Business Quantification and Implementation Notes

Business Implementations

• Drive activities to accomplish business plan objectives.
• Entrepreneurs ensure team alignment by understanding and overseeing implementations.
• Strategic plan provides direction, value, and success.
• Effective implementation gives competitive advantage.

Forecasting and Ratio Analysis

• Forecasting: Using data to predict future trends, identify risks/opportunities, and allocate resources.

Factors in Sales Forecasting

• Competition: Adjust tactics based on competitor performance.
• Macroeconomics: Regional/global economic changes affect sales.
• Events: National/global events can positively/negatively impact businesses.
• Law: Regulations/legal changes can impact sales.
• Season: Time of year affects sales.
• Employees: Internal factors (e.g., sales team size) affect sales.

Sales Forecast Creation Formulas

• $Markup = Cost \times Desired Markup$
• $Selling Price = Cost \times Markup Price$
• $Projected Daily Revenue = Selling Price \times Volume of Items Sold$
• $Projected Items Sold Monthly = Items Sold Daily \times 30$
• $Projected Monthly Revenue = Selling Price \times Projected Items Sold Monthly$
• $Projected Items Sold Annually = Items Sold Monthly \times 365$
• $Projected Annual Revenue = Selling Price \times Projected Items Sold Annually$

Adjusted Monthly Revenue Sales Forecast Factors

• February to May: +5% (peak season)
• June: +10% (start of school)
• July to August: -2%
• September to October: -9%
• November: +6.5% (Christmas season)
• December: +14.7% (Christmas season)

Ratio Analysis

• Compares two numbers from financial statements.

Profitability Ratio

• Assesses profitability and ability to generate returns.

Return on Investments (ROI)

• Compares income after taxes to total stockholder's equity.
• Formula: $ROI = Net Income / (Average Assets / 2)$

Operating Income Ratio (OIR)

• Shows profit percentage from each peso of investment.
• Formula: $OIR = (Operating Expenses + Cost of goods sold) / Net Sales$

Return on Assets (ROA)

• Measures how well a company uses its assets.
• Formula: $ROA = Operating Income / Average Total Assets$

Financial Health Ratio

• Determines capacity to pay short-term and long-term obligations.

Stockholder's Ratio

• Shows firm's long-term financial stability.
• Formula: $Stockholder’s Ratio = Total Equity / Total Assets$

Debt Ratio

• Compares total debt to assets.
• Formula: $Debt Ratio = Total Liabilities / Total Assets$

Debt-to-Equity Ratio

• Shows how much a company is financed by debt vs. equity.
• Formula: $Debt-to-Equity Ratio = Total Liabilities / Total Shareholder’s Equity$

Liquidity Ratio

• Assesses ability to pay short-term obligations.

Quick Ratio (Acid-Test Ratio)

• Measures short-term liquidity with liquid assets.
• Formula: $Quick Ratio = Quick Assets / Current Liabilities$

Current Ratio

• Shows ability to pay short-term debts.
• Formula: $Current Ratio = Current Assets / Current Liabilities$

Value Chain Analysis (VCA)

• Identifies primary and support activities to reduce costs or increase differentiation.

Primary Activities

• Inbound Logistics: Raw materials handling and warehousing.
• Operations: Machining, assembling, and testing.
• Outbound Logistics: Warehousing and distribution.
• Marketing and Sales: Advertising, promotion, and pricing.
• Service: Installation, repair, and parts.

Support Activities

• Firm Infrastructure: General management, accounting, finance, and strategic planning.
• Human Resource Management: Recruiting, training, and development.
• Technology Development: R&D and product/process improvement.
• Procurement: Purchasing materials, machines, and supplies.

Managing Human Resources

• People strategy enables business success by attracting, developing, retaining, and inspiring workforce.

Eight (8) R’s of Human Resource Management

1. Recruiting: Attracting potential resources for vacant positions.
2. Routing: Assessing potential to contribute to various functions.
3. Retaining: Holding on to valued employees with fair wages and work-life balance.
4. Resonating: Employees embracing company goals.
5. Reviewing: Measuring and evaluating performance.
6. Rewarding: Compensating and recognizing employees.
7. Retooling: Re-orienting employees to new directions.
8. Recycling: Allowing employees to change jobs/careers.

Business Model Canvas (BMC)

• Outlines a company's financial goals on a single page.

Nine (9) Components of BMC

1. Customer Segment: Groups of people/organizations to serve.
2. Customer Relationship: Personal or automated interactions.
3. Channels: Ways a company reaches customer segments.
4. Revenue Streams: How a business verifies profitability.
5. Key Activities: Crucial actions to run smoothly.
6. Key Resources: Necessary for reaching markets and generating revenue.
7. Key Partners: Relationships that make the business model work.
8. Cost Structure: Focus on innovation and value proposition.
9. Value Proposition: Why customers choose a business.

Business Permits and Licenses (Philippines)

1. Bureau of Internal Revenue Tax Identification Number
2. Social Security System (SSS)
3. Philippine Health Insurance Corporation (PhilHealth).
4. Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at Gobyerno (Pag-IBIG)
5. Barangay Clearance: Compliance with barangay requirements.
6. Department of Trade and Industry (DTI): Business Name Registration Certificate valid for five years
7. Mayor’s Permit/ Business Permit: Ensuring business is safe under city ordinance.
8. Securities & Exchange Commission (SEC) Registration Certificate: For corporations or partnerships.