Ent

repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

Vent
ure
 Ventureisoftenuseforref
erri
ngtoari
skystar
tuporEnt er
priseCompany
 Newv entureisabusinessplanthatgi
vesanopportuni
tyorchancetosetupa
company/businessont hebasisofinnovati
vebusinessi deas.I
tisasort
competi
ti
ont hatof
fer
sbusinessint
oasoli
dbusinessplan.

Pl
anni
ng
 Planningmeanstodecideinadvancewhatistobedone.
 Ventureplanni
ngisapersonalassessmentofyourfeel
ingsandthefeasi
bil
i
tyof
av entur
e.Ventur
eplanni
nganswersthequesti
on,shoul
dIbedoingthisandwhy?
Thev entur
efeasi
bil
i
typrocessexaminessevenkeyfact
orsinanyvent
ure.

Ventur
eplanning
 Isnotaboutwr it
ingabusi nesspl an.Somet imesabusi nesspl ani snotneeded.
Ventureplanningdoesnotr equiref undi ng,sourceanalysi
spr ofessionalopinions,
enti
tyformat i
onordet ailedmar ketanal ysis.Venturepl
anni ngisdev elopmentof
a means ofcompar i
ng v arious busi ness model s,usual l
yt hrough f i
nancial
modelli
ngt oanswerthef oll
owi ngquest ions:
a.Whi chv entur
econceptpr oducest hemostsal es,t hebestmar gins,the
highestnetprofitandt hel owestbr eakeven?
b.Whi chmodel requiresthel easti nvestmentbyent repreneursandot hers?
c.Whi chconceptrequi r
esequi tyasopposedt odebtf inancing?
d.Whi chproducest hehighest“ Retur nonInvestment”andt hebestliquidit
y?
e.Whi chmodel requirestheent repreneurtogi v
eupt hel eastequity?

I
.Mar
ketResear
ch(
vent
ureoppor
tuni
tyscr
eeni
ng)

 Marketresearch i
s a cr
iti
calt oolin hel
ping companies underst
and what
consumerswant,devel
opproductsthatt
hoseconsumer swil
luse,andmaint
ain
acompetit
iveadvant
ageoverothercompaniesinthei
rindust
ry.

 Mar ketresearchistheprocessofdet ermi ningt hevi

abil
i
tyofanew ser viceor
productt hr
oughr esear
chconduct eddi r
ect l
ywi thpotenti
alcustomers.Market
researchallowsacompanyt odiscovert het argetmarketandgetopi ni
onsand
otherfeedbackfrom consumersaboutt heirinteresti
ntheproductorservi
ce.

Thi
st ypeofresearchcanbeconduct edi
nhouse,byt hecompanyi tself
,orbya
thi
rd-par
tycompanyt hatspeci
ali
zesinmarketresearch.I
tcanbedonet hrough
surveys,product testi
ng,and f ocus groups. Test subjects are usuall
y
compensatedwi t
hproductsamplesand/orpaidasmal lst
ipendfort
heirti
me.

 Thepurposeofmarketresear
chistolookatthemarketassociat
edwitha
par
ti
cul
argoodorser
vicetoascer
tai
nhowtheaudi
encewil
lrecei
veit
.Thi
scan

Page1of1
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

i
nclude i
nformati
on gather
ing f
orthe purpose ofmarketsegmentat
ion and
productdiff
erent
iat
ion,which can be used t
ot ai
loradver
ti
sing ef
for
ts or
deter
minewhi chf
eaturesar
eseenasapr ior
it
ytotheconsumer
.

 Abusi nessmustengagei nav ari

etyoft askstocompl et
et hemar ketresear
ch
process.I tneeds to gatherinf
ormation based on the mar ketsectorbeing
examined.Thebusi nessneedst oanal y
zeandi nt
erpretther esul
tingdatato
determinet hepresenceofanypatternsorr el
evantdatapointsthatitcanusein
thedecision-makingprocess.

 Howmar
ketr
esear
chwor
ks?

Marketresearchconsi
stsofacombinati
onofprimar
yinfor
mati
on,orwhathas
beengat hered bythecompanyorbyaper sonhired bythecompany,and
secondaryinfor
mati
on,orwhathasbeengat
heredbyanoutsi
desour
ce.

Primar
yinfor
mat i
onisthedatathatthecompanyhascol lect
eddirectl
yort hat
hasbeencollect
edbyaper sonorbusinesshi
redtoconductt heresearch.This
typeofinf
ormationgener
all
yfal
lsint
ot wocategor
ies:explor
ator
yandspeci f
ic
resear
ch.

Expl
orator
yresearchisalessst ructur
edopt ionandf uncti
onsviamor eopen-
endedquesti
ons,anditresult
sinquest ionsori ssuesbei ngpr
esentedthatthe
companymayneedt oaddr ess.Specifi
cr esearchf i
ndsanswer stopreviously
i
denti
fiedi
ssuesthatar
eoftenbr oughttoattenti
ont hr
oughexplorat
oryresearch.

Secondaryinfor
mat i
onisdat athatanout si
deenti
tyhasal
readygat
hered.Thi
s
can include populat
ion infor
mation from governmentcensus dat
a,t r
ade
associati
onreports,orpresented researchfr
om anotherbusi
nessoperati
ng
withi
nt hesamemar ketsector.

 Exampl
e:

Manycompani es use marketresearch tot estoutnew pr oduct

sort o get
i
nf ormationf
rom consumer saboutwhatki ndsofproduct
sorser vi
cest heyneed
anddon' tcur
rent l
yhave.
Forexampl e,acompanyt hatwasconsi deri
nggoingint
obusinessmi ghtconduct
mar ketresearcht otestthev i
abil
ityofi tsproductorser v
ice.Ifthemar ket
researchconfirmsconsumeri nt
erest,t
hebusi nesscanproceedconfidentl
ywith
thebusi nesspl an.I
fnot,thecompanyshoul dusether esult
soft hemar ket
researcht omakeadj ustmentstot hepr oducttobri
ngitinl i
newithcust omer
desires.

Page2of2
 Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

4commonmar
ketr
esear
chmet
hods

There ar
el ots ofdiff
erentway syou could conductmar ketresearch and coll
ect
customerdata,butyoudon’ thavetoli
mityourselftojustoner esearchmet hod.Four
commont ypesofmar ketresear
chtechni
quesincludesurveys,int
ervi
ews,focusgroups,
andcustomerobservati
on.
1.Surveys:t
hemostcommonl yused

 Survey
saskusersashortseri
esofopen-orclosed-
endedquest
ions,whi
chcan
bedeliver
edasanon-scr
eenquest i
onnai
reorviaemail.Whenweasked 2,000
CustomerExper
ience(CX)professi
onalsaboutthei
rcompany’sapproacht o
resear
ch,sur
vey
s proved t
o be the mostcommonl yused mar ketr
esearch
techni
que.

 Whatmakesonl
inesur
vey
ssopopul
ar?

They’
reeasyandi nexpensi
vetoconduct,
andyoucandoal otofdatacoll
ection
qui
ckly.Plus,thedat
aispret
tystr
aight
for
wardtoanal
yze,evenwheny ouhav e
to 
analyzeopen-endedquesti
ons 
whoseanswersmightini
ti
all
yappeardif
ficult
tocategorize.

2.I
nter
views:
themosti
nsi
ght
ful

Page3of3
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

 Int
ervi
ewsareone-on-
oneconversati
onswi t
hmember sofy ourt argetmarket.
Nothi
ngbeatsaf ace-
to-
facei
ntervi
ew fordiv
ingdeep(andr eadingnon-verbal
cues),buti
fanin-per
sonmeetingisn’tpossi
ble,v
ideoconf
er encingisasol i
d
secondchoi
ce.
Regar
dlessofhowy ouconducti
t,anyt
ypeofin-
dept
hint
ervi
ewwi
l
lpr
oducebi
g
benef
it
sinunderst
andingyourt
argetmar
ketandcust
omers.
 Whatmakesi
nter
viewssoi
nsi
ght
ful
?
Byspeakingdirectl
ywit
hanideal
cust
omer,
you’
ll
gaingreat
er 
empat
hyfort
hei
r
exper
ience,andy oucanfol
l
owinsi
ght
ful
thr
eadsthatcanpr
oducepl
ent
yof
'
Aha!'
moment s.

Page4of4
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

3.Focusgr
oups:
themostdanger
ous

 Focusgroupsbr ingtogetheracar ef
ullyselect
edgroupofpeopl ewhof i
ta
company’
stargetmar ket
.At rai
nedmoder at
orleadsaconver
sati
onsurrounding
thepr
oduct,userexperi
ence,and/ormarketi
ngmessagetogaindeeperi
nsights.

 Whatmakesf
ocusgr
oupssodanger
ous?
I
fy ou’r
enew t omar ketresearch,Iwoul dn’trecommendst arti
ngwi t
hf ocus
groups.Doingitri
ghtisexpensive,andifyoucutcor ners,yourresearchcouldfal
l
vi
ctim to allkinds oferrors.Domi nance bi as (when a f orcefulpart
ici
pant
i
nfluences the group)and moder at
orst yl
e bias (when di fferentmoder at
or
personali
ti
esbringaboutdiff
erentresult
sint hesamest udy)aretwooft hemany
way syourfocusgroupdatacouldgetskewed.

Page5of5
 Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

4.Obser
vat
ion:
themostpower
ful

 Dur
ingacust
omerobser
vat
ionsessi
on,
someonef
rom t
hecompanyt
akesnot
es

whi
letheywat
chanideal
userengagewi
tht
hei
rpr
oduct(
orasi
mil
arpr
oduct
f
rom acompeti
tor
).
 Whatmakesobser
vat
ionsocl
everandpower
ful
?
‘
Fly-
on-the-
wall’obser
vationisagreatalt
ernati
vetofocusgroups.It’
snotonly
l
essexpensi ve,buty ou’l
lseepeopleinter
actwithy ourproductinanat ur
al
set
tingwi t
houtinfl
uencingeachother
.Theonl ydownsideist haty
oucan’tget
i
nsidetheirheads,soobser vat
ioni
snor eplacementforcustomersurvey
sand
i
ntervi
ews.

I
I.Feasi
bil
it
yAnal
ysi
s

 Afeasi bil
it
yst udyi sananalysi
sthatt akesallofapr oject
'srel
evantfact
orsinto
account —includingeconomi c,t
echnical,legal
,andschedulingconsiderat
ions—to
ascertainthel i
kelihoodofcompleti
ngt heprojectsuccessf
ull
y.Projectmanagers
usef easibil
ityst udiestodiscernthepr osandconsofunder takingapr oj
ect
befor
et heyinvestal otoft
imeandmoneyi ntoit.

Feasibi
li
tystudies al
so can pr
ovi
de a company'
s managementwit
h cr
uci
al
inf
ormat i
ont hatcoul
d prev
entthecompanyf rom ent
eri
ng bl
i
ndl
yintori
sky
businesses.

 Afeasibi
li
tystudyissimpl
yanassessmentoft hepract
ical
ityofapr oposedplan
orproj
ect.Asthenamei mpli
es,t
hesestudi
esask:Isthi
spr ojectfeasi
ble?Dowe
havethepeopl e,t
ools,t
echnol
ogy,andresourcesnecessaryf orthisproj
ectto
succeed?Willtheproj
ectgetustheret
urnoninvest
ment( ROI )thatweneedand

Page6of6
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

expect
?

 Accor ding to May ur

iH.i n herar ti
cleent i
tl
ed “Feasibil
it
yAnal ysi
s:Meani ng,
I
mpor tance,Report,Types, Process,Objecti
vesandAdv antages”,shesaidthata
feasibili
tystudyai mst oobj ect
ivelyandr ati
onallyuncov erthest r
engthsand
weaknessesofanexi sti
ng businessorpr oposed v enture,opportuni
ti
esand
threatspr esenti
nt heenv ironment ,t
her esourcesrequiredt ocarr
ythrough,and
ult
imat elythepr ospectsf orsuccess.I nitssi mpl
estt erms,thet wocr i
ter
iato
j
udgef easibi
li
tyarecostr equiredandv aluetobeat t
ained.

Awel l
-designedf easibi
li
tystudyshouldprovi
deahistor
icalbackgroundoft he
business orpr oject,a descr i
pti
on oft he pr
oductorser v
ice,account i
ng
statement s,detail
soft heoperati
onsandmanagement ,marketi
ngr esear
chand
poli
cies,f inancialdat a,legalrequi
rements and t
ax obligat
ions.Gener al
ly,
feasibi
lit
yst udi
espr ecedetechni
caldevel
opmentandproj
ectimplement at
ion.

Af easibi
l
ity st
udy evaluat
es t he pr
oject’s pot
enti
alf orsuccess;theref
ore,
per
ceivedobjectivi
tyi
sani mpor t
antf actorinthecr edibi
l
ityofthestudyf or
potent
iali
nvestorsandlendi
ngi nsti
tut
ions.Itmust,t
her ef
ore,beconduct
edwi th
anobjecti
ve,unbiasedappr oacht oprov i
deinformati
onuponwhi chdecisi
ons
canbebased.

I
nvestmentproposals,inv
olv
inghugecapi t
aloutl
ayareinvar
iabl
yir
rever
sibl
e.
Ther
efor
e,beforestarti
ngapr oject
/pr
oposal
,iti
snecessar
yandi mper
ati
veto
fi
ndoutwhetherthesamei sfeasibl
eornot
.

Thegoal
soff
easi
bil
i
tyst
udi
esar
easf
oll
ows:

a.Tounderstandt hor
oughlyallaspect
sofapr oject
,concept,orpl
an
b.To become awar e ofanypot ent
ialpr
oblems t hatcould occurwhil
e
i
mplement i
ngt heproject
c.Todet er
mi neif,afterconsideri
ngallsignif
icantfactor
s,thepr oj
ecti
s
vi
able—thatis,
wor t
hunder t
aking

Feasi
bili
tystudiesrefl
ectapr oject'
suniquegoalsandneeds, soeachi sdi f
ferent.
Howev er,t
het i
psbel owcanappl ybroadlytoundertakingaf easi
bil
itystudy .You
may ,
forexampl e,wantt odot hefoll
owi ng:
 Getf eedbackaboutt henewconceptf r
om theappr opri
atestakehol ders
 Anal yzeandaskquest ionsabouty ourdat
at omakesur ethatit
'ssol i
d
 Conductamar ketsurveyormar ketr
esear
cht oenhancedat acollection
 Wr iteanorgani zati
onal ,operat
ional,
orabusi nessplan
 Pr epareapr ojectedincomest atement

Page7of7
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

 Prepareanopeni ngdaybal ancesheet

 Makeani nit
ial"
go"or"no-go"deci
sionaboutmov i
ngaheadwi ththeplan
 Af easi
bil
itystudyassessest hepr
acticali
tyofaproposedplanorpr oj
ect
.
 Acompanymayconductaf easi
bil
i
tyst udyifi
t'
sconsider
inglaunchinga
newbusi nessoradopt i
nganewpr oductl i
ne.
 It
'sagoodi deatohav eacont i
ngencypl anincaseofunf oreseeabl
e
ci
rcumst ances,orift
heor i
ginalpr
ojectisnotfeasi
ble.

 Ty
pesofFeasi
bil
i
tyAnal
ysi
s:

Thi
sfeasi
bil
it
ycanbeascer t
ainedonfol
lowi
ngpar
amet
ers:
a.FinancialFeasi bil
it
y
b.Commer cial Feasibil
it
y
c.Technical Feasi bi
li
ty
d.Economi cFeasi bil
it
y
e.SocialFeasi bil
ity
f. Envi
ronment al feasibi
li
ty
g.Legal f
easi bil
it
y
h.Oper at
ional feasibil
ity
i. Schedulefeasi bil
it
y
j. Marketandr eal estatefeasi
bil
i
ty
k.Resour cefeasi bil
it
y

Fi
nanci
alFeasi
bil
i
ty:

I
nordert
oascert
ainfi
nanci
alviabi
l
ity
,fi
nan¬ci
alproj
ect
ionsaremadeandonthe
basi
sofsuchpr
oject
ionswhichneedtobeobjecti
veandreal
isti
c,t
hef
oll
owi
ngs
br
oadpar
ametersareeval
uatedfordet
ermi
ningt
hef
easi
bil
i
tyoft
hepr
oject
-
i
. ReturnonInvest
ment
ii
. Paybackperiodoftheoutl
ay
i
ii
. Int
ernalr
ateofreturn
i
v. Profi
tabi
li
tyi
ndex.

Page8of8
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

I
ncaseofanewpr oject,fi
nancialviabil
i
tycanbej udgedont hefol
lowi
ng
par
ameter
s:
i
. Tot alestimat edcostoft hepr oject
i
i
. Fi nancingoft heprojectint er
msofi tscapit
al st
ruct
ure,
debttoequi
ty
rati
oandpr omot er
’sshar eoft otalcost
ii
i
. Exi sti
nginv estmentbyt hepr omot erinanyot herbusi
ness
iv
. Pr ojectedcashf lowandpr ofi
tabi l
i
ty

Thef
inancialvi
abilityofapr oj
ectshoul dpr ovidethefol
lowinginformati
on:
i
.Ful ldet ai
lsoftheasset stobef i
nancedandhowl iquidt
hose
asset sare
ii
.Rat eofconv ersi
ont ocash-liquidit
y
iii
.Pr oject’sfundingpot ent
ialandr epay mentter
ms
iv.Sensi tivit
yinther epayment scapabi l
ityt
othef ol
l
owi ngfact
ors
v.Mi ldsl owingofsal es
v i
.Acut ereduction/slowingofsal es
vii
.Smal lincreaseincost
viii
.Lar gei ncreaseincost
ix.Adv er seeconomi cconditi
ons.

I
f,ontheabovementi
onedparameter
s,t
hepr
ojecti
sfoundsui
tabl
e,t
henonl
y
f
urtherf
easi
bil
it
ytest
sarecar
riedout
.

Commer
cialFeasi
bil
it
y:

Commer
cial
Feasi
bil
i
tyi
sascer
tai
nedbyf
indi
ngoutt
hef
oll
owi
ng:

i
. Cur rentandPotent
ialcompeti
ti
on
ii
. Pr ofi
tmar gi
n
i
ii
. Si zeofthemarket.
i
v. Degr eeofdemandf ortheproduct
v. Fut uregrowthofmarket
vi
.
Techni
calFeasi
bil
ity
:

Page9of9
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

Thi
sassessmentisbasedonanoutli
nedesignofsy st
em requi
rements,
to
det
erminewhethert
hecompanyhast het
echnicalexpert
isetohandl
e
complet
ionofthepr
oject.Whenwr
it
ingafeasibi
li
tyreport,
thefol
l
owingshoul
d
betakentoconsi
d¬erat
ion.

Thetechnicalfeasibil
ityassessmenti sfocusedongai ninganunder st
andi
ngof
thepresenttechnical resour cesoftheor ganizat
ionandt hei
rappli
cabil
i
tyt
othe
expectedneedsoft hepr oposedsy st
em.I tisanev al
uati
onoft hehardwar
eand
soft
war eandhowi tmeet stheneedoft hepr oposedsystem.
Anindept handcr iti
cal studyoff ol
lowingpar ametersisdone:
i
. Pl antlocat ion
ii
. Lay out
i
ii
. Pl ant&machi neryandequi pment
i
v. Manuf act uringprocess
v. I nf r
astruct ure
vi
. Technol ogy
v
ii
. Ef fi
cientwast edisposal.

Economi
cFeasi
bil
it
y:

Thepur poseofaneconomi cfeasibi

li
t ystudy(
EFS)istodemonstr
atethenet
benefi
t of a pr oposed project f
or accepti
ng or disbur
sing elect
roni
c
funds/benef
it
s,t
aki
ngi nt
oconsiderationthebenefi
tsandcost
st otheagency,
otherstat
eagenci
es,andthegeneralpublicasawhole.

I
nsy ncwitht hephrase“
Pari
tybet
weenhav esandhavenot’s”
,asocialcost-
benefi
tanalysi
s(SCBA)oftheproj
ectshoul
dbecarri
edout.Thisensur
est hat
the or
ganizati
on i
s cont
ri
but
ing t
ot he GDP ofthe economy and is also
di
schargi
ngit
ssocialobli
gat
ions,byprov
idi
ngempl
oymentoppor
tuni
ti
esand
br
ingi
nginimprov
ementinquali
tyofl
i
fe.

Thepurposeofbusinessinacapit
ali
stsocietyistoturnapr of
it,ortoearn
posi
ti
veincome.Whi
lesomeideasseem excel
lentwhentheyar
ef i
rstpr
esent
ed,
theyarenotalwayseconomical
l
yfeasibl
e.Thati s,t
hattheyarenotal ways

Page10of10
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

profi
tableorev enpossibl
ewithi
nacompany ’
sbudget
.Sincecompani
esoft
en
deter
mi netheirbudget
’ssever
almonthsinadvance,
iti
snecessar
ytoknowhow
muchoft hebudgetneedstobesetasideforf
utur
eproj
ect
s.

Economi cfeasi
bili
¬tyhelpscompani esdeterminewhatt hatamountisbefor
ea
projecti
sultimatelyapproved.Thisall
owscompani estocaref
ullymanagetheir
money t oi nsuret he mostpr ofi
tabl
e projects are under
taken.Economi c
feasibi
li
tyal
sohel pscompani esdeterminewhet herornotrevi
sionstoaproject
thatatfi
rstseemsunf easibl
ewillmakeitfeasibl
e.
SocialFeasibi
li
ty:

Socialfeasi
bil
i
tyisadet ai
ledstudyonhow oneinter
act
swi thot
herswi t
hina
system oran or gani
zati
on.Socialimpactanal
ysi
si san exer
cise ai
med at
i
dent i
fyi
ngandanal yzi
ngsuchi mpactsinordertounderst
andthescaleand
reachoftheproject
’ssoci
alimpacts.

Atami nimum,al lpr

ojectsdemandar eview ofprojectdataatt heAppraisal
Phase,soast oidenti
fyifmater
ialsoci
ali mpactsexist.Soci
alimpactanalysi
s
greatl
yr educestheoveral
lri
sksofthepr oject
,asithelpst oreduceresi
stance,
strengt
hens gener al support
, and al lows f or a mor e compr ehensiv
e
understandingofthecostsandbenefi
tsoft heproj
ect.

Howev er,soci
alimpactanalysiscanbeexpensi veandt i
meconsumi ng,sothe
ful
lanaly si
spr ocesscannotbej usti
fi
ed f
orallprojects.Atami nimum,al l
proj
ectsdemandar ev
iewofprojectdataatt
heAppraisalPhase,
soast oident
if
y
i
fmat eri
alsocialimpactsexi
st.Iftheydo,aful
lsoci
alimpactanaly
sisshouldbe
conducted.

Env
ironment
alFeasi
bil
it
y:

Theenv ir
onment alf
easibi
lit
yst udyconsidersbot hhumanandenv ironment al
heal
thf actor
s.TheES i sacompar ativ
epr ocessthatlooksatal lpotential
sol
uti
ons,andt henevaluatesthem againstspeci
ficcr
it
eri
atoulti
matelyfi
ndt he
bestchoice.I
tisaf actthatexternalenvir
onmentexertsconsi
derabl
ei nf
luence

Page11of11
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

ontheor gani
zations.Infactt
hecli
maticconditi
onsi
napar ti
cul
arar
ea/r
egion
haveasi gnif
icanti mpactont heexi
stenceofanent er
pri
se.Ther
efor
e,itis
necessar
yt oascertai
ntheenvi
ronmentviabi
l
ityaswel
l
.

Thepar
amet
ersconsi
der
edar
e:

a.Overall
protecti
onofpubli
candenvir
onment alheal
th
b.Ef
fectivereducti
onofhazardouswastetoxicit
y,mobil
it
yandvol
ume.
c.Long- t
erm and short
-ter
m ef f
ect
iveness ofenv ir
onmentalpol
ici
es ofthe
company
d.Pot enti
alconsequences oft he r
emedi almeasur es t
aken f
orpr ot
ect
ing
envi
ronment

LegalFeasi
bil
it
y:

I
tshouldfir
stbedet ermi
nedwhet hertheproposedpr oj
ectconfl
ictswithlegal
r
equir
ements,andi ftheproposedv ent
ureisacceptableinaccor dancetothe
l
awsoft heland.Theproj
ectteam hast omakeat horoughanaly
sisoft helegal
i
ssuessurr
oundingtheproj
ect,acr
osssev er
aldi
mensions.

Adet ail
edlegalduedil
igenceshoul
dbedonetoensuret
hatal
lfor
eseeabl
elegal
requir
ement s,which have notorwi l
lnotbe deal
twith,i
n otherapprai
sal
exercises,
aremetf ort
hedev el
opmentoft
hepr
oject
.

Themai
nobj
ect
ivesoft
hel
egal
feasi
bil
i
tyanal
ysi
sar
easf
oll
ows:

i
. Toensur
ethatthepr
ojecti
slegal
lydoabl
e;
i
i
. Tofaci
li
tat
eriskmanagement ,i
ndi
cati
ngther
isksandobst
acl
es
thatneed t o be addr essed withi
nt he techni
calanaly
ses,t he
fi
nancialmodel and/ortheValueforMoneyanal ysi
s;and
i
i
i. Toav oid,totheext entpossible,majorpr obl
emsi ntheproject’
s
devel
opmentandi mpl ementati
on,specif
yingtherequi
rementsthat
needtobeconsi deredatsubsequentst agesoft hePPPpr ocess,
[
publi
cpr iv
atepar t
nership]

Page12of12
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

Oper
ati
onalFeasi
bil
it
y:

Operati
onalfeasi
bil
it
yi st
hemeasur eofhowwellapr oposedsy st
em solvesthe
probl
ems,and t akesadv antageoftheopportunit
iesidenti
fi
ed dur i
ng scope
defi
nit
ionandhow i tsat
isfi
estherequir
ement
si denti
fi
edint her equi
rements
analy
sisphaseofsy stem devel
opment.

Theoper ati
onalf easi
bil
it
yassessmentf ocuseson thedegreeto which the
proposeddev elopmentpr oj
ect
sfit
si nwiththeexi
sti
ngbusinessenvi
ronment
andobj ect
iveswi thregardtodevelopmentschedul
e,del
iver
ydate,corporate
cult
ureandexi sti
ngbusinesspr
ocesses.

To ensuresuccess,desi red operati

onaloutcomesmustbei mpar t
ed duri
ng
desi
gnanddev elopment.Thesei ncludesuchdesign-
dependentparametersas
rel
i
abil
it
y,mai ntainabi
li
ty,supportabil
it
y,usabil
i
ty,di
sposabi
li
ty,sustai
nabil
i
ty,
aff
ordabi
li
tyandot hers.

Theseparametersarerequir
edtobeconsideredatt
heear
lyst
agesofdesi
gni
f
desi
redoperat
ionalbehavi
oursar
etobereali
sed.

Schedul
eFeasi
bil
it
y:

Aprojectwill
failifi
ttakest
ool ongtobecompl etedbeforeitisuseful.Typical
l
y
thi
smeansest imati
nghowl ongt hesyst
em wil
ltaketodev elop,andifitcanbe
completedinagi ventimeperi
odusi ngsomemet hodsl i
kepay backper i
od.
Schedulefeasibil
i
tyisameasur eofhowr easonabletheprojectti
met ableis.
Somepr oj
ectsar eini
tiat
edwithspecifi
cdeadli
nes.Itisnecessarytodet ermine
whetherthedeadl
inesar
emandat
oryordesi
rable.Todopr
operschedul
i
ng,
the
ver
satil
etechni
quesli
kePERT&CPM areadopted.

Mar
ketandRealEst
ateFeasi
bil
it
y:

Mar
ketf
easi
bil
i
tyst
udi
esi
nvol
vet
est
inggeogr
aphi
clocat
ionsf
orar
ealest
ate

Page13of13
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

developmentpr oject,andusuallyi nvol

v eparcel
sofrealestateland.Dev el
opers
oft
enconductmar ketstudiestodet erminethebestlocati
onwi t
hinaj ur
isdict
ion,
andt ot estalt
ernativelandusesf orgivenparcel
s.Jurisdi
cti
onsof t
enr equir
e
developersto compl et
ef easi
bilit
yst udiesbeforet heywillapproveaper mi t
appli
cationforr etai
l,commer cial,industr
ial
,man¬ufacturi
ng,housing,of f
iceor
mixed-usepr oj
ect .MarketFeasi bil
itytakesintoaccounttheimpor tanceoft he
businessinthesel ectedarea.

Resour
ceFeasi
bil
it
y:

Thisinvol
vesquest
ionssuchashowmucht i
mei sav ai
l
abletobuil
dthenew
system,whenitcanbebuil
t,whetheri
tint
erf
ereswi thnormal busi
ness
operati
ons,t
ypeandamountofr esour
cesrequired,dependencies,
and
developmental
procedur
eswithcompanyr evenuepr ospect
s.

There ar
er esources necessaryto compl et
e any project
.Allt he i
mpor t
ant
resour
cesli
kehumanr esource,ar
ti
fi
cialresour
ces,financi
alresourceetc.are
takencareofbyi ndul
gingi ncompleteresearchonf easibi
l
ityoftheresources
neededtocompl etet
hepr oj
ect.

St
epsI
nvol
vedi
nConduct
ingaFeasi
bil
it
ySt
udy
:

1)ConductaPr
eli
minar
yAnal
ysi
s

Theprimarypurposeoft hepr el
iminaryanalysisistoscr eenpr oj
ectideas
befor
e extensivet i
me,ef fort
,and moneyar einvested.Two set s of
acti
vi
ti
esar einvolved.Inthisstept heplannedser vices,targetmar kets,
anduniquechar ¬acteri
sti
csoft heser vi
cesar edescr i
bedorout l
ined,as
speci
fi
call
yaspossi blebyanswer i
ngf oll
owingquestions-
a.Doest hepracticeser
v eacur r
entlyunservedneed?
b.Doest hepracticeser
v eanexistingmar ketinwhi chdemand
exceedssuppl y?
c.Cant hepracti
cesuccessf ull
ycompet ewi t
hexi sti
ng
practi
ces?

Page14of14
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

d.Ar ecapitalrequi
rementsf orentryorconti
nuingoperat
ions
unav ail
ableorunaf f
ordable?
e.Doanyf actorspreventeffecti
vemar keti
ngtoanyorall
referralsources?
I
ftheinfor
mationgatheredsof arindicatesthattheideahaspotenti
al,
t
henitiscont
inuedwi thadet ai
ledfeasibil
i
tystudy.

2)Prepar eaPr oject

edIncomeSt atement
Anticipated income mustcov erdirectand i ndirectcosts,taking i
nto
accountt heexpectedin¬comegr owthcurve.Wor kingbackwardfrom the
anti
ci patedincome, t
herevenuenecessarytogener atethati
ncomecanbe
deri
v ed in ordert o bui
ld a proj
ected i
ncomest atement.Factorsthat
determi nethisstatementareser v
icesprovided,feesf orserv
ices,vol
ume
ofser vices,andadjustmentstorevenuesetc.

3)ConductaMar
ketSur
vey

Agoodmar ketsurv
eyiscrucial
.Ift
hepl
annercannotperf
ormt
hissur
vey,
anout
sidefir
m shouldbehired.Thepri
maryobject
iveofamar
ketsurvey
i
sareal
ist
icproject
ionofr
evenues.

Themaj
orst
epsi
ncl
ude:

a.Defi
ningthegeogr
aphicinfluenceonthemar ket.
b.Revi
ewingpopulat
iontr
ends, demographicfeatures,cul
tur
alfact
ors,
andpurchasi
ngpowerint hecommuni ty.
c.Analy
zingcompetingservicesinthecommuni tytodeterminetheir
majorstrengt
hs and weaknesses.Fact or
st o consi
deri ncl
ude
pri
cing,pr oductlines,sourcesofr eferr
al,locati
on,promotional
act
ivit
ies,qualit
yofser vi
ce,consumerloyalt
yandsat isf
acti
on,and
sal
es.
d.Determiningtotalvolumeint hemarketareaandest i
mateexpected
marketshar e.
e.Esti
mat i
ngmar ketexpansionopport
uniti
es(e.g.,
responsi
venessto

Page15of15
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

new/
enhancedser
vices)
.

4)Pl
anBusi
nessOr
gani
zat
ionandOper
ati
ons

Atthi
spoi
nt,t
heor ganizat
ionandoperati
onsoft hebusinessshoul
dbe
pl
annedi
nsuff
icientdepthtodeter
minethetechnicalf
easi
bil
it
yandcost
s
i
nvolv
edi
nstar
t-up,fi
xedinvest
ment,andoperat
ions.

Ext
ensi
veeff
ortisnecessar ytodevel
opdetai
ledplansfor
:
a.Equi pment
b.Mer chandi si
ngmet hods
c.Faci l
itylocati
onanddesign&layout
d.Av ailabil
it
yandcostofpersonnel
e.Suppl yavail
abil
i
ty(e.
g.,
vendor
s,pri
cingschedul
esexcl
usi
ve
orfranchisedproducts)
f. Overheads

5)Pr
epar
eanOpeni
ngDayBal
anceSheet

TheOpeni ngDayBal anceSheetshoul

dr ef
lectthepract
ice’
sassetsand
l
iabil
it
iesasaccurate¬l
yaspossi
bleatt
het i
met hepracti
cebegi
ns,bef
ore
the pract
ice gener
ates i
ncome.Prepareal i
stofasset srequi
red f
or
practi
ce operati
ons.The li
stshouldi ncl
ude item,source,cost,and
avail
ablefi
nancingmethods.

Necessaryasset
sincl
udeev er
ythi
ngfr
om cashnecessar yforwor ki
ng
capi
taltobui
ldi
ngsandland.Alt
houghther esult
ingli
stisr
athersimple,
theamountofeffor
trequi
redmaybeext ensive.Liabi
l
iti
est
obei ncurr
ed
andt
hei
nvest
mentr
equi
redbyt
hepr
act
icemustal
sobecl
ari
fi
ed.

Thesei
temsneedtobeconsidered:
a.Whethertoleaseorbuyland,buildi
ngs,
andequi
pment
b.Methodtofinanceassetpurchases
c.Waytofinanceaccountsreceivable

Page16of16
Ent
repreneurshi
p(TLE12) I
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uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

6)Rev
iewandAnal
yzeAl
lDat
a

Theplannershoul ddet erminei fanydat aoranal ysisperf

ormedshoul d
changeanyoft hepr ecedinganal y
ses.Basi cal
ly,t
hisst epmeansi sbased
onthepr i
nciple“St epbackandr eflectonemor et ime.”Re-examinet he
Proj
ectedIncomeSt atementandcompar ewi ththel i
stofdesi r
edasset s
andtheOpeni ngDayBal anceSheet .
Itisgood t ofind outt hatal lexpensesandl iabil
it
ies,i
nt heI ncome
Stat
ementar ereflectingr eal
ist
icexpect at
ions.Riskandcont i
ngenci esare
anal
yzed forConsi der i
ng the li
kelihood ofsi gnifi
cantchanges i nt he
curr
entmar ketthatcoul dal t
erprojecti
ons.

7)Make“
Go/
NoGo”Deci
sionorGr
een/
RedSi
gnal
Deci
sions

Allt
hepr ecedi
ngstepshav ebeenaimedatpr ovi
dingdataandanaly
sisfor
the“go/nogo”decision.Ift
heanalysi
sindicat
esthatthebusi
nessshould
yiel
datleastthedesiredminimum i
ncomeandhasgr owthpotent
ial
,a“go”
decisi
oni sappropr
iate.Anyt
hingl
ess,thanthedesir
edresul
t,wi
lli
mplya
“nogo”deci si
on.

Addit
ionalconsi
derati
onsincl
udeanswerstofoll
owingquestions:
a.I st
hereacommi t
menttomaket henecessar
ysacri
ficesinti
me,
eff
ortandmoney ?
b.Wi l
ltheacti
vit
ysatisf
ylong-
ter
m aspi
rati
ons?

I
V.St
art
-upcapi
talandFi
nanci
alSt
atement
s

 Star
tupcapitalreferst ot hemoneyt hatisr equiredt ostartanew busi ness,
whetherforoffi
cespace,per mits,l
i
censes,i nventory,pr
oductdev elopmentand
manufacturi
ng,mar keti
ngoranyot herex pense. Startupcapit
alisal sor ef
erred
toas"seedmoney .
" Themoneycancomef rom abank, i
ntheform ofabusi ness
l
oan;orf r
om ani nvestor,groupofinvestors,orv enturecapi
tali
st(
s).Int hecase
ofabankl oan,thebusi nesswi l
lbeexpect edtomakemont hlypay ment stopay
downt hedebtplusanyi nt
erestand/orfees.Int hecaseofani nvestor ,
heorshe

Page17of17
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
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ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

wil
lnegot
iat
etopr
ovi
det
hatst
art
upcapi
tali
nexchangef
oracer
tai
nst
akei
nthe
company.
 

 Financialstat
ementsarewrit
tenrecor
dst hatconveythebusinessactiv
iti
esand
thefinancialperf
ormanceofacompany .Financi
alstatementsareoftenaudi
ted
bygov ernmentagencies,
account
ants,fi
rms,etc.t
oensur eaccuracyandfortax,
fi
nancing,orinvesti
ngpur
poses.

Pur
poseofFi nancialSt
atement s
Financialst
atementsar east ructuredr epresentationoft hef i
nancialposi
ti
onand
fi
nancialper f
ormanceofanent i
ty.Theobj ecti
v esofgener alpurposef i
nancial
statement saret o pr
ov idei nf
or mat i
onaboutt hef inancialposi ti
on,fi
nancial
performance,andcashf lowsofanent itythatisusef ultoawi der angeofuser s
in maki ng and ev aluat i
ng deci si
ons about t he al locati
on of r esources.
Specifi
cally
,theobjectivesofgener alpur posef inanci alreporti
ngi nthepubl ic
sectorshoul d beto pr ovidei nformat i
onusef ulf ordeci si
onmaki ng,and to
demonst ratetheaccount abil
i
tyoft heent it
yf orther esour cesentrustedtoit,
by :

1.provi
ding i nf ormation about t he sour ces,al l
ocati
on,and uses of
fi
nancial
r esour ces;
2.Provi
dingi nfor mationabouthowt heentit
yf i
nanceditsacti
vi
ti
esandmet
i
tscashr equi rement s;
3.Provi
dingi nf ormat i
ont hatisusef ulinev al
uati
ngt heentit
y’sabi
li
tyto
fi
nanceitsact ivi
ti
esandt omeeti t
sl i
abil
it
iesandcommi t
ments;
4.Provi
ding i nformat ion aboutt he financi
alcondi t
ion ofthe ent
it
yand
changesini t
;
5.Provi
ding aggr egate i nfor
mat i
on usef ul in ev al
uati
ng the entit
y’s
perf
ormancei ntermsofser vi
cecost s,eff
ici
encyandaccompl i
shments;

Gener alpur posef inancialst atement scanal sohav eapr edi

ctiveorpr ospect i
ve
role,pr ovi
di ng i nformat ion usef ul in pr edicting the level of r esour ces
required f orcont inuedoper ations,ther esourcest hatmaybegener atedby
cont i
nued oper ations,and t he associat ed ri
sks and uncer taint
ies.Fi nancial
reportingmayal sopr ovideuser swi thi
nfor mati
on:
1.I ndicatingwhet herr esour ceswer eobt ainedandusedi naccor dancewi th
thel egall
yadopt edbudget ;
and
2.I ndicatingwhet herr esour ceswer eobt ainedandusedi naccor dancewi th
legalandcont ractualr equirement s,incl
udi ngfinanci
allimit
sest ablished
byappr opriatelegislativeaut hor
it
ies.(Par .15-
16PPSAS1)

Fi
nancial
statement
spr
ovi
dei
nfor
mat
ionaboutanent
it
y’s:
1. Assets;
2. Liabi
li
ti
es;
Page18of18
Ent
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anni
ngandCr
eat
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3. Netassets/equi
ty;
4. Revenue;
5. Expenses;
6. Otherchangesinnetasset
s/equi
ty;
7. Cashflows;and
8. Compar i
sonofbudgetandactualamount
s.(
Par
.17,
PPSAS1)
.

Responsi
bil
i
tyf
orFi
nanci
alSt
atement
s

 The responsibil
it
yf or the fair presentati
on and r eli
abil
ity of financial
stat
ement srestswi t
ht hemanagementoft hereport
ingent i
ty,part
icul
arlythe
headoff i
nance/account i
ngof fi
ceandt heheadofent i
tyorhi sauthor i
zed
repr
esentativ
e.TheSt atementofManagementResponsi bil
ityforFi nancial
Stat
ement sshallserveast hecoveringlett
erintransmit
tingtheent i
tyfinancial
stat
ement stot heCOA,andot herr egul
atoryagenciesandot herent i
ties.It
showst heent i
ty’
sr esponsibi
l
ityfort hepr epar
ati
onandpr esentationoft he
fi
nanci
al stat
ement s.

Compl
etesetoff
inanci
alst
atement
sincl
udes5component
s

1.St
atementofCompr
ehensi
veI
ncome

The Income Stat

ement,also known as Profi
tand Loss St
atement( P&L
Stat
ement),showst heresul
tsofoper at
ionsofanent i
tyoverapar t
icul
ar
peri
od oftime.The income statementpresent
sthe peri
od'
si ncome and
expensesandtheresul
ti
ngnetincomeorloss.

Manylargecompaniest
odaypr epareaSt atementofCompr ehensiv
eIncome.
TheSt at
ementofCompr ehensiveI ncomepr esentsacompany 'sresul
tsof
operat
ions(neti
ncomeorl oss)andi tsothercomprehensi
veincome( OCI
).I
f
thecompanyhasnoot hercompr ehensiv
ei ncome,thenthecontentsofthe
IncomeSt at
ementandSt atementofCompr ehensi
veIncomewoul dbet he
same.

Othercompr ehensi
vei ncome incl
udes gai
ns and l osses t
hatcannotbe
report
edint heIncomeSt at
ementsuchasr evaluati
onsurplus,t
ransl
ati
on
adjust
ments,andunr eali
zedgains,f
oragi venper i
od.Othercomprehensi
ve
i
ncomei scoveredinhigherfi
nanci
alaccount
ingstudies.

 I
ncomeSt
atementExampl
e

Page19of19
Ent
repreneurshi
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ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

Her
e i s a sampl e i ncome st at
ement of a  ser
vice 
ty sol
pe  e
pr
opri
etor
shi
p busi
ness.Letusnamet hecompanySt
  r
aussPri
nti
ngSer vi
ces.
Al
lamountsareassumedandsi mpl
i
fiedf
ori
ll
ust
rat
ionpur
poses.

Expl
anat
ionandPoi
nter
s

a.Anincomestat
ementshowst heneti
ncomeornetl
ossofabusi
ness.Thi
sis
achi
evedbydeduct
ingal
lexpensesfr
om al
li
ncome.

b.A t
ypi
calincomest atementstar
tswithaheadingwhichconsi
stsofthree
l
i
nes.Thef i
rstl
inepresent
sthenameoft hecompany
;theseconddescri
bes
t
hetit
leoftherepor
t;andthethi
rdst
atest
heperi
odcoveredi
ntherepor
t.

c.Noti
cethatthet hi
rdl
ineiswor "
ded Fort heYearEnded...
" 
Thi
smeansthatthe
i
ncomest atementpr esentsinformati
onf oraspeci f
ic 
spanoft
ime.Int he
aboveexampl e,theperiodcov er
s1y eart hatendsonDecember31,2019.
Hence,theamount spresentedi nther eportareincomeandexpensesfrom
Januar
y1, 2019t oDecember31, 2019.

Page20of20
Ent
repreneurshi
p(TLE12) I
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ion
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ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

d.Incomeaccount sarepr esentedbef oreexpenses.Intheabov estatement ,

the
i
ncomeaccounti sSer viceRev enue. Otherincomeaccountsf orser vi
cetype
businessesincl
udePr ofessional Fees,RentIncome,Tuit
ionFees,et c.
e.Expensesar epresentedaf terthei ncomeaccount s.Itisagoodpr act
iceto
arrangeexpensesaccor dingt oamount( l
argestt
osmal l
est)
.Someuser swho
arei nt
erest
edi nthecompany '
sexpensesar econcer
nedaboutt hesi zeof
eachexpense.Ar rangingt heexpensesf rom lar
gesttosmal l
estr esult
sina
mor e usef ul and or ganized r eport. Nonet hel
ess,Mi
  scell
aneous
Expense or 
SundryExpense  ispresentedl ast
.

f
.I fincomeexceedsexpenses,t her
ei sa neti ncome.Ifexpensesexceed
i
ncome, t
hereisa netl
oss.Not
icehowcomput ati
onsarepresent
ed.Asingle
l
inei sdrawn everyti
mean amounti scomput ed.Theresult
ing amount
i
s doubl
e-rul
ed 
when iti s no longer f
ollowed by any oper ati
on. For
example,
 
$57,100 (
neti
ncome).

g.The income stat

ementcomplies withthe accr
ualbasi
s ofaccounti
ng.
Incomei sr
ecogni
zedwhenear nedregar
dlessofwhencoll
ect
ed.Expenses
arerecogni
zedwhenincur
redr
egardl
essofwhenpai d.

h.Thismeansthatincomeandexpensespr esent
edint
hei ncomestatement
havebeenearnedandincurr
ed,r
espect
ivel
y.Nonet
hel
ess,itdoesnotmean
thatt
heyhav
eal l
beencoll
ect
edorpaid.

i
.Internati
onalaccount i
ngst andar
dssuggestt hatcompani
esshouldpresent
othercompr ehensiveincomei ntheirfi
nancialstat
ement
s.A St
atementof
Compr ehensiveI ncome  shows the contents of an i
ncome stat
ement
fol
lowedbyal istof"othercomprehensi
veincome".

j
. Othercompr ehensiveincome incl
udes gai
ns and l osses thatcannotbe
r
eported as profi
tand loss,such as unr eali
zed gains and losses,and
r
ev al
uat
ionsurplus.Thi
sistakenupinhigherfinanci
alaccountingstudi
es.

k.Whenthecompanydoesnothav eot hercompr

ehensi
veincome,t
hecont
ents
ofthei
ncomestatementandthestatementofcomprehensi
vei
ncomearethe
same.Inanycase,int
ernat
ionalaccounti
ngstandar
dsf av
ortheuseofthe
ti
tl
e"St
atementofComprehensiv
eIncome" .

Page21of21
Ent
repreneurshi
p(TLE12) I
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uteofTeacherEducat
ion
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ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

St
atementofCompr
ehensi
veI
ncome

Here'
sa sampl eStatementofComprehensi
veIncome,which i
ncl ot
udes  her
comprehensi
veincome.Thist
opi
cist
akenupi nhi
gheraccount
ingsoyouneed
notworryabouti
tyet
.

2.St
atementofChangesi
nCapi
tal

TheSt atementofChangesi nCapi t

al(orStatementofChangesi nEqui t
y )
showst hebal anceoft
hecapi talaccountatthebeginni
ngoft heper
iod,the
changest hatoccurr
eddur
ingtheper iod,andt
heendingbalanceasaresultof
suchchanges.Capi t
ali
saffectedbycont ri
but
ionsandwithdr
awalsofowner s,

Page22of22
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

i
ncome,
andexpenses.

Thet i
tl
eusedf orthisreportvar
iesdependi
ngupont hef
orm ofbusi ness
ownership.I
tiscall
edSt at
ementofOwner 'sEqui
tyi
nsolepropri
etorships,
Stat
ementofPar t
ners'Equi
tyinpart
ner
shipsandStat
ementofStockholders'
Equi
tyincorpor
ati
ons.

 Exampl
e

Herei s a sampl e Stat

ement of Owner'
s Equi t
y of a ser
vice 
ty sol
pe  e
propr
iet
orshi
p busi
ness,
 Str
aussPrinti
ngSer
vices.Allamountsareassumed
andsimpli
fi
edf ori
l
lust
rati
onpurposes.
Assumethatthecompanystar
tedt
hey ear2019wit
h$100,000capi
tal
.Duri
ng
theyear
,theownermade$10,000additi
onalcont
ri
buti
onsand$20,000total
wit
hdrawal
s.TheStat
ementofOwner'
sEquitywoul
dlookli
kethi
s:

Expl
anat
ionandPoi
nter
s:

a.ASt at
ementofOwner '
sEquity(SOE)showstheowner'scapi
talatthest
artof
theperi
od,thechangesthataff
ectcapit
al,
andtheresult
ingcapi
talatt
heend
oftheperi
od.Iti
salsoknownas" Stat
ementofChangesi nOwner'
sEquity
".

b.At
ypi
calSOEst
art
swi
thaheadi
ngwhi
chconsi
stsoft
hreel
i
nes.Thef
ir
stl
i
ne

Page23of23
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

showsthenameoft
hecompany
;secondt
het
it
leoft
her
epor
t;andt
hir
dthe
peri
odcover
ed.

c.Thetitl
eofther epor
tisStatementofOwner'
sEquity.Thisisusedf
orsole
propr
ietor
shi
ps.Forpartnershi
ps,theti
tl
eusedi s"StatementofPart
ner
s'
Equit
y"andforcorpor
ati
ons,"St
atementofSt
ockhol
ders'Equi
ty"
.

d.Noti
cet hatt
het hir
dli
neiswor "
ded FortheYearEnded.
..
" 
Thismeansthatt
he
SOEpr esent
si nformat
ionforaspecif
ic 
spanoftime.Intheaboveexample,
the peri
od cov er
s1 y earthatends on December31,2019.Hence,t he
amount spresentedper t
aintochangest oowner'
sequi t
yf r
om Januar
y1,
2019toDecember31, 2019.

e.Thecapitalaccountusedintheil
lust
rat
ioni
s St
rauss,Capi
tal
.Thecapi
tal
accountusedwouldvaryf
rom companytocompany.

f
.I ncomei ncreasescapital
.Expensesdecreasei
t.Netincomei sequalt o
i
ncome mi nus expenses.Hence,netincome woul
dincrease t
he capital
account.Ifexpensesexceedincome,
ther
eisanetl
oss.I
nsuchcase,netloss
willdecr
easet hecapi
talaccount.

g.Noti
cethatthe 
neti
ncome above,$57,
100,i
sthebot
tom-
li
neamounti
nthe
company'
s I
ncomeStatement.

h.Str
auss,Drawings 
repr
esentsthetot
alwit
hdrawal
smadebytheownerdur
ing
the peri
od.The ownermade $ 20, 000 t
otaldrawi
ngs.Thi
s amountis
deductedtogetthecapi
talbal
ance.

i
. TheStatementofOwner 'sEquityexampleabov eshowst hatthecompany
has 
$147,100 
incapi
talasar esultofthefoll
owing:$100,
000balanceatthe
begi
nni
ngoft heyear
,plus$10,000owner'scontri
buti
onsduri
ngthey ear
,pl
us
$57,
100netincome,andmi nus$20,000withdrawals.

j
. Goodaccount
ingform suggestst
hatasingl
el i
neisdr awnev er
yti
mean
amountiscomputed(itsigni
fi
esthatamathematicaloper
ationhasbeen
compl
eted)
.Thebott
om-li
neamounti doubl
s  e-r
uled,
i.
e. 
$147,100.

3.St
atementofFi
nanci
alPosi
ti
on

Page24of24
Ent
repreneurshi
p(TLE12) I
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uteofTeacherEducat
ion
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ytechni
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ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

ABalanceSheetpresent
sanentit
y'
sassets,
li
abili
ti
es,andcapit
alasofagi
ven
pointi
ntime.Thisreportshowstheenti
ty'
sfinancialposi
ti
onandcondit
ion,
hence,al
socal
ledStatementofFi
nanci
alPosit
ion.

Al
lassetamountsareadded.Al
lli
abi
l
ityandcapi
talaccount
sareal
soadded.
Thetotalamountofasset
sshouldbeequaltothet ot
alamountofl
iabi
l
iti
es
pl
uscapital
.

Exampl
e:

Movingonfr
om ourpreviousi
ll
ustr
ati
ons,her
eisasamplebalancesheetf
or
St
raussPri
nti
ng Ser
vices,a serv
ice t
ypesole pr
opr
iet
orshi
p busi
ness.All
amountsar
eassumedandsi mpli
fi
edforil
l
ustr
ati
onpur
poses.

Expl
anat
ionandPoi
nter
s

Page25of25
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
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ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

a.ABal
anceSheetshowsthefi
nancialposit
ionorcondi
ti
onoft
hecompany
;
t
hus,
iti
sal
socalled"St
atementofFinanci
alPosit
ion"
.

b.Atypi
calbalancesheetstart
swit
haheadi ngwhichconsist
softhr
eeli
nes.
Thefi
rstl
inepresentsthenameoft hecompany;theseconddescr
ibesthe
ti
tl
eofthereport;
andthet hi
rdst
atesthedateofthereport
.

c.Noti
cethatt hethirdli
neiswor ded"Asof .
.."Unl
iket
heothercomponent s
ofthefinancialstatementswhi chcov eraspanoft i
me( "Fortheper i
od
ended.
."
),thebalancesheetpr esentsinfor
mat i
onasofacer t
aindat
e( ata
speci
fi
cpoi ntinti
me) .Intheabov eexampl e,t
hecontent
soft hebalance
sheetpertai
nt othef i
nancialcondi
tionoft hecompanyonDecember31,
2019.

d.A balance sheetsummar i

zes t he assets,li
abi
l
iti
es,and capitalofa
company .Asset sr ef
erto pr operti
es owned and cont rol
l
ed by t
he
company .Liabi
l
iti
esareobligationstocr edi
tor
s,l
enders,etc.Andcapi
tal
repr
esentst he porti
on l
eftf ort he owners oft he busi
ness aft
erall
l
iabi
li
ti
esar epaid.Fordet
ail
edl essonsaboutassets,li
abil
it
iesandcapi
tal
,
checkouttheElement sofAccount i
ng.

e.Assets and l
iabi
l
iti
es are cl assif
ied as ei
thercur rentornon- cur
rent
.
Curr
entassetsarepr oper t
iest hatwil
lbeconv ertedi nt
ocashwi thi
n12
monthsorwi t
hintheoper ati
ngcy cleofthebusiness.Currentl
i
abil
iti
esare
duewi t
hin12mont hsorwi t
hint heoperati
ngcy cle.Non-cur
rentassets
and non-curr
ent li
abil
i
ties ar et hose that do not meet t he above
qual
if
icati
ons.

f
."Tot
alasset
s"and"
tot
all
i
abi
l
iti
esandcapi
tal
"shoul
dal
way
sbeequal
.

g.Thecapit
alamount
,$147,
100forSt
rauss,
Capi
tal
,wasact
ual
l
ytakenf
rom
theSt
atementofOwner'
sEqui
ty.

h.Thebal ancesheetmaybepr esent

edi ntwof orms:accountf orm and
reportform.Inaccountform,asset sarepresentedont hel ef
tsidewhil
e
l
iabil
it
iesandcapi t
alarepresentedont heri
ght.I
nr epor
tf orm,assetsar
e
presentedf i
rstandthenfollowedbyl iabi
l
iti
esandcapi tal.Theex ampl
e
abovei spresent
edusingther eportf
orm.

i
. Goodaccountingform suggest st
hatasingleli
neisdrawnev er
yti
mean
amountiscomput ed.Itsigni
fiest
hatamat hemati
caloperati
onhasbeen
complet
ed.The"totalassets"and"t
otal
li
abil
iti
esandcapit
al"amount
sare
doubl
e-r
uled.

Page26of26
Ent
repreneurshi
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ion
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ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

4.St
atementofCashFl
ows

TheStat
ementofCashFlows,orCashFlowStatement
,presentsthebegi
nni
ng
bal
anceofcash,thechangesthatoccurredduri
ngtheperiod,andthecash
bal
anceatt
heendoftheperiodasaresultoft
hechanges.

Thecashf l
ow stat
ementshowsthecashinfl
owsandout
fl
owsf
rom t
hree
act
ivi
ti
es:
operati
ng,i
nvest
ing,
andf
inanci
ng.

Operatingacti
vit
iespertaint otransacti
onst hataredi rectl
yrelatedt ot he
company '
smaincour seofbusi ness.Investi
ngactivi
ti
esr eferto" wheret he
companyput sitsmoney "
.Theseact i
vi
tiesincl
udel ong-term investment s,
acquisiti
onofpropert
y,plantandequipment ;andothertransacti
onsr elat
edt o
non-currentassets.Financing acti
vit
ies incl
ude transactions in which a
companyacqui resi t
sf unds.These i nclude l
oansf rom banks( long-t
erm
l
iabi
lit
ies)andcontri
buti
onsf rom owners.

Exampl
e:

Hereisasamplecashf l
owstat
ementforSt
raussPrint
ingSer
vices,aserv
ice
t
ypesolepropri
etor
shi
pbusi
ness.Al
lamount
sar eassumedandsi mpli
fi
edfor
i
ll
ustr
ati
onpurposes.

Page27of27
Ent
repreneurshi
p(TLE12) I
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uteofTeacherEducat
ion
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ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

Expl
anat
ionandPoi
nter
s

a.StatementofCashFlowspresentstheinfl
owsandout f
lowsofcashi nthe
dif
ferentacti
vi
ti
esofthebusiness,thenetincreaseordecreasei ncash,
andt heresul
ti
ngcashbal
anceatt heendoft heperi
od.Cashi nf
lowsrefer
toreceipt
sofcashwhil
ecashout f
lowst opaymentsordisbursements.

b.A typi
calcashfl
ow stat
ementst ar
tswithaheadingwhichconsistsof
thr
eel i
nes.Thefi
rstl
i
nepresentsthenameofthecompany ;t
hesecond
descri
bestheti
tl
eoftherepor
t;andthethi
rdst
atestheperi
odcoveredin
thereport
.

c.Noti
cet hatt
het hir
dlineisworded"FortheYearEnded.
.."Thi
smeansthat
t
hei nformati
on included i
nt hereportcov er
sa span oft ime.I
nt he
i
ll
ustr
ationabov e,thereportpr
esentsinflowsandoutf
lowsofcashfor1
year
,i.
e.from January1t oDecember31, 2019.

d.Cashinfl
owsandout f
lowsar
ecl
assi
fi
edi
nthr
eeact
ivi
ti
es:oper
ati
ng,
i
nvest
ing,andf
inanci
ng.

Page28of28
Ent
repreneurshi
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ytechni
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ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

e.Oper ati
ngact i
vit
iesr efertothemai noper ati
onsoft hecompanysuchas
renderingofpr of
essi onalservi
ces,acquisi
tionofinventori
esandsuppl ies,
sell
ing ofi nventor i
esf ormer chandi
sing and manuf acturi
ng concerns,
coll
ect i
onofaccount s,pay mentofaccount st osuppl i
ers,andot hers.
Gener all
y,operatingact iv
iti
esrefertot hoset hati
nv olvecur r
entasset s
andcur rentli
abil
ities.

f
.I nvesti
ngactivit
iesmaybesummedupas:" wherethecompanyput si t
s
moneyf orlong-term purposes"
,suchasacqui si
ti
onofpr oper
t y
,plantand
equipment ; and i nvest
ment in l ong-
ter
m secur it
ies. Sell
ing these
properti
esar eal soconsideredinvesti
ngactivi
ti
es.Ingener al
,investi
ng
activi
ti
esincl
udet r
ansacti
onsthati
nv ol
venon-cur
rentassets.

g.Financingacti
viti
esreferto:"wherethecompanyget sit
sf unds",suchas
i
nv estmentoft heowner /
s,andcashpr oceedsfrom bankloanandot her
l
ong- term payables.The pay mentofsuch i tems (i.
e.wi thdrawalof
owner /sandpay mentofl oans)arealsof i
nanci
ngact i
vi
ties.Generall
y,
fi
nanci ngacti
viti
esincludet hosethataffectnon-cur
rentliabil
it
iesand
capital.

h.Alli
nfl
owsarepresent
edi
nposi
ti
vef
igur
eswhi
l
eal
lout
fl
owsi
nnegat
ive
(i
nparent
heses)
.

i
. Afterinfl
owsandout flowsar epr esent
ed,t
henetincr easeordecreasein
cashi scomputed.Theni ti
saddedt othebegi
nningbal anceofcashtoget
thebal anceattheend.Easy ,right?Insimplesense,t hi
sreportpr
esents
thecashbal anceatt hebegi nningoft heperi
od,thechangesdur ingthe
period,andtheresul
ti
ngbal anceatt heendoftheperiod.

j
. Noti
cethatthecashbal
anceattheend,$21,
000,i
sthesameast
hecash
bal
ancepresent
edinthecompany'
sBalanceSheet
.

k.Goodaccounti
ngform suggestst
hatasinglel
ineisdrawnev er
yt i
mean
amountiscomputed.I
tsignif
iesthatamathemati
caloperat
ionhasbeen
compl
eted.Thecomputedbalanceattheendoftherepor
tisdouble-
rul
ed.

5.Not
est
oFi
nanci
alSt
atement
s

The Not es to Financi

alSt atements,or Supplement
ary Notes,provide
i
nformation i
n addit
ion tothose present
ed inthe Bal
ance Sheet,I
ncome
Statement,St
atementofChangesi nEquity,andCashFlow Statement
.The
notes contai
n discl
osures requi
red by account
ing st
andar
ds,suppor t
ing

Page29of29
 Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

comput
ati
ons,
breakdownofl i
neit
emsinthefaceoft
hef
inanci
alst
atement
s,
andot
heri
nfor
mationthatusersmaybei
nter
estedi
n.

Rel
ati
onshi
pamongt
heFi
nanci
alSt
atement
s

 Thef inancialstatementscontaini
nter
rel
atedinfor
mati
on.Thi
sisthereason
thefi
nanci alstatementsar
epr epar
edinthesequencepr
esent
edabove.I
nfact
,
someoft hef i
gur esi
nonef inanci
alstat
ementcomponentareact
uall
ytaken
from anothercomponent .

Thenetincomef r
om theIncomeSt at
ementisused intheSt atementof
Changesi
nEqui
ty.Rememberthati
ncomeandexpensesaf
fectcapit
al.

Theending bal
anceofcapi
talintheStatementofOwner
's/
Par
tner
s'/
SH'
s
Equi
tyi
sforwardedt
otheBal
anceSheet(
underCapi
tal
).

The cash bal

ance pr
esent
ed i
nt he Bal
ance Sheetis suppor
ted by t
he
Stat
ementofCashFl ows.Theendingbal
anceofcashi ntheStatementof
CashFlowsisthesameamountpr
esentedi
ntheBalanceSheet.

The notes t
ofi
nancialst
atements show suppor
ti
ng computat
ions ofthe
amountsandaddit
ionali
nformat
ionabouttheitemspresent
edint heabove
repor
ts.

I
V.Dev
elopi
ngBusi
nessModel

 A busi
ness modelis a conceptualframeworkto descr
ibe how a soci
al
ent
erpr
ise,
star
t-
uporNGOcr eates,capt
uresanddel
i
versval
ue.

 Thet erm busi nessmodelr ef

erst oacompany 'splanformaki nga  profit
.It
i
dent ifi
es t he pr oduct s or ser v i
ces t he busi ness plans t o sel l
,i ts
i
dent ifi
ed targetmar ket,andanyant icipated  expenses.Businessmodel sar e
i
mpor tantf orbot hnewandest abl
ishedbusi nesses.Theyhelpnew, developing
compani esat tractinvestment,recruitt alent ,andmot i
vat
emanagementand
staff.Est ablishedbusi nessesshoul dr egul arl
yupdat etheirbusinesspl ansor
they'
llf ailt oant i
cipatet r
endsandchal lengesahead.Busi nesspl anshel p
i
nv estorsev aluatecompani esthatinterestt hem.

Greatbusi
nessmodelsdependondev elopi
ngt hr
ee" gr
eenl i
ght
s,"orquali
ti
es
thathelpt he busi
ness succeed:fi
nding high-
value customers,offeri
ng
signi
fi
cantv al
ue t
o cust
omer s,and deli
ver
ing signi
ficantmar gi
ns.Great

Page30of30
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

businessmodel salso av oi
dt hree" red l
ights"thatcan der ailabusi ness:
dif
ficul
ti
esinsatisfy
ingcust omer s,tr
oublemai ntai
ningmar ketposi ti
on,and
problemsgenerati
ngf undingforgr owth.Thelistbelowout li
neskeyf actor
sin
determini
ngwhet hery ourmodelmeet seachgr eenlightandav oi
dst hered
l
ights.Examineyourownbusi nesst oseei fyoumeett hecriteriaforsuccess
and, morei
mportantl
y,t ocor
rectanyweaknessesy oumi ghthav e.
GreenLights

1.Acqui
rehi
gh-
val
uecust
omer
s

Hi
gh-
val
uecustomer
sdoesn'
tmeanri
chcust
omer
s,butcust
omer
s
whomeett
hefoll
owi
ngr
equir
ement
s:

a. Areeasyt olocate
b. All
owy out ochargeaprofi
tabl
eprice
c. Arewill
ingtot ryyourpr
oductaf
termini
malmarket
ing
expenses
d. Cangener ateenoughbusi nesstomeety oursales
andprofitobjecti
ves

Customersdon'tnecessar i
l
yneed t o bet heenduser sofy our
pr
oductorservi
ce.Theycoul dber etai
lers,dist
ri
butor
s,catal
ogsor
whomev eryousel
ly ourproductorser viceto.Ifyourendusersor
di
str
ibutor
sdon'tfi
tthisprofil
e,youcanst i
l
lmeett hi
srequir
ement
by attr
acti
ng high-value customer s t hr
ough par t
nershi
ps or
al
li
anceswithcompani esinthemar ket.

2.Of
fersi
gni
fi
cantv
aluet
ocust
omer
s

Ther
eareanumberofway syoucancreat
esigni
fi
cantv
alueand
compet
it
iveadv
ant
age,
incl
udi
ngt
hefol
l
owing:

a.Uniqueadvantagesinfeaturesandbenefit
s
b.Betterdi
str
ibuti
onthroughr et
ail
ordist
ri
bution
c.Mor ecompl et
ecust omersol uti
onsthroughal l
ianceswith
othercompanies
d.Lowerpr i
cingduet omanuf act
uringeffi
cienci
esorpr ici
ng
opti
ons
e.Fasterdeli
very
,broaderpr oductli
neormor ecustomizati
on
opti
ons

Theriseoft
hei
nter
net
,out
sour
cingand,mostofall
,thei
ncr
eased
wil
l
ingnessofcompani
es t
o part
nerin cr
eat
ive waysto ser
ve
Page31of31
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

cust
omershasr esult
ed i
neveryindust
rycr eat
inginnov
ati
onin
busi
nessstr
ategy.Thi
sgivesyouopport
unit
ies,butalsomakesi
t
i
mperati
vet hat you st
ay on the cr
eati
ve edge t ofend of
f
competi
ti
on.

3.Del
i
verpr
oduct
sorser
viceswi
thhi
ghmar
gins

Bett
ermanuf acturi
ng cost
s due t o overseas manufacturing i
s
typi
cal
lynott hecl earwaytohi ghermar gins,ascompet i
torswill
typi
cal
lymat chy ourcostsintheend.Hi ghermar gi
nscomef rom
havi
ngapr oductt hatcanbemadef r
om ani mpr ov
edprocessorby
havi
ng feat
ur es thatprovi
de signi
fi
cantv alue and al
low you to
charge more.You can achi ev
e high mar ginswith ot
hert acti
cs,
i
ncludi
ngthef oll
owing:

a.Useamor eeffici
entdistri
buti
onchannel.
b.Requirel
esssalessuppor tandsaleseffor
t.
c.Hav eani
ndustry-
leadingleanmanuf act
uri
ngpr
ocess.
d.Offermor e auxi
liar
y pr oduct
s orot heroppor
tuni
ti
es f
or
rev
enuewi t
houtincreasingcost.

RedLi
ght
s

1.Pr
ovi
def
orcust
omersat
isf
act
ion

Considerwhet heri
twillbe dif
fi
cul
t-
-and theref
ore expensi
ve--
to
sati
sfycustomersoncet
heybuy.Someoft heaspectsofabusi ness
thatcreat
ehighcust
omersat
isf
acti
oncostsincl
ude:

a.Highwar rantycosts
b.Extensiv
et echnicalsupport
c.Extensiv
ei nstall
ati
onrequir
ement
d.Extensiv
ecust omerservi
ce
e.I
nterfacepr oblemswi t
hotherequi
pment

Customersatisfacti
oncosts,whichoccurafterthesale,ar
er edfl
ags
becauset hecostsar etypical
l
yhi ghanddon' tproducer evenueor
prof
its.Ifyourt y
peofpr oductmi ghthavehighcust omerser vi
ce
costs,youneedt oconfi
gur eyourbusinesst oputthesecost son
someoneel se,eitherwi
thpar t
nershipsorall
iancesorbyr est
ri
cti
ng
yoursal es t
o an aspectoft he business thatdoesn' trequi
re
customersatisf
act i
oncosts.

Page32of32
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

2.Mai
ntai
nmar
ketposi
ti
on

Agoodbusi nessmodelusesi tsresour

cestoi mpr
oveitsmarket
posi
ti
on,addi
ngnewpr oducts,f
eaturesandcustomer
sorexpanding
i
ntonewappl i
cat
ions.Ther edflagsthati
ndi
cateitwi
llbedi
ff
icul
tto
maint
ainmarketposit
ioninclude:

a. Twoort hreemajorcustomer sbuymostofy ourpr oduct.

b. Maj orpotenti
alcompetitor
scont rol
thedist
ri
but i
onnet work.
c. Technologychangesr apidlyandr equir
eshi gh-r
iskpr oduct
development .
d. Ther eareal t
ernati
vetechnol ogi
esbeingdev el
opedt omeet
thesameneed.
e. You hav e well-
funded pot enti
alcompet i
tors who coul d
quicklymov eintoyourmar ket.

Longterm,yourabi
l
ityt
ohol dmarketposit
ionisdetermi
nedbythe
char
acteri
sti
cs ofthe over
allmarket.Forexampl e,a company
i
nvol
vedi nthesemi
conductormanufacturi
ngbusinessmustadj
ust
andguessr i
ghtonconstantchangesintechnol
ogyt ohol
dmarket
posi
ti
on.Soonerorl
atertheywil
lguesswrongandf ail
.

3.Fundt
hebusi
ness

Startup costs,oper
ating capital
,per sonnelcost s and over
head
costsar ejustasmal lpercentageoft hef undingrequir
ement sfor
anybusi ness.Thequestioni swhet hertheinvestmentswi l
lhavea
hi
ghr et
urnandwhet herthebusi nesscangr owwithoutsubstant
ial
new i nvestments.Red f lags fora busi ness modelr egardi
ng
i
nv estmentsincl
ude:

a.ROIi slessthan25percentinthef i
rstt
hreeyear
s.
b.Increment al pr
oducti
on of pr oducts or servi
ces r equi
res
subst anti
aladdi
ti
onali
nvestments.
c.Fewert han50percentoftheinvestmentrequir
edwi l
lbeusedi n
revenuepr oduci
ngareas,suchassal esandproducti
on.
d.Investment shav
et obemadepr iortosalescommi t
ment s.
e.Indust r
yasawhol ehasapoorROIorpoorpr ofi
tabi
li
ty.

Moneyisav ai
labl
efortherightplanandtheri
ghtmodel .You'
llfi
ndmoney
av
ail
ableify ourROIisr ightandi fyouhav efinanci
alleverage,whi
ch
meansy ouri ni
ti
alinv
estmentwi l
lall
ow yout o doubleort ri
plesal
es
wi
thoutrequir
inganymor efunding.
Page33of33
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

V.I
ntr
oduct
iont
oBusi
nessPl
an

 A busi
ness plan i
s a wr
itt
en documentt hatdescri
bes in detailhow a
busi
ness—usuall
yanew one—isgoingtoachieveitsgoals.Abusi nesspl
an
l
aysoutawr i
tt
enplanf
rom amarketi
ng,
financi
alandoperati
onalvi
ewpoint.

Businessplansareimport
anttoal
low acompanytolayoutit
sgoalsand
att
ractinvestment
.Theyar
ealsoawayforcompani
est
okeepthemsel
veson
tr
ackgoi ngforwar
d.

Alt
hought hey'
reespeci
all
yusef
ulfornew compani
es,ever
ycompanyshould
haveabusi nessplan.I
deal
ly
,acompanywouldrevi
sittheplanperi
odi
cal
l
yto
seei fgoal
shav ebeenmetorhav echangedandevolv
ed.Somet i
mes,anew
businessplanisprepar
edforanestabl
i
shedbusi
nessthatismov i
nginanew
dir
ection.

 El
ement
sofaBusi
nessPl
an

Asmentionedabove,not
wobusi
nesspl
ansar
ethesame.Butt
heyallhav
et he
sameelements.Belowar
esomeofthecommonandmosti mpor
tantpart
sof
abusi
nessplan.

a.Execut i
vesummar y:Thi
ssecti
onoutl
i
nest hecompanyandincl
udest
he
missionst atementalongwi t
hanyinformati
onaboutt hecompany'
s
l
eader ship,
employees,oper
ati
ons,
andlocati
on.

b.Productsandservices:Here,t
hecompanycanout l
inetheproduct sand
servi
cesitwillof
fer,andmayal soi ncludepri
cing,productli
fespan,and
benefi
tstot heconsumer .Otherf actorsthatmaygoi nt
othissect i
on
i
nclude producti
on and manuf acturi
ng processes,any pat entsthe
companymayhav e,aswellaspr oprietar
ytechnology.Anyi nformati
on
aboutresear
chanddev el
opment( R&D)canal sobei ncludedher e.

c.Marketanalysi
s:Af ir
m needsagoodhandl eofthei
ndust
ryaswellas
i
tstargetmarket.Itwil
loutl
i
nethecompetit
ionandhowitf
actor
sinthe
i
ndustry,al
ongwi t
hitsstr
engthsandweaknesses.

d.Market
ingstr
ategy:Thi
sareadescribeshow thecompanywi l
latt
ract
andkeepit
scust omerbaseandhowi tint
endstoreachtheconsumer.
Thi
smeansacl eardi
str
ibut
ionchannelmustbeout
lined.

Page34of34
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

e.Financi
al pl
anning:Inordert oatt
ractthepartyreadingthebusinesspl an,
thecompanyshoul di ncludeanyf i
nancialpl
anningand/ orprojecti
ons.
Financi
alst at
ement s,bal ancesheet s,andotherf inanci
alinformation
maybei ncludedf oralready -
establ
ishedbusinesses.New busi nesses
mayi ncludet arget
sf ort hef i
rstfew y ear
soft hebusinessandany
potenti
alinvestors.

f
. Budget:Anygood companyneedst o haveabudgeti nplace.This
i
ncludes costs rel
ated to st af
fi
ng, development, manufact
uri
ng,
marketi
ng,andanyotherexpensesrel
atedtothebusiness.

 Ty
pesofBusi
nessPl
ans

Busi
nessplanshelpcompani esident
if
ythei
robj
ect
ivesandremainontr
ack.
Theycanhelpcompani esst
artandmanagethemsel
ves,andt
ohelpgrowaf
ter
they
'r
eupandr unni
ng.Theyalsoactasameanst ogetpeopletoworkwith
andinvesti
nthebusiness.

Al
thought herearenor i
ghtorwr ongbusinessplans,t
heycanf al
lint
otwo
di
fferentcategori
es—tr
aditi
onalorl ean st
art
up.Accor ding t
ot he Smal
l
BusinessAdmi ni
str
ati
on,thetraditi
onalbusi
nessplanist hemostcommon.
Theyar estandar
d,withmuchmor edetai
lineachsecti
on.Theset endtobe
muchl ongerandrequi
realotmor ewor k.

Leanstartupbusi
nessplans,ont
heotherhand,useast andardstr
uct
ureev en
thoughtheyaren'
tascommoni nthebusinessworl
d.Thesebusinesspl
ansar e
short—asshortasonepage—andhav everyli
tt
ledet
ail
.Ifacompanyusest his
kindofplan,t
heyshouldexpectt
oprovidemor edetai
lifaninvest
ororlender
requestsi
t.

 Speci
alConsi
der
ati
ons

Acompl et
ebusinesspl anmusti ncl
udeasetoff i
nanci
alpr oj
ecti
onsf orthe
business.These f or
war d-
looki
ng proj
ect
ed financi
alstatements are often
cal
ledpr o-
formafinanci
alst at
ementsorsimplythe"pro-
formas."Theyinclude
theov eral
lbudget
,currentandpr oj
ectedfi
nancing,amar ketanal
ysis,andits
market i
ngstrat
egyapproach.

I
nabusinesspl
an,abusi
nessownerpr
ojectsrevenuesandexpensesfora
cer
tai
nper
iodoft
imeanddescr
ibest
heoperati
onalacti
vi
tyandcostsr
elat
ed

Page35of35
Ent
repreneurshi
p(TLE12) I
nstit
uteofTeacherEducat
ion
SummerCl ass2020 CamiguinPol
ytechni
cStateColl
ege
Module5: NewVenturePl
anni
ngandCr
eat
ion JasperF.Mongaya,DM

t
othebusi
ness.

 Ot
herConsi
der
ati
onsf
oraBusi
nessPl
an

Theideabehindput t
ingtogetherabusi nesspl
anistoenableowner stohavea
moredef i
nedpi ctur
eofpot ent
ialcost sanddrawbackst ocertainbusiness
deci
sions and t o helpt hem modi f
yt hei
rstructur
es accordingl
y before
i
mplement i
ng these ideas.Ital so al
lowsowner st o pr
ojectwhatt ypeof
fi
nancingi
srequiredtogett hei
rbusinessesupandr unni
ng.

Thelengthofthebusi
nessplanvari
esgreatl
yfrom busi
ness-
to-
busi
ness.Al
lof
theinf
ormationshoul
dfiti
ntoa15-t o20-
pagedocument .I
fther
earecrucial
elementsofthebusi
nessplanthattakeupalotofspace—suchasappli
cati
ons
forpatents—theyshoul
d ber efer
enced i
nt hemai n pl
an and i
ncl
uded as
appendices.

I
ft hereareanyespeci
all
yinter
est
ingaspect
soft hebusi
ness,t
heyshouldbe
highli
ghtedandusedtoattr
actfi
nanci
ng.Forexample,
TeslaMotor
s.'
select
ri
c
carbusinessessent
ial
l
ybeganonlyasabusinessplan.

Abusinesspl anisnotmeantt obeast ati

cdocument .Asthebusinessgr ows
andev ol
ves,sot ooshouldthebusi nessplan.Anannualr ev
iew ofthepl an
al
lowsanent r epr
eneurtoupdateitwhentakingmar ket
sintoconsider
ation.It
al
soprovidesanoppor tuni
tytolookbackandseewhathasbeenachi evedand
whathasnot .Thinkofitasali
vingdocumentt hatgr
owsandev olv
eswi thy our
busi
ness.

Page36of36