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ENTREPRENEURSHIP DEVELOPMENTand

BUSINESS PLANNING

December 13, 2010

facilitated by

LEONCIO CUBILLAS, JR.UP ISSI


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TOPIC OUTLINE

2.0 OVERVIEW OF BUSINESS PLANNING

2.1 Marketing and Technical Aspects2.2 Organization and Financial Aspects

4.0 SUMMARY

1.0 THE THREE Es


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THE THREE Es


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The entrepreneur is a person whoidentifies economic opportunities and

creates an enterprise for the purpose ofgenerating income

An enterprise refers to the businessorganization established to managebusiness activities efficiently

Entrepreneurship is the process wherebythe entrepreneur develops a businessstrategy aimed at making the enterprise asuccess


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OVERVIEW OF

BUSINESS PLANNING


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The Marketing Aspects


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USES OF THE PRODUCT

If you are not remarkable, you are ignorable !

EXAMPLE:

How do you make your kandila A.S.I.?


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USERS OF THE PRODUCT

USERS

BUYERS

INFLUENCERS

DECIDERS

INFANT MILK

Baby

LAUNDRY SOAP

Advertisements

Lavandera

Amo ng lavandera

Lavandera

Mother, butsometimes Father

Mother

Pediatrician


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EXISTING MARKETINGPRACTICES

YOUR OWN MARKETING

STRATEGY

PRODUCT

PLACE

PROMOTION

PRICE

3 sizes

Variety store

Distribution of

flyers

P150 per kilo

5 sizes

Variety store andDoor-to-door

Flyers, free delivery

P149.50 per kilo, 10/9


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Your product can be used in how many ways?

How big is demand compared with supply?

How good is your marketing mix?

What is your gut- feel about your product?

Answering the following questions helps

you in determining your sales forecast:


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ESTIMATES OF MARKETING EXPENSES

Salaries of marketing people

Transportation allowance of marketing people

Rental of marketing outlet

Marketing supplies

Promotional activities

etc


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The Technical Aspects


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PRODUCTION SCHEDULE

Sales Forecast

Ending Inventory

Total Quantity to be Sold

Beginning Inventory

Net Total to be Produced

+

_


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An Example of a Production Schedule

JAN FEB MARCH

SALES FORECAST 1,300 1,450 1,420

ENDING INVENTORY 60 20 30

TOTAL QUANTITY TOBE SOLD

1,360 1,470 1,450

BEGINNING

INVENTORY 0 60 20

NET TOTAL TO BEPRODUCED

1,360 1,410 1,430


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GOODS SPECIFICATIONS

Needs / Wants Specifications

Enough heat generatedwhen water heater isturned-on

45 degrees C within 30seconds

Large bolts in door frames 2.0 cm X 5.0 cm


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SERVICE SPECIFICATIONS

Needs / Wants Specifications

I want fast repair of

appliances

I want excellent

banking services

We do home servicing

Free pick-up and delivery

Lifetime guarantee

Guaranteed 24 hrs ATMservices

Were open until 8 PM

Banking services via cellphone


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PRODUCTION CAPACITY ESTIMATES

Determinants of Capacity

Number of machinery or equipment

Number of operations people involved

Area covered by the working place

SCHEDULE (S) versus CAPACITY (C)

To be Produced Capability to Produce

Three Possibilities

S < C S = C S > C


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PROCESS DESCRIPTION

Step 1 ..

Step 2 ..

Step 3 ..

.

.Step n

HOW TO !


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EQUIPMENT REQUIREMENTS

Mode of acquisition

Maintenance programs


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FACILITY LAYOUT

The basis for physical arrangement is thePROCESS DESCRIPTION.


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BASIC LAYOUT CONFIGURATIONS

Process Layout is one where similarequipment are grouped together.

Product Layout is one in which

equipment are arranged according to thesteps by which the product is made.

In a Fixed-position Layout the product

(by virtue of its bulk or weight) remainsin one location.


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LOCATION CONSIDERATIONS

Proximity to sources of materials and supplies

Nearness to customer distribution points

Availability of utilities Effects of zoning laws and regulations

Cost of land

Factors to Consider:


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MATERIALS REQUIREMENTS

Quantity requirements are based on

PRODUCTION SCHEDULE (i.e. Net Total ToBe Produced)


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WORKFORCE

Number of direct and indirect labor

With or without work experience?

Workforce compensation package


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UTILITIES REQUIREMENTS

1. Power

1.1 LightingTotal wattage / 1000 = kilowatts consumption (KW)KW x 8 hours per day x days per month = KWH

1.2 Electric Motors

Total HP x 0.746 KW per HP = KWKW x 6 hours per day x days per month = KWH

Total KWH = (1.1) + (1.2)

Total KWH x applicable electricity rates charged by the

electric utility firm


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2.0 Water2.1 Estimated water used for general cleaning2.2 Estimated water consumption for process use

Total cubic meters of water = (2.1) + (2.2)consumed per month

Total water consumption x applicable rates charged bythe water utility firm

3.0 Fuel

3.1 Number of liters of bunker fuel consumed (ifapplicable

3.2 Number of tanks of LPG consumed (if applicable)

3.3 Kilograms of charcoal consumed (if applicable)

Total cost of any combination of fuels consumed


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The Organization Aspects


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LEGAL FORMS OF BUSINESS

Proprietorship

Partnership

Corporation

Cooperatives

BMBE

Franchise


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Name

Position Title

Responsible to

Responsible for Duties and Responsibilities

Qualifications

JOB DESCRIPTION OF KEY OFFICERS


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PRE- OPERATINGACTIVITIES

PRE- OPERATINGPERIOD (weeks)

1. Prepare business plan

2. Raise financing3. Register the business4. Rent or construct facility5. Purchase equipment

6. Purchase materials and supplies7. Hire (and possibly train) people8. Trial run / COTR9. Start of normal business operations

xxxx

xxxxxxxxxxxxxxxxxx

xxxxx

xxxxxxxxx

x

BUSINESS IMPLEMENTATION TIMETABLE


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The Financial Aspects


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FIXED ASSETS

WORKING CAPITAL

PRE- OPERATING EXPENSES

Land Building Machinery and Equipment

Materials and supplies

Salaries and wages

Utilities

Other overhead costs

xxx

xxx

xxx


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DEBT- EQUITY REQUIREMENETS

FIXED ASSETS

WORKING CAPITAL

PRE- OPERATING EXPENSES

Land Building

Machinery and Equipment

Materials and supplies

Salaries and wages

Utilities Other overhead costs

DEBT EQUITY

PROJECTED INCOME STATEMENT


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PROJECTED INCOME STATEMENT

Sales

Cost of goods sold

Gross income

Marketing and Administrative expenses

Operating income

Loan payments

Income before tax

Income tax payment

Net income

-

-

-

-

a.k.a. Production cost


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PROJECTED CASH FLOW

CASH INFLOWS

TOTAL CASH INFLOWS

CASH OUTFLOWS

TOTAL CASH OUTFLOWS

NET CASH FLOW

Loan proceedsEquityCash salesCollection of receivables

Pre-operating expensesPayment for marketing expensesPayment for administrative expenses

Payment for manufacturing expenses

PROJECTED BALANCE SHEET


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PROJECTED BALANCE SHEET

ASSETS

DEBT& OWNERS EQUITY

Current Assets

Fixed Assets

CashMaterials inventoryFinished goods inventory

Land

BuildingEquipment

Accounts payableLoans payableFrom the owners pocket (in cash or in kind)


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RETURN ON INVESTMENT

ROI =Operating Income

Total Business Cost

PAY BACK PERIOD

PBP =

Total Business Cost

OperatingIncome

+ DepreciationCost


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SUMMARY


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What to sell?

MARKETINGPLAN


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What to sell?

Make, provide, or buy what is to be sold?

MARKETINGPLAN

TECHNICALPLAN


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What to sell?


MARKETINGPLAN

TECHNICALPLAN

ORGANIZATIONPLAN

Who will manage the business?


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How much will it cost to start the business?

MARKETINGPLAN

TECHNICALPLAN

ORGANIZATIONPLAN

FINANCIALPLAN

What to sell?


Who will manage the business?


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MARKETINGPLAN

TECHNICALPLAN

ORGANIZATIONPLAN

FINANCIALPLAN


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HANGGANG DITO NA LANGat

MARAMING SALAMAT

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