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Module 4

SESSION 3:
WRITING A BUSINESS PLAN

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
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What Is This Session About?

This session will guide you in accomplishing the output of the process starting from identifying
business opportunity to transforming it into business idea, and now developing it into business plan. This
is the integrative aspect of Modules One to Three.

To accomplish this business plan, you need to go back to various action worksheets (application
part of the modules) and connect them into a full story of your business plan. The good thing with this
process is you were able to deepen each part of the business plan during your learning sessions in each
module. The basic requirement in this session is putting together pieces of information and blocks of action
worksheets to be able create a written business plan.

But, you have to remember that you are an entrepreneur. An entrepreneur possesses a mindset that
perceive challenges and opportunities, moves out of the comfort zone, thinks out of the box, and takes
concrete action of ideas and plans. This is the entrepreneurial action – turning ideas into written business
plan. But the biggest challenge for you is to translate the written plan into a start-up when you finish this
subject.

What Will You Learn?

At the end of this session, you will learn how to write the business plan of your target business
venture. In writing each part of the business plan, you will develop the skills of integrating and synthesizing
ideas into meaningful information.

What Do You Already Knows?

Read the quotation. Try to relate it to your life’s
journey and to this process of making a business
plan.

Let’s Reflect
What is your impression about this quotation?
Why is it that you need a clear plan when you
travel and when you start a business?

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 3

Let’s Study
The business plan pinpoints your business destination. It is a road map because it describes how
you intend to get there. It minimizes the possibility of failure and maximizes the likelihood of success. It
also converts pipe dreams into realities by forcing you to carefully think about the specifics of your business.
It sells out your business to stakeholders. It enables thinking through policies, procedures and strategies
that will enable the business to achieve its objectives.

Company Description
What are the basic details of your business? Company name, address, and location. Form of
ownership and legal status. Date when the company was founded. Development stage of the business (start-
up or expanding). Benefits of your business to the country.

This section covers the following topic from your session on Strategic Management: Vision (what
does your ultimate image of your business look like in ten years?) Mission (how do you intend to actualize
your vision (strategy)?) Objectives (both long term and short term and should be measurable) Team
(staffing and responsibilities). You need to go back to Module Two: Session Three and review your answers
(action worksheet) on the portion of Let’s Try This.

Company Vision-Mission
Where do you want your business to be in one year? Describe the goals of your company. State
what you want to achieve for your company. Give also progress markers along the way to goal achievement
to indicate how you want to accomplish your company goals.

Vision - What is your aspiration? What do you want to achieve with your company? State the main
advantages and the benefits of your product or service for the customer. Explain in 7 words or fewer what
you want to achieve.

Mission - How do you want to achieve your Vision? Translate your Vision into actions what you
are going to do in order make the Vision come true.

Company Objectives

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 4

Where do you want your business to be in one year? Describe the goals of your companies. State
what you want to achieve for your company. Give also progress markers along the way to goal achievement
to indicate how you want to accomplish your company goals. You can use this matrix to formulate your
company objectives:

Goals Objectives (progress to be accomplished (month /

markers) year)

1. 1.
2.

2. 1.
2.

3. 1.
2.

Company Team
This section should answer the following questions: Who are the key people on your management
team? What management positions do you need to fill in the near future? What is the staff’s pay structure
like? What is the organization structure like?

Information about the management team is very important for potential capital providers. It is said
that venture capitalists support a mediocre business idea run by first-class entrepreneurs rather than a first-
class business idea run by mediocre entrepreneurs. This part should tell why you are a first-class
entrepreneur. Why are you and your team members the perfect team to run the proposed business? Start
with the name of each team member. Continue with the experience and education of each team member
that are of relevance to your business. Also, give information about the responsibilities of each team
member. Who is responsible for what in the business? Finally, if you have professional advisors for your
business list them and describe their role for your business.

Let’s Think About This

Given the three essential part of your company description:

1. What is the underlying connection of vision to mission, mission to long term goals, and long-term
goals to objectives?
2. What is the importance of good reputation/background of the management team?
Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind
August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 5

Let’s Try This

Try to fill-up the company description using the format below. This is a part of your business plan.

2.0 Company Description

2.1 Mission Statement

2.2 Long-Term Goals and Objectives

2.3 The Management Team

Let’s Study
Let us proceed now to your product description. You need to review your answers on the action
worksheet in Module Two Session One: Marketing. This section covers your product or service and its
unique features.

Product Description - you should describe the product or the service you are going to offer. You
can describe your product or service with the following guide questions which are also the most important
points. For your product or service, what is the product or service about? Make sure to mention the
following: what customer need does your product satisfy? What demands do you meet? For whom is the
product or service conceptualized? Who is your target market?

For the unique features of your product or service: what is unique or special about the product or
service (what is your competitive advantage)? Competitive advantages can be all new product or service,
lowest price, highest quality, and fastest delivery.

Let’s Think About This

In describing the product/service that you intend to offer, explain the importance of knowing your
target customers and your identified competitors as core aspects to determine the type of product/service
that you want to sell.

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 6

Let’s Try This

Try to fill-up the product/service description using the format below. This is a part of your
business plan.

1.0 Product / Service Description

1.1 The Product Service

3.2 Unique Features of the Product / Service

Let’s Study

After describing your product/service, let us now analyze our customer. You need to determine
your target customers and identify the important Product or Service Attributes for your target customers.
You need to review your answer in the worksheet on Module Two, Session One Marketing.

Customer Analysis

This section is about the most important person for your business – your customer. Your customer
is the one you must attract. Your customer is the one who will pay for your product or service. And your
customer is the one your competitors want to convince to leave you.

Primary Target Customers - Who is your primary target customer? You must do a segmentation
and describe your target group in detail. If your primary is the end consumer use the following attributes:
age, gender, location, and income level.

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 7

Important Product or Service Attributes - What are the customers’ needs and wants? List the
product or service attributes or features that are most important for your customers. Important attributes can
be quality, price, design, and branding.

Let’s Think About This

Our discussions have always been centered in the customers. Why is it that customers are the core
aspect of your business? We observe that common business in the community/barangay, particularly those
who engage in agriculture related endeavor where they grow vegetables and raise farm animals without
analyzing the customer and market first. What do you think is the implication of this to the business
endeavor?

Let’s Try This

Try to fill-up the customer analysis using the format below. This is a part of your business plan.

4.0 Customer Analysis

4.1 Primary Target Customers

4.2 Important Product / Service Attributes

Let’s Study

You have already completed your analysis about your target customers and market. Now, it’s time
to analyze your competitors. You need to go back to your Module Two, Session One Marketing and review
your answer on your action worksheet. This covers the description of your competitors, competitors’ profile
and learning from your competitors.

Competitors Analysis

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 8

In this section you should analyze your key competitors and their products or services to get a
comprehensive overview of your industry. Remember in most cases, you must gain and maintain customers
even in the face of strong competition. Thus, knowing your competitors is crucial for you.

Direct and Indirect Competitors - Who is directly and indirectly competing with you? Provide
details of your direct customers – that is customers who offer the same product or service. Give their names,
products / services and their special features (what makes them unique?) prices, location, promotion
strategies Give the same details for indirect competitors – that is competitors that offer substitute products
or services.

How is your position compared to your key competitors? First, take the attributes such as price
quality and list them in the first column of the matrix. You need to go back in your worksheet in Module
Two, Session Three Leadership and Strategic Management. Then, cross your key competitors with the
attributes or features to form a competitive profile matrix. Give an honest assessment from 1 to 5 of your
own and your competitors’ performance on each attribute or feature.

Attribute My <Competitor 1> <Competitor 2> <Competitor 3>

company

<Attribute 1>

<Attribute 2>

<Attribute 3>

How is your position compared to your key competitors? Summarize your competitor profile
matrix and derive the most important points for your business. Regarding each competitor, what are your
strengths, what are your weaknesses, and what is your competitive advantage?

Learning from Your Competitors - What aspects do your competitors do better than you? To what
extent can you learn from your competitors?

Let’s Think About This

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 9

You have already compared your product/services with your identified competitors, what is the
purpose of knowing the strengths and weaknesses of your competitors? How can you use it to your
advantage?

Let’s Try This

Try to fill-up the competitor analysis using the format below. This is a part of your business plan.

5.0 Competitor Analysis

5.1 Direct and Indirect Competitors

5.2 Competitor Profile Matrix

5.3 Competitor Profile Matrix Summary

5.4 Learning from Competitors

Let’s Study

After you analyze your competitors, you need to look at your business on a broader scope. That is
your industry analysis. In your Module Two Marketing, you need to review the industry where your
business operates. Is your industry growing? Trends? Are there business opportunities in the industry? What
are the challenges, if any? How do you intend to deal with the challenges?

Industry Analysis

This section deals with the industry or the market you are going to enter with your product or
service. So, define your industry or market and give information about its size and future development.

Answer the questions in target industry, market size, and trends and future developments you will
get your personal industry and market analysis: The Target Industry - What industry or market are you

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 10

going to enter? Define the industry and be concrete about your specific niche. Market Size – What is the
size of your market regarding revenues? Trends and Future Developments - What will be future trends and
developments in your market? State whether the market will grow, shrink, or remain stagnant in future and
give references for your assessment. State other major forces that may affect future development.

Let’s Think About This

Having the background of industry analysis, why is it essential for an entrepreneur to identify the
industry of his product/service?

Let’s Try This

Try to fill-up the industry analysis using the format below. This is a part of your business plan.

6.0 Industry Analysis

6.1 The Target Industry

6.2 The Industry Size

6.3 Trends and Future Developments

Let’s Study

This section focused on your strategic management session. You should review your action
worksheet in your Module 2 Marketing, Session Three Leadership and Strategic Management.

Business Strategy

Developing a strategy for your business is not a complicated matter. Try to answer the following
questions and the answers will be the basis for your business strategy. How can you outperform your
competitors? What are your competitive advantages and how can you use them? What are your strengths,

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 11

weaknesses, threats, opportunities? This will help you to identify a competitive advantage and suggest
actions you must take to survive and grow in your market.

The example below shows the strategic position of your company represented by the red circle
while the blue-colored circles are your competitors. There are two attributes being described, it could be
the price and the quality of your product/service. The bigger the circle, the higher magnitude of the
attributes.

Derive goals and actions plans from the Strengths, Weaknesses, Opportunities, and Threats
(SWOT)-analysis. State what you have “to do” to prepare for the future. The SWOT-analysis will help you
to take actions to survive and grow in your industry.

Opportunities Threats
1. 1.
2. 2.
3. 3.

Strengths To Do To Do
1. 1. 1.
2. 2. 2.
3. 3. 3.

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 12

Weaknesses To Do To Do
1. 1. 1.
2. 2. 2.
3. 3. 3.

Let’s Think About This

You have learned the two methods in developing your business strategies. First is comparing the
attributes of your product/service to your competitors and the second one is identifying the SWOT of your
business. To deepen your understanding of these strategies, answer the following questions:
1. What is the distinction of these two methods of business strategies?
2. How will you use these two methods in developing business strategies?

Let’s Apply This

Try to fill-up the business strategy using the format below. This is a part of your business plan.

7.0 Business Strategy

7.1 Product Attribute Map

7.2 SWOT-Analysis

7.3 Competitive Advantage

Let’s Study

Let us move now to the operational plan of your business. You should review your answer in your
action worksheet on Module Two, Session 3 Strategic Management and Leadership. These covers: input
Factors (location, premises, furniture, machinery, etc.), production / manufacturing processes, output and
performance indicators, delivery and payment, quality control, potential problems and preventive measures.

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 13

Operations Plan

You have a great idea for a product or service? This section should help you formulating how you
are going to produce the product or deliver the service. What materials and what steps are necessary to
make your product or service – or in short: how and where are your products produced?

Answer the following questions: Input Factors - What materials and equipment do you need for
your business? These includes raw materials, equipment, premises. Responsible Actors / Staff - If you have
personnel, who is responsible for what? Production Processes - How is your product or service produced?
Describe how you will produce it and how the necessary equipment comes in. Provide an operations flow
chart. If you offer a service, you can depict or describe how you are going to interact with the customer.

Outputs and Performance Indicators - What is your final product / service? What are your
performance standards regarding quality? Product / Service Delivery - How you are going to deliver your
product / service? Quality Control - How will you ensure quality control in your operations / production
process? What standards will you put in place? Potential Problems and Preventive Measures - What
problems may hinder the production process? What are your back-up plans to keep the production process
going?

Let’s Think About This

If you intend to produce a product, describe the process on how you will produce your product
from inputs to the desired output. Likewise, if you want to offer a service, describe the process on how you
will provide your service. Which of the following process you have identified that is critical to your
operation plan? Why?

Let’s Try This

Try to fill-up the operations plan using the format below. This is a part of your business plan.

8.0 Operations Plan

8.1 Input Factors

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 14

8.2 Responsible Actors / Staff

8.3 Production Process

8.4 Output and Performance Indicators

8.5 Product / Service Delivery and Payment

8.6 Quality Control

8.7 Potential Problems and Preventive Measures

Let’s Study

Let us go back to Module Two, Session One Marketing and review the Product, Price, Place, and
Promotion (4Ps) in your action worksheet to design marketing strategies.

Marketing Plan

Marketing comprehends more than advertising. The aim of marketing is to attract customers
through a variety of means at a profit. Do not forget – in most cases there are established competitors in the
market, so why should customers switch to your business? Use the different marketing strategies to build
and retain a good customer base.

Pricing Strategy - Apart from quality, price is most often the most important issue for customers to
base their purchase decision on. At what price will you offer your product or service in comparison to your
competitors? Product Strategy - How do you differentiate your product from your competitors? List your
competitive advantages.

Distribution and Sales Strategy - How will the product or service reach the customers (e.g., via
retail outlets, wholesalers, sales force, direct via web, mail order, or catalog, independent representatives,
etc.)? Promotion & Advertising Strategy - What can be a campaign that is not costly, but customers will
respond to? Describe the avenues you are going to use to advertise and promote your product or service.

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 15

Let’s Think About This

You have learned the concepts of developing marketing strategies using the 4Ps, what is the
common underlying point/aspect in formulating the said strategies? The 4Ps are distinct in each strategy
but they must be whole in entire marketing strategy. This is the so-called marketing mix. How do you
explain marketing mix in developing marketing strategies?

Let’s Try This

Try to fill-up the marketing strategy using the format below. This is a part of your business plan.

9.0 Marketing Strategy

• 9.1 Pricing Strategy

• 9.2 Product Strategy

• 9.3 Distribution and Sales Strategy

• 9.4 Promotion and Advertising Strategy

Let’s Study

You are ready to review your Module Three the Entrepreneur and His Finances. Now you will
develop your financial plan. This covers investment plan, financing plan – debt vs. equity, projected Profit
and loss statement, and balance sheet.

Investment Plan – Start-up Investment

Amount PhP

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 16

Assets

Furniture & Fittings

Tools & Equipment

Set-up fees

Deposit & First rent

Legal fees & Tax

Licenses

Preliminary expenses

Printing & Stationary

First Stock & Raw materials

Working capital

TOTAL

Financing Plan – Sources of Starting Capital

Amount Php

Source

Business owner(s) investments

Loans and money borrowed

TOTAL

Financial Projections – Projected Income Analysis

Units Month 1 Month 2 Month 3 Month 4 Month 5 Month 6

Products / Service Sales

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 17

Product / Service 1

Product / Service 2

Product / Service 3

Other income

TOTAL

Financial Projections – Projected Expenses Analysis

Units Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Direct Expenses

Raw materials
Salaries & wages
Delivery / Transport

Indirect Expenses
Rent
Repairs / Maintenance

Power & supplies

Telephone / Mobile /
Fax

License fees / Tax

Depreciation

TOTAL

Financial Projections – Projected Profit & Loss Statement

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 18

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6

Total Income
(see Projected Income
Analysis)

Total Expenses
(see Projected Expenses
Analysis)

PROFIT / LOSS
(before taxes)

Financial Projections – Balance Sheet

Assets Equity & Liabilities

Non-current assets Equity

Machinery & Tools Owners capital

Equipment & Fittings Profit

Buildings

<…> Long-term liabilities

<Loans>

Current assets

Stock Current liabilities

Debtors <Creditors>

Bank

Cash

TOTAL ASSETS TOTAL EQUITY &

LIABILITIES

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 19

Let’s Think About This

You have learned the nitty gritty details of developing a financial plan in your Module 3 the
Entrepreneur and His Finances. What is the importance of financial plan in the business plan? What is the
connection of financial plan to marketing and operation plan?

Let’s Try This

Try to fill-up the financial plan using the format below. This is a part of your business plan.

10 Financial Plan

10.1 Investment Plan

10.2 Starting Capital Plan

10.3 Projected Income Analysis

10.4 Projected Expenses Analysis

10.5 Projected Financial Statement

10.6 Financial Statement Rationale

10.7 Pro-Forma Balance Sheet Summary

Let’s Study

This section covers the following topic from your sessions on Overcoming Barriers: Critical Risks
in the Pre-Launch Phase and the Critical Risks in the Post-Launch Phase. Every start-up implies taking
Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind
August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 20

risks. Thinking about potential critical risks in both phases, before you start your business and when you
run your business, helps you in dealing with the risks when they occur.

Critical Risk

Critical Risks in the Pre-Launch Phase: What are critical risks that might hinder the start-up of your
business? Consider all factors that might negatively affect starting-up your business. Critical Risks in the
Post-Launch Phase: What might be risks that you will face when you are running your business? Less
customer interest than expected, competitor actions and retaliation, operating expenses and financing,
changes in the environment (such as changes in technology, government regulations, economy, trends, etc.).

Development Plan

The development plan is an overview of the work that remains to be completed before you can
launch your business. You can see it as a schedule that highlights the steps and milestones in the process of
getting the business up and running. This section helps you in planning your next steps and the reader gets
an idea of where you are and where you are going to be with your company in the following weeks and
months.

Steps and Finished Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7
Milestones

1.

2.

3.

4.

5.

6.

Let’s Think About This

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department
 21

This part has emphasized the importance of knowing and managing the risk before and after the
launching of your business ventures. Why is it importance for an entrepreneur to estimate the risk before
and after opening the business? What will the impact to your business be if you failed or succeed in these
activities? What is the significance of formulating a development plan in your business plan?

Let’s Try This

11 Critical Risks
11.1 Critical Risks in the Pre-Launch Phase

11.2 Critical Risks in the Post-Launch Phase

12 Development Plan
• Development Plan

Now you are ready to put together the various parts of the business plan. Please use the attached format
which is similar to the format you have used in the template “Let’s Try This” activities. After this, you now
need to make your executive summary.

Elmer A. Lorenzana, MM Module in The Entrepreneurial Mind

August 2020 Bicol University College of Business, Economics, and Management – Entrepreneurship Department