The Business Plan

by: Jean Paolo G. Lacap

With today’s changing market landscape and with the varying demands, needs, and wants of customers, surviving the competition is indeed a hard task. Many successful businesses prospered because of the innovation they have created, the unique and working strategies, and their adaptability to changes in the environment. In order to prosper in the rigid and stiff competition, each enterprise must have competitive advantage. The sources of competitive advantage may come from different factors. One is the business core competencies or the resources of the business that considered unique within the boundary of the enterprise. Thus, competitive advantage may lead to high profitability. It is also important to know how to analyze opportunities in the market and take advantage of it. Exploiting the opportunities in the market may lead to creation of a product that is superior to the existing one and thus may lead to business success.

The Business Planning Process

Establishing a new business venture requires solid planning. Any individual who wishes to come up with a venture needs to learn the fundamentals of business planning. Business planning requires several steps to fulfill it. It is defined as the process in which an entrepreneur formulates a framework to efficiently utilize his/her resources and make sound business decision thus increasing the possibility of business success. The first phase of business planning is product development. In this stage, the entrepreneur brainstorms different unique business ideas based on the analysis of the market. Product development also entails the assessment of the needs and wants of the customers particularly those that are presently not satisfied by the existing enterprises. Thus, environmental scanning is an imperative. Environmental scanning is the process of analyzing the different factors affecting the micro and macro environments of the business. From the different ideas, the entrepreneur selects the best idea by considering various parameters such as: his/her initial capital, manpower requirement, equipment/machinery needed to produce the product concept and so on. The second phase of business planning is product testing. This stage entails piloting the product in the market to test if the customer will like the business concept or not. This stage necessitates in identifying the strengths and weaknesses of the product in order to gauge product's viability in the market. In some cases, product concept may conform to minor or major changes depending on the result of product testing. The third stage is strategy formulation. This phase the entrepreneur crafts marketing strategies, human resource strategies, production/operations strategies, and financial strategies. This part still requires further research such as the identification of possible competitors, the substitute products existing in the market, the suppliers, and so on. SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is management tool that can be used in formulation strategies. SWOT analysis is a useful business tool in analyzing the internal environment by identifying the strengths and weaknesses of the company and scrutiny of the external environment by recognizing the opportunities and threats in the market. 

 

Figure 1. The Business Planning Process

And fourth stage is the business plan write-up. This phase specifies the different and vital parts of a business plan. A typical business plan includes: executive summary, industry description, marketing aspect, human resource aspect, production/operations aspect, financial aspect, and other pertinent business documents.  And the last phase is editing and proofreading. Since the business plan will serve as the basis of  the entrepreneur in establishing his/her venture, error-free manuscript is necessary. This avoids pitfalls and possible confusions on the part of the entrepreneur.