PALANAN NATIONAL HIGH SCHOOL

Module 2

Product and Business Plan Development

Lesson 1: Opportunity Seeking, Screening and Seizing Technique

Specific Objectives

At the end of the lesson, the students are expected to:

a. To use, combine and evaluate opportunity seeking, screening, and seizing technique in
understanding the market,

Topic Presentation

A. Introduction/Teaser

1. Introduce to the class the Lesson 2 of the third module, Opportunity Seeking, Screening and
Seizing Technique.

2. Discuss to the class the first topic, Opportunity Seeking. Start by explaining that entrepreneurs are
innovative opportunity seekers. They have endless curiosity to discover new or different ideas
and see whether these ideas will work in the marketplace. This is what separates entrepreneurs
from the ordinary business man whose main objective is simply to earn profits from producing,
buying, and selling goods.

Entrepreneurs create value by introducing new products or services or finding better ways of
making them. These may include innovation in terms of product design or addition of new
product features to existing ones. They may also tinker on improving their operational
capability by employing new technologies that will bring them greater efficiency, better
economies, and even enable them to reach unparalleled superiority. They may also consider
expanding their reach by creating new markets or maximizing existing market reach. At the
highest level, entrepreneurs may totally change the prevailing business paradigm by rendering
it obsolete through the introduction of disruptive technologies, processes, and systems.

Market Sources of Opportunities

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The entrepreneur must also be able to measure the actual demand and supply as well as the
potential demand and supply of the industry that the enterprise belongs to. Equally important
is the monitoring of the prevalence of product substitutes and their market impact on the
existing players in the industry. Market trend analysis is also conducted by determining the
critical variables, which would most likely affect the future directions of the industry. Lastly,
market traits, characteristics, and behavior are identified in order to match these customer
traits with product offerings of the enterprise.

Market sources of opportunities can be discovered from increased or decreased demand as

well as higher or lower supply. An example of this is the battle of the value/combo meals,
otherwise known as “more-for-less” strategy in the fast food restaurant industry. The demand
for more affordable but filling meal is continuously growing particularly for the working
population. This, in turn, creates an increased demand in the items that come with the
value/combo meals such as rice, chicken, pasta, sidings (e.g., mashed potato, french fries,
buttered corn, etc.) and beverage drink. Although smaller in portions, the volume served is
more, particularly during the peak hours. It also opens up the opportunity of offering breakfast
items and strengthening this time of day segment. More and more consumers are resorting to
having their breakfast near their workplaces or along the way to work in order to avoid getting
stuck in the rush hour traffic. However, the threat of price war remains strong such that the
industry players are compelled to strengthen their supply chain for better leverage.

Discuss Consumer Preferences, Piques, and Perceptions

Consumer preferences refer to the tastes of particular groups of people. Some examples are
the clothes people wear, the food they eat, the music they listen to, and the movies they
watch. The consumers’ age, culture, and status affect their preferences. In contrast, consumer
dislikes refer to the things that irritate customers. Either way, the entrepreneur can explore
opportunities brought about by consumer preferences or dislikes.

For example, if consumer trends show a rising preference for “fast-casual” dining, then this
would be an opportunity worth exploring. If customers show great annoyance at standing in
long queues in fast food outlets, then sit-down “fast-casual” dining could be a good
opportunity.

There are times when the product is not changed by the enterprise but what changes is the way
the customers perceive the product.

Other Sources of Opportunities

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As an opportunity seeker, the entrepreneur will surely discover other sources of opportunities.
Unexpected successes (or failures) can lead to good opportunities. Another potential source of
opportunity is the entrepreneur’s own set of skills or expertise, or hobby. New knowledge as
well as new technology can be the source of highly innovative opportunities.

Opportunity Screening
After opportunity seeking comes the rigorous process of opportunity screening. Because of the
many opportunities possible for the entrepreneur, it is important to come up with a short list of
a few very promising opportunities, which could be scrutinized in detail.

The Personal Screen

In screening opportunities, the entrepreneur first has to consider his or her preferences and
capabilities by asking three basic questions:

1. Do I have the drive to pursue this business opportunity to the end?

2. Will I spend all my time, effort, and money to make the business opportunity work?
3. Will I sacrifice my existing lifestyle, endure emotional hardship, and forego my usual
comforts to succeed in this business opportunity?

If “Yes” is your answer to all of the above, then you can begin your earnest pursuit of that
opportunity.

Opportunity Seizing
After Opportunity seeking and screening, the entrepreneur is ready for Opportunity Seizing, the
final stage. By now, the entrepreneur has an idea as to where he or she will locate the business
and how he or she will market the product or service. At this stage, the entrepreneur must be
able to determine the critical success factors that enable other players in the same industry to
succeed while, at the same time, be vigilant about those factors that cause other business to
fail.

The question for the entrepreneur in Opportunity Seizing is “Will I be able to manage, to my
advantage, the critical success factors and avoid the critical failure factors?” The critical factors
may change by depending on what market segment the enterprise is addressing. If the market
segment wants very high-quality products and can tolerate higher prices, the critical success or
failure factors here would be different from a market segment that is very price conscious but is
not too demanding on quality. Thus, it is important for the entrepreneur to establish the
positioning of the business enterprise in the marketplace. What market segment would be best
for the enterprise to enter into?

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The Development of a Business Plan

Lesson 2: What is a Business Plan?

Specific Objectives

At the end of the lesson, the students are expected to:

a. explain the key elements of the business plan;

b. relate the concept of potential market; and
c. make a propose solution in terms of product and service.

Topic Presentation

A. Introduction/Teaser

1. Review with the students the concepts covered during class period 1:
A. Review of the characteristics of an entrepreneur.

2. Afterwards, introduce to the class the coverage of the discussion for the week. (The
development of a business plan)

3. Ask the students why there is a need for business plan.

4. Explain that the purpose of this lesson is to introduce students to the importance of
planning in business and give examples of how planning can overcome problems.

5. Afterwards, explain to the class that a business plan is a written document prepared by
the entrepreneur that describes all the relevant external and internal elements involved in
starting a new venture. It is often an integration of functional plans such as marketing, finance,
manufacturing, and human resources. It also addresses both short term and long term decision
making for the first three years of operation. Thus, the business plan or, as it is sometimes
referred to, the game plan or road map, answer the questions, where am I now? Where I am
going? And how will I get there? Potential investors, suppliers, and even customers will request
or require a business plan.

Who should write the Business Plan?

The business plan should be prepared by the entrepreneur; however, he or she may consult
with many other sources in its preparation. Lawyers, accountants, marketing consultants, and
engineers are useful in the preparation of the plan. The internet also provides a wealth of
information as well as actual sample templates or outlines for business planning. Most of these

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sources are free of charge or have minimal fees for workshop attendance or to purchase or
download any information. In many instances, entrepreneurs will actually hire or offer equity
(partnership) to another person who might provide the appropriate expertise in preparing the
business plan as well as become an important member of the management team.

Scope and Value of the Business Plan-Who reads the Plan?

The business plan may be read by employees, investors, bankers, venture capitalists, suppliers,
customers, advisors, and consultants. Who is expected to read the plan can affect its actual
content and focus. Since each of these groups reads the plan for different purposes, the
entrepreneur must be prepared to address all their issues and concerns. In some ways, the
business plan must try to satisfy the needs of everyone, whereas in the actual marketplace the
entrepreneur’s product will be trying to meet the needs of selected groups of customers.
However, there are probably three perspectives that should be considered in preparing the
plan. First is the perspective of the entrepreneur, who understands better than anyone else the
creativity and technology involved in the new venture. The entrepreneur must be able to
clearly articulate what the venture is all about. Second is the marketing perspective. Too often,
an entrepreneur will consider only the product or technology and not whether someone would
buy it. Entrepreneurs must try to view their business through the eyes of their customer. Third,
the entrepreneur should try to view his or her business through the eyes of the investor. Sound
financial projections are required; if the entrepreneur does not have the skills to prepare this
information, then outside sources can be of assistance.

Writing the Business Plan

The business plan could take hundreds of hours to prepare, depending on the experience and
knowledge of the entrepreneur as well as the purpose it is intended to serve. It should be
comprehensive enough to give any potential investor a complete picture and understanding of
the new venture, and it should help the entrepreneur clarify his or her thinking about the
business.

Lesson 2: Detailed Outline of a Business Plan

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Specific Objectives

At the end of the lesson, the students are expected to:

a. explain the purpose and importance of planning and how business planning and process
works;
b. differentiate the types of business plans and summarize the process of business
planning; and
c. make a functional business plan.

Topic Presentation

1. As discussed earlier in this chapter, the entrepreneur should be aware each business
plan may be different depending on the purpose of the plan and who will be reading it.
However, most of the items in this outline are critical elements in a general plan and should be
addressed by the entrepreneur.

Introductory Page
This is the title or cover page that provides a brief summary of the business plan’s contents.
The introductory page should contain the following:
▪ The name and address of the company
▪ The name of the entrepreneur(s), contact number, email address, and website address
if available.
▪ Brief description of the company and the nature of the business

Executive Summary
This section of the business plan is prepared after the total plan is written. About two to three
pages in length, the executive summary should stimulate the interest of the potential investor.
This is a very important section of the business plan and should not be taken lightly by the
entrepreneur since the investor uses the summary to determine if the entire business plan is
worth reading. Thus, it should highlight in a concise and convincing manner the key points in
the business plan.
Generally, the executive summary should address a number of issues or questions that anyone
picking up the written plan for the first time would want to know. For example:
▪ What is the business concept or model?
▪ How is this business concept or model unique?
▪ Who are the individuals starting this business?
▪ How they will make money and how much?

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Description of Venture
The description of venture should be detailed in this section of the business plan. This will
enable the investor to ascertain the size and scope of the business. This section should begin
with the mission statement or company mission of the new venture. This statement basically
describes the nature of the business and what the entrepreneur hopes to accomplish with that
business. This mission statement or business definition will guide the firm through long term
decision making. After the mission statement, a number of important factors that provide a
clear description and understanding of the business venture should be discussed. Key elements
are the product(s) and/or service(s), the location and size of the business, the personnel and
office equipment that will be needed, the background of the entrepreneur(s), and the history of
the venture. If the product is very technical, it will be important to make sure that it’s
description is clear and easy to understand.

Describing the Venture:

▪ What is the mission of the new venture?
▪ Why will you be successful in this venture?
▪ What is your product(s) and/or service(s)?
▪ Where will the business be located?
▪ Why is this building and location right for your business?

Production Plan
If the new venture is a manufacturing operation, a production plan is necessary. This plan
should describe the complete manufacturing process. If some or all of the manufacturing
process is to be subcontracted, the plan should describe the subcontractor(s), including
location, reasons for selection, costs, and any contracts that have been completed. If the
manufacturing is to be carried out in whole or in part by the entrepreneur, he or she will need
to describe the physical plant layout, the machinery and equipment needed to perform the
manufacturing operations; raw materials and suppliers’ names, addresses, and terms; costs of
manufacturing; and any future capital equipment needs.

Operations Plan
All businesses, manufacturing or nonmanufacturing, should include an operations plan as part
of the business plan. This section goes beyond the manufacturing process (when the new
venture involved manufacturing) and describes the flow of goods and services from production
to the customer. It might include inventory or storage of manufactured products, shipping,
inventory control procedures, and customer support services. A non-manufacturer such as a
retailer or service provider would also need this section in the business plan to explain the
chronological steps in completing a business transaction. For example, an online retail clothing
operation would need to describe how and where the products offered would be purchased,
how they would be stored, how the inventory would be managed, how products would be
shipped, and most importantly, how a customer would log on and complete a transaction. In
addition, this would be a convenient place for the entrepreneur to discuss the role of
technology in the business transaction process.

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Marketing Plan
The marketing plan is an important part of the business plan since it describes how the
product(s) and/or service(s) will be distributed, priced, and promoted. Marketing research
evidence to support any of the critical marketing decision strategies as well as for forecasting
sales should be described in this section. Specific forecasts for a product(s) and/or service(s) are
indicated to project profitability of the venture. Potential investors regard the marketing plan as
critical to the success of the new venture. Thus, the entrepreneur should make every effort to
prepare as comprehensive and detailed plan as possible so that investors can be clear as to
what the gold of the venture are and what strategies are to be implemented to effectively
achieve these goals.

Organizational Plan
The organizational plan is the part of the business plan that describes the venture’s form of
ownership, that is, proprietorship, partnership, or corporation. If the venture is a partnership,
the terms of the partnership should be included. If the venture is a corporation, it is important
to deal the shares of stock authorized and share options, as well as the names, addresses, and
resumes of the directors and officers of the corporation. It is also helpful to provide an
organization chart indicating the line of authority and the responsibilities of the members of the
organization.

Assessment of Risk
Every new venture will face potential hazards, given its particular industry and competitive
environment. It is important that the entrepreneur make an assessment of risk in the following
manner. First, the entrepreneur should indicate potential risks to the new venture. Next should
be a discussion of what might happen if these risks become reality. Finally, the entrepreneur
should discuss the strategy that will be employed to prevent, minimize, or respond to the risks
should they occur. Major risks for a new venture could result from a competitor’s reaction;
weaknesses in the marketing, production, or management team; and new advances in
technology that might render the new product obsolete. Even if these factors present no risks
to the new venture, the business plan should discuss why that is the case.

Financial Plan
Like the marketing, production, and organization plans, the financial plan is an important part
of the business plan. It determines the potential investment commitment needed for the new
venture and indicates whether the business plan is economically feasible. Financial planning is
the process of estimating the capital required and determining its competition. It is the process
of framing financial policies in relation to procurement, investment and administration of funds
of an enterprise.

Appendix

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The appendix of the business plan generally contains any backup material that is not necessary
in the text of the document. Reference to any of the documents in the appendix should be
made in the plan itself.

Activity

Exercise

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