Entrep

• the financial forecast 


  refer to the monetary transactions that the business is expected to engage in
• the four critical financial statements

  income statement, balance sheet, cash flow statement, funds flow statement
• marketing strategy and action program

  should translate into revenue or sales forecasts.
• the operation strategy and the production or service delivery program

  should translate into forecasts of costs of goods produced
• The rest of enterprise delivery system should translate into forecast of operating and non-operating expenses. Together, they comprise the income statement of forecasts.
• the end result of the financial forecasts will indicate the feasibility of the enterprise
• The income statement is a financial statement that measures an enterprise's performance in terms of revenues and expenses over aq certain period.
• Formula of income statement: revenues - expenses = income or profit (loss)
• From revenues forecasted (quantities sold times the prices they are sold for), the entrepreneur must subtract the estimated cost of goods sold corresponding to the forecasted sales, This should give the gross profit.
• From the gross profit, the operating expenses must be deducted to arrive at the operating profit. Then the taxes due are subtracted to derive the net profit after taxes.
• If the enterprise has nonoperating revenues and expenses,these should be added or subtracted from the operating profitbefore the taxtes are computed.
• example of simple income statement: monthly income statement of Mang Juan's Manufacturing
• he cost of goods sold refers to the materials,labor costs, and overhead of making a product. Forservice establishments, the entrepreneur can computethe cost of servicing the customers directly as cost ofservices rendered
• Creating the balance sheet is a bit more complicated because one has to look at three different things: assets, liabilities and equities.
• Financing the assets are the liability or equity.
• Liabilities- represents the enterprise's debts to suppliers, to banks, to government, to employees, and other financiers.
• Stockholders equity represents the investors' investments in the stock (or shares) of the business
• BALANCE SHEET EQUATION:ASSETS = LIABILITIES + EQUITY
• The equation of balance sheet means that the resources invested into the enterprise in the form of liabilities and stockholders' equity must be to the total value of the assets or the enterprise itself
• Retained Earnings are accumulated profits or losses of the enterprise over the years, which have not yet been given bck to investors as dividends
• FINANCIAL RATIOS AND MEASUREMENTSIn any business endeavor, the investor or the entrepreneur himself or herself will always be interested in knowing the payback period or how long will it take for him or her to get back what he or she has invested in the enterprise.
• However, payback period is just one of the many financialcomputations one can tke a look at in considering a particularbusiness opportunity. But this will only be possible if the entrepreneur can come up with financial statements.
• computation of pay back period: payback period = total investment / annual income after taxes
• In cash payback period, the entrepreneur should add back the non-cash deductions from the income statement, which is the deprecation expense
• In effect, the faster you are able to earn back the money invested, the better it is for the entrepreneur and the more attractive the business opportunity becomes
• There is also the return on sales (ROS) ratio where the entrepreneur calculates how much profit the enterprise is earning for each peso sold.
• return on sales formula: return on sales= net profit after taxes/ sales
• Furthermore, if the entrepreneur is interested to know the return on investments made, which come in the form of assets, then he or she can compute for the return on assets (ROA).
• A feasibility study is more comprehensive and a detailed. It requires a more rigorous approach
• A feasibility study is prepared to convince bankers and investors to put money into the business opportunity
• formula of return on assets= return on assets or return on investments = net profit after taxes/ total assets / investment
• In writing the feasibility study, the entrepreneur should take into consideration


  1. More in-depth study of market potential to ensure that the business proposal will reach the forecasted sales figures

  2. Proof that the product or service being offered has the right design, attributes, specifications, and preferred features

  3. Proof that the entrepreneur and his or her team have the necessary experience, skills, and capabilities to maximize the venture's chances of success

  4. Legal visibility

  5. More detailed costing on the different assets and more justification for the production and operating expenses

  6. More thorough analysis of the technology and its sustainability
• Opportunity seizing


  At this stage the entrepreneur must be able to determine the critical success factors that enable other players in the same industry to succeed while, at the same time, be vigilant about those factors that cause other business to fail.
• After opportunity Seeking and Screening, the entrepreneur is ready for Opportunity Seizing, the final stage. By now, the entrepreneur has an idea as to where he or she will locate the business and how he or she will market the product or service.
• Opportunity seizing for the entrepreneur

  Will I be able to manage, to my advantage, the critical success factors and avoid the critical failure factors?
• The critical factors may change depending on what market segment the enterprise is addressing
• Market segment wanting very high quality products and can tolerate higher prices


  • Critical success failure factors would be different from a market segment that is very price conscious but is not too demanding on quality
• It is important for the entrepreneur to establish the positioning of the business enterprise in the marketplace
• crafting a positioning statement


  In order to craft a positioning statement, the entrepreneur is advised to look at other competitors (or substitutes) in the marketplace. Details such as their major buyers, attributers of features that make the competitors' product attractive should give the entrepreneur an idea. Customer profiling will come into the picture their characteristics, and traits, behavior and usage pattern, preferences and dislikes
• Going through the process of questioning, the entrepreneur will be able to come up with each of the competing products' Main Value Proposition (MVP) and from there, work on his own positioning.