Entrepreneurship Concepts PDF

4 ms\ **manpower\ **types of workers: direct & indirect **Method** **Machine** **Materials**\ types of materials: direct & indirect SETTING UP THE BUSINESS\ \ 1. DEVELOP A PRODUCT DESCRIPTION\ 2.1. CREATE A PROTOTYPE OF THE PRODUCT\ 2.2. TEST THE PRODUCT PROTOTYPE\ 2.3.  VALIDATE THE SERVICE DES...

4 ms\ **manpower\ **types of workers: direct & indirect **Method** **Machine** **Materials**\ types of materials: direct & indirect SETTING UP THE BUSINESS\ \ 1. DEVELOP A PRODUCT DESCRIPTION\ 2.1. CREATE A PROTOTYPE OF THE PRODUCT\ 2.2. TEST THE PRODUCT PROTOTYPE\ 2.3.  VALIDATE THE SERVICE DESCRIPTION OF THE PRODUCT WITH POTENTIAL CUSTOMERS TO DETERMINE ITS MARKET ACCEPTABILITY\ 3. SELECT/PINPOINT POTENTIAL SUPPLIERS OF RAW MATERIALS AND OTHER INPUTS NECESSARY FOR THE PRODUCTION OF THE PRODUCT OR SERVICE\ 4. DISCUSS THE VALUE/SUPPLY CHAIN IN RELATION TO THE BUSINESS ENTERPRISE\ **Supply Chain** -- the process of all parties involved in **fulfilling a customer request** **Value Chain** -- a set of interrelated activities a **business uses to create competitive advantage** VALUE CHAIN IN RELATION TO THE BUSINESS ENTERPRISE \ The idea of value chain was pioneered by **Michael Porter**. Value chain gives the company the ability to **create value** that **exceeds the cost** of providing its good and services to customers.\ \ **Inbound logistics** -- receiving supplies/ materials, warehousing or safekeeping and inventory control of the items\ **Operations** -- value creating processes that transform inputs into products (these are the methods/processes of your business)\ **Marketing and sales** -- activities that are related to getting a buyer or customer to purchase a product/service **Outbound logistics** -- activities required to get a finished product to a customer such as transportation and delivery **Services** -- activities include those that maintain and enhance a product's value (giving customers more than what they paid for - such as after-sales customer support) SUPPLY CHAIN IN RELATION TO THE BUSINESS ENTERPRISE A supply chain comprises the **flow of all activities** associated with the different stages of creating and selling a product or services **Supply chain functions include:** 1. 2. 3. 5\. Recruit qualified people for your business. **Job description** - usually lists out the job title, location, job summary, working environment, duties to be performed on the job, salary, benefits, etc. **Job specification** - lists out the qualifications, experience, training, skills, emotional attributes, mental capabilities of an individual to perform the job. 6\. Develop your business model. - also called Brick and Mortar Business Model.  - Example is a company that has physical store, establishment, stall, kiosk, or retail outlet. **Reselling** -- business makes something which is resold by other businesses with or without modifications. Example: drop shipping business **Franchising** -- practice of using another firm's successful business model in exchange for a royalty or franchise fee. 7.1. Forecast (estimate/assumption/prediction) the costs to be incurred of the business. 7.2. Forecast (estimate/assumption/prediction) the revenue of the business. 7.3. Deduct your Cost of Goods Sold/Cost of Sales/Cost of Merchandise from your estimated sales and you will have your gross profit.\ **Cost of Goods Sold** -- for agriculture/manufacturing business **Cost of Sales** -- for service type of business **Cost of Merchandise** -- for trading type of business **Gross Profit** -- the profit a business makes after deducting all the direct costs from the sales. **Factory overhead** -- costs incurred during the manufacturing process, not including the costs of direct labor and direct materials. - Examples of factory overhead costs are Production supervisor salaries, Factory rent, Factory utilities, Equipment maintenance, Factory small tools charged to expense, etc. 7.4. Compute for net income. **Net income before tax** -- monetary gain that you earn after deducting the cost of sales and operating expenses **Operating Expenses** -- costs related to marketing expenses and administrative expenses **Net income after** -- income after paying the taxes, which are computed based on your net income before tax 8\. Create a five-year projected income statement