How to Plan Your Business Determining Your Product/Service Line Focus on what specific type of product or service you

want to sell. Some of the factors given for consideration will help you come up with a great idea for a product what specific field are you interested in? Can you apply your skills or background work experience to this field? Provided below are the different types of product/service lines: 1.Product Industries - You may choose to manufacture your own product, either for the mass market or for specialized or individual demands. Canned goods, wooden or plastic toys, and ready-to-wear garments are examples of goods produced for the mass market, while precision instruments for industrial use of made-toorder furniture are examples of specialized products. 2.Process Industries - You may decide to perform only one or two operations in the total manufacturing process. If so, you are not, strictly speaking, a manufacturer but rather a process enterprise. The activities you perform can be initial operations on raw materials (milling, corrugating, sawing, or cutting), final operations (fishing, assembly, packing, or binding), or skilled or precision operations (embroidery, testing, woodcarving). 3.Subcontracting Industries - If you choose to be a subcontractor, you will undertake subcontracting work for other industries, usually bigger ones. Bigger industries sometimes subcontract the manufacture of components, supplies, or other specialized operations to smaller shops because the quality required is not viable for their high-capacity operations. Many big companies also find subcontracting a more low-cost and faster way of manufacturing products. Also, you are assured of a market for your products. You can also avail of technical and financial assistance from the big companies. One drawback of subcontracting, though, is that you rely on only one firm or two for your survival. 4.Service Industries - You could choose to sell services. Service enterprises include repair and maintenance shops, printing and machine shops, and food catering establishments. Beauty parlors, dress and tailoring shops, recreation establishments (bowling alleys and billiard halls), and entertainment enterprises (theaters, discos, and pub houses) are also considered service businesses. Although falling under the broad classification of a service enterprise, you may consider the trading business a fifth option. The most common type of trading enterprise is retailing. Types of Business According to Ownership Would you want to run the business on your own, with a partner, or with more people? Weigh the odds: 1. Single Proprietorship (one party) Advantages: Easy to set up Decision-making left entirely to owner Disadvantages: Demanding on owner's personal time Growth limited by owner's financial means 2.Partnership (at least two parties) Advantages: Relatively easy to set up

Check and balance maintained with two parties around Disadvantages: Any personal rifts between partners may dissolve partnership Equal profit sharing despite unequal attention and time given by partners to business. 3.Corporation (at least five parties) Advantages: Maximum flexibility for growth Limited liability of individual shareholders Greater room for professionalism in management Is least likely to dissolve Disadvantages: Complicated setting-up process Individual stockholders may have limited influence on management Tendency to institutionalize a bureaucracy Writing a Business Plan After you have made the preliminary decisions, you can proceed to formulate a business plan. There is no such thing as an all-purpose business plan. You should write your business plan according to the unique factors and conditions of your enterprise. However, you will find it useful to write and use a business plan along the broad guidelines suggested below: 1.State Your Objectives. This section comes first in a business plan. You tell your reader who you are, what your business goals are, and when you expect these goals to be accomplished. If you are submitting your plan to a bank, you may indicate how much you want to borrow and what you plan to do with the funds. Example of Stating Your Objectives: Pretty in Pink is an enterprise involved in the manufacturing and retailing of ready -to-wear ladies dresses. Its goals are: a.To start manufacturing and retailing by January 2000 b.To achieve profitability by January 2001 c.To seek adequate financing for the first 18 months of operation 2.Describe the Business. This section gives background information on your business and how it is currently doing: For a new business. Instead of a brief history, explain what the business will be, how the idea for your business was conceived, and how the business is expected to develop. For an existing business. Provide the following information: business name, date and place of registration, when actual operations began, a brief history of your business, and names of owners, partners, or major investors. 3.Describe Your Products or Services. Give a detailed description of your products or services so the reader gets a clear idea of what you are selling. Also give any applications or uses of your products that may not be apparent. In this portion of your plan, you should also note the competitive advantages your product has over other similar products, as well as identify the products you will be competing with. You should be able to state your

products advantages and disadvantages. 4.Identify Your Potential Market - Determine who are your present or projected customers and how many. Be as specific as possible. Are you selling to bookstore s? A grocery store? A small ladies boutique? If you are selling to the general public, you may need to group potential customers according to age, gender, income, education, and other demographic factors. You then ask yourself how you can make use of the information. If, for example, you know that your potential customers will likely be children between three to ten, what does this tell you about your location? Your advertising? Your prices? 5. Identify Your Competitors - Rather than pose as threats to you, your competition should drive you to do your best. Learn as much as you can about them. Include the following information in your plan: a.Description of competitors Identify businesses likely to become your competitors. Name them. b.Size of Competitors Determine your competitors assets and sales volume. c.Profitability of Competitors Which of your competitors are making money? Which are losing, and by how much? d.Operating Methods Determine the operating methods of each of your major competitors in terms of pricing strategy; quality of products and services; servicing, warranties, and packaging; methods of selling and distribution channels; credit terms; location; advertising and promotion; reputation; and inventory levels. Discuss only the items relevant to your business. 6. Consider Your Pricing Policy - In pricing your goods and services, all relevant factors should be considered, like cost of production and distribution as well as the degree of acceptance by the market. Another factor to consider is the pricing structure of your competitors. Of course, the aim of your pricing policy should be to set the price at a level that maximizes profit in the long run. 5.Determine Your Marketing Methods - Having a good product at a reasonable price is not enough. Your business plan must answer the following questions: a.How will you promote or advertise your business? b.How will you sell your product? Will you employ salespeople? c.What channels of distribution will you use to reach your customers? d.What do your customers think of your product? How can you improve your image as an enterprise? 6. Determine Your Key Personnel - Identify the key people in your business, including you as the owner and manager. If your business is a corporation, list the names and addresses of all directors. If your business is a partnership, list the names and addresses of all the partners. 7.Identify Your Material Requirements and Sources of Supply - List down what materials you will need and where you will get them. Include only direct materials; office supplies and other indirect materials should not be included in the list. You should prepare a table for the materials. For each of them, state how many suppliers there are, who your main supplier is, and why. Your readers will see that you have carefully thought out who your best supplier will be. 8.Determine the Process and Equipment You Will Use to Manufacture Your Product - Give a detailed explanation of your production process. For each step, explain the work done, as well as the equipment and materials used. If you are presenting a complex process, include a diagram showing your work-flow. Assign positions for the jobs that need to be done and estimate how many people you need to employ for each position. Set salary rates, too. 9.Prepare a Sales Forecast - Include a sales forecast that covers at least two years of operation. For the first year, present your sales on a monthly basis. Present the forecast of the succeeding years on a yearly basis, and explain how you arrived at the figures and at the assumptions on which they are based. 10.Prepare a Budget - In manufacturing, production costs of materials, labor, service,manufacturing

overhead, and other components should be budgeted. A service business should budget operational costs. Sales costs should include selling and distribution, storage, discounts, advertising, and promotion. General and administrative expenses include salaries, as well as legal and accounting costs. Projections should be prepared every month during the first year of operation and every quarter for the second and third years. 11.Set Your Plan to Work - You are ready to set your plan to work. It is time to raise funds, obtain a license, purchase facilities and supplies, hire and train people, and start operating. Remember that if you are to succeed, you must be prepared to work long hours and must be totally committed to your business. How to Finance Your Business Determining Your Financial Requirements Determine your financial needs and raise funds to meet these needs. You can begin a sari-sari store from your own personal savings. A garment factory, on the other hand, will require more elaborate arrangements for fund sourcing. Generally speaking, the financial requirements of a business may be classified into Fixed Capital, Working Capital, and Pre-operating Capital. Fixed Capital includes cost of land and building, or lease deposits of them; cost of improving the land or remodeling the building; machinery and equipment; furniture, furnishings, and fixtures. These are usually one-time expenses, meaning they are generally good for the duration of your business. Working Capital is the reserve money you need to run the business until it becomes self -supporting. This may take about one to six months or even longer. You need working capital to purchase your raw materials, pay your workers, pay for transportation, telephone, electricity, and water bills. Pre-Operating Capital includes money that you spend to register your business, acquire licenses for franchises, or pay a lawyer or a consultant. In other words, this is money you spend before your business begins to operate. It is advisable to prepare a forecast that outlines all these capital requirements. Be sure that no significant item has been overlooked. Be realistic and do not underestimate your requirements. Provide for contingencies and a margin of safety in estimating your capital requirements to avoid cost overruns later. Your capital should be enough to cover unexpected expenses. Observe the equipment and manpower requirements of other business establishments. If in doubt, ask a knowledgeable friend, an accountant or consultant to see if your estimates are realistic or not. For simple business activities like small-scale trading or home-based industries, simple estimates or financial requirements, income and profit would be sufficient. However, larger, more complex undertakings require a more in-depth study; this is called the project feasibility study. Banks usually require this for long-term loans. Seeking Sources of Capital The small businessman usually meets his initial requirements by dipping into his own savings or investing his other assets. Loans from relatives and friends sometimes supplement his initial capital. Some of these loans are extended interest-free. External sources of funds are available if you know where to look. Organizations such as banks, venture capital corporations, and savings and loan associations make lending money their business. In addition, some government institutions provide credit to small start-up enterprises at subsidized interest rates and liberal terms. If you are looking for capital, you may first consider looking into your own resources and the loan offerings of possible creditors: Equity Capital is the amount of personal resources you - and possibly your partner put in, plus the portion of

the profits you plow back into the business.It also includes resources invested by other people into your company. Equity is a permanent part of your capital structure. As such, it does not have to be paid back. Nevertheless, as your company grows, you will need to put in more equity or permanent capital. The small businessman may exhaust his own personal resources to get more equity funds for the business. Personal life insurance policies or other properties of value may be used in times of urgency. Friends, relatives, or other members of the community may also be persuaded to invest in the business. Creditors Equity. If you require financing from outside sources, you can avail of the loan packages of financial institutions. These are: Short-term loans. These loans are short-term financial obligations, usually lasting less than a year and normally self-liquidating. They are used to buy things that will generate funds for repayment of the loan. Some short-term loans (clean loans) are issued on an unsecured basis, which means they are made without collateral, since the bank relies on your credit reputation. Individual money lenders. Friends or relatives extend loans in the spirit of pakikisama or camaraderie. There are also unlicensed money lenders but beware of those who charge usurious rates of interest, like the so-called "five-six operators". Non Government Organizations (NGOs). NGOs are fast becoming popular sources of credit. Through enterprise development projects implemented by private and government finance institutions, these NGOs act as intermediary agents in various lending programs. Lending packages are available depending on the specific target beneficiaries of the individual programs. Their interest rates are usually lower than what banks offer. A review of your feasibility study and a credit investigation are customarily conducted. Most programs offer character loans and require minimum equity participation with little or no collateral. The organization closely monitors and evaluates each business project. Beneficiaries of these PVOs are commonly micro and small entrepreneurs. Special Lending Programs. Public and private agenc ies are confident of the strength of small entrepreneurs, and have thus created programs that would uplift their status. Rules for Sound Financing A small businessman should know exactly what type of capital he needs and how he can obtain it at the best possible terms. If he borrows the capital, he must know exactly how to repay it. An entrepreneur must also know when to require financial expansion. The ideal debt-equity ratio of ones capital structure must be 40:60. This means that the debt or borr owed portion of the total capital should be contributed by the owners equity. A 40:60 ratio is considered ideal because it will allow the firm to acquire more credit in the future when it is ready to expand. Most banks and other financial institutions lend money only if the resulting debt-equity is 60:40 when the new (borrowed) money is infused into the business. Therefore, it makes sense to limit borrowing. Otherwise, one may be saddled with a heavy repayment burden. Fixed assets and working capital requirements during normal operations must be financed from long-term sources (one year or longer). These sources are the owner's equity and long-term loans or long-term liabilities. Short-term requirements, like additional working capital needed during peak seasons (Christmas, rainy season, school opening, etc.) should come from short-term sources, such as: trade credit (30 - 90 days); short-term bank loans (from two to three months); pawnshops (three months); and friends and relatives. How to Set Up Your Business

Choosing the Site/Location of Your Business Finding a site for your business is crucial. In the retail business, your sales potential depends on your location. Like a tree, a store draws its nourishment from the area around it. A storeowner is already half-successful if he sets up shop in a good place. You must also be able to recognize factors in some sites that are detrimental to your business. Among these are: smoke, dust, disagreeable odors and noises, proximity to garages, hospitals, drinking places and similar establishments, poor sidewalks, and old, run-down buildings. Some guidelines to help you find a good location: a. Know the population of the trading area. Is the neighborhood starting to be run down? Is the population moving away? Or is it new and on the way up? Determine the purchasing power of the population. Do they own cars? Big, affluent homes? b. Study the competition - How many stores look prosperous in the area? How many look as though they are barely getting by? How many similar stores went out of business in this area last year? How many new stores opened last year? What price line does competition carry? Pinpoint which stores will be your greatest competitors. If you intend to put up a variety store, you may find it profitable to locate your store adjacent to that of your competitors because the combined appeal of two or more similar stores creates greater customer traffic. c. Study the location's accessibility See if the location is accessible to your customers, employees and of course, to you. Ask yourself the following questions: How close is the store to jeepney and bus, and other transport facilities? Are there adequate parking spaces near the store? Are the sidewalks in good repair? Is the street lighting good? Registering Your Business A new small enterprise has to be registered in various government agencies. The complexity of registration varies according to the legal form of the business. A single proprietorship is the easiest to register, while a corporation requires more elaborate procedures. Registering with the Department of Trade and Industry (DTI) The DTI-NCR administers the registration of business names. If you are a single proprietor and your business is using a name other than your own name, that business name should be registered. Business name registration with the DTI is optional for partnerships and corporations. By registering your business name with the DTI, you are assured that no other entity may legally use your business name anywhere in the Philippines. Register your Business Name at: Department of Trade and Industry - NCR Ground floor, DTI Main Building 361 Sen. Gil Puyat Ave., Makati City or at designated Satellite Registration Centers in selected cities in Metro Manila Tel. No. 890-4854 Steps: 1. Obtain application forms (duplicate copy), preferred name slip, and index card from the Information Desk and fill these up completely. Only the owner of the business is authorized to sign all the forms. 2. Meet the following requirements (For Single Proprietorship): Must be a Filipino citizen, at least 18 years old. Filipinos with names

suggestive of alien nationality must submit proof of citizenship such as birth certificate, PRC ID, voter's ID, passport. If the applicant has acquired Filipino citizenship by naturalization, election, or by other means provided by law, he must submit proof of his Filipino citizenship such as I) naturalization certificate and oath of allegiance; or II) card issued by the Bureau of Immigration and Deportation and affidavit of election or ID card issued by the Bureau of Immigration and Deportation. Must provide two recent passport-size pictures Certain types of business may have other requirements: Service and repair shops Real estate brokers Dental/medical clinic/hospitals Pawnshops Manpower services Engineering services Architectural services Other related services provided by professionals 3. Proceed to the designated window for evaluation 4. Pay required fees at the cashier Registration and Processing Fee Single - P300 Corporation/Partnership/Cooperative - P500 A penalty of P100 is imposed if the BNRS certificate is not renewed before within the 3-month grace period from the certificates expiration date 5. Get priority number 6. Proceed to the waiting area and wait for your number to be called by the examiners at Windows 1-10 7. Business Name Certificate is released within 10-15 minutes upon approval Registering with the Securities and Exchange Commission (SEC) The SEC is the government agency that gives the business enterprise its legal personality. Only partnerships and corporations need to be registered with the SEC. Single proprietorships need not register. Register your business at: Securities and Exchange Commission SEC Bldg., EDSA, Greenhills, Mandaluyong City Tel. No. 726-0931 Basic Requirements of a Partnership 1. Name Verification Slip 2. Articles of Partnership 3. Undertaking to Change Name 4. Registration Data Sheet 5. If it is a Limited Partnership, the word "Limited" is added to the name. Articles of limited partnership should always be under oath only (JURAT) and not acknowledged by the partners before a notary public 6. Partnerships need clearance from concerned government agencies Additional Requirements for a Partnership 1. License of custom brokers for custom brokerage. 2. For foreign partnerships: - Foreign Investment Agent Application Form

- Proof of Inward Remittance of non-resident alien partner or affidavit manifesting intention not to register investment with the Bangko Sentral ng Pilipinas - If the document was signed abroad, it must be authenticated by the Philippine Consular Office in the country it was executed Registration Procedures: 1. Secure name verification slip from the Records Division 2. Proceed to Cashier for payment of filing fee 3. Submit documents to the Receiving Unit of the Records Section 4. The documents are then forwarded to the Company Registration and Monitoring Department (CRMD) and assigned to processors 5. Typing pool prepares Certificate of Registration and returns to a processor (or a lawyer) and Assistant Director for initials 6. Director of the CRMD signs the Certificate of Partnership 7. The certificate of registration is forwarded to the Releasing Unit of the Records Division (ground floor), where it may be claimed by the applicant upon presentation of receipt as proof of payment of the filing fee Notes: 1. Applications of domestic corporations (stock) where subscribed capital stock are paid in cash are forwarded by the Records Division directly to the Company Registration and Pre-Need Department (CRPD). 2. Verified name is deemed unofficial unless approved by the Commission, i.e., after issuance of the certificate of incorporation 3. For businesses involving pre-need plans and commodity futures, clearance of the proposed corporate name from the Pre-need Department and Market Regulation department is required before verification of the name with the Records Division at the SEC Annex Bldg. 4. The application for registration of non-stock corporations is processed solely by the CRPD. Application under the Foreign Investment Act of 1991 or those with more than 40% foreign equity are processed first by CRMD before payment of filing fee. Registering with the Social Security System (SSS) An employer, or any person who uses the services of another person in business, trade, industry or any undertaking must be registered with the SSS. Social, civic, professional, charitable and other non-profit organizations, which hire the services of employees, are considered "employers." Register at: Social Security System (SSS) SSS Bldg., East Avenue, Diliman, Quezon City Tel. Nos. 920-6401, 920-6446 Email: sssemail@info.com.ph Single Proprietorships An owner of a single proprietorship business may accomplish and submit SSS Forms R-1 (Employer's Data Record) and R-1A (Initial or Subsequent List of Employees). Partnerships Any of the partners of a partnership firm should accomplish SSS Forms R-1 and R-1A and submit these forms together with a photocopy of the Articles of Partnership. The original copy of the Articles of Partnership must be presented for authentication. Corporations

A corporation must accomplish SSS Forms R-1 and R-1A signed by its president or any of the corporate officers or incorporators. Submit these forms together with the photocopy of the Articles of Incorporation. The original copy of the Articles of Incorporation must be presented to the SSS for authentication. Registering with the Cooperative Development Authority (CDA) All cooperatives are required to register with the CDA as per Republic Act 6938/6939. Register at: Cooperative Development Authority 6F Benlor Bldg., 1184 Quezon Ave., Quezon City Tel. No. 373-6896 Steps: 1. Submit four copies of the Articles of Cooperation 2. Submit four copies of the By-Laws 3. Submit four copies of the Economic Survey (feasibility study) 4. Submit Bond Accountable Officers (Fidelity, Cash, or Surety) 5. Capitalization not lower than P2,000 (depending on the activities registered) 6. Minimum members of at least 15 Registering with the Bureau of Internal Revenue (BIR) Every business enterprise has to register with the BIR for taxation purposes. Below are the steps to follow: 1. Secure a permanent record file number of Tax Identification Number (TIN) from the BIR National Office in Diliman, Quezon City 2. Register the business/trade name at the BIR office nearest you. Secure and file an application form, together with supporting papers, as follows: - Mayors permit - Certificate of Business Name Registration from the DTI - Articles of Partnership or Corporation - Residence Certificate 3. Secure authority to print books of account, invoices, receipts, and other accounting records by filling up four copies of an application form. Attach four draft copies of the material to be printed as well as a copy of the job order. 4. Register book of accounts, invoices, receipts, etc. Registering with the Department of Labor and Employment (DOLE) Business establishments with five or more employees are encouraged to register with DOLE, the agency which monitors compliance with labor laws. Registration is mandatory for firms which employ 50 or more workers. The Bureau of Local Employment administers the registration of establishments. To register, secure and fill up a registration form. Corporations are required to attach a photostat copy of the SEC Certificate of Registration. Registering with the Local Government All businesses, whatever the legal form, are required to secure a mayor's permit or municipal license from the municipality or city where they are located. Various cities and municipalities have different registration procedures, but the following steps prescribed in Quezon City would be typical: 1. Go to the Business Permit and Licensing Office of Quezon City Hall. Secure an application form from the Public Assistance Office

2. Submit three copies of the form together with a simple sketch of your business location Support application with a Certificate of Business Name Registration from the DTI-NCR if you are using a firm name A partnership or corporation must submit the corresponding Articles of Partnership or Incorporation duly registered with the SEC together with a photostat copy of the Certificate of Registration with the SEC and the current class "C" certificate in the case of corporations 3. Proceed to the City Treasurers Office for any payments to be made. Present Mayor's Permit for issuance of municipal licenses Business establishments are required to exhibit the mayor's permit conspicuously in the business establishment. Registering with Other Agencies Depending on the type of products they manufacture or handle and on their market orientation, certain firms are required by law to register with other government agencies: Bureau of Food and Drugs (BFAD) Philinvest Corporate Center, Alabang, Muntinlupa Tel. No. 807-0721/ Fax No. 807-0751 Email: Bfad@doh.gov.ph Garments and Textile Export Board (GTEB) 4/F, New Solid Bldg., 357 Sen. Gil Puyat Ave. Makati City Tel No. 890-4810/ Fax No. 890-4653 Email: Gteb@dti.gov.ph National Food Authority - Regulatory Division 10th flr., Matimyas Building, E. Rodriguez Sr., Quezon City Tel. 712-1719 / 712-1705 Fiber Industry Development Authority Asiatrust Bank, Annex Bldg., 1424 Quezon Avenue, Quezon City Tel. 373-7489 / 373-9241 Bureau of Fisheries and Aquatic Resources (BFAR) Arcadia Building, Quezon Avenue, Quezon City Tel. 372-5057 / 373-7452 Bureau of Animal Industry (BAI) Visayas Avenue, Quezon City Tel. 927-0971 / 926-8814 Bureau of Plant Industry (BPI) San Andres, Malate, Manila Tel. 525-7857 / 524-0768 Bureau of Forest Development FMB Building, Visayas Avenue, Diliman, Quezon City Tel. 927-4788 / 925-2138 National Tobacco Administration NTA Bldg., Panay Ave., cor. Sct. Reyes St. Quezon City Tel. No. 374-3987/ 374-2505 DTI- Bureau of Product Standards (BPS)

3/F, Trade and Industry Bldg., 361 Sen. Gil Puyat Ave., Makati City Tel. No. 890-4965/ 890-4924 Fax No. 890-5131 Email: bps@dti.dti.gov.ph National Subcontractors Exchange (SUBCONEX) DTI NCR 12/F, Trafalgar Plaza, 105 H.V. dela Costa St. Salcedo Village, Makati City Tel. No. 811-8231 to 33 Email: ncr@dti.dti.gov.ph Intellectual Property Office (IPO) IPO Bldg., 351 Sen. Gil Puyat Ave. Makati City Tel./Fax No. 890-4862; 890-4942 Email: ipo@edsamail.com DTI - Bureau of Trade Regulation and Consumer Protection (BTRCP) 2/F, Trade and Industry Bldg., 361 Sen. Gil Puyat Ave. Makati City Tel. No. 896-5785; Fax. No. 890-4949 Email: btrcp@dti.dti.gov.ph