INTRODUCTION TO

BUSINESS PLAN
PREPARATION
Chapter 6: Business Plan
 • The business plan is prepared using a
scientific approach in determining possible
business situations considering the different
perspectives of people who are interested in

The need the business. Though the perspective of the

entrepreneur has the major influence on the
business plan, he/she nonetheless must still

for a consider the views of the customers,

creditors, and even the employees and staff.
He/ She must gather sufficient and relevant

business information to support any perception or

conclusion.
• The business plan is actually the roadmap of
plan the new business. It is the roadmap of the
entrepreneur. 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.
However, there is another written document that
must be prepared and is of equal importance as the
business plan. This is the feasibility study which
serves as the forerunner of the business plan.
In general, two major tests are conducted every time
a new business idea is created namely:
1. The test of possibility
2. The test of feasibility.
 Business plan is defined as a
detailed and integrated written
document that describes the various
activities involved in operating an
entrepreneurial venture.
MAJOR PARTS OF
THE BUSINESS
PLAN
MAJOR PARTS OF THE
BUSINESS PLAN
Though there are no universally accepted standard format or structure of the
business plan, this book adopts the following format for the major parts 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
 In case the consulting team
prepares the business plan for It presents the general perspective of the business. It may consist of
one to two pages. It includes, among others, the following sections:
prospective owners or investors, the
section Statement of Confidentiality
is added as the last section. 1. Proposed name of the business

2. Address of the business

1. Introduction
3. Name of the owner or owners

4. Description of the business

5. Location of the business

6. Funding requirement and source

Proposed The formulation and drafting of the pre-

Name of opened business name is not as simple as it

sounds It is a delicate and important
entrepreneurial task. Remember that the

the name of the business may exist in the market

for many years Careful and in-depth
planning is of prime importance.
Business
THE PROPOSED BUSINESS
NAME MUST:
• reflect the business identify and image,
• promote the philosophical values and culture that the
business values the most.
• profess the brand identity of the product,
• attract or influence the target consumers.
 It is important that the address of the
business is correctly written because all
business correspondence are mailed to the
business address, Raw materials and other
Address of manufacturing supplies are also shipped by
the seller to the designated business address.

the Nowadays, it is also necessary for the

business to have an email address to
facilitate electronic communication between
Business the business and the customers,
suppliers,creditors,
and other
significant parties.
 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 contribution takes the

Name of form of a service, a description like industrial

partner or limited partner must be properly
mentioned. For business ventures that will operate
the Owner as a corporate entity, the names, nationalities, and
addresses of the incorporators must be given.
Incorporators are persons who originally formed
the corporation.
 A brief description of the business must
include information about the type of
product of service that the business intends

Description to produce or provide.

• It may include a brief information about

of The •
the ultimate mission, vision, and
objectives of the business.
The other products or services that the
Business business plans to produce or provide must
also be mentioned in the description
of the business.
Location of There are no rigid rules in the selection of
the business location since several variables
affect the selection of the business location.
the The basic entrepreneurial consideration is to
place the proposed business in a strategic

Business location that will assure competitive

advantage.
 Proximity to the target consumers

The following Distance from the sources of raw materials, labor,

and utilities
factors should
be considered Availability and cost of transportation

when deciding
on the location Peace and order situation

of the proposed Presence of direct competitors

business:
The geographic and climatic conditions
 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,

Funding equipment, supplies, and working capital.

This section also presents the source or sources of

Requirement and 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
Source settle the funding source provided by creditors
must also be mentioned.