Lesson 3

Developing a
Business Plan
Lesson 3
Potential Market
Potential market is the part of the market you can

capture in the future. Your potential market includes
the demographic groups that are not currently your
customers but could become customers in the
future.
Identifying Potential Market
 Think of every target demographic that you

currently sell to, as well as those you have not yet
targeted.
 Determine what they have in common with each
other, new milestones that you will encounter in
their lives that will impact their buying patterns,
and where they overlap or diverge from your
current customers.
According to Lake (2019), to know your potential market, ask
yourself the following questions:
 What other products do my customers need now?
 What related products do they need in the future?
 Who else could make use of the products that I am selling
now?
 What demographic information does that new group have
in common with my current customers?
Factors to be
Considered by a New
Entrepreneur
r p ro d u c t o r s e r v ic e
1. Know yo u
First, you must believe on the product or service that
you will offer to your customer.
e m a r ket p o te ntia ls
2. Analyze t h
The customer base will determine the success of your
business venture. The wider the market potential, the
more chances of growth and success.
t h e m a r ket st rate gy
3. Dete r m i n e
A unique product or service needs effective distribution
strategy to get customer into the basket of demand
potential.
t h e co m p eti to rs
4. Know
In launching a product with existing competitors, you
must know their strengths and weaknesses.
n yo u r ow n L a u re l s
5 . Do n o t s et o
The landscape of business is continuously changing. Get
new resources and develop new materials.
Strength, Weaknesses,
Opportunities and
Threats (SWOT)
SWOT ANALYSIS
It is an entrepreneurial tool in
determining the profitability of the
business operation. Opportunities
carries with it some risks involved and
this should be investigated carefully.
The strength and weaknesses are
internal factors to the entrepreneur
while the opportunities and threats
are external factors.
Preparing a
Business Plan
What is a business plan?
 A business plan is a “formal statement of a set of
business goals, the reasons why they are believed
attainable, and the plan for reaching those goals. It may
also contain background information about the
organization or team attempting to reach those goals”.
Focus of a Business Plan
 Externally focused plans target goals that are important
to external stakeholders, particularly financial
stakeholders. They typically have detailed information
about organization or team attempting to reach the
goals.
 Internally focused business plans target intermediate
goals required to reach the external goals. They may
cover the development of a new product, a new service,
a new IT system, a restructuring of finance, or the
refurbishing of a factory.
Categories of Business
Plan
s s p la n fo r p ro fi t
1. Busine
 typically focuses on financial goals
2. Marketi n g p l a n
 targets changes in perception and branding as
its primary goals
3. Proj ec t p la n
 describes the goals of a particular project
fo r n o n- pro fi t a nd
4. Busine s s p l a n
governm e nt a ge n cy
 tends to focus on service goals
erati o n a l p la n s
5. O p
 describes the goals of an internal
organization, working group or department
Content of Business
Plan
A business plan has the following parts:
1. Executive summary – It guides proponents or investors
on the overall feasibility of the proposed project at a
glance. It summarizes the major highlights and findings of
each major aspect of the study. The conclusion of the study
is the focal point.
2. Project background and history – It narrates the project
conceptualization, and details the events that led to the
study. It also presents the project proponents, the proposed
name of the project, the type of business proposal/project,
and the project location.
3. Management and personal feasibility – It pinpoints the project’s
general to specific market feasibility topics. It presents the market
and an analysis of past and future demand and supply situations for
the particular product(s).
4. Production feasibility – This refers to the manufacturing aspects
of the product. It includes the details of what the product is and
how they will be produced/raised using proposed location,
production size (capacity) and lay-out. It also looks into the
machineries and equipment, raw materials and manpower
requirements, as well as the detailed civil engineering and lay
outing of the project, as applicable. It also present the project
utilities, wastes and wastes management methods, and the
production system’s documentation form.
5. Financial feasibility – It enables the entrepreneur to know
how much capitalization will be needed to finance the project
and who will be the project’s financiers. It identifies the
financial soundness of the business plan with presentation of
some assumptions to the financial projections as well as the
project financial statements and financial analysis.
6. Socio economic feasibility – This is viewing the project’s
feasibility only from the point of view or from the standpoint
of the project’s proponent/investors. This part presents the
project’s feasibility as to how it will be beneficial to other
people and entities.
7. Project implementation and timetable – These include
the detail of all activities to be considered during the
project’s pre-investment and pre-operating phase and also
the timetable of each of these activities.
Although there is no fixed way of writing a business plan,
the introduction provides a positive overview of the entire
study. It includes the mission statement which answers the
following
Aaron Loebquestions:
Who is the customer?

What do they need?
What’s in it for the customer?
How does the company satisfy its stakeholders?
A description of the product or service must be stated in the
introduction as well as the market, the company, anticipated
sales and profits summarized from the income statement, and
required financing.
Feasibility Study
 It is a major information source in making a

critical decision whether to go or not to go into
the business.
 As a requirement, a detailed business plan is
prepared before its implementation.
The advantages of writing down the results of the
feasibility study are as follows:
The findings can be set out in a clear and logical way, so
that potential lenders can understand the business and its
likely risks/advantages. The document helps the
entrepreneur to clarify and focus his/her ideas.
It is a reference material that can be used to plan long
term development of the business.
The plan can be regularly consulted and updated as a
guide to the business development
Mistakes can be made on paper rather than in the
operation of the business.
When the plan shows that a successful business is
possible, it makes the entrepreneur feel more confident to
succeed.
It helps the entrepreneur to decide on how much money
is needed and if properly prepared, it gives the loan
agency confidence that their money will be repaid
g a fe a s i b ili t y st u d y
1. C o nd u c ti n
To reduce this risk of failure and losing money,
potential producers should go through the different
aspects of running their business in discussion with
friends and advisers before they commit funds or try
to obtain a loan. This process is known as doing a
feasibility study and when the results are written
down, the document is known as business plan.
Questions that can be answered by feasibility
study are addressed:
 Is there a demand for the product? (find out the
characteristics required of the product and the size and
value of the market).
 Who else is producing similar products? (determine the
number and type of competitors).
 What is needed to make the product? (find the
availability and cost of staff, equipment, services, raw
materials, ingredients and packaging).
 What is the cost of producing a product? (calculate the
capital costs of getting started and the operating costs of
production).
 What is the likely profit? (calculate the difference
between the expected income from sales to an
estimated share of the market and the costs of
production).
e t w e e n a fe a s ib i l i t y
2. Compa r i s o n b
a n d a b u s i n e s s p l a n
study
 A feasibility study is conducted before a decision to
proceed (go/no go).
 A business plan is prepared after a decision to
proceed (go/no go).
 A feasibility study provides an investigative function.
 A business plan provides a planning function.

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Lesson 3

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Developing a

Potential market is the part of the market you can

 Think of every target demographic that you

Who is the customer?

 It is a major information source in making a

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