entrepreneurship

• Implementation


  The process of executing a plan or policy so that a concept becomes a reality
• Implementing a plan properly

  1. Communicate clear goals and expectations

  2. Supply employees with the resources needed to help the company achieve its goals
• Profit


  Total revenue - total expenses
• Profit is calculated by deducting direct costs, such as materials and labor and indirect costs (also known as overheads) from sales
• Under normal accounting rules, sales and expenses are included in profit when they occur, not when they are actually paid
• Profit


  Helps give an idea as to whether the business is successful
• Benefits of a business making a profit


  • Expand and grow
  • Attract more investment
  • Employ more staff
• Profit


  Different to cash
• Gross profit


  The revenue a business brings in after covering the expenses required to make a sale
• Gross profit formula


  Sales - Cost of Goods Sold = Gross Profit
• Fixed expenses


  • Rent
  • Insurance
  • Salaries of employees
  • Payroll taxes and employee benefits
  • Property taxes
• Variable expenses

  • Materials used
  • Shipping costs
  • Direct labor
  • Credit card fees
  • Sales staff commissions
• Customer needs


  The named and unnamed needs of customers when they come in contact with the different business establishments or when they search for the solutions which businesses provide
• Superior customer service


  Meeting customers' needs by providing them with the products and services they want or by providing effective solutions to their problems
• Innovation


  Identifying customers' needs and providing solutions that meet those needs
• Cost of goods sold


  The price of all inventory sold which includes both fixed and variable costs
• Gross profit margin


  Gross profit (Revenue - Cost of goods sold) / Revenue
• Current ratio


  Current assets / Current liabilities
• Quick ratio


  (Current assets - Inventories) / Current liabilities = (Cash and equivalents + Marketable securities + Accounts receivable) / Current liabilities
• Return on investment (ROI)


  Net income/Average total assets
• Balance sheet


  Shows your financial picture - assets, liabilities, and capital - at some specific moment
• The balance sheet shows many reasons why profits are not cash, and why cash flow isn't intuitive
• Balancing


  Assets have to equal liabilities plus capital. Always.
• Balance sheet components


  • Assets
  • Liabilities
  • Capital
• Five-Year Financial Plan


  • Projected balance sheet and financial statement for five years
• Yearly increase in revenue is assumed at 5%
• Yearly increase in cost is assumed at 5%
• As a future entrepreneur, one should always remember that nothing is permanent in the field of entrepreneurship. What is applicable to one entrepreneur may not be applicable to another. Certain things may happen to one entrepreneur but may not happen to another.
• Task 1


  Annie bought one dozen smartphones for Php 200,000.00 with a discount of 5%. She sold at a price of Php 18,000.00 per unit. However, a new model of smartphone became available in the market, so she sold the remaining half dozen at Php 12,000.00 each unit. What was her profit or loss? Compute the gross profit.