11 ENTREPRENEURSHIP Module 1 INTRODUCTION TO BUSINESS PLAN PREPARATION 1|P age ENTREPRENEURSHIP – Grade 11 Module 1: Introduction to Business Plan Preparation Republic Act 8293, section 176 states that: No copyright shall subsist in any work of the Government of the Philippines. However, prior approval of the government agency or office wherein the work is created shall be necessary for exploitation of such work for profit. Such agency or office may, among other things, impose as a condition the payment of royalties. Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names, trademarks, etc.) included in this book are owned by their respective copyright holders. Every effort has been exerted to locate and seek permission to use these materials from their respective copyright owners. The publisher and authors do not represent nor claim ownership over them. Regional Director: Gilbert T. Sadsad Assistant Regional Director: Jessie L. Amin Development Team of the Module Writer: Marijo S. Balin Editor: Cynthia C. Competente Reviewers: Edwin L. Mias Christie L. Alvarez Illustrator/ Layout Artist: Jaypee M. Ignacio 2|P age I. Title of Material/Introduction: INTRODUCTION TO BUSINESS PLAN PREPARATION This module covers the entrepreneurial activities that must be undertaken immediately prior to the opening of small business and during the business operation. II. Objectives: At the end of this lesson, the learner should be able to implement the business plan. Specifically, the learner must be able to : 1. Define business plan, 2. Specify the different sections of the business plan, and 3. Identify the information included in the Introduction section of the business plan. 4. Compare and contrast business plan and feasibility study 5. Give the importance of the business plan III. Vocabulary List: Business - refers to the organized efforts and activities of individuals to produce and sell goods and services for profit. Business Plan - is a detailed and integrated written document that describes the various activities involved in opening and operating a new entrepreneurial venture. Entrepreneur – refers to a person who strongly advocates and correctly practices the concepts and principles of entrepreneurship in operating and managing the self-owned entrepreneurial venture. 3|P age Entrepreneurship – is the art of observing correct practices in managing and operating a self-owned, wealth-creating business enterprise by providing goods and services that are valuable to the customers. Feasibility – the possibility that can be made, done, or achieved, or is reasonable. Corporation - is a legal entity created by individuals, stockholders, or shareholders, with the purpose of operating for profit. 4|P age IV. Pre-Test: Multiple Choice. Write the letter of your answer. 1. Which of the following BEST described a business plan? a. A gallery of photos that explains the location and construction of the business b. A written plan that is a description of all the aspects of the business and includes the business's goals c. A collection of plans that are combined from different business and then analyzed and compared to your business d. A list of guidelines that tell successful business's how to run their company in order to make a profit. 2. What are the advantages of creating a business plan? a. To secure financing b. Allows the entrepreneur to focus on what they want to accomplish c. To set better objectives and benchmarks d. All of the above 3. Who should prepare the business plan? a. Anyone c. Someone on the business b. Entrepreneur d. Stakeholder 4. What section of the business plan can we find the Proposed Name of the Business, Address of the Business, Name of the Owner or Owners, Description of the Business, Location of the Business, Funding Requirement and Source? a. Introduction b. Organizational Plan c. Production Plan d. Operation Plan 5|P age 5. Which of following is the LEAST factor to be considered when deciding on the location of the proposed business? a. Distance from the sources of raw materials, labor, and utilities b. Peace and order situation c. The geographic and climatic conditions d. Proximity to the house of the owner of the business 6|P age V. Learning Activities: 1. Perform Activity #1 – FOUR PICS, ONE WORD! 2. Read the definition of a business plan and know the reasons why you need to prepare a Business Plan for small business. 4. Read the comparison between Business Plan and Feasibility Study. 5. Identify the Major Parts of the Business Plan and be familiar of its content. Activity #1 - FOUR PICS, ONE WORD! What is/are the word/s being described by the group of four pictures? 1. 4. 2. 5. 7|P age 3. 6. Based on the words that you have formed on the previous activity; how do we define a Business Plan? Take time to Read Young Entrepreneur ! A business plan is also a road map that provides directions so a business can plan its future and helps it avoid bumps in the road. It is the only single written document that must be prepared before opening a new business or expanding an existing business. It provides a clear direction to any uncertain business endeavor. A business plan is a detailed and integrated written document that describes the various activities involved in opening and operating a new entrepreneurial venture. 10 Reasons Why You Need to Prepare a Business Plan for Small Business 1. To help you with critical decisions 2. To iron out the kinks 3. To avoid the big mistakes 4. To prove the viability of the business 5. To set better objectives and benchmarks 6. To communicate objectives and benchmarks 7. To provide a guide for service providers 8. To secure financing 9. To better understand the broader landscape 10. To reduce risk 8|P age Guided Questions: 1. What are some of the tests that need to be conducted before putting up a business? 2. What is the difference between Business Plan and Feasibility Study? 3. Who should prepare a business plan? There is another written document that must be prepared and is equal importance as the business plan. This is the feasibility study which serves as the forerunner of the business plan. Two Major Tests to be Conducted every time a New Business Idea is Created 1. Test of Possibility 2. Test of Feasibility The test of possibility on the new business should have a positive result, so that the test of feasibility or viability will be conducted. Business Plan versus Feasibility Study The primary objective of the feasibility study is to determine whether the proposed business is feasible or not in all areas. If the outcome of the feasibility study is positive, then the entrepreneur prepares the business plan. The content and structure of the business plan are almost the same as those of the feasibility study. The data shown in the feasibility study are the same set of data presented or used in the business plan. Nonetheless, the business plan presents a more detailed discussion of how the business will be undertaken and operated. MAJOR PARTS OF THE BUSINESS PLAN There is no universally accepted standard format or structure of the business plan. 1. Introduction 2. Executive Summary 3. Environmental Analysis 4. Business Description 9|P age 5. Organizational Plan 6. Production Plan 7. Operation Plan 8. Marketing Plan 9. Financial Plan 10. Appendix Introduction The introduction presents the general perspective of the business. It may consist of one to two pages. It includes, among others, the following sections: 1. Proposed Name of the Business 2. Address of the Business 3. Name of the Owner or Owners 4. Description of the Business 5. Location of the Business 6. Funding Requirement and Source In case the consulting team prepares the business plan for prospective owners or investors, the section Statement of Confidentiality is added as the last section. Proposed Name of the Business The formulation and drafting of the proposed business name is not as simple as it sounds. It is a delicate and important entrepreneurial task. Remember that the name of the business may exist in the market for the many years. Careful and in-depth planning is of prime importance. The proposed business name must: 1. Reflect the business identify and image, 2. Promote the philosophical values and culture that the business values the most, 3. Profess the brand identity of the product, and 4. Attract or influence the target costumers 10 | P a g e At least three suggested trade names must be submitted to the department of Trade and Industry for approval and registration. Address of the Business It is important that the address of the Business is correctly written because all business correspondence is mailed to the business address. Raw materials and other manufacturing supplies are also shipped by the seller to the designated business address. Nowadays, it is also necessary for the business to have an e-mail address to facilitate electronic communication between the business and the customers, suppliers, creditors, and other significant parties. Name of the Owner The name of the owner must be properly stated. In a sole proprietorship, there is only one owner. In case the venture is a partnership, the names of the partners, including the extent of their liabilities, must be indicated. For example, if a partner’s must be properly mentioned. For business ventures that will operate as a corporate entity, the names, nationalities, and addresses of the incorporators must be given. Incorporators are persons who originally formed the corporation. Description of the Business A brief description of the business must include information about the type of product or service that the business intends to produce or provide. It may include a brief information about the ultimate mission, vision, and objectives of the business. The other products or services that the business plans to produce or provide must also be mentioned in the description of the business. 11 | P a g e Location of the Business There are no rigid rules in the selection of the business location since several variables affect the selection of the business location . The basic entrepreneurial consideration is to place the proposed business in a strategic location that will assure competitive advantage. What is the difference between the sections Address of the Business and Location of the Business? The former simply states the exact business address. No additional description is provided to highlight the exact business address. The latter indicates the reason/s for the selection of the location. In case the processing plant is not within the vicinity of the business, its exact location must be described. The following factors should be considered when deciding on the location of the proposed business: 1. Proximity to the target customers 2. Distance from the sources of raw materials, labor, and utilities 3. Availability and cost of transportation 4. Peace and order situation 5. Presence of direct competitors 6. The geographic and climatic conditions Funding Requirement and Source The estimated total initial cost of the business venture must be clearly indicated. It should include the projected breakdown or allocation of the total cost, e.g., how much will b for building, fixtures, equipment, supplies, and working capital. This section also presents the source or sources of funds. The initial cost of the investment may be provided solely by the owner or owners or partly by the owner and creditors. The estimated period to settle the funding source provided by the creditors must also be mentioned. 12 | P a g e VI. Practice Tasks Practice Task 1 - WHO’S WHO? ENTREPRENEUR X OR Y? Consider the following situation. Entrepreneur X Entrepreneur X put up a coffee shop immediately in his barangay. He thought of an idea that early bird catches the worm. He eventually hired his friends and ordered stocks for his coffee shop business. Entrepreneur Y Entrepreneur Y is planning to open a bakery shop in his place. He gathered first information from the residence of his place whether what kind of bread they love to eat. Questions: 1. Among the two entrepreneurs, who do you wanted to be? Why? 2. What is/are the risks to be taken by each entrepreneur? 3. What do you think the importance of business planning is? 13 | P a g e Practice Task 2 - JUSTIFY ME. Write True if the statement is correct. Otherwise write False and state your reason briefly/change the word/s that make it false. 1. The process of determining the profitability of the business is considered a test of possibility. 2. After the preparation of the business plan, the entrepreneur prepares the feasibility study of the business. 3. The business plan is entirely different from the feasibility study. 4. The feasibility study is more detailed than the business plan. 5. One of the major parts or sections of the business plan is the marketing research. 6. The executive summary is usually shown as the last part of the business plan. 7. One of the sections in the introduction of the business plan is the address of the business. 8. The funding source and requirements are usually shown as a part of the business description. 9. The name or names of the owner or owners ,of the proposed business are considered very delicate information. Hence, they must not be included in the business plan. 10. The business plan is a mixture of facts and assumptions. 14 | P a g e Practice Task 3 – TELL ME A STORY Cite a true story that you have known wherein the importance of making a business plan before the implementation was needed. You can share it in class or have it written in a paper. 15 | P a g e VII. Post Test: LET’S JOIN TOGETHER! Form a group of five (5) and do the following. Follow the format below and then share your output in class. Please be guided with the scoring rubrics below. 1. Think of three possible names(for the average learners) and five possible names(for the advanced learners) of your small business. Rank them according to your preferences. 2. Indicate the proposed complete address your business. 3. Write your names as owners of the business. 4. Make a brief description of your business. You may include the product or service that you plan to sell or serve. 5. Cite the reason for choosing the location. 6. Based on the nature and type of your proposed small business, determine the initial funding requirement. 7. State also the possible source/s of funds. Proposed Business Name 16 | P a g e Proposed Address Name of Owner/s Brief Description of the Business Reason/s for Choosing the Location Initial Possible Funding Source/s Requirement of Funds Note to Students… The group they will form will be the permanent group until they finished the business plan and was able to implement it. The business that they will write should be more realistic this time since those are the options that they need to consider and subject for the approval of the teacher. Financial aspects should be taken in consideration. The scoring rubric below will be used. SCORING RUBRICS Category Beginning Developing Proficient 2 4 6 Completeness The work is Many questions very are incomplete. missing/partially complete. Correctness The work is full of errors. Confidence in Presentation Shows no interest in topic presented. Collaboration We did the work by ourselves. We talked a little among group members Cleanliness Our final output is full of erasures. 17 | P a g e Some questions/tasks were not answered correctly. Shows little or mixed feelings about the topic being presented Two or more questions are missing or partially complete. There are 2 or 3 errors in the output. Highly Proficient 8 Excellent One question is partially answered or completely missing. All questions are answered completely. There is 1 error in the output. There are 0 errors in the output. 10 Shows Demonstrates Demonstrates some greater strong enthusiastic enthusiasm enthusiasm feelings about topic about topic about topic during entire during entire presentation. presentation. Only some of We worked We worked Everyone the group together together so worked members are most of the that everyone together cooperative. time. contributed to using his/her Sharing the final knowledge ideas output. and abilities regularly. to make the output come together. There are some Our work is Our final There are no erasures. clean. output is very erasures. clean VIII. Assignments With the same group, do the following : 1. Prepare the introduction section of your business plan. The cover page of your final output will appear below. BUSINESS PLAN (Name and Address of Your Proposed Business) JYNAPHI PROCESSING COMPANY 216 JALIPA STREET, PBLACION 1 PIGCAWAYAN, COTABATO www.jynaphi@yahoo.com OWNED BY: (Your Names as the Owners) ANGEL TOLEDO PRINCESS MALAZARTE 18 | P a g e Note that since the name, address, and name/names of the owner/owners of the business appear on the cover page, they may no longer be repeated in the Introduction section. 2. Use the guide for the format of the Introduction section of your business plan. INTRODUCTION This section of the business plan presents the description of the business, its location, and the total funding requirements and the possible funding source. Description of the Business The requirement for spacing, paragraph indention, font size and style, margins and other technical writing requirements will be subject to the policy of the school or maybe Location of the Business patterned after other research activities of the school. Scoring rubric below will be used. Funding Requirement and Source of Funds 19 | P a g e SCORING RUBRICS Category Beginning Developing Proficient 2 4 6 Completeness The work is Many questions very are incomplete. missing/partially complete. Correctness The work is full of errors. Collaboration We did the work by ourselves. We talked a little among group members Cleanliness Our final output is full of erasures. 20 | P a g e Some questions/tasks were not answered correctly. Only some of the group members are cooperative. There are some erasures. Two or more questions are missing or partially complete. There are 2 or 3 errors in the output. We worked together most of the time. Sharing ideas regularly. Our work is clean. Highly Proficient 8 Excellent One question is partially answered or completely missing. There is 1 error in the output. All questions are answered completely. We worked together so that everyone contributed to the final output. Our final output is very clean 10 There are 0 errors in the output. Everyone worked together using his/her knowledge and abilities to make the output come together. There are no erasures. IX. ANSWER KEY Pre-test 1. B 2. D 3. B 4. A 5. D Activity #1- FOUR PICS, ONE WORD! 1. Written 2. Document 3. Open 4. Operate 5. Business 6. Plan A business plan is a written document prepared for opening and operating a business. Practice Task 1 - WHO’S WHO? ENTREPRENEUR X OR Y? 1. Among the two entrepreneurs, Entrepreneur Y did a better decision of planning first before opening a business. 2. The risks to be taken by Entrepreneur X is what if his business will not grow and he already used his money too much. Opening a business should undergo planning first. On the other side, entrepreneur Y is on the right track. 3. The importance of making a business plan is it will serve a guide for your business. Practice Task 2 - JUSTIFY ME. 1. True 2. False, feasibility study before business plan 3. False, almost the same 4. False, business plan is more detailed than feasibility study 5. False, not a major part 6. False, first page 7. True 8. False, separate 9. False, must be included 10. True 21 | P a g e Practice Task 3 – TELL ME A STORY Students’ response will vary. Post Test Students’ response will vary. Assignments Students’ response will vary. 22 | P a g e References: Aduana, Nick L (2017).Entrepreneurship in Philippine Setting for Senior High School, Quezon City, Philippines : C & E Publishing Inc. pp.6, 211-220. https://www.entrepreneur.com/encyclopedia/business-plan https://www.waveapps.com/blog/entrepreneurship/importance-of-a-businessplan https://www.investopedia.com/terms/b/business.asp https://dictionary.cambridge.org/us/dictionary/english/feasibility https://corporatefinanceinstitute.com/resources/knowledge/finance/what-iscorporation-overview/ 23 | P a g e