WRITING A BUSINESS PLAN Below is the outline of a business plan: I. II.

EXECUTIVE SUMMARY MARKETING PLAN

Industry Analysis Meat processing has become a very important segment of the Philippine economy as the population grew to a base of more than 84 million consumers. The industry now contributes over P70 billion to the gross domestic product annually, provides 60,000 direct and indirect jobs, and supports allied businesses such as packaging, canning, advertising, printing, media, retail trade, among others. The Philippines Association of Meat Processors Inc. (PAMPI) was impressed by the performance of domestic meat processors as the processed meat sector appears to be performing well despite the global downturn. Determined to compete with imports from neighboring countries, local meat processors have intensified efforts and race to add value to their products. According to the Paris-based Office International des Epizooties, theres a bright prospects for the Philippines to become a production hub for high-quality processed meat products due to the foot and mouth disease-free status of most parts of the country. According to NMIS meat processing is just a small portion of the processed food industry in the Philippines, and is concentrated mainly in two regions: Region 3 and Region 10. Available data from the two regions major industry associations identifies the major meat processors in the Philippines. Region 3, specifically Pampanga, is home to the largest local meat processors, whose facilities are comparable with processed meat giants, such as Purefoods. These companies are GMP, GOP, and HACCP compliant. Of the 39 NMIS-accredited meat processors in Region 3 as of January 2010, a total of 27 (69 percent) are located in the province of Pampanga. Three of these have advanced facilities and have been given the AAA classification1, making them eligible for export operation, although only one of them (Pampangas Best) has recently ventured into exports. The triple-A classification also requires GMP, GOP, and HACCP certification, which all three processors have (Table 1). The processed meat industry in Region 3 is considered highly significant. Industry stakeholders acknowledge the importance of this sector in providing cash flow and employment to numerous residents within and around the region.

A accredited meat processing plants are authorized by the National Meat Inspection Service (NMIS) to sell processed meat only at the city, municipal or provincial level. AA accredited meat processing plants are allowed to market their processed pork both at the local and national levels, while AAA accredited meat processing plants are allowed to sell their processed pork in both the domestic and international market.

Table 1. NMIS-Accredited, GMP/GOP-Certified Meat Processing Plants in Pampanga Meat Processor 957 Foods Corporation AMC Food Products Arbees Food Products Atus Meat Products Betis Best Meat Products, Inc. Brettos International Food Corp. Country Ham & Sausage Factory Ghee & Rica Food Products Gourmets Delights Food Products Kims Toll Packaging Services (Ariels Meat Products) Len Meat Products Malows Meat Products Mama Mia Meat Products Mekeni Food Corporation Merle O. Ramos Enterprise Minettes Meat Products Mother Earth Products, Inc. Nadeco Mei Food NAN Foods Corp. National Agribusiness Corporation (AgriFreeze) Odessa Foods Pampangas Best, Inc. Roels Food Corporation Romac Industries, Inc. S.G. Farms Food Processing Titas Special Toprind Enterprises, Inc. Source: DA-NMIS Location San Fernando City Magalang, Pampanga San Fernando City Apalit, Pampanga San Fernando City Angeles City Angeles City Angeles City San Fernando City Angeles City Angeles City Guagua, Pampanga Magalang, Pampanga Porac, Pampanga San Fernando City Angeles City Mabalacat, Pampanga Angeles City San Fernando City CSEZ, Pampanga Mabalacat, Pampanga San Fernando City Mabalacat, Pampanga San Simon, Pampanga San Fernando City San Fernando City San Fernando City Class AA AA AA AA AA AA AA AA AA AA AA AA AA AAA AA AA AA AA AA AAA AA AAA AA AA AA AA AA GMP/GOP GMP/GOP GMP/GOP GMP/SOP/HAC CP GMP/GOP GMP/GOP GMP/GOP GMP/GOP GMP/GOP GMP/GOP/HAC CP GMP/GOP GMP/GOP/HAC CP GMP/GOP GMP/GOP GMP/GOP GMP/GOP GMP/GOP Certification GMP/GOP GMP/GOP GMP/GOP

GMP/GOP

Majority of the meat processors focuses on pork, chicken and beef. Only few companies venture on offering aquatic meat products in processed form (except canned products) and other sources of red meat such as chevon or goat. Also innovative food products such powder flavoring for native Filipino delicacies such as papaitan, nutritious mushroom burgers, tilapia fish nuggets will stir the public interest and curiosity. With the increasing interest of the public to try innovative food products and growing awareness to consume only healthy and beneficial foods, the race in the production of healthy, almost chemical free, innovative and organic food products will eventually result in a rewarding return of investments. With these as the driving perspective, the introduction of new innovative processed meat product is envisioned to propel the proposed Meat and Fish Processing Business Project to sustainable income generating activity. Market Analysis According to Business Monitor Online, the Philippine economy has been less affected by the global crisis than expected, having escaped a full-blown recession. Domestic meat consumption marginally declined, with demand for more expensive red meat the main casualty. However, supply has continued to grow, owing mainly to the growth of domestic processing, which has become a particularly profitable retail venture. The acquisition of modern machinery and use of improved production techniques has enabled retailers to market a broad value range of manufactured meat products to meet the needs of various consumer segments. At the lower price end, products such as corned beef and hot dogs are increasingly popular and affordable, implying a relatively stable demand for livestock regardless of the macroeconomic climate.
Table 2. Sales of Frozen Processed Red Meat, Philippines, 2004-2007

(In US$ 000,000, retail value) 2004 2005 2006 Bacon 32.7 35.5 40.8 Hamburgers 14.7 13.7 14.3 Hot dogs 94.9 107.4 121.3 Pork sausages 11.5 15.5 18.4 Salami 2 Others 9.8 10 7.1 Total 163.7 182.1 203.9 Source: Packaged Food: Euromonitor from trade sources/national statistics Meat Product Year 2007 43.2 18.2 136.4 20.5 3.4 5.7 227.4

Small industry players generally sell their products in the wet markets and nearby provinces. The bigger players utilize distributors and dealers, and normally sell their products through their own outlets or in supermarkets. According to an officer of Mekeni, one of the large meat processors in Pampanga, approximately 25 tons of meat products are sold every day. The typical breakdown of sales for a medium-sized meat processor is: distributors, 30-50 percent; dealers/hotels/caterers, 20-35 percent; outlets, 10 percent; and supermarkets, 15-30 percent.

The market of processed meat need not be expounded a lot. It is already considered a daily part of a normal diet of almost every Filipino household. With the boom of low cost franchises of various street foods, the demand had increased steadily. Analysis and observation of the local movement of processed meat products shows that retailers propel and feed the industry by bringing the product to remote communities via sarisari store scheme. Though considered as units of small purchasing capability, the sari-sari stores once tapped for the retailing of food products are very good starting points for market penetration. Competitive Analysis

The Department of Agriculture (DA) has identified several measures it believes would further propel the industry forward, and support the industrys aim of enhancing its capacity to produce quality products at improved levels of efficiency. Unfortunately, processing capabilities are less of a problem compared to domestic livestock farming, which may ultimately prove to be the biggest constraint to the progress of the processed meat sector. In spite of the fact that Region 3 is among the largest producers of livestock and poultry in the country, most of the raw materials required by the meat processors of Pampanga are imported. Table 3. Sources of raw materials Raw Material Beef Pork Buffalo meat Chicken Sugar Salt Spices Source Brazil, Australia, India, Australia Within the province, within the region, Luzon, Visayas, Mindanao, USA, Canada, France India Within the province, within the region, Luzon, USA, Canada Within the province, within the region, Luzon China Various countries

Resolving the issue will include the introduction of new innovative product in the market using locally produced commodity usually considered and sold fresh to serve as replacement or substitute such as tilapia for nuggets and mushroom for burger patties. The competitive advantages of the proposed business are listed as follows:

Table 4. Competitive Analysis Current Trend Too much chemical extenders and preservatives Mostly pork, chicken and beef Wet market processed meats such as longganisa and embutido in open and hanged casings Not much ready-to-eat/cook or instant recipe Proposed Innovation Use of organic extenders and if possible organic preservatives. Meatier product Will include chevon, veggies and fish meats Improve packaging complying with the standard quality requirement and extend product shelf-life Introduce popular recipe in instant or ready-to-cook form

In terms of market penetration, the venture will the expected entry barrier due to the presence of numerous medium and small industry players

Product Feature Pricing Strategy Distribution Channel Advertising and Promotional Activities III. ORGANIZATION AND MANAGEMENT PLAN Ownership Structure of the Business Organizational Structure Job Description and Job Specification Personnel Compensation and Fringe Benefits PRODUCTION/TECHNICAL PLAN Production Process Facilities and Equipment Raw Materials and Other Key Inputs Waste Disposal System FINANCIAL PLAN Total Project Cost Sources of Funds Projected Financial Statements Projected Income Statement Projected Cash Flow Statement Projected Balance Sheet Benefit and Cost Analysis SOCIO-ECONOMIC ASPECT

IV.

V.

VI.

VII.

APPENDICES AND EXHIBITS

The following is the brief explanation for each subtopic: I. EXECUTIVE SUMMARY This is the first part of the business plan but it is written last because summary of the key elements are discussed here. This could be two to three pages. The executive summary includes: Business name Business proponent Product Target market Short description of operation Budget requirement Sources of funds Measures of investment worth (such as ROI, IRR, NPW)

The purpose of this part is to persuade your reader that your business idea is financially viable. II. MARKETING PLAN Industry Analysis Meat processing has become a very important segment of the Philippine economy as the population grew to a base of more than 84 million consumers. The industry now contributes over P70 billion to the gross domestic product annually, provides 60,000 direct and indirect jobs, and supports allied businesses such as packaging, canning, advertising, printing, media, retail trade, among others. Theres a bright prospects for the Philippines to become a production hub for high-quality processed meat products, as the Paris-based Office International des Epizooties recognizes the foot and mouth disease-free status of most parts of the country.

Discuss here the overview of the industry sector that your business will be a part of, including industry trends, major players in the industry, and estimated industry sales. This section of the business plan will also include a summary of your business's place within the industry. You can organize your discussion into two parts; overview of the industry and summary of your business position within the industry. Write this section in several short paragraphs.

The overview of the industry might include (choose only what is applicable in your proposed business): What is the size of your industry? What sectors does this industry include? Who are the major players in this industry? What are the markets and customers for this industry? What are the industry's estimated sales this year? Last year? The year before? What national/economic trends have affected this industry and how? What national/economic trends might affect it in the future and how? What is the long-term outlook for this industry? Included in the summary of your business position are (choose only what is applicable in your proposed business): What products will your business be selling? What is your Unique Selling Proposition? (What is it about your business that makes it unique and sets it apart from competitors?) What are the barriers to entry in your industry? How will you overcome these barriers? Who are your competitors? What is the market share of your competitors? What is your business' competitive advantage (i.e. your market niche or estimated market share)? What is your target market? How are you protecting your product or process (i.e. patents, copyrights, trademarks, franchise rights that you either hold or plan to acquire)?

Market Analysis The focus of this section is a thorough examination of your target market, those people that you intend to sell your product/sincluding their geographic location, demographics, your target market's needs and how these needs are being met currently. Some of the information that you can include in describing your target market are (include only what are applicable): How old are they? What gender are they? Where do they live? What is their family structure (number of children, extended family, etc.)? What is their income? What do they do for a living? What is their lifestyle like? How do they like to spend their spare time? What motivates them? What is the size of your target market?

Competitive Analysis

An investigation of your direct (those offering the same product as yours) and indirect competitors (those offering substitute or related to your product), with an assessment of their competitive advantage and an analysis of how you will overcome any entry barriers to your chosen market. You can discuss the brands or products offered by your competitors, their strategies with regards to pricing, distribution, promotion, and advertisement. Product Feature Discuss your product by describing its physical attributes, its distinctive features, and how it differs with the existing products of your competitors. Describe also how your product will benefit your target customers. Pricing Strategy In here, determine how you will price your product. Take note that the price you charge has to be competitive but still allow you to make a reasonable profit. Tell the basis of your price determination. Basically you set your pricing through a process of calculating your costs, estimating the benefits to consumers, and comparing your product and its price to your competitors. Distribution Channel Discuss how you will distribute your product whether you will do direct selling or you will tap middlemen. Advertising and Promotional Activities Describehow you are going to introduce your product to your prospective customers. What will you use to advertise your product? Are you going to use:

the Internet television radio newspapers magazines telephone books/directories billboards cooperative advertising with wholesalers, retailers or other businesses? Do you want to use promotional activities such as:

offering free samples coupons point of purchase displays product demonstrations

III.

ORGANIZATION AND MANAGEMENT PLAN

When writing the business plan, this section describes your management team and staff and how your business ownership is structured. People reading your business plan will be looking to see not only who is on your management team but how the skills of your management and staff will contribute to the bottom line. Ownership Structure of the Business Specify the type of organization to be adopted by your business (whether sole proprietorship, partnership, corporation, cooperative etc.) Organizational Structure Discuss your organizational structure including the required manpower in operating your business. Job Description and Job Specification Describe the positions you included in your organizational structure. Present also the duties and responsibilities and the required qualifications for each position. Personnel Compensation and Fringe Benefits Indicate the salary or wage rates including your fringe benefits that you will provide to your employees. IV. PRODUCTION/TECHNICAL PLAN Production Process Discuss the step by step procedure on how you are going to produce your product. Facilities and Equipment Specify the different facilities and equipment that you will use including the costs.

Raw Materials and Other Key Inputs Discuss what are the different raw materials or inputs that you will need and the prospective suppliers. Indicate also where willyou get your utilities like water, electricity, fuel, etc. Waste Disposal System How will you manage and dispose all your wastes from operating your business.

V.

FINANCIAL PLAN

A description of your funding requirements, your detailed financial statements, and a financial statement analysis are discussed here. This section determines whether your proposed business is viable. Total Project Cost Present the itemized estimated project cost which includes: a) Initial Capital Outlay/Fixed Asset Investment (if there is) b) Pre-Operating Capital c) Operating Capital d) Contingencies The pre-operating expenses might include: business registration fees business licensing and permits starting inventory rent deposits down payments on property down payments on equipment utility set up fees

Operating expenses are the costs of keeping your business running. Your list of operating expenses may include:

salaries (yours and staff salaries) rent or mortage payments telecommunications utilities raw materials storage distribution promotion loan payments office supplies maintenance

Sources of Funds Write here where will you get your fund whether personal money, loan, or grant. For loans, the proposed financing scheme must be provided like grace period, repayment terms, interest rate, etc.) Projected Financial Statements

Compute your 5-year Projected Income Statement, Cash Flow Statement, and Balance Sheet. (You must have a list of financial assumptions that will be used here.) Benefit and Cost Analysis Based from your financial statements, present here the summary of your Benefit and Costs including the measures of project worth (Net Present Worth, Internal Rate of Return, Payback Period) and financial performance indicators like ROI, Net Profit Margin. VI. SOCIO-ECONOMIC ASPECT Give the expected socio-economic contributions of your business to the environment, community, or society as a whole (it could be employment generation, health and sanitation, environmental protection, peace and order, poverty alleviation) VII. APPENDICES AND EXHIBITS (if there is)

Any additional information that will help establish the credibility of your business idea, such as marketing studies, photographs of your product, and/or contracts or other legal agreements pertinent to your business.