Entrepreneurship PDF

INTRODUCTION TO ENTREPRENEURSHIP WHAT IS ENTREPRENEURIAL MINDSET? EMPLOYEE VS ENTREPRENEUR A. ENTREPRENEUR - A person who organizes EMPLOYEE ENTREPRENEUR...

INTRODUCTION TO ENTREPRENEURSHIP WHAT IS ENTREPRENEURIAL MINDSET? EMPLOYEE VS ENTREPRENEUR A. ENTREPRENEUR - A person who organizes EMPLOYEE ENTREPRENEUR and manages any enterprise, especially a business, usually with considerable Work - something to get Work- something to be initiative and risks. away from excited about B. MINDSET - a mental attitude or inclination C. The capabilities of innovating, introducing Serious Effort - something Serious Effort - something to do for a short period of to do at the time new technologies, increasing efficiency time and productivity, or generating new products or services, are characteristic Support - something they Support - something they qualities of entrepreneurs. deserve create FIXED MINDSET GROWTH MINDSET Income - something to be Income - something to be received immediately earned later - innate Skills - result of hard work - unchanging - can always WHAT IS ENTREPRENEURSHIP? change ★ This is the capacity and willingness to - something to Challenges - embrace develop, organize and manage a business avoid - opportunity to venture along with ANY risks in order to - will reveal lack of change make a profit. skill overwhelm - calls for ★ Entrepreneurship combined with land, perseverance labor, natural resources and capital can produce profit. - not necessary Effort - essential ★ This is strongly characterized by innovation - limited to being - leads to mastery and risk-taking, and is an essential part of not good enough a nation's ability to succeed in an ever-changing and increasingly - produces Feedback - useful and positive defensiveness - welcomed competitive global market. - personalized - identify areas to improve TYPES OF ENTREPRENEURSHIP SMALL BUSINESS - blame others, “not Setback - opportunities to ★ Contains one or two individuals my fault” learn ★ Basic type of operation - easily - focus on making ○ Ex. sari-sari store discouraging changes SCALABLE START-UP ENTREPRENEURIAL MINDSET ★ Heavily influence by innovation and ★ You are often drawn to opportunities, technology type and business innovation, and new value creation. ★ Receive money from venture capitalist ★ Characteristics include the ability to take ★ Investing on the company who has viability calculated risks and accept the realities of ○ Ex. KUMU change and uncertainty. LARGE COMPANY D. (FOUNDATIONAL/HARD) ENTREPRENEURIAL ★ Very complex SKILLS ★ Has a non-stop way of doing business 1. MARKETING SKILLS ★ Has various levels of management 2. SALES SKILLS ★ Funding comes from loans or forms of 3. FINANCE SKILLS bonds. 4. PLANNING SKILLS ○ EX. SM 5. BASIC MANAGEMENT SKILLS 6. LEADERSHIP SKILLS SOCIAL ENTREPRENEURSHIP 7. COMMUNICATION SKILLS ★ Mainly facing problems of the society like poverty, economic problems, inequality, WHAT IS A BUSINESS PLAN? etc. ★ It is a written document describing the ★ Create scholarship, livelihood, shelters nature of the business, the sales and ★ They exist to create a solution to a problem. marketing strategy, and the financial ○ Ex. Bayani Brew background, contains the projected profit and loss statement.  HARD SKILLS VS SOFT SKILLS OLD APPROACH NEW APPROACH HARD SKILLS SOFT SKILLS Only a few people in Breakthroughs are required in - So technical - Reflect your traits, any organization were every corner of a competitive - 3R’s (Reading, Writing, attitude to your work considered the organization. Rhythmic) - Helps build longer lasting creative - Can be measured relationship with peers ones. - Performing a specific job - Human resource - Strategize personnel have several Breakthrough ideas are Specialists in breakthroughs - Can be mastered tests that can show your needed only in the are still critical, but more through consistent behavior towards work. ‘strategic’ areas of the people must become involved training business. in creativity to tackle the - We can see the increasing number of certification through this challenges that are emerging. Engineers were The creativity that exists CORE COMPETENCIES IN ENTREPRENEURSHIP (SOFT routinely brought in to naturally within everyone in SKILLS) fix major production or the organization must be A. Opportunity seeking customer problems. harnessed. B. Persistence C. Commitment to work Consultants were hired A common process for D. Demand efficiency and Quality to help achieve a dramatic improvement must E. Risk taking breakthrough in be created F. Goal Setting products and markets. G. Information seeking H. Systematic Planning and Monitoring WHAT IS CREATIVITY? I. Persuasion and Networking ★ This is the act of turning new and J. Self-confidence imaginative ideas into reality. ★ The use of the imagination or original REWARDS IN BUSINESS ideas, especially in the production of an 1. Higher possibilities for greater income. artistic work. 2. “Be your own boss” ○ The state or quality of being 3. Opportunity to stretch and use your creative. capacity and creativity ○ The ability to create meaningful 4. Opportunity to help others new forms; 5. Build an entrepreneurial legacy ○ Originality ○ The process of using creative RISKS IN BUSINESS ability. 1. Possibility of Failure 2. Unpredictable state in industry ROLE OF CREATIVITY IN INNOVATION: OR CREATIVITY 3. Longer time of working hours AND PROBLEM-SOLVING 4. Wide range of responsibilities ★ Creativity can take the form of single acts of creation. BUSINESS IDEA GENERATION ★ When it is directed to innovation CREATIVITY AND INNOVATION AS QUALITY OF ‘problem-solving’ it becomes part of a ENTREPRENEURS process that may consist of several ★ There are a lot of good ideas, but there are phases. ones that are exceptionally brilliant. ★ The ability of individuals to solve problems ★ The reason behind successful businesses, by creating new knowledge becomes a key is the entrepreneur’s creativity and/or qualification for success. innovative qualities. ○ Problem-solving ★ The lack of creativity may lead to death in ○ Problem finding one’s business. ○ Prediction and anticipation ★ Entrepreneurs who want their businesses to be successful are challenged to WHAT IS INNOVATION? continuously innovate and create ★ This refers to changing or creating more something new that is valuable to their effective processes, products and ideas. targets ★ Business that innovates, create more efficient work processes and have better productivity and performance.  ★ Innovation is implementing new advances SETTING UP A SMALL BUSINESS or significant improvements to products, ★ The entrepreneur must make their business services or process that create value for work by eliminating any hindrances or business, government or society. distraction to their goals. ★ Overarch strategies and outline the tactics TYPES OF INNOVATION + EXAMPLES to accomplish them. TECH INNOVATION: Electricity, Semiconductors, The ★ Successful entrepreneurs are disciplined Internet enough to take steps every day toward the achievement of their objectives. PRODUCT INNOVATION: Cars, Planes, The iPad WHO CAN START A BUSINESS? PROCESSINNOVATION: Assembly Line, Kaizen, Lean ★ Anyone can start a small business unit. Startup ★ He may be an existing entrepreneur or a new one, having a business background or FINANCE INNOVATION: Mortgages, Derivatives, not educated or uneducated from rural Venture Capital area or urban area. CULTURAL INNOVATION:: Civil Rights, WHAT IS CAPITAL? Entrepreneurship, K-Pop ★ Capital investment refers to any amount of money that a company usually receives to LEGAL INNOVATION: Corporations, Class Action help it achieve and further its business Lawsuits, Startup Visa goal. ECOSYSTEM INNOVATION: Rome, London, NYC, Silicon HOW CAN I ARRANGE MY CAPITAL? Valley ★ The entrepreneur must realize and find out the amount and the duration of finance ★ For businesses, this could mean required as well as the duration for such implementing new ideas, creating dynamic finance is needed in the business. products or improving your existing products. ★ Being innovative does not mean inventing, FIXED CAPITAL WORKING CAPITAL innovation can mean changing your business model and adapting to changes Investing capital in the Working capital is the in your environment to deliver better long-term assets of an capital invested in the products or services. enterprise. current assets of an ★ Businesses that innovate create more enterprise. efficient work processes and have better productivity and performance. Serves strategy- ★ Innovation is extremely essential to any oriented objectives Serves operational organization, especially in today’s objectives hyper-competitive business market. The successful exploitation of new ideas is 7 SOURCES OF START-UP FINANCING critical to a business’s ability to improve its 1) Personal Investment processes, bring new and improved 2) Love Money products and services to the market, 3) Angels increase its overall efficiency and 4) Venture Capital productivity, and, most importantly, 5) Government Grants and subsidies/Loan improve its profitability. 6) Bank Loans 7) Initial Public Offering [3A] FACTORS REQUIRED TO BE CONSIDERED WHILE SETTING UP ANY SMALL BUSINESS The first step to starting a business is to figure out what product or service you will offer. In this lesson, we’ll talk about where you can find ideas. WHAT IS MARKET? ★ A market is a place where buyers and sellers can meet to facilitate the exchange or transaction of goods and services. HOW CAN I SELECT THE LINE OF RIGHT BUSINESS FOR a) Think of what interests you and ME? then find a business that’s related to it. b) Think of a business and then research on the industry it belongs to. ★ Once you have found that industry, you can look at the external forces that affect it. a) Political policies b) Economics c) Social d) Technology e) Environment WHAT IS THE RIGHT LOCATION OF MY BUSINESS? BUSINESS LOCATION ★ means the physical location (address) of ★ The process of launching a business the business location. begins when the entrepreneur starts ★ If business location includes more than one thinking about a line of business, which can parcel, all parcel numbers must be listed be undertaken by him. on the Application for Business License and a) He may consider business receive a Zoning Clearance approval opportunities as per the MARKET before a Business License will be issued. DEMAND. b) He may go for an EXISTING FACTORS WHICH INFLUENCE THE IMPORTANCE OF PRODUCT OR A NEW PRODUCT. But LOCATION before taking any step he has to 1) The business activity ascertain the profitability of the 2) The number/location of competitors business and the amount of 3) Reliance on personal visits by customers capital investment. 4) The methods used to contact customers ★ Having estimated the profitability and risk 5) Reliance on local supplies involved, the entrepreneur must decide 6) Reliance on specialized labor skills which line of business could be desirable to pursue. WHY IS GOOD LOCATION IMPORTANT? INTERNAL SOURCES OF IDEA ★ The best location can increase brand visibility. ★ Entrepreneurs are observant. They are able ★ Easy access is a huge advantage. to find ideas in personal everyday ★ Think about suppliers' accessibility. experiences, because they are always asking themselves, “What do people need, and what is the best way to give it to HOW TO SELECT YOUR BUSINESS WORKFORCE? them?” Look at your experiences, skills or ★ An entrepreneur cannot run the business even personal challenges for possible alone. He has to employ people to help business ideas. him. Skilled and Semi-skilled workers have a) Education to be recruited particularly for b) Previous work experience manufacturing work. Before starting the c) Crisis business, the entrepreneur must find out d) Hobbies whether he will be able to get the right type e) Talents of employees for the activities involved. EXTERNAL SOURCES OF IDEA EXAMPLE OF GREAT WORKPLACE VALUES ★ Achievement/Accomplishment ★ Aside from looking at your personal ★ Inner Harmony, Peace of Mind experiences, you can also study what is ★ Belonging/Caring going in the world around you. These can ★ Integrity give you an idea of up-and-coming trends, ★ Fun technology, or consumer needs. To make it ★ Personal Growth, Learning, and easier to find ideas from external sources Self-Actualization easier, focus on a particular industry ★ Financial Stability (example: food, beauty and wellness, computer technology, education, etc.). You can approach it in two different ways:  [3B] RECOGNIZING POTENTIAL MARKET THE POTENTIAL MARKET ALLOWS YOU TO: POTENTIAL MARKET ★ Identifying new customers to ensure the ★ This is the part of the market you can future of your business. capture in the future. ★ Think proactively about ways for your ★ It includes the demographic groups of business to grow and change. customers who will purchase your product ★ Show the potential of your business to or services in the future who might become investors or collaborators. your regular customers from the expansion ★ Increase your profit. of your business. ★ Create a strategic plan when there will be changes in the economy or market. VALUE PROPOSITION ★ This is the unique selling proposition of the enterprise. ★ The proposition is an easy-to-understand reason why a customer should buy a product or service from that business. ★ The ideal value proposition is to-the-point and appeals to a customer's strongest decision-making drivers. POTENTIAL MARKET DURING THE PANDEMIC ★ Grocery Stores and Other Essential Retailers ★ Online Shopping ★ Consumer Health Products ★ Personal Protective Equipment ★ DIY TARGET CUSTOMER ★ A group of potential customers to whom a company wants to sell its products and services. ★ This group also includes specific customers UNDERSTANDING A VALUE PROPOSITION to whom a company directs its marketing ★ A value proposition should clearly explain efforts. how a product fills a need, communicate ★ A target market is one part of the total the specifics of its added benefit, and state market for a good or service. the reason why it is better than similar products on the market. ★ The proposition is an easy-to-understand reason why a customer should buy a product or service from that business. REQUIREMENTS OF A VALUE PROPOSITION ★ It should always be displayed prominently on a company's website and in other consumer touch points. ★ It also must be intuitive, so that a customer can read or hear the value proposition and understand the delivered value without needing further explanation. ★ A successful value proposition typically has a strong, clear headline that communicates the delivered benefit to the consumer. ★ The headline should be a single memorable sentence, phrase, or even a tagline.  ★ In order to craft a strong value proposition, EXAMPLES companies will often conduct market - Flickr for video. research to determine which messages - Friendster for dogs. resonate the best with their customers. - The Firefox of media players. HOW TO DEVELOP A VALUE PROPOSITION? ERIC SINK’S VALUE POSITIONING ★ Understand the benefits customers receive ★ Eric Sink writes that marketing is somewhat ★ Connect benefits to the value like an iceberg - the part sticking out of the ★ Target your audience water is highly visible. For this Eric suggests ★ Differentiate the Product and Service the following format for positioning. ★ Put everything into a clear and easy to read sentence TEMPLATE ★ Place it everywhere - Superlative ("why choose this product"). ★ Test its effectiveness - Label ("what is this product"). - Qualifiers ("who should choose this product"). - Sample(s) - The easiest operating system for netbook PC’s. - The most secure payment gateway for mobile e-commerce. GUY KAWASAKI ★ Lose weight with our cloud-based diet application. VERB ACTION Application Does what Differentiation What sets it apart GEOFF MOORE’S VALUE POSITIONING STATEMENT ★ Probably the most popularized - in his seminal book Crossing the Chasm - Geoff HOW DO YOU CHOOSE THE RIGHT PRODUCT TO SELL? Moore suggests a specific template for HERE ARE A FEW QUESTIONS: outlining your value positioning. 1) What are your primary considerations for ★ In addition to the first part below, Moore choosing a particular product? also introduces a second statement 2) Can you meet the needs of the customer focused on competitive positioning. and solve a specific problem? 3) How capable are you to produce the TEMPLATE product? For _________ (target customer) who ________ 4) What is the size of your potential reachable (statement of the need or opportunity) our market? (product/service name) is ____________ 5) Would you need to comply with (product category) that (statement of benefit) government rules and regulations? ____________. 6) If a similar product exists, can your product be superior in its functionality, presentation SAMPLE or marketing? For non-technical marketers who struggle to find 7) What barriers must be overcome for a return on investment in social media our product is potential new product entry? a web-based analytics software that translates 8) What are the potential sales, growth, engagement metrics into actionable revenue profits, and time for payback? metrics. RECOGNIZING THE IMPORTANCE OF MARKETING VENTURE HACKS’ HIGH-CONCEPT PITCH MIX IN THE DEVELOPMENT OF MARKETING ★ A high concept pitch distills a startup’s STRATEGY vision into a single sentence. It’s the perfect tool for fans and investors who are MARKETING spreading the word about your company. ★ Marketing … ○ Is not ADVERTISING [Proven industry example] for/of [new domain]. ○ Is not SELLING  ○ Is not PROMOTION THE TARGET MARKET ★ Because the organization obviously can’t ★ “The aim of marketing is to make selling satisfy all consumer needs, it must unnecessary.” - Peter Drucker (1973) concentrate its efforts on certain needs of ★ Businesses need to sell products if they are a specific group of potential consumers to achieve their objectives. ★ This is the target market -- one or more ★ Marketing is about ensuring that specific groups of potential consumers businesses can sell as many products as toward which an organization directs its possible in order to make profits. marketing programme. WHAT DOES IN INVOLVE? CUSTOMERS DEVELOPMENT Marketing is a very complex concept. It involves: ★ Research ★ Product design ★ Setting prices WHY IS IT NEEDED? ★ Each year, millions of new products are launched. ★ Without careful marketing, these products would fail “Marketing is the science and art of MARKETING VS SALES exploring, creating and delivering value to satisfy THE MARKETING CONCEPT the needs and wants of a target market, ★ Organizations must concentrate on the maintaining loyalty at a profit.” customer and not the product or the - Professor Philip Kotler company. ★ Organizations should revolve round the NEEDS (EAT, DRESS, MOVE) customer and not the other way around. ↓ ★ The purpose of a business is to create and WANTS (CHEESEBURGER, TUXEDO, CAR) keep a customer. ↓ MARKETER THE SELLING CONCEPT ★ Focuses on matching your product or WANTS + BUYING POWER = DEMAND service features and benefits in a way that suits the prospect sales. MARKETING’S FIRST TASK ★ Process is anything that you do to close the Discovering Consumer Needs sale and get. ★ signed agreement or contract ★ It is anything that engages you with the prospect or customer on a personal level rather than at a distance THE MAJOR ROLE OF MARKETING AND SELLING People DO NOT buy the products people buy. HOW MARKETING BECAME SO IMPORTANT? ★ Informs and educates MARKETING’S SECOND TASK ★ Selling your product Satisfying Consumer Needs ★ Grows a business ★ Engaging with your customers ★ Builds and sustains identity ★ Provides an even playing field THE MARKETING MIX ★ The marketing mix is the combination of variables that a business uses to carry out its marketing strategy and meet customer needs. ★ The marketing mix is often called the 4Ps:  ○ Product 3. Copycat - a product that has been ○ Price designed, branded or packaged to look ○ Place exactly like that of a well-established ○ Promotion competitor; a cheap imitation. ★ The tools available to a business to gain 4. Niche - goods or services that serve a the reaction it is seeking from its target specific customer base and product market in relation to its marketing category. A part of a larger market objectives distinguished by specific preferences and ★ 7Ps – Price, Product, Promotion, Place, customers. People, Process, Physical Environment ★ Traditional 4Ps extended to cope with THE PRODUCT LIFE CYCLE today's changing environment The product lifecycle looks at the sales of a product over time. STAGES IN THE PRODUCT LIFECYCLE PRODUCT a. Development – high costs but no sales b. Launch – high expenditure on promotion and product development, low sales c. Growth – sales increase and product should break-even d. Maturity – sales stabilize, less expenditure on promotion needed, revenue & profit should be high e. Decline – sales decline, extension strategies can be adopted or the product withdrawn ★ Design, Technology, Usefulness, EXTENSION STRATEGIES Convenience, Value, Quality, Packaging, ★ Extension strategies should maintain or Branding, Accessories, Warranties increase sales. They include: ★ Product refers to the functions and features ○ Modifying the product of a good or service. ○ Reducing the price ★ Should satisfy the needs of the customer ○ Adding a feature ★ May have a Unique Selling Proposition ○ Promoting to a different market (USP) sector ★ ‘Product’ also includes a range of factors such as packaging, quality, warranties, PRICE after-sales service and branding THE FOUR GENERAL TYPES OF PRODUCTS 1. Breakthrough - give the customer a product which is technologically and creatively superior to the existing product which is present in the market. (Breakthrough innovations harnessing new technology) ★ Strategies: Skimming, Penetration, 2. Differentiated - one that shares many Penetration, Psychological, Cost-Plus, Loss qualities with other, similar products and leader etc. yet has a unique selling point or difference. ★ The price of a product will depend on: (ex: cars) ○ The cost to make it ○ The amount of profit desired  ○ Other objectives of the business MARKETING COMMUNICATIONS MIX ○ The price competitors charge ○ The price customers are willing to pay -- Is there a high demand? -- Is demand sensitive to changes in price? ★ The price must be one that the customer thinks is good value for money. ★ This is not the same as being cheap! ★ Prices have a great psychological effect on customers. PRICING STRATEGIES & TACTICS ★ Skimming THE PROMOTIONAL MESSAGE SHOULD … ★ Penetration ★ Grab Attention ★ Economy ★ Stimulate Interest ★ Premium ★ Create Desire ★ Psychological ★ Promote Action ★ A price is set which customers perceive as lower than it is e.g., P39.99 instead of P40 PROMOTIONAL MIX ★ Most businesses use a combination of different promotional activities. ★ The chosen promotional mix will depend on: ○ Cost ○ Target market ○ Product ○ Competitors PLACE PROMOTION ★ Retail, Wholesale, Mail order, Internet, Direct Sales, Peer-to-Peer, Multi-Channel ★ The means by which products and services get from producer to consumer and where they can be accessed by the consumer ★ The more places to buy the product and the easier it is made to buy it, the better for the business (and the consumer?) ★ Special Offers, Advertising, Endorsements, ★ Products should be conveniently available User trials, Direct mailing, Leaflets/posters, for customers to buy Free gifts, Competitions, Joint ventures ★ ‘Places’ include: ★ Strategies to make the consumer aware of ○ Stores the existence of a product or service ○ Mail order ★ NOT just advertising ○ Tele sales ★ The aims of promotion are to: ○ Internet - The use of e-commerce ○ Raise awareness (promoting and selling on the ○ Encourage sales internet) has grown massively ○ Create or change a brand image over recent years. ○ Maintain market share ○ Increase market share Jobber → one that buys merchandise from POSITIONING manufacturers and sells it to retailers. ★ - This is an effort to influence consumer perception of a brand or product. RELEVANT LOCATION DRIVERS ★ Developing a product and brand image in a. Physical proximity to target markets the minds of consumers. b. Customer Traffic Flow ★ Effective positioning involves a good c. Industry Clustering understanding of competing products and d. Convergence of Multiple Industries the benefits that are sought by your target e. Population Concentrations market. f. Activity hubs g. Growth potential Let’s take a look at some examples: h. Business climate 1. Apple computers. What is the idea you i. Cost of doing business and producing have about Apple? goods and services - A progressive technology company that delivers aesthetic PEOPLE high-tech products that are very cool? That’s their position in relation to computers (an already understood concept) and that’s effective PR. 2. Listerine. What you think? - In the realm of mouthwash, Listerine is the one that kills germs? That’s their position in the known territory of mouthwashes. PHYSICAL ENVIRONMENT ★ Employees, Management, Culture, Customer Service ★ People represent the business ★ The image they present can be important ★ First contact, often human – what is the lasting image they provide to the customer? ★ Extent of training and knowledge of the product/service concerned ★ Do staff represent the desired culture of the ★ Smart, Run-down Interface, Comfort, business? Facilities ★ The ambience, mood or physical NOTE: As your customers’ needs change, your presentation of the environment company needs to change to meet them. ★ Packaging. ★ Internet/web pages. ★ Paperwork (such as invoices, tickets......). ★ Brochures.  ★ Furnishings. THE MARKETING CONCEPT ★ Uniforms. ★ Focus on Customer Wants and Needs ★ Business cards. ★ Integrate Organization’s Activities to Satisfy ★ The building itself (such as prestigious Customer Needs and Wants offices or scenic headquarters). ★ Achieve Organization’s Long-Term Goals ★ Mailboxes and many others...... by Satisfying Customer Wants and Needs PROCESS COMPARING SALES AND MARKET ORGANIZATIONS STAGES IN CONSUMER DECISION PROCESS DEVELOPING COMPETITIVE ADVANTAGE ★ Create Customer Value MARKETING MODEL ★ Maintain Customer Satisfaction ★ Build Customer Relationship EVOLVING MARKETING MIX ★ The marketing mix will evolve over time. ★ The product portfolio may grow as a business becomes more established. ★ More expensive promotional activities may be adopted as a firm’s revenue increases. ★ More outlets may be opened, or products sold via the internet. ★ Price may change as demand changes. NOTE: If performance is lower than expectations, MARKETING MANAGEMENT PHILOSOPHIES satisfaction is low. If performance is higher than expectations, satisfaction is high. WHY DO SO MANY PRODUCTS FAIL? ★ market size may have been overestimated ★ actual product may not have been designed really well ★ competitors fight back harder than expected ★ priced too high ★ advertised poorly ★ corporate politics despite poor marketing research findings ★ costs of product development are higher than expected ★ incorrectly positioned in the market  WRITING A DETAILED BUSINESS PLAN opportunity that involves underutilized or unexploited resources that can be used to create BUSINESS PLAN added value. ★ Document that describes your business in terms of what it does, the products and REPRESSED DEMAND OPPORTUNITY: A repressed services it offers, your business strategy demand opportunity capitalizes on existing and business goals, and your action plan demands that the current offerings don’t cater to. outlining how you plan to achieve your For example, Uber capitalized on a repressed goals and earn money. demand for an on-demand cab system in the existing cab industry. WHY WRITE A BUSINESS PLAN? 1. A business plan is an important tool for any TECHNOLOGY OPPORTUNITY: A technology entrepreneur to judge the effectiveness of opportunity is a type of business opportunity that what you have been doing. allows businesses to introduce new technologies 2. Your business plan can also be a useful that can be used in existing markets. tool to help you raise capital for your business venture. COMPETITIVE OPPORTUNITY: A competitive 3. Provides an operating plan to assist you in opportunity allows businesses to introduce new running your business, this improves your products or services that can provide more value probability of success. than their competitors while solving the problems of 4. Communicates your idea to others, serves the target market better. as a “selling tool”, and provides basis for your financing proposal. STRATEGIC PARTNERSHIP OPPORTUNITY: A strategic partnership opportunity involves the chance to THE FIVE COMPONENTS OF A BUSINESS PLAN collaborate with businesses from complementary industries, allowing them to access new resources, 1. Opportunities strengthen their product offerings, and increase 2. Execution Plan their competitive advantage. 3. Company Overview and Team 4. Financial Plan IMPORTANCE OF A BUSINESS OPPORTUNITY 5. Executive Summary ★ The chance to build a business: A business opportunity can be an existing unsolved OPPORTUNITIES problem in the market or a new problem Where the real meat of your plans lives – it includes arising from current trends, which is the information about the problem that you’re solving, chance to build a business. your solution, who you plan to sell to, and how your ★ The chance to avoid failure: A business is product or service fits into the existing competitive likely to fail without opportunities. This is landscape. because they are essential for implementing ideas and innovations that FACTORS can make a business successful. They ★ These factors can be a source/inspiration allow businesses to take the right decision to get ideas. at the right time. ○ Problem and solution ★ The chance to grow: Opportunities allow ○ Target market businesses to create and implement ideas ○ Market analysis and market and innovations. It is also a chance to research improve performance by solving existing ○ TAM SAM SOM problems better, providing a more refined ○ Your ideal customer – gender, value proposition to the target market, and age, like, dislikes building a more efficient business model. ○ Key customers ★ The chance to maximize profits: A business ○ Competition – competitive price opportunity involves favorable conditions ○ Future Products and services that can be used to increase profits. These conditions include but are not limited to TYPES OF BUSINESS OPPORTUNITY the availability of resources, the existence NEW MARKET OPPORTUNITY: A new market of market demand, and the presence of opportunity involves an untapped market, which favorable competition. The goal is to find gives businesses the chance to create and solutions that can potentially maximize implement ideas and innovations without facing profits while solving problems. much competition. UNTAPPED RESOURCE OPPORTUNITY: An untapped resource opportunity is a type of business  EXECUTION PLAN COMPANY OVERVIEW AND TEAM ★ Includes everything about how you’re ★ You’ll review the structure of your company actually going to make your business work. and who the key team members are. These You’ll cover your marketing and sales details are especially important to plans, operations, how you’ll measure investors, as they’ll want to know who’s success and the key milestone that you behind the company and if they can expect to achieve. convert a good idea into a great business. ★ The “how-to” for your venture ★ The company (business) overview is a ★ It should be a tool that you use with your component of a business plan that team on a regular basis to manage the provides a summary of the business. business, communicate your critical goals ★ This section shows the audience your and timing of deliverables, and celebrate company's structure, values, mission, and your successes. offerings. It can also highlight what makes ★ Describes the transition of your team and your organization stand out from other your company from where it is today to the competitors. at-scale company you envision in the ★ Referred to as the "company description" or future. "summary." ★ The execution plan will outline leadership, ★ Is an informational statement about a structural and cultural changes to be company that is designed to provide made as the business grows. people with some basic data about the company and its operations. COMPONENTS OF EXECUTION PLAN ○ Team 1. Market and Sales Plan ○ Company overview 2. Positioning Statement – benefits ○ Mission statement 3. Pricing – depends on your positioning ○ Intellectual property 4. Promotion – communication plan to ○ Business structure and ownership appeal to our customer ○ Company history 5. Packaging – require by the law ○ Location 6. Distribution – channels 7. Original Equipment Manufacturer – a The leaders who work most effectively, it company that builds a product designed seems to me, never say ‘I.’ And that’s not because for end-users they have trained themselves not to say ‘I.’ They 8. Milestones – plan to achieve don’t think ‘I.’ They think ‘we’; they think ‘team.’ They 9. Traction – initially started and enjoying the understand their job to be to make the team benefits function. 10. Metrics – measurements of what you – Peter F. Drucker wanted to achieve RISKS Are possible events that, should they happen, could cause a company’s revenues or profits to be lower than what the owner had forecast. They are a standard part of a thorough business plan, whether the plan is designed for internal use by the management team or will be presented to outside investors. Risk factors are also called threats because they threaten the business’s success and in extreme circumstances even its survival. ★ Product risk is the risk that the product can't be created. ★ Market risk is the risk that the market will develop differently than expected. ★ People risk is big in companies that depend on having certain employees or certain kinds of employees. ★ Financial risk is the risk that a company will run out of money or mismanage their money in some way. ★ Competitive risk is the risk that a competing product or service will be able to win. TIPS IN WRITING COMPANY OVERVIEW ★ ENHANCED ROI PORTFOLIO: Important Outline what this business is all about: components of financial planning include ★ What is it, what does it do? financial decisions, risk assessments, cash ★ Where does it do it? management, liability management, and ★ How was it established and when? goal planning. ★ By whom? ★ FOR BETTER INVESTMENT: Money's worth has ★ Why was it set up? drastically decreased during the last few ★ Has it been successful and if not why not? decades. It is only expected to get worse over the next few months. As a result, FINANCIAL PLAN managing your finances effectively is ★ This is often what entrepreneurs find most essential for a better and safer future. daunting, but it doesn’t have to be as ★ GUIDED RETIREMENT PLAN: Planning your intimidating as it seems. finances wisely can help you create a ★ It is a guide for the company to achieve its sufficient retirement fund even when your goal. salary is no longer enough to cover your ★ This can be considered as a roadmap to expenses. In order to accomplish your life's success, with detailed plans and budgets goals, it is typically a good idea to start saying how they will be achieved. investing early. ★ The plan explains how the entrepreneur intends to meet financial obligations and PROCESS maintain the venture’s liquidity. ★ Preparation of sales conjecture. ○ Sales forecast: wrap estimate, 6 – ★ Decide the number of funds – fixed and 12 months working capital. ○ Personnel plan: payroll issues ★ Conclude the expected benefits and profile (wage, benefit, taxes) benefits e.g., ts to decide the number of funds that can SSS, Philhealth, HMO be provided through internal sources. ○ Income statement, or profit or loss ★ This causes us to evaluate the requirement statement: (Sales – Expenses = from Profit/Loss) ★ external sources. ○ Cash flow statement: outgoing ★ Recognize the conceivable sources and set and inflow of cash up the ○ Balance sheet: Assets = Liabilities ★ money spending plans, consolidating + Equity these variables. ○ Use of funds: Assets, capital, expansion of business EXECUTIVE SUMMARY ○ Exit strategy – bankruptcy ★ Synthesis and combination of everything. (liquidate or sell) ★ 1 – 2 pages ★ Contains everything that is important and IMPORTANCE relevant to the business audience. ★ INCOME MANAGEMENT: It can assist you in ★ It is written at the end of the process and managing your money as effectively as inserted at the very top of the business possible. It can also help you create a plan plan to get a well-reserved, concise that will make it easier for you to determine summary of the information that follows. how many resources you will need each month for spending. CRITICAL COMPONENTS OF EXECUTIVE SUMMARY ★ IMPROVED CASH FLOW: – Growth in income 1. Sentence Overview results in a rise in total retained earnings. 2. Problem and Solution This method of prioritizing your expenses 3. Target Market can help you maintain track of your 4. Competition working capital, cut prices for overhead, 5. Company Overview and Team and ultimately increase your overall 6. Financial Summary capital. 7. Funding Requirements ★ FOR BETTER INVESTMENT: A wise financial 8. Milestone and Traction strategy considers your unique circumstances, risk tolerance, and CONTENT OF THE EXECUTIVE SUMMARY long-term objectives. Then, based on your ★ VGMO of the Business - The business plan requirements and goals, it helps you make must depict the fundamental the greatest financial decisions. Future characteristics, nature, philosophical financial resources can be created and values, identity, and image of the business. planned with the help of financial planning. VISION ★ Where are we going? ★ What does a firm ultimately like to become? MISSION ★ How will you achieve the vision? ★ It usually begins with the word “to.” GOALS ★ It is a bigger picture of what one wants to achieve. ★ An intermediate result to be achieved by a certain time as part of the grand plan. OBJECTIVES ★ WHAT is to be accomplished by WHEN. ★ It should be quantified if possible.