Introduction to
Business Plan
Preparation
BUSINESS PLAN is also a road map that provides
directions so a business can plan its future and
helps it avoid bumps in the road. It is the only
single written document that must be prepared
before opening a new business or expanding an
existing business. It provides a clear direction to
any uncertain business endeavor.
A business plan is a detailed and integrated
written document that describes the various
activities involved in opening and operating a new
entrepreneurial venture.
10 Reasons Why You Need to Prepare a Business
Plan for Small Business
1. To help you with critical decisions
2. To iron out the kinks
3. To avoid the big mistakes
4. To prove the viability of the business
5. To set better objectives and benchmarks
6. To communicate objectives and benchmarks
10 Reasons Why You Need to Prepare a Business
Plan for Small Business
7. To provide a guide for service providers
8. To secure financing
9. To better understand the broader landscape
10. To reduce risk
There is another written document that must be
prepared and is equal importance as the
business plan. This is the FEASIBILITY STUDY
which serves as the forerunner of the business
plan.
Two Major Tests to be Conducted every time a
New Business Idea is Created
1. Test of Possibility
2. Test of Feasibility
The test of possibility on the new business should
have a positive result, so that the test of feasibility
or viability will be conducted.
BUSINESS PLAN VERSUS FEASIBILITY STUDY
The primary objective of the feasibility study is
to determine whether the proposed business is
feasible or not in all areas. If the outcome of the
feasibility study is positive, then the
entrepreneur prepares the business plan.
BUSINESS PLAN VERSUS FEASIBILITY STUDY
The content and structure of the business plan
are almost the same as those of the feasibility
study. The data shown in the feasibility study are
the same set of data presented or used in the
business plan. Nonetheless, the business plan
presents a more detailed discussion of how the
business will be undertaken and operated.
MAJOR PARTS OF THE BUSINESS PLAN There is no
universally accepted standard format or
structure of the business plan.
1. Introduction
2. Executive Summary
3. Environmental Analysis
4. Business Description
5. Organizational Plan
MAJOR PARTS OF THE BUSINESS PLAN There is no
universally accepted standard format or
structure of the business 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
The following sections:
4. Description of the Business
5. Location of the Business
6. Funding Requirement and Source
In case the consulting team prepares the business
plan for prospective owners or investors, the
section Statement of Confidentiality is added as
the last section.
Proposed Name of the Business
The formulation and drafting of the proposed
business name are not as simple as it sounds. It is a
delicate and important entrepreneurial task.
Remember that the name of the business may exist
in the market for the many years. Careful and in-
depth planning is of prime importance.
At least three suggested trade names must be
submitted to the department of Trade and
Industry for approval and registration
1. The proposed business name must:
2. Reflect the business identity and image,
3. Promote the philosophical values and culture
that the business values the most,
4. Profess the brand identity of the product, and
5. Attract or influence the target customers.
Name of the Owner
The name of the owner must be properly stated. In
a sole proprietorship, there is only one owner. In
case the venture is a partnership, the names of the
partners, including the extent of their liabilities,
must be indicated. For example, if a partner’s
must be properly mentioned.
• For business ventures that will operate as a
corporate entity, the names, nationalities, and
addresses of the incorporators must be given.
Incorporators are persons who originally formed
the corporation.
Description of the Business
A brief description of the business must include
information about the type of product or service
that the business intends to produce or provide. It
may include a brief information about the ultimate
mission, vision, and objectives of the business. The
other products or services that the business plans
to produce or provide must also be mentioned in
the description of the business.
Location of the Business
There are no rigid rules in the selection of the
business location since several variables affect the
selection of the business location. The basic
entrepreneurial consideration is to place the
proposed business in a strategic location that will
assure competitive advantage.
What is the difference between the sections
Address of the Business and Location of the
Business?
The former simply states the exact business
address. No additional description is provided to
highlight the exact business address. The latter
indicates the reason/s for the selection of the
location. In case the processing plant is not within
the vicinity of the business, its exact location must
be described.
The following factors should be considered when
deciding on the location of the proposed business:
1. Proximity to the target customers
2. Distance from the sources of raw materials,
labor, and utilities
3. Availability and cost of transportation
4. Peace and order situation
5. Presence of direct competitors
6. The geographic and climatic conditions
Funding Requirement and Source
The estimated total initial cost of the business
venture must be clearly indicated. It should include
the projected breakdown or allocation of the total
cost, e.g., how much will b for building, fixtures,
equipment, supplies, and working capital. This
section also presents the source or sources of
funds.
Funding Requirement and Source
The initial cost of the investment may be provided
solely by the owner or owners or partly by the
owner and creditors. The estimated period to
settle the funding source provided by the creditors
must also be mentioned.
