowadays, it is also necessary for the business to have an e-mail address to facilitate
electronic communication between the business and the customers, suppliers, creditors, and
other significant parties.

Name of the Owner

The name of the owner must be properly stated. In a sole proprietorship, there is only one
owner. In case the venture is a partnership, the names of the partners, including the extent of their
liabilities, must be indicated. For example, if a partner’s must be properly mentioned.

For business ventures that will operate as a corporate entity, the names, nationalities,
and addresses of the incorporators must be given. Incorporators are persons who originally formed
the corporation.

Description of the Business

A brief description of the business must include information about the type of product or
service that the business intends to produce or provide. It may include a brief information about the
ultimate mission, vision, and objectives of the business. The other products or services that the
business plans to produce or provide must also be mentioned in the description of the business.

Location of the Business

There are no rigid rules in the selection of the business location since several variables affect
the selection of the business location . The basic entrepreneurial consideration is to place the
proposed business in a strategic location that will assure competitive advantage.

What is the difference between the sections Address of the Business and Location of the
Business?

The former simply states the exact business address. No additional description is provided to
highlight the exact business address. The latter indicates the reason/s for the selection of the
location. In case the processing plant is not within the vicinity of the business, its exact location must
be described.

The following factors should be considered when deciding on the location of the proposed
business:
1. Proximity to the target customers
2. Distance from the sources of raw materials, labor, and utilities
3. Availability and cost of transportation
4. Peace and order situation
5. Presence of direct competitors
6. The geographic and climatic conditions
 Funding Requirement and Source

The estimated total initial cost of the business venture must be clearly indicated. It should
include the projected breakdown or allocation of the total cost, e.g., how much will be for building,
fixtures, equipment, supplies, and working capital. This section also presents the source or sources
of funds. The initial cost of the investment may be provided solely by the owner or owners or
partly by the owner and creditors. The estimated period to settle the funding source provided by
the creditors must also be mentioned.

VI. Practice Tasks

Practice Task 1 - WHO’S WHO? ENTREPRENEUR X OR Y?

Consider the following situation.

Entrepreneur X

Entrepreneur X put up a coffee shop immediately in his barangay. He thought of an

idea that early bird catches the worm. He eventually hired his friends and ordered stocks for
his coffee shop business.

Entrepreneur Y

Entrepreneur Y is planning to open a bakery shop in his place. He gathered first

information from the residence of his place whether what kind of bread they love to eat.

Questions:
1. Among the two entrepreneurs, who do you wanted to be? Why?
2. What is/are the risks to be taken by each entrepreneur?
3. What do you think the importance of business planning is?

Practice Task 2 - JUSTIFY ME.

Write True if the statement is correct. Otherwise write False and state your reason
briefly/change the word/s that make it false.
1. The process of determining the profitability of the business is considered a test of
possibility.
2. After the preparation of the business plan, the entrepreneur prepares the feasibility
study of the business.
3. The business plan is entirely different from the feasibility study.
4. The feasibility study is more detailed than the business plan.
5. One of the major parts or sections of the business plan is the marketing research.
6. The executive summary is usually shown as the last part of the business plan.
7. One of the sections in the introduction of the business plan is the address of the
business.
8. The funding source and requirements are usually shown as a part of the business
description.
9. The name or names of the owner or owners of the proposed business are considered
very delicate information. Hence, they must not be included in the business plan.
10. The business plan is a mixture of facts and assumptions.
 Practice Task 3 – TELL ME A STORY

Cite a true story that you have known wherein the importance of making a business plan
before the implementation was needed. You can share it in class or have it written in a paper.

VII. Post Test

LET’S JOIN TOGETHER!

Form a group of five (5) and do the following. Follow the format below and then share your
output in class. Please be guided with the scoring rubrics below.
1. Think of three possible names (for the average learners) and five possible names (for the
advanced learners) of your small business. Rank them according to your preferences.
2. Indicate the proposed complete address your business.
3. Write your names as owners of the business.
4. Make a brief description of your business. You may include the product or service that
you plan to sell or serve.
5. Cite the reason for choosing the location.
6. Based on the nature and type of your proposed small business, determine the initial
funding requirement.
7. State also the possible source/s of funds.

Proposed Proposed Name of Brief Reason/s for Initial Possible

Business Address Owner/s Description Choosing Funding Source/s of
Name of the the Location Requirement Funds
Business
 Note to Learners…

The group they will form will be the permanent group until they finished the business plan
and was able to implement it. The business that they will write should be more realistic this time
since those are the options that they need to consider and subject for the approval of the teacher.
Financial aspects should be taken in consideration.

The scoring below will be used.

SCORING RUBRICS

CATEGORY Beginning Developing Proficient Highly Excellent

Proficient
2 4 6 8 10
Completeness The work is Many questions Two or more One question is All questions
very are questions are partially are answered
incomplete missing/partially missing or answered or completely
complete partially completely
complete missing
Correctness The work is full Some There are 2 or There is 1 error There are 0
of errors questions/tasks 3 errors in the in the output. errors in the
were not output. output.
answered
correctly.
Confidence in Shows no Shows little or Shows some Demonstrates Demonstrates
Presentation interest in mixed feelings enthusiastic greater strong
topic about the topic feelings about enthusiasm enthusiasm
presented. being presented topic about topic about topic
during entire during entire
presentation. presentation.
collaboration We did the We talked a We worked We worked Everyone
work by little among together most together so worked
ourselves. group members of the time. that everyone together using
Only some of Sharing ideas contributed to his/her
the group regularly. the final knowledge and
members are output. abilities to
cooperative. make the
output come
together.
Cleanliness Our final There are some Our work is Our final There are no
output is full of erasures. clean. output is very erasures.
erasures. clean
VIII. Assignment

With the same group, do the following:

1. Prepare the introduction section of your business plan. The cover page of your final
output will appear below.

BUSINESS PLAN

(Name and Address of Your Proposed Business)

DMEJ PROCESSING COMPANY
SITIO LOMBOY, BRGY. MANALPAC
SOLSONA, ILOCOS NORTE
www.dmej@gmail.com

OWNED BY:
(Your Names as the Owners)
LEO B. JULIAN
DIANE MARIE E. JULIAN
 Note that since the name, address, and name/names of the owner/owners of the
business appear on the cover page, they may no longer be repeated in the Introduction
section.

2. Use the guide for the format of the Introduction section of your business plan.

INTRODUCTION

This section of the business plan presents the description of the business, its
location, and the total funding requirements and the possible funding source.

Description of the Business

Location of the Business

Funding Requirement and Source of Funds

 SCORING RUBRICS

CATEGORY Beginning Developing Proficient Highly Excellent

Proficient
2 4 6 8 10
Completeness The work is Many questions Two or more One question is All questions
very are questions are partially are answered
incomplete missing/partially missing or answered or completely
complete partially completely
complete missing
Correctness The work is full Some There are 2 or There is 1 error There are 0
of errors questions/tasks 3 errors in the in the output. errors in the
were not output. output.
answered
correctly.
collaboration We did the We talked a We worked We worked Everyone
work by little among together most together so worked
ourselves. group members of the time. that everyone together using
Only some of Sharing ideas contributed to his/her
the group regularly. the final knowledge and
members are output. abilities to
cooperative. make the
output come
together.
Cleanliness Our final There are some Our work is Our final There are no
output is full of erasures. clean. output is very erasures.
erasures. clean