Who is an Entrepreneur ?

❖To clarify ideas and identify gaps in management information about their
A person who takes the risk of converting a new idea into reality. business, competitors and market.
What is Entrepreneurship? ❖To identify the resources that would be required to implement the plan
The Process of Bearing Risk of Running a Business ❖To document ownership arrangements, future prospectus and projected
• a process of actions of an entrepreneur who is a person always in search of growth of the business venture
something new and exploits such ideas into gainful opportunities by accepting the BUSINESS PLANNING PROCESS
risk and uncertainty with the enterprise. ❖Idea generation : is the first step in the business planning process. This step
Characteristics of a successful entrepreneur differentiates entrepreneur from usual business. An entrepreneur may come up
•Creativity with new business idea or may bring in value addition to existing product in the
•Innovation market. Sources of new idea for entrepreneurs are :
•Dynamism • Consumers/ customers
•Leadership • Existing companies
•Teambuilding • Research and development
•Achievement Motivation • Employees
•Problem solving • Dealers, retailers
•Risk taking and decision making ability ❖Environmental scanning : once the entrepreneur is through the idea generation
•Commitment stage, next entrepreneur is required to conduct environmental scanning which
BUSINESS PLAN includes analyzing external and internal environment that affects business idea.
❖Business plan is a written document prepared by entrepreneur that describes 1. External environment comprises of :
all the relevant external and internal elements involved in starting new venture. It ❑ Socio cultural appraisal : it gives brief overview about the culture and tradition
is an integration of functional plans such as marketing, finance , manufacturing existing in society. It is comprised of values and beliefs of people which
and human resource plan. determines the acceptance of product by customer in the market.
❖A business plan is a blue print of step by step process that would be followed to ❑ Technological appraisal : it assess various technological options available to
convert business idea into successful business venture. convert an idea to product. It also provides an brief overview about technological
OBJECTIVE OR IMPORTANCE OF BUSINESS PLAN updation.
❖To give direction to the vision formulated by the entrepreneur ❑ Economic appraisal : it assess the status of the society in terms of economic
❖To objectively evaluate the prospectus of business development, per capita income, national income, consumption pattern in the
❖To monitor the progress after implementing business plan business.
❖To persuade others to join business ❑ Demographic appraisal : it assess the population pattern of given geographic
❖To seek loans from financial institutions area. Which includes sex, age profile, distribution etc.
❖To visualize concept in terms of market availability, ❑ Government appraisal : it assess the various legislation, policies, incentives
organizational, operational, and financial feasibility formulated for particular industry. Flexibility of these rues determine ease for
❖To guide entrepreneur in actual implementation of plan entrepreneur in terms of opening venture in particular area.
❖To identify actual strength and weakness of plan
❖To identify challenges in terms of opportunities and
threats from the external markets.
2. Internal environment : III. Business Proponents
• Raw material : it refers to in terms of availability of raw material required for a) Resource mobilizers and financial backers
the process of production. If the material availability is at distance place and is ▪ They want to know who else are on board to share the burden of raising money
very expensive then entrepreneur should give second thought to the same. to see the whole thing through.
• Production/ operation : it assess the availability of variousmachineries, b) Technology providers and applicators
equipment's, tools and techniques that would be required for production. ▪ They want to know if there will be sufficient funds to pay for the technology.
• Finance : it studies total requirement of finance in terms of start up expenses, c) Governance and top management
fixed expenses, running expenses etc. ▪ They want to know what strategies and performance indicators are being
• Market : refers to study on potential customer and target customers in market. proposed.
• Human resource : refers to demand and supply of required human resource in d) Operating and support team
market and estimation of expenses to be incurred on human resource ▪ They want to know what programs, activities, tasks, and resources would be in
❖Feasibility analysis : refers to conducting detailed analysis in relation to every place.
aspect relevant to business and determining credibility of business. IV. Target customers and the Main Value Proposition
• Market analysis : is conducted to estimate the demand and market share for Target customers must be of sufficient size, sufficient paying capacity, and have
proposed product and service in future. Demand and market analysis is based on sufficient interest to purchase the products being offered by the enterprise. Main
factors like consumption pattern, availability of substitute goods and services etc. Value Proposition is the unique selling proposition of the enterprise.
• Technical and operational analysis : is to assess operational ability of proposed V. Market demand and supply, industry dynamics, and Macro Environment
business enterprise. Technical or operational analysis collects data on following Factors
parameters : ▪the BP should estimate the total market supply and demand for the product
1. Material availability offerings of the enterprise.
2. Material requirement planning ▪Determine the critical factors that influence this market demand and supply.
3. Plant location The BP should discuss the relevant industry dynamics:
4. Plant capacity 1. Who are the competing enterprises in the industry and what are their
comparative advantage/disadvantages?
2. Who are the suppliers in the industry and what are their capabilities and
Contents Of The Business Plan
bargaining power?
I. Introduction
3. What are the channels of distribution being used by the industry? How
A. Business concept and business model
effective are these channels?
B. The business goals: vision, mission, and objectives
The BP should discuss the major trends and changing patterns in the macro-
C. Business offering and justification
environment:
II. Executive Summary
a) Social environment
❑contains everything that is relevant and important to the business audience. It
b) Political environment
is a synthesis of the entire plan. It must contain the major argumentations of the
c) Economic environment
business proponent on why the business will work and succeed.
d) Ecological environment
❑Can only be written last in order to capture the findings and insights of the
e) Technological environment
other parts, but for presentation purposes, it it placed in the first parts of the BP.
VI. Product /service offering: description, evolution, and justification
• The products must be described by highlighting the features and Who Reads the Business Plan—And What
attributes that would most appeal to the target customers. Are They Looking For?
VII. Enterprise Strategy And Enterprise Delivery System There are two primary audiences for a firm’s business plan
Enterprise Strategy builds and develops the game plan for attaining Audience
competitiveness. Enterprise Delivery System is the entire process of converting a) A Firm’s Employees
input (resources) into output and these output into outcomes. A clearly written business plan helps the employees of a firm operate in sync and
a) Input (resources mobilized) move forward in a consistent and purposeful manner.
b) Throughput (process/transformation) b) Investors and other external stakeholders
c) Output (products/services) A firm’s business plan must make the case that the firm is a good use of an
VIII. Financial forecasts: expected returns, risks, and contingencies investor’s funds or the attention of others.
❖The BP must translate everything that we have discussed so far into financial Guidelines for Writing a Business Plan 1 of 5
forecasts and outcomes. • Structure of the Business Plan
❖From the financial forecasts, the BP should then calculate the expected returns – To make the best impression a business plan should follow a conventional
from the business. structure, such as the outline for the business plan shown in the chapter.
Important return calculations are the ff.: – Although some entrepreneurs want to demonstrate creativity, departing from
1. Expected return on sales the basic structure of the conventional business plan is usually a mistake.
2. Expected return on assets or investments – Typically, investors are busy people and want a plan where they can easily find
3. Expected return on stockholders’ equity. critical information.
IX. Environmental and regulatory compliance Guidelines for Writing a Business Plan 2 of 5
❖The BP must articulate the laws, rules, and regulations governing the business, • Structure of the Business Plan (continued)
and the industry that the enterprise is in. – Software Packages
X. Capital structure and financial offering: returns and benefits to investors, • There are many software packages available that employ an interactive, menu-
financiers, and partners driven approach to assist in the writing of a business plan.
• Includes discussions on who are the investors, the financiers, and the partners • Some of these programs are very helpful. However, entrepreneurs should avoid
of the enterprise a boilerplate plan that looks as though it came from a “canned” source.
• The BP must appeal to its target audience. It must highlight for them the main – Sense of Excitement
features of the business plan that they are looking for. • Along with facts and figures, a business plan needs to project a sense of
anticipation and excitement about the possibilities that surround a new venture.
WRITING A BUSINESS PLAN Guidelines for Writing a Business Plan 3 of 5
What Is a Business Plan? • Content of the Business Plan
• Business Plan – The business plan should give clear and concise information on all the important
– A business plan is a written narrative, typically 25 to 35 pages long, that aspects of the proposed venture.
describes what a new business plans to accomplish. – It must be long enough to provide sufficient information yet short enough to
• Dual-Use Document maintain reader interest.
– For most new ventures, the business plan is a dual-purpose document used – For most plans, 25 to 35 pages is sufficient.
both inside and outside the firm. • Types of Business Plans
– There are three types of business plans, which are shown on the next slide. • In many instances an investor will ask for a copy of a firm’s executive summary
Types of Business Plans and will ask for a copy of the entire plan only if the executive summary is
● Summary business plan (10-15 pages) sufficiently convincing.
Works best for new ventures in the early stages of development that want to test • The executive summary, then, is arguably the most important section of a
the waters to see if investors are interested in their idea business plan.
● Full business plan (25-35 pages) Section 2: Industry Analysis
Works best for new ventures who are at the point where they need funding or • Industry Analysis
financing; serves as a blueprint for the company‘s operations – This section should begin by describing the industry the business will enter in
● Operational Business Plan (40-100 pages) terms of its size, growth rate, and sales projections.
It is meant primarily for an internal audience; works best as a tool for creating a – Items to include in this section:
blueprint for a new venture‘s operations and providing guidance to operational • Industry size, growth rate, and sales projections.
managers • Industry structure.
• Nature of participants.
Guidelines for Writing a Business Plan 5 of 5 • Key success factors.
• Recognizing the Elements of the Plan May Change • Industry trends.
– It’s important to recognize that the plan will usually change while written. • Long-term prospects.
– New insights invariably emerge when an entrepreneur or a team of Key Insights
entrepreneurs immerse themselves in writing the plan and start getting feedback • Before a business selects a target market it should have a good grasp of its
from others. industry—including where its promising areas are and where its points of
Outline of Business Plan vulnerability are.
• Outline of Business Plan • The industry that a company participates in largely defines the playing field that
– A suggested outline of a business plan is shown on the next several slides. a firm will participate in.
– Most business plans do not include all the elements introduced in the sample Company Description
plan; we include them here for the purpose of completeness. 1 of 2
– Each entrepreneur must decide which elements to include in his or her plan. Section 3; Company Description
Section 1: Executive Summary – This section begins with a general description of the company.
• Executive Summary – Items to include in this section:
– The executive summary is a short overview of the entire business plan. • Company description.
– It provides a busy reader with everything that needs to be known about the • Company history.
new venture’s distinctive nature. • Mission statement.
– An executive summary shouldn’t exceed two single-spaced pages. • Products and services.
– Even though the executive summary appears at the beginning of the business • Current status.
plan, it should be written last. • Legal status and ownership.
• The plan itself will evolve as it’s written, so not everything is known at the • Key partnerships (if any).
outset.
Key Insights
Key Insights • Computing a break-even analysis is an extremely useful exercise for any
• While at first glance this section may seem less important than the others, it is proposed or existing business.
extremely important. Section 6: Marketing Plan
• It demonstrates to your reader that you know how to translate an idea into a – The marketing plan focuses on how the business will market and sell its product
business. or service.
Section 4: Market Analysis – Items to include in this section:
• Market Analysis • Overall marketing strategy.
– The market analysis breaks the industry into segments and zeros in on the • Product, price, promotions, and distribution.
specific segment (or target market) to which the firm will try to appeal. • Sales process (or cycle).
– Items to include in this section: • Sales tactics.
• Market segmentation and target market selection. Key Insights
• Buyer behavior. • The best way to describe a start-up’s marketing plan is to start by articulating its
• Competitor analysis. marketing strategy, positioning, and points of differentiation, and then talk about
Key Insights how these overall aspects of the plan will be supported by price, promotional mix,
• Most start-ups do not service their entire industry. Instead, they focus on and distribution strategy.
servicing a specific (target) market within the industry. • It’s also important to discuss the company sales process
• It’s important to include a section in the market analysis that deals with the Section 7: Design and Development Plan
behavior of the consumers in the market. The more a start-up knows about the • Design and Development Plan
consumers in its target market, the more it can tailor its products or services – If you’re developing a completely new product or service, you need to include a
appropriately. section in your business plan that focuses on the status of your development
Section 5: The Economics of the Business efforts.
• The Economics of the Business – Items to include in this section:
– This section addresses the basic logic of how profits are earned in the business • Development status and tasks.
and how many units of a business’s profits must be sold for the business to • Challenges and risks.
“break even” and then start earning a profit. • Projected development costs.
– Items to include in this section: • Proprietary issues (patents, trademarks, copyrights, licenses, brand names).
• Revenue drivers and profit margins. Key Insights
• Fixed and variable costs. • Many seemingly promising start-ups never get off the ground because L their
• Operating leverage and its implications. product development efforts stall or the actual development of the product or
• Start-up costs. service turns out to be more difficult than thought.
• Break-even chart and calculations. • As a result, this is a very important section for businesses developing a
Key Insights completely new product or service
• Two companies in the same industr may make profits in different ways. One Section 8: Operations Plan
may be a high-margin, low- volume business, while the other may be a low- • Operations Plan
margin, high-volume business. It’s important to check to make sure the approach – Outlines how your business will be run and how your
you select is sound. product or service will be produced.
– A useful way to illustrate how your business will be run is to describe it in terms • Obtaining critical financing.
of “back stage” (unseen to the customer) and “front stage” (seen by the • Starting production.
customer) activities. • Obtaining the first sale.
– Items to include in this section: Key Insight
• General approach to operations. • An effectively prepared and presented schedule can be extremely helpful in
• Business location. convincing potential investors that the management team is aware of award
• Facilities and equipment. needs to take place to launch the venture and has a plan in place to get there.
Key Insights Presenting the Business Plan to Investors
• You have to strike a careful balance between adequately describing this topic • The Oral Presentation
and providing too much detail. – The first rule in making an oral presentation is to follow directions. If you’re told
• As a result, it is best to keep this section short and crisp. you have 15 minutes, don’t talk for more than the allotted time.
Section 9: Management Team and Company – The presentation should be smooth and well-rehearsed.
Structure – The slides should be sharp and not cluttered.
• Management Team and Company Structure • Questions and Feedback to Expect from Investors
– The management team of a new venture typically consists of the founder or – The smart entrepreneur has a good idea of the questions that will be asked, and
founders and a handful of key management personnel. will be prepared for those queries.
– Items to include in this section: Presenting the Business Plan to Investors
• Management team. Twelve PowerPoint Slides to Include in an Investor Presentation
• Board of directors. 1. Title Slide
• Board of advisers. 2. Problem
• Company structure. 3. Solution
Key Insights 4. Opportunity and target market
• This is a critical section of a business plan. 5. Technology
• Many investors and others who read the business plan look first at the 6. Competition
executive summary and then go directly to the management team section to 7. Marketing and sales
assess the strength of the people starting the firm. 8. Management team
Section 10: Overall Schedule 9. Financial projections
• Overall Schedule 10. Current status
– A schedule should be prepared that shows the major eventsrequired to launch 11. Financing sought
the business. 12. Summary
– The schedule should be in the format of milestones critical to the business’s
success. In its broadest Sense, marketing is about creating and accumulating customers.
– Examples of milestones: Marketing plans are designed to capture market share and defeat competitors.
• Incorporating the venture. The marketing function and the marketing mix serve the overall business strategy.
• Completion of prototypes.
• Rental of facilities.
SEVEN P’s Branding and brand equity development should go hand-in-hand with
1. POSITIONING positioning. Branding and brand equity development should go hand-in-hand
-is the way the customers perceive the enterprise and its products or services in with positioning. Volvo stresses its safety brand positioning by crashing their test
their minds. (The stronger the overlap is in these three perspectives, the more cars into brick walls to dramatize the minimal effect on the owner-driver.
defined the positioning of an enterprise is in the marketplace. ) Powerful brands have become the generic name for their product categories.
- Positioning, in the context of a marketing battle plan,has three overlapping Example of Powerful brands: Kleenex, Band-Aid, Xerox, and Scotch Tape, Johnson
objectives. and Johnson, Procter and Gamble, Pfizer, Ayala, and SM.
1. It has an enterprise perspective. 2. PRODUCT
Enterprise scans the market environment and decides to position itself with is the tangible good or the intangible service that the
products that specifically address the needs of a chosen target market. enterprise offers to its customers in order to satisfy their needs and to produce
2. It has a competitive perspective. their expected results.
Enterprise has to differentiate and distinguish itself from its competitors. 4 general types of products that are marketed by enterprises:
3. Takes the customers' perspective. - Breakthrough products
- Enterprises can establish their positioning either by starting with their own It offers completely new performance benefits. They may double the
product creations or with their customers’ outcome expectations. performance at half the cost. Marketing breakthrough products need a higher
- The competitive landscape of the enterprise, relative to its market, can be level of customer education and orientation.
clearly mapped out by laying out both the latitudinal and longitudinal market. Common examples of breakthrough products are borne out of the biotechnology
dimensions. held particularly in terms of coming up with new vaccines to protect people from
Latitude certain viruses.
It lays out what's important to the different customer segments from their - Differentiated products
differing points of view. Tries to claim a new space in the mind of the customer different from the spaces
Longitude occupied by existing products but there would be additional benefits on special
Represents the product features and attributes of competitors in the aspects of the product.
marketplace. Example of Differentiated products
*In determining its positioning, the enterprise should be mindful of the main There are many different eyeglasses available in the market today but
value proposition (MVP) to its customers relative to its competitors. Transitions® lenses was able to differentiate itself from the rest because the
*It must evaluate the other six P’s of marketing to find out if they complement lenses they use adapt to changing light. With this feature, the wearer gets
and reinforce one another. Each of the P’s of marketing must communicate additional protection against ultraviolet rays, glare, and eye fatigue.
something to the customer. - Copycat products
- To establish the positioning of its various products in the marketplace, the Offering more physical space in the shelves, lower prices, easier access, and
enterprise endeavors to build the brand of each product promotional
3 purposes of BRANDING: A classic Philippine example of copycat product is the Beer na Beer brand of Asia
1. To differentiate the product from other products. Brewery pitted against San Miguel Pale Pilsen. Both have amber colored bottles
2. To avoid a commodity image for the product. with similarly styled white colored font printed outside the bottle. N o wonder
3. To fill a space in the consumer’s mind that would prevent other products from after Beer na Beer came out of the market, San Miguel filed a law suit against Asia
occupying the same space. Brewery for trademark infringement. In this case, San Miguel prevailed.
- Niche products frequent.
They are products with lower reach, lower visibility, low prices, and lower top of 5. Locational features such as parking spaces, foot access, creature comforts, and
mind. They are content to play minor roles in specific and smaller market the like.
segments. •In a similar way, the entrepreneur must be able to determine the price with the
3. PACKAGING location because it will spell out the success or failure of the business. The
There were used to be a time when products came wrapped in ordinary entrepreneur has to consider the following:
packaging that prominently displayed the brand name, the main attributes of the 1. The cost of buying or renting, renovating, and operating the location.
product, the company's logo, and its place of business. 2. Customer volume, drop-in rates (what percentage of customer traffic would
• There were used to be a time when products came wrapped in ordinary stop by the store) and sales conversion ratios (what percentage of drop-ins would
packaging that prominently displayed the brand name, the main actually purchase something from the store).
attributes of the product, the company's logo, and its place of business. 3. Revenues based-on the volume and mix of goods and services expected to be
5 Packaging purposes: sold at certain prices.
1. Identifies the product, describes its features and benefits, and complies with 4. Profits.
government rules on specifying its contents, weight, chemical composition, and Relevant Location Drivers
potency. It provides easy brand identification for the consumers. It would benefit the entrepreneur to do an in-depth location analysis. These are
2. Differentiates the product from its competitors and even from its other brand the 'musts' in choosing the location for your business:
offerings. 1. Physical Proximity to Target Market
3. Lengthens the lifespan, physically protects, and extends the usefulness of the Locations are chosen base on how close it is to the target market. Ideally, the best
product. locations should be easily accessible from home or the workplace.
4. Packaging has become an environmental issue by itself. Recyclability and 2. Customer Traffic Flow
biodegradability are now a major concern of packagers and consumers alike. Refers to the people that regularly come into contact with your business
5. The aforementioned purposes of packaging have increased the cost of establishment.
packaging and, therefore. the price of the product. 3. Industry Clustering
• Packaging does not refer to the wrapper or container of the product. It can A lot of competitors clustered in one location usually draw in a bigger market to
mean the bundle of products or services that are put together to attract and the area, some entrepreneurs prefer to establish a monopoly far away from
delight customers and also mean the terms and conditions attached to the sale or competitors.
after-sale servicing of the product. 4. Convergence of Multiple Industries
4. PLACE Locations where multiple industries converge.
Initial Location Screening 5. Population Concentrations
In finding a good location, one needs to consider the following: The more populous the location is, the greater is the opportunity for business and
1. The number of customers residing or working in the area, and the number of profit.
customers who frequently pass through the area. 6. Activity Hubs
2. The density or number of customers per unit area. Activity hubs such as large schools, high-rise buildings, public parks, transport
3. The access routes to alternative locations and their traffic count in those terminals, and entertainment centers provide good location potentials for food
routes. establishments and client-specific services.
4. The buying habits of customers or where they buy, at what time and how
7. Growth Potential
The new development site will be the natural greener pasture for early locators.
The early locators will catch the early customers.
5. PEOPLE
-are the ultimate marketing strategy.
The marketing efforts of people are organized at four levels:
(1) to create customer awareness; (2) to arouse customer interest; (3) to educate
customers as they evaluate their buying choices; and (4) to close the sale and
deliver the products
To arouse the interest of customers, the enterprise can use several people or
organizational modalities.
6. PROMOTION
-is the explicit communication strategy adopted by an enterprise to elicit the
patronage, loyalty, and support not only from its customers but also from its
other significant stakeholders.
- The idea is to match the size of the market with the medium used and the
resources of the enterprise.
7. PRICE
Pricing depends on the business objectives set by the enterprise.
Major factor for the customer in buying a product, it is not the only factor such as
in the case of buying premium products.