Entrepreneurship Reviewer.docx

**Entrepreneurship** - - ' **For students**, entrepreneurship is often seen as a **pathway to innovation, personal growth, and financial independence.** It also represents an opportunity to apply their knowledge in real-world settings, develop practical skills, and contribute to their commu...

**Entrepreneurship** - - ' **For students**, entrepreneurship is often seen as a **pathway to innovation, personal growth, and financial independence.** It also represents an opportunity to apply their knowledge in real-world settings, develop practical skills, and contribute to their communities. **Who are the Entrepreneurs?** Entrepreneurs are individuals who **identify business opportunity** and take the **initiative to create, organize**, and **manage a new business venture**. They are **characterized** by their **willingness to take risks, innovate, and find solutions to problems**. Entrepreneurs are **often seen as leaders and visionaries** who drive economic growth and development by creating new products, services, or processes. **Characteristics of an Entrepreneur:** 1. 2. 3. 4. 5. **Famous Entrepreneurs:** 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. **Core Competencies in Entrepreneurship** 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. **Lesson 2: Planning the Enterprise** **What is a business plan?** - - - **Purpose of a Business Plan:** 1. 2. 3. 4. **Introduction to a Business Plan** 1. 2. 3. **Understand the Customer Demographics and Context** a. 1. 2. **Cultural and Social Factors** 1. 2. **Identify Key Market Problems and Needs** **Common Market Problems:** a. 1. 2. **b. Affordability and Economic Constraints:** 1. 2. **c. Lack of Information and Transparency:\ ** 1. 2. **d. Infrastructure and Logistics Issues:** 1. 2. **4 SPECIFIC MARKET NEEDS:** 1. Need: There is a need for products and services that are both affordable and accessible to a broad range of customers, including those from backgrounds or remote areas. 2. Need: Consumers need access to clear, accurate, and comprehensive information about products, services, and financial options. This includes educational resources that help them make informed decisions. 3. Need: Solutions that improve the customer experience, such as easy-to- use online platforms, efficient delivery services, and customer support, are in demand. 4. Need: Products and services that cater to local preferences and cultural practices can better meet the needs of Filipino consumers. **Opportunity Seeking - 2** **Entrepreneur** **Creates value** by introducing products or services or **finding better ways of making them**. **Ordinary Businessman** The main objective is **simply earn profit** from producing, buying, and selling good and services. **Personal Sources Opportunities:** - - - - - - - - **Education and Training** For many entrepreneurs, **a key springboard in capturing business opportunities** lies in their education and training, which **provides them the required competence and knowledge** in creating quality products and services for specific customers. **Innate Skills and Hobbies** For some entrepreneurs, **their way to success emanates from the things they love to do**. True enough, innate skills that translate into hobbies can become more expedient catch nets of entrepreneurial opportunities. **Work Experiences and Exposures** Work experiences and exposures greatly facilitate the ease in capturing business opportunities among entrepreneurs. **Previous employment became channels for entrepreneurs to access suppliers, potential customers, and to learn the mechanics and processes** needed to create products or fulfill services. **Family Ties and Connections** The **family unit** is vital to many entrepreneurs, **Parents, siblings, cousins, aunts and uncles, and even second generation relatives** have **provided financial, emotional, and career support** for many Filipinos. Family has become a treasure trove of entrepreneurial opportunities. **Conducive Entrepreneurial Environments** The **locality where a person lives, works, or has known for a long-time is bursting with opportunities.** The locality provides a very conducive environment for entrepreneurs to find ways to capitalize markers by offering new or better products and services. **Serendipitous Encounters** The occurrence and development of unexpected even in a happy and beneficial way. **Macro-environment** Refers to the "big or macro forces" that affect the area, the industry, and the market. It influence how business should be conducted, how consumers will behave, how supply and demand will move, how different competitors would position themselves and how the cost of doing business will proceed. Micro-environment can be divided into 5 categories: **SPEET** **S ocial** **P olitical** **E conomic** **E cological** **T echnological** **Social-cultural Factors** Represent a general view of locality's traditions, custom, beliefs, norms, and perceptions. Includes the demographics and cultural dimensions that govern the relevant entrepreneurial endeavor. **Political Factors** Defines the governance system of the country or the local areas of business. Includes political policies and process e s, as well as permits, approvals, and licenses necessary to operate the business. **Economic Conditions** Primarily caused by changes or movements in the Philippine economy. Affects revenues and cost and the supply and demand of the industry and the business being studied. **Ecological Environment** Includes all natural resources and the ecosystem that includes all human beings, animals, plants, and minerals. Includes environmental sources such as weather, climate, climate change, and other associated factors such as water shortages. **Technological Environment** Include the pace of technological change and technical developments that have the potential for wide-ranging effects on society. The entrepreneur is left with no choice but to invest in new technologies in order to keep up with competition. **Opportunity Seizing** At this stage, the entrepreneur must be able to determine the critical success factors that enable other players in the same industry to succeed while, at the same time, be vigilant about those factors that cause other businesses to fail The question for the entrepreneur in Opportunity Seizing is: ***"Will I be able to manage, to my advantage, the critical success factors and avoid the critical failure factors?"*** **CRAFTING A POSITIONING STATEMENT** In order to craft a positioning statement, the entrepreneur is advised to look at other competitors (or substitutes) in the marketplace. Going through the process of questioning, the entrepreneur will be able to come up with each of the competing products' Main Value Proposition (MVP) and from there, work on his own positioning. 1\. What are the main customer segments? 2\. What are the different product attributes and features of each of the competitors? 3\. What are the existing marketing practices of the various competitors? 4\. What are the market preferences of consumers when it comes to the products being offered?   **CONCEPTUALIZING THE PRODUCT OR SERVICE OFFERING** After making an assessment of the competing products, the entrepreneur must then conceptualize his or her own products. A concept is an 'idealized abstraction of the product or service to be offered to the preferred market of the entrepreneur. Case Example: ***Cozy Condo Cocoon Product Concept*** In order to come up with the product or service concept, the following options or directions may be considered by the entrepreneur: 1. 2. 3. 4. **DESIGNING, PROTOTYPING, AND TESTING THE PRODUCT** From conceptualization, the entrepreneur proceeds to the design, prototyping, and testing of the concept. Designing means that the entrepreneur must render the concept and translate it into its very physical and very real dimensions (measurement). This entails building a prototype of the product that will be ready for actual testing by the entrepreneur and then, later on, subject to testing by potential customers through focus group discussions (FGD), surveys, product demonstration sessions, and the like. The next thing the entrepreneur must do is to assess how much resources are available in order to seize the opportunity and what kind of organizational set-up will work best for this kind of opportunity. **IMPLEMENTING, ORGANIZING, AND FINANCING** Good planning and good programming are essential to have good implementation. The entrepreneur must begin with the end in mind, or his or her desired end results, for the chosen opportunity. A good planner and programmer must make several important choices to achieve the desired end results. First is to choose the correct technology, the one that would produce the output that would meet the quality specifications of the customers. Second is to choose the right people who can perform the technical and managerial functions necessary to realize the desired end results. Third is to design the operating workflow that would assure the effective, economical, and efficient production of the output. Fourth is to specify the systems and procedure§ that would govern the enterprise, motivate and discipline the work force, and satisfy the customers. Fifth is to design the organizational architecture that would allow the people to function at their best. Given the above considerations, the entrepreneur must be diligent in taking the necessary steps toward determining the required resources. 1. 2. 3. 4. 5. **PERSONAL SCREENING** **5 BASIC QUESTIONS ABOUT PREFERENCES AND CAPABILITIES** The entrepreneur has to first consider his or her preferences and capabilities by asking five basic questions 1. 2. 3. 4. 5.  **ROLES OF OPERATION MANAGEMENT** **The 12Rs of Opportunity Screening** The \"12 Rs \" of opportunity screening is a framework that some organizations use to evaluate and prioritize business opportunities or projects. Each \"R\" represents a specific aspect or criterion that can be considered during the screening process. The goal is to assess opportunities comprehensively by examining them from various angles. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. **WHERE TO USE?** These 12 criteria can be better managed if quantified and formed into a matrix to help the entrepreneur concretize the evidence that the chosen opportunity (or opportunities) is well worth pursuing.  **Note for the Matrix:** \*Rating Weight-Score Note: Criteria numbers 1 to 10 are positive indicators, meaning the higher the scores, the better. Criteria numbers 11 and 12 are negative indicators, meaning the lower the scores, the better. Hence, the rating system is reversed for the negative indicators. **THE PRE FEASIBILITY STUDY** A pre-feasibility study is an initial assessment or analysis conducted to determine the viability and potential of a proposed project, business venture, or investment opportunity. It serves as a preliminary step before committing significant time, resources, and effort to a full-scale feasibility study or project development. The primary purpose of a pre-feasibility study is to help stakeholders make informed decisions about whether to proceed with further investigation and development of the project. **4 FACTORS IN PRE FEASIBILITY STUDY** 1. [Market perspective], **on the other hand**, *refers to the viewpoint or outlook of individuals*, *organizations, or experts regarding a particular market.* a. b. c. **2. TECHNOLOGY ASSESSMENT ANF OPERATIONS VIABILITY** Technology assessment and operations viability are two important aspects of business planning and strategy, focusing on evaluating the technology used in a business and ensuring that its operations are sustainable and efficient. 1. 2. 3. 4. **3. INVESTMENT REQUIREMENTS AND PRODUCTION OR SERVICING COSTS** THE ENTREPRENEUR NEEDS TO DETERMINE HOW MUCH MONEY IS REQUIRED TO START THE BUSINESS OPPORTUNITY WITH CONSIDERATION TO THE TECHNOLOGIES AND OPERATING LEVELS EXPECTED. 1. 2. 3. **4. FINANCIAL FORECAST AND DETERMINATION OF FINANCIAL FEASIBILITY** THE FINANCIAL FORECAST REFERS TO THE MONETARY TRANSACTIONS THAT THE BUSINESS EXPECTED TO ENGAGE IN THE CREATION OF FOUR FINANCIAL STATEMENT: *1. INCOME STATEMENT* *2. BALANCE SHEET* *3. CASH FLOW STATEMENT* *4. FUNDS CASHFLOW STATEMENT* **INCOME STATEMENT** REVENUES- EXPENSES= INCOME OR PROFIT (LOSS) it measures the enterprises performance in terms of revenues and expenses over a certain period of time. **BALANCE SHEET** ASSETS= LIABILITIES + OWNER'S EQUITY **FINANCIAL RATIOS AND MEASUREMENTS** PAYBACK PERIOD= TOTAL INVESMENTS / ANNUAL INCOME AFTER TAXES RETURN ON SALES= NET PROFIT AFTER TAXES/ SALES RETURN OF ASSETS AND INVESMENT= NET PROFIT AFTER TAXES/ TOTAL ASSETS OR INVESTMENT **Here\'s a SWOT analysis for Coca-Cola Bottling Corporation:** **Strengths:** 1. 2. 3. 4. 5. **Weaknesses:** 1. 2. 3. 4. 5. **Opportunities:** 1. 2. 3. 4. 5. **Threats:** 1. 2. 3. 4. 5. This SWOT analysis provides a comprehensive overview of Coca-Cola Bottling Corporation\'s internal strengths and weaknesses, as well as external opportunities and threats in the beverage industry. **BALANCE SHEET** A financial statement that provides a snapshot of a company\'s financial position at a specific point in time. It details what the company owns (assets), what it owes (liabilities), and the value of the owner\'s equity in the company. The balance sheet is one of the key financial statements used to assess the financial health of a business. **PARTS OF BALANCE SHEET** 1. Definition: Assets are resources owned by the company that are expected to bring future economic benefits. They are typically classified into current and non-current assets. **TYPES OF ASSETS** - assets that are expected to be converted into cash or used up within one year. **Cash:** Money available immediately, such as in bank accounts. **Accounts Receivable:** Money owed to the company by customers. **Inventory:** Goods available for sale. - assets that will benefit the company for more than one year. **Property, Plant, and Equipment (PPE):** Physical assets like buildings, machinery, and vehicles. **Intangible Assets**: Non-physical assets like patents, trademarks, and goodwill. 2. Definition: Obligations or debts that the company owes to others. **TYPES OF LIABILITIES** - These are obligations the company needs to settle within one year. **Accounts Payable:** Money the company owes to suppliers. Short-term Loans: Loans that need to be repaid within a year. **Accrued Expenses:** Expenses that have been incurred but not yet paid, such as wages or utilities. - These are obligations due after one year. **Long-term Loans:** Loans that are payable over a period longer than one year. **Bonds Payable:** Debt securities issued by the company to raise capital. 3. Definition: Equity represents the owners\' claim on the company\'s assets after all liabilities have been paid. ** Components:** **Share Capital/Common Stock:** The initial and ongoing investment made by the owners or shareholders in the company. **Retained Earnings:** The portion of the company\'s profits that is retained in the business rather than distributed as dividends. **Additional Paid-in Capital:** The amount of money shareholders have invested in the company above the nominal value of the stock. ** Treasury Stock:** The company\'s own shares that have been repurchased and held in **Summary:** ** Assets:** What the company owns. ** Liabilities:** What the company owes. ** Equity:** The remaining interest in the assets of the company after deducting lia Balance Sheet Equation The balance sheet is based on the fundamental accounting equation: **Assets = Liabilities + Equity Assets** This equation must ***[always balance,]*** meaning the total value of the assets must equal the total **Example:** \"Luzon Trading,\" which sells office supplies. The company has been in operation for a few years, and they want to assess their financial position to determine if they can expand their business. Luzon Trading\'s Financial Information as of December 31, 2023: Assets: Cash in Bank: P150,000 Accounts Receivable (from customers): P80,000 Inventory (office supplies): P120,000 Office Equipment: P200,000 Delivery Vehicle: P400,000of liabilities and equity combLiabilities: Accounts Payable (to suppliers): P50,000 Short-term Loan: P100,000 Long-term Loan (for delivery vehicle): P300,000ined.bilities.reserve.reflects the net worth of the company. Equity: Share Capital: P400,000 Retained Earnings: P100,000 **STEPS TO CREATE LUZON TRADING\'S BALANCE SHEET** **I. (LIST THE ASSETS)** NON-CURRENT ASSETS: CURRENT ASSETS: Cash in Bank: P150,000 Office Equipment: P200,000 Accounts Receivable: P80,000 Delivery Vehicle: P400,000 Inventory: P120,000 Total Assets = P950,000 **II. (LIST THE LIABILITIES)** NON-CURRENT LIABILITIES: CURRENT LIABILITIES: Accounts Payable: P50,000. Long-term Loan: P300,000 Short-term Loan: P100,000 Total Liabilities = P450,000 **III. Determine the Equity** Share Capital: P400,000 Retained Earnings: P100,000 Total Equity = P500,000 **IV. CONSTRUCT THE BALANCE SHEET** LUZON TRADING BALANCE SHEET AS OF DECEMBER 31, 2023 Assets: Current Assets: Cash in Bank: P150,000 Accounts Receivable: P80,000 Inventory: P120,000 Total Current Assets: P350,000 Non-Current Assets: Office Equipment: P200,000 Delivery Vehicle: P400,000 Total Non-Current Assets: P600,000 Total Assets = P950,000 Liabilities Non-Current Liabilities: Current Liabilities: Long-term Loan: P300,000 Accounts Payable: P50,000 Total Non-Current Liabilities: P300,000 Short-term Loan: P100,000 Total Current Liabilities: P150,000 Total Liabilities = P450,000 Equity: Share Capital: P400,000 Retained Earnings: P100,000 Total Equity = P500,000 Total Liabilities and Equity = P950,000 **V. Analysis** Luzon Trading has total assets of P950,000, which includes cash, receivables, inventory, and significant investments in office equipment and a delivery vehicle. The company has liabilities of P450,000, mainly in the form of loans, but it also has a strong equity base of P500,000. Since the balance sheet balances (Total Assets = Total Liabilities + Equity), it shows that Luzon Trading is in a stable financial position. BUSINESS PLAN PART 2 To screen a proposed business , use the following criteria: viability, profitability, and customer requirements. **1. Viability** This refers to whether the business solution can actually be implemented and sustained in the real world. To evaluate viability: **Feasibility**: Is the solution technically and operationally possible? Are resources (like manpower, materials, or technology) available? **Market Demand**: Is there a demand for the solution in the target market? Are there enough potential customers? **Legal & Regulatory Compliance:** Does the business idea comply with all relevant laws, permits, and regulations? **Scalability:** Can the business grow? Is it adaptable to changing market trends or customer needs? **2. Profitability** Profitability measures how much profit the business is likely to generate. Here are key points to consider: **Revenue Potential**: Estimate how much money the business can make. Is the price point attractive to customers while covering costs? **Cost Management**: Assess the costs of production, distribution, marketing, and operations. Are these costs manageable? **Break-even Point:** Calculate how long it will take before the business starts generating profit. Is the time frame acceptable? ** Return on Investment (ROI):** Will the investors or owners get a good return for the money and effort they put in? **3. Customer Requirements** Your solution should meet the needs and expectations of the target customers. This involves: **Understanding the Target Market**: Who are your customers? What are their demographics, preferences, and behaviors? **Customer Pain Points**: Does the solution address specific customer problems or needs? Does it offer value that competitors don't? **Customer Satisfaction**: Will the product or service meet or exceed customer expectations? How will you gather and act on feedback? **Customer Convenience**: Is the product or service easy to access, use, or purchase? Is it delivered in a timely manner? Example: I If your proposed business solution is a delivery service for homemade meals targeting busy professionals: Viability: Are there enough customers in the area? Do you have the means to prepare and deliver meals efficiently? Profitability: Can you charge a price that covers your costs (ingredients, delivery expenses) and still make a profit? How many customers do you need to break even? Customer Requirements: Do busy professionals want healthy, convenient meals? Can they order easily through an app or website? Can you cater to dietary preferences?