OUR LADY OF FATIMA ACADEMY

DAO, CAPIZ
LEARNING MODULE
Entrepreneurship 12
3rd Quarter

DEVELOPING A BUSINESS PLAN

The business plan is prepared using a scientific approach in determining possible business situations
considering the different perspective of people who are interested in the business. Though the perspective of the
entrepreneur has the major influence on the business plan, he or she nonetheless must still consider the views of
the customers, creditors, and even the employees and staff. He or she must gather sufficient and relevant
information to support any perception or conclusion.
Market Problems
Entrepreneurs face various challenges when planning a business, the main aspect to recognize is the
place or position that in a future time the entrepreneur wants to be or the objectives that want to be achieved. In
order to find the right path that will lead to success the entrepreneur must analyze all the aspects that surround
the business idea he intends to realize.
Entrepreneurs should formulate a business plan when they have already spotted assessed the
opportunities for the market. A BUSINESS PLAN is a comprehensive paper that details the marketing,
operational, human resource, financial, strategic direction, and tactics of the business. The business plan will be
the core guide and direction of the entrepreneur in calculating the resources needed, assessing how to obtain
these resources, and running the business.

DETERMINING THE CAPITAL NEEDED

It is mandatory in the entrepreneurial process to calculate the resources needed to establish the business.
Careful calculation must be applied in computing the complete set of resources needed and include only those
items that are considered as the real needs in venture creation. Allowance must also be considered.

RUNNING THE BUSINESS

This is the part where the entrepreneur should use the resources allocated for the new venture. All
aspects of the business plan should be critically observed from operations, marketing and sales, human
resources, finance, and the strategy implementation. The entrepreneur should have a control and monitoring
system.

Scanning the marketing environment

Scanning the marketing environment is the starting point of any new venture that involves understanding
and knowing the complexity of the environment. Through scanning the environment an entrepreneur can
recognize various opportunities and understand thoroughly the arena where the future business will operate.

Seeking, screening, seizing

The 3S of opportunity spotting and assessment is the framework that most of the promising
entrepreneurs use to finally come up with the ultimate product or service suited for a specific opportunity. An
opportunity is an entrepreneur’s business idea that can potentially become a commercial product or service in
the future.

S1 Seeking the opportunity

Opportunity seeking is the first and is the most difficult process to the number of options that the
entrepreneur will have to choose from. It involves the development of new ideas from various sources:

Macro-environmental sources
STEEPLED – This is a mnemonic for sociocultural, technological, economic, environmental, political,
legal, ethical and demographic factors. This represents the general environment where the entrepreneur can
identify business opportunities from and where the future business is about to operate.
1. INDUSTRY
This is the source of current trend on what is happening in the industry where the future business will
belong to. Ex. An entrepreneur wants to engage into rice retailing, he or she should know the nature and the
happenings of the rice industry.
2. NEW DISCOVERY OR KNOWLEDGE
These are new trends that can be the core business model of a new venture.
3. FUTURISTIC OPPORTUNITIES
These are the projected new opportunities that can possibly affect the new business while it is running.
Ex. Sari-sari stores in the future will be able to incorporate financial transactions such as accepting bills
payment and process remittances.
Micro-market sources Consumer preferences, interests and perception
These are the current needs and wants of the potential customers that should be discovered right away
by a building entrepreneur.
A need is recognized when a customer believes that there is a difference between his or her current
situation versus his or her desired condition.
A want is recognized when a customer believes that there is a specific product or service that can
perfectly suit the need.
1. COMPETITORS
Recognizing and understanding potential competitors will aid the entrepreneur to develop a product or
service that is unique and will surely stand out on the competition.

2. UNEXPECTED OPPORTUNITIES FROM CUSTOMERS

Oftentimes, the most brilliant ventures come from the most unexpected opportunities. Existing problems
often give rise an unexpected opportunity.

3. IRRITANTS IN THE MARKETPLACE SUCH AS DETERENTS, PROBLEMS, COMPLAINTS,

AND DELAYS
Entrepreneurs see opportunities in situations where there is a recurring problem or sometimes when
there is no more hope in solving the problem.

4. TALENTS, HOBBIES, SKILLS, and EXPERTISE

Business opportunities do not just come from outside forces but also from within the entrepreneur. The
entrepreneurs’ talent, hobbies, skills, and expertise can be a good source of opportunity.

5. LOCATION
Often, entrepreneurs just have to look at their ecosystem and they will be able to spot a business
opportunity right away. EX. School

Macro-environmental sources
STEEPLED ANALYSIS
The result of the STEEPLED scan will aid the entrepreneur in deciding what product or service to set up
and whether this new venture will succeed or not. It can help the entrepreneur to check if there is a compelling
business opportunity or threat.
SOCI0-cultural factors
These factors represent a general view of a locality’s traditions, customs, beliefs, norms and perceptions.
These factors affects how a person of the locality behaves and reacts to marketing and selling activities.
The entrepreneur should take note of the following sociocultural factors:
Health consciousness Attitude toward product quality and customer service
Educational level Attitudes toward saving and investing
Attitudes towards imported goods and services Emphasis on safety
Attitudes toward the person’s lifestyle Religion and beliefs
Buying habits

Technological factors
These are composed of innovations of an existing technology or an invention. Entrepreneurs should
always be up-to-date with the technological changes, as these are catalysts in improving a product or service or
replacing them entirely.
The entrepreneur should take note of the following Technological factors:
Basic infrastructure Legislation regarding technology
Rate of technological change Communication infrastructure
Spending on research and development Access to newest technology
Technology incentives Internet infrastructure and penetration

Economic factors
These factors play a vital role in scanning of marketing environment because economic factors directly
affect any business venture. These factors include income, expenses, and resources, that can influence the cost
of doing and generating income.
The entrepreneur should take note of the following Economic factors:
Exchange rates Level of consumers’ disposable income
Unemployment trends Trade flows and patterns
Labor Cost Monetary policies
Stages of Business Cycle Stock Market Trends
Price fluctuations

Environmental or ecological factors

The scan of these factors will help the entrepreneur determine if the business he or she is entering into
will comply with the environmental standards or will just be a hazard to people, animals, and nature.
The entrepreneur should take note of the following Environmental or ecological factors:
Weather Waste management
Climate Change Attitudes toward “green” or ecological products
Laws regulating environmental pollution Endangered Species
Air and water pollution Attitudes toward and support for renewable energy
Recycling

Political factors
These factors are mostly induced by the government policies and administrations, which can have a
strong effect in the entrepreneur’s business.
The entrepreneur should take note of the following Political factors:
Government Stability and likely changes Freedom of press
Bureaucracy Rule of Law
Corruption level Government Effectiveness
Tax policy Political Rights

Legal factors
Related with political factors, legal factors are government laws and regulations that can restrict or allow
business activities.
The entrepreneur should take note of the following Legal factors:
Anti-trust law Consumer protection
Discrimination law Employment law
Copyright, patents/intellectual property rights Health and Safety law
Data protection law

Ethical factors
These are the factors that will serve as an entrepreneurs’ guide on how to be ethical in running the
business
The entrepreneur should take note of the following Ethical factors:
Ethical advertising and sales practices
Accepted accounting, management, and marketing standards
Attitude toward counterfeiting and breaking patents
Attitude toward development and well-ding of employees

DEMographic factors
These are the characteristics of the people in the target market.
The entrepreneur should take note of the following DEMographic factors:
Population growth rate Gender distribution Family size and structure
Age distribution and life expectancy rates Social Classes Minorities
S2 Screening the opportunity
It is a process of cautiously selecting the best opportunity. The selection will depend on the
entrepreneurs’
internal intent, i.e. the main objective that the business will accomplish in the entrepreneur’s life external intent
which will address the compelling needs of the target.
The entrepreneur should apply due diligence and independent judgement in selecting the opportunities
that have a potential and eliminate those that are not within the scope of the entrepreneur’s risk appetite. Risk
appetite refers to the entrepreneurs’ tolerance of business risks.
TIME must be considered by the entrepreneur in screening the opportunities at hand, as it is considered
of the most critical resources of an entrepreneur. Time should only be devoted to worthwhile opportunities.
Therefore, entrepreneurs must always be sharp-eyed for real opportunities. They must be able to intelligently
say no to low compelling opportunities and proceed with sensible ones.
The most important elements that are always present in a opportunity. The entrepreneur should say no to
an opportunity if it does not contain any of these business opportunity elements:
Has superior value to customers
Solves a compelling problem, issue, a need or a want
Is a potential cash cow
Matches with the entrepreneur’s skills, resources, and risk appetite.

S3 Seizing the opportunity

This the “publishing through” with the chosen opportunity. Entrepreneurs should make the best out of
this opportunity, and they should exert effort and dedication for the future success of the new venture.
Entrepreneurs idea can any be type of innovations.
Innovation is the process of positively improving an existing product or service. It is a key driver for
economic growth. Innovation is inevitable as the world constantly changes. Therefore the products and services
must also adapt to these changes.
Breakthrough innovation
These innovations, which may also include inventions, occur infrequently as these establish the platform
on which future innovations in an area are developed. Breakthrough innovations must be protected by a patent,
a trade secret, or a copyright.
Examples: Internet, computer, airplane
Technological innovation
These innovations are technological advancements of an existing product or service. These innovations
needs to be protected.
Ex. Wireless Fidelity, laptop
Ordinary innovation
They are commonly originating from market analysis and technology pull instead of a technology push.
This means that the market has a strong influence in the implementation of an innovation.
Ex. Unlimited internet plans of telecommunications, wireless mouse

Product or service planning and development process

In the seeking process, one opportunity stood out from a number of sources. The opportunity was tested
according to its attractiveness and feasibility in the screening process. The last process, called product or service
planning and development process.
Idea stage
In this stage, the entrepreneur determines what are the feasible products or service that will perfectly suit
the opportunity. Usually, a market evaluation is conducted by the entrepreneur to assess whether the new
product or service ideas will be accepted by the market using values and benefits to consumer metrics.
On the other hand, the value of the new products and services should also be assess if these will benefit the
entrepreneur. Product and services that are unappealing to the market should be eliminated at this stage.
Concept stage
In this stage the developed idea will undergo a consumer acceptance test. This test includes getting the
initial reactions of the primary target market and the distribution channel.
Conversational interviews are conducted to understand consumer preference on physical characteristics
and attributes of a product or the physical evidence of a service.
Both favorable and unfavorable results will be used to devise an acceptable product or service. This will
also be used to compare new idea with the competition with regard to the superiority or inferiority.
Product development stage
In this stage, the entrepreneur leverages on the information generated from the prospective customers
via the concept stage. Actual reactions from prospective customers are determined. The entrepreneur will
conduct a consumer panel where the actual product samples or actual service samples will be given or rendered
to panel of potential customers.
The participants’ task is to critique the actual product or service and record the good qualities and
inferior attributes. They are also given samples of competitors’ products or services for comparative purposes.
Test marketing stage
This stage validates the work done from the first three stages to measure success in the
commercialization of the product or service. Actual sales results will be the foundation of the customer’s
acceptance level and will be the basis in commercializing the product or service
Recognizing the potential market is really one of the most difficult task to do. It involves tedious
research and research to ensure success.
Once the 3s of opportunity spotting and assessment have been diligently done. The entrepreneur should
now be ready to prepare a comprehensive business plan that covers the marketing, operations, and financial
plans.
 DEVELOPING A BUSINESS PLAN
Business Plan is defined as a detailed and integrated written document that describes the various
activities involved in opening and operating a new entrepreneurial venture. In case the business project is
relatively large in terms of financing or funding requirements, the entrepreneur usually seeks the assistance of
consultants. In this book, however, the concept of business plan preparation is more applicable to a small
nosiness that the learner is expected to open as the final major requirement of the course in entrepreneurship.

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. Environment Analysis
4. Business Description
5. Organizational Plan
6. Production Plan
7. Operation Plan
8. Marketing Plan
9. Financial Plan
10. Appendix
Introduction
The introduction presents the general perspective of the business. It may consist of one to two
pages. It includes, among others, the following sections:
1. Proposed name of the business
2. Address of the business
3. Name of the owner or owners
4. Description of the business
5. Location of the business
6. Funding requirement and source
Executive Summary
Although the executive summary is commonly the last section to be written after all other
major parts have been completed, it is the next major part of the business plan after the introduction. It
points out the overall highlights of the business plan as well as a bird’s eye view of its sections. It must
be written in simple language that can be easily understood and at the same time attract the attention
and influence the decision of the reader.
There is no standard format as to its sections and contents, the executive summary must include
the following sections:
1. Vision, mission, goals and objective of the business
2. Business model adopted
3. Business and product positions
4. Wealth improvement approaches
5. Parties supporting the business
Environmental Analysis
The next major parts or section of the business plan after the executive summary is the environmental
analysis. It is a strategic tool that helps determine the external and internal factors affecting the performance of
the business. These factors may be political, economic, social, or technological in nature. The environmental
analysis may consist of at least 20 pages including the graphical representation, tables, and consumptions. The
environmental analysis section is considered the heart of the business plan. It consists to global analysis,
societal analysis, and industry analysis.
Business Description
The business description section presents the nature and form of the business to be undertaken, and may
cover two to three pages. As the nature, the business may be a merchandising, service, manufacturing, or a
hybrid. The description must include the innovative features of the business. As to form, it may either be a sole
proprietorship, a partnership, or corporation. The reason/s for the selection of the form must also be indicated.
 In case the study is about an already existing business, the present status of the business must be
provided, including the intended innovation.
In addition, the business description also includes the following information:
1. Product or service that it plans to produce or serve
2. Various plant and office equipment
3. Size of the proposed business
4. Future parties with whom contracts may be necessary
5. Personnel requirement
6. Administrative operation
Organization Plan
The organization plan provides a detailed description of the business in terms of the following:
1. Form of the business organization
2. Liability of the owner or owners
3. Organizational Structure
4. Roles and Responsibilities
5. Salary requirements
Production Plan
The production plan presents or describes activities related to the production of goods. The Production
plan is the result of the industry analysis, particularly the study of supply and demand and consumer behaviour.
The production plan usually includes the following:
1. Production schedule
2. Production process
3. Processing plant and equipment
4. Source of materials
5. Production cost
Operational Plan
The Operational Plan is a major section of the business plan that outlines the various activities from the
acquisition of raw materials to the delivery of the products to the target consumers.
The operation plan commonly covers the following areas:
1. Evaluation of suppliers
2. Materials requisition and receiving procedures
3. Storage and inventory control system
4. Shipment system and control
5. Functions and support services
Marketing Plan
The marketing plan details how the proposed business will sell its product to the target consumers. It
may consist of some or all of the following important sections:
1. Product
2. Place
3. Price
4. Promotion
5. People
6. Packaging
7. Positioning
Financial Plan
The last major section of the business plan is the financial plan. It accumulates and describes all the data
expressed in monetary units from the other sections of the business plan.
The financial plan simply collates and describes the various sets of information derived from the other
sections of the business plan. It is composed of the following important areas:
1. Major assumptions
2. Projected statement of comprehensive income
3. Projected statement of cash flows
4. Projected statement of financial position
5. Financial statement analysis