07 Handout 1
07 Handout 1
07 Handout 1
There are two (2) important reasons for writing a business plan. (Barringer & Ireland, 2019):
Internal reason exemplifies the entrepreneur's way of thinking systematically for every aspect
related to its venture. This includes analyzing the business's present and future, focusing on the
internal factors such as whom the people to employ or work with, where to get resources, the
possible sources of funds, and the likes.
External reason exemplifies the qualities of the business that will appeal to its consumer. This
will help an entrepreneur plan accordingly, answering the questions such as what kind of market
the business will serve, the current demands of the people, who are the possible competitors,
among others.
Aside from preparing an entrepreneur for any possible drawbacks, writing a business plan can also help
analyze the business and its overall performance from planning to development.
There is other importance of a business plan that an entrepreneur should consider (Bajao & Osorno,
2020):
More companies stay in business – Since there is a direction to follow, businesses with a
business plan have coordinated ways and organizations that promote beneficial actions that
lead to more market and profit gains, making them see a great future, so they stay in business.
An entrepreneur is more certain of what to do – This will help to analyze one's business. This will
let an entrepreneur determine why customers do not go after the product or service and the
things competitors offer to make them better. Knowing all these factors can help an
entrepreneur what to do when things go wrong.
An entrepreneur can provide resources better – Since business planning is knowing the
operations of the venture to be put up, it can determine if the existing resources are enough. This
will also help an entrepreneur provide enough resources by finding skilled-people beneficial to
work with.
An entrepreneur can understand and manage his finances well – A business plan includes even
the financial capability of a business to keep running in a span of a year or two. This is a relevant
factor of a business plan as this will present how a business must forecast its sales and expenses
or costs.
Everyone is aware of the plan – Everyone related to the venture needs to know about the
business plan; thus, the people are drawn together in the same direction and become united.
This is not only promoting teamwork but also setting limitations for people to be aware of the
things to be done toward attaining a goal.
There are three (3) types of business plans (Barringer & Ireland, 2019):
Summary business plan - This is the kind of business plan that presents only 10 to 15 pages,
usually used by first-timers or pioneers. On the side of those first-timers, this works if they are
not ready yet to go for a full business plan presentation as they are just starting and adjusting.
For pioneers, they are using this if they are preparing for a new business and want to spend
minimal time in writing a business plan.
Full business plan - This is the kind of business plan usually used for investor's opinion. They are
usually composed of 25 to 35 pages explaining further details regarding the companies'
operations and plans. This one is like their blueprint.
Operational business plan - This is the kind of business plan prepared for existing businesses for
internal purposes. This kind handles 40 to 100 pages that include many details regarding the
venture and serves as a guide to operational managers.
Different business plans exist for different purposes as well, and an entrepreneur should be familiar with
what is the best one to present or prepare whenever needed.
I. Cover sheet - This will serve as your title page. This includes the name, address, and contact
details of the company. This also includes the month and year it was established. The name of
the one who prepared it and the number of copies prepared should also be mentioned.
II. Executive summary - This explains the purpose of the business, the management, and the
strengths of the company. This section summarizes the objectives and the purpose of why a
company wants to be successful. This contains the financing details, if needed, where it explains
further why a company needs funding, how much money they need, and how they will pay back
or be of benefits to the investors. An entrepreneur must accomplish this latter part upon
completing the business plan as this part will present the components of a finished business
plan.
III. Table of contents – This includes the details of the page references or the outline of the topics
in the business plan.
IV. PART I - The organizational plan - This is the summary description of the business. This will
explain the broad overview of the business – the origin, the date, and the purpose of the
company's formation.
o Security - This section will discuss the company's security regarding inventory
control and theft of information – online or offline.
V. PART II - Marketing plan - This section of the business plan will describe all the marketing
strategies the company will use, including their market analysis. This will also explain the
advertising and public relations campaigns, traditional programs, and the new technological
strategies.
Overview and goals of your marketing strategy – This is the summary of the objectives
of the marketing plan. This includes the general information of how the business plans
to conduct its analysis and strategy.
Market analysis - This will explain the target market, competitors, market trends, and
research regarding the product a company will either manufacture or produce or the
services that they will provide.
Marketing strategy - This is the general description of sales and distribution methods,
packaging, pricing, branding, and database marketing. This will also define the sales
strategies, incentives or promotions, advertising strategies, public relations, and
networking.
Customer service - This will give details about the customer service activities and
expected outcomes of achieving excellence through the lenses of the consumers.
Implementation of marketing strategy - This will define the in-house responsibilities
and out-sourced functions like how advertising, its network, public relations, and
marketing firms will be conducted.
Assessment of marketing effectiveness - This will be the method a company will be
using after a quarter evaluation.
VI. PART III – Financial documents - This section of the business plan exemplifies the quantitative
details of marketing plans. This will showcase the past if it is already existing, current for the
present financial reports, and future finances projected for the company.
Summary of financial needs - This part is only needed if the company is seeking funding.
This will highlight the reason for applying for financial needs and the amount the
company is in need.
Loan fund dispersal statement - Likewise, with the summary of financial needs, this part
is only needed if the company is seeking funding. This will need the details regarding the
process of dispersal of the loan fund with supporting data.
Pro-forma cash flow statement (budget) - This part describes the business plan details
regarding money, the cash inflow and outflow in each time frame, and how it is used for
internal planning.
Three-year income projection - This is only applicable to companies that were already
established. This serves to foresee pro forma cash flow for the next three (3) years
depending on the 1st year's revenue and expenses, along with the possible economic
and industry changes in the following year.
Projected balance sheet - This is the presentation of the foreseen assets, liabilities, and net
worth of the company at the end of the next fiscal year.
Break-even analysis - The break-even point is the equal matching of expenses to its
sales and service volume. This section can be presented by total revenue offsetting
exactly or
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equally the expenses or presenting the total production units in which the income and
the cost match.
VII. PART IV- Supporting documents - This section presents the supporting documents as a backup
for the main parts of the business plan.
Personal resumes - This part includes all the resumes of the people who are facilitating
or will facilitate the venture.
Owner's financial statements - This part includes the company owner's assets and
liabilities. If the entrepreneur is just starting, this must be included under the financial
section (Part III).
VIII. Credit reports - This part includes all the related credits from any suppliers, wholesalers, credit
bureaus, and banks.
IX. Copies of leases, mortgages, purchase agreements, etc. - This part includes all the
agreements related to the company leasing or mortgage.
X. Letters of References - This part includes the recommendations from business or personal
references for being reputable and reliable.
XI. Contracts - This part includes all the business contracts duly signed and completed and even
those currently processed.
XII. Other legal documents - This includes all legal papers, including legal structure, proprietary
rights, insurance papers, partnership agreements, and even those shipping-related papers.
XIII. Miscellaneous documents - This includes those documents that are not exemplified in the
main body. Examples are those location plans and demographics, competition, and cost
analysis. This also includes the advertising rate sheet.
An entrepreneur must analyze the importance of each part and its components. Presenting a business
plan is not just presenting a paper. It is presenting an emerging enterprise that should not only reflect
success but a clear platform too.