I.  Objectives:  At the end of the lesson, the   students should be able to:

  1. Explain business planning.
  2.  Enumerate the Principles of planning.
  3.  Differentiate the stages of planning.
  4. Identify the criteria of an effective business plan.
  5. List the different components of a business plan.
  6. Describe the characteristics of a sound business plan.

II.  Lecture:
          Planning in plain and simple language is thinking ahead.  In business, it is thinking ahead of objectives, strategies, financing, production, marketing, profit prospects, and growth possibilities.  (Fajardo)

Business Planning Explain
Business planning involves
the attainment of goals, and the way to accomplish such
goals.  A time frame is needed in attaining
the goals.

          Starting the business is not the end of business planning.  Ultimately, it is the consumer satisfaction that requires planning.  This should be properly planned because consumer satisfaction means business stability and growth.
          In financial language, consumer satisfaction is profit.  This, business planning is continuous process until consumer satisfaction is maximized and sustained.

Principles of Planning
  • Planning must be realistic.
  • Planning must be based on felt needs.
  • Planning must be flexible.
  • Planning must start with simple projects.
Stages of Business Planning
          Professor Phillip Kotler, author of Marketing Management, said that there are four stages of business planning. 

  • Unplanned stage.  At this stage the owner-manager is busy looking for funds, customers, materials and equipment.   His entire attention is devoted to the daily operations of his business in his intense desire to survive.
  • Budgeting-System stage.  The owner-manager realizes the need to develop and use a budgeting system.  Estimated incomes from sales and expected expenditures are made.  This is done to facilitate the orderly functions of the growing enterprise.
  • Annual planning stage.  The owner-manager drafts an annual plan.  He can use either:

A. Top-down planning

the owner-manager provides

the goals and let the employees

comply with them.   


B.  Bottom-up planning – 

the owner-manager           

encourages his employees

to participate in planning

the goals and strategies of

the enterprise.  

  • Strategic Planning Stage.  As the business enterprise becomes bigger, a long-range planning is needed.  This is a three or five-year plan.
 Criteria of Effective Planning
  1. The plan should state clearly its objectives.
  2. The plan should provide measures for a satisfactory accomplishment of the objectives in terms of quantity, quality, time and cost.
  3. The plan should state the policies which should guide people in attaining the objectives.
  4. The plan should indicate the department or unit will  be involved in accomplishing the objectives.
  5. The plan should indicate the time which should be allowed for each activity.
  6. The plan should specify the required resources and their corresponding costs.
  7.  The plan should designate the officers who will be held accountable for the accomplishment of the objectives.
Components of Business Planning
  1.  SWOT
  2. Objectives
  3. Strategies
  4. Time frame 
 Characteristics of a Sound Business Plan
  1. Objective
  2. Clear
  3. Logical and simple
  4. Flexible
  5. Stable
  6. Complete and integrated
III.  Discussion:
1.  What are the possible effects, if one establishes a business without planning?
IV.  Reference:  Entrepreneurship by Fajardo


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