LANAO SCHOOL OF SCIENCE AND TECHNOLOGY INC.

MARANDING, LALA, LANAO DEL NORTE

COLLEGE OF
CRIMINOLOGY

Entrepreneurial Mind

Prepared by: Mr. ELEUTERIO G. QUILOQUILO

Instructor
Module Introduction to
1
Entrepreneurship
Objectives:

➢ discuss the relevance of the course and explain the key concepts of common
competencies; explain the core competencies in Entrepreneurship; and explore
job opportunities for Entrepreneurship as a career.

Activity 1

Give at least five (5) names of entrepreneurs that you know. May it be from your
locality or within Philippines. Identify what are their common traits as
entrepreneur. Write it in one half cross wise and submit it to your teacher.

Competencies of Entrepreneurs

1. What characteristics that you can observe or see that is common to

them?
2. Who among the entrepreneurs you mentioned that you admire most and
why?
3. In your own opinion, what do you need to possess to become a successful
entrepreneur?
Relevance of Entrepreneurship to an organization

1. Development of Managerial capabilities- this means that one of the benefits

an entrepreneur gets is to develop his managerial skills.
2. Creation of Organizations- which means that because of entrepreneurships
many organizations will exist.
3. Improving standard of living- this means that entrepreneurship can lift up the
economic status of an individual.
4. Means of economic development- this means that not only the life of the
entrepreneur is improved but also the society where the business is located.

Concept of Entrepreneurship

The word “entrepreneur” was derived from the French verb enterprendre,
which means “ to undertake” This is pinpointing to those who ”undertake” the risk
of enterprise. The enterprise is created by an entrepreneur and the process is called
“Entrepreneurship” Entrepreneurs are innovators, willing to take risks and
generate new ideas to make it unique and profitable solutions to the present-day
problems.

Factors Affecting Entrepreneurship

1. Personality Factors which includes:

a. Initiative- which means doing things even before being told

b. Proactive-which means he can classify opportunities and seize it.
c. Problem Solver- which means he can retain good relations with other people
d. Perseverance-meaning he will pursue things to get done regardless of
challenges
e. Persuasion- means that he can entice people to buy even if they don’t.
f. A Planner- meaning he makes plan before doing things and do not fail to monitor
it.
g. Risk-taker which means that he is willing to gamble but he will calculate it first.

2. Environmental Factors which include political, climate, legal system, economic

and social conditions and market situations.

Common Competencies in Entrepreneurship

1. Decisive- an entrepreneur must be firm in making decisions.

2. Communicator- an entrepreneur must have a convincing power.
3. Leader-an entrepreneur an entrepreneur must have the charisma to be obeyed
by his employees
4. Opportunity seeker- an entrepreneur must have the ability to be the first to see
business chances.
5. Proactive- controlling a situation by making things to happen or by preparing
for possible future problems.
6. Risk Taker- they have the courage to pursue what is their business ideas.
7. Innovative- the entrepreneurs have big business ideas and they do not stop
improving and thinking of new worthwhile ideas for their business.

Core Competencies in Entrepreneurship

1. Economic and dynamic activity- Entrepreneurship is an economic activity
because it involves the creation and operation of an enterprise with a view to
creating value or wealth by ensuring optimum utilization of limited resources.
2. Innovative- Entrepreneurs constantly look for new ideas, thus he needs to be
creative.
3. Profit Potential- meaning the entrepreneur can be compensated by his profit
coming from the operation.
4. Risk bearing –meaning the entrepreneur needs to gamble but wise enough to
offset the risk.
Types of entrepreneurs 1. Innovative entrepreneur- they are those who always
make new things by thinking of new ideas. 2. Imitating entrepreneurs- they are
those who don’t create new things but only follow the ideas of other entrepreneurs.
3. Fabian entrepreneurs- they are those skeptical. They don’t initiate but follow
only after they are satisfied.
4. Drone entrepreneur- they are those who lives on the labor of others. They are
die-hard conservatives even ready to suffer the loss of business.
5. Social entrepreneurs-they are those who initiate changes in the various fields
such as education, health, human rights, environment and enterprise development.

Career Opportunities of Entrepreneurship

1. Business Consultant- with the expertise of the entrepreneur he can be a very

good source of advices to other entrepreneurs and would be business man.
2. Teacher- a graduate of an entrepreneurship can be use his knowledge in
teaching
3. Researcher- the entrepreneur can be employed as researcher by an enterprise.
4. Sales- the entrepreneurship graduate can apply as salesman
5. Business Reporter- the entrepreneur being expert in the field, he can be
employed as business reporter.

Types of Entrepreneurs

1. Innovative entrepreneurs- have the ability to think newer, better and more
economical ideas.
2. Imitating- these are people who follow the path show by innovative
entrepreneurs
3. Fabian Entrepreneurs- are skeptical about changes to be made in the
organization.
4. Drone entrepreneurs- are persons who lives on the labor of other
5. Social entrepreneur- are people who drive social innovation and
transformation in various fields including education, health, human rights and
many others
Interpretation: If you have more YES than NO, you have the qualities of an
entrepreneur.

Activity 3 Interview the Known

Choose three successful entrepreneurs in your community or nearby places and

conduct an interview using the guide questions below. Discuss the result of your
interview to your teacher.

1. What motivated you to become an entrepreneur?

2. What do you think are your characteristics and competencies that made you a
successful entrepreneur?
3. What do you think of being employed? Why didn’t you choose that path?

Activity 4 Research Me Research on the life story of at least three (3)

entrepreneurs in your locality; identify how they started their business. Ask how
much their start-up capital.

References: DepEd- ADM

 Module Recognize a Potential
2
Market

Objectives:
• Learn and understand the sources of opportunities for business.
• Determine the essentials in the entrepreneur’s opportunity seeking
• Identify market problems and propose potential products or services that will
meet the market needs.
• Know the problem in which a business opportunity arises from.
• Identify, screen and proposed solution to meet the problem
• Select the best product or service that will meet the market’s need with a
consideration of generating profit

Direction: Arrange the scrambled letters to form a correct word.

1. UPSIERSPL ________________ 6. UTSBETIUST ________________

2. NISSUBES ________________ 7. ICEVERS ________________
3. KERTAM ________________ 8. PECITIONMTO ________________
4. EDICRRSTO ________________ 9. IMCLTEA ________________
5. SUTEMOSRC ________________ 10. NTERTSAN ________________
Essentials in Entrepreneur’s Opportunity Seeking

These are the basic foundation that the entrepreneur must have in seeking
opportunities:

Entrepreneurial mind frame. This allows the entrepreneur to see things in a

very positive and optimistic way in the midst of difficult situation. Being a risk -
taker, an entrepreneur can find solution when problems arise.

Entrepreneurial heart flame. Entrepreneur's driven passion, they are attracted

to discover satisfaction in the act and process of discovery. Passion is the great
desire of an entrepreneur to achieve his/her goals.

Entrepreneurial gut game. This refers to the ability of the entrepreneur of being
intuitive. This also known as intuition. The gut game also means confidence in
one’s self and the firm believes that everything you aspire can be reached.

Sources of Opportunities There are many ways to discover opportunities. Looking

at the big picture some have noticed the emerging trends and patterns for business
opportunities. While others are trying to find out their target market. Some are the
following sources of opportunities:

1. Changes in the environment Entrepreneurial ideas arise when changes

happen in the external environment. A person with an entrepreneurial drive views
these changes positively.

External environment refers to the physical environment, societal environment,

and industry environment where the business operates.

1.1 The physical environment includes

a. Climate- the weather conditions.
b. Natural resources- such as minerals, forests, water, and fertile land that occur
in nature and can be used for economic gain.
c. Wildlife- includes all mammals, birds, reptiles, fish, etc., that live in the wild.

1.2 The Societal environment includes the various forces like

a. Political forces- includes all the laws, rules, and regulations that govern business
practices as well as the permits, approvals, and licenses necessary to operate the
business.
b. Economic forces- such as income level and employment rate.
c. Sociocultural forces- customs, lifestyles and values that characterize a society.
d. Technological environment- New inventions and technology innovations.

1.3 The industry environment of the business includes:

a. Competitors
b. Customers
c. Creditors
d. Employees
e. Government
f. Suppliers

For example, one factor in the physical environment that can easily change
is the climate. The temperature is very high during summer but very low during the
rainy season.

An individual with entrepreneurial drive can be extremely imaginative and

inventive in identifying opportunities. He/she can venture a business that responds
to the needs of the people during summer and rainy season.

2. Technological discovery and advancement A person with

entrepreneurial interest sees possibility of business opportunities in any new
discovery or because of the use of latest technology. For example, an individual
with knowledge in repair and installation of a machine engine discovers that
additional engine parts that considerably reduce fuel consumption.

3. Government’s thrust, programs, and policies The priorities, projects,

programs, and policies of the government are also good sources of ideas. For
example, the use of firecrackers to celebrate New Year’s Eve is strictly prohibited.
People without entrepreneurial interest will view the ordinance as a plain
restriction. However, for an entrepreneur, it is a business opportunity to come up
with a new product that will serve as a substitute for firecrackers.

4. People’s interest The interest, hobbies, and preferences of people are

rich source of entrepreneurial ideas. Like the increasing number of Internet Café at
present could be lead to the strong attachment of young people to computers.

5. Past experiences The expertise and skills developed by a person who has
worked in a particular field may lead to the opening of related business enterprise.
For example an accountant who has learned the appropriate accounting and
management skills and techniques in a prominent accounting firm can start
his/her business venture by opening his/her own accounting firm.

Forces of Competition Model It is also known as the “five forces of competition,”

An industry environment is a competitive environment. Regardless of what product
or services you have, competition is always present.

Competition – it is the act or process of trying to get or win something. For

example, the prices are lower when there is a competition among the stores. These
are the five forces competing within the industry:

• Buyers
• Potential new entrants
• Rivalry among existing firms
• Substitute products
• Supplier

1. Buyers The buyers are the one that pays cash in exchange to your goods and
services. For example, the influenced of the price or in the bargaining strategy. The
buyer has a strong and magnified bargaining power. The threat of its bargaining
power will be less if the following factors notice:

a. There are several suppliers available in the market.

b. The buyer has the potential for backward integration.
c. The cost of switching the supplier cost is minimal.
d. The product represents a high percentage of the buyer’s cost.
e. The buyer purchases large portions of the seller’s product or services.
2. Potential New Entrants
A new entrant is defined as the one who enters something. For example, the level of
capital requirements, if the business requires huge capital, new entrants should
decline to join the business. This gives a threat to the business. This can be notice
if there is the presence of the following factors:
a. Substantial capital requirement.
b. Strict government policy.
c. Difficulty in accessing distribution channels.
d. Economies of scale. e. High cost of product differentiation. f. High switching cost
3. Rivalry among Existing Firms
Rivalry is a state or situation in which people or groups are competing with each
other. For example it depends on the Marketing strategy of your competitor, like
giving freebies and special offers. The intensity of rivalry among existing firms is
characterized to the following factors:
a. Diversity of rivals.
b. Number of competing firms.
c. Characteristics of the products or services.
d. Increased capacity. e. Amount of fixed costs.
f. Rate of industry growth.
4. Substitute Products
Substitute means anything that takes the place or function of another. For example
the consumers decide to use margarine as a substitute for butter. In case the price
of butter increases, preferably the consumer will gradually switch to margarine.
A substitute product can give a big threat in the industry environment if the
following factors are notice:
a. Switching cost is low.
b. Preferences and tastes of the customers easily change.
c. Product differentiation is highly noticeable
d. The quality of substitute products dramatically improves. e. The price of
substitute product is substantially lower.
5. Suppliers The Suppliers are the one that provide something that is needed or
wanted. For example if the supply and services being offered is unstable or keep.
The intensity of the threat is strong in this kind of the competitive force in the
industry. This can be notice if there is the presence of the following factors:
a. The supplier has the ability for forward integration.
b. Suppliers in the industry are few, but the sales volume is high.
c. Substitute products are not readily available in the market
d. The switching cost is very high.
e. The product or service is unique.
Conduct a short interview of any successful entrepreneur in your locality. Ask the
following question:

• What is the nature of your business?

• Who are your customers?
• What industry are you operating?
• How much was your starting capital?
• How many years in operation?
• How many manpower involved from the start of operation until now?
References:
Module Recognize and Understand the
m
3 Market

Objectives:
1 – Describe the unique selling proposition and value proposition that
differentiate one’s product/service from existing products/services.
2 – Determine who the customers are in terms of:
a. Target market
b. Customer requirement
c. Market size

Activity1 . Identify whether Unique Selling Proposition or Value Proposition on

one’s product/service.

Example: Langhap Sarap Example: Unique Selling Proposition

1. Safeguard ___________________________
2. Love ko to ___________________________
3. Supermarket ___________________________
4. Surf ___________________________
5. Bukas kahit anong oras ___________________________

Activity 2. Determine what method of market segmentation (Geographic,

Demographic, Psychological and Behavioral Segmentation) will be used to the
following items.

1. We have Climate Change. ___________________

2. Over 60 years of age. ___________________
3. Branded (US Levi’s). ___________________
4. This product is good for my health. ___________________
5. Most People in the community are Roman
Catholic. ___________________

Value Proposition (VP) is a business or marketing statement that summarizes

why a consumer should buy a company's product or use its service. This statement
is often used to convince a customer to purchase a particular product or service to
add a form of value to their lives. In creating Value Proposition, entrepreneurs will
consider the basic elements:
• Target Customer
• Needs/opportunity
• Name of the product
• Name of the enterprise/company
There are many competitors in the market to establish superiority to them.
Entrepreneurs should think some alternative and how it works better. An
important aspect in Value Proposition must be truthful that will establish
credibility to the consumers.

Example: Potential value proposition is most common in small businesses of

your locality.

Aling Charing Sari-sari Store open only from 6:00 am to 6:00 pm, but Aling
Charing noticed that there are customers who go nearby town to look for a
convenience store at around 10:00 pm to 6:00 am. She believes that this is a great
opportunity for her store to operate 24/7. In this example, proposed value
proposition:

“Charing Sari-sari Store, opens 24/7”.

The business describes sari-sari store – a basic retail store. The assurance
from this value proposition is because of the phrase “opens 24/7”, Aling Charing
Sarisari Store opens 24/7, which make it different from other competitors.

Unique selling proposition (USP) refers to how you sell your product or
services to your customer. You will address the wants and desires of your
customers.
As entrepreneur, you think of marketing concept that persuade your target
customers. The following questions you may ask in doing this, What the customers
want? What brand does well? What your competitor does well?

Some tips for the entrepreneur on how to create an effective unique selling
proposition to the target customers:

• Identify and rank the uniqueness of the product or services character

• Very Specific
• Keep it short and simple (KISS)

As entrepreneur, present the best feature of your product or services that are
different from other competitors. Identifying the unique selling proposition requires
marketing research that you will learn from the other modules. In promoting your
products or services, make sure that it is very specific and put details that
emphasize the differentiator against the competitors. Keep it short and simple and
think of a tagline that is easy to remember. Right now, the proposed unique selling
proposition:

“Charing Sari-sari Store, opens 24/7”.

Readers get confused between value proposition and unique selling

proposition. The two propositions are used to differentiate the products from
competitors. For example, Jollibee is known to have a Filipino taste burger. This
brand has a unique selling point because of its tagline “Langhap Sarap”
Unique Value Proposition and Value Proposition are two most famous tools
used to explain why prospect customers buy each products and services. Based on
each definition, we learn that USP and VP are frameworks of each business
industry.

The two propositions are valuable for the entrepreneurs.

After you understand the value proposition and the unique selling proposition,
now it’s time to understand the target market, customers requirement and market
size.
A. Target Market

Market Targeting is a sage in market identification process that aims to

determine the buyers with common needs and characteristics. Prospect customers
are market segment that entrepreneurial venture intends to serve.
In targeting a specific market, it will exclude people even if it will not fit your
criteria. Rather, target marketing allows you to focus your marketing money and
brand message on a specific market that is more likely to buy from you than other
markets. Product is more affordable, efficient, and effective way to reach potential
clients and generate business.

Commonly used methods for segmenting the market are follows.

1. Geographic segmentation – the total market is divided according to

geographical location.
• Variables to consider:
a. Climate
b. Dominant ethnic group
c. Culture
d. Density (either rural or urban)

2. Demographic Segmentation – divided based consumers.

• Variables to consider:
a. Gender
b. Age
c. Income
d. Occupation
e. Education
f. Religion
g. Ethnic group
h. Family size

3. Psychological Segmentation- divided in terms for customers think and

believe.
• Variables to consider:
a. Needs and wants
b. Attitudes
c. Social class
d. Personality traits
e. Knowledge and awareness
f. Brand concept
g. Lifestyle

4. Behavioral Segmentation- divided according to customers behavior

pattern as they interact with a company.
• Variables to consider:
a. Perceptions
b. Knowledge
c. Reaction
d. Benefits
e. Loyalty
f. Responses

B. Customer Requirements
Customer requirements are the specific characteristics that the customers need
from a product or a service.

There can be two types of customer requirements:

1. Service Requirement
2. Output Requirement

Service Requirement:

Intangible thing or product that is not able to be touched but customer can feel
the fulfillment. There are elements in service requirement like on-time delivery,
service with a smile, easy-payment etc. It includes all aspects of how a customer
expect to be treated while purchasing a product and how easy the buying process
goes.

Output Requirements:

Tangible thing or things that can be seen. Characteristic specifications that a

consumer expects to be fulfilled in the product. Costumer that will avail services as
a product, then various service requirements can take the form of output
requirements.

For example, if the consumer hires a multi cab, then on-time arrival becomes an
output requirement. Customer buys gadgets (phone speaker), the specification like
the loudness and clarity are the output requirements.

C. Market Size
Entrepreneur’s most critical task is to calculate the market size, and the potential
value that market has for their startup business. Market research will determine
entrepreneur possible customers in one locality.

What is Market Size?

Market size is like a size of arena where the entrepreneurs will play their
business. It is the approximate number of sellers and buyers in a particular
market. Companies are interested in knowing the market size before launching a
new product or service in the area. In determining the market size, entrepreneur
will conduct a strategic marketing research from reliable sources using the
following method. First step is to estimate the potential market – approximate
number of customers that will buy the product or avail your services. Second step
is to estimate the customers who probably dislike to buy your product or avail the
services. Third step is for the entrepreneur to estimate the market share, that
means plotting and calculating of the competitor’s market share to determine the
portion of the new venture. Market size become the most important if you ever need
to raise funding for your business

Based on the previous discussion:

1. Discuss the unique selling proposition and value proposition.

2. What are commonly used methods for segmenting the market?

Entrepreneurs will take a look at each customer’s demand in the market.

Understanding your market will help reach your goal to compete with bigger
competitors. Building positive relationships with customers required more
understanding in customers purchasing motivations and habits.
______________________ and ____________________ basically joint hand
in hand to promote its product and services. __________________is a sage in market
identification process that aims to determine the buyer common need and
behavior.
There are four (4) methods for segmentation, ________________,
_______________, _______________and ___________________. There are two types of
customer requirement the __________ and __________, the tangible and
intangible things. Understanding your market will help reach your goal to compete
with bigger competitors.

As an entrepreneur, you are planning to have a business. Use these following

questions as your guide.

1. What product you want to sell?

2. Apply the concept of value proposition and unique selling proposition.

Make a tagline for your chosen product?

3. Who is your target market?

References:
Module
4
Market Research
Objectives:

➢ Discuss market research and know the meaning of data gathering and Identify
the different data gathering techniques
 DATA COLLECTION is the most valuable tool of any type of research study.
Inaccurate data collection may cause mistakes and ultimately lead to invalid
results.

TIPS in GATHERING DATA

• Organize collected data as soon as it is available
• Know what message you want to get across and then collect data that is
relevant to the message
• Collect more data
• Create more data

Regularly run experiments or collect data

• Challenge your assumptions

• Set reasonable expectations
• Take note of interesting or significant data In this lesson, we will consider the
three different data collection techniques –

SURVEY (Questionnaire), INTERVIEW and FOCUS GROUP DISCUSSION – and

evaluate their suitability under different circumstances.

SURVEYS are the most common way to gather primary research with the use of
questionnaires or interview schedule. These can be done via direct mail, over the
phone, internet (e.g. Google) or email, face-to-face or on Web (e.g. Skype or Viber).
When designing or constructing your own research questionnaire, remember the
following guidelines. (Edralin, 2016)

• Keep it simple as possible.

• Make sure it is clearly appealing and easy to read.
• Cluster or block related questions.
• Move from complex questions to more specific questions.
• Make sure questions are concise and easily understood.
• Avoid questions that are difficult to answer.
• Make sure any response scales used are consistent with categories that are
mutually exclusive.

INTERVIEW is one of the most reliable and credible ways of getting relevant
information from target customers. It is typically done in personal between the
researcher/entrepreneur and a respondent where the researcher asks pertinent
questions that will give significant pieces of information about the problem that he
will solve. The interview is also helpful even when the business has already started
because the customers’ feedback provides the entrepreneur a glimpse of what the
customers think about the business. Interviews normally last from 15 to 40
minutes, but they can last longer, depending on the participants’ interest in the
topic.
In a structured interview, the researcher asks a standard set of questions and
nothing more (Leedy and Ormrod, 2001).

• Personal interviews are the traditional method of conducting an

interview. It allows the researcher to establish relationship with
potential participants and therefore gain their cooperation. It generates
highest response rates in survey research. They also allow the
researcher to clarify indefinite answers and when necessary, seek
follow-up information.

• Telephone interviews are less expensive and less time consuming,

but the disadvantages are that the response rate is not as high as the
face-to- face interview, but considerably higher than the mailed
questionnaire.

Aside from the main basic groups of research methods (quantitative, qualitative
and mixed), there are different tools that can be used to collect data. Interviews can
be done either in personal or over the phone. Surveys/questionnaires can be paper
or web based. Focus Group Discussions can be moderated group interviews and
brainstorming sessions that provide information on user’s needs and behaviors.

GUIDED PRACTICE / ACTIVITY:

Conduct a survey among 15 college students in our school about “Milk Tea”. Use
the survey form below:
Identify the following:
1. It is an information gathered directly from the respondents who answered set of
questions. ______________________________
2. It is the traditional method of data collection which is normally done on a
personal manner with the respondents. __________________________
3. It obtains information on general attitudes, understand the circumstances under
which customers might require your product or services, understand their desired
outcomes. _______________________
4. It is the most common way to gather primary research with the use of
questionnaire or interview schedule. __________________________
5. It is the most valuable tool of any type of research study. ______________________
6. A data gathering technique where it can be done via direct mail, over the phone,
internet or e-mail. ______________________
7. They also allow the researcher to clarify indefinite answers and when necessary,
seek follow-up information. _______________________
8. A data gathering technique where it can be moderated group interviews and
brainstorming sessions that provides information on user’s needs and
behavior._________________________
9. It is typically done in personal between the researcher/entrepreneur and a
respondent where the researcher asks pertinent questions that will give significant
pieces of information about the problem that he will solve. _____________________
10. It can be a moderated group interviews and brainstorming sessions that
provide information on user’s needs and behaviors.___________________
11. It normally lasts from 15 to 40 minutes, but they can last longer, depending on
the participants’ interest in the topic._____________________
12. It is a type of interview are less expensive and less time consuming
______________________

Give at least one guideline or consideration in the use of the following data
gathering techniques in market research:

13. Surveys - ___________________________________________________

14. Focus Group Discussion _________________________________________
15. Interviews ____________________________________________________

Explain briefly but in a concise manner.

References:
Module The Marketing Mix (7P’s) in Relation to
the Business Opportunity
5

Marketing Mix is a set of controllable and connected variables that a company

gather to satisfy a customer better than its competitor. It is also known as the “Ps”
in
marketing. Originally, there were only 4Ps but the model has been continually
modified
until it became 7P’s. The original 4 P’s stands for product, place, price and
promotion.
Eventually, three elements have been added, namely: people, packaging and
positioning to comprise the 7 P’s.

The 7 P’s of Marketing Mix

1. PRODUCT
Marketing strategy typically starts with the product. Marketers can’t plan a
distribution system or set a price if they don’t know exactly what the product will
be offered to the market. Product refers to any goods or services that are produced
to meet the consumers’ wants, tastes and preferences. An example of goods
includes tires, MP3 players, clothing and etc. Goods can be categorized into
business goods or consumer goods. A buyer of consumer goods may not have
thorough knowledge of the goods he buys and uses. An example of services
includes hair salons and accounting firms. Services can be divided into consumer
services, such as hair styling or professional services, such as engineering and
accounting.
2. PLACE
Place represents the location where the buyer and seller exchange goods or
services. It is also called as the distribution channel. It can include any physical
store as well as virtual stores or online shops on the Internet.

Channel 1 contains two stages between producer and consumer - a wholesaler and
a retailer. A wholesaler typically buys and stores large quantities of several
producers' goods and then breaks into bulk deliveries to supply retailers with
smaller quantities. For small retailers with limited order quantities, the use of
wholesalers makes economic sense.

Channel 2 contains one intermediary. In consumer markets, this is typically a

retailer. A retailer is a company that buys products from a manufacturer or
wholesaler and sells them to end users or customers. In a sense, a retailer is an
intermediary or middleman that customers use to get products from the
manufacturers. Channel 3 is called a "direct-marketing" channel, since it has no
intermediary levels. In this case the manufacturer sells directly to customers.

3. PRICE

The price is a serious component of the marketing mix. What do you think is the
meaning of a Price? In the narrowest sense, price is the value of money in exchange
for a product or service. Generally speaking, the price is the amount or value that a
customer gives up to enjoy the benefits of having or using a product or service. One
example of a pricing strategy is the penetration pricing. It is when the price charged
for products and services is set artificially low in order to gain market share. Once
this is attained, the price can be higher than before. For example, if you are going
to open a Beauty Salon, you need to set your prices lower than those of your
competitors so that you can
penetrate the market. If you already have a good number of market share then you
can slowly increase your price.

4. PROMOTION

Promotion refers to the complete set of activities, which communicate the

product, brand or service to the user. The idea is to attract people to buy your
product over others. Advertising, Personal Selling, Sales Promotion, Direct
Marketing, and Social Media are examples of promotion.

5. PEOPLE

Your team, a staff that makes it happen for you, your audience, and your
advertisers are the people in marketing. This consists of each person who is
involved in the product or service whether directly or indirectly.
People are the ultimate marketing strategy. They sell and push the product.
People are one of the most important elements of the marketing mix today. This is
because of the remarkable rise of the services industry. Products are being sold
through retail channels today. If the retail channels are not handled with the right
people, the product will not be sold. Services must be first class nowadays. The
people rendering the service must be competent and skilled enough so that that the
clients will patronize your service.

Therefore, the right people are essential in marketing mix in the current marketing
scenario.

6. PACKAGING

Packaging is a silent hero in the marketing world. Packaging refers to the outside
appearance of a product and how it is presented to the customers. The best
packaging should be attractive enough and cost efficient for the customers.
Packaging is highly functional. It is for protection, containment, information, utility
of use and promotion.

7. POSITIONING

When a company presents a product or service in a way that is different from the
competitors, they are said to be “positioning” it. Positioning refers to a process used
by marketers to create an image in the minds of a target market.
Solid positioning will allow a single product to attract different customers for not
the same reasons. For example, two people are interested in buying a phone; one
wants a phone that is cheaper in price and fashionable while the other buyer is looking
for a phone that is durable and has longer battery life and yet they buy the same exact
phone.
 Module Develop a Brand Name
6

Brand Name is a name, symbol, or other feature that distinguishes a seller's

goods or services in the marketplace. Your brand is one of your greatest assets
because your brand is your customers' over-all experience of your business. Brand
strategy is a long-term design for the development of a popular brand in order to
achieve the goals and objectives. A well-defined brand strategy shakes all parts of a
business and is directly linked to customer needs, wants, emotions, and
competitive surroundings

Experts believe that a good brand can result in better loyalty for its customers, a
better corporate image and a more relevant identity.
As more customers continue to differentiate between emotional and experienced
companies, a brand may be the first step forward in your competition instead of
price points and product features. The question is, can you build a brand which
truly talks to your audience?

Branding is a powerful and sustainable high-level marketing strategy used to

create or influence a brand. Branding as a strategy to distinguish products and
companies and to build economic value to both customers and to brand owners,
are described by Pickton and Broderick in 2001.

Commonly Used Branding Strategy

1) Purpose

"Every brand makes a promise. But in a market in which customer confidence is

little and budgetary observance is great, it’s not just making a promise that
separates one brand from another, but having a significant purpose," (Allen
Adamson)

How can you define your business' purpose? According to Business Strategy
Insider, purpose can be viewed in two ways:

a. Functional. This way focuses on the assessments of success in terms of fast

and profitable reasons. For example, the purpose of the business is to make
money.

b. Intentional. This way focuses on fulfillment as it relates to the capability to

generate money and do well in the world.

2) Consistency
The significant of consistency is to avoid things that don’t relate to or improve
your brand. Consistency aids to brand recognition, which fuels customer loyalty.

3) Emotion

There should be an emotional voice, whispering "Buy me". This means you allow
the customers have chance to feel that they are part of your brand.
You should find ways to connect more deeply and emotionally with your
customers. Make them feel part of the family and use emotion to build
relationships and promote brand loyalty.

4) Flexibility

Marketers should remain flexible to in this rapidly changing world. Consistency

targets at setting the standard for your brand, flexibility allows you to adjust and
differentiate your approach from your competition.
According to Kevin Budelmann, "Effective identity programs require sufficient
consistency to be identifiable, but sufficient variation to keep things fresh and
human" so if your old tactics don't work anymore, don't be afraid to change. It
doesn’t mean it worked in the past it may still work now.

5) Employee Involvement

It is equally important for your employees to be well versed in how they

communicate with customers and represent the brand of your product

6) Loyalty

Loyalty is an important part of brand strategy. At the end of the day, the emphasis
on a positive relationship between you and your existing customers sets the tone
for what potential customers can expect from doing business with you.

7) Competitive Awareness

Do not be frightened of competition. Take it as a challenge to improve your

branding strategy and craft a better value in your brand.
Paste the P’s

Look for newspapers or magazines. Find and identify pictures related to the P’s
in Marketing Mix. Cut out the pictures, sort and paste them on the box, then write
a short description on the line next to the picture.

The Power of Color!

I am going to show you some colors. For each one, write down the FIRST
company or product that comes in to your head when you see the color.
What’s the FIRST BRAND you think of when you see these colors?
Task 1 . Invent a new product and give it a name. Sketch it.

Task 2. Once you have chosen the name for your product write a short
explanation. In your explanations you should describe your product and explain
how and why you chose its name.
Module 4 M’s of Operations in Relation to
the Business Opportunity and
7
Developing Business Model
Manpower

Talks about human labor force involved in the manufacture of products. It is

measured as the most serious and main factor of production. The entrepreneur
must determine, attain and match the most competent and skilled employees with
the jobs at the most appropriate time period.

Educational qualifications and experience, status of employment, numbers of

workers required, skills and expertise required for the job are some of the
manpower criteria that must be highly considered by the entrepreneur.

Material
Talks about raw materials necessary in the production of a product. Materials
mainly form part of the finished product. Just in case the resources are below
standard, the finished product will be of unsatisfactory as well.
The entrepreneur may consider cost, quality, availability, credibility of suppliers
and waste that the raw material may produce.

Machine
Discusses about manufacturing equipment used in the production of goods or
delivery of services.

In the process of selecting the type of equipment to purchase, the entrepreneur

may consider types of products to be produced, production system to be adopted,
cost of the equipment, capacity of the equipment, availability of spare parts in the
local market, efficiency of the equipment and the skills required in running the
equipment.

Method
Production method discusses the process or way of transforming raw materials
to finished products. The resources undergo some stages before it is finalized and
becomes set for delivery to the target buyers.
The selection of the method of production is dependent on product to produce,
mode of production, manufacturing equipment to use and required skills to do the
work.

Product Description

It is the promotion that explains what a product is and why it’s worth buying?
The purpose of a product description is to provide customers with details around
the features and benefits of the product so they’re obliged to buy.
Know who your target market is, focus on the product benefits, tell the full story,
use natural language and tone, use power words that sell, and use good images.
These are guidelines for you to have a good product description; since some
customers are very particular with it since they consider the welfare of their family,
if it is safe to use.

Prototyping

A duplication of a product as it will be produced, which may contain such details

as color, graphics, packaging and directions. One of the important early steps in
the inventing process is making a prototype. Benefits are the reasons why
customers will decide to buy the products such as affordability, efficiency or ease of
use. The features of the product or service merely provide a descriptive fact about
the product or service.

It is better to test your product prototype to meet customers’ needs and

expectations; and for your product to be known and saleable. Pretesting of the
product or service is similar to a sample of the product or service given to the
consumer free of cost in order that he/she may try the product before committing
to a purchase

Supplier

An entity that offers goods and services to another business. This entity is
among of supply chain of a business, which may offer the main part of the value
contained within its products. Certain suppliers may even involve in drop shipping,
where they ship goods directly to the customers of the buyer.

Suppliers are your business partners; without them your business will not live.
You need them as much as you need your customers to be satisfied. But as an
entrepreneur you have to choose a potential supplier that has loyalty and value
your partnership; a supplier that would lead you to the fulfillment of your business
objectives, mission and vision.

Value chain is a method or activities by which a company adds value to an

item, with production, marketing, and the provision of after-sales service. The main
goal and benefit of a value chain, and therefore value chain analysis, is to make or
support a competitive benefit.
A supply chain is a structure of organizations, people, activities, data, and
resources involved in moving a product or service from supplier to customer.
The main objective of supply chain management includes management of a
varied range of components and procedures, for instance, storing of raw materials,
handling the inventory, warehousing, and movement of finished product from the
point of processing to the point of consumption.

Business model describes the reasons of how an organization creates,

delivers, and captures value in economic, social, cultural or other contexts. The
development of business model construction and variation is also called business
model innovation and forms a part of business plan.

It is a company's plan for how it will make revenues and make a profit. It
describes what products or services the business plans to manufacture and
market, and how it plans to do so, as well as what expenses it will incur.
There are important phases in developing your business model, namely;
Identifying the specific audience; establishing business process; recording a
business resources; developing strong value proposition; determining key business
partners; and creating a demand for today’s generation strategy and be open for
innovations.

After developing a business model, we will proceed in developing a business

plan. To be able to successfully complete this module, you need to prepare a
business plan and operate your plan and finally keep records of your business
transactions.

Business plan is an important tool for you to have an idea about the future of
your business. Your business plan will be your guide in the moment you will be
implementing and operating your business proposal.
You can also make use of the business plan in securing investment capital from
financial institutions or lenders. It can also be used to influence people to work for
your enterprise, to secure credit from suppliers, and to fascinate potential
customers.

Read the stories of Jessie, Mercy and Monna below to fully understand the
importance of having a business plan:

“Jessie is the eldest of five children of Mr. & Mrs. Natividad. The family is having
difficulty to support for their everyday needs. Because of this, Jessie tried to enter
selling banana cue and with his dream to make his business grow, he put up many
stalls in the community without considering the advises of his friends to make a
business plan before implementing his decision. After a few months his stalls
shutdown .”

“Mercy is the youngest in the family. She found out that she loves to cut hair
and apply make up to her friends. Until such time that her friends introduced her to
their friends too for haircut and make up when there are occasions. Few months
after, Mercy was told by her friends to put up a beauty parlor in their place. So she
asks her mother who is also a businesswoman to teach her how to make a business
plan and eventually ended with a successful business.”

“Monna is a diligent student. Because of her knowledge gained from school

about business plan she was able to enhance her skills in business and finally found
herself into his laundry shop business.”

Each scenario taught us that business is not just about how much income or
profit you can get but it’s about the life of your business. And in having a business,
you also have to consider technological forces, Social forces, Political forces,
Cultural forces, Economic forces and Legal forces.
The following are the components found in a Business Plan.

• Introduction- this part discusses what is the business plan all about.
• Executive Summary- is part of the business plan which is the first to be
presented but the last to be made.
• Management Section- shows how you will manage your business and the
people you need to help you in your operations.
• Marketing Section- shows the design of your product/service; pricing, where
you will sell and how you will introduce your product/service to your market.
• Financial Section- shows the money needed for the business, how much you
will take in and how much you will pay out.
• Production Section- shows the area, equipment and materials needed for the
business.
• Competitive Analysis- is the strategy where you identify major competitors
and research their products, sales and marketing strategies.
• Market- The persons who will buy the product or services
• Organizational chart- is the diagram showing graphically the relation of one
official to another, or others of a company
Complete the statements below and write your answers on the space provided.

1. _____________ talks about human labor force involved in the manufacture of

products. It is measured as the most serious and main factor of production.
2. _____________ is about raw materials necessary in the production of a
product.
3. _____________ discusses the process or way of transforming raw materials to
finished products.
4. The purpose of a _____________________ is to provide customers with details
around the features and benefits of the product so they’re obliged to buy.
5. A duplication of a product as it will be produced, which may contain such details
as color, graphics, packaging and directions. One of the necessary early steps
in the inventing method is creating a _______________.
6. ____________ are your business partners, without them your business will not
live.
7. ______________________ describes the reasons of how an organization
creates, delivers, and captures value in economic, social, cultural or other
contexts.
8. ____________________ is an important tool for you to have an idea about the
future of your business.
9. ____________________ is part of the business plan which is the first to be
presented but the last to be made.
10. ____________________ shows the design of your product/service; pricing,
where you will sell and how you will introduce your product/service to your
market.

Direction: Answer the following questions base on the picture shown below. Write your
answers on the space provided. Two (2) points in each correct answer.

1. Are you familiar with the picture above? Give one example of a food business
establishment that you think is famous among teenagers today.
______________________________________________________________
_____________________________________________________________.

2. What do you think is the reason why this particular food business
establishment becomes famous among teens nowadays?

______________________________________________________________
_____________________________________________________________.
3. Do you know some other ways to enjoy their product other than coming in
personally into their store and buying their product for yourself?

______________________________________________________________
_____________________________________________________________.

4. Do you think such strategies are effective to make the business more
productive? Why or why not?
______________________________________________________________
____________________________________________________________
 Module Forecasting the Revenues of the
8 Business

How close were your estimates compared to the actual time? Did your estimate fell short
compared to the actual time? What do you think were the factors that might have contributed
in getting you early to school? List the reasons in the blank.

On the other hand, does your actual time exceed your estimates? What do you think were the
factors that might have contributed in arriving later than your estimated time? List the
reasons in the blank.

Making informed estimates requires careful considerations on several factors that

might affect the outcome of your travel such as, distance from home to school, the
means of transportation you will be taking, the number of passengers and etc.
Traveling from home to school on regular basis had helped you arrive with an
estimate that was very close to the actual time of arrival. Considering these factors
are essential in making informed estimates by the entrepreneur. Since the business
he/she is venturing ha sn ’t started yet, it is important that these factors affecting
forecasting will be determined to better help him/her in making the best decisions
for the business. The entrepreneur after realizing the potential for profit of his/her
business concept, the next step is to estimate how much the revenue is on daily,
monthly and annual basis. Before going to forecasting and projecting the revenues
of the business, let us determine first what revenue is.
Revenue is a result when sales exceed the cost to produce goods or render the
services. Revenue is recognized when earned, whether paid in cash or charged to
the account of the customer. Other terms related to revenue includes Sales and
Service Income. Sales is used especially when the nature of business is
merchandising or retail, while Service Income is used to record revenues earned by
rendering services. You have just learned about what revenue is. This time, let us
study the various factors to consider in forecasting revenues. The entrepreneur
would want his/her forecasting for his/her small business as credible and as
accurate as possible to avoid complications in the future. In estimating potential
revenue for the business, factors such as external and internal factors that can
affect the business must be considered. These factors should serve as basis in
forecasting revenues of the business. These factors are:
1. The economic condition of the country. When the economy grows, its growth is
experienced by the consumers. Consumers are more likely to buy products and
services. The entrepreneur must be able to identify the overall health of the
economy in order to make informed estimates. A healthy economy makes good
business.
2. The competing businesses or competitors. Observe how your competitors are
doing business. Since you share the same market with them, information about the
number of products sold daily or the number of items they are carrying will give
you the idea as to how much your competitors are selling. This will give you a
benchmark on how much products you need to stock your business in order to
cope up with the customer demand. This will also give you a better estimate as to
how much market share is available for you to exploit.
3. Changes happening in the community. Changes’ happening in the environment
such as customer demographic, lifestyle and buying behaviour gives the
entrepreneur a better perspective about the market. The entrepreneur should
always be keen in adapting to these changes in order to sustain the business. For
example, teens usually follow popular celebrities especially in their fashion trend.
Being able to anticipate these changes allows the entrepreneur to maximize sales
potential.
4. The internal aspect of the business. Another factor that affects forecasting
revenues in the business itself. Plant capacity often plays a very important role in
forecasting. For example, a “Puto” maker can only make 250 pieces of puto every
day; therefore he/she can only sell as much as 250 pieces of puto every day. The
number of products manufactured and made depends on the capacity of the plant,
availability of raw materials and labour and also the number of salespersons
determines the amount of revenues earned by an entrepreneur. Now that all factors
affecting forecasting revenues are identified, you can now calculate and project
potential revenues of your chosen business. The table below shows an example of
revenues forecasted in a Ready to Wear Online Selling Business.

Example: Ms. Fashion Nista recently opened her dream business and named Fit
Mo’to Ready to Wear Online Selling Business, an online selling business which
specializes in ready to wear clothes for teens and young adults. Based on her initial
interview among several online selling businesses, the average number of tshirts
sold every day is 10 and the average pair of fashion jeans sold every day is 6. From
the information gathered, Ms. Nista projected the revenue of her it Fit Mo’to Ready
to Wear Online Selling Business. She gets her supplies at a local RTW dealer in the
city. The cost per piece of t-shirt is 90 pesos, while a pair of fashion jeans costs 230
pesos per piece. She then adds a 50 percent mark up to every piece of RTW sold.
Mark up refers to the amount added to the cost to come up with the selling price.
The formula for getting the mark up price is as follows:

Mark Up Price = ( Cost x desired mark up percentage)

Mark Up for T-shirt = ( 90.00 x .50)
Mark Up for T-shirt = 45.00

In calculating for the selling price, the formula is as follows:

Selling Price = Cost + Mark Up

Selling Price = 90.00 + 45.00
Selling Price for T-shirt = 135.00
The numbers in the last table are very attractive, having revenues that are
increasing in numbers is a good sign that a business is growing. However, an
entrepreneur should not be overwhelmed on these revenues as these are just gross
revenue, this is not the final amount of profit or income an entrepreneur will get at
the end of every period. Take note that the amount of net revenue is still subjected
to the expenses incurred in the operation of business.
Entrepreneurs use ______________ techniques to determine events that might affect
the operation of the business. Factors such as __________ and _________ much be
considered to avoid possible complications in the future. To forecast revenues, it is
best that the entrepreneur must be acquainted with the _________, and __________
to determine the selling price of a product. This way, the selling price is then
multiplied to the projected volume to arrive with the ______________. The
entrepreneur should always present the assumptions to consider in projecting
revenues, may it be seasonality, economic slow down or changes in costumer
preferences and the like. This will help achieve the best educated estimate of your
revenues
 Module Computation of Gross
9
Profit
After carefully studying the contents of this module, you should be able to:
• compute for profits
• define profitability, liquidity & solvency
• identify commonly used profitability ratios

Let us see what you already know about forecasting revenues and costs.
Answer the questions below.

Write True if the statement is correct & write False if you think the answer is not
correct.
_________1. The gross profit rate of the entrepreneurial venture is computed by
dividing the cost of goods sold by net sales.
_________ 2. The gross profit rate provides information on the cost ratio of the
business.
_________3. In evaluating the profitability of the entrepreneurial venture, the
evaluation must focus on the information reflected on the face of the
balance sheet.
_________4. The operating profit margin rate indicates information on the
percentage of operating expenses on the net sales.
_________5. Mr. Q is a practicing Doctor of Medicine. During the month of March
2019 he received Professional Fees amounting to P 1,000,000 and
total expenses of P250,000. The net income of Mr. Q is P 750,000.
__________6. Profit is the money received from customer in exchange of
products given to customer.
_________ 7. The gross profit rate of the entrepreneurial venture is computed by
dividing the cost of goods sold by net sales.
_________ 8. The gross profit rate provides information on the cost ratio of
business.
_________ 9. One of the objectives in evaluating the gross profit rate of the
business is to determine whether the amount of the gross profit is
sufficient to cover the operating expenses.
__________10. The operating profit margin rate indicates information on the
percentage of operating expenses to net sales.
__________11 The government is not interested in financial statements since it is
not a party to any of the transactions of the business.
__________12. The net profit margin rate presents the general perspective of the
operating performance of the business.
__________13. The amount of income per peso investment can be determined by
computing the net profit margin rate.
__________14. In normal situation, it is favorable for the business to have high
inventory
__________15. Preparation & presentation of the financial statements of the entity is
the primary responsibility of an accountant.

Activity 1

Read and understand the given problem.

Rodrigo is engaged in a buy-and sell business of perfumes. He bought 10

boxes of perfumes. Each box costs 12,000.00 and contains a dozen of perfume
bottles. He is planning to sell one perfume bottle at P1, 500. What is his expected
profit on the 10 boxes of perfumes?

The ultimate goal of any business whether a retail or wholesale is to earn a

profit. Getting the difference between the amount of money earned from the selling
10 boxes containing a dozen of perfume bottles and the cost of those 10 boxes gives
the profit.

In the example that I gave, answer the following questions:

1. How much does Rodrigo earned profit?

2. Is it good to engage in a business? Yes or No?

3. What do you think of Rodrigo’s business? Is it good for a beginner?

Return of Investment (ROI)

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

The average total assets are by dividing the sum of the total assets at the
beginning and end of the period.
How to Increase your Sales
➢
Improve profit by looking at the money you earn from sales, and increase:

o The number of customers

o The volume of goods or services existing customers to buy

o The sales price

 How did you understand the lessons that you have studied in this module?
Answer
the following questions.

Write true if the statement is correct & write False if you think the answer is not
correct.
_________1. The gross profit rate of the entrepreneurial venture is computed by
dividing the cost of goods sold by net sales.
_________ 2. The gross profit rate provides information on the cost ratio of the
business.
_________3. In evaluating the profitability of the entrepreneurial venture, the
evaluation must focus on the information reflected on the face of the
balance sheet.
_________4. The operating profit margin rate indicates information on the
percentage of operating expenses on the net sales.
_________5. Mr. Q is a practicing Doctor of Medicine. During the month of March
2019 he received Professional Fees amounting to P 1,000,000 and
total expenses of P250,000. The net income of Mr. Q is P 750,000.
_________6. Profit is the money received from customer in exchange of
products given to customer.
_________7. The gross profit rate of the entrepreneurial venture is computed by
dividing the cost of goods sold by net sales.
_________
8. The gross profit rate provides information on the cost ratio of
business.
_________ 9. One of the objectives in evaluating the gross profit rate of the
business is to determine whether the amount of the gross profit is
sufficient to cover the operating expenses.
_________
10. The operating profit margin rate indicates information on the
percentage of operating expenses to net sales.
_________
11 . The government is not interested in financial statements since it is
not a party to any of the transactions of the business.
_________12. The net profit margin rate presents the general perspective of the
operating performance of the business.
_________
13. The amount of income per peso investment can be determined by
computing the net profit margin rate.
_________
14. In normal situation, it is favorable for the business to have high
inventory
_________
15. Preparation & presentation of the financial statements of the entity is
the primary responsibility of an accountant.
 Module
Business Implementation
10

Objectives:

• Implementing the business plan

• operating the business
• selling the product
• Identifying reasons for keeping business records

Before you proceed, let us first recall our previous lesson.

Profit is the amount you gain after selling your product. In computing your
profit, you just simply follow this formula:

Sales - Cost of Goods Sold = Gross Profit

The gross profit represents the difference between net sales and cost of sales.

Variable costs are those things that change based on the amount of product
being made and are incurred as a direct result of producing the product.
Variable costs include:

1. Materials used
2. Direct labor
3. Packaging
4. Freight
5. Plant supervisor salaries
6. Utilities for a plant or a warehouse
7. Depreciation expense on production equipment
8. Machinery

Fixed costs generally are more static in nature. They include:

1. Office expenses such as supplies, utilities, a telephone for the

office, etc.
2. Salaries and wages of office staff, salespeople, officers and owners
3. Payroll taxes and employee benefits
4. Advertising, promotional and other sales expenses
5. Insurance
6. Auto expenses for salespeople
7. Professional fees
8. Rent
Identify the services offered by the following offices to you as an entrepreneur.

1. Department of Trade and Industry (DTI)_____________________

2. Securities and Exchange Commission (SEC)_________________
3. Bureau of Internal Revenue (BIR)__________________________
4. Mayor’s Office_________________________________________
5. Social Security System (SSS)____________________________
6. Philhealth____________________________________________
7. Pag-ibig Fund_________________________________________

Answer the following questions:

1. As an entrepreneur, is it important to know the services offered by the offices

mentioned above?
2. If your answer is YES, in what way that their services becomes important to you?
3. If your answer is NO, what makes their services unnecessary to you?
4. Do you think a business can last without availing the services of the said offices?
Why? Or why not?

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 accomplished 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. In Operating a business, the
entrepreneur should first consult professional for advices, like accountants or
consultants from small enterprises. In your case, you can consult your teacher in
entrepreneurship or anyone you think that could help you.

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
tradename
• 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
• 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.

Developing system to log, store and dispose of records can benefit the business. A
systematic recording allows you to;

A. Plan and work more efficiently

B. Meet legal and tax requirements
C. Measure profit and performance
D. Protect your rights, and
E. Manage potential risks

Activity 1

Try to look around in your community and identify the three (3) oldest existing
businesses and find time to ask the owner on how did they started their business
and sustain it until today.

➢ Implementing the Business Plan is not that easy. It needs to be registered

to make it legal and record keeping gives a lot of benefits to the enterprise.
7. Which of the following is NOT a benefit to the enterprise?
A. Plan and work more efficiently.
B. Meet legal and tax requirements.
C. Can check if the business is doing good.
D. It cannot protect the rights of the owner.
 Module Perform Bookkeeping Tasks
11

In the previous lesson, you learned how to make and prepare a business
plan, operate the business, know how to sell the product, and the significance for
keeping business records.

A business plan is an effective tool in making your dream business come

true. It reiterates different plans or strategies in Operation and Administration,
Marketing, Production and Logistics, Finance, etc.

The operational plan put into details on what business model you are going
to employ and how are you going to start the business. Among others, it’s also
reiterated the layers of management; type of skills and employee attitude your
business need and the steps on how to get the government license.

The marketing plan contains valuable strategies as to what product you are
going to produce or sell, what industry you want to enter, group of target
customers, or your target market and the business model or strategies you are
going to employ.

The production plan revealed the production processes and the quality
control system of the goods produced for sale. While the logistics provides a
channel of distribution of the goods from production lines down to the
wholesalers/retailers or directly to consumers

The financial plan talks about monetary requirements before you open the
business. While financial forecast informs the business owners of the expected
outcome of the business in monetary terms
What is a General Ledger?

The general ledger is a grouping of all accounts directly traceable to chart of

accounts. These accounts will be reflected in the financial statements as a
summary of all financial activities that have taken place as recorded in the general
journal and subsidiary ledgers. Depicted in figure 2 below is a sample format of a
general ledger:
On the other hand, the trial balance report has two phases. The first phase
“Unadjusted trial balance” is a report of all balances after the posting of the general
ledger accounts. The general ledger account balances are extracted to construct the
unadjusted trial balance. Meanwhile, the second phase is the “Adjusted trial
balance”. This phase is a final report of trial balance after all necessary
adjustments in journal entries are posted in the general ledger.

What is an Adjusting Entry? Making an adjusting entry helps the bookkeeper

capture all financial events happened over a period of time within the accounting
cycle. It is essential in keeping the financial record updated. The bookkeeper is
going to look or examine accounts that need to be updated. Outlined below are the
five basic sources of adjusting entries:

1. Depreciation expense
2. Deferred expenses of prepaid expenses
3. Deferred income of unearned income
4. Accrued expenses of accrued liabilities
5. Accrued income or accrued assets

1. Depreciation This is a method of allocating the cost of an asset to an expense

over the accounting periods that make up the asset’s useful life. Examples of assets
subject to depreciation are: Store, Office, Building, and Transportation equipment.
These types of assets lose their ability to provide useful service as time passes.
Depreciation can also be referred to as the decrease in the usefulness of these types
of assets. Take note that Land is not subject to depreciation because the value of
land mostly increases as time passes. There are several methods or formulas to
compute the amount of depreciation. The simplest is the straight-line method.

There are several methods or formulas to compute the amount of depreciation. The
simplest is the straight-line method.
The depreciation expense is an allocated for all sixed assets except land.
Examples are building, equipment and or machineries that the business is using to
generate income. It shall be reported as an expense account in the income
statement directly attributable in the said fixed assets. While the accumulated
depreciation is a balance sheet account but treated as a contra-account to the
concerned fixed asset. Refer to the illustration below:
 The supplies expense is an income statement account, while the supplies
which is now credited is an asset account. All asset has a normal debit balance.
Considering that the supplies in this record is credited. This will be deducted to the
supplies account in the balance sheet to generate the remaining balance in
supplies.
Activity 1 :

1. The cost of the equipment is PHP35,000. It was estimated to have a useful

life of five years. It is estimated that after five years, the office equipment can be sold
at a scrap value of PHP1,000. To compute for the monthly depreciation, just divide
the annual depreciation by 24. Two years is composed of 24 months.

2. Purchased P10,000 worth of office supplies on account. By the end of the

month, PHP4,000 worth of these supplies are still unused.

3. On February 15, 2016 Matapang entered into a contract with Makisig to

maintain the computers of Makisig for two months starting on February 15,
2016 up to April 15, 2016. On the same date, Makisig paid the total contract
amount of PHP40,000 in full. The entries to record and adjust the books are:
In the February 29, 2016 entry above, as of end of February 2016, Matapang
has already earned the service revenue for the first 15 days, thus an
adjusting entry is recorded.

4. On February 29, 2016, Matapang received the electric bill for the month of
February amounting to PHP3,800. Matapang will pay this bill on March
 2016. The electric bill represents the cost of electricity used (or incurred) for
February. Although the said bill is still unpaid and thus was not recorded,
the matching principle and accrual basis of accounting dictates that the
same should be recorded in February. Otherwise, your expense will be
understated and thus the company will be reporting an overstated income
(or an erroneous income). Needless to say, erroneous information may lead
to wrong decisions.

5. On February 28, 2016, Matapang repaired the computer of Pedro for

PHP15,000. Pedro was on an out-of-town trip so he could not pay Matapang.
He told Matapang that he will pay for their services on March 1, 2016.
Matapang has already earned the PHP15,000 but was not paid as of the end
of February 2016. Therefore, an income should be properly recognized in
February 2016 for this transaction.
 Module Prepare an Income Statement
12 and a Balance Sheet

INCOME STATEMENT

This statement is one of the major financial reports. Also known as profit and loss
statement or statement of comprehensive income. This statement summarizes the
results of company’s operations for a specific period of time. If the result of
operation is positive, then the business earns net income otherwise, net loss.

Ledger accounts that can be found in the income statement are called Temporary
accounts of Nominal accounts. They are called such because at the end of the
accounting period, balances under these accounts are transferred to the capital
account, thus having only temporary amounts and resulting to zero beginning
balances at the beginning of the following year.(Haddock, Price, & Farina, 2012)
Examples of temporary accounts include revenues, sales, utilities expense, supplies
expense, salaries expense, depreciation expense, interest expense among others.
Depicted in figure 8 below is sample format of an income statement.

The different parts of income statement are:

• The heading or title of report

• Name of the company

• Date or period covered

Major parts are:

• Income or revenues - consist of all income received within the period upon
provision of services for service-concern business and sales for merchandising
• Expenses – money spent during the conduct of business operations
• Net income / net loss – the outcome of business operations.
Contra asset are those asset account presented under the asset portion of the
balance sheet such as Allowance for Bad debts and Accumulated depreciation.
Depicted in figure 9 below is sample format of a balance sheet of a service type
business presented in as an account format with contra asset account.

The different parts of balance sheet are:

• The heading or title of report

• Name of the company
• Date or period covered
Major parts are:

• Assets (Current and Non-current)

Current Assets – Assets that can be realized (collected, sold, used up) one year
after year-end date. Examples include Cash, Accounts Receivable, Merchandise
Inventory, Prepaid Expense, etc.
Current Assets are arranged based on which asset can be realized first
(liquidity). Current assets and current liabilities are also called short term assets
and shot term liabilities.

Noncurrent Assets – Assets that cannot be realized (collected, sold, used up) one
year after yearend date. Examples include Property, Plant and Equipment
(equipment, furniture, building, land), Long Term investments, Intangible Assets
etc.
• Liabilities (Current and Non-current)

Current Liabilities – Liabilities that fall due (paid, recognized as revenue) within
one year after year end date. Examples include Notes Payable, Accounts Payable,
Accrued Expenses (example: Utilities Payable), Unearned Income, etc.

Noncurrent Liabilities – Liabilities that do not fall due (paid, recognized as

revenue) within one year after year-end date. Examples include Loans Payable,
Mortgage Payable, etc. Noncurrent assets and noncurrent liabilities are also called
long term assets and long-term liabilities.

• Owner’s Equity or Capital Capital is an item of balance sheet wherein the

capital or interest of the owner of the business is listed. Initial withdrawal of capital
will be recorded in a drawing account of the owner and will be reflected as a
deduction to the capital balance.

Activity 1

1. Give at least 5 examples of Current Assets and Non-Current Assists under

the Assets and Liabilities and explain each function?
2. Give at least two examples of the Balance sheets and Income Statements?
And explain.