ENTREP - BUSINESS IMPLEMENTATION Flashcards
The purposes of the business plan are:
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- Entice partners, investors, and bankers to fund a business venture.
- Communicate what the enterprise is all about, what market it wants to serve.
- Show what financial returns it could muster.
The ____ must be very clear about the purpose in establishing the enterprise.
Entrepreneur
Whether it is for generating profits or feeding the family, making a difference in the industry or actualizing the self, the purpose must be ____ ____ to motivate the entrepreneur.
compelling enough
The enterprise must state its mission statement clearly for:
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01 The sake of the customers being wooed;
02 The investors who need to know what they are getting into;
03 The financiers evaluating the enterprise; and
04 The government functionaries who must regulate the activities of industries and businesses.
The business plan should contain important information about the following:
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➢The business itself;
➢The organizers;
➢The management and technical people;
➢The financial structure;
➢Its market potential;
➢Its target market;
➢Its projected sales, expenses, and profits; and
➢Its probable risks.
It should begin with business concept and the vision for the enterprise in the next three to five years.
Business Plan
It should proceed to an enumeration of business objectives, key result areas, and performance indicator. An overall enterprise strategy should then be articulated to show how the performance could be attained.
Business Plan
Business Plan should begin with business concept and the vision for the enterprise in the next ____ ____ ____ years.
three to five
The business plan should contain an executive summary of the following:
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- The organizers and the key people behind the nosiness and why these people have the resources, talents, skills, and technology to achieve success;
- The market being targeted and why there is enough market potential to justify the business;
- How the business will be operated and organized, including all outsourcing, subcontracting, franchising, and licensing agreements;
- The products or services to be offered and why they are right for the market;
- The investment capital required for the business and what exactly it would be used for;
- The technology, the technical expertise, the equipment, and material suppliers to be utilized;
- The capital structure (short and long term debt, stockholders’ equity) of the business;
- The operating budget, financial projections (income statement, balance sheet, cash flow), and return on investment prospects; and
- The risks in the business and the contingency measures to counterpart them.
The Business Plan must be able to estimate the capital required by the enterprise. The capital required would be dictated by the investment in the assets of the enterprise. These assets are composed of the following:
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- The current assets, which are short-lived assets. They are composed of cash, inventory, accounts receivables, and other current assets.
- The long-lived or fixed assets. They are composed of property, plant, and equipment.
- The other assets. They are composed of organizational and pre-operating expenses. Interest rate, therefore, is the obvious choice of
the manager when asked to make a decision
They are composed of cash, inventory, accounts receivables, and other current assets.
Current assets, which are short-lived assets
They are composed of property, plant, and equipment.
Long-lived or fixed assets
They are composed of organizational and pre-operating expenses. Interest rate, therefore, is the obvious choice of the manager when asked to make a decision.
Other assests
The assets of the enterprise are financed
by its liabilities. These liabilities are
composed of:
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- Current liabilities such as suppliers’ credit and other short-term credit;
- Long term debt; and
- Owner’s equity
Types of Business Organization
Sole Proprietorship
Partnership
- General Partnership
- A Limited Partnership
Corporation
- Stock Corporation
- Non-Stock Non- Profit Corporation
- Close Corporation
- Corporate Sole
The simplest and easiest enterprise to organize. The owner or the entrepreneur has sole control over the enterprise. He or she reaps all the profits and, also, all the losses. But he or she will also incur all the risk.
Sole Proprietorship
Sole Proprietorship permits & clearances:
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✓Barangay clearance
✓Fire safety clearance
✓Certificate of electrical inspection
✓Certificate of occupancy
✓Department of Trade and Industry (DTI) certificate
✓Lease contract if space is leased
✓Locational clearance
If two or more persons bind themselves into a contract to contribute money, property, and expertise in a common venture with the intention of dividing the profits among themselves, then they would have entered into a ____
Partnership
Composed of partners who are liable individually and collectively to all those who have claims against them.
General Partnership
Consist of partners who have limited liabilities while others in the partnership have unlimited liabilities. A limited partner is not personally liable for all the obligations of the partnership beyond his or her prorated capital contribution to the partnership.
A Limited Partnership
The partnership should obtain all the required government clearances, permits, and licenses. It should get:
- A bank certificate of deposit on the money contributions of the partners; and
- The approval for its partnership name form the Department of Trade and Industry.
The third form of business organization. Like the partnership, the ____ also has a separate legal personality quite distinct from the investors who contributed money to the enterprise.
Corporation
Four types of Corporation
- Stock Corporation
- Non-Stock Non- Profit Corporation
- Close Corporation
- Corporate Sole
Issues capital stocks divided into shares (or proportions of the total capital).
Stock Corporation
