Module 3

DEVELOP A
BUSINESS PLAN

ECF3
ENTREPRENEURAL
Management

to your THIRD
module!

This module is a combination of

synchronous & asynchronous learning
and will last for one week
Long Test will be given via
Google Form in asynchronous test

Develop a Business
Plan

ARLENE F. MUSONES, MBA

Instructor

No part of this module may be

reproduced in any form without prior
permission in writing from the
Instructor.

October 9, 2023
Date Initiated
October 14, 2023
Date of Completion
 DEVELOP A BUSINESS PLAN
MODULE 3

TABLE OF CONTENTS

MODULE OUTLINE

Overview 3
Module Duration 3
Learning Objectives 3
Input Information 3
Learning Activities 3
Assessment/Evaluation 3
Assignment 3
Learning Resources 4

MODULE PROPER

Introduction

3.1 Why a Business Plan Important? 5

The Business Plan 5
Importance of a Business Plan 5
3.2 What Goes into a Business Plan? 5
Basic Elements of a Business Plan 6
Complete the Business Plan 8
3.3. How to create an effective Business Plan? 10
Research the Business Plan? 10
Mistakes in Business Planning 12
Proposed Project 12

San Mateo Municipal College Module 3/ECF3/Page 2

College of Business and Accountancy Prepared by: Arlene F. Musones, MBA

 DEVELOP A BUSINESS PLAN
MODULE 3 OUTLINE

OVERVIEW
This module introduces the business plan and discusses how to create an effective plan. It will also show you how to write a
business plan and discusses the different parts of the business plan. The lesson to be discussed will teach you how to look for
resources available for researching your business plan as well how to detect common mistakes in business planning.
MODULE DURATION

October 9 to October 14, 2023 Synchronous Meeting and Asynchronous Learning

For asynchronous learning inquiries, you may reach me through the messenger group chat from Monday to Thursday at 5pm to
8pm. or thru my GMAIL – arlenemusones143@gmail.com

LEARNING OBJECTES

After completing this module, you are expected to:

1. explain the purpose of writing a business plan;
2. describe the importance of the business plan;
3. describe the basic elements and how to pull a business plan together;
4. describe resources available for researching your business plan and;
5. name common mistakes to avoid in business planning.

INPUT INFORMATION

Develop a Business Plan

LEARNING ACTIVITIES

1. Group discussion during a synchronous meeting

2. Asynchronous Learning

ASSESSMENT/EVALUATION
I. Synchronous Test with a time limit.
A long test link will be provided through our group chat. This is a synchronous test with a time limit.
II. Asynchronous Learning
a. Individual Activity – Individual Learning Portfolio
b. Group Activity – Case Study

ASSIGNMENT
Individual Learning Portfolio. In your own words, (minimum of 30 words each question):
1. Why do you think the quality of the business plan is so critical an entrepreneur’s success?
2. Why is it possible to write an executive summary only after you have written the main body of your business plan? Why
might the executive summary be more important than the body of the plan?
3. Why do you think it is important to include management and staffing issues in the operations section of your business plan?
4. Why is it important for financial projections to be realistic and as accurate as possible when writing your business plan?

San Mateo Municipal College Module 3/ECF3/Page 3

College of Business and Accountancy Prepared by: Arlene F. Musones, MBA

 Deadline: To be announced in the GC.
Group Activity: Each group will formulate its own Business Project Plan.
Build your Business Plan Project
Deadline: To be announced in the GC.

LEARNING RESOURCES
Book/E-book:
Entrepreneurship by Cynthia L. Greene @2013 Cengage Learning Asia Pte. Ltd.
Entrepreneurship by Bruce R. Barringer and R. Duane Ireland, Fourth Edition

San Mateo Municipal College Module 3/ECF3/Page 4

College of Business and Accountancy Prepared by: Arlene F. Musones, MBA

 DEVELOP A BUSINESS PLAN
MODULE 3 PROPER

INTRODUCTION
A business plan is a written document that describes all the steps necessary for opening and operating a successful business. It
explains the idea behind your business and spells out how your product or service will be produced and sold. Its specific objectives and
describes how your business will achieve them. It describes the backgrounds and experience of the people who will be running the
business. Writing a business plan is important because it makes you think about all aspects of your business, helps you secure
financing for your business, helps you communicate your ideas to others, and can serve as a tool for managing your business.

3.1. Why a Business Plan is important?

Once you have settled on a business idea, it is time to start making plans for the business. A business plan is a written document that
describes all the steps necessary for opening and operating a successful business. In this module, you will learn what goes into a
business plan and begin the development of a business plan for your business idea.
A business plan does the following:

 describes what your business will produce, how you will produce it, and who will buy your product or service
 explains who will run your business and who will supply it with goods
 states how your business will win over customer from competitors and what your business will do to keep customers.
 provides detailed financial information that shows how your business will succeed in earning a profit
Writing a business plan is one of the most difficult and important things you will do as an entrepreneur. Writing a solid business plan is
critical because the plan can make or break your business. Some people may tell you that you do not really need a business plan, but
potential investors will want to know in what you are asking them to invest. The business plan will also serve as a guide for you as you
get your business started.
Purposes of a Business Plan
The business plan serves three important purposes:
1. A business plan explains the idea behind your business and spells out how your product or service will be produced and sold.
2. A business plan sets specific objectives and describes how your business expects to achieve them.
3. A business plan describes the backgrounds and experience of the people who will be running the business.
Importance of a Business Plan
1. A business plan makes you think about all aspects of your business.
2. A business plan may help you secure financing for your business.
3. A business plan helps you communicate your ideas to others.
4. A business plan can serve as a tool for managing your business.

3.2 What goes into a Business Plan?

Every new business should have a business plan, but not all businesses plans are alike. The content of the business plan for a small,
home-based, single-owner business will differ from a business plan for large corporation with offices in many cities. But regardless of
the business, all business plans serve the same basic purposes. They should contain the same three basic components – introductory
elements, the main body, and the appendix.
The main body of the business plan will contain the bulk of the information about the business idea. It provides details on how the
business will succeed. A lot of time and effort will go into writing the main body of the plan, and it should be compiled before the other
components in the business plan. It should be organized in the following sections, or elements:
1. introduction
2. marketing
3. financial management
4. operations

San Mateo Municipal College Module 3/ECF3/Page 5

College of Business and Accountancy Prepared by: Arlene F. Musones, MBA

 5. concluding statement
Nora Ellis and Samantha Richards are qualified childcare providers who have worked together at a day care center for many years.
Because of the high demand for quality day care services, Nora and Samantha know they are well positioned to meet this need. They
decide to create a business for operating their own center.
Basic Elements of a Business Plan
Introduction
The introduction section of a business plan contains many important details about the proposed business idea. The following
information should be included in the introduction section.

 a detailed description of the business and its goals

 the ownership of the business and the legal business
 the skills and experience you bring to the business
 the advantages you and your business have over your competitiveness
DETAILED DESCRIPTION. Something inspired the idea for your business. Describing how you came up with your idea can help
leaders, investors, and others understand what your business is about. Your business plan should also outline your short-term (three
months to one year), medium-term (two to five years) goals. This section describes your vision for the company’s future. Stating goals
will help provide you with decision and focus for your business activities.
Nora and Samantha know their short-and medium-term goals. In the first year of business, they want to get financing to lease or buy a
facility, equip the facility, and staff it. By their third year of business, they want to invest in more equipment and expand their facility.
They have not yet thought through what their objectives are for the long term. Writing a business plan will force them to think about
future plans.
OWNERSHIP AND LEGAL STRUCTURE. In your business, you should have a section detailing your form of ownership. Will it be a
sole proprietorship (one owner), a partnership (two or more owners), or a corporation (many owners that hold shares of stock in the
business)? Provide information relevant to your form of business, such as who your partners are or how many shareholders you have.
This section of the business plan is important because each legal form of business has an effect on how the business works and
makes profits.
SKILLS AND EXPERIENCE. A written summary of your experience is an essential part of your business plan. This summary should
emphasize all experience you have that relates to the business, including paid work experience, volunteer experience, and any hobbies
you have relate to your proposed business. The skills and experience of any managers or professional employees who will be hired will
also be relevant.
Nora and Samantha have Master’s degrees in early childhood education. Together, they have more than 35 years of experience in day
care, including 15 years in management. To show that they are well qualified to run a center, they include copies of their resumes and
letters of reference from satisfied parents.
ADVANTAGES. You should list your company’s advantages over the competition. These advantages may include the following:

 Performance
 Quality
 Reliability
 Distribution
 Price
 Promotion
 Public image or reputation
Marketing
The marketing section of your business plan should describe the products/and or services you will offer, the market, the industry, and
your location. Developing a marketing plan will be examined in more detail in module 5.

San Mateo Municipal College Module 3/ECF3/Page 6

College of Business and Accountancy Prepared by: Arlene F. Musones, MBA

PRODUCT/SERVICES. Describe your products and services and explain how they differ from those already on the market. Highlight
any unique features, and explain the benefits customers will receive by purchasing from your business.
MARKET. You will explain whom your prospective customers are, how large the market is for your product or service, and how you
plan to enter the market. You should also explain how you plan to deal with competition.
INDUSTRY. You should describe the industry in which you will operate. To find this information, you will need to perform research.
Things you should include in this section are as follows:

 External factors affecting your business, such as high competition or a lack of certain suppliers
 Growth potential of the industry, including growth forecasts
 Economic trends of the industry
 Technology trends that may affect the industry
LOCATION. Describe the location of your business. Lenders and investors want to know exactly where your business will be, because
the location of a business is often a critical factor to its success.
Writing the marketing section of the business plan is easy for Nora and Samantha, because they have a clear idea of what they want to
do. Their prospective customers are the parents of the 1,000 to 1,500 children between the ages of two and five who live in their area.
Nora and Samantha determine that 90 percent of the families would be able to afford their center. They will advertise in local
newspapers and send out fliers to families in their target market. When providing information on the industry in which they will operate,
they include population data for their area. This information shows that demand for their service could grow over time. Nora and
Samantha describe their plan to start the business in a prime location, in the heart of a suburb where most families have young children
and both parents work outside the home.
Financial Management
The financial section of your business plan will help determine your financial needs. It forces you to look at financial risks and the costs
and expenses of running your business. It consists of three elements,
1. Identification of Risks. Prospective lenders and investors will want to know what risk your business faces and how you plan
to deal with them. Do not be afraid to list potential problems. Lenders know that every business faces risks. They will be
reassured to see that you have clearly thought through the potential problems and have a plan for dealing with them. Risks
typically faced by new businesses include competitors cutting prices, costs exceeding projections, and demand for your
product or service declining.
2. Financial Statements. A new business must include projected financial statements in its business plan. An existing business
must include current as well as projected statements. A financial statement based on projected revenues and expenses is
called a proforma financial statement.
3. Funding Request and Return on Investment. You must indicate how much you need to borrow and how you plan to use the
money. You should give investors and idea of how much money they could expect to earn on their investment in your
business. You should state how much money you are personally investing and provide a personal financial statement.
Nora and Samantha have included pro forma financial statements for their business, which show how much money and profit
they expect to earn. They require $140,000 to start their business. Together they are contributing $85,000 of their own money.
This means they need a bank to loan them $55,000. They include this information in their plan as well.
Operations
The operation of your company is critical to its success. In this section of your business plan, you should explain how the business will
be managed on a day-to-day basis and discuss hiring and personnel procedures. You should also include information on insurance
and lease or rental agreements. Describe the equipment that will be necessary for production of your products or services and how the
products or services will be produced and delivered.
As part of the operations section of their business plan, Nora and Samantha describe hiring plans to ensure their day care center is
well-satisfied. They also devote a section to health and safety and outline plans for dealing with emergencies.
Concluding Statement

San Mateo Municipal College Module 3/ECF3/Page 7

College of Business and Accountancy Prepared by: Arlene F. Musones, MBA

In this section, you should summarize the goals and objectives you have for your business. You should also emphasize your
commitment to the success of the business.

Complete the Business Plan

After you have completed the main body of your business plan, you will need to focus your efforts on the other components-the
introductory elements and the appendix. Then you must pull all the components together into a well-organized, attractive document.
Introductory Elements
Every business plan should begin with a cover letter, a title page, a table of contents, a statement of purpose, and an executive
summary. These elements help set the tone for the body of your business plan.
COVER LETTER. A letter that introduces and explains an accompanying documents or set of documents is called a cover letter. The
cover letter for your business plan should include your name, the name of your business, and your address and telephone number. It
should briefly describe your business and its potential for success. It also needs to tell the reader how much capital you need. Nora and
Samantha prepare the cover letter shown below.

TITLE PAGE Your business plan should have a title page that indicates the
name of your company, the date, the owner of the company, the title of the
owner, and the address and phone number of the company.
TABLE OF CONTENTS. A table of contents is a listing of the material
included in a publication. It shows the reader what each page covers. It is
similar to a table of contents in a textbook. It is important that your table of
contents is accurate, so make sure the sections are listed in the proper
order and the given page numbers are correct.
STATEMENT OF PURPOSE. A brief explanation of why you are asking for
a loan and what you plan to do with money is called a statement of purpose.

San Mateo Municipal College Module 3/ECF3/Page 8

College of Business and Accountancy Prepared by: Arlene F. Musones, MBA

It should be no more than one or two paragraphs. Nora and Samantha write the statement of purpose shown here.
EXECUTIVE SUMMARY. Before getting into the detail of the main body of the business plan, readers will want to read an Executive
Summary. An Executive Summary is a short restatement of the report. It should
capture the interest of its readers and make them want to read more. If the
executive summary is unconvincing, a lender may decide not to read your entire
business plan. This makes a strong executive summary critical to the success of
your business.
The executive summary should be no longer than one or two pages, and it should
be written in a clear, simple style. Your executive summary should be written in a
clear, simple style. Your executive summary should do all of the following:

 Describe your business concept and communicate what is unique about

your idea
 Include your projections for sales, costs, and profits
 Identify your needs (inventory, land, building, equipment, etc.)
 State the amount you are interested in borrowing
Although the executive summary appears before the body of the business plan, it
should be written after the business plan has been completed. To write the
executive summary, go through the business plan and find the most important and
persuasive points you have made. Then draft an outline of an executive summary
base on these points.
Once you have created a draft of your executive summary, ask people who do and
do not understand your business to read the summary. If readers do not come away with a clear sense of what you plan to do and why
you will succeed in doing it, your executive summary needs more work. Nora and Samantha’ executive summary is shown at the right
side.
Appendix
The appendix to the business plan included supporting documents that provide additional information and back up statements made in
the body of the report. To help you determine what supporting documents to include, you should ask yourself what you would want to
know about a business before you would lend it money. Documents that might be included in the appendix include the following:

 Tax returns of the business owner for the past three years
 Personal financial statement of the owner
 Copy of proposed lease or purchase agreement for the building space
 Copy of licenses and other legal documents
 Copy of resume of the owner
 Letters of recommendation
 Copies of letters of intent from suppliers
 Copies of any large sales contracts you have already negotiated
Put It All Together
Your business plan is your best opportunity to let other people know what you want to do with your company. It gives you the chance to
convince them that your idea is sound and that you have the talent and resources to make your idea a successful business venture. To
make the best of this opportunity, you will want to create an attractive document that is neat, well organized, and inviting to read.
Handwritten business plans are not acceptable. All business plans must be word processed and printed on standard-sized white paper.
In addition, your business plan should follow a standard format containing the introductory elements, the main body, and the appendix.

3.3 How to create an effective Business Plan?

Your business plan needs to convince readers that you have come up with a practical business idea. To do this, you must include
information and data from objective sources to show that your idea is founded on solid evidence. Researching and writing a business

San Mateo Municipal College Module 3/ECF3/Page 9

College of Business and Accountancy Prepared by: Arlene F. Musones, MBA

plan takes time. In fact, most entrepreneurs spend 50 to 100 hours developing their business plans. The process requires patience,
research, thought, and a great deal of writing and editing.
Pulling together the information you need for your business plan involves researching your business, from leasing space, or equipment
to what you will charge for your product or service to dealing with competitors. Researching will teach you a great deal about running
business and provide you with specific ideas for starting a company.
Community, Government, and Professional Resources
When writing a business plan, you will likely need to seek out advice from others. People from many organizations can help you with
your business plan. Available resources include the SBA, the SBDC, SCORE, your local chamber of commerce, trade associations,
and professional business consultants.
THE SBA. The U.S. Small Business Administration (SBA) is an independent agency of the federal government that was created to
help American start, build, and grow businesses. The SBA also provides aid, counsel, and assistance to protect the interests of small
business concerns, to preserve free competitive enterprise, and to maintain and strengthen the overall economy of our nation.
THE SBDC. The Office of Small Business Development Centers (SBDC) provides management assistance to current and
prospective small business owners. Counselors from the SBDC provide free one-on-one assistance in developing a business plan.
They also provide inexpensive workshops on topics that may help you develop your plan. SBDCs were formed as a cooperative effort
of the private sector, the educational community, and federal state, and local governments. They enhance economic development by
providing small businesses with training and technical assistance. Assistance from an SBDC is available to anyone who cannot afford
the services of a private consultant and who is interested in beginning a small business for the first time or improving or expanding an
existing small business.
SCORE. Another source of valuable assistance is SCORE. The Service Corps of
Retired Executives (SCORE) is made up of more than 10,500 retired executives
who volunteer their time to provide entrepreneurs with real-world advice and know-
how. They provide free confidential advice that could be helpful to you as you prepare
your business plan. You can set up a meeting with a SCORE volunteer, or you can
work with a SCORE volunteer over the Internet. SCORE also offers workshops that
are a valuable way to learn more about doing business and a way to network with
other business professionals who can help you succeed. The topics of the workshops
focus on important small business issues, ranging from business planning and
marketing to web based retailing. The SCORE Counselors represent every business
area. Some have worked as executives at Fortune 500 companies, while others were
small business owners themselves. SCORE provide assistance for you for just a few sessions or a number of years, based on your
needs.
CHAMBER OF COMMERCE. In many communities, the local Chamber of Commerce offers assistance and information to
entrepreneurs. It can provide information on trends affecting local businesses, local resources, and zoning and licensing information.
TRADE ASSOCIATION S. Organizations made up of professionals in a specific industry are
called trade associations. They exist to provide information, education, and networking
opportunities to individuals in their industry. These associations can be valuable sources of
information to entrepreneurs.
PROFESSIONAL CONSULTANTS. Some entrepreneurs hire experts to help them.
Professional business consultants can be found in directories available in your library or on the
Internet.
FINANCIAL INSTITUTIONS. Many entrepreneurs are not familiar with the financial aspect of
starting and running a business. When writing the financial aspect of starting and running a
business. When writing the financial section of your business plan, it may be beneficial to talk
with a banker and accountant. They can help answer your questions about loans and financial
statements.
PRINT RESOURCES

San Mateo Municipal College Module 3/ECF3/Page 10

College of Business and Accountancy Prepared by: Arlene F. Musones, MBA

Information for your business plan can come from many print sources. Your public library will have many books on entrepreneurship
that may provide you with valuable information on running your own business. In addition, books on marketing, financing, hiring and
managing a staff, purchasing a business, and operating a franchise can be helpful. The library will also have books devoted specifically
to writing a business plan that include sample business plans.
Magazines may also prove helpful – especially magazines devoted to small business ownership and to the industry in which you will be
competing. Ask your librarian to help you find magazines that contain information that may be relevant to your business plan.
Government documents, including publications issued by the Small Business Administration (SBA) and other federal agencies, may
provide you with useful information. The SBA district office nearest you will have many publications that can help you complete your
business plan.
Online Resources
Much of the information you find in print resources is also available on the internet. The SBA, SBDC, and SCORE web sites contain
much of the same information that is provided in print. Many magazine articles that deal with entrepreneurial topics can be found
online.
In addition, there are many sites specifically for entrepreneurs and small businesses that may give you detailed information. Internet
search engines can help you locate resources.
Nora and Samantha, who are starting their own day care business, began research for their business plan by reading books from the
library. They also read information on a day care facilities that they received from the Small Business Administration. They found many
samples of business plans on the Internet that they were able to adapt to meet their needs. Once they had an outline prepared for their
business plan, they met with a counselor from their local Small Business Development Center to get feedback and advice for improving
their business plan. The number of hours spent on research helped Nora and Samantha prepare an effective business plan.

Mistakes in Business Planning

Many entrepreneurs will not take the necessary time to carefully plan their business and prepare their business plan. This can
contribute difficulties in getting their business started as well as business failure.
To create an effective business plan, avoid making the following common mistakes:
1. Unrealistic Financial Projections. Many investors will go straight to the financial section of the business plan, so it is very
important for the projections in this section to be realistic. Projections should be based on solid evidence for the potential
growth of the company.
2. An Undefined Target Market. You must clearly define your market and give a clear picture of your potential customers.
Clearly explain why these customers will buy your product. Be realistic about your market and do not assume that everyone
will want to buy your product or service.
3. Poor Research. Many potential business owners are anxious to get their business operating and do not spend the time
necessary to do good research. Use up-to-date research information, and verify the facts and figures in your business plan.
4. Ignored Competition. Do not overlook the competition and do not focus only on what the competition has done wrong.
Investors want to see who your competition is and how you plan to compete in the market. Outline how you will differentiate
yourself from the competition.
5. Inconsistencies in the Business Plan. It is important to review your final business plan and be sure that your plan is well
written and formatted in an attractive style. Be sure that information provided is consistent from section to section. It is a good
idea to have an objective person review your final business plan before you show it to investors.

San Mateo Municipal College Module 3/ECF3/Page 11

College of Business and Accountancy Prepared by: Arlene F. Musones, MBA

 Proposed PROJECT:
Build your Business Plan Project
This activity will help you get started on the development of a business plan for your business idea.
1. Describe how you came up with the idea for your business project. Explain why there is a market/need for your product or
service. Interview five or more people about your product or service. How many of them would buy it? Did any of them
make suggestions? Prepare a one-page report that fully describes your product or service and how it differs from what is
currently available.
2. List your short-medium-and long-term goals. What steps do you need to take to achieve each of these goals? Do you
foresee any obstacles in attaining them? if so, describe them and explain how will overcome them?
3. Contact the DTI and ask information about your type of business. Use this information to write a paragraph about the
industry in which you will be competing. What are the economic, technological, or growth trends in this industry? Is the
location of your business a critical factor in its success? Why or why not?
4. Begin the financial section of your business plan by writing a report that identifies the risks your business faces. Explain
how you will overcome each risk. Provide examples from magazine articles about business people in your field who have
succeeded when faced with similar problems.
5. Present all the information you have compiled to your teacher. Explain why you made the choices you did. Be prepared to
defend your choices.

San Mateo Municipal College Module 3/ECF3/Page 12

College of Business and Accountancy Prepared by: Arlene F. Musones, MBA