BUSINESS PLAN WORKBOOK
TECHNICAL PLAN 16. Think of the different activities in your business
• If you are into manufacturing, list down and describe the step-by-step manufacturing process, from procurement of raw materials up to the point of delivery.
• If you are into trading, list down and describe the different activities, from procurement of merchandise up to the point of sale, of your business.
• If you are a service provider, list down and describe the different activities involved in servicing a client.
Step 1
DESCRIPTION
17. Based on your description in the preceding question, draw your process flow diagram on the space provided. Use the symbols at the bottom of the page. Refer to Chapter 7.
Operation
Transport
Inspection Storage
Delay
17. Based on your description in the preceding question, draw your process flow diagram on the space provided. Use the symbols at the bottom of the page. Refer to Chapter 7.
Operation
Transport
Inspection Storage
Delay
18. Property, plant, and equipment. What assets do you need for your business? How much does each one cost? How many units do you need for each type of machine/equipment/furniture/ fixture/vehicle? Compute for your annual depreciation charges. (Note: Be careful. The total annual depreciation charges in the 1st year may not be the same as that in the 3rd year – if some of the fixed assets are fully depreciated by the 2nd year.)
TABLE 4
Fixed Investment and Depreciation Schedule
Annual Depreciation Charges Acquisition
Cost Qty. Total Cost
Life Span
(in years) Year
1 Year
2 Year
3
Land --- --- --- ---
Building
Building improvements Machines/eqpt./tools
Total Machines/eqpt/tools
TABLE 4
Fixed Investment and Depreciation Schedule
Annual Depreciation Charges Acquisition
Cost Qty. Total Cost
Life Span
(in years) Year
1 Year
2 Year
3
Furniture and fixtures --- --- --- ---
Total furniture & fixtures Office equipment
Total office equipment Vehicle
Total vehicles GRAND TOTAL
TABLE 4
Fixed Investment and Depreciation Schedule
Annual Depreciation Charges Acquisition
Cost Qty. Total Cost
Life Span
(in years) Year
1 Year
2 Year
3
Furniture and fixtures --- --- --- ---
Total furniture & fixtures Office equipment
Total office equipment Vehicle
Total vehicles GRAND TOTAL
19. Design your layout on the space provided below.
• For wannabe manufacturers: How will you arrange your machines and work areas in relation to one another? How much space (include storage areas) will you need? Draw your plant layout.
• For wannabe traders: Draw the layout of your selling area. Where will you locate your different merchandise? How much space, inclusive of your storage area, will you need?
• For wannabe service providers: Draw the layout of your work area. How much space, inclusive of your reception and storage areas, will you need?
20. How will you dispose of your business’ waste? Can you sell them? Can you recycle
them? Will you need to spend for their disposal? How much?
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Manufacturers, traders and service providers please take note of the questions that you need to answer.
• For wannabe manufacturers, answer questions 21 to 35. When you’re done proceed to your organizational plan on page 38.
• For wannabe traders, answer questions 30, 31, 36 & 37. When you’re done proceed to page 38.
• For wannabe service providers, answer questions 30, 31, 38 to 40. When done proceed to page 38.
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21. It’s time to come up with your production schedule. Aside from your projected sales volume, you may want to keep a few units in your finished goods (F.G.) inventory to meet unexpected demand. How many units would you like to keep in your ending F.G.
inventory at the end of the period? Keep in mind that your beginning inventory account for subsequent periods is your previous year’s ending inventory figure.
If you manufacture only one product line, fill in Table 5-A. If you have several product lines move on to the next page.
TABLE 5-A
Production Schedule for a Single Product Line Business
Year 1 Year 2 Year 3
Planned sales volume, in units (from Table 1)
Add: Desired Ending F.G. inventory, in units
Less: Beginning F.G. inventory, in units 0 Units to be produced
For you multi-product line manufacturers, here is how you fill in Table 5-B:
1. You get the information for columns A and B from Schedule 1-B.
2. Decide on how many units of finished goods for each product line (column C) you want to keep in F.G. inventory.
3. Compute for Column E. (Column E = Column B + Column C – Column D) 4. Leave Columns F and G for the moment. We’ll return to them shortly.
Do the same thing for Years 2 and 3. Copy Table 5-B in a separate sheet of paper. Be sure you have the right figures in column D. Remember your beginning inventory is the previous period’s ending inventory. Be sure to staple your schedules for the succeeding years to the next page so that you don’t lose them.
Manufacturers, traders and service providers please take note of the questions that you need to answer.
• For wannabe manufacturers, answer questions 21 to 35. When you’re done proceed to your organizational plan on page 38.
• For wannabe traders, answer questions 30, 31, 36 & 37. When you’re done proceed to page 38.
• For wannabe service providers, answer questions 30, 31, 38 to 40. When done proceed to page 38.
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21. It’s time to come up with your production schedule. Aside from your projected sales volume, you may want to keep a few units in your finished goods (F.G.) inventory to meet unexpected demand. How many units would you like to keep in your ending F.G.
inventory at the end of the period? Keep in mind that your beginning inventory account for subsequent periods is your previous year’s ending inventory figure.
If you manufacture only one product line, fill in Table 5-A. If you have several product lines move on to the next page.
TABLE 5-A
Production Schedule for a Single Product Line Business
Year 1 Year 2 Year 3
Planned sales volume, in units (from Table 1)
Add: Desired Ending F.G. inventory, in units
Less: Beginning F.G. inventory, in units 0 Units to be produced
For you multi-product line manufacturers, here is how you fill in Table 5-B:
1. You get the information for columns A and B from Schedule 1-B.
2. Decide on how many units of finished goods for each product line (column C) you want to keep in F.G. inventory.
3. Compute for Column E. (Column E = Column B + Column C – Column D) 4. Leave Columns F and G for the moment. We’ll return to them shortly.
Do the same thing for Years 2 and 3. Copy Table 5-B in a separate sheet of paper. Be sure you have the right figures in column D. Remember your beginning inventory is the previous period’s ending inventory. Be sure to staple your schedules for the succeeding years to the next page so that you don’t lose them.
TABLE 5-B
Production Schedule for a Multiple Product Line Business
Product
22. Direct raw material requirements. What direct raw materials do you need in the manufacture of your product(s)? Are you assured of a continuous supply of all your direct material requirements? Fill in the next schedule. For each type of direct material, how much do you need per unit of product you intend to produce?
Schedule 3-A
For you to determine the direct material cost that goes into each unit of your product, you will have to come up with a separate Schedule 3-A for each of your product lines. Staple them together and be sure that each schedule is properly labeled as to what type of product line you are referring to.
23. Do you expect prices of direct materials to increase in the next 3 years? By how much?
If you’re in a single product line business, complete Table 6-A to come up with direct
22. Direct raw material requirements. What direct raw materials do you need in the manufacture of your product(s)? Are you assured of a continuous supply of all your direct material requirements? Fill in the next schedule. For each type of direct material, how much do you need per unit of product you intend to produce?
Schedule 3-A
Direct Raw Material Requirements
PRODUCT: __________________________________
Direct material (A)
Purchase cost/
unit of material (B)
Quantity needed/unit to be produced
(C)
Cost/unit to be produced
(D)
e.g. milk P 55.00/liter 50 ml P 2.75
Direct material cost/unit
For you to determine the direct material cost that goes into each unit of your product, you will have to come up with a separate Schedule 3-A for each of your product lines. Staple them together and be sure that each schedule is properly labeled as to what type of product line you are referring to.
23. Do you expect prices of direct materials to increase in the next 3 years? By how much?
If you’re in a single product line business, complete Table 6-A to come up with direct
material costs for the next 3 years. Be sure to impute price increases in your direct material cost per unit for the succeeding years if you expect the cost of materials to go up.
TABLE 6-A
Direct Material Cost for a Single Product Line Business
Year 1 Year 2 Year 3 Units to be produced (from Table 5)
x Direct material cost/unit (Schedule 3-A)
Total direct material cost
If you have multiple product lines fill in Table 6-B. Get the data from the different schedules you made under question 22. (Schedule 3-A).
TABLE 6-B
Direct Raw Material Cost for a Multiple Product Line Business
Product Line (A)
Direct raw material cost/unit
to be produced (B)
No. of units to be produced
(C)
Direct raw material cost per
product line (D)
Total direct material cost (for Year 1) You will have to do the same thing over again for Years 2 and 3.
24. Go over your direct raw material schedule in question 22. Pick out the materials that you think you should keep in stock and fill in the next schedule.
Schedule 3-B
Direct Material Ending Inventory Schedule
Direct material Purchase cost/
unit of direct material
Quantity
to be kept in stock Cost of material in stock
e.g. short bond paper P 130.00/ream 10 reams P 1,300.00
Desired Ending Inventory of Direct Materials (for Year 1)
25. Do you expect prices of your direct materials to rise? By how much? Come up with a similar schedule as the one above for your 2nd and 3rd year of operations. When you’re done complete Table 7 to come up with your direct material purchases for the next 3 years. Be sure to impute price increases in your direct material inventory costs for the succeeding years if you expect cost of materials to go up. Again, your beginning inventory account for subsequent periods is your previous year’s ending inventory figure.
TABLE 7
Direct Material Purchases
Year 1 Year 2 Year 3
Total direct material cost
(from Table 6-A or 6-B)
Add: Desired direct materials ending inventory (from Schedule 3-B)
Less: Direct materials beginning inventory 0 Total direct material purchases
24. Go over your direct raw material schedule in question 22. Pick out the materials that you think you should keep in stock and fill in the next schedule.
Schedule 3-B
Direct Material Ending Inventory Schedule
Direct material Purchase cost/
unit of direct material
Quantity
to be kept in stock Cost of material in stock
e.g. short bond paper P 130.00/ream 10 reams P 1,300.00
Desired Ending Inventory of Direct Materials (for Year 1)
25. Do you expect prices of your direct materials to rise? By how much? Come up with a similar schedule as the one above for your 2nd and 3rd year of operations. When you’re done complete Table 7 to come up with your direct material purchases for the next 3 years. Be sure to impute price increases in your direct material inventory costs for the succeeding years if you expect cost of materials to go up. Again, your beginning inventory account for subsequent periods is your previous year’s ending inventory figure.
TABLE 7
Direct Material Purchases
Year 1 Year 2 Year 3
Total direct material cost
(from Table 6-A or 6-B)
Add: Desired direct materials ending inventory (from Schedule 3-B)
Less: Direct materials beginning inventory 0 Total direct material purchases
26. Indirect raw material requirements. Now you need to figure out your indirect material requirements. Where will you obtain them? Are you assured of a continuous supply of all your indirect material requirements? For each type of indirect material, how much do you need for the year? Fill in the following schedule.
Schedule 4-A
Indirect Material Requirement Indirect material Purchase cost/
unit Quantity
needed/year Cost/year