Subject: Entrepreneurship

Grade Level: Grade 12/ 2nd Semester

Week 1
CHAPTER 1: PLANNING THE ENTERPRISE

What is a business plan for?

Entrepreneur
 a person who starts a business and it willing to risk loss in order to make money; they are the one who
organizes,
manages and assumes the risks of a business or enterprise.
Business Plan
 is a written description of your business future. It is a document that describes what you plan to do and how you
plan to do it.
 A formal written document containing business goal, the methods on how these goals can be attained, and the
time frame that these goals need to be achieved.

Business plans are prepared for multiple purposes such as:

1. It serves the entrepreneur who must set a navigational course.
2. It serves investors and cautions financers.
3. It serves managers and staff of the organization so that they will know the strategies and programs of the
enterprise.

I. Introduction

A. The business concept and the business model

B. The business goals: vision, mission, objectives, and performance targets
C. The business offering and justification

II Executive summary

III. The business proponents: organizers with their capabilities and contributions

IV. The target customers and the main value proposition to the customer

V. The market, market justification based on the industry dynamics and the macro environment factors affecting the
opportunities and treats in the market, the size, potential and realistic share of the market

VI. The product and service offering

VII. The enterprise strategy and enterprise

VII. Financial forecasts: expected returns, risks, and contingencies
VIII. Environmental and regulatory compliance
IX. The capital structure and financial offering returns and benefits to investors, financiers, business partners

I. INTRODUCTION
A. CONTENTS OF THE BUSINESS PLAN
Business Concept
 contains the essence of the enterprise in a concise but powerful manner.
Product Concept
 must be translated into a business model if a formula on how the enterprise exactly plans to make money out of
the business.
Business Model
 a formula on how the enterprise exactly plans to make money out of the business.
Four areas of moneymaking which the business model must address:
1. How will be business raise revenues? What critical factors will cause the revenues to materialize?
2. What will be the costs of the enterprise products and other cost of doing business? How will these costs managed
to ensure comfortable profits? What critical factors will drive the costs? How can these factors be controlled?
3. What will be the major investment of the enterprise? Why will these investments give the enterprise a competitive
edge?
4. How will the enterprise finance the investments? How will the enterprise fund its growth?

B. THE BUSINESS GOALS: VISION, MISSION, OBJECTIVES, AND PERFORMANCE OF TARGETS

 The business goals display the future and long-term prospects of the enterprise.

C. The Business Offering and Justification

A business justification is a justification for a proposed business venture or expense. Usually in written form, the
document is often included in business plans created as part of a loan application.

II. EXECUTIVE SUMMARY

 Contains everything that is relevant and important to business audience. It is synthesis often the entire plan.

The executive summary should then introduce and highlight the good qualities of:
1. the business proponents and their partners;
2. the enterprise organization and its capabilities;
3. the technology providers and their expertise and experience; and
4. the suppliers and all the major service providers.

III. THE BUSINESS PROPONENTS

Four types of stakeholder:
1. Resource mobilizers and financial backers
2. Technology providers and applicators
3. Governance and top management
4. Operating and support team
IV. THE TARGET CUSTOMERS AND THE MAIN VALUE PROPOSITION TO THE CUSTOMER
Target customers
 must be of sufficient size, sufficient paying capacity, and have sufficient interest to purchase the products being
offered by the enterprise.
Main value proposition
 is the unique selling proposition of the enterprise.
V. MARKET DEMAND AND SUPPLY, INDUSTRY DYNAMICS, AND MACRO ENVIRONMENTAL
FACTORS
Market dynamics are forces which will impact prices and the behaviors of producers and consumers.

The business plan should discuss the relevant industry dynamics:

• Who are the competing enterprises in the industry and what are their comparative advantages and dis advantages?
• What business models and strategies are they employing?
• Who are the suppliers in the industry and what are their capabilities and bargaining power?
• What are the channels of distribution being used by the industry? How effective are these channels?

Significant impacts on the relevant industry and the behavior of customer:(SPEET)

Social Environment
 includes the demographics and cultural dimensions that govern the relevant entrepreneurial behavior. The
structure, social status and dynamics of the population at large, as well as the people’s beliefs, tastes, mores,
customs, and traditional dictate the major parameters of market behavior.
Political Environment
 defines the governance system of the country or the local area of business. It includes all the laws, rules, and
regulations on allowable or disallowable business practices.
Economic Environment
 mainly driven by supply and demand forces. It is the same factor that drives the interest and foreign exchange
rates to fluctuate with the movement of the market forces.
Ecological Environment
 includes all-natural resources and the ecosystem that defines the habitat of man, animals, plants, and minerals.
Technological Environment
 make s or breaks competing participants in any industry. New scientific and technological discoveries often lead
to the launch and commercializing of new products with superior attributes or to rendering the old ones obsolete.
VI. THE PRODUCT/SERVICE OFFERING: DESCRIPTION, EVOLUTION, AND JUSTIFICATION
 The product/services must be described by highlighting the features and attributes that would most appeal to the
target customers. The business plan should also prove that the products/services would be accepted and carried
by the distribution channels

VII. ENTERPRISE STRATEGY AND ENTERPRISE DELIVERY SYSTEM

Enterprise strategy
 builds and develop the game plan for attaining competitiveness
Enterprise delivery system
 the entire process of converting input (resources) into output and these output into outcomes.

Process of Enterprise Delivery System:

INPUT
(Resources Mobilized)
THROUGHPUT
(The transformation process where input is converted to output)
OUTPUT
(The product/Service)
MARKETING
(This will be marketed to the customers (in case of goods) or experienced by the customers (in case of service))
OUTCOMES
(Customer satisfaction level, profits generated, and the performance of people from the transaction)

Input Throughput Output Marketing Desired Outcomes

* Harnessing of human, * Conversion of input * Good produces or o Positioning o Customer

money, physical into output and the services delivered. o Product satisfied
resources. transformation o Packaging o sales volume
process within the o Place attained
* resources mobilizer factor or service o People o profits
shop. o Promotion generate
o money
o Price o people
o men
performance
o machine
 o Materials
o Methods
o Management

VIII. FINANCIAL FORECASTS: EXPECTED RETURNS, RISKS, AND CONTINGENCIES

The important return calculations are the following:
1. Expected return on sales
2. Expected return on assets
3. Expected return on stockholders’ equity
 The business plan should calculate the long-term returns, using the time value of money, they should evaluate
both business risks and financial risks involved
IX. ENVIRONMENTAL AND REGULATORY COMPLIANCE
 The business plan must articulate the law, rules and regulations governing the business and the industry that the
enterprise is in. It should ascertain that all the necessary permits, licenses, and authority to use proprietary
intellectual capital had either been secured or would definitely be secured.

X. THE CAPITAL STRUCTURE AND FINANCIAL OFFERING RETURNS AND BENEFITS TO

INVESTORS, FINANCIERS BUSINESS PARTNERS

 Finally, the business plan must appeal to its target audience. It must highlight for them the main features of the
business plan that they are looking for.

CHAPTER 2: OPPORTUNITY, SEEKING, SCREENING, AND SEIZING

Opportunity Seeking
Entrepreneurs are innovative opportunity seekers. They have endless curiosity to discover new or different
idea
and see whether these ideas will work in the marketplace. They create value by introducing new products or services or
finding better ways of making them.

Entrepreneurial Mind Frame, Heart Frame, and Gut Game

ENTREPRENEURIAL MIND FRAME

 Allows the entrepreneur to see things in a very positive and optimistic light in the midst of crisis or difficult
situations.
ENTREPRENEURIAL HEART FRAME-
 It is common for the inventor and entrepreneur the surging passion; driven by passion they are drawn to find
fulfillment in the act and process of discovery.
ENTREPRENEURIAL GUT GAME
 Ability of the entrepreneur to sense without using the five senses.

The Many Sources of Opportunities

Macro Environment
 Refers to the “big or macro forces” that affect the area, the industry, and the market, which the enterprise belongs
to.
 They influence how business should be conducted, how consumers will behave, how supply and demand will
move, how different competitors would position themselves and how the cost of doing business will proceed.

Macro environment forces composed of five categories:

1. Socio-cultural environment
  includes the demographics and cultural dimensions that govern the relevant entrepreneurial endeavor.
2. Political environment
 defines the governance system of the country or the local area of business. It includes the laws, rules,
and regulations that govern business practices as well as the permits, approvals and license necessary to
operate the business.

3. Economic environment
 supply and demand forces mainly drive the macro economic environment, they are the same factors that
drive the interest and foreign exchange rates that need the movement for the market.
4. Ecological environment
 includes all the natural resources and the ecosystem, habitat of men, animals, plants and minerals. There
is a growing awareness in the world today that will make this factor more and more important for the
countries, industries and business.
5. Technological environment
 New scientific and technological discoveries, which often lead to the launch and commercialization of
new products with superior attributes to the industry.

Industry Sources of Opportunities

One of the most difficult aspects about industry analysis is defining what constitutes an industry in the first
place. The proper classification of what industry the enterprise is competing in is important if the entrepreneur’s intention
is to define who are the relevant customers, who are the direct and indirect competitors, and what are the critical
characteristics of the market as to the quality of products.

Participants in an industry include:

1. Rivals or competitors in a particular type of business. (e.g., Jollibee vs. McDonald’s, Coca-Cola vs. Pepsi) True
rivals or competitors are those competing for the same or similar markets.
2. Supplier of input (e.g., fuel, electricity, raw materials) to rivals as well as suppliers of machinery and equipment,
suppliers of manpower and expertise, and suppliers of merchandise.
3. Consumer market segments being served by rivals or competitors.
4. Substitute products or services, which customers shift or turn to.
5. All other support and enabling industries.

Product Chain Value-Added Chain

Raw Material Raw Materials’ Prices and Additional

Cost and Profits

Market Sources of Opportunities

The entrepreneur must also be able to measure the actual demand and supply as well as the potential
demand and supply of the industry that the enterprise belongs to. Market trend analysis is also conducted by determining
theSemi-Processing Semi-Processing
critical variables, which Semi-
would most likely affect the future direction of the Processed Goods Prices and
industry.
Additional Costs and Profits
Micromarket
 refers to the specific target market segment of a particular enterprise. These are the target customers that
represent the immediate
Fully Processed customers of an enterprise, meaning those who are currently
Products/Services Prices of Processed
buying the goodsGoods
or services offered
by the enterprise and its direct competitors.

Consumer Preferences, Piques, and Perceptions

Consumer preferences
 refer to the tastes of particular group of people.
Consumer dislikes
 refer to the things that irritate customer. Either way, the entrepreneur can explore opportunities brought
about by consumer preferences or dislikes.

Other Sources of Opportunities

1. Customer preferences change over time.
2. People’s tastes in clothes, music, shoes, entertainment, dance, sports, hobbies and even careers have evolved over
the years.
3. What piques customers is a great source of opportunities.
4. Before the customer is won over, there is first a battle for the mind. Next, there is a battle for the heart. Finally,
there is a battle for the wallet.
5. The longer the customer wants to use the product, the greater the chances of creating lasting loyalty.
6. Opportunities abound in shaping consumer perceptions or occupying spaces in their minds or places in their heart
that have not yet been filled.
7. New inventions, new system and work processes, new insights about the human psyche, new applications for old
knowledge, new revelations about how the physical world works
8. Determining personal preferences and competencies lay the foundation for a new business venture.
9. Un expected occurrences in both the external and internal environment of the enterprise indicate that significant
changes are happening and opportunities are sprouting.

Opportunity Screening
In personal screening opportunities, the entrepreneur first has to consider his or her preferences and
capabilities by asking three basic questions:
1. Do I have the drive to pursue this business opportunity to the end?
2. Will I spend all my time, effort, and money to make the business opportunity work?
3. Will I sacrifice my existing lifestyle, endure emotional hardship, and forego my usual comforts to succeed in this
business opportunity?

The Rs of Opportunity Screening

1. Relevance
 to vision, mission, and objectives of the entrepreneur. The opportunity must be aligned with what you
have as your personal vision, mission, and objectives for the enterprise you want to set up.
2. Resonance
 to values. Other that vision, mission, and objectives, the opportunity must match the values and desired
virtues that you have or wish to impart.
3. Reinforcement of Entrepreneurial Interests.
 how does the opportunity resonate with the entrepreneur’s personal interests, talents, and skills?
4. Revenue
 in any entrepreneurial endeavor, it is important to determine the sales potential of the products or services
you want to offer. Is there a big enough market out there to grab and nurture for growth?
5. Responsiveness
 to customer needs and wants. If the opportunity that you want to pursue addresses the unfulfilled or
undeserved needs and wants of the customers, then you have a better chance of succeeding.
6. Reach.
 Opportunities that have good chances of expanding through branches, distributorships, dealerships, or
franchise outlets in order to attain rapid growth are better opportunities.