ENTREPRENEURSHIP

Week 3
Name of the Learner: Grade Level:

Section: Date:

Business Model

Background Information for Learners What is a

Business Model?
Business model is a description of how your business makes money. It is an explanation of how you
deliver value to your customers at an appropriate cost. Models generally include information like
products or services the business plans to sell, target markets, and any anticipated expenses. It acts as the
blueprint of the business and a roadmap for its success or failure as it explains how the business creates
and captures value through its decisions and processes. According to management guru Peter Drucker:
“A business model is supposed to answer who your customer is, what value you can create/add for the
customer and how you can do that at reasonable costs (Das 2020).” In their simplest forms, business
models can be broken into three parts (Parsons n.d.):
● Everything it takes to make something: design, raw materials, manufacturing, labor, and so on.
● Everything it takes to sell that thing: marketing, distribution, delivering a service, and processing
the sale.
● How and what the customer pays: pricing strategy, payment methods, payment timing, and so on.

Different Kinds of Business Model (Parsons n.d.)

1. Advertising – You have to satisfy your two customer groups: your readers or viewers and your
advertisers. Examples YouTube
2. Affiliate – Uses links embedded in content instead of visual advertisements that are easily
identifiable. For example, if you run a book review website, you could embed links to
Amazon within your reviews. Examples; Top TenReviews.com
3. Brokerage – Connects buyers and sellers and helps facilitate a transaction. Example: Real
Estate Agency
4. Customization/ Concierge- Take existing products/ services and add a custom element to the
transaction that makes every sale unique for the given customer. Example Nike Customized
sneakers
5. Crowdsourcing – Frequently paired to Advertising models to generate revenue. Providing the
right rewards to entice the crowd is the key to successful crowdsourcing. Example: YouTube
6. Franchise – Common in the Restaurant Industry. You are selling the recipe for starting and
running a successful business to someone else. Example: Jollibee
7. Leasing – Like renting, at the end of a lease agreement, the customer needs to return the
product. Example: Condominium, Cars
8. Marketplace – Allow sellers to list items for sale and provide customers with easy tools for
connecting to sellers. Example: eBay, Shoppee
9. Subscription – Consumers get charged a subscription fee to get access to service. Example:
Netflix
10. Pay-As-You-Go – Customers get charged for actual usage at the end of the billing period.
Water or Electric Companies
Develop Business Model
Business models are important for both new and established businesses. In developing business models,
entrepreneurs must adapt the dynamics of traffic lights. These are the three “green lights” or the positive
signals that can help entrepreneurs to develop ideal business models and eventually succeed. On the
other hand, there are three “red lights’ or negative signals that entrepreneurs must avoid.
Green Lights
▪ Target high value customers – someone who is easy to find, willing to pay a price that will
reasonably profit the entrepreneur, easy to persuade with the least promotional effect, and
someone who can join the bandwagon of customers that, when consolidated, can generate a
substantial amount of revenues aligned with the profit objectives of the entrepreneur.
▪ Offer products or services with great value – The value proposition and unique selling proposition
should always kick in. The entrepreneur must position the unique attributes of the product/
service. The entrepreneur must also devise an efficient distribution system where the flow of
goods/ services delivery is convenient, fast and available when needed, and consider the influx of
technological advancements such as the internet, and third party outsourcing.
▪ Offer products or services with reasonable profit – Increase markup and decrease operation cost.
The entrepreneur should devise an efficient distribution system, lessen unnecessary manpower
efforts, apply lean manufacturing processes, and add support products or auxiliary services that
can increase revenue without adding substantial cost.
Red Lights
▪ Satisfying the customer becomes too costly and irrational – The entrepreneur must calculate the cost
and profit associated with serving the customer before pursuing the business. In marketing, the
term “lifetime value of a customer” was coined to understand the potential value that customer
can bring to the business in the long run, but there are obvious red flags which are collectively
called customer satisfaction costs: (1) Warranty because some products are as sturdy as they
should be. (2)After sales costs- some products or services require extensive technical support,
installation and customer service.
▪ Being a market leader is difficult to sustain – If there are major customers purchasing the
entrepreneur’s product or services. If there are major players in the industry that control the
majority of the distribution network. If technology has changed the way the entrepreneur operates
the business. If technology replaces the need for the product/ service, and if the competitors can
easily tap the market.
▪ Return on Investment (ROI) takes too long and too small – If the reports say that ROI is less than
25% in the first three years of business operations. If there is additional capital for the production.
Only less than 50% of the capital required will be allocated to revenue-generating activities. If the
present capacity is also incapable to produce or handle new commitments. If there is an
uncontrollable industry factor.

Components of Business Model Canvas

 Source: http://bit.ly/Keypartners
A. Value Proposition – A description of the goods or services
that a company offers and why they are desirable to customers.
It is a promise of value to be delivered. It summarizes why a
customer should buy a product or use a service.
Example: “The number one bottled water brand by volume
Nestle Pure Life Purified Water enhanced with Minerals for
Taste offers healthy hydration in a variety of sizes and
is committed to helping families live a healthy, active
lifestyle.”
Unique Selling Proposition (USP) - A consideration presented by the seller as the reason one
product or service is different and better from another product or service. You can include the
Product characteristics, Price Structure, Placement Strategy and Promotional Strategy.
Example: “Pizza delivered in 30 minutes or it’s Free!” – Domino’s Pizza
Tagline – A short, memorable phrase that is used throughout your marketing. It should convey the
main sentiment or feeling that you want people to associate with your brand.
Example: “Langhap Sarap” - Jollibee , “Just Do It” – Nike,
“We Find Ways” – BDO
B. Customer Segmentation - the process of dividing
customers into groups based on common
characteristics so companies can market to each group
effectively and appropriately. It identifies the target market.
Companies often segment customers according to
demographics that include:

✔ Age

✔ Gender

✔ Marital status

✔ Location (urban, suburban, rural)

✔ Life stage (single, married, divorced, empty-nester, retired, etc.)

Customer segmentation requires a company to gather specific information – data – about
customers and analyze it to identify patterns that can be used to create segments (Murphy 2020).
Data Gathering Techniques:
● Face-To-Face/ Telephone/ Chat/ Online Interview – a data collection when the interviewer
communicates directly with the respondents.
● Focused Group Discussion (FGD) – Group of people are gathered and shared their
perceptions, opinions, beliefs, ideas, and attitudes towards the product or service, concept,
advertisement and packaging.
● Surveys – Company prepared a survey questionnaire. Surveys may be done through paper
questionnaires or online via google forms.
 C. Channels - describes how a company communicates with and
reaches its Customer Segments to deliver its Value
Proposition. It is important to understand which pathway (or
channel) is best for your company to reach your customers
(ATm Startup Aggieland Texas A & M University n.d.).
FIVE TYPES OF CHANNEL PHASES:
▪ AWARENESS- how do we raise awareness about our
company’s products and services? Advertising (Word of Mouth, Social Media, Newspaper, etc.)
▪ EVALUATION- how do we help customers evaluate our organization Value Proposition? Surveys
or Reviews
▪ PURCHASE- how do we allow customers to purchase specific products and services? Web vs.
Brick and Mortar or Self-Checkout
▪ DELIVERY- how do we deliver a Value Proposition to customers?
Over the counter or Delivered/Catered
▪ AFTER SALES- How do we provide post-purchase customer support?
Call center or Return policy or Customer assistance
D. Customer Relationships - The ways in which your
company communicates and deals with existing
customers. Follow-ups build relationships aside from
saying “Thank you”. Palin said, “Satisfying customers
isn’t enough to guarantee they’ll come back, you need
to go above and beyond. That’s true whether you run a
coffee shop where regulars want to feel like a part of
the family or an auto-parts company whose customers
demand high quality and responsive service.”
Six Tips to Create Good Customer Relationship (bdc
n.d.):
1. Understand what your customer values – Listen to what they say, and how they say it and
adjust your approach to match their expectations.
2. Show you genuinely care – People want to connect beyond the professional level.
Being friendly and with a personal approach pays off.
3. Adapt to their pace – If customers in a hurry do not slow them down. If the customers want to
chat do not rush them.
4. Let your brand be your guide – Your branding and marketing make a promise and it is
essential to deliver on that. Do not fail your customers with your company’s promise.
5. Model the behavior you want to see – The way you treat your employees shows them how
they are supposed to treat your customers.
6. Remember that relationships are built over time – Exceed expectations. It is important to go
above, and beyond, you do not need to hit the home run with every conversation.
E. Revenue Streams – I would like you to know what revenue
means, Revenue is the amount of money that is brought into a
company through its various business activities (e.g. sales of
products and services). How will you find your revenue? For
example, if you sell 10 packs of ube-cheese pandesal per day
for 120 per pack. Let us break down using this formula
Number of Goods sold x Price = Revenue.
 #of Goods Price Daily Weekly Monthly Yearly
sold Revenue Revenue Revenue Revenue

10 Packs of 120.00 =1,200.00 1,200.00 x 1,200 x 30 1, 200 x

ube-cheese 7 = 8,400 = 36,000 365 =
Pandesal 438,000

Revenue Streams is the various sources from which a business earns money from the sale of
goods or the provision of services. The types of revenue that a business records on its accounts depending
on the types of activities carried out by the business. The revenue accounts of retail businesses are more
diverse, as compared to businesses that provide services (Corporate Finance Institute 2015).
Revenue Stream is the building block presenting the cash a company generates from each
Customer Segment. It can be generated in different ways (Empower Women 2016):
▪ Sale of Physical Product – The customers pay cash for the product.
▪ Usage Fee – The customer pays a user fee for a particular service.
▪ Subscription fee – The customers pay for a particular service. Example Netflix Movie
Subscription
▪ Lending/Renting/Leasing – The customer pays to use a particular product for a fixed period of time.
▪ Brokerage Fee – Company gets a revenue from an intermediate service. It is often used by real
estate agents, and credit card providers
▪ Advertising – Your company may charge fees for advertising a product, service or brand.
▪ Volume and Unit Selling – Your company charges a fixed price for a product however if the
customers choose to buy in a higher quantity you may give them a discount or you may have a
different price for different customer segments.
Take note: You will need to decide what kind of Revenue Stream best fits your business.

F. Key Resources - The resources are needed to create value

for your customers. These resources can be categorized
into four main categories (Empower Women 2016):
▪ Physical resources – raw materials, building, vehicle,
transportation, storage facility, machines, factory, and
equipment.
▪ Human Resources – staff or employees (engineer
or marketing expert)
▪ Intellectual Resources – brand, patent, copyright, partnership, customer database. ▪
Financial Resources – cash, credit, equity

G. Key Partners - The relationships that you have with other

business, governmental, or non-consumer entities that help your
business model work such as suppliers,
manufacturers, business partners, etc. Four Types of
Partnerships
▪ Strategic Alliances between Non-competitors – You can
partner with a manufacturer to produce a part of your
business product.
 ▪ Competition – You can strategically partner with your competitor.
▪ Joint Ventures to Develop New Businesses – You can join your company with another
company to create a new different entity.
▪ Buyer-Supplier Relationship – You can build a reliable relationship with your buyer and
supplier.

H. Key Activities - Any activities that your business is

engaged in for the primary purpose of making a profit
such as operations, marketing, production,
problem-solving, and administration. The Key
activities of a business represent what the company
must do to make the business model work. These
activities can be
producing a product or providing a service, or a mix of both (Epperhart 2015). Two Major
Types of Key Activities
▪ Supply Chain Management – Supply chain comes in two places: Key Resources and Key
Partners. Key Resources are helping you manage your Key Partners.
▪ Software Development – Today almost all business systems have been moved into software
processes. Computer software that helps you manage all of the pieces of a business that
need to operate and run.

I. Cost Structure - The costs and expenses that your

company will incur while operating your business
model.
Two Main Categories of Cost
▪ Cost-Driven – Focuses on minimizing the costs
of the product or service as much as possible.
▪ Value-Driven – Focuses on creating more value
in the product itself, not necessarily producing the product at the lowest possible cost.
Types of Cost (Murphy 2020)
▪ Fixed Cost – Costs that do not vary with the level of output in the short term. Example :
Rent, Office Supplies, Advertising
▪ Variable Cost – Cost varies in direct proportion with the level of output. Example: Raw
materials, Packaging costs, Labor cost
▪ Operating Cost – Expenses associated with day-to-day business transactions. It can be
variable or fixed cost.
▪ Direct Cost – Related to producing a good or service. It includes raw materials, labor,
distribution and expenses.
▪ Indirect Cost – Unrelated to producing a good or service. Electricity used to power the plant
is considered as an indirect cost because the electricity is used for all the products made in
the plant.

Learning Competency with Code

1. Develop a Business Model
TLE_ICTAN11/12EM-Ia-2
Activities
Day 1
Activity 1: Multiple Choice
Instruction: Read comprehensively. Choose the correct letter of your answer.
1. “Broadcast Yourself” – Youtube
a. Business Model c. Unique Selling Proposition
b. Tagline d. Value Proposition
2. Gather specific information – data – about customers and analyze it to identify patterns that can
be used.
a. Customer Feedback c. Customer Segments
b. Customer Relationships d. Customer Service
3. “The milk chocolate melts in your mouth, not in your hand.” – Mars, Incorporated
a. Business Model c. Unique Selling Proposition
b. Tagline d. Value Proposition
4. Number of Costs of Good Sold multiplied by Price.
a. Cost b. Good c. Price d. Revenue
5. The relationships that you have with other business, governmental, or non-consumer entities that
help your business model work.
a. Key Activities c. Key Partners
b. Key Chain d. Key Resources
6. The amount of money that has to be paid to acquire a given product
a. Cost b. Good c. Price d. Revenue
7. “Who your customer is, what value you can create/add for the customer and how you can do that
at reasonable costs.”
a. Business Model c. Unique Selling Proposition
b. Tagline d. Value Proposition
8. Understand what your customer values.
a. Customer Feedback c. Customer Segments
b. Customer Relationships d. Customer Service
9. Any activities that your business is engaged in for the primary purpose of making a profit.
a. Key Activities c. Key Partners
b. Key Chain d. Key Resources
10. “Why is there nothing quite like the iPhone? Every iPhone we’ve made – and we mean every
single one – was built on the same belief. That a phone should be more than a collection of
features. That, above all, a phone should be absolutely simple, beautiful and magical to use.”
a. Business Model c. Unique Selling Proposition
b. Tagline d. Value Proposition
Day 2-4
Activity 2: Develop your Business Model using the Business Model Canvas
1. Create your Product Idea
2. Guide questions are provided for each box
3. You may create a group with 3 to 5 members to help each other in developing business models.
4. You may present through video presentation or audio presentation.
7. Key 8. Key 1. Value 4. Customer 2. Custome
Partners Activities Propositio Relationships r
n Segments

Who are What Key What type of

your key Activities do What value do you relationship does For whom are
partners our Value deliver to the each of your you creating
(Suppliers) Proposition customer? customer value?
? require? segments expect
Which of your Who are your
you to establish
Which key Your customer’s most important
and maintain
resources distribution problems you need customers (target
with them?
are you channel? to solve? market)?
acquiring
Customer What products and
from your
Relationships services you will
partners
? offer to each
(suppliers)?
Customer
Revenue
Which key Segments?
Streams?
activities do
partners 6. Key 3. Channel
perform? Resources s

What key Through which

resources do channels do your
your value customer
proposition segments want to
require? be reached?
9. Cost Structure 4. Revenue Streams

What are the most important cost inherent in For what are your customers really
your business? willing to pay?
Which key resources are most expensive? For what they pay?
Which key activities are most expensive? How are they paying?
Is your business more cost-driven or How would day prefer to pay?
valuedriven?
How much does each Revenue Stream
contribute to overall revenues?
 Is your business more on fixed cost or variable
cost?

Source: wwwbusinessmodelgeneration.com Reflections:

How Business Model can help you in making Business Plan?
References

n.d. ATm Startup Aggieland Texas A & M University. Accessed September 9, 2020. https://bmcintroduction.wordpress.com/channels/. n.d. bdc. Accessed
September 9, 2020. https://bit.ly/2RasxUC.

2015. Corporate Finance Institute. Accessed September 9, 2020. https://corporatefinanceinstitute.com/resources/knowledge/accounting/revenue-streams/.

Das, Sourobh. 2020. feedough.com. July 8. Accessed September 9, 2020. https://www.feedough.com/what-is-a-business-model/.

2016. Empower Women. Accessed September 9, 2020. https://bit.ly/3m9w57F.

2016. Empower Women. Accessed September 9, 2020. https://bit.ly/3bQGlNx.

Epperhart, Billy. 2015. Wealthbuilders. March 30. Accessed September 9, 2020. https://bit.ly/2RdUgUs.

Parsons, Noah. n.d. Bplans. Accessed September 9, 2020. https://articles.bplans.com/what-is-a-business-model-business-models-explained/. n.d. Shopify.com.

Accessed September 9, 2020. https://bit.ly/3hlJ9Uc.

Answer Key

Activity 1: Product Benefits or Product Features

1. b. Tagline 6. c. Price
2. c. Customer Segments 7. a. Business Model
3. c. Unique Selling Proposition 8. b. Customer Relationships
4. d. Revenue 9. a. Key Activities
5. c. Key Partners 10. d. Value proposition

Activity 2: Business Model

Rubric for Business Model Canvas

Exceeds Standards (10) Meets Standards (5) Not Approaching Standards Score
(3)

Product Idea Well thought out, creative, A creative product that is/ Poorly considered and
and unique product that is may be viable in the presented product that may
*Minimum Viable Product viable to the market place. market place. Some not be practical in the market
It is evident that extensive thought was given to the place. Little to no thought or
thought was put in to the MVP creation of the consideration was put in to
MVP idea. product idea. MVP idea.

1. Value Proposition Specific customer problems Specific customer Vague specific customer
cited and needs with problems cited and needs problems cited and needs
extensive back up data to with back up data to show with lack of back up data to
show MULTIPLE market potential. Specific show market potential.
market potential. Specific key features of product Specific key features of
key features of product that product that does not match

match the customers’ that match the customers’ the customers’

problems/needs. problems/needs. problems/needs.
 2. Customer Clear understanding of Clear understanding of
Segments specific customers in specific customers with
MULTIPLE markets. potential size of market. Clear understanding of
Specific business model Specific business model specific customers missing
archetypes for each market. archetypes for customer. potential size of market.
Multiple jobs we are Complete understanding of General or missing business
handling for the customer the job we are handling for model archetypes for
specific to the market. the customer customer. Missing or to
general of an understanding
of the job we are handling for
the customer.

3. Channels Extensive research of B2B Specific B2B (Businessto- Unclear B2B (Business-
(Business-tobusiness)/B2C business)/B2C (business- tobusiness)/B2C (business-
(businessto-Customer) to-Customer) channels of toCustomer) channel
channels of distribution distribution with citations understanding. Missing
with citations for each for each specific and specific channels and
specific and alternative alternative channels. alternative channels.
channels.

4. Customer In depth three-part plan to Three-part plan to attract, Missing steps to attract, keep,
Relationships attract, keep and grow keep and grow customers and grow the customer.
customers with specific with specific benchmarks. Missing understanding of
benchmarks. Specific Clear understanding of the needed relationship with
understanding of the complete customer customer.
complete customer relationship needs.
relationship needs.

5. Revenue Streams Clear understanding of the Clear understanding of the A general understanding of
profit stream for the profit stream for the the profit stream for the
product/service in product/service. A product/service. A partial
MULTIPLE markets. A complete revenue model revenue model based on
complete revenue model based on customer customer segments. General
based on MULTIPLE segments. Specific pricing pricing tactics for customer
customer segments. tactics for customer segment.
Specific pricing tactics for segment.
each customer segment.

6. Key Partners An extensive list of key A complete list of key Incomplete of missing list of
partners, suppliers, partners, suppliers, key partners, suppliers,
resources required of each resources required of each resources required of each
key partner. Key partners key partner. Key partners key partner. Key partners
expected return from your expected return from your expected return missing or to
side of the venture with side of the venture. general, from your side of the
monetary value venture.

7. Key Activities List of key activities with List of key activities with Missing or general list of key
backup data on needs to backup data on needs to activities without backup data
achieve key activities for achieve key activities. on needs to achieve key
MULTIPLE markets. Detailed tasks for activities. Missing detailed
Detailed tasks for manufacturing, technology, tasks for manufacturing,
manufacturing, technology, supply chain and other technology, supply chain and
supply chain and other activities specific to other activities specific to
activities specific to product/service.. product/service.
product/service.

8. Key Resources Complete list of resources Complete list of resources General list of resources
needed with citations for needed with citations for needed without citations for
connecting with the connecting with the connecting with the
resources, and sorted by resources, and sorted by resources, and missing
prioritization by prioritization. prioritization.
MULTIPLE markets.

9. Cost Structure Explanation of critical costs Explanation of critical Missing or general critical
for product/service with costs for product/service costs for product/service
sources for with sources. Complete without sources. In-complete
MULTIPLE markets. spreadsheet with detailed spreadsheet with detailed
Complete spreadsheet with fixed and variable for a fixed and variable for a
detailed fixed and variable for startup or in house resource startup or in house resource
a startup or in house resource requirement. requirement.
requirement by
MARKET.

Source: https://bit.ly/2Rqzu4d

Rubric for Video or Audio Presentation

Exceeds Standards (10) Meets Standards (5) Not Approaching Standards (3) Score
 Subject Knowledge Ties presentator has a Each presenter understands Presenter does not understand
complete understanding of their position on the their position on the Business
"Business Model Canvas", Business Model Canvas Model Canvas, product
product and customer product knowledge, and knowledge, and sources
segment in the executive sources referenced in referenced in executive
summary and presentation. executive summary and summary and slides.
slides.

Script Well thought out Slide Slide presentation follows a Slide presentation out of
design, follows a sequential sequential order, slide sequential order, slide transition
order, slide transition flows transition flows and proper does not flow and proper
and proper grammar, spelling grammar, spelling slide grammar, spelling slide
slide organization. All target organization. organization missing.
referenced customer included.

Delivery Excellent presentation oral Presenters oral skills well Poor oral delivery, presentation
skills well practiced, slides practiced, slides tided into not tying into slides, not
tided into presentation, and presentation, and proper prepared for client presentation.
proper attire for the event. attire for the event. Unable to respond to clients
Well thought out responses Thought out responses for questions.
for client questions with data client questions.
support for answers.

Source: https://bit.ly/2Rqzu4d

ENTREPRENEURSHIP
Week 4

Name of the Learner: Grade Level:

Section: Date:

Forecast the Revenues of the Business

Background Information for Learners What is

Revenue Forecast?
Revenue is the income obtained by a business from its sales of goods (referred to as sales revenue) or
sales of services provided to its customer (referred to as service revenue). Forecasting revenue goes hand-
in-hand with forecasting sales.
Revenue Forecast is the calculation of the quantity of cash that a company will receive from
sales in products or services during a particular time. The business revenue forecast is an essential part of
business planning though it is not intended to give actual figures for each year's earnings.
Purpose of forecasting revenue
1. Can help you discover why, when, where, and how of your sales activities.
2. It can assist you to come up with a better strategy to maximize your profit.
3. It can also help with your cash flow management through planning your capital needs to keep
away from lacking payments, dropping suppliers and investors, and adverse credit history.
4. It can assist to determine profit margin and contribution to gross profits.
5. It can manage production scheduling to prevent bottlenecks that would possibly cause lost
income and help to spot potential downtimes that cause to pay workers.
6. It can also identify peak hours.
 SIMPLE STEPS TO FORECAST REVENUE
1. Choose which forecasting methodology primarily based on the business is needed, how much
time you have, and your degree of confidence in the data.
a. TOP-DOWN FORECASTING. It is a method of estimating a company’s future performance
by starting with high-level market share (your TAM-total available market), potential market
share and down to revenue.
For example, if your company is selling a Mobile Phone, you may look at the number of
consumers who have purchased mobile phones.
b. BOTTOM-UP FORECASTING- It is a method of estimating company’s future performance
via starting with low-level company data and working up to revenue.

**You can calculate the company’s estimated revenue by multiplying the number of orders and
the average price.
c. QUALITATIVE FORECASTING- It is an estimation methodology that uses professional
judgment instead than numerical analysis. It depends upon the information of experienced and
expert consultants to provide insights into future outcomes.
d. QUANTITATIVE FORECASTING- It is a statistical approach to make predictions about the
future which makes use of numerical measures and prior results to predict future events. They
are highly structured on mathematical calculations.
2. Identify and break down your revenue drivers so that you can forecast them later. These are
the metrics that will drive your revenue:
● Salespeople
● Marketing
● Number of customers
● Average frequency of purchase (how often a single customer buys your product)
● Average purchase volume (how many products a single customer buys)
● Variety of products Amount sold of each product
● Prices of each product
● Sales cycle (how long from start to finish does it take a salesperson to close a sale)
3. Project the drivers and use the drivers to forecast the revenues. And compute the Sales
Revenue.
Formula for Revenue:
Price of per unit x number of unit sold = revenue
Forecast Expenses Incurred
Businesses incur more than a few types of expenses. An expense is the cost of operations that a
business incurs to generate revenue (Liberto 2020). It is the cost of doing business; the sum of all
activities that result in a profit. It is necessary to recognize the distinction among expenditure, expense
and cost. Expenditure refers to the amount incurred in a long term period by the company to purchase
and increase the value of fixed assets (Morah 2019). On the other hand, expenses refer to the costs that
are ongoing payments incurred on a short term basis and used to generate revenue. Cost, it refers to the
amount of money spent on the production or creation of goods or services (Cambridge Dictionary n.d.).

As the diagram above illustrates, there are several types of expenses. The common way to
categorize them is into operating vs. non-operating (Adkins 2019) and fixed cost vs. variable cost (Fresh
Books Accounting n.d.).
 OPERATING NON-OPERATING FIXED COST VARIABLE COST
EXPENSE EXPENSE

An expense a This is not related to An expense that An expense that

business incurs in a company’s day- remains changes directly and
order to keep today operation or constant for a proportionally to the
running the manufacturing. period of time changes in business
operation. irrespective of activity level or
the level of volume.
outputs. Does This also refers to the
not vary directly actual costs of making
to sales. the product or
providing the service.
Payroll Depreciation Rent Transaction fees
Insurance fees Amortization Salaries and Commissions
License fees Bank fees wages Marketing and
Rent Lawsuit payments Loan payments advertising
Marketing and associated fees Direct labor
(advertising and Currency exchange Taxes
promotional fees) rate Costs of goods sold
Accounting fees Restructuring costs Materials and supplies
Building Obsolete inventory Packaging
maintenance Interest
and repairs Taxes
Utilities
Attorney’s fees
Property Taxes
Travel expenses
You must forecast each expense of the business including:
Startup Expenses- These are the expenses incurred for the duration of creating a new business such as
pre-operating expenses (Morah 2019).
Fixed Costs - All the overhead costs of the business.
Variable Costs - All of the costs that vary with the business.

Compute Profits
The terms "profit" and "income" are often used interchangeably in day-to-day life.
Profit is generally understood to refer to the cash that is left over after accounting for expenses (Kenton
2020). Computing a profit or loss has to be completed by all companies of any size, form the small
enterprise to large enterprise. It is in a simple calculation Total Revenue – Total Expenses = Profit.
1. Compute all the revenue from sales of goods and services
Example: You owned school supplies. September 1, 2020, you sold 10,000 worth of bond papers to
Sapang Bato National High School. September 2, 2020, you sold to Angeles City National Trade School
10,000 worth of bond papers and to Sapang Bato Elementary School 15, 000 worth of ink and bond
papers. September 3, 2020, you sold 10,000 worth of school supplies from various customers.
DATE ITEM/S AMOUNT

September 1, 2020 Bond Papers 10,000

 September 2, 2020 Bond Papers and ink 25,000

September 3, 2020 School Supplies 10,000

Total Revenue
45,000
2. Compute all the costs and expenses for the accounting period ( 1 month).
For example: Let’s say your school supplies business spent 3,500.00 for paying your store rentals and
2,000.00 for your saleslady salary. In this case, your total expense is 3,500.00 + 2,000.00 = 5,500.00.
3. Subtract all the expenses from the revenue. You just simply subtract your expenses to your sales
revenue. The money left represents your business profit. In the example, you already computed
your total revenue and total expenses from your school supplies business. Subtracting your total
expenses from your total revenue gives you 45,000 – 5,500 = 39, 500 profit.
4. Note that a negative result for profit is called net loss. Learning Competency with Code
1. Forecast the revenue of the business
2. Forecast the cost to be incurred
3. Compute Profits
TLE_ICTAN11/12EM-Ia-2
Activities
Day 1
Activity 1: CROSSWORD PUZZLE

Across
2. An expense that remains constant for a period of time
4. The amount of money spent the production or creation of goods or services.
7. The cash that is left over after accounting for expenses.
8. The amount incurred in a long-term period by the company to purchase and increase the value of fixed
assets
9. The income obtained by a business from its sales of goods or services provided to customers 10. A
statistical approach to make predictions about the future which makes use of numerical measures.
Down
1. An expense that changes directly and proportionally to the changes in business activity level or
volume.
3. An expense incurred for the duration of creating a new business
 5. Uses professional judgement instead than numerical analysis
6. The cost of operations that a business incurs to generate revenue

Day 2
Activity 2: Identification
Instruction: Read the statement comprehensively. Identify which of the statements best described as
Fixed Cost, Variable Cost, Operating Expense, and Non-Operating expense.
1. Your business rents a space at CHH building on Friendship Highway where you pay 25,000
monthly. This is an example of __________.
2. If you own a home, you must pay using electricity. The amount you pay changes monthly
depending on how much you consume. This is an example of a _________.
3. An expense that is not related to your company’s day-to-day operation.
4. An expense of your business incur in order to keep running your business.
5. The actual costs of making a product or providing the service. Activity 3: Compute Expenses,
Sales Revenue, and Profits Transactions for September 2020 were as follows:
Advertising costs paid in cash 2,000
Purchased equipment for 6,000 cash
Paid 1,500 cash for September Store rent Provided services to
customers 7500.
Cash collected from customers 15,000.
1. Identify and calculate total revenue.
2. Identify and calculate total expenses.
3. Compute profits.
Day 3-4
Activity 4: Forecasting is all about assumptions. Assumed that you are going to establish your Milk Tea
Store in your area.
Instruction/ Guide Questions:
1. Who are your target market/ potential buyers?
2. What are the flavors are you going to offer for the first month of operation?
3. What are the glass sizes available?
4. What are the ingredients and supplies you are going to use?
5. Estimate all your expenses and cost of goods sold in purchasing ingredients and supplies.
6. Compute all the expenses and cost of goods sold.
7. What are the equipment/machines you will purchase in establishing your milk tea business?
8. Estimate the amount of the machine and equipment.
9. Compute all the amounts used in purchasing machines/ equipment..
10. What marketing platforms are you going to use? Estimate the amount for advertising expenses.
11. Compute the total advertising expense.
12. Are you going to hire staff? If so, how much is the salary each day? How many staff will you
hire?
13. Compute your staff salary in one month.
14. How much will it cost to acquire a Barangay Business permit?
15. Calculate all your expenses from supplies and ingredients, machine/ equipment, advertising
expense, salary expense, and business permit.
16. Estimate the price of your milk tea, by size and flavor.
17. Estimate the number of customers who will buy your milk tea for each size and flavor in a day.
18. How many customers will add each day to buy your milk tea?
19. Compute your sales per day, per week and per month.
 20. To compute your Profit, Add all your sales revenue in a month and subtract all your expenses and
costs.
Reflections:
How Forecasting can contribute to the startup business?
References
Adkins, William. 2019. Small Business Chron. March 1. Accessed September 11, 2020. https://smallbusiness.chron.com/differencebetween-operating-
nonoperating-expenses-39827.html.

n.d. allBusiness. Accessed September 11, 2020. https://bit.ly/35uHMA5.

n.d. bdc. Accessed September 9, 2020. https://bit.ly/2RasxUC.

n.d. Cambridge Dictionary. Accessed September 11, 2020. https://dictionary.cambridge.org/us/dictionary/english/cost.

n.d. Fresh Books Accounting. Accessed September 10, 2020. https://bit.ly/35wgdGw.

Kenton, Will. 2020. Investopedia. July 21. Accessed September 11, 2020. https://www.investopedia.com/terms/p/profit.asp.

Liberto, Daniel. 2020. Investopedia. August 23. Accessed September 12, 2020. https://www.investopedia.com/terms/e/expense.asp.

Morah, Chizoba. 2019. Investopedia. November 27. Accessed September 12, 2020.
https://corporatefinanceinstitute.com/resources/knowledge/accounting/expenditure/. Murphy, Chris B. 2020.
Investopedia. March 13. Accessed September 10, 2020. https://bit.ly/33k8jgI.

http://puzzlemaker.discoveryeducation.com/code/BuildCrissCross.asp

Answer Key

Activity 1 ACROSS DOWN

2. FIXED COST 1. VARIABLE COST

4. COST 3. STARTUP EXPENSE
7. PROFIT 5. QUALITATIVE
8. EXPENDITURE 6. EXPENSE
9. REVENUE
10. QUANTITATIVE

Activity 2:

1. FIXED COST
2. VARIABLE COST
3. NON- OPERATING EXPENSE
4. OPERATING EXPENSE
5. VARIABLE COST

Activity 3:

1. Service Revenue 7500.00 Sales Revenue

15,000.00

Total Revenue 22, 500.00

2. Advertising Costs 2,000.00 Equipment

6,000.00

Rent 1,500.00

Total Expenses 9,500.00

3. Total Revenue 22,500.00 Total Expenses

9,500.00

Profit 13,000.00

Activity 4:

- Learners may have a different answer

- Consider the teacher’s judgement in evaluating the learner’s answer.
 ENTREPRENEURSHIP
Week 5

Name of the Learner: Grade Level:

Section: Date:

Starting a Business
Background Information for Learners
Starting a business involves many activities related to organizing the organization, generating of an
idea for the enterprise, researching the idea's potential for success, and writing a business plan. Starting a
business of any size requires an investment. Regardless of the size of a business, it must be unique in
order to succeed. Many large, successful companies began as small organizations with a business idea
that was significantly different from anything else on the market (Encyclopedia.com 2019). The most
frequently used forms by entrepreneurs are startup, buying existing business and franchising.
Startup is a young company founded by one or more entrepreneurs to develop a unique product
or service and bring it to market. Buying existing business is acquiring either the shares or all the assets
of the existing company. Franchising is when the owner of the company that already has a successful
product or service, licenses its trademark, trade name, and methods of doing business to others in
exchange for an initial franchise fee and royalty payments (Edralin 2019).
Consider these factors (Edralin 2019) before
you start a business to build an entrepreneurial
mindset. It is important to an entrepreneur to exploit
the opportunity by starting a business on the right path,
with a solid foundation to enable to grow, succeed and
become sustainable in the business.
In starting a business, you must be clear about
your purpose in establishing your own business
whether it is for profits or for feeding your family.
You must also present a winning business
concept that manifest tremendous future possibilities
or might say you may change the world.
You must also think of having an angel in your
business. Look for partners that can contribute their
expertise, experience and good character that will
enable your business to succeed.

Steps to Start a Business

Starting a business involves planning, making key financial decisions and compel a series of legal
activities. Here are the steps that might guide you in starting your business:
1. Conduct Market Research – Gathering
information about existing business and
 potential customers may help you to tell if there is an opportunity and may find you a
competitive advantage for your business.
2. Write your
Business Plan – Your business plan is the foundation of your
business. It is your roadmap on how to structure, run and grow
your new business. Your convincing power to attract investor to
your business. 3. Fund your business – Look for sources of
funds.
4. Pick your Business Location – Finding business location is one of your important decisions to
make.
5. Choose a Business Structure – Identify whether your business is micro or large, single
proprietorship or partnership, it will give impact your business registration requirements and your
personal liability.
6. Choose your Business Name – Make sure your business name is unique and not being used by
someone else.
7. Register your Business- Make your business legal to protect your brand.
8. Apply Licenses and Business Permit – Make your business legally operated and compliant.
9. Advertise your Business – You may use traditional advertising such as television ads, radio ads,
and newspaper your ads and the easiest way now is using social media platforms such as
Facebook, Youtube, Instagram and the like.
10. Build your Team – Look for staff that will contribute to the success of your business.

Learning Competency with Code

Manifest Understanding of starting and operating a simple business. CS_EP11/12B-ENTREP-
IVa-i-1
Activities
Day 1-2
Activity 1
Instruction: Arrange the steps to start a business. Rewrite the whole statement from Step 1 to
10.
1. Look for sources of funds
2. Make your business legal to protect your brand name.
3. Use Social Media Platform in advertising your business.
4. Look for trained staff.
5. Make your business legally compliant.
6. Create a unique business name.
7. Gather information from existing business and from potential customers.
8. Create your business plan
9. Find a strategic location.
10. Identify your business structure.
Day 3-4
Activity 2: Choose the three top most important factors you will consider before starting a business.
Explain each factors why you choose the three as your top most important factors to consider.
Rubric for Essay
EXCELLENT VERY GOOD AVERAGE
5 4 3
 Ideas This paper is clear and focused. It This paper is mostly The writer is beginning to
holds the reader's attention. Relevant focus, and has some define the topic, even though
details and quotes enrich the central good details and development is still basic or
theme. quotes. general.
Organization The organization enhances and Paragraphs are The organizational structure
shows the central idea or theme. The mostly organize, in is strong enough to move the
order, structure of information is order, and makes reader through the text
compelling and moves the reader sense to the reader. without too much confusion.
through the text.
Sentence The writing has an easy flow, The writing mostly The text hums along with a
Fluency rhythm, and cadence. Sentences are flows, and usually steady beat, but tends to be
well organize with strong and varied invites oral reading. more businesslike than
structure that invites expressive oral musical, more mechanical
reading. than fluid.

References
Edralin, Divina M. 2019. "Starting a Business." In Entrepreneurship, by Divina M. Edralin, 43-63. Quezon City: Vibal Group Inc.

2019. Encyclopedia.com. November 22. Accessed October 25, 2020. https://bit.ly/3onghj3.

Answer Key

Activity 1

Scoring Rubrics

Arrange completely and properly 10pts.

Activity 2:

- Learners may have a different answer

- Consider the teacher’s judgement in evaluating the learner’s answer.