WRITING A BUSINESS PLAN

(Minabuting ilathala ang artikulo para makatulong sa pangkaraniwang Pilipino na nag-iisip na magsimula ng kanilang negosyo sa pamamagitan ng kanilang maliit na puhunan)

After you have made the preliminary decisions, you can start preparing a business plan. There is no such thing as an all-purpose business plan. You should write your business plan according to the unique factors and conditions of your enterprise.

The business plan has four main components: the marketing plan, the technical plan, the organizational plan and the financial plan. The following guidelines may help you in writing your business plan:

INTRODUCTION

1. State your objectives. This section, which precedes all business plans, tells your reader who you are, what your business goals are, and when you expect these goals to be accomplished. If your business has a track record of say, three years, then you can approach a bank and indicate how much you want to borrow and what you plan to do with the funds.

2. Describe the business. This section gives background information on your business and how it is currently doing.

For a new business – Instead of a brief history, explain what the business will be, how the idea for your business was conceived, and how the business is expected to develop.

For an existing business – Provide the following information: business name, date and place of registration, date when operations began, brief history of the business, names of owners, partners or major investors.

THE MARKETING PLAN

3. Describe your products or services. Give a detailed description of your products or services to give the reader a clear idea of what you are selling. Describe, as well, applications or uses of your products that may not be apparent.

This section of your plan is also for presenting the competitive advantages your product has over similar products as well as for identifying the products you will compete with. State your product’s advantages and disadvantages.

4. Identify your potential market. Determine who are your present or projected customers and how many. Be as specific as possible. Are you selling to bookstores? Grocery stores? Small ladies’ boutiques? If you are selling to the general public, you may need to group potential customers according to age, gender, income, education and other demographic factors. You then ask yourself how you can make use of the information. If, for example, you know that your potential customers will likely be children aged three to ten, what does this tell you about your location? your advertising? your prices?

5. Identify your competitors. Competition need not be a threat. Rather it should spur you to do your best. Learn as much as you can about your competitors. Include the following information in your plan:

a. Description of competitors. Identify businesses likely to become your competitors.

b. Size of competitors. Determine your competitors’ assets and sales volume.

c. Profitability of competitors. Which of your competitors are making money? Which are losing? By how much?

d. Operating methods. Determine the operating methods of each of your major competitors in terms of pricing strategy; quality of products and services; servicing, warranties and packaging; methods of selling and channels of distribution; credit terms; location; advertising and promotion; reputation; and, inventory levels. Discuss only the items relevant to your business.

6. Consider your pricing policy. In pricing your goods and services, all relevant factors should be considered, like cost of production and distribution and the degree of acceptance by the market. Another factor to account for is the pricing structure of your competitors. Of course, the aim of your pricing policy should be to set the price at a level that maximizes profit in the long run.

7. Determine your marketing methods. Selling a good product at a reasonable price is not enough. Your business plan must answer the following questions:

a. How will you promote or advertise your business?

b. How will you sell your product? Will you employ sales people? Will you have your own outlet? Will you engage marketing agents?

c. What channels of distribution will you use to reach your customers?

d. What do your customers think of your product? How can you improve your image as an enterprise?

THE TECHNICAL (PRODUCTION) PLAN

8. Identify your material requirements and sources of supply. List down what materials you will need and where you will get them. Include only direct materials and office supplies. Other indirect materials should not be included in the list.

Tabulate your material requirements. For each item, state how many suppliers there are, who your main supplier is, and why. Your readers will see that you have carefully thought out who your best suppliers will be.

9. Determine the process and equipment you will use to manufacture your product. Give a detailed explanation of your production process. For each step, explain the work done, as well as the equipment and materials used. If you are presenting a complex process, include a diagram showing the work flow.

THE ORGANIZATIONAL PLAN

10. Determine your key personnel. Identify the key people in your business, including you as owner and manager. If your business is a corporation, list the names and addresses of all directors. If your business is a partnership, list the names and addresses of all the partners.

11. Identify your work force and support personnel. List down the skills and positions you need, the number of people for each position, and their corresponding salaries and wages.

THE FINANCIAL PLAN

12. Determine your financial requirements. Prepare a forecast that outlines all your capital requirements. There are three: fixed capital, working capital and pre-operating capital.

Fixed capital includes cost of land and building or lease deposits on them; cost of improving the land or renovating the building; furniture, furnishings and fixtures; and machinery and equipment. These are usually one-time expenses, and will generally last the lifetime of the business.

Working capital is the reserve money you need to run the business until it becomes selt-supporting. This may take from one to six months or even longer. You need working capital to purchase your raw materials, compensate your workers, and pay for transportation, telephone, electricity and water bills.

Pre-operating capital includes money you spend to register your business, acquire licenses for franchises, or pay a consultant or lawyer. This is money that you spend before your business begins to operate.

Be sure that no significant item is overlooked. Be realistic and do not underestimate your requirements. Provide for contingencies and a margin of safety to avoid cost overruns later.

13. Prepare a budget. The budget should include marketing, production and general and administrative expenses. Marketing, which provides the revenues of the business, requires  expenses in selling and distribution, storage, discounts, advertising and promotion. Production cost includes cost of materials and components, labor, and manufacturing overhead. General and administrative expenses include salaries of administrative staff as well as legal and accounting costs. Projections should be prepared every month during the first year of operations and every quarter for the second and third years.

At this point, you are ready to implement your plan. It is time to raise funds, register your business, find a suitable location, purchase equipment and supplies, hire and train people, and start operating. In other words, from here on, you put what you have written into action.

http://philippines.smetoolkit.org/philippine/en/file/content/6880/en/doyouwanttogointobusiness.pdf
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