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ENTREP HANDOUT Materials
- Raw items that are used in creating a
UNIT 10: Method, Machine, Materials, product or performing a service. and Manpower (4Ms Of Operations) - It refers to the raw materials, Method ingredients, feedstock, or the - Refers to the process that is strictly unprocessed materials needed for the followed in the manufacturing of a production. business product. Manpower - Human resources who will handle IF NOT FOLLOWED, YOU WILL the WASTE MONEY, TIME, AND business operations. EFFORT - The entrepreneur should hire Machine qualified employees who can handle - Refers to the tools, facilities, and operational functions. systems that are used to produce a RECRUITMENT PROCESS: product. - You have to identify the tools, - Reads resume, and cover letters to facilities, systems, and equipment evaluate the applicants. required for manufacturing and 1. Job Analysis production because sometimes the - A tool to collect job-related data. It business only requires simple tools. identifies the duties, responsibilities, Landline Phones to be used for skills, abilities, and work telemarketing and customer service. environment of a specific job. Mobile Phones to cater the option to 2. Job Description – Information about have mobile applications for the the job i.e job title, job location, job business, for order-taking, payments, position, job summary (i.e report the marketing, marketing research, sales and entertain customers), mobile banking, and Internet nature, duties to be performed. It also promotion. includes working conditions (i.e Computers for internet marketing, requires standing) and machines or taking orders, and online response used to employ in the business. and queries. 3. Job Specification - Qualification, Point of Sale (POS) Machines for educational attainment, work charging debit/credit card, tracking experience relevant to the job, sales, storing data, and analyzing physical appearance, and age limit. purchases. SELECTION PROCESS Accounting and Inventory Software for accounting business - This process pertains to the process transactions, profitability, sales, and of picking the right applicant for the inventory. job. right job. Website for order taking, 24/7 marketing, online conversations, and collecting customer information Design - Improve the marketability of the product through its appearance. - A distinct design may differentiate the product from others in the market. BE CREATIVE TO YOUR DESIGN IN ORDER TO STANDOUT FROM THE COMPETITORS. Product Colors - Color is an important consideration for products. The use of the right color combination is appealing to the customers. Product Quality - Collection of characteristics of a product. - It should fulfill and meet the requirements of the end users. - The product is in good quality if it is reliable and performs all its functions smoothly. Product Warranty - Feature where the buyer is assured that the product being purchased Lesson 2: Product Description and meets the specification stated in the Prototyping product label. Product Description Lesson 3: Product Testing and Validation - Declaration of information about a product. Product Testing - Purpose of creating a product - Process of examining the original description is to supply the model of the product customers with important information about the features of the Importance of Product Testing product. 1. Testing and evaluating the prototype Product Satisfying Features allows the business to determine the - Characteristics of the product that aspect of improvements and changes describe its appearance and in the product. capabilities. 2. Evaluating the product prototype which is composed of consumers assesses the final production cost. who are the target market for 3. The entrepreneur allows the validation. designer of the product to plan an 3. Final Design. This includes the efficient and cost effective product design chosen by the consumer line. panel. 4. The customer can use the product 4. Proofs. Proofs are printed samples of efficiently and safely. It can labels that are submitted to printing guarantee customer satisfaction suppliers after the final artwork is because the product is tested. accepted. 5. Product testing may lead to 5. Delivery and Quality Checking. innovation and become highly Copies of acceptable color ranges are competitive. given to compare and check if actual Labeling/Label packaging is achieved. - A piece of printed information about Lesson 4: Supplier, Value, and Supply the product’s features and attributes. Chain - Provides a description. Raw Materials Types of Labels - known as feedstock in case of 1. Brand Label machines, refers to the unprocessed - Simply applied to the product or material used in the primary package. It gives the customer production or manufacturing of information about the brand. goods. 2. Descriptive Label Logistics Components of Supply - Specifies the product usage, Chain construction, care, performance, or other features. - Logistics refers to the process of - This also includes manual, and planning and implementing efficient instructions transportation and storage of goods 3. Grade Label from the point of origin to the point - Identifies the product quality with of consumption. letters and numbers or words. Supply Chain - It contains the expiry date, content - It is the distribution of the supplies values, and other features. where there is a connection of Label Development Process individuals, organizations, and others in the production and distribution of 1. Initial Design. Designs are product to the final consumer. submitted for approval. This is to - It is the transportation of goods from ensure better choices before the final producers to end consumers. results are given. Value Chain 2. Consumer Test. Designs that are - A step-by-step activity needed to create accepted by an approving officer are a product or a service. referred to the consumer panel, - A business conducts value chain decisions such as expansion or restructuring. analysis by evaluating the detailed External users, including investors and procedures involved in each step. creditors, assess the statement to gauge potential returns on investment.
Michael Porter’s Value Chain
- creates a general-purpose value chain Income Statement Formula and that a business may use to examine Preparation all the activities involved in creating Revenues - Expenses = Income or value for its customers. Profit (Loss) - The value chain activities are - from the forecasted revenues of the performed to determine the cost and business, the entrepreneur has to effect of the activities on profits of deduct the estimated cost of goods the business. sold. - This tool may help understand the - The difference between those two sources of the value of the should give the gross profit of the organization. business. The operating expenses Elements in Porter’s Value Chain must then be subtracted from the - focuses on how inputs are changed gross profit to arrive at the operating into outputs that are purchased by the profit. customers. - The taxes due are then subtracted to - Using these viewpoints, Porter determine the net profit after taxes. identifies a chain of activities common to all businesses and Parts of Income Statement divides them into Primary and 1. Gross Sales or Sales Revenue. Every Support Activities. income statement begins with the Lesson 5: Income statement, Balance business's gross sales or revenues, Sheet calculated based on the chosen accounting method. Income Statement - Known as the profit and loss 2. Cost of Goods Sold (COGS). The statement cost of goods sold refers to the direct - A detailed report that shows all the costs associated with producing all of the income or earnings, expenses, and products and/or services sold by the the resulting profits or losses of a business. business for a given accounting COGS comprises all direct expenses period. incurred, such as raw materials, labor Users of income statements fall into two fees, and shipping costs. In the case of a categories: internal and external. Internal milk tea shop, its cost of goods sold users, like management and boards of would include the cost of raw tea leaves, directors, analyze performance to inform sugar, milk, and the packaging used for 7. Net Profit after Taxes. Net profit the product. after taxes is the variable that always marks the end of an income statement. It is a financial term that reflects the profit of a business after all taxes have already been paid. It represents the earnings after all expenses have been deducted from the sales revenue of the business.
3. Gross Profit/Margin. Gross Balance Sheet
profit/margin is derived from subtracting - Which is sometimes referred to as the total cost of goods sold from the the “statement of financial position,” sales revenue. This variable of the is one of the financial statements that income statement manifests the provide for the so-called “book profitability of the business after taking value” of a business. The balance into account the direct costs incurred, sheet gives information as to the i.e., the costs associated with making and ability of a business to meet its long- selling its products, prior to subtracting term financial obligations.’ its overhead costs. - It is a statement that shows the assets, liabilities, and equity of a 4. Operating Expenses. Also referred business during a certain period of to as general expenses, operating time. expenses mainly include rent or lease, - The equation used in any balance bank fees, equipment or machinery sheet is Assets = Liabilities + expenses, marketing and advertising Equity. expenses, and all other expenditures to keep the business going. Components of Balance Sheet
5. Operating Profit/Margin. The 1. Assets. represent all of the
operating profit in an income statement investments of a business, which reflects the residual income after include cash, accounts receivable, deducting all expenses or costs of doing inventory of goods, machinery, business, excluding deductions of tools, equipment, facilities, and so interests and taxes. Also referred to as forth. “operating income,” operating profit a. Current assets serves as a good indicator of the -These assets are generally potential profitability of a business what the business expects to because it does not include all other turn into cash within a period external factors from the calculation. of one year. Examples of 6. Taxes Due. Taxes basically refer to current assets include cash the total amount of tax debt owed by the and cash equivalents, business to the Bureau of Internal marketable securities, Revenue (BIR), the taxing authority in inventory, accounts the Philippines. receivable, and prepaid necessary in making their operating, expenses. investing, and financing decisions. b. Noncurrent assets 1. Customer or client invoices -These assets are referred to has to be recorded to determine as the long-term investments whether payments have been made that the business reckons to on time or if they still have hold for at least one year. outstanding balances.
2. Liabilities. Pertain to anything that it 2. Payroll
owes to the suppliers, banks, the Important bookkeeping task that government, to its employees, and to other must be monitored on a weekly or financial institutions. monthly basis, depending on the nature of business. a. Current liabilities 3. Payments to suppliers - These are the liabilities of a business Every entrepreneur must stay on top that are usually due within a period of his payments to all the suppliers. of one year. The settlement of these This action helps preserving liabilities may be from the use of reputation and overall credibility of current assets such as ash or from the the business. sale of inventory. 4. Bank accounts b. Noncurrent liabilities Business rely on paper checks and cash in paying bills. Monitoring bank - Noncurrent liabilities are those that a accounts helps in tracking the business doesn’t expect to settle number of cash withdrawals that within a period of one year. These were already made. long-term obligations would include long-term leases, bonds payable, Single-entry vs Double-entry product warranties, and loans. Single-entry. All financial 3. Equity transactions are recorded as a single - Equity primarily refers to the net entry in the books of accounts and worth of a business—the amount of only calculates net income of money left after selling all its assets accounts, and does not consider the and after paying its liabilities. assets and liabilities of business. - The equation for equity would be Double-entry. Transactions have Equity = Assets - Liabilities. impact on assets, liabilities, and equity of the business and may be Lesson 6: Bookkeeping, recorded under either the “debit” or Bookkeeping. The process that “credit” side of bookkeeping system. involves daily recording of a Double-entry Bookkeeping business’s financial status so that every transaction or event will be - States that all financial transactions able to track all information have equal and opposite effects in two different accounts- debit and credit side. - Follows the equation of Assets = Liabilities + Equity Ledger - Permanent summary on all accounts entered in reporting journals.