Developing a Business

Plan:
Screening Proposed
Solutions for Viability
VIABILITY
• is defined as the ability to survive or persist; the
quality of being able to happen or having a
reasonable chance of success.
• It also refers to the practical potential of start-up
business idea to survive and grow in the
marketplace.
• Viability of the business is likewise measured by
its long-term survival and its ability to sustain
profits and continue doing business over a period
Entrepreneurs Must Give Serious Considerations
Based On Viability In The Following Areas:

1. OBJECTIVES OR GOALS
2. MANPOWER OR HUMAN
RESOURCE
3. MANAGEMENT MUST
CAPITALIZE IN THE USE OF NEW
TECHNOLOGY
  refers to the people who work for
the business and the entrepreneur
 important factor for the business
success
 they must be given training, if
MANPOWER necessary, and orientation of the
company‘s operation
Or HUMAN  Employees must be motivated to
RESOURCE perform better, be persistent, must
know the management, and
focused in the mission and vision
of the business
 Their condition must be looked
into by top management.
  serves as its direction
 It must be clearly set by
the management in its
OBJECTIVES Mission and Vision as a
or GOALS guiding tool for its plans
and programs to motion
the enterprise to
profitability
  as it helps in easing work for
employees, speeds up work,
increase productivity, improves
MANAGEMENT quality of products or service
MUST better
CAPITALIZE IN  As product and service quality
THE USE OF is improved, the business will
be able to create more satisfied
TECHNOLOGY
customers which is essential in
creating more loyal repeat
customers.
THINGS TO TEST- CHECK BUSINESS VIABILITY OF
NEW VENTURE

HOW VIABLE IS MY/ OUR

BUSINESS IDEA?
 THINGS TO TEST- CHECK BUSINESS VIABILITY OF
NEW VENTURE
1. UNIQUENESS.
2. FINANCING THE VENTURE
3. CUSTOMER
4. COMPETITION
5. ECONOMIC MOOD
6. TIMING
7. MARKETING OF GOODS AND SERVICES
8. CONTINUING CASH FLOW
9. BASIC FEASIBILITY
 It doesn‘t necessarily mean
you have to invent or create
an entirely new idea for your
UNIQUENESS target market but, it should be
advantageously different and
stand out from your
competitors. Most successful
How do you stand businesses have a strong,
out from others? unique concept and a clear
identity.
 Every business need money for costs
and other expenses in starting a
FINANCING business whether, buying or renting
THE space and equipment, tools and basic
materials, or the like. You need to
VENTURE
make realistic estimation and know
where to obtain your budget. Have a
good finance understanding. The
How much would amount needed could be from you
own money, loan, or from a willing
you need to finance
investor.
your new venture?
 Sources of Capital/ Funds for
the Business
Internal External
source a.
source
long-term sources of
debt financing
a. Savings/assets (personal properties)
of a starting entrepreneur b. Bank loans
b. Sources from internal operation
(business revenue)
c. Short-term sources of debt financing a. Partners’ contribution for
(banks,investment/lending partnership organization
institutions) b. Stock options for
other corporations
sources c. Liquidation of assets
 Knowing who will be buying your
product or service is important for
your business success because you
would know where to find them.
CUSTOMER
Who are your customers? Define
your customers whether they are
students, busy professionals, mothers,
teenagers, etc.
Who’s going to Know your customer profile to better
buy? understand what they need and afford
to pay.
 It is more expected than not that you have
competitors in the market offering the
same.
Competitors can be a great resource to you
COMPETITION as an upstart; you can see how much they
charge, what marketing strategy they use
and the location they choose.
Ask yourself: how can I do better than the
competition? What is the competitive
How can I do advantage of the venture?
better than my Use your uniqueness identified in step one
competitors? to find ways to outdo your competitors.
 Your business' success can greatly depend
on economic mood. Gauge the state of the
economic environment and think of how it
ECONOMIC relates to your new business venture.
MOOD Are consumers cutting expenses or
spending more? Even in this trying times
of pandemic and economic downturn, can
be an opportunity if you can meet the
Where are consumers’ mood of the consumer.
mind right now? If your business idea doesn't fit the current
What are the concerns trends in spending, think of ways you can
that affect their fit it into today's needs.
spending behavior?
 If you expect your business to be
seasonal, time to open your business
at the strongest consumer demand.
TIMING
For example, if your business is
offering milk tea products, it is best
to open during summer months or hot
seasons than rainy days. New
Is your business customers will come and will
seasonal or not? eventually become repeat customers.
 In step three you identified your customer.
MARKETING At this point develop a marketing strategy
OF GOODS for your potential buyers for them to know
AND about your great new business and on how
to buy them.
SERVICES
With today's internet capacity, marketing
can be relatively low-cost, using online
coupons and mailing lists.
What is your Brainstorm ideas with friends and family,
marketing and look at what your competitors do to
strategy? get new business
 Before you open up shop,
prepare a detailed financial plan.
CONTINUING This is in preparation if the
CASH FLOW business will already be booming
and more supplies and costs will
be needed to keep with the
demand. Plan at least for your
Do you have a business' first year, so that you
proper financial get rid of possible hindrances -
plan? especially financial ones.
 There are legal requirements that needs
to be complied for opening a business.
BASIC
Make sure that your business idea will
FEASIBILITY not violate government requirements
and proper documents can be legally
obtained.
The product or service offered must be
Is it legal? Can the doable, legal, complies the standard of
safety and health, and is relevant to
product or service
solve a need.
work?
PROFITABILITY
•is a business‘ ability to gain profit from its
business activities and investment.
•Though profit is closely related to profitability,
the latter is but, a measurement of business
efficiency – and ultimately it‘s success or
failure.
•A further definition of profitability is a
business's ability to produce a return on an
investment based on its resources.
TO MEASURE PROFITABILITY WE USE:

1. PAYBACK PERIOD
2. RETURN ON INVESTMENT (ROI)
3. RETURN ON SALES (ROS)
  refers to the
allotted time,
usually number
of years that an
PAYBACK investment is
PERIOD recovered.
 Simply put, the
payback period
𝒊𝒏𝒊𝒕𝒊𝒂𝒍𝒊𝒏𝒗𝒆𝒔𝒕𝒎𝒆𝒏𝒕𝒐𝒓 𝒄𝒂𝒑𝒊𝒕𝒂𝒍 is the length of
¿
𝒑𝒓𝒐𝒇𝒊𝒕 time an
investment
reaches a break-
  is a performance measure
used to evaluate the
efficiency of an investment
or compare the efficiency
RETURN ON of a number of different
INVESTMENT investments.
 ROI tries to directly
(ROI) Or Return measure the amount of
return on a particular
on Assets investment, relative to the
investment‘s cost.
𝒏𝒆𝒕 𝒊𝒏𝒄𝒐𝒎𝒆𝒐𝒓 𝒑𝒓𝒐𝒇𝒊𝒕
¿  To calculate ROI, the
𝑐𝑜𝑠𝑡 𝑜𝑓 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡𝑜𝑟 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 benefit (or return) of an
investment is divided by
the cost of the investment.
The result is expressed as
a percentage or a ratio.
  measures the overall operating results
of an entity.
 The measure considers all income
RETURN ON recognized and all expenses incurred
during the period. Return on Sales is a
SALES (ROS) or financial ratio that shows how
NET PROFIT efficiently a company is able to
generate operating profit from its
MARGIN revenue.
 It is used to measure the performance
of the company by analyzing what
percentage of the revenue eventually
results in profit for the company rather
than being spent towards paying the
company‘s operating cost.
 RETURN
ON SALES
(ROS) or
NET
PROFIT
MARGIN
 is what is left of the business
revenue, income or sales after
it pays all expenses.
Directly related expense to
PROFIT revenue include wages,
expenses in producing a
product, operating expenses,
debt-reduction payments and
other expenses related to the
conduct of the business
activities.
BREAK-EVEN
happens when there is
no profit nor loss after
deducting expenses from
revenue.
 example
Cairo lost his job because of the pandemic and he wanted
to earn some money On March 16, 2020 he decided to
make frozen lumpiang shanghai to sell online. His initial
capital in starting his business is ₱ 640.00. Upon posting it
online, all lumpia were sold. More friends ordered and
recommended his lumpia so he decided to make a business
out of it. Below is a record of the result of his business
transactions for 5 days. Let us check if he gained profit or
not.
DAY GROSS SALES COST OF NET SALES OPERATING NET
GOODS EXPENSES INCOME/
SOLD NET PROFIT
1 200 pcs @ 500.00 140
5.00=1000
2 300 pcs @ 800.00 250
5.00=1500
3 350 pcs @ 1250.00 500
5.00=1750
4 250 pcs @ 550.00 200
5.00=1250
5 320 pcs @ 800.00 250
5.00=1600
TOTA 7100 =3,900
L:
Compute for:
a. ROI
b. ROS
c. Payback Period
What are my requirements?
•Let’s say that you are a consumer who is
very particular on the features and
benefits of products and services for your
satisfaction. With the products/services
listed below, try to list down your
requirements for you to be convinced to
buy/avail the products/services you want.
SOAP
COFFEE SHOP
CELLPHONE
MOVIE
BUS RIDE
1. What do you consider in
identifying your requirement/s for
you to buy/avail the
product/service you want?
2. As a customer, why is it that we
set requirement/s for us to
buy/avail the product/service we
need?
3. As a business owner, why do we
need to understand and be aware
of the requirement/s of our
customers?
CUSTOMER REQUIREMENTS
•Refers to the characteristics or
specifications that should be present
in a product for it to be deemed
desirable by the consumer.
Two types of customer requirements

1. Service Requirement
2. Output Requirement
  Intangible aspects of purchasing a
product that a customer aspects to
be fulfilled.
 It consists of elements like on-time
SERVICE delivery, service with a smile, easy
REQUIRE payment etc.
MENT  It encompasses all aspects of how a
customer expects to be treated while
purchasing a product and how
smooth his buying process goes.
  Tangible characteristics, features or
specifications that a consumer
expects to be fulfilled in the
OUTPUT product.
REQUIRE  If a consumer is availing a service
MENT as a product, then various service
requirements can take the form of
output requirements.
Three levels of customer
requirements
1. Must Haves
2. Satisfiers
3. Delighters
  These are the bare minimum
requirements expected by the
customers; if fulfilled customers
will be not show any exceptional
Must appreciation but if not fulfilled, the
Haves customer will show dissatisfaction.
 The customers do not explicitly
express their desire for these but
expect it to be understood.
  There are the requirements that
customers express their desire for,
explicitly. If you offer better or
Satisfiers more of these satisfiers, then the
customers will appreciate it more
and will be more satisfied.
  These are the extras or the add ons.
Absence of these will not leave the
customer dissatisfied; in fact, the
absence of these characteristics
Delighters might not even be noticed. But
adding these would increase the
customer’s satisfaction greatly and
will leave them delighted.