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Entrepreneurship
Quarter 2 – Module 5:
Developing a Business Model

1
 What I Need to Know
Good day! Welcome to the fifth module of your subject in Entrepreneurship for this quarter.
In the previous module you identified the qualified people and their functions in your proposed
business. Here, you will be learning how to develop your proposed business and forecast its
financial aspect.

At the end of this lesson, you are expected to: Develop the business model
(TLE_ICTAN11/12PC-0h-j-13); Forecast the revenues of the business (TLE_ICTAN11/12PC0h-
j-14); Forecast the costs to be incurred (TLE_ICTAN11/12PC-0h-j-15); Compute for profits
(TLE_ICTAN11/12PC-0h-j-16).

The module discusses the topic on:

Lesson 1 - Developing the Business Model
Lesson 2 - Forecasting the Revenues of the Business, the Costs to be Incurred and
Computing Profits

After going through this module, you are expected to:

1. determine the components and importance of preparing a business model;
2. forecast the revenues of the business, the costs to be incurred and the profits to be earned;
and,
3. prepare the business plan matrix.

GENERAL INSTRUCTION: Write all your answers on the answer sheet or in a

separate paper/notebook as per advised by the subject teacher.

What I Know
Hello! Let’s begin with challenging our minds in developing a business plan model. Answer this test
to find out what you already know about the lesson you are about to take in this module. Encircle
the letter of your answer.

1. What model is used by the entrepreneurs to generate profit which includes the products or
services that a business plans to sell, identified target market, and anticipated expenses?
a. Business Plan Model b. Business Model c. Feasibility Study d. Marketing
Model
2. Which of the following components of a business model shows the forecasts revenues, costs to
be incurred, and possible profits to be earned?
a. Product promotion b. Financial projections c. Channel of distribution d. SWOT Analysis

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3. Which of the following is prepared when an entrepreneur wants to take captures, in writing, the
essence of where he wants to take his business, and inspire to reach the companies’ goals?
a. Objective Statementb. Mission Statement c. Vision Statement d. Business description

4. What is the difference between the expected income and the total operating costs over the first
year, including any loan payment?
a. sales b. capital c. gross profit d. cost

5. When an entrepreneur is making a clear description of the products/services, it’s competitive

advantages, customer and others benefits to give the reader a clear idea of the business’
intentions, he is ____.
a. making a description of the business c. making the business’ vision statement
b. making the business’ objectives d. making the business’ mission statement

6. What statement in the business model that includes statement of purpose and explains how the
company plans to achieve the stated goals?
a. Objective Statementb. Mission Statement c. Vision Statement d. Business description

7. What do you call that amount of money that is needed to buy the facilities and equipment, to
register and license the business and get the necessary certificates?
a. Working Capital b. Start-up Capital c. Savings d. Income

8. What do you call that capital which includes the costs of raw materials, packaging, staff training,
product promotion etc. that have to be made before he business begins to generate income from
sales of the product?
a. Working Capital b. Start-up Capital c. Savings d. Income

9. What are calculated before the start of the business to determine whether the entrepreneur’s
savings (known as the owner’s equity) will be sufficient to start the business without loan?
a.Sales and Profit c. Start-up Capital and Initial Working Capital
b.Sales and Expenses d. Start-up Capital and Sales

10. What are these expenses that have to be paid even if no production takes place and those that
depend on the amount of product that is produced?
a. Operating Cost b. Fixed Cost c. Variable Cost d. Cost

11. Which of the following components of a business model shows the organizational structure of
the proposed business and their functions?
a. Product promotion b. Human resource c. channel of distribution d. SWOT Analysis

12. Which of the following components of a business model shows the Strengths, Weaknesses,
Opportunities, and Threats of the components of your proposed business?
a. Product promotion b. Human resource c. channel of distribution d. SWOT Analysis

13. Which of the following components of a business model shows the set of steps it takes for your
product to get in the hands of the key customer or consumer.
a. Product promotion b. Human resource c. Channel of distribution d. SWOT Analysis

14. Which of the following components of a business model shows how you will communicate your
product or service to your customers?
a. Product promotion b. Human resource c. Channel of distribution d. SWOT Analysis
15. Which of the following components of a business model shows where your proposed business is
located?
a. Product promotion b. Business location c. Channel of distribution d. SWOT Analysis
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Lesson Developing a Business Model
1
Hello dear Entrepreneur! This module would assist you on developing your own business
model, forecast the revenues to be gained and the costs to be incurred, and compute the profits that
you will possibly earning in your proposed business.

What’s In
Before going through in this module, let’s recall your understanding on recruiting qualified
people for one’s business.

Activity 1: “Remember and Find It”

Instruction: Read the statement carefully and find the missing word inside the box to complete each
statement.
labor business right people needs

1. Human resource management is the management of an organization’s workforce or _________.

2. Human resource management is responsible for ensuring that a business complies with
employment and ________laws required by the government.

3. To recruit the best people for your company you need to know what your company _______.

4. Hiring the _____ person in your company is essential.

5. When you hire the right people, you can focus on running your ________.

Notes to the Teacher

Teacher facilitates an activity that enables learners to use previously taught lesson.

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 What’s New
You have learned in the previous lesson about recruiting of
qualified people for one’s business which might give you the
excitement and motivation to move forward in order to come up with
a business model.
Now let’s see your excitement and
motivation! Activity 2: “Identify and It will
be Fine!”

Instruction: Identify some of the components of a business model

and find the best answer that describes it from the box
below.
 Answers

“We envision extra ordinary dining experience

and the best in the multi cuisine restaurant
business.”

- To offer excellent food and service.

- To expand our marketing and advertising
in neighbouring cities

“We provide great tasting food and have an

efficient and friendly service”

Month Jan Feb March

Income 50 60 90
(P’000)
Expenses 60 80 95
(P’000)
Cumulative (10) (30) (35)
Profit/loss
(P’000)

Vision Objectives Channel of Financial Projection

distribution
 Mission Product promotion Human Resource SWOT Analysis

Processing Questions:

Instruction: Based on the activity, answer the following questions:

1. What do you think is the purpose of letting you identify each item in
the first column of the matrix?
_________________________________________________________________________
____

2. Give additional contents that should be included in the matrix. Give

your reason/s why we should include it.
_________________________________________________________________________
____

What is It
Hello! So you have just started to identify some of the essential
components of a business model in your previous activity.
Inherent in any business plan is a description of the Business
Model chosen by the entrepreneur as the one that they feel will best
ensure success. Based upon their analysis from the essential initial
research stage, an entrepreneur should determine how each element
of their business model—including their revenue streams, cost
structure, customer segments, value propositions, key activities, key
partners, and so on—might fit together to improve the potential
success of their business venture.
Business Model
The term business model refers to a company's plan for making a
profit. It identifies the products or services the business plans to sell,
its identified target market, and any anticipated expenses.
Importance of Business Model
A business model is concerned with how you design your business to:
 • meet customers’ needs (offer something that they want to buy);
• generate a profitable revenue stream from sales;
• build a business that has a sustainable competitive advantage – in other
words, it can’t easily be replicated; and provide opportunities for
growth.

Essentially, using a business model helps you make better decisions about
your business.

For established businesses, it improves how teams make decisions

about the future of the business.

For start-ups, it helps entrepreneurs formulate the best solution

to meet customers’ needs and at the same time be profitable.
Whenever I use with entrepreneurs they end up with a much deeper
understanding of their options and how they need to put a business
together.
The business model framework helps you to logically put together
the pieces of a business, see how they fit together and then make
decisions about which business model is the best fit for a strategy and
market position.

Here is a list of essential components included in a business model:

Description of the Business The structure of your business – it is the type of operation
e.g. wholesale, retail, food service, manufacturing or
service-oriented. Also state whether the business is new or
already established.
Vision A vision statement captures, in writing, the essence of
where you want to take your business, and can inspire
you and your staff to reach your goals.
Mission A mission statement is a simple statement that explains
your company’s goals. It’s a summary of what your
company does for its customers, employees, and owners.
Objectives Objective statements should ultimately identify company
goals. They should also include a statement of purpose

and an explanation of how the company plans to achieve

the stated goals.

Product/services offered A clear description of the products/services, it’s

Location of the Business
(Draw location map)
Human Resource
Sources of merchandise
competitive advantages, customer benefits, etc.
Complete to give the reader a clear idea of your intentions
- Emphasize any unique features or variations from
concepts that can typically be found in the industry.
It is where your proposed business is located.
The organizational structure of your proposed business
and their functions.
If you created your own products, include where to source
your materials, if not, where to source your product, thru
manufacturers, wholesalers, or retailers.
Product Promotion
Channel of distribution
SWOT Analysis
Example: SWOT Analysis
Factors
Describe how you will communicate your product or
service to your customers
It is the set of steps it takes for your product to get in the
hands of the key customer or consumer. Distribution can
also be physical or digital, depending on the kind of
business and industry.
It shows the Strengths, Weaknesses, Opportunities, and
Threats of the components of your proposed business
Strengths Weaknesses Opportunities Threats

Product/Services ➢ Unique ➢ The main ➢ Only our ➢ The product

taste ingredient store process can
➢ Resources is produced produces the easily be
are found in season product replicated by
in the area around the other business
area owners.
Price

Management

Product
Promotion
Location

Financial Projections Shows the forecasts revenues, costs to be incurred,

and possible profits to be earned.
 Lesson Forecasting the Revenues of the

2 Business, the Costs to be

incurred and Computing Profits

Forecasting the Revenues of the Business and the Costs to be Incurred

Having completed the study of technical feasibility, the
entrepreneur should then have sufficient information to determine
the costs that are likely to be involve in production. Additionally, the
market survey will have supplied information about the sale price that
could be achieved for the new product. The entrepreneur is therefore
in a position to calculate the expected income and expenditure and
the gross profit that can be achieved.
1. Start-up Costs
The start-up capital is the amount of money that is needed to
buy the facilities and equipment, to register and license the
business and get the necessary certificates.

Working capital includes the costs of raw materials,

packaging, staff training, product promotion etc. that have to be
made before the business begins to generate income from sales of
the product.

Example of Start-up costs for burger production

Start-up cost Amount (Php)
Renovation of space for the store 5,000
Equipment 10,000
Registration of business 2,000
Business License 2,000
Hygiene inspection and certificate 1,500
Staff training 3,000
Initial production promotion 2,500
TOTAL 26,000
2. Operating Costs
There are two types of operating (production) costs. Those
expenses that have to be paid even if no production takes place
are called fixed costs and those that depend on the amount of
food that is produced are the variable cost.

Example of operating costs for burger production

Operating Cost Amount (Php)
Labor 5,000
Raw materials and ingredients (for 1 month production) 8,000
Packaging 2,000
Electricity 2,500
Communication 500
 Rent 2,000
TOTAL 20,000
3. Income and Profit
From the market survey, the estimated market size and share
enable you to calculate the expected sales. The gross profit (or
gross loss) is the difference between the expected income and the
total operating costs over the first year, including any loan
repayments.

Income is therefore calculate as follows:

Income = Selling price per unit x number of units sold

Example of projected income and profit of burger production per month.

Selling No. of pcs Expected Operating Cost Gross Profit
Price/pc sold Income (expected
(selling price x income
no. of pcs sold) operating cost)
22.50 1,500 33,750 20,000 13,750
If the gross profit indicates that the proposed business is likely to
be successful, it is then necessary to repeat the calculation of
monthly gross profit for one to five years.
This will then show whether there is sufficient cash available to operate the
business.
 What’s More

Now, let’s try to screen what you have read on the discussion by answering the
questions below.
Instruction: Write your answers on the space provided.
1. What is a business model?
_____________________________________________________________________________

2. What is the importance of a business model?

_____________________________________________________________________________

3. Give the essential components included in a business model.

_____________________________________________________________________________

4.What do we forecast in the financial projections?

_____________________________________________________________________________
 What I Have Learned

It’s time to connect the learnings into one.

Instruction: Fill the space with word(s) to complete our learning in this module.
1. Business model refers to a company's plan for making a _________.
2. Essentially, using a business model helps you make better ________ about
your business.
3. For established businesses, business models improves how teams make
decisions about the _______ of the business.

4.-5.For start-ups business, it helps entrepreneurs formulate the

______ solution to meet customers’ needs and at the same time be
______.
6. A ______ statement is a simple statement that explains your
company’s goals. It’s a summary of what your company does for its
customers, employees, and owners.

7. A _________ in the business model shows the Strengths, Weaknesses,

Opportunities, and Threats of the proposed business.

8. Location of the business is where your proposed business is _______.

9. Having completed the study of technical feasibility, the entrepreneur
should then have sufficient information to determine the ______ that
are likely to be involve in production.
10. The entrepreneur is therefore in a position to ________ the expected
income and expenditure and the gross profit that can be achieved.

What I Can Do
Activity 3: “My Business Model”

Instruction: Fill in the business plan organizer to complete the

components of your own business model. This is a
simplified matrix to capsulize the project designed by a
co-writer Hilda Emma D. Macaway of GSCNHS.
Write your answers on a separate sheet of paper.
A. Cover Page
Name of the Business
Name of the Owner

B. Contents

I - The Business

Description of the Business

Vision
Mission
Objectives
Product/services offered

Location of the Business

(Draw location map)
II - Marketing Plan

Sources of Merchandise

Product Promotion

Describe the channel of distribution

SWOT Analysis
Factors Strengths Weaknesses Opportunities Threats

Product/Services

Price

Management

Work Force

Competitors

III – Financial Plan

Table A. Projected Product Cost
Product List Estimated Estimated Estimated Estimated cost
Cost/unit Supply/unit cost/day for 3 days
(Cost/unit x (Cost/dayx3)
supply/unit)
Burger with a
Twist 12.50 50pcs 625.00 1,875.00

Total

Table B. Projected Income

Product List Estimated Mark-up price Estimated Selling Estimated
Cost/unit 12.50x.80=10.00 Price Gross sales/day
12.50+10.00 22.50x50pcs
Burger with a
Twist 12.50 10.00 22.50 1,125
Total

Table C. Other Expenses

Items Price per Quantity Total Price Total Price
item (1 day) (3 days)
Office Supplies – (note book) 15.00 1 15.00 45.00

Total

Table D. Equipment/Facilities
Equipment/Facilities Indicate Quantity Total Price Total Price
Rental Price (1 day) (3 days)
or borrowed
Gas range 3.00 1 3.00 9.00

Total

Table E. Estimated Net Income

1 day 3 days

Estimated Gross Sales 1,125.00 3,375.00

Less:

Projected Product Cost 625.00 1,875.00

Other Expenses 15.00 45.00
Equipment/Facilities 3.00 9.00
Estimated Net Income 482.00 1,446.00
Table F. Capital/Investment (Depending on the Type of business)
Investors Amount of Investment
Sole Proprietorship, Partnership or Corporation

Members (if there are members)

Total Capital

IV – Organizational and Staffing Plan

A. Draw the Organizational Chart
B. Staffing Plan
Task/Designation Job Descriptions
 Assessment

Congratulations! You have achieved. The test is given for you to recognize
what you have learned in this module.
Instruction: Read the questions and encircle the correct letter of your answer.

1. Which of the following components of a business model shows the set of steps it
takes for your product to get in the hands of the key customer or consumer.
a. Product promotion b. Human resource c. Channel of distribution d. SWOT
Analysis

2. Which of the following components of a business model shows the Strengths,

Weaknesses, Opportunities, and Threats of the components of your proposed
business?
a. Product promotion b. Human resource c. channel of distribution d. SWOT
Analysis

3. Which of the following components of a business model shows where your

proposed business is located?
a. Product promotion b. Business location c. Channel of distribution d. SWOT
Analysis

4. What are these expenses that have to be paid even if no production takes place
and those that depend on the amount of product that is produced?
a. Operating Cost b. Fixed Cost c. Variable Cost d. Cost

5. Which of the following components of a business model shows the forecasts

revenues, costs to be incurred, and possible profits to be earned?
a. Product promotion b. Financial projections c. Channel of distribution d.
SWOT Analysis

3. What statement in the business model that includes statement o purpose and
explains how the company plans to achieve the state goals?
a. Objective Statement b. Mission Statement c. Vision Statement d.
Business description
4. What do you call that amount of money that is needed to buy the facilities
and equipment, to register and license the business and get the necessary
certificates?
a. Working Capital b. Start-up Capital c. Savings d. Income

5. What do you call that capital which includes the costs of raw materials,
packaging, staff training, product promotion etc. that have to be made
before he business begins to generate income from sales of the product.
a. Working Capital b. Start-up Capital c. Savings d. Income

9. What are calculated before the start of the business to determine whether the
entrepreneur’s savings (known as the owner’s equity) will be sufficient to start the
business without loan?
b.Sales and Profit c. Start-up Capital and Initial Working Capital
c. Sales and Expenses d. Start-up Capital and Sales

10.What are these expenses that have to be paid even if no production takes place
and those that depend on the amount of product that is produced?
a. Operating Cost b. Fixed Cost c. Variable Cost d. Cost

11.Which of the following is prepared when an entrepreneur wants to take

captures, in writing, the essence of where he wants to take his business, and
inspire to reach the companies’ goals?
a. Objective Statement b. Mission Statement c. Vision Statement d. Business
description

12. What model is used by the entrepreneurs to generate profit which includes the
products or services that a business plans to sell, identified target market, and
anticipated expenses? a. Business Plan Model b. Business Model c.
Feasibility Study d. Marketing Model

13. Which of the following components of a business model shows how you will
communicate your product or service to your customers?
a. Product promotion b. Human resource c. Channel of distribution d. SWOT
Analysis

14. Which of the following components of a business model shows the

organizational structure of the proposed business and their functions?
a. Product promotion b. Human resource c. channel of distribution d. SWOT
Analysis

15. What is the difference between the expected income and the total operating
costs over the first year, including any loan payment?
a. sales b. capital c. gross profit d. cost
 Additional Activities
Congratulations! You made it until the end of our lesson. Now, it’s time for you
to forecast the given data.

Activity 4: “Complete Me”

Instruction: Compute for the expected cost, income and profit.

Projected Product Cost

Product List Estimated Estimated Estimated Estimated cost
Cost/unit Supply/unit cost/day for 3 days

yema buko 3.50 200pcs

yema camote 3.00 180pcs

Total 6.50 380pcs

Projected Income
Product List Estimated Mark-up price Estimated Selling Estimated
Cost/unit (50%) Price Gross
sales/day

yema buko 3.50

yema camote 3.00

Total

Other Expenses
Items Price per Quantity Total Price Total Price
item (1 day) (3 days)
Office Supplies 10.00 2 20.00

Total

Equipment/Facilities
Equipment/Facilities Indicate Quantity Total Price Total Price
Rental Price (1 day) (3 days)
or borrowed
Sealer machine 2.00 1 2.00 9.00
Estimated Net Income
1 day 3 days

Estimated Gross Sales

Less:

Projected Product Cost

 Other Expenses

Equipment/Facilities

Estimated Net Income