Module in Entrepreneurship

MESSAGE TO THE STUDENTS
Dear students of Maryknoll High School of New Corella, Inc. (MHSNCI) Praise be Jesus, Mary and
Joseph. As we continue living in this present time, we are aware that the COVID-19 (coronavirus) situation
makes an anxious time for many members of our family and community, especially those who have pre-existing
health conditions, family members in high – risk groups, friends and family in other affected countries. This
pandemic taught us to strengthen our faith to God and made us realized that without him we are nothing. This
pandemic also strengthens our bond not only as a Filipino but as the children of God.
As you go through in this learning guide you will learn and know the struggles and strength of life, how
they survive and get through with those challenges as they fight for their lives. May this be an eye opener for us
that we should value our lives as we live in this world and always thank God for the blessings He bestowed
upon us despite the ups and downs of life.
As we continue facing and fighting this pandemic, I wish and pray for your safety together with your
family, relatives and friends.
PART I (Subject Information and Learning Guide Direction)
This part contains the Learning Guide overview which gives you an insight about the subject. This
Learning Guide will serve as a bridge between the teacher and students to meet the qualification that students
should surpass as per mandated by PEAC and Department of Education. This will help you to comply the
standards regardless the crisis that affects your learning process. This learning guide composed of the intended
learning outcomes that we wish to achieve at the end of the school year.
What’s important? Please take time to read this part since this will provide you a guide on what to
expect in Learning Guide. When you know what to do, you can be more confident on doing it alone with
confidence with the intervention of accessible materials about this Learning Guide. Warning! In any
circumstances, please don’t be tempted to jump on another lesson without the compliance from the first one
designed for you. Always be reminded that this learning guide is designed for you to grow in your own. Take it
slowly but surely, do not rush and be determined.
PART II (Instruction)
This part will allow you to perform activities depending on the designed task given with appropriate
instruction. This Learning Guide will help you analyze the outcome of your task to attain the desired
understanding of the concepts. Appropriate inputs will be included here not only limited to photos, separate
documents such as worksheets and fact sheets, etc. Further, you are guided to apply the concept in real life
application similar to what is presented in the activity.
PART III (Practice)
This part of the learning guide will help you to practice and rehearse the concepts in every activity
designed. Focus, determination, and honesty should always take consideration since you will be working alone
at home.
What’s important? An honest man is the noblest work of God, so be honest with your work since you
are a child of God. Do not allow the other person to do your part but instead you may ask a help coming from
them because at the end you will reap what you sow.
PART IV (Assessment/Deliverables)
This is your ticket for culmination in this subject. Never allow yourself to CHEAT! Your developmental
output is graded so do your best. You are expected to submit your weekly task every second week.
In case you need to contact me, please use the lines below:
09100873617 or 09273506398
https://www.facebook.com/damiles.ginalyn
damiles.ginalyn@yahoo.com
ENTREPRENEURSHIP
Entrepreneurship: Concept and Functions
(source: ENTREPRENEURSHIP Grade 11 Copyright 2016 by Diocesan Printing Press and Publishing, Inc.)
1st Quarter (Week 1-2)

Content Standards : The learner demonstrates understanding of key concepts, underlying principles, and core
competencies in Entrepreneurship.
Performance Standards: The learner independently creates/provides a quality and marketable product and/or
service in Entrepreneurship as prescribed in the TESDA Training
Regulation.
Most Essential Learning Competencies : Discuss the relevance of the course

Explore job opportunities for
Entrepreneurship as a career

Content Standards : The learner demonstrates understanding of concepts, underlying principles, and processes
of developing a business plan.
Performance Standards: The learner independently or with his/her classmates presents an acceptable detailed
business plan
Most Essential Learning Competencies :

• Recognize a potential market
• Analyze the market need
• Determine the possible product/s or service/s that will meet the need;`
• Screen the proposed solution/s based on viability, profitability, and customer requirements; and
• Select the best product or service that will meet the market need.
Content Standards :The learner demonstrates understanding of environment and market in one’s
locality/town.
Performance Standards: The learner independently creates a business vicinity map reflective of potential
market in one’s locality/town

Recognize the importance of marketing mix in the development of marketing strategy
Describe the Marketing Mix (7Ps) in relation to the business opportunity vis-à- vis: Product; Place; Price;
Promotion; People; Packaging; and Positioning,
Develop a brand name
2nd Quarter
(Week 1-4)
Demonstrate understanding of the 4 Ms of operations
Describe the 4Ms (Manpower, Method, Machine, Materials) of operations in relation to the business
opportunity:
• Develop a product description
• Create a prototype of the product
• Test the product prototype
• Validate the service description of the product with potential customers to determine its market acceptability;
• Select/pinpoint potential suppliers of raw materials and other inputs necessary for the production of the
product or service;
• Discuss the value/supply chain in relation to the business enterprise; and
• Recruit qualified people for one’s business enterprise.
• Develop the business model
• Forecast the revenues of the business
Forecast the costs to be incurred
Compute for profits
(Week 5 – 9)
Content Standards :The learner demonstrates understanding of concepts, underlying principles, and processes
of starting and operating a simple business.
Performance Standards: The learner independently or with his/her classmates starts and operates a business
according to the business plan and presents a terminal report of its operation.
Manifest understanding of starting and operating a simple business
• Implement the business plan
• Identify the reasons for keeping business records
• Perform key bookkeeping tasks
• Identify where there is a profit or loss for a business; and
• Generate an overall report on the activity
2nd Quiz
ENTREPRENEURSHIP 11
I-TRUE OR FALSE. Write True if the statement is correct and False if it is not. (2pts.each)
1. A business record is either a hard or digital copy of business dealings.

2. A student who graduated with a business degree and wants to use his strong entrepreneurship skills can
start a company of his dreams.
3. Expenses is the money spent or cost incurred in a business with an effort to generate revenue, it represents
the cost of doing business.
4. Summary of sales is a report that allows you to view the total sales between specific date ranges.
5. Balance Sheet measures and analyzes the enterprise in terms of liquidity, financial flexibility and solvency.
6. Entrepreneurship is the process of designing, launching and running a new business, which typically begins
as a small business, such as a start-up company, offering a product, process or service for sale or
hire.
7. Effective marketing requires you to be an amateur psychologist.
8. Revenue is the amount of money that a company actually receives during a specific period generated from
sale of goods or services of the business.
9. Income statement shows the performance of the enterprise for a given period of time.
10. Cash flows projection is a forecast of the cash the business anticipates to receive and disburse during the
course of a given span of time.
11. The way Bill Gates singlehandedly revolutionized the use of home computers is an excellent example of
being creative, innovative, and willing to expand his investment.
12. Bookkeeping is the process of recording “systematically” the business transactions in a chronological
manner.
13. A small business enterprise has a maximum possible safety of business secret.
14. Assets = Liabilities + Owner’s Equity.
15. Entrepreneurship can be scary because there is no guarantee that the business will work, and the
entrepreneur may end up losing money for the first few years.
II. ENUMERATION:
1-10.Enumerate the ten (10) parts and template of a Business Plan.
III. ESSAY. Answer concisely. (Explain 5 points each)
1. What is your realization about Entrepreneurship?
2. Imagine yourself 10 years from now. You would be given a chance to make your business plan a reality. Would you take
the risk in this business venture even if it is scary because there is no guarantee that the business will work?
1st Quiz
I. Identification. Identify the statement that is being described. Write the answer on the space before the number.
______________1. A type of small business enterprise that provides efficient management, project appraisal, raising sources of
finance, methods of reducing risk, technical and engineering services, etc. are provided through this types.
_______2. This is a type of enterprise which buy and resell merchandise in significant amounts to final consumers.
______________3. It has been defined as the capacity and willingness to develop, organize, and manage a business venture along
with any of its risks in order to make a profit.
_______4. Who get raw materials and change them into finished goods for sale?
_______5. A type of business which buys goods from suppliers and sells them to customers.
______________6. It is the process of designing, launching and running a new business, which typically begins as a small business,
such as a start-up company, offering a product, process or service for sale or hire.
______________7. A type of small business enterprise that provides services for customers, and types of service firms including
hotels, barber and beauty shops, all types of repair shops, plumbers, and electricians.
_______8. Typical kind of small business enterprise such as food stores, clothing stores, and drugstores.
______________9. It engaged in developing newer methods, techniques of production, sales and software system can serve others
who are in need of those.
_______10. A firm that is classed as small if it has 250 employees or less.
II-TRUE OR FALSE. Write True if the statement is a characteristics of Small Business Enterprise and False if is not.
1. Managed by other people.
2. Independently run/managed by the owner.
3. Family workers or fewer hired workers.
4. Able to adopt modern technology.
5. Open Labor owner/management relations.
6. Little emphasis on long term planning.
__7.One characteristics of small business enterprise is a scope for specialist service
__ 8. A small business enterprise has a maximum possible safety of business secret.
9. Requirement of minimum legal formalities.
10. Business is housed in a large establishment.
III. Matching Type

Match the statements in column A with their corresponding terms/ phrases in column B. Write only the letter of the correct answer.
A B
______1. It is chartered by the state in which it is headquartered, A. Business reporter

is considered by law to be a unique entity, B. Business consultant
separate and apart from those who own it. C. Sales
_2. Two or more people share ownership of a single business. D. Not-for-profit fundraiser
______3. These firms are owned by one person, usually the individual E. Research anddevelopment
who has a day-today responsibility for running the business. F. Partnerships
______4. Knows how to write business articles in newspapers and magazines G. Entrepreneurship
because they understand and are capable of explaining the business trends. H. Recruiter
______5. Their main duty is to implement the company's strategy in the most efficient way. I. Sole Proprietorships
______6. They help to make decisions and analyze their business problems. J. Middle managers or Mid-
level management
______7. Nowadays, networking businesses are very rampant in our community. K. Corporations
In order for you to gain profit, you need them to attract new members. L. Entrepreneur
______8. It will serve as a training ground for business course M. Franchise Enterprise
graduates on how to implement marketing.
______9. This are individuals needed by a non-profit organization because of their strategies,
relationships and networking.
10. It is quite hard because you need to understand the business concepts,
strategies and ideas in entrepreneurship.
IV. ENUMERATION:
1-5. What are the essentials in Search for Business Ideas?
6-10. The 5 strategy on planning for small business.
11-15. Give at least 5 ways in marketing the small business.

What is Entrepreneurship?
Entrepreneurship has traditionally been defined as the process of designing, launching and running a
new business, which typically begins as a small business, such as a start-up company, offering a product,
process or service for sale or hire. It has been defined as the capacity and willingness to develop, organize, and
manage a business venture along with any of its risks in order to make a profit.
Enterprise/Small Business
1. Small physical size
2. Small investment size
3. Small employment size
4. Management Style: Hired or Self
5. Market Size: Limited, Local or Wide & Foreign
Types of Small Business Enterprise
1. Manufacturing firms: A manufacturing firm is classed as small if it has 250 employees or less.
Manufacturers get raw materials and change them into finished goods for sale.
2. Services: A service firm provides services for customers, and types of service firms including hotels, barber
and beauty shops, all types of repair shops, plumbers, and electricians.
3. Wholesaling: Wholesalers buy and resell merchandise in significant amounts to final consumers.
4. Research & Development: Firms engaged in developing newer methods, techniques of production, sales
and software system can serve others who are in need of those.
5. Consulting: Consultancy services with regard to efficient management, project appraisal, raising sources of
finance, methods of reducing risk, technical and engineering services, etc. are provided through these types of
firms.
6. Retailing: A retail business is one that buys goods from suppliers and sells them to customers. Typical kinds
of retail firms are food stores, clothing stores, drugstores.
Characteristics of Small Business Enterprise

There are various essential characteristics of a small business. Small businesses are different from medium and
larger business organizations. The widely identified characteristics of a small business can be better understood
as described below.
1. Managed by the owner

- Decisions are taken at one point and all risks are borne by the owner.
- Little or no delegation of authority; Extension of the entrepreneurs’ personality.
- Verbal communication; No separate entity.
- Independently run/managed.
2. Family workers and or fewer hired worker
3. Mostly owner financed and or limited borrowed funds with no access to the share market
4. No scope for specialist service
5. Unable to adopt modern technology
6. Little emphasis on long term planning
7. Volume of sales relatively smaller
8. Size of investment is relatively smaller
9. Close labor owner. Management relations
10. Requirement of minimum legal formalities
11. No or limited use of innovated production/ marketing
12. Business is housed in small establishments
13. Maximum possible safety of business secret
Search for Business Ideas

1. Understanding your customer
This might seem strange to start here as how do you know your customers before you have a business
idea in place. The answer is simple – your customers make the business, therefore, without customers there is
no business. If you have a business idea, don’t try to develop the idea around what YOU think will the potential
customers like or need, but find out what your customers actually desire. Too often, business owners get an idea
in their head and jump right in with both feet. However, they soon find out that their target market does not
want what they are offering. Spending both time and money on a project just to see it languish is not the perfect
business idea.
2. Passion
Passion here does not mean being fanatical about your product or service. Rather, it means having some
interest in what you do. More often than not, you will be spending 15 to 18 hours a day working on your
business in the beginning – usually for the first 12 to 18 months (more like 2 years in the economy). You have
to constantly think about ways to improve your business as well as be out talking about it to everyone,
everywhere. If you end up starting a venture that you don’t have passion for, something that does not make you
enjoy doing, it will be very hard to put in the hours and energy to make it successful. Thus, it is not a perfect
business idea.
3. Understand Your Competition
Every business has competition – either directly or indirectly. Think about movie theatres. They have
direct competition with video rental stores or at home television. They also have indirect competition from any
other activity that consumers spend their disposable income on, like bowling, paint ball, golf, etc. Anything that
people do in their spare time could be your competition.
Furthermore, some competitors are ruthless. Meaning, that if you promote and offer a product that is
similar to theirs but at a lower price, these competitors will just lower their price to match or beat you. If they
are already established businesses – they may be able to undercut your price enough to drive you out of
business.
4. Cash Flow
Lots of entrepreneurs enter the business world with great ideas but very poor understanding of the
capital it will take to get their venture off the ground. Most will prototype their product or service and
understand what it takes to make the product or provide the service, but they don’t understand how much capital
it takes to manage the rest of the organization – including marketing (very expensive but extremely necessary),
employees (more than just salaries or wages), insurance or supplies and all the little miscellaneous expenses that
add up very quickly like phone, internet, computer services, etc. Knowing your total cash flow will help ensure
that all your costs (variable and fixed) can be covered by the business – the perfect business idea. Many
business with great products fail because they could not cover simple expenses like rentals or utilities.
5. You
Know who you are. Know your strengths and weaknesses. Know that you are ready, willing and able to
do what it takes to make your venture a success. Many business owners thought that all they have to do was
hang out their shingle and they can become successful. Thus, it boils down to actually running the business day-
to-day.
Strategize Planning for Small Business

1. Articulate Your vision – Your Purpose, Mission & Core Values
Creating, articulating and sticking to your vision is the single most important job you have as a leader.
A clear vision is needed to guide and influence your strategic planning process. Have you ever asked yourself,
“What is the purpose of my business?” If not, sit down right now and figure it out.
2. Understand How Strategy Drives the Plan

When you take the time to define the why, what and how of your business, you’re ready to identify
strategies to achieve your Mission. To determine what those strategies should be, examine the company
strengths that you can employ to achieve a strong return on your investments. Look for resources and
capabilities you can leverage for maximum gain. To develop a competitive advantage that is sustainable,
focusing on no more than three to five core strengths is recommended.
3. Link Your Vision to the Annual and Quarterly Priorities

It can sometimes be a challenge to bridge the gap between one’s long-term vision and the daily
operations. The structure used to bridge this gap is called “Strategy Planning Methodology.” It breaks down our
current Mission into the annual and quarterly priorities we need to complete in order to achieve our Mission.
The work of the quarterly priorities then gets broken down into SMART (Specific, Measurable, Achievable,
Relevant and Time-Bound) objectives that are owned by employees and have deliverables.
4. Establish a Rhythm for Success

Strategic planning isn’t a one-time event. Once you’ve laid out your strategy, it’s crucial to stay focused
over the long-term. I’ve found that it’s vital to schedule a steady rhythm of productive meetings – annually,
quarterly, monthly, weekly, and daily. During these meetings, evaluate the plan, what’s working and what needs
to be adjusted. You may be tempted to skip these meetings, but don’t do it. You’ll waste a lot more time
throughout the week, month and quarter if you’re not clear on your goals. Make this investment in regular
meetings and you’ll get the best thing to help you succeed – confidence.
Marketing the Small Business
1. Get the know-how.
Knowing what not to do when it comes to marketing is as important as knowing what to do. Let’s face
it, the murky world of marketing can be tricky to navigate. So get the full know-how before you go plunging
into the mainstream of any business activity.
2. Put your customers first.

Understanding who your customers are, what makes them tick and what they really want and value.
And of course, staying in touch with them long after the sale, puts you ahead of the competition.
3. Know your target market.

Targeting your marketing activities fairly and squarely at the people who need and want your service or
product is the secret to creating quality enquiries and getting prospects to open their wallet.
4. Understand that marketing is not advertising.

Don’t make the mistake of thinking that advertising and creating websites are the only two ways to
attract more business. You can market your small business in literally hundreds of ways. So, it pays to know
what they are and then eliminate the ones that won’t work, or that you can’t afford, up-front.
5. Set sales goals and targets.

Marketing really is a number game. Marketing efforts that won’t directly or indirectly bring in new
business have absolutely no point. Know what your goals are in terms of revenue, expenses, profit, and number
of enquiries and, of course, number of new sales.
6. Get a handle on the four Ps of marketing.

Getting your product, pricing, placement strategy (distribution) and promotional strategy humming
along and working together is crucial to good marketing.
FORMS OF SMALL BUSINESS OWNERSHIP
Sole Proprietorships
These firms are owned by one person, usually the individual who has a day-to-day responsibility for running the
business. Sole proprietors own all the asset of the business and the profits generated by it. They also assume
complete responsibility for any of its liabilities or debts. In the eyes of the law and the public, you are one the
same with the business.
Partnerships
In a Partnership, two or more people share ownership of a single business. Like proprietorships, the law does
not distinguish between the business and its owners. The Partners should have a legal agreement that sets forth
how decisions will be made, profits will be shared, disputes will be resolved, how future partners will be
admitted to the partnership, how partners can be brought out, or what steps will be taken to dissolve the
partnership when needed. Yes, it’s hard to think about a “break-up” when the business is just getting started, but
many partnerships split up at crisis times and unless there is a defined process, there will even be greater
problems. They also must decide up-front how much time and capital each will contribute.
Corporations
A corporation, chartered by the state in which it is headquartered, is considered by law to be a unique entity,
separate and apart from those who own it. A corporation can be taxed; it can be sued; it can enter into
contractual agreements. The owners of a corporation are its shareholders. The shareholders elect a board of
directors to oversee the major policies and decisions. The corporation has a life of its own and does not dissolve
when ownership changes.
Career Opportunities in Entrepreneurship
There are eight career opportunities where you can use your entrepreneurial degree, if you are not ready to start
your own business.
1. Mid-level management
Middle managers’ main duty is to implement the company’s strategy in the most efficient way. Mid-level
managers are designed to supervise company workers to ensure that the company is moving forward to the right
track.
2. Business consultant
Since some entrepreneurs are not graduates of any business course, they will need consultants to help make
decisions and analyze their business problems.
3. Sales
Leadership in sales is very important. It will serve as a training ground for business course graduates on how to
implement marketing strategies they have learned in their trainings.
4. Research and Development

Research and Development is quite hard because you need to understand the business concepts, strategies and
ideas in entrepreneurship.
5. Not-for-profit fundraiser
Raising funds for a non-profit organization needs strategies, relationships and networking. This provides best
venues to learn the concepts of the business.
6. Recruiter
Nowadays networking businesses are very rampant in our community. In order for you to gain profit you need
to recruit new members.
7. Business reporter
People with a degree in business will know how to write business articles in newspapers and magazines because
they understand and are capable of explaining the business trends.
Let’s Try This! No. 1
Just Give Me a Reason: Now based on the discussion above, choose at least 5 career opportunities you like most
and justify your choice.
Chosen Career Reasons
3 Things
List down at least 3 career opportunities not mentioned in the discussion. Explain how important it is for
Filipinos to venture into that kind of business.
1.
2.
3.
LESSON 2
Identifying Market Problems
Your market consists of:

Existing customers – People who have already purchased the product.
Prospects – People who have not yet purchased the product but are considering it.
Target market users – People in the target market who are not currently looking for a solution.
According to Greg Satell, there are three ways to identify market problems and solutions:
1. Focus on innovation and the competition
As an entrepreneur, it is easy to focus on building innovative solutions that do not connect directly to
market problems; just because you can innovate doesn’t always mean that you should.
It’s also easy to pay too much attention to what competitors are doing and expend resources on trying
to beat them to market. In many cases, the customer does not care about extra features.
2. Focusing only on customers
Customers will give you profit so focus on your customer’s needs. As an entrepreneur, you must know
their demands and feedbacks. You must get their attention if they don’t know your product. You must listen to
their problems and connect to your products as the solution.
Example: If you are selling a food supplement, of course your target market are those people suffering
from sickness. Then you will introduce your product as the solution to their disease.
3. Focusing only on revenue

It’s quite difficult to focus into two elements – the prospects and existing customers. For prospect
customers, you must gain their trust to the products or services being offered. While you are protecting the
existing customers, you must gain their trust to the products or services being offered. While you are protecting
the existing customer, you must also keep them. Example: The instant coffee – there are a lots of flavor
available now in the market but the original product is still existing. The new flavor is for the prospect buyers
that loves to drink coffee with a twist, while the original flavor is for the loyal customers who love the product.

In the table below, list down five businesses found in your neighborhood and identify what kind of products and
services they offer.
Name of Business Establishment Products/Services Offered

Quiz
You are engaged in a business venture which is running for a couple of months now. Identify the market
problems and suggest solutions for each perceived
market problem.
1. Existing customers
Problems:
Solutions:
2. Prospects
Problems:
Solutions:
3. Target users
Problems:
Solutions:
LESSON 3
Unique Selling Proposition and Value Proposition
Unique Selling Proposition

Here’s to uncover your Unique Selling Proposition and use it to power up your sales (Entrepreneur Small
Business Encyclopedia, 2015)
1. Put yourself in your customer’s shoes.

Too often, entrepreneurs fall in love with their product or service and forget that it is the customer’s
needs, not their own, that they must satisfy. Step back from your daily operations and carefully scrutinize what
your customers really want. Suppose you own a Halo-halo stall. Sure, customers will come into your Halo-halo
place for food. But is it only food they all want? What could make them come back again and again and ignore
your competition? The answer might be quality, convenience, reliability, friendliness, cleanliness, and courtesy
or customer service.
Remember, price is never the only reason why people buy your product or service. If your
competitors are beating you on pricing because they are larger, you have to find another sales feature that
addresses the customer’s needs and then build your sales and promotional efforts around that feature.
Example:
Based on the success story of National Bookstore in Rappler Philippines by Chris Schnabel.
Nanay Coring said it was really the community that pushed the bookstore’s success. It was their
persistence to have a bookstore in their community that convinced her to expand.
The popularity was because the price was right, she said. A pragmatist, she only charged the converted
dollar price on imported books because the slight discount she got buying such was enough for her, Nanay
Coring reasoned.” Besides, the buyers would see the dollar price printed on the back cover!” Nanay Coring
exclaimed.
She added that her decision to post only a very small mark-up on books was partly motivated by her own
experiences.
“I wanted to help people learn, since I myself was poor but eager to learn,” Nanay Coring said.
2. Know what motivates your customers’ behavior and buying decisions.
Effective marketing requires you to be an amateur psychologist. You need to know what drives and
motivates customers. Go beyond the traditional customer demographics such as age, gender, race, income and
geographic location that most businesses collect to analyze their sales trends.
Cosmetics and liquor companies are great examples of industries that know the value of psychologically
oriented promotion. People buy these products based on their desires (for pretty women, luxury, glamour and so
on), not on their needs.
3. Uncover the real reasons why customers buy your product instead of a competitor’s.
As your business grows, you’ll be able to ask your best source of information: your customers. For
example, detergent soap entrepreneur could ask them why they like his detergent over others, plus ask them to
rate the importance of the features he offers, such as perfume, fabric conditioner and free texts. You will be
surprised how honest people are when you ask how you can improve your service delivery.
Don’t get discouraged. Successful business ownership is not about having a unique product or service;
it’s about making your product stand out in a market filled with similar items.
Value Proposition
People buy for a reason. There should be something in your product/services that would give consumers a
good reason to go back and buy more. There must be something that has to make you the best option for your
target customers; otherwise they have no reason to buy what you are selling. This implies further, that you offer
something to your customers that will make them value or treasure your product/services.
The value that you incorporate to your product is called value proposition. Value proposition is “a
believable collection of the most persuasive reasons that people should notice you and take the action you are
asking for”. Value is created by fulfilling deep desires and solving deep problems. This gets the people moving
and spending for your product/service.

Select a successful entrepreneur/practitioner. Conduct an interview by utilizing the sets of questions below.
Documents the interview and present this to class.
1. How did you identify your customers?
2. What were your considerations in selecting your customers?
3. Explain how your product/services become unique to other product/s.
4. Did you consult somebody before you engaged in this business? Cite sample insights that you gained from
consultation.
5. What were your preparations before you started the actual business?
6. What creative and innovative techniques did you adopt to your product/services? What was the effect of the
innovative techniques to the sales and profits of your business?
7. What strategy did you consider to have a unique selling proposition to your product/services?
LESSON 4
TARGET MARKET
Let’s Start!
People who aspire to start a business need to explore the economic, cultural and social conditions
prevailing in the area. Needs and wants of the people in a certain area that are not met may be considered as
business opportunities. Identifying the needs of the community, its resources, available raw materials, skills,
and appropriate technology can help a new entrepreneur in seizing a business opportunity.
Six Steps in Defining your Target Market
There are six steps in defining the target market according to Jakub Jirsak.
1. Understand the problems that you solve.

The starting point in defining the target market for your proposition is to understand the problems that
you want to solve. Once you have obtained sufficient ideas on what these are, you can start to work out on who
is most likely to suffer from these problems.
2. Paint a picture of the customer.

Start to list all the different types of customers that suffer from the problems you want to solve. Once
done, you can start to build up a picture of these customers. Group them by location – for example, farmers or
banana growers. Group them by market sector – are they retailers, wholesalers or manufacturers?
Ask yourself other types of relevant questions about these people. Are they still single? Are they male or
female or LGBT? Define them in as many relevant ways as possible.
3. Who will gain from the value in your offer?

Ask yourself:
To whom will these problems be most troublesome?
Who will have the most to lose by not dealing with these issues?
If you can demonstrate that cost of NOT sorting out the problem is GREATER than the cost of dealing
with them, then your case becomes compelling.
Remember to take into account aspects like emotional upheaval, stress and the risk to reputation when
implementing your solution, as well as a bottom line cost. It is all these factors that make up the value in your
offering.
4. Think about your market
Today, we live in the world of niche. For example, we are no longer prisoners of television schedules.
We can watch what we want at our own convenience from almost anywhere in the world; meaning, every
person can enjoy a unique viewing experience.
The web is fantastic at delivering personalized products and services, cutting out many of the distribution
challenges that previously existed.
It will be easier to build your reputation and gain referrals. You will also find out that you get more from
your marketing endeavors’.
Therefore, with the previous knowledge gained, start to segment your market. Do you want to work:
 With particular types of people – farmers, banana growers, beauticians market vendors?
 In certain geographical locations – High lands (ComVal area), Low lands (Panabo or Carmen in Davao
del Norte)?
5. Look internally at your company
One way to decide on the right markets to pursue is to think about your company and your business.
 Do you have particular areas of expertise like working in specific markets such as banana production?
 Do you have unique knowledge of a specific geographical area?
 Are you better at getting on with certain types of people?
6. What else is available?

Once you have decided the answers to the preceding questions, you must look at the market to see
what else are available. The question you must answer is:
 Why am I uniquely placed to solve the problem?

It may be that for some marketplaces there is no answer. However, in certain sectors or geographical
locations there may be a compelling response to that question. If you are unable to answer the question, you
may either have the wrong target market or the wrong offering. In this case, more work needs to be done before
you start targeting your potential customers.
Let’s Try This! No.5
Interview at least 10 of your friends. Assess their responses to determine what kind of customers they are. After
the assessment, you can now determine the kind of customers they are. After the assessment, you can now
determine the kind of customers they are and you can have a better understanding of the prospect market for
your business.
Name Type of Customer
Lesson 5
Customer Requirements and Market Size
`
Let’s Start!
There are ten things you need to know about your customers based on the suggestions of foreign entrepreneurs
from the United Kingdom.
1. Who they are

If you sell directly to individuals, find out your customer’s gender, age, marital status and occupation. If you
sell to other businesses, find out what size and kind of business they are.
2. What they do
If you sell directly to individuals, it’s worth knowing their occupations and interests. If you sell to other
businesses, it helps to have an understanding of what their business is trying to achieve.
3. Why they buy

If you know why customers buy a product or service, it’s easier to match their needs to benefits your business
can offer.
4. When they buy

If you approach a customer just at the time they want to buy, you will massively increase your chances of
success.
5. How they buy

For example, some people prefer to buy from a website, while others prefer a face-to-face meeting.
6. How much money they have

You’ll be more successful if you can match what you’re offering to what you know your customer can afford.
7. What makes them feel good about buying

If u know what makes them tick, you can serve them in the way they prefer.
8. What they expect of you

For example, if your customers expect reliable delivery and you don’t disappoint them, you stand to gain
repeat business.
9. What they think about you

If your customers enjoy dealing with you, they’re likely to buy more. And you can only tackle problems
that customers have if you know what they are.
10. What they think about your competitors

If you know how your customers view your competition, you stand a much better chance of staying
ahead of your rivals.
How to Determine Market Size for a Business Plan

When you start a business, you can sense if there is a market for the products or services you have in
mind, but you need hard facts. You have to know the number of potential customers in the marketplace, so that
your business plan will be realistic. If you use arbitrary figures based on wishful thinking, no one will take your
business plan seriously. You can estimate the size of the market if you use reliable sources and method.
Step 1
Get estimates for the potential market. The potential market is the total number of people or businesses
that may be interested in your product or service. Make a survey first in your area so that you will know if your
targets are suitable for your product or services offered. List down and make a graph so that it is clear and
understandable.
For example, your products are fertilizers for bananas. First of all, estimate how many banana plantations
are there in your locality and how many hectares of banana plantations will be your market.
Step 2
Trim down your potential market. Eliminate those people whom you think are not your customers,
especially if they have negative feedbacks on your products and services rendered and also those people you
think will be your competitor.
For example, there are a lot of people that have negative feedbacks on your product especially if your
product is new in the market. Of course, you cannot please everyone. Focus only to that person who believes in
your products so that you can build rapport from the solid customers.
Step 3
Estimate your market share. Make a survey to your existing customers if they are satisfied of your
product. Calculate how many percent of your customers love your product and will take your product back.
Find ways and means so that you can gain the trust of your customers and you will like your product.
For example, you need now to evaluate the feedbacks of your loyal customers about your product so that
you can get testimonies out from their experiences. Feed backing is very important for you to develop. Hear the
demands for improvement of your products from the loyal customer so that their trust remains.
List at least 10 businesses which interest you and find out who are your possible customers.
Business Idea Possible Customers

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Lesson 6
Validate Customer-Related Concerns
Let’s Start!
How to Interview a Customer
Here’s how to interview a customer according to Geoffrey James:
If you want to know how you can best help a customer, you must ask them. And there’s a real art to
interviewing customers so that they will reveal the needs and opportunities your offering can meet.
First, you must know the right questions to ask. If you don’t, you’ll be spending all your precious time
with the customer chit-chatting. While some “rapport building” is a good idea, it’s not going to move the sale
forward.
Second, even if you know the right questions, you also need to know how to ask them. If you ask in a
manner that confuses the customer, you will surely not get the information you need, but you’ll probably irritate
the customer in the process.
1. Prepare for the meeting.

Go into every customer meeting with a plan to learn more about that customer. Before each meeting,
review your relationship with the customer and identify gaps in your understanding of the customer’s business.
2. Start a conversation, not an inquisition.

Talk to the customers about their experiences regarding your business. Talk about the opportunities of
the business especially the possible profits if they will go into it. Relate the good things that happened in your
life while you are doing your business to encourage your customer.
3. Introduce non-leading, open-ended questions.

Ask your customers why they like your products and services. What things attracted them most in your
product or services? Ask why they like your product and why they want to subscribe to your services.
Task!
Go to the following suggested places below. Interview the customers about their concerns in the establishments.
Examples: customer services, security, cleanliness and quality service.
1. Shopping Mall
Process Response
2. Public Market
Process Response
3. Salon
Process Response
4. Terminal
Process Response
5. Fast Food
Process Response
LESSON 7
Marketing Mix (8 P’s)
Let’s Start!
Marketing Mix (8 P’s)
Product
The product should fit the task consumers want it for, it should work and it should be what the consumers are
expecting to get.
Place
The product should be available from where your target consumer finds it easiest to shop. This may be High
Street, Mail Order or the more current option via e-commerce or an online shop.
Price
The product should always be seen as representing good value for money. This does not necessarily mean it
should be the cheapest available; one of the main tenets of the marketing concept is that customers are usually
happy to pay a little more for something that works really well for them.
Promotion
Advertising, PR, Sales Promotion, Personal Selling and, in more recent times, Social Media are all key
communication tools for an organization. These tools should be used to put across the organization’s message to
the correct audiences in the manner they would most like to hear, whether it be informative or appealing to their
emotions.
People
All companies are reliant on the people who run them from the front line Sales staff to the Managing Director.
Having the right people is essential because they are as much a part of your business offering as the
products/services you are offering.
Processes
The delivery of your service is usually done with the customer present so how the service is delivered is once
again part of what the consumer is paying for.
Physical Evidence
Almost all services include some physical elements even if the bulk of what the consumer is paying for is
intangible. For example, a Hair Salon would provide its client with a completed hairdo, while an insurance
company would give their customers some form of printed material. Even if the material is not physically
printed (in the case of PDF’s) they are still receiving a “physical product” by this definition.
Productivity & Quality

This P asks “is what you’re offering your customer a good deal?’ This is less about you as a business improving
your own productivity for cost management, and more about how your company passes this onto its customers.

Task!
Think about your business and apply the 8p’s
Name of Business: Name of Proprietor:

Product:
Place:
Price:
Promotion:
People:
Processes:
Physical Evidence:
Productivity and Quality:
LESSON 3
Branding
Let’s Start!
Branding is a marketing practice of creating a name, symbol or design that identifies and differentiates a
product/service from other products/services. It is also a promise to your customers. It tells them what they can
expect from your products/services and it differentiates your offerings from other competitors. Your brand is
derived from who you are, who you want to be and who people perceive you to be.
Branding is one of the most important aspects of any business. An effective brand strategy gives you a
major edge in increasingly competitive markets.
The features of a good product brand are as follows:

1. Delivers the message clearly
2. Confirms your credibility
3. Connects your target prospects emotionally
4. Motivates the buyer
5. Concretizes uses loyalty
Here are some simple tips to publicize your brand
1. Develop a tagline. Write a meaningful, unforgettable, and easy to remember statement that captures the
essence of your brand.
2. Get a great logo. Create a logo suitable to your business and consistent with your tagline and display it
prominently.
3. Write down your brand messaging. Select key messages you want to communicate about your brand.
4. Be true to your brand. Deliver your brand promise
5. Be consistent. Be reliable and consistent every time.

Task!
Think about your business and create at least three new brand names with logo and tag line.
LESSON 9
4M’s of Operations
Let’s Start!
According to Robert and Chad of Counts in Consulting Business, there are 4m’s of operations:
Method
This is the system used in the operations. Every manager has its own methods on how to run the
business. Every business had its own way to reach their target customers.
Manpower
When examining the Methods you now have in place, what is the ideal number of persons needed to
perform these methods and what positions should they be in? How will the personnel be trained and measured
for their performance? What is the “cycle time” of each part of the Method?
Machine
When examining the facilities, vehicles and tools, do you have everything you need to ensure the safety
of the employees while maximizing the efficiency and productivity of the department? Do all employees have
access to the same tools and equipment if needed? Do the tools enable them to perform tasks independently?
Are they trained on how to maintain the machinery and tools?
Materials
Do you have the materials needed to perform all parts of production and are they conveniently located to
minimize waste? Example: All materials needed to clean and package are always available and are placed to
minimize effort. Does the layout of the production department minimize wasted movement? Example: Does the
part flow go in one direction or does it zig and zag throughout your facility?

Task!
Think about your own business. Apply the 4m’s of operations and explain each operation.
Name of Business: Name of Proprietor:

Method: Manpower:
Machine: Materials:
LESSON 10
Develop the Business Model
Let’s Start!
Great business models depend on developing three “green lights,” or qualities that will help the
business succeed: finding high-value customers, offering significant value to customers, and delivering
significant value to customers, and delivering significant margins. Great business models also avoid three “red
lights” that can derail a business: difficulties in satisfying customers, trouble maintaining market position, and
problems generating funding for growth. The list below outlines key factors in determining whether your model
meets each green light and avoids the red lights. Examine your own business to see if you meet the criteria for
success and more importantly, to correct any weaknesses you might have.
Green Lights
1. Acquire high-value customers

High-value customers do not mean rich customers, but customers who meet the following
requirements:
 Are easy to locate
 Allow you to charge a profitable price
 Are willing to try your product after minimal marketing expenses
 Can generate enough business to meet your sales and profit objectives
Customers don’t necessarily need to be the end users of your product or service. They could be
retailers, distributors, catalogs or whomever you sell your product or service to. If your end users or
distributors don’t fit this profile, you can still meet this requirement by attracting high-value customers
through partnerships or alliances with companies in the market.
2. Offer significant value to customers.

There are number of ways you can employ to create significant value and competitive advantage,
including the following:
 Unique advantages in features and benefits

 Better distribution through retail or distribution
 More complete customer solutions through alliances with other companies
 Lower pricing due to manufacturing efficiencies or pricing options
 Faster delivery, broader product line or more customization options
The rise of the internet, outsourcing and most of all, the increased willingness of companies to
partner in creative ways to serve customers has resulted in every industry, the creation of innovation in
business strategy. This gives you opportunities and makes imperative that you stay on the creative edge
to fend off competition.
3. Deliver products or services with high margins
Better manufacturing costs due to overseas production are typically not the clear way to higher
margins as competitors and match your costs in the end. Higher margins come from having a product
that can be made from an improved process or by having features that provide significant value and
allow you to charge more. You can achieve high margins with other tactics, including the following:
 Use a more efficient distribution channel.
 Require less sales support and sales effort.
 Have an industry-leading lean manufacturing process.
 Offer more auxiliary products or other opportunities for revenue without increasing cost.
Red Lights
1. Provide for customer satisfaction

Consider whether it will be difficult--and therefore expensive—to satisfy customers once they buy.
Some of the aspects of a business that create high customer satisfaction costs include:
 High warranty costs

 Extensive technical support
 Extensive installation requirement
 Extensive customer service
 Interface problems with other equipment
Customer satisfaction costs, which occur after the sale, are red flags because the costs are
typically high and don’t produce revenue or profits. If your type of product has high customer service
costs, you need to configure your business to put these costs on someone else, either with partnerships or
alliances or by restricting your sales to an aspect of the business that doesn’t require customer
satisfaction costs.
2. Maintain market position
A good business model uses its resources to improve its market position, adding new products,
features and customers or expanding into new applications. The red flags, indicating the difficulty to
maintain market position will include:
 Two or three major customers buy most of your product.

 Major potential competitors control the distribution network.
 Technology changes rapidly and requires high-risk product development.
 There are alternative technologies being developed to meet the same need.
 You have well-funded potential competitors who could quickly move into your market.
The ability to hold market position is determined by the characteristics of the overall market. For
example, a company involved in the semiconductor manufacturing business must adjust and guess right
on constant changes in technology to hold market position. Sooner or later they will guess wrong and
fail.
3. Fund the business

Start-up costs, operating capital, personnel costs and overhead costs are just a small percentage
of the funding requirements for any business. The question is whether the investments will have a high
return and whether the business can grow without substantial new investments. Red flags for a business
model regarding investments include:
 ROI is less than 25 % in the first three years.

 Incremental production of products or services requires substantial additional investments.
 Fewer than 50% of the investment required will be used in revenue producing areas, such as sales and
production.
 Investments have to be made prior to sales commitments.
 Industry as a whole has a poor ROI or proof profitability.
Money is available for the right plan and the right model. You’ll find money available if your
ROI is right and if you have financial leverage, which means your initial investment will allow you to
double or triple sales without requiring any more funding.

Task!
Develop a business model for your own business.
Lesson 11
Forecast the Revenues of the Business
Let’s Start!
Forecasting the revenues is simply an act of looking at some raw data and making logical assumptions. In
business, to make a comprehensive forecast of its revenues one must look at the past revenue figures, and then
consider the following factors to make an educated guess about the future revenues of the business.
The customers:
Identify the customers’ base and determine which one will be included in the forecast.
The location:
Include the current geographical area as well as the area you plan to expand in the future.
Market conditions:
Identify the state of the market and the potential opportunities and threats that can affect the
amount revenue of the business.
Business position:
Consider the position of the business within the industry and factors in growth expectations.
Seasonal adjustments:
Many businesses have increased and decreased revenues in a cyclical seasonal cycle.
Aside from historical records of the business, forecasting the revenues it may necessitate the use of other
technique in forecasting such as research. Here are some good sources of information to be used:
1. Look at the most recent consumer-spending habits to see how in demand the products are.
2. Find detailed information about your industry.
3. Check the most recent producer price index to determine price stability of your industry.
After gathering all the relevant information from the historical records and research, you can spring into
the prediction of the future revenues of the business.
In setting projections, it is easy to be overconfident or overly conservative. That’s why the projections
should be tested several times so that necessary adjustments of your projections can be made based on
how real-world situation compared to your projections.
Forecast the Costs to be Incurred
Predicting the expenses of the business is perhaps easier than forecasting the revenue because you’ll be
working with past expenses records, and if it is needed, a research forecast is added to provide a detailed
presentation of the expenses. You’ll need to calculate two types of expenses:
 Fixed costs: These are the expenses that remain the constant regardless of the activity. These include the
following:
- Rent
- Fixed Salaries
- Insurance
- Advertising and Marketing Expenses
- Postage
- Internet and Technology Costs
 Variable costs: These are expenses that vary depending on the level of activity that occur in the
business. These include the following:
- Cost of Sales
- Packaging Costs
- Cost of Labor
- Customer service costs
Here are some rules that must be observed when forecasting expenses:
 Double your estimates for advertising and marketing costs since they always escalate beyond
expectations.
 Triple your estimates for legal, insurance and licensing fees since they’re very hard to predict without
experience and almost always exceed expectations.
 Keep track of direct sales and customer service time as a direct labor expense even if you’re doing these
activities yourself during the start-up stage because you want to forecast this expense when you have
more clients.
All forecasted expenses will be checked several times to ensure that it will be relevant in the future
operation of the business.
Task!
Forecast the revenues of your business.
Name of the Business:
Overhead:
Fixed Cost:
Conservative Case:
Aggressive Case:
LESSON 12
Compute for Profits
Let’s Start!
A business owner is primarily motivated to engage in a business to earn profit. One of the most important
financial concepts you will need to learn in running new business is the computation of the profit.
Gross Profit
Gross Profit is a company’s total revenue minus the cost of sales. Gross Profit is the profit a company
makes after deducting the costs associated with making and selling its products, or the costs associated with
providing its services. Gross profit will appear on a company’s income statement or can be calculated with this
formula:
Gross profit = Revenue – Cost of Sales
Gross Profit can be used to calculate the gross profit margin. Expressed as a percentage, this metric is
useful for comparing a company’s production efficiency over time. Gross Profit is expressed as a currency
value, gross profit margin as a percentage. The formula for gross profit margin is:
Gross profit margin = gross profit / revenue = (revenue – cost of sales) / revenue
Gross profit margin is a financial ratio used to assess a firm’s financial condition by revealing the
proportion of money left over from revenues after accounting for the cost of sales. Gross profit margin serves as
the source for paying additional expenses and future savings.
The gross margin is not an exact estimate of the company’s pricing strategy but it does give a good sign of
financial condition. Without an adequate gross margin, a company will be unable to pay its operating and other
expenses and savings for the future. In general, a company’s gross profit margin should be stable. It should not
fluctuate much from one period to another, unless the industry it is in has been undergoing drastic changes
which will affect the costs of sales or pricing policies.
Net Profit
Net Profit is the actual profit after working expenses not included in the calculation of gross profit have
been paid. Net Profit will appear on a company’s income statement or can be calculated with this formula:
Net profit = Gross Profit – Operating Expenses – Interest – Taxes
Net margin is the ratio of net profits to revenues for a business typically expressed as a percentage – that shows
how much of each peso earned by the business is translated into profits. Net margins can generally be calculated
as:
Net profit margin = Net Profit / revenue
Net Profit margins will vary from business, and certain ranges can be expected from industry to industry, as
similar business constraints exist in each distinct industry. Businesses that are able to expand their net profit
margins over time will generally be rewarded with business growth, as it leads directly to higher levels of
profitability.
Create the company’s five (5) year projected financial statements
Business entity exists in a complex system where economic, political and social systems are overlapping and
intertwining. It is not surprising that most firms’ owners develop a set of objectives and one of these objectives
is the financial goals. The business aims to be successful and grow in the industry through maximizing the
profit of the business.
In forecasting, it allows the business to anticipate the events before they occur and create necessary plan of
actions to exploit the opportunities or prevent the threats that can affect the business operation.
In the planning process, begin with a sales forecast for the next year and so years. Then the assets required to
meet the sales target are determined and a decision is made concerning how to finance the required assets. At
this point, income statement and balance sheet can be projected.
In developing the projected financial statement, we will follow the important steps.
1. Forecast the Income Statements

a) Establish a sales projection
b) Determine a production schedule or the cost of sales.
c) Compute the selling and administrative expenses.
d) Consider financial expenses such as Interest.
e) Determine the net profit.
2. Forecast the Balance Sheet

a) Project the assets that will be needed to support the projected sales.
b) Determine if additional funds will be needed in the operation.
LESSON 13
How to Implement a Business Plan
Let’s Start!
After successfully creating the business plan, it’s time to get started in the real thing – implement it. The
quality of the business plan can be checked during this part. It is in here that you will all the more understand
that the creation of the business plan must be thorough so that you won’t experience many problems in
implementing it.
One pitfall for example is when you fail to scrutinize your Market Analysis. Failure in this part would
mean that you don’t know critical information about your target market, customers and competitors. In the
book, the Art of War by Sun Tzu, he said that one must plan ahead and don’t make it up as you go. This rings
very true in both business and war.
SIMPLE STEPS IN IMPLEMENTING A BUSINESS PLAN
1. Create a To-do list
This list will help you the most when (1) this is organized according to the functional areas of business
(Marketing, Finance, Human Resource and so on), (2) the person responsible is listed and (3) the deadline is set.
Check this Sample Business Plan Implementation To-do List!
Activity Department Person Responsible Deadline

1. Processing licenses, Operations/Mgt. Therese June-July 2016
permits and clearances
2. Visit the bank for loan Finance Maria June-July 2016
requirements
3. Contact Operations/Mgt. Theresa July 2016
Telecommunication
Companies for Internet
Connection at the Office
(Compare Prices)
4. Complete the Logo Marketing Edmund July 2016
design and send to layout
artist for tarpaulin,
brochures and PR
campaigns
5. Contact Suppliers and Marketing Edmund August 2016
contact possible
customers (Create a
comprehensive list)
6. Renovate the Stall Operations/Mgt. Theresa and Maria August 2016
(install internet
connection)
7. Hire and Train Operations and Edmund August 16-31, 2016
Salesmen; Arrange the Marketing
products
8. Run Radio and Local Marketing Edmund August-December 2016
News Paper
Advertisements
9. Store Opening All All September 1, 2016
This list could go on and on. There are actually several ways to be creative in doing your to-do list. You can
organize it monthly, daily or per functional area. Per functional area would mean you could have separate To-do
list for each department. You just have to use the format that you think will suit your needs.
2. Monitor the Activities
The purpose of this is to check if you have achieved the goals you have set in your to do list. In this part, you
can identify the ff:
1. Are activities achieved?

2. Are the activities achieved according to timeline?
3. What are the possible things that can be done to fix (should there be any) issues?
4. Should you consider changing priorities? Why? How?
Monitoring can be done daily, weekly or monthly depending on the need of your organization.
3. Evaluating your plan
Monitoring is different from evaluating. Imagine you are cooking and while cooking, you check your Cook
Book and constantly check the tenderness of your ingredients. Monitoring these things can have a significant
result in your final output. When your final output, your dish, is being served and tasted by others and is now
reaping positive comments, this is called evaluating. Evaluating the implementation of business plan is done
when the business plan is fully implemented.
Evaluating the implementation of business plan is essential so that you can learn which part of the
implementation is the bottle neck. In some cases, it could be very slow business processing and too many red
tapes, supplier availability, leasing contract issues and so on. Hence, when you were able to monitor well, you
can also evaluate well.
Sample monitoring question would be: How many suppliers were contacted?
At the end of the implementation
Sample evaluation question would be: Did we contact enough suppliers?

Did we contact the correct suppliers?
Check this Sample Monitoring Worksheet!
Monitoring Schedule Date:

Whole Grocery Store Checkpoints: Within three years: Hire two more managers for efficient shifting of 24/7
Store. Establish strong relationship with 3 suppliers per product category.
Have two more delivery trucks.
Marketing:
Operations:
Human Resources:
Finance:
Checkpoints could be goals you set as mentioned in your Business Plan. Other examples are shown below.
1. Strengthen community service involvement by partnering with Youth Groups and allocating 2% of the
budget in Promotions for strong PR.
2. Pay down debt by 20 percent this year.
3. Provide health care for all employees by 1st quarter of 2016.

Activity
1. Create a Business Plan To-do list. Make sure to study all the things that you must do to set up the business.
Copy the Format in the Sample Business Plan To-do list shown earlier in the lesson. Arrange them
chronologically.
2. Monitor. Monitor weekly your Business Plan To-do list and check progress. Write five (5) issues you have
met and determine how you intend to fix them in order to follow your business plan implementations timeline.
Discuss this with your group for brainstorming.
LESSON 14
Operate the Business
Let’s Start!
Operating business varies in different countries. However, all countries strive to create and implement
laws that will make business easier. More business means more jobs and more jobs could eventually lead to
lower crime rates and many others.
In the Philippines, according to Philippine Business registry, there was a 9% increase in renewal and new
business registration from 2014-2015. This is expected to increase as the Philippines forged into ASEAN
integration.
The Official Gazette of the Philippines published the following requirements and procedures in
registering business in the Philippines:
I. REQUIREMENTS AND PROCEDURE FOR REGISTERING YOUR BUSINESS UNDER SOLE-

PROPRIETORSHIP
A. Register your business with the DTI and obtain a Business Name Registration Certificate
B. Obtain Barangay/Municipality/Regional Clearance from the concerned local government where you will set
up your office
Requirements
1. Business Name Registration Certificate
2. Two valid IDs
3. Proof of address of business location (Note: If you will be operating from home, your home address will
suffice)
C. Go to the mayor’s office in order to secure a business permit in the municipal level
Requirements
1. Business Name Registration Certificate
2. Map/sketch of location where your business will be located
3. Two valid IDs
4. Community tax certificate (in some cases)
D. Go to the Bureau of Internal Revenue (BIR) district office where your business will be located
Requirements
a. Business Name Registration Certificate
b. Mayor’s permit
c. Barangay clearance
d. Proof of your business address (e.g. lease/rental agreement, land title)
e. Book of Accounts, to be stamped by BIR (which can be purchased in office supplies stores)
f. Receipts and invoices from BIR accredited print shops, to be stamped by the BIR
E. Obtain a Tax Identification Number (TIN)
F. Fill out an application form for a Certificate of Authority to Print Receipts and Invoices
G. Have your Book of Accounts, receipts, and invoices stamped by the BIR
H. Apply as a self-employed member of the Social Security System (compulsory for business owners in the
Philippines)
II. REQUIREMENTS IN REGISTERING A PARTNERSHIP OR CORPORATION
Please note the following:
1. All applications and supporting documents must be in four (4) copies and in A4 size bond paper with a
cover sheets.
2. Documents signed abroad must be authenticated by the Philippine Embassy or Consulate in the country
where signed.
3. Audited Financial Statements and Special Audit Reports must be certified by an independent Certified
Public Accountant (CPA), with Statement of Representation filed with the SEC. Said statement must
indicate the CPA Cert. No., PRC/BOA No. and the PTR No. of the CPA and SEC accreditation of
External Auditor if applicable.
4. All applications must indicate the Tax Identification Number (TIN) of the incorporators,
directors/trustees, stockholders/members for corporations, and partners for partnerships.
STOCK CORPORATIONS
a. Name Verification Slip (on-line or at the Name Verification Unit, 2nd floor, SEC Bldg.)
b. Articles of Incorporation and By-laws
c. Treasurer’s Affidavit
d. Bank Certificate of Deposit (notarized in place where bank is located)
e. Written Undertaking to Change Corporate Name by any Incorporator or Director
f. Clearance from other government agencies (if applicable)
g. Foreign Investment Application Form F – 100 (for subsidiaries of foreign corporations)
h. Proof of Inward Remittance by Non-Resident Aliens/Subscribers
NON-STOCK CORPORATIONS
b. Articles of Incorporation and By-laws
c. Bank Certificate of Deposit of at least P1 million, and a statement of willingness to allow the
Commission to conduct an audit. (only if a Foundation is to be registered)
d. Written Undertaking to Change Corporate Name by any Trustee**
e. List of members and amount contributed certified by the Secretary and Treasure**
f. Copy of the Certificate of election or letter of appointment of a bishop, rabbi, presiding priest etc.
(only for Corporation Sole)
g. Master Deed duly entered under the primary entry of the concerned Register of Deeds and Certification
that there is no existing similar corporation within the condominium (only for Condominium
Corporation)
h. Certification from the Housing and Land Use Regulatory Board (HLURB) that there is no other existing
homeowners or similar associations in the community where the association is to be established
(only for Neighborhood Associations)
PARTNERSHIPS (GENERAL/LIMITED)
b. Articles of Partnership (For Limited Partnerships, this should be executed under oath “JURAT”)
c. Written Undertaking to Change Corporate Name by any Partner**
d. Form F – 105 for partnerships with Foreign Equity
e. Proof of Inward Remittance by foreign partners
PROCEDURE IN REGISTERING A PARTNERSHIP OR CORPORATION
1. Verify/reserve proposed name (on-line or at the Name Verification Unit, 2nd floor, SEC Bldg.)
2. Draw up the Articles of Incorporation and By-laws in accordance with the Corporation Code.
(Blank forms are also available at SECCU, 3rd floor, SEC Bldg.)
3. If applicable, get endorsements from other government agencies. In addition, the CRMD obtains
clearances from other SEC departments whenever these are deemed appropriate.
4. Deposit paid-up capital/contribution (for foundations only) in the bank.
5. Present six (6) sets of the accomplished forms and documents for pre-processing at the CRMD. Only
complete application documents are accepted for processing. All documents executed outside the
Philippines must be authenticated by the appropriate Philippine embassy or consulate in the area
concerned.
6. Pay the filing fees to Cashiers’ counter (located at G/F SEC Bldg.).
7. Claim the Certificate/License from the Releasing Unit, Records Division upon presentation of the official
receipt issued for payment of filing fee.
REMINDER: Applicants must buy and register their Stock & Transfer Book or Membership Book immediately
after the issuance of the Certificate of incorporation or within 30 days upon issuance thereof.
All registered corporations are required to submit a yearly General Information Sheet (GIS) and Audited
Financial Statement (AFS) in the appropriate formats specified by the Commission.
III. ADDITIONAL AGENCIES
There are enterprises that are required to secure special clearances, licenses or permit from government agencies
because of the line of their products. Below are some business and the corresponding agencies where one must
secure special certificate or permit.
TYPE OF BUSINESS WHAT AND WHERE

Animals and animal products, registration of Registration certificate – Bureau of Animal Industry
veterinary drugs and animal facilities
Aquatic animals, importation, Fishpond lease Permit – Bureau of Fisheries and Aquatic Resources
agreement (DA-BFAR)
Fertilizer products and registration of pesticide Registration certificate – Fertilizer and Pesticide
products Authority (DA-FPA)
Fiber and fiber products processing and trading Registration certificate; commodity clearance –
Fiber Development Authority, (DA-FIDA)
Film and television production, export and import, Registration certificate – Movie & Television
booking, etc. Review and Classification Board (MTRCB)
Food, chemicals, health related business Registration certificate – Bureau of Food and Drugs,
Dept. of Health (DoH-BFAD)
Flour processing, Grains wholesaling & retailing, License – National Food Authority (DA-NFA)
milling, warehousing, exporting, importing,
indenting, packaging, threshing, corn shelling,
mechanical drying
Meat plant accreditation for meat & meat products, Accreditation certificate, Registration certificate –
slaughterhouse operations National Meat Inspection Commission (DA-NMIC)
Pawnshop & lending investor Registration certificate – Bangko Sentral ng Pilipinas,
Dept. of Finance (DoF-BSP)
Plants & plant products: nursery accreditation Seed Permit – Bureau of Plant Industry (DA-BPI)
certification and phytosanitary certificate Registration certificate – DA-BPI
Recruitment or placement agency for foreign Registration certificate – Phil. Overseas; Employment
employment Administration, Dept. of Labor (DOLE-POEA);
Recruitment or placement agency for local Registration certificate – Bureau of Local
employment Employment (DOLE-BLE)
Schools &educational institutions: Permit – Dept. of Education (DepEd);
Educational institution (nursery, primary, elementary, Commission on Higher Education (CHEd);
secondary levels); Tertiary level; Technical – Registration and accreditation certificate – Technical
vocational education, training program registration Education Skills Development Authority (DOLE-
and accreditation TESDA)
Security agency business Permit – Philippine National Police, Dept. of Interior
& Local Government (DILG-PNP)
Service and repair shops for: Motor vehicles; Accreditation license: Bureau of Trade Regulation
automotive & heavy equipment; engine & and Consumer Protection, (DTI-BTRCP); DTI
engineering works, & machine shops; electronics, regional offices
electrical, air conditioning & refrigeration; office &
data processing equipment; medical & industrial
equipment; appliances or devices; and private
emission centers
Sugar trading, muscovado converting & trading, Registration certificate – Sugar Regulatory
processing or manufacturing sugar-based products Administration (DA-SRA)
for export
Telecom business License – National Telecommunication Commission,
Dept. of Transportation & Communication, (DOTC-
NTC)
Tourism –related projects Registration and accreditation certificate – Dept. of
Tourism (DOT)
Video production, sales and rental Optical Media Board (formerly Videogram
Regulatory Board), Office of the President (OP-
OMB)

Activity
A. Look at your business plan. Create a flow chart for your licensing activities. If applicable, include steps in
getting permits and other clearances. Indicate the corresponding expenses and waiting time for each step.
B. List three reasons why it takes a long time to finish licensing, getting a permits or clearances. Suggest some
ways to solve the three issues.
1.
2.
3.
LESSON 15
Sell the Product Service to Potential Customer
Let’s Start!
In your business plan, you have carefully studied there who your target market will be. You have also
established your Marketing plan that detailed how your marketing activities will be. The challenge in every
business is really how to make your customers feel the value of your product or service in as much as you do.
The following are some tips in selling the product/service to potential customers.
1. Sharpen your product knowledge.
Remember that customers buy benefits, not products. It is essential to communicate the value of the
benefits of your product. You can’t communicate benefits if you are not well-versed in your product offering. If
you double as the marketing personnel in your business, this means you need to have a thorough knowledge of
all your product offerings. Customers would like to hear suggestions and answers to their questions fast and
accurately. If you will hire salesmen or customer representative, it pays that they must have extensive product
knowledge to avoid having frustrated customers.
2. Check what your competitors are doing.
This doesn’t mean copying all that they are doing because that too could be dangerous. However, you
need to be active in knowing what your competitors are doing in order to achieve sales. You can visit their
websites or check their posters. Check other possible areas where they lack and find opportunities there.
3. Practice proper negotiation techniques.
This is applicable once you have thoroughly understood who your target market is. Since you were able
to establish that in the creation of the business plan in the earlier part of this book, you just have to study now
what negotiation technique best apply to your target market. You can learn this by talking to some associates
and by practice with actual customers.
Be sure to have in mind that your goal is to arrive in a win-win situation and forge long term relationship.
In order to become an effective negotiator, you must be able to (1) ask good questions that will allow you to get
the exact things you want to know, (2) be patient and (3) be creative in communicating the value of your
products or services.

Activity
Read Blogs Online. Check blogs from Entrepreneurs, Salesmen or Marketing Managers and search for their
suggested strategies in selling services or products. Please find blogs that is related to the product or service that
you are proposing to have in your business plan. Use the worksheet below.
Selling Strategies Worksheet
Name Company and Position Suggested Strategies

1.
2.
3.
LESSON 16
Identify the Reasons in Keeping Business Records
Let’s Start!
Business Records
A business record is either a hard or digital copy of business dealings. Common examples are minutes,
accounting-related documents, and employment contracts and so on. These business records are often having
retention periods as prescribed by the company or by the law of the country where the business operates. For tax
purposes, accurate record keeping is necessary in audit investigation endeavors and avoiding penalties and fines
by making sure that the correct taxes are paid in time.
Examples of Business Records
The following are examples of business records.
1. Books of account recording receipts and payments, or income and expenditure
2. Underlying documentation necessary to verify the entries in the books of account; such as vouchers,
bank statements, invoices, receipts and other relevant papers
3. Record of the assets and liabilities of your business
4. Day by day record of all sums of money received and expanded by your trade, profession or business
together with supporting details of the receipts or payments.
5. Lists of debtors and creditors
6. Stockage figures
7. Quantities and values of the goods
8. Identifies of the sellers and buyers.
9. If you provide services, you must keep a record of all services provided. The sums charged and paid for
them have to be traceable through the books of account to the statement of income and expenditure.
10. Meeting minutes

11. Memoranda
12. Employment contracts
Top Reasons for Keeping Business Records
1. Check the performance of your business
Keeping a detailed and updated record can allow you to see which items or services are selling. This
can aid you in your decision making in your next purchases.
2. Financial Statements preparation
Accurate financial statements are from good records. Financial Statements are primary requirements in
banks in applying for loans. Hence, you must keep good records in order to achieve accurate income
statements and balance sheets.
3. Identify sources of income
The business will receive money and other income from many sources. The records will help you
identify the sources of income. This tracking is necessary so that you can separate business from
non-business receipts and taxable from non-taxable income.

Activity
In the implementation of the business plan, keep all your business records. Create one folder for each type and
correctly label the covers. This serves as your portfolio.
LESSON 17
Perform Key Bookkeeping Task
Let’s Start!
Bookkeeping is the process of recording “systematically” the business transactions in a chronological

manner. It is systematic because bookkeeping follows certain procedures and principles in performing the tasks.
Also, it should be done in a chronological manner because the transactions are recorded in order of the date of
occurrence.
The collected data are first entered in the accounting records and then extracted, classified and
summarized in the form of financial statements.
The bookkeeper does the “how accounting is done” which refers to the mechanical aspects, then the
accountant does the “why accounting is done” which refers to the analytical and interpretative aspects.
Manual Bookkeeping
This is a mechanical task involving the collection of basic financial data and keeping a manual record of
the business revenues and expenses. This service is typically used by small business because the accounts and
transactions do not involved high degree of complexity.
Computerized Bookkeeping
This is involved with the use of technology such computers and accounting software. Typically, this
service is used by medium and large business enterprises because these businesses engage to voluminous
transactions which entail a high level of complexity.
Revenues
This is the amount of money that a company actually receives during a specific period generated from
sale of goods or services of the business.
Expenses
This is the money spent or cost incurred in a business with an effort to generate revenue; it represents
the cost of doing business. The bookkeeper must monitor the expenses because it is an important indicator of a
business operations, there are specific accounting rules on expense recognition and for tax purposes.
Taxes
This is an involuntary fee levied on individuals or businesses that is enforced by a government entity.
All businesses must provide accurate financial information regarding its revenues and expenses which is the
basis on the computation of tax payable. Failure to present correct and truthful information will lead to severe
consequences that may affect the business reputation.
Cash Flows
It is the incoming and outgoing of cash representing the operating activities of a business. Business
owners usually focus on how to improve their profit and disregard the stability of their cash flow. Every
business requires sufficient cash to attain success and growth in the industry
Profitability
It is the state or condition of yielding a financial profit or gain. Bookkeeping provides information to
better understand the business operation and help the owners to have a better grasp of how much progress they
make form year to year. Through financial analysis, the business owners can prepare adequate plans to avoid
future threats and exploit the emerging opportunities.
Double – Entry System

It is a system that recognizes the two-fold effects of a transaction; the value received and the value
parted with. This system posts a single transaction as an income or expense item, and then creates a second
entry to trace the transaction to a corresponding account. For example, payment of salaries, the salaries is posted
as an expense and a decrease to the cash account. The justified the equality of debit and credit amounts.

Activity
Visit a business entity in your community and ask them how they keep the records of all their business
transactions. Then make written narrative report about the business bookkeeping.
LESSON 18
Interpret Financial Statements
Let’s Start!
Financial Statements are the means by which the information accumulated and processed in financial
accounting are periodically communicated to the users. They are designed to serve the needs of variety of users
such as owners, creditors and government which will enable them to arrive at sound economic decisions. These
are the basic financial statements namely:
1. Balance Sheet
2. Income Statement
Financial Statements serves as a scorecard of an enterprise where it presents the financial condition and
the result of operation in figures or amounts. Financial statements alone have its own limitation it does not
provide an absolute measure of the actual result of the business. To have a deeper understanding of the financial
statements it requires an interpretation of the results through employing additional techniques to know what’s
behind the numbers. The figures in the financial statements are converted into percentages or ratios which are
much easier to understand and you can visualize the underlying realities of this quantitative information in order
to strengthen the financial information and to have comprehensible results. For example, with the data presented
below:
XYZ Store ABC Market

Net Profit (2015) P 500,000 P 750,000
Net Profit Margin 8% 5.25%
Based on the example presented, if we only consider the Net Profit of the two entities, we can say that
ABC Market (P 750,000) is more profitable as compared with XYZ Store. But the amounts can be a deceiving
factor in analyzing the actual result of the business operation. In financial statement interpretation, we must a
greater emphasis on the equivalent percentage or ratio through this we can assess the extent of the result of the
business operation. In financial statement interpretation, we must a greater emphasis on the equivalent
percentage or ratio through this we can assess the extent of the result of the business operation.
Between the two entities, XYZ Store yields to an 8% net profit margin (Net Profit ÷ Net Sales) much
higher than ABC Market with 5.25%. This indicate that XYZ Store to have a comprehensive understanding of
the financial statements it involves using other methods to improve the statements and be more meaningful in
making decisions for the success and growth of the business.
Balance Sheet
It is a financial statement which shows the financial condition of an enterprise by listing the assets,
liabilities and owner’s equity as at a specific date. This statement is also called Statement of Financial Position.
The Balance Sheet measures and analyses the enterprise in terms of liquidity, financial, flexibility and
solvency. Liquidity is the stability of the enterprise to meet current maturing obligations. It is important that the
business must have an adequate cash balance or near cash investment to fulfill its future financial commitments.
The entity’s liquidity is measures through certain ratios such as Current Ratio (Current Assets ÷ Current
Liabilities), if the entity has more Current Assets over it’s over its Current Liabilities it indicate that the entity
can pay off its current obligation using their available current assets.
Financial flexibility is the ability to take effective actions to alter the amounts and timing of cash flows
so that it can respond to unexpected needs and opportunities. Businesses must be aware of all opportunities and
threats that can affect the business. An entity must have the capacity to adapt on the changes and react
immediately on the events that occur to the entity.
Solvency is the availability of cash over longer term maturing obligation as they fall due. Business
owners must look on every direction of the business both the short term and long term events. In dealings with
business obligation there should have an adequate resources to settle all obligations that will mature. Business
can minimize the potential losses from unsettle obligations through rigid planning activities and monitoring of
all business events.
(Please see JRA Balance Sheet –Sheet 3 at Microsoft Excel)
Income Statement
This is a statement which shows the performance of the enterprise for a given period of time. It
summarizes the revenues earned and expenses incurred for that period of time. The performance of the
enterprise is primarily measured in terms of the level of revenues earned by the enterprise. It is also useful in
predicting the capacity of the enterprise to generate cash flows from its existing resource base.
Like the balance sheet, income statement must be interpreted to have a clear understanding of its result
especially because various users are putting more emphasis on the profitability of the business. The information
that will be provided must be accurate and sufficient to help them make good decisions.
(Please see JRA Balance Sheet – Sheet 4 at Microsoft Excel)
Cash Flows Projection
The cash flows projection is a forecast of the cash the business anticipates to receive and disburse
during the course of a given span of time. It is useful in the financial management of a business especially in
planning its future cash requirements to avoid a crisis in liquidity. Cash flows projection is also called cash
flows forecasting or cash flows management.
Cash flows projection is an important input in the valuation of assets, budgeting and capital structure of
an enterprise. In the context of small and medium enterprises, cash flows projection is much simpler, planning
what cash will come into the business in order to ensure and managed to avoid cash shortage. The business
owners need to learn fast that “Cash is King”, therefore they have to master the cash flows forecasting.
Projecting the timing of cash flows will minimize the potential crisis on cash because the owner has
visualize the expected sources of cash that can be generated in the business as well as the potential spending
necessary to operate the business.
In a cash flows projection, the first step is to determine the minimum amount of cash to be held by the
entity that can suffice the needs of the business operation. Sales forecast is the most important part of financial
forecasting. It is the key point in determining the expected result of the operation. Sales are the primary source
of cash in the business. Aside from sales it is important to include other sources of cash that will come in the
business such as loans proceeds and sale of long-term assets.
After identifying the sources of cash the next step is determining the cash disbursement or the
expected usage of cash in the business. This will include payment of supplies, salaries, rent, and other expense
like payment of maturing obligations and cash withdrawal by the owner. These are the necessary steps in cash
flows projections. This will help the entity to determine if there is a need for borrowings due to cash shortage
while if there is cash surplus it will be invested to other ventures.
These are the step in cash flows projection to be reported in a cash budget:
1. Determining an adequate minimum cash balance

2. Forecasting sales
3. Forecasting cash receipts
4. Forecasting cash disbursements
5. Estimating the end of the month cash balance
(Please see Earring Unlimited Cash Budget – Sheet 5 at Microsoft Excel)
Summary of Sales and Cash Receipts
Summary of sales is a report that allows you to view the total sales between specific date ranges. It
provides a detailed insight of the daily sales, including, but not limited to sales, fees, discounts and taxes. It
provides awareness on how the sales are generated. It may incorporate the information of sales volume
observed per item or group of items; how many new or current accounts were contacted and any costs that were
involved in promoting and selling the products. This report will give a complete understanding of sales
movement and you can follow the trends and analyze its pattern. This will aid the management/owner in
establishing a reliable projection of sales in the next operation, which will minimize the potential losses that will
arise from understatement or overstatement of sales.
Cash receipt is a printed document used by a business each time that cash is received for goods or
services rendered. A summary of cash receipts is prepared to sum up the issued receipts within a specific period
of time whether daily, weekly or monthly basis. It presents a thorough explanation of the inflows of cash into
the business. It provides a breakdown on cash received which will be used in disbursements of expenses.
It is important to know the timing of cash inflow to cash outflows. The inflow and outflow must have a
synchronized movement to avoid unnecessary borrowing and spending in the business. By preparing a summary
of cash receipts, you can decide when to engage in borrowings to help defray the expenses or when to use the
cash for investment.

Activity
The following are available for MTO Enterprises for year 2015: Complete the Income Statement with the
necessary details.
REQUIRED:
1) Compute the missing percentages in the above statements.

2) Evaluate the entity’s liquidity, financial flexibility and profitability.
(Please see MTO Enterprises Income Statement– Sheet 6 at Microsoft Excel)
(Please see MTO Enterprises Balance Sheet– Sheet 7 at Microsoft Excel)
LESSON 19
Prepare an Income Statements and Balance Sheet
Let’s Start!
Income Statement
Income Statement is a statement which shows the performance of the enterprises for a given period of time.
This statement present all revenues earned within the given period as well the expenses incurred. This income
performance used to be known as the “result of operations” of the enterprise consisting of revenues, costs and
expenses, and the operating result which can be either profit or loss. Their relationship can be expressed as
follows:
REVENUES P XXX
- COSTS AND EXPENSES XXX
= PROFIT (LOSS) P XXX
In the preparation of Income Statement you must consider the following steps:
1. Setting up your Income Statement

1.1. Select a time period for your statement.
Income statement measures the revenues and expenses during a certain period of time. Typically the
statements are generated on a monthly, quarterly or yearly basis.
1.2. Format the income statement header

At the top of the document, write the name of the business, directly beneath the company name, write
title of the report (income statement), and after that is the period o time that coves the income
statement.
1.3. Format the body of the income statement

The income statements have four distinct sections.
 The first section of the income statement calculates the net sales (Nets Sales = Sales –
Sales Discounts – Sales Return & Allowances).
 The second section is the cost of sales where it presents the details of the cost of the sold
units during the given period.
 The third section is the operating expenses where all expenses incurred whether paid or
not it was presented according to the nature of expenses.
 The fourth section of the income statement calculates the net profit or net loss as the
results of operation.
2. Preparing the Gross Profit Section
2.1. Write the “Sales” below the income statement header

2.2. Write the “Cost of Sales below “Sales”.
2.3. Label the next line “Gross Profit”.
2.4. Subtract cost of sales from sales revenue. The resulting value is the gross profit for the period.
3. Preparing the Net Profit Section
3.1. Write all the types of operating expenses.

3.2. Sum the operating expenses line item to determine total operating expenses.
3.3. Label the next line “Net Profit”.
3.4. Transfer the balance of net profit to the owner’s equity.
Usually, the first statement that you have to prepare is the Income Statement because it is much easier to gather
the data and the formation is so simple.
(Please see JRA Traders Income Statement– Sheet 8 at Microsoft Excel)

Balance Sheet
It is a financial statement which shows the financial position of an enterprise as of a particular period. It consists
of assets, liabilities and owner’s equity.
In preparing the balance sheet, it may not be necessary to make any further analysis of the data. The needed data
is the balances of the assets, liabilities and the owner’s equity accounts. A balance sheet is of two forms: Report
form and Account Form.
In the preparation of balance Sheet, you must consider the following steps:
1. Setting up your Balance Sheet

1.1. Use the basic accounting equation to make a balance sheet
This is Assets = Liabilities + Owner’s Equity. Thus the balance sheet has three sections:
Assets, which are the resources owned; Liabilities, which are the entity’s debts; and Owner’s
equity which is the investment by the owner.
1.2. Choose the date for the balance sheet
1.3. Prepare the header of the balance sheet
2. Preparing the Assets Section

2.1. List all current assets
2.2. List all non-current assets
2.3. Add – up the currents and non-current assets totals and labels this amount “Total Assets”.
3. Preparing the Liabilities Section

3.1. Determine current liabilities
3.2. Determine all long-term liabilities
3.3. Add the current liabilities subtotal to the long-term liabilities subtotal and label this line
“Total Liabilities”.
4. Calculating Owner’s Equity and Totals

4.1. Calculate the owner’s equity
4.2. Add the “Total Liabilities” and “Total Owner’s Equity”.
(Please see JRA Traders Balance Sheet– Sheet 9 at Microsoft Excel)
(Please see Let’s Try This! No. 20 – Sheet 10 at Microsoft Excel)
LESSON 20
Identify where there is Profit or Loss for Business
Let’s Start!
The primary motive of a person engaged in business is profit. To create opportunities to others by
providing employment might only be incidental depending upon the nature of the business and the amount of
capital invested.
Accounting helps the owner to know how much profit or loss does the business make. By putting into
records the revenues earned and the expenses incurred is already a simple accounting itself. Since risk is
inherited to every business activity, the results of operations may not always turn out to be as expected.
Business sometimes experience obstacles and thus incurs losses. However, a business may stand at a point
much better than incurring losses. That is, if the business cannot make profits, it cannot also incur losses. This
can happen in an instance where the total costs and expenses incurred are equal to total sales or revenues for a
given period. When the business is in “no profit, no loss” situation it could be referred that there is a
“breakeven” or “breakeven point” of sales.
Illustrated below are three possible results of the business operations:

Profit Loss Breakeven
Revenue P250,000 P250,000 P250,000

Less: Costs and Expenses 220,000 270,000 250,000
Profit (Loss) P30,000 (P20,000) -0-
Business as an entity has some goals to attain. Its success depends to a great extent on the ability of the
management or owner to render decisions in behalf of the business. It is crucial to the business to identify the
results of the operation in order to determine if there is a need to make changes on the existing situation or
simply retain the current operation. All this are the responsibility of the management or the owner to make a
sound judgment to help sustain the business and grow in a competitive market.

Activity
Determination of Profit and Loss
The following relates to the result of operation of the business:

Find the missing revenues, expenses and profit (loss) in five cases.
CASE 1 CASE 2 CASE 3 CASE 4 CASE 5
Revenues P100,000 P75,000 ? P165,000 P120,000

Expenses 85,000 ? 90,000 ? 150,000
Profit (Loss) ? P20,000 (P20,000) P -0- ?
LESSON 21
Generate Overall Report on the Activity
Let’s Start
Reports are documents that communicate specific information about the business to other individuals.
These individuals are the employees and sometime they are investors. In a business, information plays a vital
role because it will help the business to prosper or to solve problems of the business. The information
communicated may vary depending on the recipient.
Business reports are written to communicate. Sometimes they are written as a means to attract business
investors. Business reports are also written for employees, to keep them aligned with the business goals and
objectives. Whichever recipient the report is written for, the purpose is to communicate specific information
that is important in the business operation.
Financial Statement is a form of a business report. It highlights the results of operation and the financial
condition of the business. This type of business report is aimed to provide quantitative information about the
business within a specific period. It can be used to inform employees about the financial standing of the
business, as well as to the owner about the status of the operation (profit or loss) of the business. The business
must prepare a financial statement to gather enough information to help determine business decisions. It also
serves as basis in forecasting for future plans of the business.
A business report can be the best way for the business to communicate vital financial and background
information to other individuals. A detailed report about the financial and non-financial aspect of the business
must be prepared to reveal the strengths and weaknesses of the business. The gathered information will be used
to improve operational weaknesses and reinforce the business strengths.
BUSINESS PLAN PARTS AND TEMPLATE
1. COVER SHEET – reflected here are the name of the business, the proponents and date of business plan
presentation.
2. TABLE OF CONTENTS – this should be limited to one page only to allow readers find the sections easily.
3. EXECUTIVE SUMMARY – purpose and objectives of the plan should be clearly stated here including a
brief summary of marketing, financial, operational and management or organizational plans. A brief description
of target market and products and the legal structure of the business are also in this part.
4. DESCRIPTION OF THE BUSINESS – the business opportunity perceived by the group should be stated
including the explanation of the product or service. The advantages and disadvantages relative to competitors
should be clearly identified. Growth opportunities should also be noted.
5. MARKETING PLAN – the 4Ps and 7Ps (for service-oriented business) of marketing should be discussed
including the marketing strategies in entering the market and gaining market share.
6. MARKET ANALYSES – a clear description of the target market including their size and nature and reason
for choosing should be reflected here. Direct and indirect competitors must also be carefully studied here.
Competitors’ locations, suppliers, channels of distribution, pricing and unique practices must be all noted.
7. MANAGEMENT/ORGANIZATIONAL PLAN – the description of management personnel and supervisory

procedures must be shown here including the number of employees required. Job descriptions for each job title
including the respective salary must also be reflected. An organization chart is a crucial part of this section. The
requirements for licenses, permits and other regulations affecting the business must also be listed.
8. OPERATIONAL PLAN – An operational plan is not only for manufacturing –related businesses but for
every business. The location, layout, facilities, equipment, machinery, fixtures and furnishings must be shown
including the quality control, inventor and production methods. Purchasing methods for raw materials and
finished goods should also be stated.
9. FINANCIAL PLAN – it is paramount that the projections are reasonable and conservative. A sharp increase
on the second year of business operation is not necessary. Remember that lenders know when assumptions of
the plan are credible. This section of the business plan should contain the following:
a. An analysis of capitalization plan that states the sources and uses of funds
b. Capital equipment list and start-up costs – equipment, machinery, fixtures and furnishings which could
qualify as collateral for future loans
c. Summary of how you’ll use the money on capital expenditures
d. ROI
e. Projected income statements – monthly for the first year and annually for the next three years.
f. Projected cash flow – monthly for the first year and annually for the next three years.
g. Break-even analysis identify the point at which expenses equal gross revenue or the sales revenue less the
cost of goods sold (no profit, no loss).
10. APPENDICES – resumes of manager and supervisor, summaries of market research and technical
descriptions of the product or process must be attached in this part.
SAMPLE BUSINESS PLAN TEMPLATE
[ LOGO OF SCHOOL]
[ NAME OF SCHOOL]
[ADDRESS OF SCHOOL (St. and City)]
A BUSINESS PLAN ON [ INSERT NAME OF BUSINESS]
IN PARTIAL FULFILLMENT OF THE COURSE
APPLIED ENTREPRENEURSHIP
SUBMITTED BY
[INSERT NAME OF GROUP MEMBERS ALPHABETICALLY]
[ DATE (MONTH AND YEAR)]
This Business Plan is confidential and is the proprietary property of [INSERT YOUR BUSINESS NAME
HERE]. No reproduction of any kind or release of this document is permissible without prior written consent
of [INSERT YOUR BUSINESS NAME HERE]. [
Table of Contents
Page
Section I. Executive Summary………………………………………………………………….
Section II. Description of the Business…………………………………………………………
Section III. Marketing Plan and Market Analysis………………………………………………
Section IV. Management/Organizational Plan………………………………………………….
Section V. Operational Plan…………………………………………………………………….
Section VI. Financial Plan………………………………………………………………………
Section VII. Appendix…….…………………………………………………………………….

Section I. Executive Summary
[Write this when all of the other parts of the business plan are done.]
Section II. Description of the Business

A. Company Overview
1. [COMPANY OVERVIEW]
2. [LOCATION –BENEFITS, LIMITATIONS, ZONING]
3. [LEGAL STRUCTURE AND WHEN FORMED]
4. [TYPE –SERVICE, RETAIL, MANUFACTURING, CONSTRUCTION]
5.[SIZE, SALES, NUMBER OF EMPLOYESS, SQUARE FOOTAGE OF FACILITIES]
6. [HISTORY HIGHLIGHTS]
7. [MISSION – WHY YOU EXIST, YOUR BUSINESS VALUES]
8. [VISION – WHERE YOU WANT TO GO; NONSPECIFIC, DIRECTIONAL, MOTIVATIONAL]
9. [IMPORTANT COMPANY FEATURES – CUSTOMERS, EMPLOYEES, OTHER STAKEHOLDERS,
VALUE]
B. Nature of the Business
1. [WHAT PRODUCT/SERVICE YOU SELL?]
2. [FOR WHAT NEED, PROBLEM, and OPPORTUNITY? BENEFIT TO BUYER?]
3. [FOR WHAT MARKET AREA AND TARGET AUDIENCE? MARKET POTENTIAL?]
4. [WHAT ARE THE ALTERNATIVES TO YOUR PRODUCT/SERVICE? YOUR COMPETITIVE
ADVANTAGE?]
C. Key Characteristics of the Industry
1. [BRIEF SUMMARY OF THE SIZE OF THE INDUSTRY, TYPE OF BUSINESSES, HISTORY,
TRENDS, CRITICAL ISSUES, AND YOUR BUSINESS FIT IN THE INDUSTRY]
D. Brief Financial Highlights
1. [SALES FORECAST, BREAK-EVEN POINT, FINANCING IF NEEDED –HOW MUCH, FOR WHAT
PAYBACK, WHEN?]
E. Strategic Management
1. [HOW YOU ADDRESS INTERNAL STRENGTHS AND WEAKNESSES, EXTERNAL
OPPORTUNITIES, AND THREATS]
2. [SUMMARY OF SHORT-RANGE AND LONG-RANGE GOALS]
3. [KEY MEASURABLE DRIVERS THAT IMPACT YOUR COSTS, REVENUE, AND BUSINESS
GOALS – E.G., NUMBER OF CLIENTS OR PROJECTS PER YEAR, AVERAGE SALES PER CLIENTS,
RETURN ON INVESTMENT, INVENTORY TURNS, PRODUCT REJECTION RATE, QUALITY,
CAPACITY, COST OF LEAD/SALE]
F. Compelling, Market-Driven Reason Why This Business Will Succeed
1. [YOUR IDENTITY – MAKE THIS A “30 –SECOND COMMERCIAL” OF WORDS IN PRINT, AN
ELEVATOR STATEMENT OF THE BENEFITS OF YOUR BUSINESS PLAN TO THE CUSTOMER
WHO IS READING IT.]
SECTION III. Marketing Plan and Market Analysis

A. Business, Industry, and Situation Overview
[GENERAL DESCRIPTION OF THE BUSINESS]
B. Target Market and Trade Area
[WHO AND WHERE IS YOUR TARGET MARKET?]
C. Products/Services
[WHAT NEEDS, PROBLEMS, AND OPPORTUNITIES DOES YOUR PRODUCT OR SERVICES
ADDRESS?]
D. Competitive Advantage
[WHAT IS YOUR COMPETITIVE ADVANTAGE OR POSITIONING?]
E. Marketing Strategies
[WHAT ARE YOUR OVERALL MARKETING STRATEGIES?]
F. Sales Forecasts and Assumptions
[HOW MUCH MONEY WILL YOU GENERATE; INCLUDE A SALES SUMMARY FORECAST AND
NARRATIVE IN YOUR ASSUMPTIONS – HOW MUCH REVENUE THE PROJECT WILL DEVELOP.]
G. Measures of Success
[WHAT KEY FACTORS YOU WILL MEASURE AND WHEN? SALES PER CUSTOMER, NUMBER
OF CUSTOMERS PER DAY AND MONTH, EXPANSION OF TRADE AREA, PRODUCT RETURN
RATE, ETC.?]
H. Milestones and Measures
1. Goals
a.[WHERE DO YOU WANT TO GO? VISION; SHORT –AND LONG-RANGE STRATEGIC
OBJECTIVES/PRIORITIES;GOALS THAT ARE SPECIFIC, MEASURABLE, ATTAINABLE,
REWARDING, AND TIMED]
b. [TACTICS –HOW ARE YOU GOING TO GET THERE? MANAGEABLE TASKS AND PRECISE
ACTION PLANS]
c. [DATA GATHERING AND ANALYSIS – TRACK AND ADJUST TO PROGRESS.]
d. [HOW DOES PERFORMANCE COMPARE TO TARGET MEASURES? WHAT ARE YOUR KEY
MILESTONES AND CRITICAL SUCCESS FACTORS? WHAT ARE YOUR KEY MILESTONES AND
CRITICAL SUCCESS FACTORS? WHAT “BENCHMARK” INFORMATION DO YOU NEED FOR
DATA-BASED DECISIONS? WHO WILL MEASURE WHAT/WHEN? MEASURE WHAT IS
MEANINGFUL.]
2. Scenario Planning
a. [LONG VIEW: IF/THEN –WHAT ARE KEY CROSSROADS, MILESTONES, AND OTHER
FACTORS THAT WILL PROMPT YOU TO CONTINUE OR MODIFY STRATEGIC DIRECTIONS?]
3. After the Plan
a. [WHAT DO YOU NEED TO KEEP DOING OR PRESERVE? STOP DOING, DESTROY, AND LET
GO? START DOING, CREATE, OR CHANGE?]
b. [INCLUDE PROJECT NOTEBOOKS, PORTFOLIOS, CUSTOMER COMMENTS, RECOGNITION,
AWARDS, MENTORING, CONTINUING EDUCATION, INDIVIDUAL, AND ORGANIZATIONAL
DEVELOPMENT – TIME MANAGEMENT, ORGANIZATIONAL SKILLS, CREATIVITY.
Section IV. Management/Organizational Plan

A. Owner and Managers
[IDENTIFY EACH INDIVIDUAL AND DESCRIBE HIS OR HER EXPERIENCE, KEY SKILLS, AND
SKILL LEVELS.]
B. Employees
[HUMAN RESOURCES POLICIES AND PROCEDURES IN AREAS SUCH AS JOB ANALYSIS, JOB
DESCRIPTIONS, HIRING STRATEGY, COMPENSATION, PERFORMANCE EVALUATION
PROCESS, EMPLOYEE TRAINING, RETENTION, MOTIVATION]
C. Consultants and Advisors
[IDENTIFY ATTORNEYS, ACCOUNTANTS, INSURANCE AGENTS, ETC,]
D. Organizational Structure/Communications
[INDIVIDUAL JOB DESCRIPTIONS LISTING DUTIES AND TASKS WITH REPORTING
STRUCTURE]
E. Individual and Organizational Development
[AS THE BUSINESS OWNER, HOW WILL YOU PREPARE FOR ONGOING CONTINUOUS
IMPROVEMENT FOR YOURSELF AND OTHERS THROUGHOUT THE ORGANIZATION?]
F. Management Strategies
[HOW WILL YOU MAKE THE MOST OF THE PEOPLE INVOLVED WITH YOUR BUSINESS? WHAT
CAN YOU DELEGATE OR OUTSOURCE? WHAT HELP AND SUPPORT DO YOU NEED? HOW
WOULD YOU DESCRIBE YOUR ORGANIZATIONAL CULTURE?]
SECTION V. Operational Plan

A. Location and Equipment
[WHERE IS THE BUSINESS LOCATED AND CONDUCTED? WHY: FEATURES? ANY ZONING
ISSUES? WHAT EQUIPMENT AND INVENTORY ITEMS ARE REQUIRED TO START AND RUN
YOUR BUSINESS? WHAT DO YOU CURRENTLY OWN? WHAT WILL YOU LEASE? WHAT WILL
YOU PURCHASE?]
B. Hours of Operation
[WHEN DOES YOUR BUSINESS OPERATE – REGULAR BUSINESS HOURS, SEASONAL/SPECIAL
EVENTS?]
C. How do you Design, Source, Purchase, Produce, and Distribute?
[NEW PRODUCT DEVELOPMENT, SOURCING, PRODUCTION, AND INVENTORY PROCEDURES,
SALES AND DISTRIBUTION, QUALITY]
D. Data Management
[HOW DO YOU MANAGE DATA – ENTRY, PROCESSING, BACK-UP, CONTACTS,
CORRESPONDENCE, BOOKKEEPING, AND OTHER FILES?]
E. Intellectual Property
[HOW DO YOU PROTECT DESIGNS, COPYRIGHTS, AND OTHER INTELLECTUAL PROPERTY?]
F. Risk Management
[HOW DO YOU PREVENT AND MANAGE RISK – FINANCIAL, LIABILITY, ENVIRONMENTAL
AND SAFETY, SECURITY, RECORD RETENTION, SECURITY OF DATA (COMPANY, EMPLOYEE,
CUSTOMER, SUPPLIER). POLITICAL RISKS, LEGAL RISKS, LOSS, DECLINE/GROWTH, OTHER?]
G. Insurance
[WHAT HAVE YOU LEARNED FROM AN INSURANCE BROKER ABOUT THE COSTS AND TYPES
OF INSURANCE YOU NEED?]
H. Taxes
[WHAT LOCAL, STATE, AND FEDERAL REGULATIONS AND TAXES APPLY TO YOUR
BUSINESS?]
I. Licenses and Permits
[WHAT PERMITS AND LICENSES HAVE YOU DETERMINED APPLY TO YOUR BUSINESS?]
J. Business Cycles
[WHAT DO YOU KNOW ABOUT YOUR BUSINESS CYCLES? PRODUCTION? DELIVERY? SALES?
INVENTORY? FINANCIALS?]
K. Operational Strategies
[HOW WILL YOU MAKE THE MOST OF YOU LOCATION, PURCHASING, AND PRODUCTION
PROCESSES?]
Section VI. Financial Plan

A. Financial Assumptions
1. [DISCUSS ASSUMPTIONS MADE TO ARRIVE AT FINANCIAL PROJECTIONS – HOW DID YOU
DETERMINE YOUR COST OF PRODUCTION, PRICING, DOLLARS OF SALES, ETC.?]
2. [IF SEEKING FUNDING, DISCUSS HOW MUCH MONEY YOU ARE SEEKING AND WHAT THAT
MONEY WILL BE USED FOR. HOW WILL THE MONEY BE REPAID? DO YOUR FINANCIAL
WORKSHEETS SUPPORT THIS?]
3. [DISCUSS YOUR BREAK EVEN ANALYSIS.]
4. [DESCRIBE WHERE NEEDED FUNDS WILL BE OBTAINED AND WHAT ALL FUNDS WILL BE
USED FOR (E.G., PERSONAL CONTRIBUTION OF 20% USED TO ACQUIRE EQUIPMENT, LOAN
FOR BUILDING, ETC.)]
B. Bookkeeping, Record-keeping, Accounting System & Process
1. [RATIO ANALYSIS – LIQUIDITY, LEVERAGE, ACTIVITY, PROFITABILITY, GROWTH}
2. [BUSINESS FINANCING: PERSONAL SAVINGS, EQUITY FINANCING, RISK AND REWARDS;
DEBT FINANCING – CAN YOU PAY? DEBT RATIO? WILL YOU PAY? CREDIT SCORE? WHAT IF
YOU DON’T PAY? OTHER SOURCES OF FINANCING]
3. [DISCUSS YOUR BREAK EVEN ANALYSIS.]
4. [DESCRIBE WHERE NEEDED FUNDS WILL BE OBTAINED AND WHAT ALL FUNDS WILL BE
USED FOR (E.G., PERSONAL CONTRIBUTION OF 20% USED TO ACQUIRE EQUIPMENT, LOAN
FOR BUILDING, ETC,)]
C. Financial Worksheets
1. [START-UP OR EXPANSION COSTS WORKSHEET]
2. [CASH FLOW PROJECTIONS]
3. [BALANCE SHEET]
4. [PROFIT AND LOSS STATEMENT]
5. [PERSONAL FINANCIAL STATEMENT]
6. [BREAK EVEN ANALYSIS]
Section VII. Appendix

[IN THE APPENDIX, ATTACH ANY SUPPORTING INFORMATION SUCH AS RESUMES,
PROMOTIONAL MATERIALS, CONTRACTS WITH CUSTOMERS, AND SO FORTH.]

ACTIVITY
Prepare the final draft of your Business Plan for presentation, defense and critiquing.

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MESSAGE TO THE STUDENTS

PART I (Subject Information and Learning Guide Direction)

PART III (Practice)

1st Quarter (Week 1-2)

Most Essential Learning Competencies : Discuss the relevance of the course

1st Quarter (Week 3-6)

Most Essential Learning Competencies :

1st Quarter (Week 7-9)

Most Essential Learning Competencies :

1. A business record is either a hard or digital copy of business dealings.

III. ESSAY. Answer concisely. (Explain 5 points each)

1. What is your realization about Entrepreneurship?

III. Matching Type

______1. It is chartered by the state in which it is headquartered, A. Business reporter

1-5. What are the essentials in Search for Business Ideas?

6-10. The 5 strategy on planning for small business.

11-15. Give at least 5 ways in marketing the small business.

Types of Small Business Enterprise

Characteristics of Small Business Enterprise

1. Managed by the owner

Search for Business Ideas

Strategize Planning for Small Business

2. Understand How Strategy Drives the Plan

3. Link Your Vision to the Annual and Quarterly Priorities

4. Establish a Rhythm for Success

2. Put your customers first.

3. Know your target market.

4. Understand that marketing is not advertising.

5. Set sales goals and targets.

6. Get a handle on the four Ps of marketing.

FORMS OF SMALL BUSINESS OWNERSHIP

Career Opportunities in Entrepreneurship

4. Research and Development

Let’s Try This! No. 1

Chosen Career Reasons

Your market consists of:

1. Focus on innovation and the competition

3. Focusing only on revenue

Let’s Try This! No. 2

Name of Business Establishment Products/Services Offered

Let’s Try This! No. 3

Unique Selling Proposition

1. Put yourself in your customer’s shoes.

2. Know what motivates your customers’ behavior and buying decisions.

Let’s Try This! No. 4

1. How did you identify your customers?

2. What were your considerations in selecting your customers?

3. Explain how your product/services become unique to other product/s.

Six Steps in Defining your Target Market

1. Understand the problems that you solve.

2. Paint a picture of the customer.

3. Who will gain from the value in your offer?

4. Think about your market

5. Look internally at your company

6. What else is available?

 Why am I uniquely placed to solve the problem?

Let’s Try This! No.5

Name Type of Customer

1. Who they are

3. Why they buy

4. When they buy

5. How they buy

6. How much money they have