Entrepreneurship

Module 5:

Describe the 4Ms (Manpower, Method, Machine, Materials) of operations in relation to the business opportunities

The 4M’s of operation in relation to business opportunity means that the four critical domains, usually attributed to manufacturing are: man, machine, material and method should work together.

These four critical domains are also applicable to business opportunities since business in essence is tied to manufacturing as well. When putting up a business, manpower is critical as well as the other elements.

huMan (Skill, Technology, Organization, Resources) 

Do our associates have the skill (and the will) to do what is expected of them safely, consistently and effectively? 

Machine (Equipment) 

Are our machines capable of safe and reliable output at the desired quality and rate? Do breakdowns, defects or unplanned stoppages inhibit their ability to meet that goal? 

Method (Process, Schedule, Procedure) 

Do we have standard work methods in place which ensure and support consistent, safe production? 

Material (Information, Raw Materials, Consumables, Quality) 

Do they meet the required specifications – are there no defects and shortages? Is excess handling or movement reduced or eliminated? Are they stored appropriately?

But is 4Ms only for process improvement? 

Not yet. Of course 4Ms is a powerful method for process improvement, but it’s also the most important method you should apply during the process design and/or product design phase, and in daily operation management. Many improvement projects or investment project on new process and/or new products lack 4Ms review and design. 

The obvious effect of this missing is the final solution not to work or fit-to-spec or purpose, and additional budget required to fix for the lack-of-4Ms review and design. A lot of over-processing and over-budget is due to lack of 4Ms review and design. 

Absolutely, the 4Ms technique is able to apply in any phase of a process from the concept to design phase, from prototype to mass production, from daily control to continuous improvement, innovation, etc. By understanding and using it effectively, you can add much valuable in your continuous improvement activities.

Module 6:

Recruiting Qualified People for One’s Business Enterprise

The Importance of Hiring the Right People

Often, it is much easier to know who the right person is for your team when you have experienced hiring the wrong people. The right person is someone that fits in and that adds to your company, instead of taking away from what you have created.

When you hire the right people in a company, you will be able to gain the following benefits:

• You will slash the costs of the hiring process

• You won’t have to deal with the damage that a bad hire can do to your company

• You will preserve the morale of your internal teams

• You will protect your image as an employer

• You won’t let good candidates go out the door

Author Michael Klazema has been developing products for preemployment screening and improving online customer experiences in the background screening industry since 2009. Hiring the right people today can reduce the number of people you’ll need to hire in the future. Candidates who are interested and invested in your business will be open to growing their role as your business matures. Employees who are capable of taking ownership of their work and their place within your company will not only help your business prosper, but they’ll work to stabilize and improve your company at all levels of growth.

In the world of business, it is no secret that the spirit of competition is a vital principle. When it comes to recruitment, you will want to attract the best and the brightest people to serve as the foundations and grassroots of your company. Your people will be your company’s greatest resource.

Your business will benefit if you know what you are trying to accomplish in hiring. For many entrepreneurial businesses, hiring capable, and selfmotivated employees provides a competitive advantage. Prospective hires should have not only great technical skills but also the motivation to make the business a success. 

Look for employees who:

• Embody the company’s values. 

• Work hard and work smart. 

• Have the specific skills required. 

• Learn quickly when new skills are needed. 

• Are able to work with little supervision. 

• Take initiative to make things happen. 

• Are comfortable in the uncertainty of an entrepreneurial situation. 

• Are flexible to business needs and changing requirements.

Recruitment refers to the process of identifying, attracting, interviewing, selecting, hiring and onboarding employees. In other words, it involves everything from the identification of a staffing need to filling it.

Selection is the action or fact of carefully choosing someone or something as being the best or most suitable "such men decided the selection of candidates.” 

Module 7:

COMPUTE PROFITS AND PROJECTED FINANCIAL STATEMENTS

Welcome to computing PROFIT. 

The simplest formula is: total revenue – total expenses = profit

Profit is calculated by deducting direct costs, such as materials and labor and indirect costs (also known as overheads) from sales.

Why is profit important? 

It is important for a business to understand how much profit they’ve made to give it an idea as to whether the business is successful.

By calculating profit, it helps give some clarity. If a business is making a profit it can: 

• expand and grow 

• attract more investment 

• employ more staff.

What Is Gross Profit?

Gross profit is the revenue a business brings in after covering the expenses required to make a sale. Simply put, gross profit is a business’s total sales, less the cost of goods sold. 

The equation for calculating gross profit is simple: 

Sales – Cost of Goods Sold = Gross Profit

Fixed Expenses:

Fixed costs don’t change based on production. 

Examples of fixed costs include: 

• Rent 

• Insurance 

• Salaries of employees 

• Payroll taxes and employee benefits 

• Property taxes

Variable Expenses:

On the other hand, variable expenses are costs that can change based on how much you’re producing. 

Examples of variable costs include: 

• Materials used 

• Shipping costs 

• Direct labor 

• Credit card fees 

• Sales staff commissions 

Cost of Goods Sold 

-The cost of goods sold is the price of all inventory sold which includes both fixed and variable costs.

This can include merchandise purchased for resale, raw materials, labor costs, and sometimes merchant account fees.

Gross profit, then, is the money you have available to run your business after paying for the goods or services that let you make the sales in the first place.

How to Calculate Gross Profit Margin?

The gross profit formula can also be used to calculate your gross profit margin. The gross profit margin is a good way to measure your business’s production efficiency over time. Whereas gross profit is a peso amount, the gross profit margin is a percentage. 

The gross profit margin formula is: 

Gross profit margin = Gross profit (Revenue – Cost of goods sold) / Revenue

Because gross profit can rise while gross profit margins can fall, it can be misleading to simply calculate just gross profit without considering the gross profit margin. 

Analyze the Liquidity Status of the Business Liquidity Ratios

Current ratio = Current assets / Current liabilities 

Quick ratio = (Current assets – Inventories) / Current liabilities = (Cash and equivalents + Marketable securities + Accounts receivable) / Current liabilities

Financial statements are important in a company management as a means of communicating past successes as well as future expectations. The financial statement records all the operating results such as sales, expenses and profits or losses.

Return of Investment (ROI) 

The Return of investment (ROI) measures the amount of net income per peso invested to the business.

The formula to compute ROI is as follows. 

Return on investments = Net income Average total assets

Balance Sheet includes spending and income that isn’t in the Profit and Loss.

The Balance Sheet shows your financial picture – assets, liabilities, and capital – at some specific moment. It helps to understand that the Profit and Loss shows financial performance over a length of time, like a month, quarter, or year.

Balancing is a common term associated with bookkeeping, accounting, and finance.

• Assets. Cash, accounts receivable, inventory, land, buildings, vehicles, furniture, and other things the company owns. Assets can usually be sold to somebody else. One definition is “anything with monetary value that a business owns.” 

• Liabilities. Debts, notes payable, accounts payable, amounts of money owed to be paid back. 

• Capital (also called equity). Ownership, stock, investment, retained earnings. Actually there’s an iron-clad and never-broken rule of accounting: Assets = Liabilities + Capital. That means you can subtract liabilities from assets to calculate capital.

Module 8:

BUSINESS IMPLEMENTATION

How to implement a business plan?

Writing a business plan is actually quite a daunting prospect.

The concept of having a solid business that simply makes money and is sustainable seems to be lost. However, even the most realistic well-thoughtout business plan is just a stack of paper if it isn’t implemented.

Outline in creating a Business Plan:

Business proposition – What is your product/service? Who are your clients? Who is your competition? How are you going to sell your product or service? 

Management team – Who is your management team – directors, key personnel and any strategic partners and alliances you may have? 

Marketing – How are you going to promote (marketing, including market research, and pricing) your product or service? 

Staff – Who do you need to employ and what is your organizational structure? 

Operations – More information about your office premises, and infrastructure needed, such as IT, website, telecoms, and similar. 

Infrastructure – What is your trading entity, insurance needed, lawyers and accountants you will be using? Finances – More information about your profit and loss forecasts, cash flow, finance needed, and investment opportunities.

How to Implement your Business Plan?

• Set out your objectives

• Set tasks to reach your objectives

• Time allocation

• Progress and review

• Keep a tab on your finances

• Join a trading association or networking group

Guidelines for successful business plan implementation:

1. Objectives - the entrepreneur should have a clear idea on what is his purpose of putting up his enterprise. 

2. Tasks- this means that the entrepreneur must know what the tasks are he has to perform in order that his objectives will be realized. 

3. Time allocation- This means that the entrepreneur should have a timetable or a schedule to follow every task, so that it will be accomplish on time and realize his objective. 

4. Progress- This means that the entrepreneur should monitor the development of the tasks and the accomplishment of the objective

The following are the basic requirements to start a business in the Philippines:

Securities and Exchange Commission (SEC) Registration - for partnership or Corporation. 

Department of Trade and Industry (DTI) Registration - for your business trade name.Department of Trade and Industry 

Mayor’s Business Permit - for getting the license to operate in the city or municipality and payment of your local business taxes. 

Bureau of Internal Revenue (BIR) Registration - for getting TIN, official receipts and invoices, registering your books of accounts and paying your national Internal revenue taxes. Bureau of Internal Revenue | Official Gazette of the Republic 

SSS, PhilHealth, and Pag-Ibig Fund registration - for registering yourself or company as an employer and for remitting your employees’ contribution together with your employer’s share.

Other steps to follow before operating a Business are as follows:

1. Set up an accounting system or hire an accountant. Knowing how the business is doing financially is important for planning and survival. 

2. Advertise the business. No one will buy the products or services if customers do not know that the company exists. You can make use of the social media. 

3. Secure insurance for the business. Liability insurance protects the business in the event of litigation. Consider life and disability insurance, health insurance and fire insurance when you are leasing an office or storefront.

Keeping Business Records

Good record keeping can help protect the business, measure the performance and maximize profit.

Records are the source documents, both physical and electronic, that specify transaction dates and amounts, legal agreements and private customer and business details.

A systematic recording allows you to;

1. Plan and work more efficiently 

2. Meet legal and tax requirements 

3. Measure profit and performance 

4. Protect your rights,

5. Manage potential risks

Proper business record keeping provides the business a real advantage over the competition in different ways.

1. It helps you to manage your accounts, interests, taxes and working costs effectively. 

2. Tells about cash in hand 

3. Act as resource for new strategies. 

4. Helps in finding solutions for business issues. 

5. Tells about the customer service and employee efficiency. 

6. Helps in monitoring company growth rate and profit. 

7. How your business performs against your competitors. 

8. Tells about hidden and unexpected costs. 

9. And most of all it is the most resourceful adviser whenever your business is in serious trouble.