AgBus414 Chapter5
AgBus414 Chapter5
AgBus414 Chapter5
Starting a business requires a lot of work, time and money. A business, either
new or an expansion, must undertake careful planning of the project which will serve
as guide in the implementation.
The business plan, also called a venture plan, is a step-by-step guide that will
assist you in realizing your business.
In the course of writing the business plan, the small business operator (SBO)
is afforded sufficient time to consider all factors relevant to operating the business.
Through analysis of the environment and derivation of what can be expected to
happen, decisions about various aspects of business operations can be considered
in advance.
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the business plan. The timetable indicated in performing the various aspects of
operations is also a very useful guide for the management of the firm.
When the SBO needs initial or additional funding for his business venture, the
business plan is a handy means for convincing lenders and investors. In many
cases, the business plan indicates that the proponent SBO is fully aware of what he
is getting into. Lenders will be more comfortable to see various documents that
indicate the borrower can repay the loan. Such documentation takes the form of
financial projections which are usually included in the business plan.
1. Business Title- chose of the business name and brief explanation of reason
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2. Business Type- definition of the classification
3. Business Location- definition of the business address
4. Business Status- defining the nature of business plan
5. Business Description- brief description of the mode of operation of the
business
6. Type of Ownership- defining business by legal entity
7. Business Owner’s Profile- personal information of the investors
8. Business Objectives- definition of the organization’s goals
9. Financial Scheme- defining amount and sources of required capital
10. Summary of Business Feasibility:
a. Marketing Aspect
b. Production Aspect
c. Management Aspect
d. Financial Aspect
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5. LOCATION- definition of business location, plat site and other factors
affecting sales, procurement and delivery of materials and products
6. WASTE DISPOSAL- definition of quantity, manner of waste disposal and
costs
7. PRODUCTION COSTING- determining the required cost to produce one unit
of output considering all production costs
Purpose of Organization
1. Avoids misunderstandings as who makes decisions and who do certain tasks
2. Defines clear accountability for certain decisions and works performed
3. Minimize overlapping of functions
4. Enhances communication and coordination
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Typical Organizational Chart
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c. Machinery
d. Office Equipment
3. Pre-operating Expenses
Preparing the Income Statement involves nothing more than subtracting from
the gross revenues all the expenses incurred during the period. The difference
between the total revenues and total expense figures will give the net income.
The Cash Flow Statement is the significant planning tool in projecting the
business cash requirements and cash shortages. It is determining in advance how
much cash is needed to start and run the business until that point when cash
receipts from sales and other income starts coming in, when it will be needed.
The Cash Flow Statement can be used for monitoring and evaluating the
actual inflow of cash ( from sales and other income) and the outflow of cash ( as
cash paid for various expenses) in the business.
Projected Balance Sheet- The presentation of the assets derived from the project
from corresponding liabilities and equities (net worth). It is the overall picture of an
enterprise’s financial condition over a certain period.
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The ASSETS of the company are the cash, properties and resources owned
by the enterprise. They are all the items of value such as cash, land, building,
machinery, and receivables/ sales on account.
The LIABILITIES of the enterprise refer to all the rights, interests and claims
of outside creditors. It includes accounts payable, loans, taxes due, equity or capital
which are claims of the owners.
This accounting equation explicitly suggests that any form of asset is funded in fused
by the owner. Both sides should always be equal.
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BUSINESS PLAN
I. BACKGROUND INFORMATION
A. Product Description:
1. Product Description : ____________________________________
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2. What are its uses : ____________________________________
3. What are its possible substitutes : _________________________
4. What are it advantages compared to competition, in terms of:
a. Quality: _________________________________________
b. Price : __________________________________________
B. Target Customers:
1. Who are the main customers? ______________________________
2. Why are they chosen? ____________________________________
3. What are the Customer Classification and profitable percentage sale for
each?
( ) A1, Ultra Rich = ___% ( ) B2, Lower Middle Class = ___%
( ) A2, Rich = ___% ( ) C1, Poor = ___%
( ) B1, Higher Middle Class = ___% ( ) C2, Very Poor = ___%
4. Frequency of Buying:
( ) Daily ( ) Six Months Average
( ) Weekly ( ) Every Cycle
( ) Monthly ( ) Seasonal/ Occasional
C. Competition
1. Who are your competitors?
______________________________________________________
2. What are your advantages against your competitors?
______________________________________________________
D. Terms of Sales
1. Sales terms used by competitors: ( ) Cash
( ) Credit with PDC
( ) Credit with ___ % DP
( ) Installments
( ) Others (specify)
2. What term would you adopt? _______________________________
E. Market Share:
1. Projected Market Share: Percentage Volume Amount
At the start ____% ____% ____%
In the 1st Year ____% ____% ____%
In the 3rd Year ____% ____% ____%
In the 5th Year ____% ____% ____%
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_______________ ___________ ___________ __________ __________
VI. LABOR
1. Skills and qualifications required by the business:
______________________________________________________________
______________________________________________________________
_____________________________________________________
2. Availability of required skills/ qualifications in the area:
___________________________________________________________
3. Alternative sources of skills/qualifications
___________________________________________________________
4. How much will be paid for such skills/ qualifications:
___________________________________________________________
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VII. LABOR COST Schedule 3
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X. PRE-OPERATING EXPENSES Schedule 6
1. Pre-operating Requirements
Expenses: Amount
Expenses: Amount
2. Fixed Investment:
Land PhP ______ PhP ______ PhP ______
Building PhP ______ PhP ______ PhP ______
Machinery PhP ______ PhP ______ PhP ______
Equipment PhP ______ PhP ______ PhP ______
Office Equipment PhP ______ PhP ______ PhP ______
Total Cost - _________
3. Pre-Operating Cost PhP ______ PhP ______ PhP ______
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TOTAL PhP ______ PhP ______ PhP ______
1 PhP ________ PhP ________ PhP _______ PhP ______ PhP _____
2 ________ ________ ________ ________ ______
3 ________ ________ ________ ________ ______
4 ________ ________ ________ ________ ______
5 ________ ________ ________ ________ ______
Direct Materials
(Schedule 2) _______ _______ _______ _______ _______
Direct Labor
(Schedule 3) _______ _______ _______ _______ ______
Overhead Cost
(Schedule 4) _______ _______ _______ _______ _______
Gross Profit PhP ______ PhP ______ PhP ______ PhP ______ PhP ______
Less: Pre-operating
(Schedule 6) _______ _______ _______ _______ _______
Admin Cost
(Schedule 7) _______ _______ _______ _______ _______
Interest on Loan _______ _______ _______ _______ _______
Net Profit before Tax PhP ______ PhP ______ PhP ______ PhP ______ PhP ______
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Less: Income Tax _______ _______ _______ _______ _______
Net Profit after Tax PhP ______ PhP ______ PhP ______ PhP ______ PhP ______
CASH FLOW
Total Cash In-flow PhP _____ _____ _____ _____ _____ _____
CASH OUTFLOW
Total Cash Out-flow PhP _____ _____ _____ _____ _____ _____
Net Cash In-Flow/ Out-Flow _____ _____ _____ _____ _____ _____
ASSET
Other Assets
Pre-operating _____ _____ _____ _____ _____ _____
Investments _____ _____ _____ _____ _____ _____
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LIABILITIES
Owner’s Capital/ Equity PhP _____ _____ _____ _____ _____ _____
Retained Earnings
Less: Dividend _____ _____ _____ _____ _____ _____
Net Equity _____ _____ _____ _____ _____ _____
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Reference
Flores, M.F. (2017). Business Plan. Unlimited Books Library Services & Publishing
Inc. p.p. 1-13
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