COURSE MATERIAL 1 - Focus in execution -The most important thing is

on how to make your ideas into reality

INTRODUCTION - Have integrity -Your principles will help you to
achieve your goals
Entrepreneurship refers to the concept, creating -Give back - Always be thankful on what you have
and managing a business ventures by gaining profit and give it back to others or to your team.
and by taking different challenges and risk in the
industry. It is also a process of starting up a Key Concept and Common Competencies in
business by an entrepreneur. Entrepreneurship
Entrepreneur is known for being an innovator,
decision maker and risk taker. They are the one Key concept will help us to deeply understand the
who creates the idea, turn it into a plan and make it importance of Entrepreneurship and what are the
into reality. things that we have to consider. It will give us ideas
and guidance with the things that we’re going to
Why is Entrepreneurship important? deal with.
- It can improve standards of living and create 1.InnovationThey implement innovative ideas on
wealth not only for entrepreneur but also for related the available opportunities and bring out something
businesses. new. Always make sure that you have a back-up
- It also helps drive change with innovation, where plan.
new and improved products enable new markets to 2. Organization Entrepreneurs need to control all
be developed the people in his business as well as to process
- It is important to market economies because they singlehandedly. He should know how to manage
can act as the wheels of the economic growth of his employees as well as the transactions internal
the country. and external.
3. Risk Every type of business faces different kinds
Factors to become a Successful Entrepreneur of problem and risk taking is part of it. Being an
Starting up a business needs a lot of effort and entrepreneur, you must know how to handle it.
responsibilities. There are things that we have to do Unexpected situation should take as a challenge
so that all of our sacrifices will be worth it. Here are and learn from it.
some factors that we have to consider in putting up 4. Vision Every type of business faces different
a business. kinds of problem and risk taking is part of it. Being
Be passionate -Show that you love what you’re an entrepreneur, you must know how to handle it.
doing. Entrepreneur should have a monthly or yearly plan
Maintain focus -Learn how to manage your time for him to have a guideline and to always
and prioritize what’s important remember his vision.
-Work hard -Give your effort and be engaged
-Enjoy the journey - In very path that you’re going Common Competencies
to take, always enjoy and learn from it. Opportunity-seeking and initiative -
-Trust your gut feeling - Use your instinct in Entrepreneurs seek opportunities and take the
making decisions initiative to transform them into business situation.
-Be flexible but persistent -Make sure that you Like when they get ideas, they will make sure to
can adjust from every situation but always remind innovate and do something great about it.
yourself about your goal. Persistence -You should have a lot of patience; it
- Rely on your team -There is no “I” in the word is part of being an entrepreneur. If you are facing
TEAM. Always ask for some help if needed.
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some problems, you must be going through with it Sales management - It’s the process of developing
and with the goal in your mind. a sales force, coordinating sales operation, and
implementing sales technique. (e.g. Sales
Commitment -Being committed with your work representative, Account Executive, Sales Manager,
means you’re valuing it. etc.)
Demand for efficiency and quality - Our Human resources -They oversee the recruiting,
customers go back to us not because they like the interviewing and hiring new staff. (e.g. Consultant,
people, but because of the quality of product and HR Manager, Compensation and Benefits
services that we provide. Manager)
Taking calculated risk - All business has to take Bookkeeper- Responsible for organization’s
risks because it’s part of the process, but taking accounts known as the general ledger. They also
risks should also be thinking carefully. record all the transactions and post debits and
Goal setting - Being an entrepreneur means you credits.
have to see the future already. Setting goals can be Project officer - Plans and coordinate project
good for months, 1 year or 5 years. It will serve as activities, including scheduling, reporting and
guidelines for your journey. document control. (e.g. Project assistant and
Information seeking - You should also be a good Project Officer)
researcher, you have to make sure that you have
references with the things you’re planning to do. Reasons why entrepreneurs fail
Systematic planning and monitoring -There are Lack of focus, Treating yourself as a monopoly,
a lot of things that we have to deal with especially Lack of funds, Lack of marketing
during the process of managing our own business.
You have to learn on how to manage your time as
well as to prioritize the most important thing than to COURSE MATERIAL 2
the least one. DEVELOPING A BUSINESS PLAN

Core competencies are helping us to define the The business plan is prepared using a scientific
characteristics of a business or individual that approach in determining possible business
makes them stand out from the other competitors. It situations considering the different perspectives of
will also help the business to stay competitive in the people who are interested in the business. Though
industry. Entrepreneurship has three core the perspective of the entrepreneur has the major
competencies. influence on the business plan, he/she nonetheless
1. Personal Competency This is the first thing you must still consider the views of the customers,
should have to be an entrepreneur. It is a set of creditors, and even the employees and staff.
skills to include self-awareness, self-management He/She must gather sufficient and relevant
and relations skills. Some of the examples are information to support any perception or
creativity, determination, integrity emotional conclusion.
balance and self-criticism. The business plan is actually the roadmap of
2. Interpersonal Competency It is the ability to the new business. It is the roadmap of the
interact with other and with your community. This entrepreneur. It is the only single written document
includes the ability to maintain a healthy that must be prepare before opening a new
relationship. Examples for this are good business expanding an existing business. It
communication, engagement/charisma and respect provides a clear direction to any uncertain business
to others. endeavor.
3. Business Competency It is a set of particular
abilities and knowledge that sets a company apart Business plan is defined as a detailed and
from its competitors. You should know your integrated written document that describes the
product/services. These are some of the various activities involved in opening and operating
a new entrepreneurial venture. In case the
Career Opportunities business project is relatively large in terms of
Accounting and management - It involves the financing or funding requirements, the entrepreneur
presentation of financial purposes to be used by usually seeks the assistance of consultants.
your management in making key businesses. (e.g.
Accounting staff, manager, Data analyst, etc.) The concept of business plan preparation is more
applicable to a small business that you is expected
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to open as the final major requirement of the course performance of the business. These factors may be
in entrepreneurship. political, economic, social, or technological in
nature.
MAJOR PARTS OF THE BUSINESS PLAN • The environmental analysis section is considered
the heart of the business plan.
Though there are no universally accepted standard • Since the business that you intend to open in this
format or structure of the business plan, this course entrepreneurial course is considered small in terms
material adopts the following format for the major of capitalization, the industry analysis will focus
parts of the business plan mainly on the consumers and competitors.
• In today's competitive business environment, an
Introduction environmental analysis is already a necessity. It is
The introduction presents the general perspective perceived as the basic element for business
of the business. It may consist of one to two pages. survival.
It includes, among others, the· following sections: • It may consist of global analysis, societal
1. Proposed name of the business analysis, and industry analysis.
2. Address of the business
3. Name of the owner or owners Business Description
4. Description of the business ❖ The business description section presents the
s. Location of the business nature and form of the business to be undertaken,
6. Funding requirement and source and may cover two to three pages.
❖ As to nature, the business may be a
In case the consulting team prepares the business merchandising, service, manufacturing, or a hybrid.
plan for prospective owners or investors, the The description must include the innovative
section Statement of Confidentiality is added as features of the business.
the last section ❖ As to form, it may either be a sole proprietorship,
a partnership, or corporation. The reason/ s for the
Executive Summary
selection of the form must also be indicated
In addition, the business description also includes
✓ Although the executive summary is commonly the following information:
the last section to be written after all other major 1. Product or service that it plans to produce or
parts have been completed, it is the next major part serve
of the business plan after the introduction. 2. Various plant and office equipment
✓ It points out the overall highlights of the business 3. Size of the proposed business
plan as well as a bird’s-eye view of its sections. 4. Future parties with whom contracts may be
✓ It must be written in simple language that can be necessary
easily understood and at the same time attract the 5. Personnel requirement
attention and influence the decision of the reader. 6. Administrative operation
✓ Investors, creditors, and other significant parties
usually proceed to the details of the business plan Organization Plan
once they find the executive summary interesting,
convincing, and worthy of further reading. Although The organization plan provides a detailed
there is no standard format as to its sections and description of the business in terms of the
contents, the executive summary must include the following:
following sections: l. Form of the business organization
1. Vision, mission, goals, and objectives of the ➢ A business organization can come in the form of
business a sole proprietorship, a partnership, or a
2. Business model corporation.
3. Business and product position ➢ There must be a purpose for the selection of the
4. Wealth improvement approaches most appropriate business form.
5. Parties supporting the business ➢ In other words, the mere statement, “The ABC
Manufacturing shall be in the form of a sole
Environmental Analysis proprietorship,” is an incomplete description of the
• It is a strategic tool that helps determine the business organization.
external and internal factors affecting the
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2. Liability of the owner or owners 2. PRODUCTION PROCESS
➢ This section describes the extent of the owner's ➢ The different processes or stages involved in the
financial obligations with creditors. production of goods must be clearly spelled out in
➢ The extent of financial liability can either be this section
limited or unlimited. 3. PROCESSING PLANT AND EQUIPMENT
➢ The term limited liability means that in the case ➢ This section of the production plan describes the
of business dissolution and there still remains manufacturing plant, the machinery and equipment,
unsettled financial obligation of the business, the and the various tools to be used in the production
creditor cannot go after the personal property of the of goods, including their respective estimated costs.
business owner. 4. SOURCES OF MATERIALS
The liability of the owner is only up to the extent of ➢ The possible sources of raw materials and
his/ her financial contributions to the business. manufacturing supplies must be described in terms
➢ On the other hand, the term unlimited liability of the following: proximity of the source to the
means that the creditors can run after the personal processing plant, payment terms and conditions,
property of the owner in the event that the business discounts and damages, and terms of shipment.
fails to fully settle its financial obligation during 5. PRODUCTION COST
business dissolution. ➢ This section of the plan must show the estimated
3. Organizational structure cost of production.
➢ The organizational structure of the business is ➢ The three elements of cost namely labor, direct
usually shown or reflected in the organization chart. materials, and factory overhead must be properly
➢ It shows and defines the hierarchy of the described and accounted for.
different positions in the organization and the
interrelationships of the different offices or OPERATION PLAN
departments.
➢ The organizational chart depicts the flow of ▪ The operation plan is a major section of the
communication within the organization, and the line business plan that outlines the various activities,
and staff authority that must be observed and from the acquisition of raw materials to the delivery
executed. of the products to the target consumers.
4. Roles and responsibilities ▪ The operation plan commonly covers the following
➢ The roles and responsibilities of the various areas:
1. Evaluation of suppliers
positions in the business organization must be
2. Materials requisition and receiving procedures
clearly defined in order to minimize and avoid
3. Storage and inventory control system
misunderstanding and overlapping of functions.
4. Ship1nent system and control
5. Salary requirements
5. Functions of support services
➢ The organizational plan must show the total
estimated monthly and annual salary requirements MARKETING PLAN
of the business.
➢ All other mandatory benefits like the employer's
➢ The marketing plan details how the ·proposed
contributions to the Social Security System (SSS),
business will sell its product to the target
Pag-Ibig, and Philhealth must likewise be specified.
consumers.
Production Plan ➢ It may consist of some or all of the following
important sections:
• The production plan presents or describes 1. Product
activities related to the production of goods. 2. Place
• The production plan is the result of the industry 3. Price
analysis, particularly the study of supply and 4. Promotion
demand and consumer behavior. 5. People
• The production plan usually includes the following: 6. Packaging
1. PRODUCTION SCHEDULE 7. Positioning
➢ The production schedule presents the total
number of goods to be produced and the expected
time to produce them.
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➢ Basically, the business plan describes the you selling yourself or ideas. You have to see or
factors of the marketing mix in its various sections, make something for your product or services to
such as product and people in the business stand out. It requires hard-soul sourcing and a lot of
description section, place or location in the creativity.
introduction, and positioning in the environmental The best way to describe USP is “What makes you
analysis section. different from the competition?” Your USP play to
your strengths and should be based on what makes
your brand or product uniquely valuable to your
customer.

The image explains the USP. First, you have to

know what does your customers’ wants and needs.
Next, what or where does your competitor good at.
Lastly, what are the things that you sure your
business can produce well. You’re uniqueness.
Once you identify these three, you will now see
what your USP’s are by collecting data for the first
and last step

FINANCIAL PLAN 7 STEPS IN IDENTIFYING YOUR USP

BRAINSTORM IDEAS
❖ The last major section of the business plan is the
IDENTIFY YOUR CUSTOMER
financial plan.
ANALYZE YOUR COMPETITORS
❖ It accumulates and describes all the data LIST YOUR STRENGTH
expressed in monetary units from the other KNOW YOUR WEAKNESSES
sections of the business plan. WHAT MAKES YOU UNIQUE
❖ For example, the amount of salaries that TRANSLATE YOUR USP INTO RIGHT WORDS
appears in the projected statement of
comprehensive income comes from the These steps to identify the USP of your business
organization plan, and the cost of machineries and will help you to make your business stand out to
equipment that appears in the noncurrent asset any other competitors.
section of the projected statement of financial A good USP streamlines your strategy by allowing
position comes from the production plan. you to communicate how you want your market to
❖ The financial plan simply collates and describes perceive your product and brand, and focus on its
the various sets of information derived from the particular benefits. It will serve as your key
other sections of the business plan. differentiator and the reason your customer will buy
❖ It is composed of the following important areas: from you and an important part of your marketing
1. Major assumptions strategy for attracting new customers.
2. Projected statement of comprehensive income
3. Projected statement of cash flows Value Proposition is a promise of value to be
4. Projected statement of changes in equity delivered, communicated and acknowledged to
5. Projected statement of financial position their customers. It can also be presented as a
6. Financial statement analysis business or marketing statement that a company
uses to summarize why a consumer should buy a
APPENDIX product or use a service. For a simple
understanding, it is the “why” someone should do a
COURSE MATERIAL 3
business with you.

RECOGNIZE AND UNDERSTAND THE MARKET IMPORTANCE OF VALUE PROPOSITION

The development of value proposition is a vital part
Unique Selling Proposition- It is a unique way of of a company’s business strategy. Since the
selling point or slogan that differentiates your proposition provided a company with a method to
product or services from its competitors. It’s like influence the decision-making of customers, it is a

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frequently displayed on the company’s marketing you? Identify the common characteristics and
material such as a website. This could also help the interest. Which product brings in the most business.
business to gain sales. Check your competition - Who are your
competitors targeting? Who are their current
HOW TO CREATE A VALUE PROPOSITION customers? You may find a niche market that they
Value proposition is quiet challenging yet rewarding are overlooking.
task for every business. Here are the tips that will Analyze your product/services -Write out a list of
help you to create an effective value proposition. features of your product or service. Next is to list
1. Know your customer You must analyze the the benefits that provides. Lastly, make a list of
market and your potential customers. You can also people who have a need that your benefit fulfills.
use your USP here. Choose specific demographic target
2. Identify your costs and benefits Identify and -Figure out not only who has a need for your
assess the benefits delivered by your company and product or service, but also who is the most likely to
its products or services along with the cost incurred buy it. Here are some factors that you can consider:
to provide them. Age, location, gender, income level, educational
3. Don’t forget about your competitors Evaluate level, marital or family status, occupation and
your competitor’s landscape in the market. ethnical background.
4. Be clear and concise Your target customer Consider the psychographics of your target
must quickly grasp the message you want to -It is a more personal characteristic of a person
convey. including: Personality, attitude, values, interest and
5. Design is king! Make your proposition visible hobbies, lifestyle and behavior. Determine how
and appealing on all marketing materials. As you your product or service will fit into your target’s
observe the way on how we create the value lifestyle.
proposition, it is somehow connected with the Evaluate your decision - Once you’ve decided on
Unique Selling Proposition. They have the same a target market, be sure to consider some of these
goal, and the goal is to stand out to the other questions:
competitor, to know your strengths and 1. Will my target really benefit from my
weaknesses and to improve your business. product/service?
2. Can they afford my product/service?
IDENTIFY YOUR CUSTOMER We started a 3. Can I reach them with my message? Are they
business for us to gain profit, to pursue our dreams easily accessible?
and to give something to other people. These
people are we called customers. They are reason Customer Requirements The next thing to identify
why we keep on doing innovations, creating new your customer is by the customer requirements. It
products and showing the best of what we can do. is what motivates consumers to purchase a product
And without them, businesses cannot continue to or service. For us to know more about it, target
exist. By identifying and understanding your market is needed and it will help us a lot especially
customers, you can assess their needs and in identifying the desired interest of your customer.
determine whether your product or service will meet Customer requirements may vary based on the
those needs. Research will help you determine the products or services sold by the business.Here are
customer group most likely to purchase your the four main customer needs that an entrepreneur
products or services. We can determine the must consider.
customer in terms of target market, customer Price -It is important for a price to match the quality
requirement and market size of the product or service that the business is
selling.
Target Market To build a solid foundation for your Quality - Customer always expects some level of
business, you must first identify your typical quality, no matter how much they pay for a product
customer and tailor your marketing pitch or service.
accordingly. It will help you to focus on the market Choice - Customers have different needs and
that is more likely to buy your products. There are desires when buying items.
tips on how you can easily identify your target Convenience - It relates to something being
market. easier, quicker or generally less hassle for
Look at your current customer base - Who are customers. They are actually willing to pay more for
your current customers and why do they buy from it.

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Market Size allows you to secure better investment, Focus Group Discussion (FGD) - It is involving a
make more clear-headed plans and avoid getting small number of people usually 4-8 brought
sucked into a strategy that simply has no future. together with a moderator to focus on a specific
Market size refers to the total number of potential product or topic. Example: You have coffee cupping
buyers for your products. Technically, it’s the total (tasting), you need to know what coffee is great so
number of potential customers or sales in a given you have to ask different people for their different
period of time. It is important because there is a ideas and comments at
chance for you to gain investors. If you’re sure that Survey - This allows you to evaluate customer
your business is profitable then investors will make sentiment at a micro or macro level. This includes
time for you. Another thing is you can develop and customers’ general level of satisfaction with your
enhance your solid marketing and business strategy product or service, their experiences with your
and lastly is to learn and determine your budgeting customer service, their loyalty to your organization
and hiring plans. and more. Example: You have a small survey of the
coffee beans that you offer and the customer will
just choose which one is the best for them.

COURSE MATERIAL 4
4M'S OF OPERATIONS
Operations Management
- is the administration of business practices to
create the highest level of efficiency possible within
the organization.
This image shows the three metrics to describe the -It helps the business to work from the raw
market your business operates in. These metrics materials and labor into its outcome which are the
are key components of a business plan, particularly
goods and services.
as you craft your marketing and sales strategy.
-OM also balances cost with revenue to achieve the
Validate Customer Related Concern Customer highest net operating profit possible.
validation is an essential phase of the product
development process. It tests assumption, What are the goals of Operations Management?
hypothesis about the customer problem, target
market and product. It also helps the entrepreneur 1. Maximize efficiency while producing goods
to avoid building a product that no one wants. and services that effectively fulfil customer
needs.
Talking to your friends and family is fine but they 2. Countless operating decision must be made
don’t have the same mindset as with your that have both long- and short-term impacts
customers. Customer validation tells you whether on the organization’s ability to produce
customers will really buy your product or not. Your goods and services that provide added
customers need to actually put their money where value to customers.
their mouth is for this sentiment to be worth anything. 3. Be able to produce affordable, functional,
We can also say that customer validation is another and attractive products that customers will
research tool for you to collect new or original purchase at a price that will earn profits for
information. There are three ways for you to get the company.
suggestions and feedbacks from your customers.
4M's in production
Interviews -Product managers use customer -Exploring these 4M’s provides us with a structured
validation interviews to help inform product
framework for root cause analysis by helping us to
decisions by validating problems, solutions and
understand how much each one may have
pain points. Examples: While the customers are
currently buying your products or services, you can contributed to issues.
actually ask them about their opinion or
suggestions.
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-It also plays their part in identifying root causes • A clear product/service description is
and improvement opportunities within the safety important, and this will serve as the
sub-committees. blueprint of all the business operations.
What is the importance of 4M’s in production? • Developing the description is how you will
convince the customer to buy your product.
4M’s represent the most important factors which
influence on the result of any concerned process, • This must provide all the information and
not only for the root cause analysis but also for details of your product/services on your
many purposes sites.
4M thinking finds a place in all the pillars to some • The details can be one sentence, a short
extent but is most widely used mechanism. The paragraph or bulleted. They can be serious,
structure it brings in identifying sources of variation, funny or quirky.
root causes of problems or improvement
Creating a prototype of the product
opportunities is invaluable as a core element of
problem solving. • A prototype is a preliminary model or
sample of a new product or service that is
Information, raw materials, consumable and
quality created to test a product concept or a
service process.
Do you have all the materials needed to perform all
• What exactly does a prototype look like?
parts of production and are they conveniently
located to minimize waste? • Depends on the idea
Do they meet the required specifications – are • Depends on your budget
there no defects and shortage?
• Depends on your goals
Equipment
Four steps in creating product or service
Do you have everything to ensure the safety of the prototypes
employees while maximizing the efficiency and
productivity of the organization? 1. Concept sketch

Do breakdowns, defects or unplanned stoppages -Draw your idea to help you visualize your
inhibit their ability to meet the goal? prototype in greater detail.

Skills, technology, organization and resources 2. Virtual Prototype

What is the ideal number of people it will take to Create a digital sketch of your idea. Example:
perform the method? CAD CAutoD

Does the manpower have the skills and the will to 3. Physical Prototype
do what is expected of them safely, consistently Build a physical prototype. Once your first
and effectively? prototype was built, you may find flaws that need to
Process, schedule and procedure correct before you seek a patent. You may need to
build several prototypes to get a good one done.
Do we have the standard work methods in place
which ensure and support consistent and safe 4. Locate a manufacturer
production? Locate a manufacturer that can produce your
Product description product at a profitable price.

• The product/service description describes

how does it works and how it benefits the
customer.
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 What are the advantages of creating a 4. Product costing test- the entrepreneur must
product/service prototype? examine every stage of the manufacturing process
or every process of the service blueprint to evaluate
Enables the entrepreneur to engage in a trial and
and finalize the cost involved. This is the time when
error, provides room for improvements, and refines
the entrepreneur can match the expected costs
the functionality of the product design or service
versus his or her budget. Modification in the
process.
manufacturing processor service blueprint can still
Helps to describe the product or service to the be made at this point to align with the cost objective
product team of the entrepreneur.

Provides a window to test the performance and 5. Component test - Each component of
specifications of various materials and service the product or service must be tested
processes. independently to identify component failures for
goods or service failures for services. Any failure
Elicit respect from the key stakeholders and identified must be redesigned and tested again until
customers. It gives credibility to the entrepreneur it becomes fully operational and functional.
TEST THE PRODUCT PROTOTYPE 6. Competitors’ product/service test – the
Testing the prototype is a vital process before an entrepreneur must test a similar line of products or
actual product or service is launched to the market. the competitors
It will uncover the final loopholes that need to be ‘product or service itself to compare and get the be
fixed before commercialization. st practices to be applied to the new product or
service
It gives the entrepreneur a leeway to examine and
scrutinize the prototype and provide feedback as to Validation of Market Acceptability
what can be improved before the launch. These • Validation of Market Acceptability is
improvements and changes must be completed first the process of finding out if the intended
before moving forward to the next step primary target will be buying the product or
Methods applied in Testing the Product availing the service.
Prototype • Market acceptability is a critical factor that
1. Focus Group Discussion (FGD) – The the entrepreneur must validate before
participants will provide relevant insight about the launching the product or service, because
new products or service. The objective of the FGD this can strongly suggest if the business will
is to identify errors, deficiencies, and issues that be successful or not.
may impede the success of the product. • Market acceptability is a critical factor that
Participants also need to provide suggestions and the entrepreneur must validate before
practical solutions on how to improve deficiencies. launching the product or service, because
2. Legality and ethical test - Prior to launching, this can strongly suggest if the business will
the entrepreneur must ensure that the product or be successful or not.
service complies with all relevant laws and Ways to Validate your Product Acceptability
regulations and has a necessary license or permit
to operate a particular business. • Sales - Nothing is more important than
customers seeing the value in your product
3. Safety test - the entrepreneur must ensure that and exchanging money for it.
the product is safe to use, safe to be
consumed (food and beverages), and safe to be • Research - It can be useful when you are
applied still in the ideation stage. Look also for your
(cosmetic products). The product should not in any competition. Competition is good, because it
way harm the customer or put the customer in confirms that there is existing demand for
peculiar situations what you plan to sell.
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• Demand and Supply - Analyze demand Value chain is the whole series of activities that
and search volume. create and build value at every step. It is also a
process in which a company adds value to
• Campaign - Market research can be useful,
its raw materials to produce products and
but real product validation requires paying
eventually sold to consumers. It gives
customers.
companies a competitive advantage in the
• Feedback -Meet your customer in person, industry, while the supply chain leads to overall
you’ll benefit by getting to talk to potential customer satisfaction.
customers, seeing their initial reactions Five steps in the value chain process.
to your product, and finding out if they are
willing • Inbound Logistics- Receiving,
warehousing, and inventory control.
Select a Potential Supplier
• Operations- Value-creating activities that
Selecting a supplier is the process of looking for
transform inputs into products, such as
a potential supplier to acquire the necessary
assembly and manufacturing.
materials to support the outputs
of organizations. • Outbound Logistics- Activities required
getting a finished product to a customer.
• price lists
These include warehousing, inventory
• value for money management, order fulfilment,
andshipping.4.
• quality
• Marketing and Sales- Activities associated
• reliability with getting a buyer to purchase
• service a product.5.

Identify your suppliers. Set the criteria to help • Service- Activities that maintain and
you find the right supplier, you may consider enhance a product's value, such as
the customer support and warranty service.

• Cost BUSINESS MODEL

• Price Business model is a description of how your

business makes money. It is an explanation of how
• Reliability you deliver value to your customers at an
appropriate cost.
• Stability
Key components of a business model
• Location
1. Everything it takes to make something
• Quality & Safety
• Design
• Delivery
• Raw materials
• Service
• Manufacturing
• Social Responsibility,
• Labor
• Convenience
2. Everything it takes to sell that thing
• Simplicity
• Marketing
• Risk and Agility
• Distribution
Value/Supply Chain in relation to the business
• Delivering a service
enterprise
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 • Processing the sale business planning though it is not intended to give
actual figures for each year's earnings.
3. How and what customer pays
• Pricing strategy Purpose of forecasting revenue
1. Can help you discover why, when, where, and
• Payment method
how of your sales activities.
• Payment timing 2. It can assist you to come up with a better
Different kinds of Business Model strategy to maximize your profit.
3. It can also help with your cash flow management
1. Advertising – You must satisfy your customer through planning your capital needs to keep away
groups: your readers or viewers (e.g. from lacking payments, dropping suppliers and
YouTube) investors, and adverse credit history.
2. Affiliate – Uses links embedded in content 4. It can assist to determine profit margin and
instead of visual advertisements that are easily contribution to gross profits.
identifiable. (e.g. Top 5. It can manage production scheduling to prevent
bottlenecks that would possibly cause lost income
TenReviews.com
and help to spot potential downtimes that cause to
3. Franchise – Common in the restaurant industry. pay workers.
You are selling the recipe and starting and running 6. It can also identify peak hours
a successful business to someone else. (e.g
Jollibee) Steps to Forecast Revenue
1. Choose which forecasting methodology primarily
4. Leasing – Like renting, at the end of a lease
based on the business is needed, how much time
agreement, the customer needs to return the you have, and your degree of confidence in the
product. (e.g. Condo & Cars) data.
5. Marketplace – allow the seller to list items for
sale and provide customers with easy tools for a. TOP-DOWN FORECASTING. It is a method of
connecting to seller. (e.g. Shopee & eBay) estimating a company’s future performance by
6. Pay-as you-go – customers get charged for starting with high-level market share (your TAM-
actual usage at the end of the billing period. (e.g. total available market), potential market share and
water and electric consumption) down to revenue. For example, if your company is
selling a Mobile Phone, you may look at the
How to choose the right Business Model? number of consumers who have purchased mobile
How will my product or service benefit the phones.
customer?
How will I generate revenue? b. BOTTOM-UP FORECASTING- It is a method of
estimating company’s future performance via
Who’s my target customer? starting with low-level company data and working
up to revenue. You can calculate the company’s
What start-up costs am I looking at?
estimated revenue by multiplying the number of
Which expenses will be fixed and variable costs? orders and the average price.

Do I need support from investors? c. QUALITATIVE FORECASTING- It is an

estimation methodology that uses professional
Revenue of the Business Revenue is the income judgment instead than numerical analysis. It
obtained by a business from its sales of goods depends upon the information of experienced and
(referred to as sales revenue) or sales of services expert consultants to provide insights into future
provided to its customer (referred to as service outcomes.
revenue). Forecasting revenue goes hand-in-hand
with forecasting sales. d. QUANTITATIVE FORECASTING- It is a
statistical approach to make predictions about the
Revenue Forecast is the calculation of the quantity future which makes use of numerical measures and
of cash that a company will receive from sales in prior results to predict future events. They are
products or services during a particular time. The highly structured on mathematical calculations.
business revenue forecast is an essential part of
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2. Identify and break down your revenue drivers so Steps to follow in creating Financial Statement
that you can forecast them later. 1. Pick a reporting period
These are the metrics that will drive your revenue: The first step in preparing an income statement is
Salespeople to choose the reporting period your report will
Marketing cover. It can be annually, quarterly or monthly
Number of customers basis. Publicly traded companies are required to
Average frequency of purchase (how often a single prepare financial statement on a quarterly and
customer buys your product) annual basis, but small business isn’t as heavily
Average purchase volume (how many products a regulated in their reporting. This information will
single customer buys) help you make business decisions to make your
Variety of products Amount sold of each product company more efficient and profitable.
Prices of each product
Sales cycle (how long from start to finish does it 2. Generate a trial balance report
take a salesperson to close a sale) It is a crucial part of creating an income statement,
as it's how a company gathers data for their
3. Project the drivers and use the drivers to forecast account balances.
the revenues. And compute the Sales Revenue.
Formula for Revenue: 3. Calculate your revenue
Price of per unit x number of unit sold = revenue It includes all the money earned for services during
the reporting period, even if you haven’t received all
Forecast Expenses Incurred the payments. Add up all the revenue line items
from your trial balance report and enter the total
-An expense is the cost of operations that a amount in the revenue line item of your income
business incurs to generate revenue. It is the cost statement.
of doing business; the sum of all activities that
result in a profit. It is necessary to recognize the 4. Determine cost of goods sold
distinction among expenditure, expense and cost. Your cost of goods sold includes the direct labor,
-Expenditure refers to the amount incurred in a materials and overhead expenses you’ve incurred
long-term period by the company to purchase and to provide your goods or services. Add up all the
increase the value of fixed assets. cost of goods sold line items on your trial balance
-On the other hand, expenses refer to the costs that report and list the total cost of goods sold on the
are ongoing payments incurred on a short-term income statement, directly below the revenue line
basis and used to generate revenue. item.
-Cost, it refers to the amount of money spent on the
production or creation of goods or services 5. Calculate the Gross Margin
Subtract the cost of goods sold total from the
Startup Expenses- These are the expenses revenue total on your income statement. This
incurred for the duration of creating a new business calculation will give you the gross margin, or the
such as pre-operating expenses gross amount earned from the sale of your goods
Fixed Costs - All the overhead costs of the and services.
business.
Variable Costs - All the costs that vary with the 6. Include Operating Expenses
business. Add up all the operating expenses listed on your
trial balance report. Each expense line should be
double-checked to make sure you have the correct
Financial Statement Projection The best way to figures. Enter the total amount into the income
ascertain how much revenue your business has statement as the selling and administrative
generated; you’ll need to create a performance expenses line item. It’s located directly below the
statement alongside other financial statements. To gross margin line.
write an income statement and report profits your
small business is generating, follow these 7. Calculate Your Income
accounting steps: Subtract the selling and administrative expenses
total from the gross margin. This will give you the

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amount of pre-tax income. Enter the amount at the The Magna Carta for Small Enterprises (R.A. 6977)
bottom of the income statement. indicates that the firm must have total assets
valued at above Php 1.5 million to Php 15 million to
8. Include Income Taxes be considered small business.
To calculate income tax, multiply your applicable
state tax rate by your pre-tax income figure. Add Small business may be defined by using any of the
this to the income statement, below the pre-tax two approaches: market share or total
income figure. assets. Assets are defined as anything that a
business owns, has value, and can be converted to
9. Calculate Net Income cash. Assets are broken down into two main
To determine your business’s net income, subtract categories. These two categories are current
the income tax from the pre-tax income figure. assets and noncurrent assets. Each of these
Enter the figure into the final line item of your categories is further broken down into
income statement. This will give you a general subcategories. Total assets are the sum of all
understanding of your business performance, current and noncurrent assets and must equal the
letting you see how profitable you have been. sum of total liabilities and stockholders' equity
combined.
10. Finalize the Income Statement
Add your business details and the reporting period TYPES OF SMALL BUSINESS
covered by the income statement. With all the data 1. Small Manufacturing Business
you’ve compiled, you’ve now created an accurate A manufacturing business is one involved in the
income statement. This will give you a future conversion of raw materials into products needed
understanding of income statement definition that by the society. Examples of small business
will be of great benefit to you and your business engaged in manufacturing are bakeries, tricycle
practice. sidecar assembly shops, bagoong manufacturers,
restaurants, and others.
COURSE MATERIAL 5 2. Small Service Business
Implementing Simple Business Service businesses are those that provide service
one way or another.
Business size is one factor that does not prevent
one from engaging in entrepreneurship. Since only 3. Wholesaling
a small number of people have capital large • Wholesaling refers to the activities of persons or
enough to start a large enterprise, the bigger establishments which sell to retailers and other
number of people with minimal resources are merchants, and/or industrial, institutional, and
forced to operate on a small-scale basis, if they commercial users, but who do not sell in large
decide on becoming entrepreneurs. amounts to final consumers.
But despite of this facts, you need to remember the Examples: soft drinks wholesalers in local areas,
premise that if small businesses are managed dealers of supplies and office equipment, grains
properly, their chances of becoming large wholesalers, and the like.
enterprises are increased. But if in case, it will not
develop into large business, the small business you 4. Retailing
have also have a significant contribution. • Retailing covers all activities involve in the sale of
goods and/or services to the final consumers.
NATURE OF THE BUSINESS Examples: (retail drugstores, fast food shops,
Market Share Approach appliance stores, and others.)
Defined as one which is independently owned and
operated, and which is not dominant in its field of 5. General Construction Firms
operations. • General construction firms are those engaged in
the construction of buildings whether for private
Total Assets Approach individuals or firms, or for the government.
Defined as one having total assets that fall within a
certain bracket.

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 CHARACTERISTICS OF SMALL BUSINESS LAW THAT AFFECTS BUSINESS
Small businesses have their own distinctive
characteristics. PRESIDENTIAL DECREE NO. 442
Independent Management – The owner is also THE LABOR CODE OF THE PHILIPPINES is a
the manager. decree instituting a labor code. This law has
Small Capital Requirement – Small business revised and consolidated labor and social laws in
requires only small capital, and this can be supplied the country. The Labor Code protects labor,
by a single or a few individuals. promotes employment and human resource
Mostly Local Operation – Small business usually development, and ensures industrial peace based
operates in a certain locality although there are on social justice.
cases when the market is not confined to a local Specific Features:
area. Minimum wage, 13th Month Pay (PD no. 851),
overtime and holiday pay, rest day, leave, benefits,
ECONOMIC IMPORTANCE OF SMALL union rights,
BUSINESS
PROVIDERS ECONOMIC OPPORTUNITIES FOR REPUBLIC ACT NO. 7394
ENTREPRENEURS PROVIDERS OF PRODUCT CONSUMER ACT OF THE PHILIPPINES protects
AND SERVICE TO THE CUSTOMERS the interests of the consumer, promotes his or her
SUPPLIERS OF PRODUCT AND SERVICE TO general welfare, and establishes standards of
OTHER BUSINESSES DISTRIBUTORS OF conduct for business and industry.
PRODUCT AND SERVICE TO OTHER a) protection against hazards to health and safety;
BUSINESSES SUPPORTERS OF THE b) protection against deceptive, unfair and
GOVERNMENT unconscionable sales acts and practices;
PROVIDERS OF EMPLOYMENT c) provision of information and education to
facilitate sound choice and the proper exercise of
STRATING A BUSINESS: LEGAL FORMS AND rights by the consumer;
REQUIREMENTS d) provision of adequate rights and means of
redress; and
There are various business laws and regulations e) involvement of consumer representatives in the
that affect a business – from start up to dissolution. formulation of social and economic policies.
It is important for business owners to know the
business laws that apply to their businesses, and to REPUBLIC ACT NO. 9501 MAGNA CARTA FOR
know the rules and regulations of said laws in order MICRO, SMALL, AND MEDIUM ENTERPISES
to avoid being sanctioned, penalized, fined, or shut recognizes the potential of MSMEs to generate
down by the governing bodies that execute them. employment and economic growth. It aims to
promote entrepreneurship, help entrepreneurs, and
In the Philippines in order to make sure your support the growth and development of MSMEs.
business is considered a legal entity you need to
register in the following agencies SEC. BIR, Amending RA6977
PHILHEALTH small business should now have 3M and 1 pesos
You will need to go through the following steps. up to 15M. Meaning, those who have 3M below
-Compile and notarize all necessary documents total asset value is now considered as micro
-Register your business with the Security Exchange business. This law is to STRENGTHEN the
Commission (SEC) DEVELOPMENT AND ASSISTANCE PROGRAMS
-Register with the Bureau of Internal Revenue (BIR) TO MICRO, SMALL AND MEDIUM SCALE
ENTERPRISES,
Beside each step is a corresponding regulation:
Acquire a Business Permit REPUBLIC ACT NO. 10644 - GO NEGOSYO ACT
Acquire accounting related systems also promotes job creation and inclusive growth
Register with the SSS through the creation and development of MSMEs.
Register with the PhilHealth This law aims to reduce business and bureaucratic
Register with the HDMR (PagIBIG) constraints in creating MSMEs. It also aims to
Comply with regulation requirements provide incentives and benefits to MSMEs, as well
Pay all the necessary fees

THE BOOK LOUNGE PH | 14

as strengthen the Micro, Small and Medium
Enterprises Development (MSMED) Council.

This law is to strengthen the MSMED council that

provide assistance to MSME’s who may avail of
programs for technology transfer, production and
management training, as well as marketing
assistance from the DTI, the DOST, TESDA and
other concerned agencies.

REPUBLIC ACT NO. 10524 EQUAL

OPPORTUNITY FOR EMPLOYMENT ACT
Ensures that people with disability are given equal
job opportunities. This law states that a qualified
worker or employee should enjoy the same
conditions of employment, compensation,
privileges, benefits, incentives, and allowances as a
qualified normal employee. This law also ensures
that at least one percent of all positions in
government, offices, and corporations be reserved
for people with disability.

REPUBLIC ACT NO. 10911

THE ANTI-AGE DISCRIMINATION IN
EMPLOYMENT ACT
protects individual against discrimination because
of their age. This law ensures that people are hired
because of their knowledge, skills, qualifications,
and not because of their age.

These laws show that going into business is not an

easy task. Yet being a law abiding business-
person has its perks – by following the laws,
businesses and entrepreneurs maintain a good
reputation and an integrity that cannot be easily
tarnished. Consumers will honor law-abiding
businesses with a level of trust. The
reasonable belief that if businesses follow the
rules of the land, then they will not break these
same rules. They will also not cheat their
customers. By following the laws, they are
given the protection and privileges afforded by
those same laws.

REPUBLIC ACT NO. 8972

THE SOLO PARENT’S WELFARE ACT OF
2000 provides benefits and privileges to single
parents and their children.

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