Republic of the Philippines

Region I
PANGASINAN STATE UNIVERSITY
SCHOOL OF ADVANCED STUDIES
Urdaneta City, Pangasinan

THE 217: PRINCIPLES AND

PROCESSES FOR ENTERPRISE
DEVELOPMENT
GEORGIA A. SORNIO
Discussant
ENTREPRENEURIAL MINDSET
The stability of the venture is greatly influenced by the foundations
laid. Entrepreneurs scan, analyze, and adapt their plans to whatever
conditions that exist.
BUSINESS PLAN

It is a written or codified text containing pertinent information about the

venture. It shows the venture’s different attributes and supposed character.
It should be the minimum document required in the start of the business
venture. It is designed to give its readers the clear picture of what the
venture is. It is the proof that adequate research and analysis have been
given to the venture.

The business plan is an effective tool for the entrepreneur. It should be

treated, in fact as a part of the business operations. It also serves as a
guide in running or operating the venture. Moreover, the development of
the business plan allows the entrepreneur to discover what new and
additional information are needed about the venture.
 ROLE OF THE BUSINESS PLAN

1. It communicates to people.

2. It permits constant change.

3. It is a call to action.
What should the BUSINESS PLAN contain?

It should contain key elements needed to produce results notably to

influence investors to join the business and customers to prioritize it. A
good business plan is not only about format but contents as well. It must
show relevance existing conditions. Therefore it should be based on
sufficient research and should present sound analysis from the data
obtained.
 Through a plan you significantly increase your chances of success if you focus on
five areas which entrepreneurs sometimes overlook.

1. Realism

2. Outside Advice

3. Recognizing Change

4. Balancing Growth

5. Result-Orientation
PLANNING to PLAN

FIRST STEP: Identification of business opportunity.

Business Opportunity
SECOND STEP : Conduct a Personal Inventory.
• Start-up Personal Characteristics
• Purchase • Drive and energy
• Franchise • Self confidence
• Expansion • Long term involvement
• Persistent problem solving
• Goal setting

• Moderate risk taking

• Dealing with failure
• Use of feedback
THIRD STEP: Preliminary Evaluation.
Preliminary
Evaluation
 Types of Strategic Factors:
• Essential strategic
factors  The need for a certain size or type of target market
• Uncontrollable factors segment.
• Controllable factors  Availability of a certain type or range of products.
• Strengths  Dependence on a highly reliable source of supply.
• Weaknesses  Required size, location or layout of physical
• Opportunities facilities.
• Risks  Availability of an essential service such as water,
electricity, telecommunications, or transportation.
 An assured line of finance on reasonable terms.
 The need for highly skilled or experienced
manpower.
 Uncontrollable Factors:

 Competition
 Economic and financial conditions
 Legal regulations and political conditions
 Social and cultural trends
 Technology
 Controllable Factors:

 Purchasing
 Production
 Labor
 Marketing
 Finance
Guidelines for the Preparation of the BUSINESS PLAN

The careful preparation of a business plan represents a unique opportunity to

think through all aspects of operating a business. As an operating tool, the plan
provides you with the means to examine the consequences and determines the
human and financial resources necessary to launch or expand your business.

Business plan can help to avoid going into a business venture that is doomed to
fail. If the proposed venture is at best marginal, the business plan will show you
why. The process of preparing a business plan also provides the chance to test the
motivation, commitment and technical expertise of potential partners. This is done
by having your partner plan and document the business activities that will be his or
her responsibility. Most importantly, business plan provides the information needed
by others to evaluate your venture, especially if you will need to seek outside
financing. A thorough business plan automatically becomes a complete financing
proposal which will meet the requirements of most lenders and investors.
1. INTRODUCTION

The introduction should state the objectives of the plan or proposal

as simply as possible. If the plan is to be used by your key employees,
the introduction should be a brief description of how the plan is to be
implemented.

If the plan is also to be used as a financing proposal, the

introduction should specify who is asking for finance, how much
money is required, the purposes for which the funds will be used, and
how the funds will benefit the business. If the funds are in the form of
equity , indicate what rate of return the investor may expect. If the
funds are to be borrowed, indicates when they will be repaid.
EXAMPLE

HARVEY’S PRIDE CORP. is seeking a loan of P33,000 to purchase

property, carry out improvements, refund an existing bank loan, and
provide sufficient working capital to where expand an existing wholesale/
retail seafood market. This loan will be secured by a first mortgage over
the property and the guarantees of the principals. Terms offered are 15%
interest (reducible) and repayments of six equal half-yearly installments in
May and September.
2. THE INDUSTRY

You must indicate the present status and prospects for

the industry in which the proposed business will operate.
Discuss any new products, new markets and customers,
and any other national, regional or economic trends that
could have an impact on your venture.
 EXAMPLE

According to the National Statistics Office, the consumption of seafood has been
growing at an average rate of 4.2% per year over the last 10 years. During the past
three years, however, growth rates have average 5.7 percent for a year.

Several new developments indicate that the increase in consumption of seafood

will continue:

• The increased price of meat and meat products make seafood an increasingly
attractive substitute.
• The renewed emphasis on diet and nutrition features increase consumption of
seafood.
• The declaration of the 200-kilometer limit will encourage the philippine fishing
fleet to increase their catches and provide a greater quantity of local fresh
seafood.
3. THE BUSINESS

You need to briefly describe what sort of business you are in or

intend to enter. Indicate its name, how it is organized (proprietorship,
partnership, company), and its main activities (retailing, service,
manufacturing, wholesaling or some combinations ). Describe its
location, and the layout of facilities. Be sure to relate anything of
importance about your kind of business that you have learned from
people such as trade suppliers, banks, and other business people.
 EXAMPLE

HARVEY'S PRIDE is a wholesale/retail seafood market operating as proprietary

company. It specializes in selling extremely fresh seafood. At present, 60% of sales
are to the retail trade. Plans provide for an expansion of wholesale sales where
profits are higher because of lower labor costs and greater inventory turnover.
HARVEY'S PRIDE has been operating for two years in leased premises at No. 5
Jose, Parañaque, Metro Manila. The principals have secured an option to buy the
premises for 22,000. Jose Avenue is part of the Coastal Highway, a heavily traveled
tourist route.
The principals have performed major leasehold improvements including interior
decoration an installation of a walk-in freezer. The building includes a 135 Sq. M
sales area, a 12 x 12 cutting room and a further 80 Sq. M of space which is currently
unused and available for expansion.
4. THE PRODUCT OR SERVICE

You must describe exactly what you are going to sell. Indicate the
primary and use of your product or service as well as any important
secondary uses. Emphasize those factors which make your product or
service unique or superior so that which is already on the market.
Discuss any opportunities for the expansion of your product line or the
development of related products or services. If the product, process,
or service requires any design or development before it is ready to be
placed on the market, the nature and extent of the work (including
costs ) should be fully documented.
EXAMPLE

HARVEY’S PRIDE sells premium quality of seafoods to both wholesale in

retail trade. The business already has a reputation for selling only the
freshest seafood obtainable. Availability of supply fluctuates depending on
the season and the weather, but the firm's policy is to carry complete line of
all local seafoods.
Long range plans call for the installation of fish smoking equipment. This
will expand the product line and provide an outlet for unsold inventory.
5. THE MARKET

The purpose of this section is to demonstrate that your venture can

achieve the sales indicated in your financial forecast. This section is
the most difficult to prepare, but it is the key section in any business
plan.
4 BASIC STEPS IN DETERMINING YOUR MARKET:

Identify your customer profile

Who will be your customers ? you can classify customers into groups having
common characteristics such as age, sex or geographical location. What are their
buying motives - price, quality, service, convenience or perhaps necessity ?
 Determine the size of the total market
How much should they be spending on your product or service ? how many
potential customers exist within your trading area ? can this market be expanded ?
why ?

Assess the competition

What have you learned of their operations? Who are your nearest competitors?
Explain why you think that you can capture a share of their business or keep them
from capturing a share of yours. What is their share of the total market ?

Estimate your sales

Based on the previous three steps estimate the sales that you expect to attain
over the next three years. Be careful, make sure your estimates lined up with the
facts. This information is critical to your financial forecast.
EXAMPLE

HARVEY’S PRIDE is committed to provide premium quality seafood at

competitive prices customers within 40 km of Manila Bay. The retail demand is
seasonal while the wholesale demand is constant and increasing.
According to the most recent census figures from the National Statistics office,
there are 25,000 people living within a 40-kilometer radius of Manila Bay – making
up approximately 5,300 households. This figure nearly doubles during December
and January when holiday-makers come to Manila Bay Area.
The most recent Household Expenditure survey by the National Statistics Office
indicates that the average weekly household expenditure on seafood is 81 cents or
about 42 pesos per year. Therefore, the current demand for seafood in the target
market is about P 222,600 per annum. This figure should increase by 5 to 10% per
annum.
 There are two seafood operations competing directly with HARVEY’S PRIDE:

• Blue Ring Fish Sales. This is a clean, two-man operation specializing in cheaper
fish. It sells directly to housewives from one truck and does some wholesale trade,
which the operators hope to expand. It would account for no more than 15% of the
market.

• Roger’s Seafoods. this firm has the largest proportion of the wholesale trade. It
operates 3 trucks. The principal, Roger Ballo, is planning to open a retail store. Since
he is getting on in years, he may be planning to give up part of the wholesale trade.
Roger’s seafoods would account for 40% of the current market.

HARVEY'S PRIDE accounts for approximately 45% of the market with last year’s
sales of P67,500. However, the most recent Retail Sales Survey shows that sales of
seafood in Manila Bay Area were below market potential and an opportunity exists to
increase not only the total market but also our share of it. Sales estimates are included
in the Financial Forecast.
6. MARKETING STRATEGY

Here, you must explain your general marketing philosophy

and strategy that develop from the assessment of the
market. It should identify your target market, show how you
are going to satisfy that market, indicate your pricing policy
and explain your tactics for advertising and promotion. Do
not forget to keep track of your marketing costs because they
go into the financial forecast.
EXAMPLE

HARVEY’S PRIDE has developed an image and reputation for quality, fresh
seafood at competitive prices. We will continue to convey this image to our two
market segments - retail and wholesale.

To the retail trade, we will specifically promote our convenient location, the
benefits in the diet, and the savings of seafood compared to meat. We will
complement our quality image with clean, attractive facilities and excellent service.
Promotion will be based primarily on newspaper advertising and display.

We will make the direct approaches to the wholesale trade. There are 17
restaurants and 11 food markets constituting most of the wholesale business. We
will emphasize consistency of supply, convenient location and delivery service,
quality and volume discounts.
7. MANAGEMENT

If your business plan is to be used as financing proposal , this section is

particularly important. Venture capitalists and lenders invest as much in people as
they do in particular business propositions. For this reason, you need to
demonstrate the capabilities and capacity of your management team and its
advisers.

Outline the personal history of the principles and show how their work experience
relates to the venture. State their duties and responsibilities and indicate the
salaries they expect to draw from the business. Be sure to list your advisers such
as your solicitor, accountant, insurance broker and banker.
EXAMPLE

The principals in HARVEY’S PRIDE are Mr. Richard Amor and Mr. Edward Murillo.
Mr. Amor was born in Manila in 1944 and lived there all his life. He has been self-
employed since he left school and operated a fishing trawler out of Manila Bay for 12
years. He recently completed the Associate Diploma in Small Business at the Philippine
College of Advanced Education.

Mr. Murillo was born in Makati in 1939. He served for 10 years in the Philippine
Navy before joining the seafood division of a large food company. He has had direct
experience with hiring, training and directing operations in fish packaging and
marketing. Mr. Amor is well known at the Fisherman's Cooperative and throughout the
local community. He's particularly experienced in the wholesale side of the business.
Mr. Murillo is experienced in that retail trade and will be responsible for the control of
costs and inventory. Salaries for the principles will be P500/month in the first year,
P750/month in the second year and P1000/month thereafter. Profits will be distributed
equally between the principles after in re investment for expansion.
The firm has engaged the services of the following advisers:

Accountant –Mr. George Escribe, AASA CPA

Solicitor – Mr. Tony Portolo, Esq.
Bank – National Bank

The firm has also joined the Philippine Seafood Traders Association which provides
inter-firm comparison information to its members through the Manila University.
 8. LABOR

You need to determine and document your manpower needs now and over the
coming years. Will they be permanent or casual, full or part time? What skills are
required and are the people you need available? What will be the costs?

HARVEY’S PRIDE will engage one part-time sales assistant at

award casual rates whose duties will be selling seafoods over the
EXAMPLE counter to retail customers. During peak periods, the firm will
employ a fish cutter on a casual basis at award rates. The duties of
this position will be to help prepare seafood for the wholesale trade.
Suitable labor is available, and Mr. Murillio is experience in training
and directly employees.
Application and effect of new funds

The proceeds of the proposed P33,000 loan will be used as follows:

Purchased of Property P22,000

Renovations and improvements P 4,000
Repayment of bank loan P 3,145
Working capital P 3,855
P 33,000

HARVEY’S PRIDE (HPC) can purchase the property at No. 5 Jose Avenue under the terms of a
lease/purchase agreement for P22,000. An independent valuer has appraised the property, with
leasehold improvements, at P35,000.
The funds for renovations and improvements will be used to develop the 80 Sq. m. of floor space
which is currently unused. The principals wish to repay the bank loan to free the security over lease-
hold improvements held by the bank.
The working capital is necessary to meet increased expenses resulting from the continued growth
of the business and to take advantage of bulk rates on specialty items such as Philippine lobster tail.
The new funds will be sufficient to finance the transition through a planned expansion so that the
business can enjoy a greater share of an expanding market.
9. FINANCIAL FORECASTS

Financial forecasts represent your best estimates of future operations. If the

business already exists, you must show its current financial position before
proceeding to the forecast. If your business plan is also financing proposal, you
need to insert a statement showing the application and the expected effect of the
new funds.

The financial plan is concerned with 2 issues – liquidity and profitability.

 LIQUIDITY PROFITABILITY
It refers the need for sufficient Profitability estimates are based
cash to pay your bills as they on the sales estimates in your
become due. Liquidity estimates market analysis and the expenses
are based on projected cash related to achieving those sales –
receipts and disbursements – they they are documented in the form of
are documented in the form of forecasted income statements or
forecasted cash flow statements. profit and loss statements.

Financial forecasts should be shown monthly for the first year and quarterly
for the succeeding two years.
10.SUPPORTING EXHIBITS

Particularly when the business plan is used to seek finance, you

should include copies of documentary evidence substantiate your claims.

Examples of supporting exhibits are :

• detailed resumes of principals
• credit information
• quotations or estimates
• letters of intent from prospective customers
• leases or buy or sell agreements
• legal documents
• census or demographic data;
• design plans or engineering specifications.
Benefits of having a BUSINESS PLAN

Essential Business Provides clear directions

Tool

BUSINESS
Strong foundation of PLAN Useful finance-raising
research and analysis tool

Shows forecasts and

measuring points that allowed
Keeping the focus and the charting progress.
creativity on track

Allows information and

experiences
Tips in preparing a GOOD BUSINESS PLAN

1 Prepare an objectively short plan.

2 Explain thoroughly and honestly.
3 Refer to a third person.
4 Always consider pitfalls.
5 Stick to one business.
6 Emphasize the target customers.
7 Keep the Plan neat and logically organized.
8 Capture the readers’ interest.
 The business plan is the document presented to banks or investors to obtained
financial capital. Aside from it being written well, the entrepreneur should avoid this
mistakes which Broome enumerates as this may translate to a denied bank loan and
investor “thumbs down”.

NEVER

• Submit a “rough copy”, perhaps with coffee stains on the pages and crossed out
words in the text, causing lenders a question whether the entrepreneurs take their
ideas seriously.
• Use outdated financial information or industry comparison, leaving doubts about
entrepreneurs’ planning ability.
• Use unsubstantiated assumptions by not explaining the “whys” of every point in the
plan.
• Fail to consider perspective pitfalls . Bankers can conclude that ideas are not realistic.
• Fail to understand the financial information. Even if outside sources are used to
prepare the projections, owners must fully comprehend information.
NEVER

• Overlook the importance of outside influences. Owners need to discuss the

potential impact of competitive factors as well as the economic environment
prevalent at the time of request.
• Give no indication that they have anything at stake in the venture. Lenders
expect entrepreneurs to have some equity capital invested into the business.
• Be unwilling to personally guarantee any loans. If the business owners aren't
willing to stand behind their company, why should the bank?
• Demand unrealistic loan terms lenders want to find about business viability
before discussing loan terms.
• Focus too much on collateral. Even for cash-secured loans, bankers look
toward projected profits for loan repayment. The emphasis should be on cash
flow.
Avoiding the Pitfalls in Planning

Tips to help avoid the errors made by entrepreneurs:

1. Set realistic GOALS

2. Involve everyone in the venture
3. Make a workable document
4. Balance the attention you give to every aspect of the plan
5. Set the target market
6. Anticipate possible problems
7. Establish performance standards
8. Show maturity
9. Show commitment and dedication
 According to Roger Thompson, in the article Get Full Value from Your Plan,
he listed common mistakes in developing the business plan well as the
remedies for each:

1. Single-Purpose use
Remedy: Stress implementation

2. One-person commitment
Remedy: Involve all members of the management team in preparing
the plan.

3. Benign neglect
Remedy: Follow up the plan by scheduling regular meetings.
4. Unworkable document
Remedy: Give the plan life by developing one-page action summaries
for each department.

5. Unbalanced application
Remedy: Get balanced participation from key managers and employees
in all areas of the company.

6. Disillusionment
Remedy: Develop contingency plans- both positive and negative.

7. Too-action-oriented
Remedy: Encourage these managers to develop plans for their areas of
responsibility.
8. No performance standard
Remedy: Encourage managers to establish specific, measurable
objectives in their respective areas.

9. Poor progress control

Remedy: Hold regular meetings to discuss progress of the plan and
nothing else.

10. Early consumption

Remedy: Update the plan every six months.
OUTLINE OF A COMPREHENSIVE BUSINESS PLAN
1. Cover Sheet
 Business name, address, phone number, web-sites, e-mail address
 Date

2. Table of Contents

3. Executive Summary
 Description of the business Concept and the Business
 The Opportunity and Strategy
 The Target Market and Projections
 The Competitive Advantages
 The Economics, Profitability and Harvest Potential
 The Team
 The Offering
4. The Industry and the Company and its Product(s) or Service ( s)
 The Industry
 The Company and the Concept
 The Product(s) and the Service(s)
 Entry and Growth Strategy

5. Market Research and Analysis

 Customers
 Market Size and Trends
 Competition and Competitive Edge
 Estimated Market Shares and Sales
 On-going Market Evaluation

6. The Economics of the Business

 Gross and Operating Margins
 Profit Potential and Durability
  Fixed, Variable, and Semi-variable Cost
 Months to Breakeven
 Months to Reach Positive Cash Flow

7. Marketing Plan
 Overall marketing strategy
 Pricing
 Sales Tactics
 Service and Warranty Policies
 Advertising and Promotion
 Distribution

8. Design and Development Plans

 Development Status and Tasks
 Difficulties and Risks
 Product Improvement and New Products
  Costs
 Propriety Issues

9. Manufacturing and Operations Plan

 Operating Cycle
 Geographical Location
 Facilities and Improvements
 Strategy and Plans
 Regulatory and Legal Issues

10. Management Team

 Organization
 Key Management Personnel
 Management Compensation and Ownership
 Other Investors
 Employment and Other Agreements and Stock Option and Bonus Plans
  Board of Directors
 Other Shareholders, Rights and Restrictions
 Supporting Professional Advisors and Services

11. Overall Schedule

12. Critical risks, Problems and Assumptions

13. The Financial Plan

 Actual Income Statements and Balance Sheets
 Pro Forma Income Statements
 Pro Forma Balance Sheets
 Pro Forma Cash Flow Analysis
 Break Even Chart and Calculations
 Cost Control
 Highlights
14. Proposed Company Offering
 Desired Financing
 Offering
 Capitalization
 Use of Funds
 Investor’s Return

15. Appendixes
 Brochures Describing the Products
 Letters of Recommendation or Endorsements
 Future Activities
OUTLINE OF A SIMPLE BUSINESS PLAN

I. THE PROBLEM/NEED
 
This pertains to the description of the problem/need being addressed to, as well as the
reasons/rationale why the problem/need must be addressed by the business and the descriptions
on how the business has solved the problem/need.

II. STATEMENT OF VISION, MISSION AND VALUES

VISION
It is a description or statement of what the proponent sees if the problem/need is solved.

MISSION
It is a clear description of goals and objectives that presents practical steps to achieve the vision.

VALUES
It is a clear statement of values critical to the culture, integrity and activities of the business.
III. THE MARKETING PLAN
 

A. Research and Analysis

It is a description of the target market, market size, competition,
market share and market trends.
 

B. Marketing Strategies
This includes the Four P’s – price, promotion, product and place.
The Four P’s all work together to reinforce the positioning strategy
which is based upon what your target customer wants or needs.
EXERCISE A

MARKET PLAN

Instructions: In a group, write the market plan and be sure to include the features of your product
or service, the target audience and your marketing strategies.

Product:________________________

Target Market: Who will buy your product/service? Why will they buy it?

PRODUCT OTHERS
AGE JOB RESIDENCE
INTEREST (Please Specify)
___________ ___________ ___________ ___________ ___________
Competitors: Who else sells a product or service similar to yours?
(List up to three)
a. Excellent Bakery
b. Heaven’s Touch Bakery
c. Pan de Manila

Do your competitors have a large clientele, or they seem to be busy?

a. ___________________ b. ___________________ c. __________________

When are your competitors most busy?

HOURS DAYS MONTHS

a.____________________ ______________________ _____________________
b.____________________ ______________________ _____________________
c.____________________ ______________________ _____________________

Where do your competitors’ customers live?

a. Within one kilometer: Two to five kilometer:
b. Within one kilometer: Two to five kilometer:
c. Within one kilometer: Two to five kilometer:
EXERCISE B

MARKET PLAN

Comparison Chart of Competitors:

Directions: Underline the appropriate answer that best describes the statement.

COMPARE Excellent Heaven’s Touch Pan de Manila

       
Market Share % GOOD,FAIR,POOR GOOD,FAIR,POOR GOOD,FAIR,POOR
Quality GOOD,FAIR,POOR GOOD,FAIR,POOR GOOD,FAIR,POOR
Location GOOD,FAIR,POOR GOOD,FAIR,POOR GOOD,FAIR,POOR
Size of Facility LARGE,MED,SMALL LARGE,MED,SMALL LARGE,MED,SMALL
Prices HIGH, AVERAGE,LOW HIGH, AVERAGE,LOW HIGH,
AVERAGE,LOW
Reputation GOOD,FAIR,POOR GOOD,FAIR,POOR GOOD,FAIR,POOR
       
Pricing:

How much will you charge?______________________________________

Why will you charge this price? __________________________________
How much do your competitors charge?__________________________
Why do your competitors charge that price?______________________

Advertising
Indicate choice of sales tools: REASON FOR CHOOSING THIS METHOD

Telephone _________________________________________________________
Personal Contact _________________________________________________________
Paid Advertising _________________________________________________________
1.Newspaper Ads
2.Radio and TV
3.Posters, signs and billboards
4.Direct mail brochures, flyers, letters, samples (choose one)
Free Publicity _________________________________________________________
Using Contacts _________________________________________________________
Public Relations _________________________________________________________
Sales Promotions _________________________________________________________
 EXERCISE C
 
MARKET PLAN
 
Public Relations
 
What can you do to get the attention of the potential customers:
Newspapers? ________________________________________________
Magazines? ________________________________________________
TV Stations? ________________________________________________
Radio Stations? ________________________________________________
Promotions ________________________________________________
 
Which of the following will you use to get your product or service into the hands of the customers? Why?
Games ________________________________________________
Coupons ________________________________________________
Special Prices ________________________________________________
Double Offers ________________________________________________
Other (pls. specify) ________________________________________________
IV. PRODUCTION AND TECHNICAL PLAN

The Production Paradigm

Transformation
Process
Outputs
Inputs ASSEMBLING
CANNING FINISHED PRODUCTS:
LABOR CONSTRUCTING BAGS
LAND CULTURING T-SHIRTS
MACHINE DRAWING FURNITURE
RAW MATERIALS SEWING CANNED GOODS
MILLING PASTRY
PRINTING
BAKING
V. ORGANIZATIONAL/MANAGE
Manager/Owner
MENT PLAN

This plan includes the

members of the team and the
team’s contribution to the Supervisor
business.

Clerk

Maintenance
VI. SUSTAINABILITY

I. Financial Plan
“Where the money comes from and where it goes.”
This section of the business plan is the key area, where people will judge
how competent you are as an entrepreneur. It must be well written, concise
and sufficiently documented.
 
Example of financial plan:
 
A. Anong Sarap Bakery, the initial capital is P 40,000.00. There will be five
members. Each of the members shall share Php 8,000.00.
 FIXED COST    
Rental   PhP3,000.00
Salaries:    
  Baker 3,500.00
B. Monthly Expenses   Helper 3,000.00
Roller   450.00
Mixer   900.00
Slicer   200.00
Tools & Utensils   175.00
Table 1: (A)TOTAL FIXED COST   PhP 11,225.00
     
VARIABLE COST (Month)    
MONTHLY EXPENSES Raw Materials
 
 
Flour PhP 3,000.00
 

  Butter/Lard 550.00
  Yeast/Leavening 120.00
  Egg 1,000.00
  Flavoring 500.00
  Sugar 1,000.00
Telephone Bill   600.00
Electricity   1,000.00
Table 1 shows the projected expenses LPG   1,000.00
per month during the initial year of Water   500.00
operation. It is noted that fixed cost is Transportation   1,000.00
greater that the variable costs. Miscellaneous   2,000.00
(B)TOTAL VARIABLE   PhP 12,370.00
COST
(A+B) TOTAL MONTHLY   Php 23,595.00
COST
 Projected Projected
Volume Volume Yearly
Types of Daily Monthly
Costing Projected
Bread Revenue Revenue
Table 2:
Revenue

Daily Monthly

C – P 1.50
Peter M - 50¢ 200 P 400.00 6000 P 12,000.00 P144,000.00
Pandesal
SP – P 2.00

PROJECTED C – P 4.00

Monay Lisa M – P 1.00 100 P 500.00 3000 P 15,000.00 P180,000.00

REVENUE SP – P 5.00

C – P 4.50
Mama
M – P 1.50 50 P 300.00 1500 P 9,000.00 P108,000.00
Empanada
SP – P 6.00

C – P 1.75
Hopia Like
M - .75¢ 150 P 375.00 4500 P 11,250.00 P135,000.00
Ko

Cost – C SP – P 2.50

Mark-up - M
C - P 22.00
Tasty ang
M – P 5.00 25 P 675.00 750 P 20,250.00 P243,000.00
Selling price - SP Bread ko!
SP – P 27.00

  Total 525 P 2,250.00 15750 P 67,500.00 P810,000.00

 Projected Projected
Volume Daily Volume Yearly Projected
Types of Bread Costing Monthly Revenue
Revenue Revenue

Daily Monthly

C – P 1.50

Peter Pandesal M - 50¢ 200 P 400.00 6000 P 12,000.00 P144,000.00

SP – P 2.00
30 days 30 days 12 months
C – P 4.00

Monay Lisa M – P 1.00 100 P 500.00 3000 P 15,000.00 P180,000.00

SP – P 5.00

C – P 4.50

Mama Empanada M – P 1.50 50 P 300.00 1500 P 9,000.00 P108,000.00

SP – P 6.00

C – P 1.75

Hopia Like Ko M - .75¢ 150 P 375.00 4500 P 11,250.00 P135,000.00

SP – P 2.50

C - P 22.00

Tasty ang Bread ko! M – P 5.00 25 P 675.00 750 P 20,250.00 P243,000.00

SP – P 27.00

  Total 525 P 2,250.00 15750 P 67,500.00 P810,000.00

 DAILY REVENUE = Selling Price x DAILY Projected Volume

 MONTHLY PROJECTED VOLUME = DAILY Projected Volume x 30 days

 MONTHLY REVENUE = DAILY Revenue x 30 days

 YEARLY PROJECTED REVENUE = MONTHLY Revenue x 12 months

Table 3:

  Jan Feb Mar Apr May Jun

MONTHLY PROJECTED Revenue P67,500.00 P69,187.50 P72,646.88 P79,911.56 P87,902.72 P96,692.99
REVENUES

Cost P23,595.00 P24,184.88 P25,394.12 P27,933.53 P30,726.88 P33,799.57

 REVENUE = Monthly Revenue

Projected
P43,905.00 P45,002.63 P47,252.76 P51,978.03 P57,175.84 P62,893.42
Net Profit
 COST = Fixed Costs +
Variable Costs

 PROJECTED NET PROFIT =

Revenue - Cost
Table 4:

Jul Aug Sep Oct Nov Dec Total

P99,110.32 P94,154.80 P91,800.93 P87,210.88 P104,653.06 P125,583.67 P1,076,355.31

MONTHLY PROJECTED
REVENUES P34,644.56 P32,912.33 P32,089.52 P30,485.05 P36,582.06 P43,898.47 P376,245.98

P64,465.75 P61,242.47 P59,711.40 P56,725.83 P68,071.00 P74,878.10 P700,109.33

Table 4 shows that the months from August to October are considered non-peak months. It is
assumed that the business grows by its monthly profit because of old and new consumers of the
products. According to the table shown above, August to October are non-peak months (5% loss from
previous month is computed) whereas June, November and December are peak months (for June,
10% increase of sales from previous month and 20% for the latter months).
 Non – Peak MONTHS ( - 5 %)

Revenue x .5 = _______ - Revenue

 Peak MONTHS ( + 10%)

Previous Revenue x .10 = ________ + Previous Revenue

 Consecutive Peak MONTHS ( + 20%)

Previous Revenue x .20 = ____________ + Revenue

Break-Even
 
Total Revenue (TR) = Fixed Cost (FC) + Variable Cost (VC)
 
When TR is greater than FC and VC means the business is earning profit.
 
When TR is less than the FC + VC means the business is losing.
 
When TR = then FC + VC, the business is break-even.

Tables 2 & 3 showed the projected cost and revenue by month. Based on the
table the Total Revenue is greater than the combined fixed and variable cost.
It indicates that Anong Sarap Bakery has the great potential of generating
profit.
 Examples of Projected Income
Statement and Cashflow
  2008 2009
Table 5:

REVENUE PhP 1,076,355.31 PhP 1,237,808.60

15 %
ANONG SARAP BAKERY
PROJECTED INCOME
STATEMENT FOR THE YEARS Cost /Expenses PhP376,245.98 Php432,682.87
ENDED 2008 AND 2009

Projected Net
PhP700,109.33 PhP805,125.73
Income

Projected Income for the year is expected

to by at least rise by 15%
Table 6:
  January February March
CASH FLOW 1st Beginning Cash P 40,000.00 P 60,310.00 P 81,127.75
QUARTER OF 2008 Balance
     
Cash Inflows P 43,905.00 P 45,002.63 P 47,252.76
Net Income P 83,905.00 P 105,312.63 P 128,380.51
 Cash Inflows = Proj.
Cash Outflow      
Net Profit of the Month Fixed Cost P 11,225.00 P 11,225.00 P 11,225.00
 Net Income = Beginning Variable Cost P 12,370.00 P 12,959.88 P 14,169.12
Cash Balance + Cash P 23,595.00 P 24,184.88 P 25,394.12
Inflows
 Ending Cash Balance = Ending Cash P 60,310.00 P 81,127.75 P 102,986.39
Balance
Net Income – Total Cash
Outflow
   February
Beginning Cash P 60,310.00 January Ending Cash Balance
Balance
 
Cash Inflows P 45,002.63 February Projected Net Profit
Net Income P 105,312.63 Beginning Cash Balance + Cash Inflows

Cash Outflow  
Fixed Cost P 11,225.00
Variable Cost P 12,959.88 February Monthly Revenue - FC
P 24,184.88
February Monthly Revenue ( FC + VC =
Cost)

Ending Cash P 81,127.75 Net Income – Total Cash Outflow

Balance
I. For the initial operation of Anong Sarap Bakery, the investments shall
come entirely from its 5-member team sharing equally. Each will have
20% capital share.

II. The initial source fund may be generated by special fund - raising
activities from the school. This can also be coursed through the YECS
for the students to invest.

III.Based on our projection the business will earn 2.5% on the first month
and 5% on the second month. Having this as a continuing trend, it is
expected that after a year, the 15% return on investment is highly
feasible.
VII. SOCIAL IMPACT

This part should enumerate the impact of the business activity to its
employees, consumer and the community as well. Social impact should
also emphasize social responsibility to sound environment and sanitation
practices.

The impact should be stated in a clear and concise statement that is

anchored on the mission, vision and values of the business.
Social Impact Sample Form

1. Anong Sarap Bakery aspires to be the most admired cooperative bakeshop in

Marikina City. Its unique feature is the cooperative spirit among its incorporators.
In the next years to come we want this bakery to be operative inside the ERVHS
Campus, where students can have their on-the-job-training (OJT) and they can
invest in the future.

2. Anong Sarap Bakery will conduct activities that would promote spirit of
entrepreneurship through active participation in community and school activities
since they are the number one clientele of the bakeshop.

3. Our target is to have a bakeshop where students through their on-the-job-

training (OJT) program can work with. It vows to support the training needs of
the school in terms of baking, marketing, back office operations and food service.
Anong Sarap Bakery considers itself as partner in progress of the community and
school.