CHAPTER I

PLANNING THE INTERPRISE

Jilbert V. Rapińan
Froidelyn V. Manlangit
Jemina Margaret S. Bayos
Gina Rose B. Cortez
12-ZEÑAS
WHAT IS A BUSINESS PLAN FOR?
Entrepreneurship who plan to enter any business endeavor must have a business
plan 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 feasibility study.
Many new enterprises need to convince prospective business investors about the
soundness and potential of their business.
There are business plans that are written during the first few years of the
enterprises in order to guide the entrepreneur on which strategies would be
most beneficial for the enterprise to take.
Clearly a business plan serves many master. First, it serves the entrepreneur who
must set a navigational course.
The business plan must have a specific audience in mind and what important
questions do this audience want answered. In order to aid the entrepreneur in
getting his or her business plan organized, the following format may be good
start:
I. Introduction
A. The Business Concept and the Business Model
B. The Business Goals: Vision, Mission, Objectives, and Performance Target.
C. The Business Offering and Justification.
II. Introduction
III. The Business Proponents: Organizers with their Capabilities and
Contributions.
IV. The Target Customers and the Main Value Proposition to the
Customers.
V. The Market, Market Justification based on the Industry Dynamics and
the Micro Environmental 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 Enterprises Strategy and Enterprise Delivery System: Business
Competiveness.
IX. Environmental and Regulatory Compliance
X. The Capital Structures and financial Offering: Returns and Benefits to
Investors, Financiers, and Business Partners.
 1.2 CONTENTS OF THE BUSINESS PLAN
A business concept contains the essence of the enterprise in a concise but
powerful manner. It stresses the value of the products offering to the targets
customers who would most likely buy it.
The products Concept must then be translated into a business model. A
business model is a formula on how the enterprises exactly plans to make
money out of the business. There are four areas of money making the
business model must address.
How will the business raise revenues? What critical factors will cause the
revenues to materialize?
What will be the cost of the enterprise products and other cost of doing
business? How will these costs be managed to ensure comfortable profits?
What critical factors will drive the costs? How can these factors be
controlled?
What will be the major investments of the enterprise? Why will these
investments give the enterprises a competitive edge?
How will the enterprise finance the investments? How will the enterprise
fund its growth?
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, Objectives, key result areas and
performance indicators of the enterprise.
 To illustrate, let us examine the vision of Doubles
Happiness, Doubles Happiness is an eatery in a bus
terminal. It has three outlets located at bus terminal in
Central Luzon.
 Case Examples 1: Doubles Happiness
The vision of Doubles 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
statements.
 For Double Happiness its mission statement is “to provide
quality food and passenger convenience services that would
generates sufficient profits for the stocks holders 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.
THE EXECUTIVE SUMMARY
The executive summary contains everything that is relevant
and important to the business audience.
It is a 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 business venture.
The executive summary should then introduce and highlight
the good qualities of:
1. The business proponents and their partners.
2. The enterprise organization and its capability.
3. The technology providers and their expertise and experience.
4. The suppliers and all the major service providers.
 THE BUSINESS PROPONENT
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
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 performance 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.
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 have sufficient interest to purchase the
products being offered by the enterprises. The Main
Value Proposition is the unique selling proposition of
the enterprises.
 Market Demand and Supply, Industry Dynamics,
and Macro Environment 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 enterprise.
It is normal for enterprises 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 enterprises.
Once these other critical factors or variables are determined, the
business plan should then forecast the future demand and supply.
The market analysis and forecasting exercise should lead to a
quantification of the current and prospective size of the market. Bothe
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?
 What are the channels of distribution being used by the
industry? How effective are these channel?
 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
behaviour of consumers.
Social Environment includes the demographic and cultural
dimensions that govern the relevant entrepreneurial behavior.
 Political Environment defines the governance system of the
country or the local area of business.
 Economic Environment is mainly driven by supply and demand
forces.
 Ecological Environment includes all natural resources and the
ecosystem that defines the habitat of man, animals, plants, and
minerals.
 Technological Environment makes or breaks competing
participants in any industry.
Product/Service Offering: Description,
Evolution, 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
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.
 Enterprises Strategy and
Enterprises Delivery System
The business plan should expound on the Enterprises 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 Enterprises 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 are converted to output), and produces the Output (the
products/service). The output or 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.
 Financial Forecast: Expected Return,
Risks, and Contingencies
The eighth 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 forecast 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 investment; 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.
  
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, rule, and
regulations governing the business, and the industry that the
enterprise is in. It should ascertain that all the necessary
permits, licences, 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.
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 offering of the enterprise
including some discussions on who are the investors, the
financiers, and the partners of the enterprise.
Finally, the business plan must appeal to its target
audience. It must highlight for them the main features
of the business plan that they are looking for.