How do I make a business plan? (Supplement)

How do I make a business plan? Part 1
How do I make a business plan?Part 2
How do I make a business plan? (Supplement)

Your business plan is not complete with the organizational plan and financial plan. (Supplement)

Q: Our company is offering us a one-time loan which I plan to invest in a carinderia. I have talked to my high school friend who is a good cook to help me out in establishing this business. I only have PhP 150,000 to start with. My family is committed to support me with manpower since most of my relatives are currently unemployed.

Currently I have been browsing the internet for materials that could help me build the business plan, cash flow, and feasibility. What other things should I need to consider?

-- Teddy U. Tabanao Jr.
Organization Plan

The first thing to do is to define your VMGO: vision, mission, goals, and objective. The VMGO is a statement of what you want your carinderia to achieve in the long term and short term. It is an expression of what you want your carinderia to be known for and your purpose for setting up the carinderia.

You specify what you want to achieve within a short period of time, say 1 or 2 years, in your goals. While you lay down the specific activities you will do to support your goals. The VMGO provides the direction for your business.

Define the legal form for your business. Is it going to be a single proprietorship, a partnership, a cooperative, or a corporation? Whatever form you decide upon, ask yourself whether this is the best legal form for your carinderia; be clear about your reasons.

In addition to the licenses, permits and registration expenses, you need to set aside some money for other pre-operating expenses. You can get the amount back since pre-operating expenses are amortized during the course of the business. Fill in the pre-operating expenses table below.

(Click the tables to see a larger version)

The success of any business depends to a large extent on the people you hire. Think also of the management aspects of your business: marketing, production, finance, and administration. Assess your capability to manage the carinderia by yourself. This requires a full-time job. If you cannot afford to leave your present job yet, then you need to hire someone to manage the business.

Identify the kind of people you need for the business. By doing a task analysis, you can determine the number of people you will need, the skills you require and the amount you will spend for their salaries.

Once you have identified the positions, write down the job description that go with each position and the qualifications that the position requires. Now you can compute for your administrative expenses.

It is proper to allot rent expense even if you own the space that you will use for the business. You base the rent expense on the amount you think that space would command if you rent it out.

Utilities consist of your water, electricity, and telephone and other communication expenses. Professional fees refer to the payments you give to consultants. Usually, businesses, big and small, get a financial consultant on a retainer basis. The primary task of this person is to prepare financial statements.

The Financial Plan

It is now time to check the viability of your business idea. If you are ready, proceed with the following set of tables. You are going to compute for your total project cost and come up with your income statement, balance sheet and cash flow statement.

Find out how much money you will need to implement the activities you have planned. Break down the cost of each item into two to reflect how much of the cost will be funded by the loan from your office (debt) and how much of its cost will you pay from your own pocket (equity). The ideal debt:equity limit set by banks is 40:60 per cent.

If you borrow money, you will need to pay interest. Now, project your income statement for the next 3 years.

How sure are you that you have cash when you need it? Prepare your cash flow statement so that you will know when you are going to need additional cash.

Now, try making your balance sheet

Now that you have all the figures, it is time for you to decide. Do you think your carinderia is viable? Should you proceed with your plan or would you rather think things over?

You have come to the end of your business plan. Keep in mind that your projections are only as good as your assumptions are. Therefore, always try to make close-to-accurate assumptions.

“SmallBiz Clinic” is a joint project of EYP and the UP Institute for Small-Scale Industries (UP ISSI) that aims to provide free online consultancy and information services to small and medium-scale enterprises. A team of expert consultants from UP ISSI answers questions sent in by SME readers and advises them on general actions to take to better manage their businesses.

The UP ISSI is a training and research organization created in 1966 to help promote the development of small enterprises in the country. It has trained generations of successful Filipino entrepreneurs via comprehensive development programs in management, marketing, and finance, as well as other innovative development strategies such as the training of small business consultants.

UP ISSI brings to the “SmallBiz Clinic” over 35 years of frontline expertise in the day-to-day challenges and issues of running a Philippine-based enterprise.

Source: Philstar.com

How do I make a business plan? (2)

A business of any size will always benefit from the value that a business plan brings, even a small carinderia. Standard business plans tackle four interrelated topics: marketing, technical, organization, and financial.

Your technical section must define the following:

* Production process
* Your property, plant, and equipment
* Physical layout and waste disposal
* Production schedules and manpower

How do I make a business plan? (2)

Marketing is the first and most important part of your business plan. (Second of a two-part series) How do I make a business plan? Part 1 |How do I make a business plan?Part 2

Q: Our company is offering us a one-time loan which I plan to invest in a carinderia. I have talked to my high school friend who is a good cook to help me out in establishing this business. I only have PhP 150,000 to start with. My family is committed to support me with manpower since most of my relatives are currently unemployed.

Currently I have been browsing the internet for materials that could help me build the business plan, cash flow, and feasibility. What other things should I need to consider?

--Teddy U. Tabanao Jr.

In the technical plan, you convert your sales projections into production volume. You need to go through your production details. It all starts and ends with the basic question: How many orders will you cook for each dish?

Production Process

Look at your carinderia in the light of a manufacturing activity. Document everything at the start and every time you cook a new dish.

Unnecessary costs often arise due to poor production planning. Any business requires proper production planning.

Firstly, you can identify the common ingredients that you need for the different dishes that you cook for the day, the day after, or even for the whole week. Secondly, you can determine how much time and resources you need. Review these steps:

* Materials preparation: Acquiring and preparing the ingredients.
* Cooking process: Your recipe, your step-by-step formula.
* Finishing process and packaging: Garnishing, arrangement, and packing.
* Delivery: Serving and orders by telephone.

Documenting the process enables you to assign somebody to take over from your cook when he or she is not available. It also prevents you from being overly dependent on the former.

Your Property, Plant, and Equipment

Review the assets you need for your carinderia, from where you will buy them, and how much each one will to cost.

As in many carinderias, you may use your existing equipment such as stoves, toasters, refrigerator, freezer, and utensils. There is nothing wrong with the idea for as long as their use in the business isn?t hampered by household use.

Physical Layout and Waste Disposal

How will you arrange your equipment, work area, and dining area relative to one another? How much space will you need, including storage areas? Will it be able to accommodate the kitchen and serving area for a certain number of people during mealtimes?

Knowing the steps will help you determine where you can put your equipment and furniture. Determine the locations of electrical outlets and water sink, and the size of the eating area.

Create a layout that will reduce crisscrossing of activities, eliminate backtracking, and provide a smooth flow of production. This will reduce costs and improve work efficiency.

More questions: How will you dispose of the carinderia?s waste? Can you sell them? Can you recycle them? Will you need to spend for their disposal? How much?

Production Schedules and Manpower

The purpose of this schedule is to ensure that you meet your sales projections.

It is concerned with inventory of direct materials (major ingredients) and indirect materials (minor ingredients including other serving supplies). It is also concerned with how many units you actually need, how many units you should keep as reserve, and how much it will all cost. Other businesses would keep an inventory of finished goods but this does not apply to your case.

The following tables will guide you. Prepare a weekly schedule for the first month, then a monthly schedule afterwards until the end of your first year. Afterwards, you can use the data to make yearly schedule.

Make a table or schedule for each dish you intend to serve. The beauty of drawing a production plan and preparing production tables for each dish is you will be guided in identifying the level of skills you will need, distributing the tasks to the workers in a manner that they are kept busy, as well as in optimizing the use of your equipment.

Weekly Production (click the table to see a readable, larger version):

Following the format of the tables for the major ingredients, you may proceed to prepare the schedule for the minor ingredients for each dish.

Review your step-by-step cooking process and the time needed to complete each process. Given your production volume, how many people will you need to complete each step?

This makes up your technical/production plan. Go over it once again and make sure that you did not miss out on anything. By this time you may have realized that the four sections are closely interdependent and interrelated. I suggest that you take your time in completing this part since this is the heart of your business.

“SmallBiz Clinic” is a joint project of EYP and the UP Institute for Small-Scale Industries (UP ISSI) that aims to provide free online consultancy and information services to small and medium-scale enterprises. A team of expert consultants from UP ISSI answers questions sent in by SME readers and advises them on general actions to take to better manage their businesses.

The UP ISSI is a training and research organization created in 1966 to help promote the development of small enterprises in the country. It has trained generations of successful Filipino entrepreneurs via comprehensive development programs in management, marketing, and finance, as well as other innovative development strategies such as the training of small business consultants.

UP ISSI brings to the “SmallBiz Clinic” over 35 years of frontline expertise in the day-to-day challenges and issues of running a Philippine-based enterprise.

Source: Philstar

How do I make a business plan? (1)

Marketing is the first and most important part of your business plan.

How do I make a business plan? Part 1
How do I make a business plan?Part 2
How do I make a business plan? (Supplement)

Q: Our company is offering us a one-time loan which I plan to invest in a carinderia. I have talked to my high school friend who is a good cook to help me out in establishing this business. I only have PhP 150,000 to start with. My family is committed to support me with manpower since most of my relatives are currently unemployed.

Currently I have been browsing the internet for materials that could help me build the business plan, cash flow, and feasibility. What other things should I need to consider?

— Teddy U. Tabanao Jr.

A: A business plan for any type and size of enterprise is made up of four interrelated sections: marketing, technical, organization, and financial. You must prepare each section plan carefully. Put them together and--voilà--you have your business plan.

Four sections

In your marketing plan, make sure that your carinderia satisfies a need or a want for certain foods at specific times of the day. Ideally, your carinderia should provide the right food, for the right price, at the right place, at the right time, and supported by the right promotion.

Your technical plan describes all technical aspects of the carinderia:

* menu and cooking processes
* place and layout of the kitchen and eating area
* ingredients and materials for the menu
* cooking and processing equipment, furniture, utensils
* manpower requirements

The technical plan includes details about your production:

* number of servings for each type of food you expect to sell in a week for the first month
* major and minor ingredients of each food offering that you need to buy, in what quantities, how much, and when
* level of stock you may keep for certain ingredients

In your organizational plan, you decide on the legal form of your carinderia business. You also determine the people you need as well as the skills and qualifications to look for when identifying prospective employees.

Lastly, your financial plan will reveal how much capital you will need for the carinderia and how much profit to expect during the first few years of operation.

Let me give, for now, details of the marketing plan--as it is probably the most important plan for a food retailing business which you have in mind.
Your product

Specify the menu that you will offer in the carinderia. List down the types of meat, fish and seafood, and vegetable dishes you will sell.

Then look at the environment where you intend to set up the carinderia. What dishes similar to yours are available in the market? How many carinderias offer these dishes? Can the competition meet the demand of the market? If not, how big is the unmet demand of the market? In terms of quality, how will your dishes compare with your competitors?

What will be your marketing strategy? Do you intend to offer the same dishes as your competitors? Do you want to specialize on a few dishes? What types of dishes would you want to be known for?

Your buyers

In general, who do you think are the type of people who will be interested to buy your dishes? In particular, what segment of the population is your target customers who will likely buy from you because they want your dishes and are willing and able to pay for them? Where are your target buyers and how big is this segment?

A simple market research will help you determine your place in the carinderia business in the area where you intend to locate. Simply follow these steps:


If you cannot read the text on this table, refer below:

Menu = Target customers =How often and when do customers buy =Price per order =Competitor's name =Competitor's price
Menudo
Fried chicken
Chopsuey
Etc.

Menu: List the dishes you intend to cook and sell.

Target customers: Describe the customers for the each dish. Ask yourself these questions: who are the people who want this dish and are willing to pay for it? Are they mostly men, women or children? Are they young or old? What type work do they do? Are their incomes low or high? Where do they live and where do they buy at present? Are they on your street, in your barangay, near your carinderia or far away?

How often and when do customers buy: Write down the frequency and time your intended customers buy each dish. For example, is it every mealtime (breakfast, lunch, dinner) everyday, every week, every month, during rainy season, in summer, on payday?

Price per order: Write down the price you will charge for the dish.

Competitor's name: List the other businesses, your competitors, who sell the same dishes. What is special about their dishes? Include fastfood chains among your competitors.

Competitor's price: Write down the prices your competitors charge for a similar dish.

Your Price

How much will you charge for each dish? How did you arrive at your price? Will you change increase your price eventually? By how much? How does your price compare to that of your competitors? How much lower or how much higher?

You make a sales projection for each dish that you will cook and sell. Simply fill out the table below.

Note: To keep it simple, we will assume that all sales will be on cash basis. There is no need to breakdown your sales into cash sales and credit sales.

Example: Meat Dish (Planned Sales Volume/Sales)

Your place of business

Location is very important for a carinderia business. Your customers must easily access you. You have to answer these questions satisfactorily. Where do you intend to locate your carinderia? Why did you choose this place in particular? I suggest that you draw a location map of where you intend to set up the carinderia. Identify and show where your target customers will likely come from. Indicate landmarks (schools, offices, etc) and access routes.

Will you serve dine-in and take-out customers only? Will you get orders from employees and workers from nearby establishments? Will you deliver? If so, how will you bring their orders to them?

Promoting your carinderia

Getting people to turn their backs on the more established carinderias and patronize yours is not going to be easy. Neither is it cheap--especially in the early stages of the business. You need to allot a budget for promotions.

This effort should answer these questions: How will you attract customers to your carinderia? Are you going to use posters or flyers to make your customers aware and entice them to come to you? What gimmicks do you intend to use and how much will you spend for these?

This completes your marketing plan. Go over it once more and check for any unanswered questions or details you may have missed out.

(To be continued)


“SmallBiz Clinic” is a joint project of EYP and the UP Institute for Small-Scale Industries (UP ISSI) that aims to provide free online consultancy and information services to small and medium-scale enterprises. A team of expert consultants from UP ISSI answers questions sent in by SME readers and advises them on general actions to take to better manage their businesses.

The UP ISSI is a training and research organization created in 1966 to help promote the development of small enterprises in the country. It has trained generations of successful Filipino entrepreneurs via comprehensive development programs in management, marketing, and finance, as well as other innovative development strategies such as the training of small business consultants.

UP ISSI brings to the “SmallBiz Clinic” over 35 years of frontline expertise in the day-to-day challenges and issues of running a Philippine-based enterprise.

Source: Philstar.com