12

SHS Department of Education-Region III

TARLAC CITY SCHOOLS DIVISION
Juan Luna St., Sto. Cristo, Tarlac City 2300
Email address: [email protected]/ Tel. No. (045) 470 - 8180

ENTREPRENEURSHIP
Quarter 2: Week 4
Learning Activity Sheets
 ENTREPRENEURSHIP
GRADE 12

Name of Learner: ______________________________ Quarter 2 Week 4

Grade Level:_______________________ Date : ____________

4M’s of Operation Part IV

(Forecast Revenue of the Business)

Background Information
One of the most difficult part of the business plan is the financial plan. Not All
entrepreneurs are adept with accounting procedures, rules and reporting policies.
However, there is no choice for the entrepreneurs but to be familiar with numbers. The
sustainability of a business depends all to the meticulous monitoring of finances. This is
the portion of the business plan that speaks of the product or service performance.
Financial management begins when the entrepreneur starts to raise capital for the
business `venture. Capital is the money that will be allocated by entrepreneur to establish
a business. It shouldn't be mixed with the personal money of the entrepreneur. A business
is a separate entity and should not be mixed with the personal finances of the
entrepreneur.
Collateral refers to a high value asset that is submitted by the business to the bank
when applying for a loan and will be subject for a possession if the business defaults.
Regardless of where the capital was sourced, putting this capital at risk is one of the major
reasons that most entrepreneurs are afraid to engage in the business venture. But also,
those who take the risks gain the experience and use this experience to succeed. Not all
entrepreneurs became successful the first time they ventured into business. All of them
experience failures and use these failures to their advantage.
A business opportunity can only be considered a real one when the entrepreneur
recognizes the opportunity that may bring him or her revenue. Revenue is the output of a
sale where in the sales price exceeds the cost to produce the product or render the
service.
In this Learning Activity Sheet (LAS), we will be exploring with the different factors
affecting the revenue, the computation of revenue., income statement and the balance
sheet. You will be guided with the activities provided so you need to read and understand
the content carefully.

Factors affecting estimation of revenue

1. The economy and the external primary target market. Similar to finding business
opportunities estimating revenue is greatly affected by the entire economy and the
behavior of primary target market. The entrepreneur must be able to incorporate the
overall health of economy in its estimation of projected revenue. He or she needs to know
if the economy is either booming, stable or slow down. However, there will be times when
the overall economy is not a reflection of what the entrepreneurs primary target market is
experiencing therefore the entrepreneur must also do separate revenue estimation for the
primary target market as to whether it is booming stable or slowing down.
2. The external competitors. The entrepreneur must device a comprehensive
competitive profile matrix - a chart that details the relevant data of both direct and
indirect competitors and how these factors affect profitability. Direct competitors are
those that offer exactly the same product / product lines or services as the entrepreneur.
Indirect competitors are those that do not offer exactly the same products or services but
influence or affect the interest entrepreneurs market share (e.g., if the entrepreneur sells
soft drinks, his or her market will be affected by those who sell other beverage such as
mineral water, iced tea, juices and alcoholic drinks.)
The entrepreneur must plot the strength of each competitor, its financial data and
its respective market share. A thorough analysis must be conducted to assess whether the
entrepreneur will really earn from the business opportunity.
When entering a market dominated by stronger and larger competitors, the
challenge for entrepreneur is to come up with a highly differentiated product or service with
a very strong unique selling proposition
otherwise, he or she will be “ eaten alive “by
these large players.
When entering a market with weaker
and smaller competitors, the challenge is to
compete with them directly. There is a bigger Risk-taking is part of being an
chance here to succeed and take away the entrepreneur. Most entrepreneurs start
market share. Entrepreneur can also enter a their businesses using hard earned
market with no competitors. This rarely money. That is why it is important to
happen though; these days, there are virtually take calculated risks to minimize the
no unique products or services, or there are uncertainty that that comes along with
few entrepreneurs who want to venture in an
any business venture
entirely different market that no one has tried
yet.
Aside from the basic financial data the entrepreneur must also be vigilant in
reviewing and assessing the business and marketing strategies of the competitors those
that were proven effective strategies of the competitors must be emulated and altered a bit
by the entrepreneur and those that were certified as ineffective must not be repeated to
avoid unnecessary losses understanding the strategies of the competitors allows the
entrepreneur to neutralize its effects to his or her business.
3. The internal business. To assess potential revenue the entrepreneur must also
devise his or her own marketing strategies based on external an internal scan and from
the competitive profile matrix. With this data the entrepreneur can now craft effective
strategies that can outweigh those of the competitors. However, the entrepreneur must
always be on the lookout because competitors do not just sit and wait to be beaten. They
will always react to what their competitors are doing. They can always resort to cut prices
improve features and benefits on their product or service that can differentiate them from
the rest or implement more strategic and effective marketing tactics each of the players in
the market is thinking ahead and monitors the moves of the others to keep at pace the
entrepreneur must always be alert and reactive to all kinds of contingencies or else the
revenue will suffer.

Computation of Gross Revenue

Once all the influencers above are identified, the entrepreneur can now calculate
and project the potential revenue numbers for five years.
Step 1. Compute for the market universe or total market.
The entrepreneur must derive the figure that represents the market universe or the
total market to understand how big the market is this is represented by the size of potential
customers and how often they will use or consume the product or how often they will avail
the service .

Market size = total number of customers multiplied by the number of

time the customer buys the product or avail the service per year
multiplied by the average amount per purchase divided by the service
availment.
Market size = total number of customers multiplied by the number of time the
Step 2. Compute the marketbuys
customer share of the competitors.
the product or avail the service per year multiplied by the average
Market share is the proportion
amount perofpurchase
an entire market's
divided by thesales
servicethat is taken by a specific
availment.
organization. It is represented as a percentage of the market and is useful for gaining a
general sense of a firm’s size in comparison to its competitors. Owning a large percentage
of market share is a strong indicator of the success of a business, especially if that share
is increasing over time. The market share percentages of all major competitors in a market
are commonly calculated and compared, to determine the relative success of each
business.
To calculate market share, divide the firm’s sales by the sales of the entire market for the
indicated measurement period. The formula is:

Company sales ÷ Entire market sales = Market share

3. Plan to capture remaining market share
An entrepreneur must devise business strategies on how to tap remaining market
and not let the competitors overtake him. Some of the strategies that can be employed is
to provide a marketing promo to customers. This is an application of differentiation
strategy-an approach business develops by providing customers with something unique,
different and distinct from items their competitors may offer in the marketplace. If the
competitors try to copy it, then an entrepreneur must think of another strategy to
differentiate his service from them. He can focus on customer experience whereby
customers even without going to the store can buy using their social media accounts, this
tale of creating various differentiation strategies will be a collaborating process just to
capture and maintain the remaining market share. If the differentiation strategy is really
compelling, then an entrepreneur can even acquire the market share of market leaders. It
is good to set targets, but these targets will be dependent on the external and internal
factors previously mentioned.
4. Prepare a realistic five-year projected annual revenue.
An entrepreneur must set a realistic and achievable five-year projection that
incorporates the contingencies and the external/internal factors discussed. He must
monitor the growth or decline of both the market size and his market share. If the
movement in market size and market share is not proportional, then an entrepreneur can
already glean roughly what is happening. If the market size is growing but the market
share is not growing, then there is something wrong with the strategies of an entrepreneur.
If market size is not growing but market share is growing then an entrepreneur must be
doing a good job in serving the customers; thus he is eating the market share of
competitors assuming an entrepreneur is optimistic that he will be able to differentiate and
grow the business, he is looking at the 5% growth in year 1 due to adjustments and
difficulties he will encounter, 15% growth in years 2 and 3 and 20% growth in years 4 to 5.
Table 1.0 shows a projected annual gross revenue.

Table 1.0 Sample projected annual gross revenues

Year 1 Year 2 Year 3 Year 4 Year 5
P 4,032,000 P 4,636,800 P 5,332,320 P 6,398,784 P 7,678,541

The numbers in table 1.0 are quite attractive to look at especially on the
perspective of a retail entrepreneur. But an entrepreneur shouldn't be overwhelmed by
these numbers as these are just gross revenues and the values of the product as well as
the expenses associated with the sale have not yet been incorporated.

Statement of Comprehensive Income

The real income or net revenue is only realized when all expenses have been
already deducted from the gross revenue. Therefore, the entrepreneur must prepare the
statement of comprehensive income which is a financial statement that details the
computation of net revenue by deducting cost of sales, expenses and taxes from the gross
revenues generated. Despite the attractiveness of the gross revenue figures an
entrepreneur is still not sure if he is earning from his venture. The sustainability of a
business largely depends on the net revenues because this increase the value of a
business. These increments are used to fund product research development initiatives and
business expansion. Financial institutions also based their credit decisions on the bottom
line (statement of comprehensive income) and not on gross revenues of businesses.

Statement of Financial Position

The entrepreneur must also prepare a statement of financial position to account for
the assets, liabilities and capital of the business. A statement of financial position is a core
financial statement that describes the financial situation of the business. The entrepreneur
 must separate his or her personal assets and liabilities and only account for what assets
are attributable to the business. Business should be a separate and distinct personality.

Elements of Statement of Financial Position

1. Asset represents the resources of the business that are expected to have future
economic value assets are divided into current assets which are mostly liquid assets that
can be exchanged to cash within one year and non-current assets which are long-term
assets that can be converted to cash for more than one year.
2. Liabilities are what the business owes to another person of financial institution or
any creditors.
3. Owner’s Equity or Capital is the funds allocated by the entrepreneur to run the
business.
Accounting equation should always be balanced as represented by the equation
Assets = Liabilities + Owner’s Equity
It is ideal to prepare statement of financial position every year so that the entrepreneur can
analyze the financial situation of his or her business. These figures will change every year
so the entrepreneur or his/her accountant must determine the real balances of each
account.

Learning Competency with Code:

Demonstrate an understanding of the 4M’s of operation
• Forecast the revenues of the business (TLE_ICTAN11/12EM-Ia-2)

Directions: Read the instructions carefully in answering the given activities.

Activity 1. WORD HUNT

Instruction: Find the following words in the arrows by encircling the words from the grid.

C A C O L L A T E R A L R I S
1.OPPORTUNITIESS U S T A I O T E R O O A F N A
R S A C A P I T A L R F I C S
2.TAXESS
R T X S B A T L I A B I N T S
E X E S I B L R N S T A A R R
3. MARKET SIZE
N B S E L A E I C O A N N E O
4. RISK TAKING T A S X I S T K O P E A C V T
A S S E T S E S M P U G I N I
5. COMPETITORS X E P E I A S T E O N E A O T
I O P S E C O A S R E M L T E
6. REVENUE S Z I E S I Z K T S V E N T P
A S S T S E Z I S T E K R A M
7. LIABILITIES I N S E I T I N U T R O P P O
8. CURRENT ASSETS F I N A C E D G S E U T P A C
B U S S I N E S S O P O O R T
9. COLLATERAL

10. CAPITAL

.
Activity 2. IDENTIFICATION
Instruction: Read each statement carefully find the correct answer in the box below. Write
the letter of your answer on the space provided before the number.

A. Statement of Comprehensive Income B. Market share C. Indirect Competitors

D. Differentiated Strategy E. Risk-Taking F. Direct Competitors

G. Market Size H. Capital I. Collateral

J. Statement of Financial Position K. Revenue

L. Competitive profile matrix

______1. The total number of customers multiplied by the number of times the customer
buys the product or avail the service per year multiplied by the average amount per
purchase divided by the service availment.
______2. This is a part of being an entrepreneur. Most entrepreneurs start their
businesses using their hard-earned money.
______3. Refers to those that offer exactly the same product / product lines or services as
the entrepreneur.
______4. It is a chart that details the relevant data of both direct and indirect competitors
and how these factors affect profitability.
______5. It is the money that will be allocated by entrepreneur to establish a business.
______6. It is the output of a sale wherein the sales price exceeds the cost to produce the
product or render the service.
______7. Refers those that do not offer exactly the same products or services but
influence or affect the interest entrepreneurs market share.
______8. Company sales ÷ Entire market sales
______9. An approach business develops by providing customers with something unique,
different and distinct from items their competitors may offer in the marketplace.
_____10. A financial statement that details the computation of net revenue by deducting
cost of sales, expenses and taxes from the gross revenues generated.

Activity 3. Read the following situation below, compute what is asked. Show your
solutions.

Mr. Ali Magkasakeet owns a big sari-sari store in Sitio Buno, Matatalaib Tarlac
City. He became interested also in selling cellphone prepaid load, because 95%
of the people in his barangay have cellphones and most of them are on prepaid.
He wants to know the market size of the prepaid load business in his barangay.
He has the following data:
Cellphone owners in sitio Buno Matatalaib Tarlac city – 10,000
No. of times customers buy load per week – 2
Average amount of load customers buy - P 100
He served 100 customers with 100- peso load at 105 each.
 a. What is the Market size of cellphone prepaid load in Sitio Buno?
________________________________________________________________________
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b. How much is the gross revenue of Mr. Ali Magkasakeet?

________________________________________________________________________
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________________________________________________________________________

Activity 4
Think of your business, give a computation of your sales or revenue forecast for the first
year to third or to fifth years. Give ways on how to increase your sales or revenue. Explain
your answers.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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Rubrics for the Activity

Criteria 5 4 3 2 1
1. The learner shows a clear description a
explanation of concepts
2. The learner shows accurate information a
relevant examples from the given topic
total
Grand Total /10

Reflection:
Direction: Complete the statements below.
1. I have learned that…
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
2. The part of the lesson I like best is/are….
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

3. I believe the lesson can help me in….

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
 Criteria Highest Possible Score
The learner has complete
response with a detailed 5
explanation.
The reflection captures what the
learner learned, and what the
learner thinks the activity can 5
help him/her.
TOTAL 10 POINTS

References
K to 12 Most Essential Learning Competencies with Corresponding CG Codes.
Department of Education. Pasig City

Diwa Textbook, Entrepreneur second edition. Published by Diwa publishing. 4/F, SEDCCO
1 Bldg., 120 Thailand (Formerly Rada) cor. Legaspi Village, Makati City.
https://www.accountingtools.com/articles/how-to-calculate-market-share.html
https://www.google.com/search?q=differentiation+strategy&oq=differentiation+s&aqs=chro
me.1.69i57j0i433i457j0l6.9484j0j15&sourceid=chrome&ie=UTF-8
Answer Keys:
Activity 1 Activity 2

1. b 6. k
CA COL L A T E R AL R I S 2. e 7. c
US TAI OT E RO OA F NA 3. f 8. b
RS ACAPI T A L RF I CS 4. l 9. d
RT XSBAT L I A BI NT S
5. h 10. j
EXE SI B L R NS TA A RR
NBS EL A E I CO AN NEO
TAS XI S T K OP EA CVT
ASS ET S E S MP UG I NI
XE P EI A S T EO NE A OT
I OP SEC O A SR EM L TE
SZ I ESI Z K TS VE NTP
AS S TSE Z I ST EK RAM
I NS EI T I N UT RO PPO
FI N ACE D G SE UT PAC
BUS SI N E S SO PO ORT

Activity 4 – Answers may vary

Activity 3
a.10,000 (2 times a week x 4 weeks x12 mos)
=10,000 (96)
=960,000 (100)
=96,000,000 market shares

b. 100 X 105 =10, 500 Gross Revenue Mr. Ali

Magkasakeet
Prepared by:

ARIANNE D. PEREZ
Teacher II
MATATALAIB HIGH SCHOOL