(This is an abridged version of an article that first appeared in the recent Entrepreneur bookazine, "The Ultimate Guide to Starting Your Own Business".)

Having a business plan is also an ideal way to start a business, for it means you're not leav­ing anything to chance, and it would also in­crease the odds of you landing an investor or a lender, who always looks at this document to see how viable it would be in the long run.

In your business plan, you will be mapping out your company's direction, brand values, iden­tity, and more important, how it will operate to give it a good fighting chance of succeeding against its more entrenched rivals. And with a realistic and well thought out business plan in your arsenal, along with an inspiring vision statement, a catchy business name, and a good location, half the battle is already won.

Naming a company

Before you sit down to write your busi­ness plan, you have to choose a suitable name for the company you're going to put up. This is the name you will constantly be referring to when you begin piecing your busi­ness plan together. Aside from your company name, you may also find the need to come up with a separate name for your product, which will be your brand name.

How do businesses get their names? There are as many ways of naming a business as there are a myriad reasons for putting one up. It is not uncommon to hear entrepreneurs nam­ing their companies after their surnames, their children's first names, or those of other close relatives.

Indeed, select­ing the right name for your new busi­ness, according to the Department of Trade and Industry, is "extremely im­portant because it distinguishes your products and services from those of your competitors, and helps to establish your identity in the marketplace." Under the Business Name Law, new businesses must register their identity with the DTI.

And the name you choose should describe the nature of your business. You cannot use business names that are identical with those already registered with the DTI or with oth­er government agencies such as the Securi­ties and Exchange Commission, and the De­partment of Labor and Employment.

Also not acceptable to the DTI are business names "which are or whose nature of business is ille­gal, offensive, scandalous, or contrary to propri­ety; names composed of purely generic words; names which by law or regulation cannot be appropriated; names or styles used by the gov­ernment in its governmental functions."

Making a business plan

Once you've decided on an appropriate name for your company and brand, it is time to draw up a business plan. Don't let the act of putting everything on paper intim­idate you. For all the technical terms you will encounter, what you will create is essentially a road map that will guide you in your pursuit of your dream business. You will be outlining cer­tain strategies and objectives, list down resources, including capital and fixed assets, and iden­tifying the best methods for your company to become viable and generate your desired prof­its.

Business plan format

Business plans can vary significantly in shape and form, although there are a few common elements you must not omit: a vision statement; a profile of your business, your products and key people; a de­scription of the economic environment and how you intend to steer your op­erations through possible turbulence; a marketing plan and eval­uation of competition; and a budget, including a cash flow assessment

Here are some useful guides to preparing the different sections of your business plan:

1. The Mission Statement

 A brief statement of the purpose of your business and its goals, including the business concept you plan to adopt. Try to keep the goals realistic so as not to put the document under a cloud of doubt with the reader, who could be a potential investor or lender.

2. Executive Summary

 A concise brief of the plan's crucial contents. This section encapsulates your entire business plan and is designed for people who may not have the time to go over the entire document, but are most likely the ones who should be informed about business. The executive summary is usually written last, after the entire document is completed.

3. The Business and Its Management Team

A clear and complete description of the business you intend to set up and how you plan to go about it. It is important to state the rationale behind the business's establishment, along with a listing of key people who will invest in or manage the business and a brief look at their prior experiences, educational attainment, leadership skills, and personal resources.

 The section's objective is to convince the reader that your management team is capable of leading the business and steer it towards your profit goals. If there is any particular management strategy that you plan to adopt, it will be good to state it in this section, along with identifiable results using this strategy.

 Include in this section an overview of the general economic environment in which the business will operate, along with an explanation of how the management team plans to perform under these conditions. Needless to say, economic indicators will be needed for an accurate depiction of this overview. These data can also be referred to in the other sections of the business plan.

4. The Product and the Marketing Plan

 This is where you will discuss your product as the main source of revenues for your business. Does your product have any unique characteristic? How big is its potential market, and how much of that potential market can you attract over a certain period? Cite your sources of raw materials and other inputs, and make an assessment of the availability of these materials in a given time.

In describing your market, provide a detailed description of your potential customers, such as their demographic profiles, which should come with recent trends in their consumption patterns that may have an impact on your products. When you make your sales projections, avoid making overly optimistic forecasts. Keep in mind that any perception of economic or political uncertainties are likely to influence consumer decisions, so try to factor in such possibilities.

5. The Financial Strategy

 For some people, this is what the business is all about - making profits. This section, which may attract the most interest from your readers, summarizes the flow of money into and out of the business, coming up with either a profit or loss for a particular period.

Finance people will take a deeper look at these numbers, specifically analyzing performance ratios (profit against revenue, profit against assets, and profit against capital invested into the business, among others). Your accountant can prepare this section for you.

The cash flow portion of your financial reports will also generate a lot of attention. Essentially, a cash flow analysis will show how efficient the management has been in making use of the cash that flows into the business. Most new businesses, however, tend to end accounting periods with deficits. How this will be brought into the positive column is an important point that the business plan should reflect. It may be useful to provide for contingencies for additional cash that can be plugged in by either your investors or your lenders.

For the operations, you will need to present a detailed budget, where all your departments' projected expenditures are reflected. The budget is an important guide when you try to raise revenues or when making capital investments. Usually the budget is broken down into monthly expenses to allow management to get a better grip of the business's activities, including problems that may arise from unexpected slumps in sales revenues.

(The original article of this abridged version was authored by Entrepreneur magazine editor in chief Jose M. Galang. Readers who want to get a copy of "The Ultimate Guide to Starting Your Own Business" may go to Filbar's magazine stands or call up our Circulation Department at 451-8888 local 1094.)