entrep7

• Forecasting


  A planning tool that helps the entrepreneur cope with uncertainties in the future operation of the business
• Mark-up


  The amount added to the cost of a product to determine the selling price
• Forecasting depends on data from the past and present to make meaningful estimates on revenues and costs
• Forecasting revenues and costs is the same as weather forecasting, though forecasting revenues and costs is in the context of business
• Entrepreneurs use forecasting techniques to determine events that might affect the operation of the business such as sales expectations, costs incurred in the business as well as the profit that the business is earning
• Making informed estimates reduces risks that might be experienced by the entrepreneur in the future
• Selling price


  Computed by adding cost per unit and mark-up
• Forecasting revenues and costs is a crucial part of developing a business plan
• Forecasting


  Techniques used by entrepreneurs to determine events that might affect the operation of the business
• Factors to consider in forecasting revenues

  • External factors
  • Internal factors
• External factors


  • Economic condition of the country
  • Competing businesses or competitors
  • Changes happening in the community
• Internal factors


  • Plant capacity
  • Availability of raw materials
  • Labour
  • Number of salespersons
• Calculating selling price


  1. Cost

  2. Mark-up percentage

  3. Selling price = Cost + Mark-up
• Mark-up


  Amount added to the cost to come up with the selling price
• Projected revenue is not the final amount of profit or income an entrepreneur will get at the end of every period
• Projected revenue is still subjected to the expenses incurred in the operation of the business
• Entrepreneurs should present the assumptions to consider in projecting revenues, such as seasonality, economic slow down or changes in customer preferences
• Presenting the assumptions helps achieve the best educated estimate of revenues
• Merchandise/Products


  Goods or items sold by the business
• Selling Price


  The price at which the merchandise/products are sold
• Projected Volume


  The estimated or forecasted quantity of merchandise/products that will be sold
• Projected Revenue


  The estimated or forecasted total income from selling the merchandise/products
• Average No. of Items Sold (Monthly)

  The average quantity of merchandise/products sold per month
• Average No. of Items Sold (Yearly)

  The average quantity of merchandise/products sold per year
• Cost per Unit


  The cost to acquire or produce each unit of merchandise/product
• Mark-up


  The percentage added to the cost per unit to determine the selling price
• Calculating Selling Price


  1. Cost per Unit

  2. Mark-up

  3. Selling Price = Cost per Unit + (Cost per Unit x Mark-up %)
• When sales exceed the cost to produce goods, the result is called profit
• Mark-up refers to the amount added to the cost of a product to determine the selling price
• Forecasting is a planning tool that helps the entrepreneur cope with uncertainties in their future operation
• Costs incurred through payment of utilities such as water and electricity are called operating expenses
• Selling fruits is an example of a merchandising business, not a service concern business
• The selling price of a product is calculated by adding its cost per unit and mark-up
• Merchandise or goods purchased are called Purchases
• Loss is a result when cost to produce goods is greater than the sales
• Information to investigate for existing businesses

  • Name of Business
  • Merchandise/Products
  • Cost per Unit
  • Mark-up %
  • Selling Price
  • Projected Volume
  • Projected Revenue
  • Average No. of Items Sold (Daily)
• Products to sell in a new merchandising business


  • Product 1
  • Cost per Unit
  • Mark Up
  • Selling Price
  • Product 2
  • Cost per Unit
  • Mark Up
  • Selling Price
• Mang Eduard


  Purchased 4 dozens of umbrellas every week
• Supplier


  Charges 200.00 pesos per dozen for freight
• Mang Eduard


  Can sell 12 umbrellas every day