Business Quantification and Implementation

Business Implementations

  • Business implementations drive activities aimed at achieving objectives in a business plan.

  • Entrepreneurs play a crucial role in overseeing implementations to align team efforts with company objectives.

  • A strategic plan is essential for providing a clear direction to ensure goal attainment and customer value.

  • Effective business implementation can grant a competitive advantage.

Forecasting and Ratio Analysis

Forecasting

  • Involves assessing expected revenue based on past and present data.

  • Helps identify risks and opportunities to allocate resources efficiently.

Factors Influencing Sales Forecasting

  • Competition: Adjust forecasts based on competitors' performance.

  • Macroeconomics: Economic conditions affect overall sales potential.

  • Events: External events can create opportunities or challenges.

  • Laws: Regulatory changes impact market conditions.

  • Seasonality: Seasonal trends influence product demand.

  • Employees: Workforce capability affects sales results.

Creating a Sales Forecast

  • Sales forecast estimates potential sales over time, including revenue and costs.

  • Formulas:

    • 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 Monthly Revenue Calculated from Daily Figures

Example: Ms. Mira Bella's Revenue Forecasting

  1. Daily Sales:

    • Summer Dress

      • Cost: P83.00, Selling Price: P124.50, Daily Sales: 20, Daily Revenue: P2,490.00.

    • Ripped Jeans

      • Cost: P215.00, Selling Price: P322.50, Daily Sales: 16, Daily Revenue: P5,160.00.

    • Total Daily Revenue: P7,650.00

  2. Monthly and Annual Sales Projections based on daily data:

    • Monthly Revenue: Increase Forecasts based on seasonality adjustments.

    • Annual Revenue: P2,792,250.00 projected from estimated sales.

Ratio Analysis

Profitability Ratios

  • Measures company's efficiency in generating returns.

  • Return on Investment (ROI):

    • Formula: ROI = Net Income / Average Assets

  • Operating Income Ratio (OIR):

    • Formula: OIR = (Operating Expenses + Cost of Goods Sold) / Net Sales

Financial Health Ratios

  • Analyze a company’s capacity to meet obligations.

  • Stockholder's Ratio:

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

  • Debt Ratio:

    • Formula: Debt Ratio = Total Liabilities / Total Assets

Liquidity Ratios

  • Indicates ability to cover short-term liabilities.

  • Quick Ratio:

    • Formula: Quick Ratio = Quick Assets / Current Liabilities

  • Current Ratio:

    • Formula: Current Ratio = Current Assets / Current Liabilities

Value Chain Analysis (VCA) Model

  • Identifying primary and support activities for efficiency.

Primary Activities

  • Inbound Logistics

  • Operations

  • Outbound Logistics

  • Marketing and Sales

  • Service

Support Activities

  • Firm infrastructure

  • Human Resource Management

  • Technology Development

  • Procurement

Managing Human Resources (The Eight Rs)

  1. Recruiting: Attracting potential candidates.

  2. Routing: Assessing hires for future versatility.

  3. Retaining: Keeping employees satisfied and engaged.

  4. Resonating: Aligning personal and company goals.

  5. Reviewing: Performance measurement against goals.

  6. Rewarding: Compensating and recognizing efforts.

  7. Retooling: Updating skills and attitudes as necessary.

  8. Recycling: Providing opportunities for job changes within the organization.

Business Model Canvas (BMC)

  • A visual framework to outline and develop a business model.

Components of BMC

  1. Customer Segment: Different groups targeted.

  2. Customer Relationship: Strategies for engaging customers.

  3. Channels: Methods to reach customers.

  4. Revenue Streams: Sources of income.

  5. Key Activities: Essential actions for business operation.

  6. Key Resources: Critical assets needed.

  7. Key Partners: Crucial external relationships.

  8. Cost Structure: Overview of costs.

  9. Value Proposition: Unique offerings that solve customer problems.