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.