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Entrepreneurship K12 applied track

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Entrepreneurship K12 applied track

  1. 1. Entrepreneurship Planning the Enterprise
  2. 2. Entrepreneurship Planning the Enterprise
  3. 3. What is entrepreneur?  Someone who exercises initiative by organizing a venture to take benefit of an opportunity and, as the decision maker, decides what, how, and how much of a good service will be produced.  An entrepreneur supplies risk capital as a risk taker, and monitors and controls the business activities. The entrepreneur is usually a sole proprietor, a partner, or the one who owns the majority of shares in an incorporated venture.
  4. 4.  According to economist Joseph Alois Schumpeter (1883-1950), entrepreneurs are not necessarily motivated by profit but regard it as a standard for measuring achievement or success.
  5. 5. What is entrepreneurship?  Entrepreneurship is the process of discovering new ways of combining resources.
  6. 6. What is a business plan for? Business plans written prior to setting up an enterprise, which are similar to a prefeasibility study and a feasibility study.
  7. 7. Business Plan Format I. Introduction a. The Business Concept and the Business Model b. The Business Goals: Vision, Mission, Objectives, and Performance targets c. The Business Offering and Justification II. Executive Summary III. The business proponents: Organizers with their capabilities and contributions
  8. 8. IV. The Target customers and Main Value proposition to the customer V. The Market, Market Justification based on the Industry Dynamics and the Macro Environmental factors affecting the opportunities and threats in the market, the size, potential and realistic share of the market VI. The product and service offerings VII. The enterprise strategy and enterprise delivery systems: Business Competitiveness VIII. The Financial Forecasts and Expected returns, risks, and contingencies IX. Environmental and regulatory compliance X. The capital structure and financial offering: returns and benefits to investors financiers, and business partners
  9. 9. Contents of the Business Plan 1. How will the business raise revenues? What critical factors will cause the revenues to materialize? 2. What will be the costs of the enterprise products and other costs of doing business? How will these costs be managed to ensure confortable profits? What critical factors will drive the costs? How can these factors be controlled?
  10. 10. 3. What will be the major investments of the enterprise? Why will these investments give the enterprise a competitive edge? 4. How will the enterprise finance the investments? How will the enterprise fund its growth?
  11. 11. The Business Goals: Vision, Mission, Objectives, and Performance Targets The business goals show the future and long- term prospects of the enterprise. It is composed of the vision, mission, objectives, key result areas, and performance indicators of the enterprise.
  12. 12. Case Example 1: Double Happiness The vision of Double Happiness is “to establish a commanding presence and market leadership as a food chain servicing major bus terminals in central luzon within the next five years.” The Business goals are communicated by articulating the basic purpose of setting up the enterprise in a mission statement. Needless to say, all business enterprises are established for the purpose of making money for its investors.
  13. 13. for Double Happiness, its mission statement is “to provide quality food and passenger convenience services that would generate sufficient profits for the stockholders and improve the lives of its employees. the vision and mission statements must then be translated into measurable end results, more popularly called objectives. objectives must be more specific that the vision and mission statements. They should be measurable, achievable, and time-bound. for double happiness, their stated objectives are: 1. to establish a strong market presence in central luzon 2. to earn good financial returns for its owners; 3. to delight customers with high quality food and services; and 4. to make double happiness a happy and rewarding place to work in
  14. 14. The objectives should then be translated into KRAs. KRAs are the qualitative manifestations that the objectives are being achieved. Double Happiness, KRAs for each of the objectives are as follows: Objectives Key Result Areas 1. To establish a strong market presence in Central Luzon a. Number of food outlets in major bus terminal in Central Luzon b. Sales volume attained c. Market share in central luzon
  15. 15. 2. To earn good financial returns for its owners a. Amount of net profits realized for the next five years b. Return of equity (ROE) c. Return on assets (ROA) or Return on investment (ROI) d. Return on sales (ROS) 3. To delight customers with high quality food and services a. Growth in sales per outlet b. Percentage of repeat customers c. Number of customer commendations or complaints d. Awards and recognition given by the community or the government for excellent service e. Customer survey rating to ascertain customers’ degree of delight
  16. 16. In turn, the key result areas must be rendered into quantified performance measurements, otherwise called performance indicators. These performance indicators or PIs serve as the aspirational scorecard of the enterprise managers and the motivational results of the investors. However, the PIs must actually be credible to the business audience in mind 4. To make Double Happiness a happy and rewarding place to work in a. Compensation and benefits of managers and workers are above industry rates b. Management and employee turnover c. Number of job applicants compared to other similar establishment
  17. 17. In the case of Double Happiness, the performance indicators for each of the key result areas are as follows: Key Result Areas Performance Indicators 2014 (Now) 2015 (one year Later) 2020 (five years later) a. number of food outlets in major bus terminals in central luzon b. Sales volume c. Market share in Central Luzon 3 Php. 7 million 2% 5 Php. 13 million 3% 20 Php. 60 million 12%
  18. 18. 2014 (Now) 2015 (One Year Later) 2020 (Five Years Later) a. Amount of net profits realized for the next five years b. Return on equity (ROE) c. Return on assets (ROA) or return on investment (ROI) d. Return on sales (ROS) Php. 1million 30% 15% 14% Php. 2 million 40% 20% 15% Php. 10 million 60% 30% 16% a. Growth is sales per outlet b. Percentage of repeat customers c. Number of customer commendations; number of costumer complaints d. Awards and recognition given by the community or the government for excellent service e. Customer survey rating to ascertain customers’ degree of delight 20% 30% 4 out of 20 1 out of 20 None 3.5 (on a scale of 1 to 5) 20% 40% 6 out of 20 1 out of 50 One by bulacan chamber 4 (on a scale of 1 to 50) 20% 50% 10 out of 20 1 out of 100
  19. 19. 2014 (Now) 2015(One year later) 2020 (Five year later) a. Compensation and benefits of managers and workers are above industry rates b. Management and employee turnover c. Number of job applicants compared to other similar establishments Same as industry 3 out of 10 per year 10% more job applicants 5% above industry 2 out of 10 per year 20% more job applicants 15% above industry 1 out of 10 per year 30% more job applicants
  20. 20. The Executive Summary The executive summary contains everything that is relevant and important to the business audience. It is a synthesis of the entire plan. It must contain the major argumentations of the business proponent on why the business will work and succeed. It should provide the business plan audience all the arguments on why they should participate in the business venture. The executive summary should then introduce and highlight the good qualities of: 1. the business proponents and their partners; 2. the enterprise organization and its capabilities; 3. the technology providers and their expertise and experience; and 4. the suppliers and all the major service providers
  21. 21. it should likewise describe the products/services of the enterprise, their features and attributes, and why they are the right ones to deliver to the customers. The executive summary should then proceed to discuss and justify the enterprise strategy and enterprise delivery system. The enterprise strategy builds and develops the game plan for attaining competitiveness. The enterprise delivery system is the entire process of converting input (resources) into output and these output into outcomes. It should then render all the major institutional, market, operations, and organizational strategies previously cited into financial strategies and forecasts.
  22. 22. Investment requirements should be presented along with the summaries of the projected income statements, balance sheets, cash flows, and funds flow, and their analyses and conclusions. Yields and returns, along with risks and contingency measures, should round up this section. The Executive Summary should also contain a section on the environmental and regulatory compliance of the proposed business, as well as the more proactive programs to become a more responsible corporate citizen. Finally, the Executive Summary should present the capital structure of the proposed business and show how this structure will respond to the investment programs and financial forecasts of the enterprise. however, the Executive Summary can only be written last in order to capture the findings and insights of the other parts, but for presentation purposes, it is placed in the first part of the business plan.
  23. 23. The Business Proponents The third section of the business plan contains information about the business proponents or stakeholders. There are four types of stakeholders: 1. Resource mobilizers and financial backers 2. Technology providers and applicators 3. Governance and top management 4. Operating and support team if the business plan readers are the resource providers, then they will want to know who else are on board to share the burden of raising money to see the whole thing through. if the business plan readers are the technology providers, they will want to know if there will be sufficient funds to pay for the technology.
  24. 24. If the business plan readers are the governance and top management team, then they will want to know what strategies and performance indicators are being proposed. If the business plan readers are the implementing, operating, and support teams, they will want to know what programs, activities, tasks, and resources would be in place.
  25. 25. The target customers and the main value proposition The business proponent must be very precise about the target audience of target customers. Target Customers must be of sufficient size, sufficient paying capacity, and have sufficient interest to purchase the products being offered by the enterprise. The main value proposition is the unique selling proposition of the enterprise.
  26. 26. Market Demand and Supply, Industry Dynamics, and Macro Environmental Factors It is normal for enterprises to actually expand their product offerings to include the other segments of a bigger market. The business proponent should examine all the opportunities in this bigger market in order to determine what exactly influences this bigger market. The business plan should estimate the total market supply and demand for the product offerings of the enterprise. The business plan should then determine the major critical factors that influence this market demand and supply once these critical factors or variables are determined, the business plan should then forecast the future demand and supply. If these physical factors are
  27. 27. Expected to remain the same, then most likely, the future forecast will follow the past trends. If not, the future estimate of demand and supply should be revised according to the new variables influencing the demand and supply. The market analysis and forecasting exercise should lead to a quantification of the current and prospective size of the market. Both the current and potential consumptions should then be dissected. The business plan should discuss the relevant industry dynamics.  Who are the competing enterprises in the industry and what are their comparative advantages and disadvantages? What business models and strategies are they employing?  Who are the suppliers in the industry and what are their capabilities and bargaining power?  What are the channels of distribution being used by the industry? How effective are these channels?
  28. 28. Both the industry players and the market are affected by the macro environment, which includes the social, political, economic, ecological, and technological (SPEET) forces.  Social Environment includes the demographics and cultural dimensions that govern the relevant entrepreneurial behavior.  Political Environment defines the governance system of the country or the local area of business.  Ecological Environment includes all natural resources and the ecosystem that defines the habitat of man, animals, plants and minerals.  Technological Environment makes or breaks competing participants in any industry.
  29. 29. Product/Service offering: Description, Evolution, and Justification The products/services must be described by highlighting the features and attributes that would most appeal to the target customers. The business plan should also prove that the products/services would be accepted and carried by the distribution channels.
  30. 30. Enterprise Strategy and Enterprise Delivery System The business plan should expound on the enterprise strategy (ES) by mapping the competitive landscape and by situating the enterprise and its competitors as to their strategies and chosen positioning's. The business plan should then show how the enterprise delivery system (EDS) would enable the business to implement the enterprise strategy The enterprise delivery system starts from the Input (resources mobilized), and the output ( the products/services).
  31. 31. The output are then marketed to the customers or experienced by the customers. Customer satisfaction level, profit generated, and the performance of people from the transaction are the outcomes of the EDS.
  32. 32. By: Lunyl B. Sumalinog
  33. 33. References: Book Dr. Eduardo A. Morator, jr. Entrepreneurship, First Edition, 2016. Rex Book Store, Inc. Websites: Retrieved from: www.businessdictionary.com/definition/entrepreneur.html www.econlib.org/library/Enc/Entrepreneurship.html

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