Entrepreneurship- 2nd Periodical Examination

Business implementations

Are the driving force behind all activities striving to accomplish one or more

objectives in a business plan.

Entrepreneurs

They can ensure that their team works towards company objectives

by understanding business implementations and effectively overseeing them.

Strategic plan

It is essential for a business as it provides a clear direction to follow, ensuring the attainment of goals, providing value to customers, and, ultimately, achieving success.

Forecasting

It involves using past and present data and patterns to make predictions or estimates about future events or trends.

It plays a crucial role in enabling businesses to identify risks and opportunities

and efficiently allocate resources by estimating future demand for their products or services.

Factors to Consider in Sales Forecasting

i. Competition

ii. Macroeconomics

iii. Events

iv. Law

v. Season

vi. Employees

Competition

If a competitor is doing well, you may employ tactics, like discounting, to level up your

presence.

If a competitor goes out of business, you can seize that opportunity to

capture some of their market shares and increase your own.

Macroeconomics

Factors, from regional to global changes, will affect your sales.

Selling most goods in a solid economic climate is more accessible and challenging if the general economy is terrible.

Events

Events that affect the national or global economy can sometimes have a positive impact on some businesses, as we have seen in the recent pandemic, which has caused many businesses to struggle but, at the same time, has massively benefited the producers of hand sanitizer and face

masks.

Law

Regulations or legal requirements changes can also impact your sales if your product or business structure is affected.

Season

The time of year can also impact your sales.

Employees

Internal factors such as your employees also affect your sales forecasts.

How to Create a Sales Forecast

Formulas:

• Markup

• Selling Price

• Projected Daily Revenue

• Projected Items Sold Monthly

• Projected Monthly Revenue

• Projected Items Sold Annually

• Projected Annual Revenue

Markup

Cost per unit x Desired Markup

Selling Price

Cost Per Unit x Markup Price

Projected Daily Revenue

Selling Price x Volume of Items Sold

Projected Items Sold Monthly

Items Sold Daily x 30 Days

Projected Monthly Revenue

Selling Price x Projected Items Sold Monthly

Projected Items Sold Annually

Items Sold Monthly x 365 Days

Projected Annual Revenue

Selling Price x Projected Items Sold Annually

Financial ratio

It compares two (2) numbers from a company's financial statements to show their

relationship.

Ratio Analysis

I. Profitability Ratio

a. Return on Investments (ROI)

b. Operating Income Ratio (OIR)

c. Return on Assets (ROA)

II. Financial Health Ratio

a. Stockholder's Ratio

b. Debt Ratio

c. Debt-to-Equity Ratio

III. Liquidity Ratio

a. Quick Ratio (Acid-Test Ratio)

b. Current Ratio

Profitability Ratio

It refers to a financial metric used to assess a company's profitability and

ability to generate shareholder returns.

It measures profitability and efficiency by comparing net

income to revenue, assets, or equity.

Return on Investments (ROI)

It is also called return on equity (ROE).

It compares income or profit after taxes to total stockholder's equity, specifically

average stockholder's equity.

Formula: Return on Investments (ROI) = Net Income / (Average Assets / 2)

Operating Income Ratio (OIR)

It shows the percentage of profit a company can generate from each peso of its investment.

Formula: Operating Income Ratio = (Operating Expenses + Cost of goods sold) / Net

Sales

Return on Assets (ROA)

It is a measure of how well a company has used its assets.

Formula: Return on Assets = Operating Income / Average Total Assets

Financial Health Ratio

It refers to a financial metric that determines the company’s capacity to pay its short-term and long-term obligations as they become due.

Stockholder's Ratio

It’s claims are also important as they show the firm's long-term financial stability.

Formula: Stockholder’s Ratio = Total Equity / Total Assets

Debt Ratio

The debt ratio is a way to compare a company's total debt to its assets.

Formula: Debt Ratio = Total Liabilities / Total Assets

Debt-to-Equity Ratio

It shows how much of a company's balance sheet is financed by suppliers, lenders, creditors, and obligors compared to what shareholders have invested.

Formula: Debt-to-Equity Ratio = Total Liabilities / Total Shareholder’s Equity

Liquidity Ratio

It refers to the company’s ability to pay its short-term obligations or liabilities.

Quick Ratio (Acid-Test Ratio)

It measures a company's short-term liquidity and ability to meet obligations with liquid assets.

Formula: Quick Ratio = Quick Assets / Current Liabilities

Current Ratio

It shows a company's ability to pay short-term bills and debts.

Formula: Current Ratio = Current Assets / Current Liabilities

Value chain

It represents a firm's internal activities when transforming inputs into outputs.

Value Chain Analysis (VCA)

It is a process that involves identifying the primary and support activities of a particular organization or industry and capitalizing on these activities to reduce costs or increase differentiation.

Primary Activities

i. Inbound logistics

ii. Operations

iii. Outbound logistics

iv. Marketing and sales

v. Service

Inbound logistics

It involves raw materials handling and warehousing.

Operations

It involves machining, assembling, and testing.

Outbound logistics

It involves warehousing and distribution of finished products.

Marketing and sales

It involves advertising, promotion, and pricing channel relations.

Service

It involves installation, repair, and parts.

Secondary Activities

i. Firm infrastructure

ii. Human resource management

iii. Technology development

iv. Procurement

Firm infrastructure

It involves general management, accounting, finance, and strategic planning.

Human resource management

It involves recruiting, training, and development.

Technology development

It involves research and development and product or process improvement.

Procurement

It involves purchasing raw materials, machines, and supplies.

People strategy

It is the organization’s prioritized people plan that enables a business to be successful by

attracting, developing, retaining, and inspiring the workforce.

The Eight (8) Rs of HR (Morato, 2016)

1. Recruiting

2. Routing

3. Retaining

4. Resonating

5. Reviewing

6. Rewarding

7. Retooling

8. Recycling

Recruiting

It is the process of finding and attracting potential resources for filling up

vacant positions in an organization.

Routing

When people are hired, their potential must be assessed regarding their ability to

contribute to the organization in various functions and responsibilities several years later.

Retaining

It is holding on to people, provided that a company wants to keep them in the first place.

Resonating

Emphasizes that employees must embrace and internalize the company's goals to

achieve these goals efficiently.

Reviewing

Measuring and evaluating their performance with the organizational goals in mind.

Rewarding

Concerned with compensating, giving incentives, and recognizing employees for their

work, loyalty, and accomplishment, which can be monetary or non-monetary.

Retooling

This means re-orienting employees to the new directions of the enterprise, such as

giving updates about the performance of an organization in a quarter or a year.

Recycling

This allows employees to change jobs or even careers.

Business Model Canvas (BMC)

It is sometimes called a "Business Management Canvas,"

It explains who your customer base is, how a business provides value to them, and the specifics of financing that go along with it.

The business model canvas consists of nine (9) components

i. Customer Segment

ii. Customer Relationship

iii. Channels

iv. Revenue Streams

v. Key Activities

vi. Key Resources

vii. Key Partners

viii. Cost Structure

ix. Value Proposition

Customer Segment

These are the various groups of people or organizations that an enterprise

aims to reach and serve.

Customer Relationship

Relationships can be personal or automated, transactional or long-term,

and the goal can be to get new customers, keep existing ones, or increase sales.

Channels

These are ways a company reaches out to specific customer groups. Channels are

situated in BMC between Customer Segments and Value Propositions.

Revenue Streams

Revenue streams are crucial and should align with the business model's cost

structure.

Key Activities

A business must take these most crucial actions to run smoothly.

Key Resources

Necessary for each business model.

Key Partners

Relationships a business has with other people or organizations that make the

business model work, such as suppliers, manufacturers, or advisors

Cost Structure

The idea of a cost structure is to help figure out how to focus on innovation and developing a value proposition.

Value Proposition

Customers choose a business over others because of its value proposition, which

meets their needs or solves the customers' problems.

Each Value Proposition is a set of products and services designed to meet the needs of a particular customer segment.

Business Permits and Licenses

(Essential business permits and licenses you should secure before

launching your business.)

1. Bureau of Internal Revenue Tax Identification Number.

2. Barangay Clearance.

3. Department of Trade and Industry (DTI).

4. Mayor’s Permit/ Business Permit.

5. Securities & Exchange Commission (SEC) Registration Certificate.

Bureau of Internal Revenue Tax Identification Number.

To acquire all the necessary permits and licenses for your business, you must have a tax identification (TIN) number issued by the Bureau of Internal Revenue (BIR).

Barangay Clearance

It certifies that your business complies with the requirements of the barangay where it is situated.

Department of Trade and Industry (DTI)

Business Name Registration Certificate You need to obtain a registration certificate from DTI, which will be valid for five years, so that you'll be able to use your trading name for any business-related operation.

Mayor’s Permit/ Business Permit

Getting a business permit from the mayor’s office ensures your business is safe under your city or town’s ordinance.

Securities & Exchange Commission (SEC) Registration Certificate

You must secure an SEC certificate if your business falls under the corporation or partnership categories.

Business Permits and Licenses

(Businesses with employees must secure government-mandated permits from the following:)

1. Social Security System (SSS).

2. Philippine Health Insurance Corporation (PhilHealth).

3. Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at Gobyerno (Pag-IBIG).

Social Security System (SSS)

Its Employer's Registration will ensure employees are covered with

insurance benefits like sickness, disability, maternity, and death per Republic Act No. 8282.

Philippine Health Insurance Corporation (PhilHealth)

Its Employer’s Registration will cover their employees’ health insurance.

Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at Gobyerno (Pag-IBIG)

Its Employer's Registration will benefit employees who intend to apply for housing loans.