Subject: Entrepreneurship

Governor Pack Road, Baguio City, Philippines 2600

Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: HE 12 A and B
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 1: Developing a Business

Subject Teacher: Frejobel E. Langpaoen
Plan (Planning the Enterprise)

Information Sheet LO 1.1.1

WHAT IS A BUSINESS PLAN FOR?
Entrepreneurs who plan to enter any business endeavor must have business plan on hand to guide them throughout
the process. Different business plans are prepared for different purposes. There are business plans written prior to setting
up an enterprise, which are similar to a prefeasibility study and a feasibility study. Many new enterprises need to convince
prospective business investors about the soundness and potential of their business. They need to convey the capabilities
and competencies of their owners and managers. They must also be able to ‘sell’ the proponent and the business
proposition to the audience. These are situations when a good business plan is needed.
There are business plans that are written during the first few years of the enterprise in order to guide the entrepreneur on
which strategies would be most beneficial for the enterprise to take and there are business plans that are focused on
bringing the enterprise of a higher level of growth, a period where the enterprise has already reached its peak and would
want to enter into another endeavor by recreating and re-establishing itself.
Clearly, a business plan serves many masters. First, it serves the entrepreneur who must set a navigational course. Second,
it serves investors and cautious financiers and third, it serves the managers and staff of the organization so that they will
know the strategies and programs of the enterprise.

CONTENT

The business plan must have a specific audience in mind and what important questions do this audience
want to be answered. To aid the entrepreneur in getting his or her business plan organized the following
format may be a good start:

I. Introduction

A. The Business Concept and the Business Model

B. The Business Goals: Vision, Mission, Objectives, and Performance Targets
C. The Business Offering and Justification

II. Executive Summary

III. The Business Proponents: Organizers with their Capabilities and Contributions

IV. The Target Customers and the Main Value Proposition to the Customer

V. The Market, Market Justification based on the Industry Dynamics and the Macro Environment
Factors Affecting the Opportunities and Threats in the Market, the Size, Potential and Realistic
Share of the Market.

VI. The Product and Service Offerings

VII. The Enterprise Strategy and Enterprise Delivery Systems: Business Competitiveness

VIII. The Financial Forecast and Expected, Risks, and Contingencies

IX. Environmental and Regulatory Compliance

X. The Capital Structure and Financial Offering: Returns and Benefits to Investors, Financiers, and
Business Partners

For each of the above items in the business plan, it would be good to have an idea of what they should contain.

INFORMATION SHEET 1.1.2

1 Entrepreneurship
 Subject: Entrepreneurship
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: HE 12 A and B
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 1: Developing a Business

Subject Teacher: Frejobel E. Langpaoen
Plan (Planning the Enterprise)

CONTENTS OF THE BUSINESS PLAN

CONTENT

THE BUSINESS CONCEPT AND THE BUSINESS MODEL

A business concept contains the essence of the enterprise in a concise but powerful manner. It stresses the value of
the product offering to the target customers who would most likely buy it.

The product concept must then be translated into a business model. A business model is a formula on hoe the enterprise
exactly plans to make money out of the business. There are four areas of moneymaking which the business model must
address:

1. How will the business raise revenues? What critical factors will cause the revenues to materialize?

2. What will be the cost of the enterprise products and other costs of doing business? How will these costs managed
to ensure comfortable profits? What critical factors will drive the costs? How can these factors be controlled?

3. What will be the major investments of the enterprise? Why will these investments give the enterprise a
competitive edge?

4. How will the enterprise finance the investments? How will the enterprise fund its growth?

I. THE BUSINESS GOALS: VISION, MISSION, OBJECTIVES, AND PERFORMANCE TARGETS

The business goals show the future and long-term prospects of the enterprise. It is composed of the vision,
mission, key result areas, and performance indicators of the enterprise.

To Illustrate, let us examine the vision of Double Happiness. Double Happiness is an eatery in a bus terminal. It
has three outlets located at bus terminals in Central Luzon.

Case Example 1: Double Happiness

The vision of Double Happiness is “To establish a commanding presence and market leadership as a food chain servicing major
bus terminals in Central Luzon within the next five years.”

The Business Goals are communicated by articulating the basic purpose of setting up the enterprise in a mission statement.
Needless to say, all business enterprises are established for the purpose of making money for its investors.

For Double Happiness, its mission statement is “To provide quality food and passenger convenience and improve the lives of its
employees.”

The vision and the mission statements must then be translated into measurable end results, more popularly called objectives.

Objectives must be more specific than the vision and mission statements. They should be measurable, achievable, and time-bound.

For Double Happiness, their stated objectives are:

1. to establish a strong market presence in Central Luzon;
2. to earn good financial returns for its owners;
3. to delight customers with high quality food and services; and
4. to make Double Happiness a happy and rewarding place to work in.

The objectives should then be translated into key result areas or KRA’s.
KRA’s are the qualitative manifestations that the objectives are being achieved.

2 Entrepreneurship
 Subject: Entrepreneurship
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: HE 12 A and B
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 1: Developing a Business

Subject Teacher: Frejobel E. Langpaoen
Plan (Planning the Enterprise)

In the case of Double Happiness, the key result areas for each of the objectives are as follows:

Objectives Key Result Areas

1. To establish a strong market 1a. Number of food outlets in major bus terminals in Central Luzon
presence in Central Luzon.
1b. Sales volume attained

1c. Market share in Central Luzon

2. To earn good financial returns for 2a. Amount of net profits for the next five years
its owners
2b. Return on equity (ROE)

2c. Return on assets (ROA) or return on Investments (ROI)

2d. Return on sales (ROS)

3. To delight customers with high 3a. Growth in sales per outlet

quality food and services
3b. Percentage of repeat customers

3c. Number of customer commendations or complaints

3d. Awards and recognition given by the community or the government

for excellent service

3e. Customer survey rating to ascertain customers’ degree of delight

4. To make Double Happiness a 4a. Compensation and benefits of managers and workers are above
happy and rewarding place to work in industry rates

4b. Management and employee turnover

4c. Number of job applicants compared to other similar establishments

In turn, the key result areas must be rendered into quantified performance measurements, otherwise called performance
indicators. These performance indicators or PI’s serve as the aspirational scorecard of the enterprise managers and the motivational
results of the investors. However, the PI’s must be credible to the business audience in mind.

In the case of Double Happiness, the performance indicators for each of the key result areas are as follows:

Key Result Areas Performance Indicators

2014 (Now) 2015 (One Year Later) 2020 (Five Years Later)

1a. Number of food outlets in 3 5 20

major bus terminals in Central
Luzon

1b. Sales volume attained 7 million 13 million 60 million

1c. Market share in Central Luzon 2% 3% 12%

2a. Amount of net profits realized 1 million 2 million 10 million

for the next five years

2b. Return of equity (ROE)

30% 40% 60%
2c. Return of assets (ROA) or
return on investments (ROI) 15% 20% 30%

3 Entrepreneurship
 Subject: Entrepreneurship
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: HE 12 A and B
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 1: Developing a Business

Subject Teacher: Frejobel E. Langpaoen
Plan (Planning the Enterprise)

2d. Return on sales (ROS)

14% 15% 16%
3a. Growth in sales per outlet 20% 20 % 20 %

3b. Percentage of repeat customers

30% 40% 50%
3c. Number of customer
commendations; number of
customer complaints 4 out of 20 6 out of 20 10 out of 20
1 out of 20 1 out of 50 1 out of 100
3d. Awards and recognition given
by the community to the
government for excellent service None One by Bulacan Chamber Two by Central Luzon
Provinces
3e. Customer survey rating to
ascertain customers’ degree of
delight 4 (on a scale of 1 to 5)
3.5 (on a scale of 4.5 (on a scale of 1 to 5)
1 to 5)
4a. Compensation and benefits of Same as Industry 5% above Industry 15% above Industry
managers and workers are above
industry rates

4b. Management and employee 3 out of 10 per

turnover year 2 out of 10 per year 1 out of 10 per year

4c. Number of job applicants 10% more job

compared to other similar applicants 20% more job applicants 30% more job applicants
establishments

II. THE EXECUTIVE SUMMARY

The executive summary contains everything that is relevant and important the business audience. It is synthesis of the
entire plan. It must contain the major argumentations of the business proponent on why the business will work and
succeed. It should provide the business plan audience all the arguments on why they should participate in the business
venture.

The executive summary should then introduce and highlights the good qualities of:

1. the business proponents and their partners;

2. the enterprise organization and its capabilities;
3. the technology providers and their expertise and experience; and
4. the suppliers and all the major service providers

It should likewise describe the products/services of the enterprise, their features and attributes, and why they are the right
ones to deliver to the customers.

The Executive Summary should then proceed to discuss and justify the Enterprise Strategy and Enterprise Delivery
System. The Enterprise Strategy builds and develops the game plan for attaining competitiveness. The Enterprise Delivery
System is the entire process of converting input (resources) into output and these output into outcomes.

It should then render all the major institutional, market, operations, and organizational strategies previously cited into
financial strategies and forecasts.

Investments requirements should be presented along with the summaries of the projected income statements, balance
sheets, cash flows, and funds flow, and their analyses and conclusions. Yields and returns, along with risks and
contingency measures, should round up this section.

4 Entrepreneurship
 Subject: Entrepreneurship
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: HE 12 A and B
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 1: Developing a Business

Subject Teacher: Frejobel E. Langpaoen
Plan (Planning the Enterprise)

The Executive Summary should present the capital structure of the proposed business compliance of the proposed
business, as well as the more proactive programs to become a more responsible corporate citizen.

Finally, the Executive Summary should present the capital structure of the proposed business and show how this structure
will respond to the investment programs and financial forecasts of the enterprise.

However, the Executive Summary can only be written last in order to capture the findings and insights of the other parts,
but for presentation purposes, it is placed in the first part of the business plan.

III.THE BUSINESS PROPONENTS

The third section of the business plan contains information about the business proponents or stakeholders. There are
four types of stakeholders:
1. Resource mobilizers and financial backers
2. Technology providers and applicators
3. Governance and top management
4. Operating and support team

If the business plan readers are the resource providers, then they will want to know who else are on board to share the
burden of raising money to see the whole thing through.

If the business plan readers are the technology providers, they will want to know if there will be sufficient funds to pay for
the technology.

If the business plan readers are the governance and top management team, then they will want to know what strategies and
performances indicators are being proposed.

If the business plan readers are the implementing, operating, and support teams, they will want to know what programs,
activities, tasks, and resources would be in place.

IV. THE TARGET CUSTOMERS AND THE MAIN VALUE PROPOSITION

The fourth section of the business plan is the Target Customers and the Main Value Proposition.

The Business proponent must be very precise about the target audience or target customers. Target Customers must be of
sufficient size, sufficient paying capacity, and sufficient interest to purchase the products being offered by the enterprise.
The Main Value Proposition is the unique selling proposition of the enterprise.

Knowing where the target customers are exactly concentrated, the business plan should then pinpoint what the customers
buy, how they buy, when they buy, where they buy, and what convinces them to buy. This information should then be
used to justify the exact locations and marketing channels to be employed by the enterprise.

V. MARKET DEMAND AND SUPPLY, INDUSTRY DYNAMICS, AND MACRO ENVIRONMENTAL

FACTORS

The fifth section of the business plan is the market demand and supply, the industry dynamics, and the macro
environmental forces affecting the business of the enterprise.

It is normal for enterprise to actually expand their product offerings to include the other segments of a bigger market. The
business proponent should examine all the opportunities in this bigger market in order to determine what exactly
influences this bigger market.

The business plan should estimate the total market supply and demand for the product offerings of the enterprise. The
business plan should then determine the major critical factors that influence this market demand and supply.

5 Entrepreneurship
 Subject: Entrepreneurship
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: HE 12 A and B
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 1: Developing a Business

Subject Teacher: Frejobel E. Langpaoen
Plan (Planning the Enterprise)

The market analysis and forecasting exercise should lead to a quantification of the current and prospective size of the
market. Both the current and potential consumptions should then be dissected.

The business plan should discuss the relevant industry dynamics:

 Who are the competing enterprises in the industry and what are their comparative advantages and disadvantages?
What business models and strategies are they employing?

 Who are the suppliers in the industry and what are their capabilities and bargaining power?

 Who are the channels of distribution being used by the industry? How effective are these channels?

Both the industry players and the market are affected by the macro environment, which includes the social, political,
economic, ecological, and technological (SPEET) forces. The business plan should discuss the major trends and changing
patterns in the macro-environment, which would have significant impacts on the relevant industry and the behavior of
consumers.

 Social environment – includes the demographics and cultural dimensions that govern the relevant entrepreneurial
behavior. The structure, social status, and dynamics of the population at large, as well as the people’s beliefs,
tastes, mores, customs, and traditions dictate the major parameters of market behavior.

 Political environment – defines the governance system of the country or the local area of business. It includes all
the laws, rules, and regulations on allowable and disallowable business practices.

 Economic environment - is mainly driven by supply and demand forces. It is the same factor that drives the
interest and foreign exchange rates to fluctuate with the movement of the market forces.

 Ecological environment – includes all-natural resources and the ecosystem

 Technological Environment – makes or breaks competing participants in any industry. New scientific and
technological discoveries often lead to the launch and commercialization of new products with superior attributes
or to rendering the old ones obsolete.

VI. PRODUCT/SERVICE OFFERING: DESCRIPTION, EVOLUTION, AND JUSTIFICATION

The sixth section of the business plan is the product/service offerings that should contain a description, evolution, and
justification of the product/service offerings.
The products/services must be described by the highlighting the features and attributes that would most appeal to the
target customers. The business plan should also prove that the products/services would be accepted and carried by the
distribution channels.

VII. ENTERPRISE STRATEGY AND ENTERPRISE DELIVERY SYSTEM

The business plan should expound on the Enterprise Strategy (ES) by mapping the competitive landscape and by
situating the enterprise and its competitors as to their strategies and chosen positioning’s.
The business plan should then show how the Enterprise Delivery System (EDS) would enable the business to implement
the Enterprise Strategy.
The Enterprise Delivery System starts from the Input (resources mobilized), proceeds to the Throughput (the
transformation process where input is converted to output), and produces the Output (the product/services). The Output
are then marketed to the customers (in the case of goods) or experienced by the customers (in the case of services).
Customer satisfaction level, profits generated, and the performance of people from the transaction are the Outcomes of the
EDS.

Table 1.1. Enterprise Delivery System

Input Throughout Output Marketing Desired Outcomes

 Harnessing of human,  Conversion of  Goods  Positioning  Customer
money and physical input into output produced or satisfied
6 Entrepreneurship
 Subject: Entrepreneurship
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: HE 12 A and B
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 1: Developing a Business

Subject Teacher: Frejobel E. Langpaoen
Plan (Planning the Enterprise)

resources and the services  Product  Sales volume

 Resources mobilized transformation delivered  Packaging attained
- Money process within the  Place  Profits
- Men factory or service  People generated
- Machines shop  Promotion  People
- Materials  Price performance
- Methods 
- Management

The EDS involves the harnessing of human, money, and physical resources from well-selected sources. These resources
become the input (money, men, materials, methods, and management) which the Operations unit within the EDS (i.e., the
manufacturing or service delivery personnel) will convert or transform into output.

The output will then be delivered to the customers through the Marketing unit of the EDS. The products/services of the
enterprise are positioned to meet the requirements of the selected market segment by choosing the right packaging,
pricing, promotions, people for selling and distribution, and places or locations where the targeted customers can best be
found.

The Operations and Marketing units are supported by the Finance, Administration, and Human Resource Management
units, which oversee the flow of money, the procurement and maintenance of machinery and materials, and ensure the
proper deployment and development of people.

The EDS serves as the enabler of the Enterprise Strategy. The business plan must demonstrate how the EDS and the ES
tandem lead the attainment of the desired enterprise outcomes. These business outcomes should reasonably include:
 High customer satisfaction levels;
 High sales volume, market share, and market reach;
 High financial returns; and
 High people performance, productivity, and morale levels.

VIII. FINANCIAL FORECASTS: EXPECTED RETURNS, RISKS, AND CONTINGENCIES

The eight section of the business plan is the financial forecast including the financial returns, the financial risks, and
the financial contingencies.
The business plan must translate everything that we have discussed so far into financial forecasts and outcomes. From the
financial forecasts, the business plan should then calculate the expected returns from the business. The important return
calculations are the following: (1) expected return on sales; (2) expected return on assets or investments; and (3) expected
return on stockholders’ equity.
The business plan should also calculate the long-term returns, using the time value of money. This means estimating the
internal rate of return and the expected net present value. The business plan should then evaluate both the business risks
and the financial risks involved.

IX. ENVIRONMENTAL AND REGULATORY COMPLIANCE

The ninth part of the business plan is composed of the environmental and regulatory compliance.
The business plan must articulate the laws, rules. And regulations governing the business, and the industry that the
enterprise is in. It should ascertain that all the necessary permits, licenses, and authority to use proprietary intellectual
capital had either been secured or would definitely be secured. The business plan should also assure the reader that all the
necessary local government ordinances and barangay ethics would be followed by the enterprise.

X. CAPITAL STRUCTURE AND FINANCIAL OFFERING: RETURNS AND BENEFITS TO

INVESTORS, FINANCIERS, AND PARTNERS.
The tenth section of the business plan contains the capital structure and financial offerings of the enterprise including
some discussions on who are the investors, the financiers, and the partners of the enterprise.
7 Entrepreneurship
 Subject: Entrepreneurship
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: HE 12 A and B
Email: [email protected]; Website: www.uc-bcf.edu.ph

MODULE 1: Developing a Business

Subject Teacher: Frejobel E. Langpaoen
Plan (Planning the Enterprise)

Finally, the business plan must appeal to its target audience. It must highlight for them the main features of the business
plan they are looking for.

REFERENCES:

DIWA Senior High School. Entrepreneurship 2016. DIWA Learning Systems Inc.

REX BOOKSTORE. Entrepreneurship 2016.

Entrepreneur and Entrepreneurship Definition (investopedia.com)

Entrepreneurship Aptitudes Test (psychtests.com)

Introduction to Entrepreneurship | Boundless Business (lumenlearning.com)

Chapter 1 – Introduction to Entrepreneurship – Entrepreneurship and Innovation Toolkit (usask.ca)

Introduction: Entrepreneurship | Encyclopedia.com

8 Entrepreneurship