ENTREPRENEURSHIP

Lesson 1. INTRODUCTION
Relevance of the Course
“If you can dream it, you can do it.” - Walt Disney
It is the entrepreneur who could change the global economic landscape.
This will open new avenue to explore the market that is untapped and undeveloped.
This will strengthen the domestic economy by developing new industries and generate local employment for our people.
Benefits to Senior High School Students
1. Adaptation of concepts and strategies for idea generation.
2. Evaluate feasibility of ideas.
3. Discovery of entrepreneurial innovators to start their own business.
4. Consider ethical and legal business practices.
5. Write a micro business plan.
Usefulness of the Course to the Students
1. Develop skills in starting up a business.
2. Demonstrate skills in maintaining business in long term basis.
3. Enhances knowledge of business operations and expansion.
4. Demonstrates business management.
5. Considers to become employer than employee.
6. Changes in personal and career attitudes including: communication; problem solving; self-management /personal
responsibility; collaboration/networking; creativity and teamwork.
Importance of Entrepreneurship Education
1. Entrepreneurship education is very important to our economy as key driver. - Shoe Mart
2. Entrepreneurship education is an individual lifelong learning process.
3. Entrepreneurship will energize school management.
4. Entrepreneurship will transform learners to be innovators.

Lesson 2. Key Concepts and Common Competencies

“Opportunity comes from one person’s idea that influences others to take action.”

Entrepreneurship
= Is a science of converting processed into remarkable business venture.
=A capacity for innovation, investment and expansion in new market, products and techniques.
=Taking the risks and invest resources to make something unique or new.
Competencies
Specific Goal Setting= Entrepreneurs should be motivated to set goals, particularly business growth objectives.
Self-Efficacy= Entrepreneurs must believe in their own ability or self-confidence.
Need for Achievement= Entrepreneurs must have a high need for achievement to take responsibility for outcomes.
Ambition= Entrepreneurs must be motivated, persistent, and persevere even in the face of situational challenges.
Willingness to Learn=Entrepreneurs should have a strong willingness to learn often pursue opportunities to acquire new
skills and competencies.
Strong Initiative=Entrepreneurs must have a high initiative are often driven to work hard.
Adaptability and Flexibility= Entrepreneurs must learn how to deal very well with a unique ability to choose actions even
without all necessary information.

Willingness to take risks =Entrepreneurs are willing to take consequences, they can identify and calculate risks.
Interpersonal skills = Entrepreneurs must have a strong interpersonal skill of working well with people from different
backgrounds.
Industry Wide Competencies/Work Competencies
1. Networking/Collaboration
2. Creative/Critical Thinking
3. Planning/Organizing
4. Checking, Examining & Recording
5. Business Principles
6. Computer Competency
7. Workplace Competencies
8. High-Growth, High-Value entrepreneurship
9. Innovation and Creation
10. Marketing
11. Business Operations
12. Risk Assessment & Management
13. Financial Management
14. Problem Solving/Decision Making
10 Competencies for Entrepreneurial Success
1. Integrity
2. Conceptual Thinking
3. Risk Taking
4. Networking/Collaboration
5. Strategic Thinking
6. Commercial Aptitude
7. Decisiveness
8. Optimism
9. Customer Relation Service
10. People Centered
LESSON 3: Core Competencies in Entrepreneurship
“The greatest discovery of my generation is that people can alter their lives by altering their attitudes,”- William James
Entrepreneurs are individuals who are alert to profitable opportunities for the exchange of goods and services. - during opening
of classes, during Christmas.
Entrepreneurial Skills and Competencies
1. Negotiating
2. Planning
3. Risk Assessing
4. Purchasing
5. Accounting
6. Purchasing and Training
7. Selling
8. Controlling and dealing with emergencies

a. The entrepreneur as a Missionary= The entrepreneur is a missionary who perceives opportunities inherent in the
exchange of goods with great desire for profit.
b. Entrepreneur is Goal Driven = The entrepreneur is goal driven and self-confident as he sets his goals and strives to
attain the projected target and accomplishments.
c. The entrepreneur as a Marketing Man= The needs and wants of customers are properly identified and these are
propelling reason for him to take the opportunity to make profit.
d. Entrepreneur Starts Small to Become Big=Entrepreneurs start small scale but with their managerial talents and
persistence, they exploit the opportunities available for their disposal.
e. The Making of Entrepreneur= It is a dynamic process and an approach.
1. Approach – entrepreneur considers the business opportunity as a chance to find new ways to solve the problem
rather solving immediately the problem.
2. Manager – adapter, Entrepreneur – innovator.
 3. Entrepreneurship – is a process that can be developed, learned and nurtured.
ENTREPRENEURSHIP IS A DYNAMIC PROCESS
 It is a dynamic process of innovation and the creation of new venture.
 The real entrepreneur is an individual with the greatest drive for expansion and growth and has propensity
to make a difference in terms of their achievements in profit and exploitation of the resources.
 Entrepreneur develops strategic plans and programs that will ascertain a definite advantage over the
others in their line of business.
THE FACTORS THAT DEVELOP ENTREPRENEURIAL ACTIVITY
1. The entrepreneur Takes the Initiative
2. Organization of Capital Resources
3. The Development of Administrative Machinery
4. The Development of Entrepreneurial Autonomy
5. The Development of SWOT Analysis
PECULIAR CHARACTERISTICS OF MANAGERS IN SOLVING PROBLEMS
1. The manager develops system and procedure that are précised based on current practices in the industry.
2. The manager is interested in solving organizational problems rather than finding other avenues in the
solution of the problems.
3. The manager is interested in the refinement of policies and procedure and tends to revise them to solve
existing problems.
4. The manager is interested in the refinement of policies and procedure and tends to revise them to solve
existing problems.
5. The manager is interested in the refinement of policies and procedure and tends to revise them to solve
existing problems.
CHARACTERISTICS OF ENTREPRENEUR IN SOLVING PROBLEMS
1. He looks at the problem on different angles and finds means to circumvent the same.
2. He discovers the roots of the problem and develops avenues to better solve the problem. He formulates
solutions and alternatives.
3. He develops basic assumptions and hypothesis related to current practices and makes innovations based
on careful analysis through SWOT.
4. The entrepreneurs is interested in the end result rather than the means to achieve it. He has little tolerance
for details and routine work.
5. He capitalizes on people with bright ideas and talents and gets their opinion and consensus and with little
regards for people with mediocre ideas.
THE DEVELOPMENT OF ENTREPRENEURSHIP
The making of Filipino Entrepreneur
1. The making of Filipino entrepreneur is a process of trial and error – colonization for more than 300 years is
a great factor in the slow development of entrepreneurial activity in the country.
2. The concept of owning a small business makes the person an entrepreneur – where entrepreneurship is
more than being self employed. (copy cat syndrome)

LESSON 4: Job Opportunities

“When you love what you do, you have the passion you’ll need to fuel the often intense road of entrepreneurship.
Keep the passion alive.”
- Kevin O’Leary
Job Opportunities
1. Employment is One Great Factor in Economic Development
2. Income Opportunity in the Countryside is still Subsistence in Nature
3. We need to introduce new technology to make farming productive, improved irrigation, working condition and
increase productivity wherein technology is one important factor in development. (economy and entrep’l act.)
The Challenges for Entrepreneurship
 1. The new entrepreneur must be a doer and willing to work hard and long until he achieved the task he wanted for
himself.
2. Personal attention and comprehensive awareness for progress of the business is not trusted to other people.
3. The new entrepreneur must have high sense of integrity that he stands firm on his principles and ideals.
4. Emotional stability is an important factor in the making of an entrepreneur.
5. The build in self-starting mechanism that drive entrepreneur to success is his executive ability to manage people
and resources – 5 functions of management.
Starting Point to Entrepreneurial Success
1. Start to be on your own. – employee to employer.
2. Explore the Business Environment. – feasibility study and SWOT analysis.
3. Be in control – key driver to success.
4. Have a Good Accountant or a Trusted Financial Adviser – for different financial activities of a business.
5. Seek the advice of Professionals. – legalities, etc.
DEVELOPING BUSINESS PLAN
What is viability?
 Viability is defined as the ability to survive. In a business sense, that ability to survive is ultimately linked to financial
performance and position.
 A business is viable where either:
 it is returning a profit that is sufficient to provide a return to the business owner while also meeting its commitments to
business creditors
 it has sufficient cash resources to sustain itself through a period when it is not returning a profit.
What is Profitability?
 is the ability of a business to earn a profit. A profit is what is left of the revenue a business generates after it pays all
expenses directly related to the generation of the revenue, such as producing a product, and other expenses related to the
conduct of the business activities.
 Profitability is the primary goal of all business ventures. Without profitability the business will not survive in the long run. So
measuring current and past profitability and projecting future profitability is very important.
 Profitability is measured with income and expenses. Income is money generated from the activities of the business.
However, money coming into the business from activities like borrowing money do not create income. This is simply a cash
transaction between the business and the lender to generate cash for operating the business or buying assets.
 Expenses are the cost of resources used up or consumed by the activities of the business. Resources such as a machine
whose useful life is more than one year is used up over a period of years.
IDENTIFY AND MEET A MARKET NEED
WHAT IS A TARGET MARKET?
 The target market is the individuals or companies that are interested in a particular product or service and are willing and
able to pay for it.
 The marketing concept uses the needs of customers as the primary focus during the planning, production, distribution, and
promotion of a product or service.
UNDERSTAND YOUR CUSTOMER
 Customers are the people who buy the products and services companies offer.
 Customers buy goods and services to satisfy economic wants and needs.
 An economic want is an unfilled desire of a customer.
 An economic need is anything that is required to live.
DEMOGRAPHICS AND PSYCHOGRAPHICS
  Demographics are data that describe a group of people in terms of their age, marital status, family size, ethnicity, gender,
profession, education, and income.
 Psychographics are data that describe a group of people in terms of their tastes, opinions, personality traits, and lifestyle
habits.
IDENTIFY YOUR TARGET MARKET
1. Who are my customers: individuals or companies?
2. If customers are individuals:
How old are they?
How much money do they earn?
Where do they live?
How do they spend their time and money?
3. If customers are companies:
What industries are they in?
Where are those industries located?
4. What needs or wants will my product or service satisfy?
5. How many potential customers live in the area in which I want to operate?
6. Where do these potential customers currently buy the products or services I want to sell them?
7. What price are they willing to pay for my products or services?
8. What can I do for my customers that other companies are not already doing for them?
THE IMPORTANCE OF A CUSTOMER PROFILE
 A customer profile is a description of the characteristics of the person or company that is likely to purchase a product or
service.
MARKET SEGMENTS- Groups of customers within a large market who share common characteristics are known as market
segments.
UNDERSTAND COMPETITION- Knowing about your competition will help you define your target market.
Market research is a system for collecting, recording, and analyzing information about customers, competitors, goods, and services.
Market researchers collect primary and secondary data.
1. Primary data is information collected for the very first time to fit a specific purpose.
 Questionnaire or survey
 Observation
 Focus groups
 Disadvantage of primary data
2. Secondary data is data found in already published sources.
 Publications issued by government and community organizations, such as the U.S. Census Bureau, the Small
Business Administration, and Chamber of Commerce
 Books about specific industries
 Information on web sites for government and businesses
 Books about other entrepreneurs who set up similar businesses
 Specialized magazines and journals devoted to particular fields
 Newspaper articles and statistics
HOW TO PERFORM MARKET RESEARCH
1. FIVE STEPS OF PRIMARY MARKET RESEARCH
 Define the question
 Select a research method
 Collect data
 Analyze data
 Draw conclusions
2. DESIGN A SURVEY
 Length of questionnaire
 Questions
a. Clear
b. Easy to answer
c. Only important questions
IDENTIFY YOUR COMPETITION
 Direct competition is competition from a business that makes most of its money selling the same or similar products or
services as another business.
 Indirect competition is competition from a business that makes only a small amount of money selling the same or similar
products or services as another business.
 Find your direct competition
 Find your indirect competition
COMPETING WITH LARGE BUSINESSES
 Large retailers usually are able to keep larger quantities of products in stock.
 Large retail chains don’t rely on one single product line.
 Large companies usually have more resources to devote to advertising.
STUDY INDIVIDUAL COMPETITORS
 Price
 Location
 Facility
 Strengths
 Weaknesses
 Strategy
STRATEGIES FOR MAINTAINING CUSTOMER LOYALTY
 Listen and respond to feedback
 Other strategies for maintaining loyalty
 Superior service
 More convenient hours than other businesses
 Easy return policies
 Store-specific credit cards
 Personal notes or cards
 Frequent buyer programs
FUNDAMENTALS OF MARKET

Unique Selling Proposition- a method to market your product or service in a way that is different than other competitor’s marketing
strategies
Unique - clearly sets you apart from your competition, positioning you the more logical choice.
Selling - It persuades another to exchange money for a product or service.
Proposition - It is a proposal or offer suggested for acceptance
7-step process in constructing your Unique Selling Proposition
Step 1: Use Your Biggest Benefits - Clearly describe the 3 biggest benefits of owning your product or service.
Step 2: Be Unique - your USP separates you from the competition, sets up a "buying criteria"
SAMPLE
PRODUCT: "A unique baseball swing that will instantly force you to hit like a pro."
• OFFER: "You can learn this simple technique that makes you hit like a pro in just 10 minutes of batting practice."
• GUARANTEE: "If you don't hit like a pro baseball player the first time you use this new swing, we'll refund your money."
Step 3: Solve An Industry "Pain Point" Or “Performance Gap” - Identify which needs are going unfulfilled within either your industry or
your local market.
Step 4: Be Specific and Offer Proof - Consumers are skeptical of advertising claims companies make.
Step 5: Condense into One Clear And Concise Sentence - The most powerful USPs are so perfectly written, you cannot change or
move even a single word.
Step 6: Integrate Your USP Into ALL Marketing Materials - Variations of your USP will be included in theALL your marketing materials
Step 7: Deliver on Your USP's Promise –Be bold when developing your USP but be careful to ensure that you can deliver.

Value Proposition An analysis or statement of the combination of good and services offered by a company to its customer in
exchange for payment.
 Value proposition refers to a business or marketing statement that a company uses to summarize why a consumer should
buy a product or use a service. This statement convinces a potential consumer that one particular product or service will add
more value or better solve a problem than other similar offerings will.
A COMPLETE VALUE PROPOSITION WILL IDENTIFY
1. MAIN CUSTOMER
2. CUSTOMERS PROBLEM
3. UNIQUE BENEFIT
4. COMPETITIVE ADVANTAGE

STEPS IN DEVELOPING VALUE PREPOSITION

Step 1: Know your customer

 Who is he or she?
 What does s/he do and need?
 What problems does s/he need to solve?
 What improvements does s/he look for?
 What does s/he value?
Step 2: Know your product, service or idea

 How does the product, service or idea solve the problem or offer improvement?
 What value and hard results does it offer the customer?
Step 3: Know your competitors
 How does your product or idea create more value than competing ones?
Step 4: Distill the customeroriented proposition
• "Why should I buy this specific product or idea?"
Step 5: Pull it all together
 turn around your customers' answer' from step 4 into a value proposition statement.
SAMPLE:

HOW TO CHOOSE A GREAT BRAND NAME

What is brand identity?

 A brand identity is more than a logo. It’s more than a brand style guide. It’s an essential way to differentiate yourself from
your competition. A brand identity influences your customers’ experience at every touchpoint.
 It is the sum total of how your brand looks, feels, and speaks to them—the elements that help them decide if they want to
engage with you.
 To us, it’s the total composite of elements that shape how your brand is perceived. Some brand identities are tied to the
practical elements: design, packaging, etc. Some even move into the realm of the senses: how it sounds, tastes, feels, and
even smells (e.g., cosmetics).

For the purposes of this post, we’re focusing on the visual element of a brand identity (aka your brand’s visual language).

This includes:

 Logo
 Color palette
 Typography
 Iconography
 Design system
 Photography/graphics

Keys to a Good Brand Identity

A logo and a color palette alone do not make a brand identity. A good identity is well thought-out to make it:

 Distinct: It stands out among competitors and catches your audience’s attention.
 Memorable: It makes a visual impact. (Consider Apple: The logo is so memorable, they only include the logo—not their
name—on their products.)
 Cohesive: Each piece complements the brand identity.
 Easy to apply: It’s intuitive and clear for designers.

The Process Behind the Brand Identity

 When we begin a branding project, we approach each phase from a philosophical and highly critical standpoint. We want to
inspect, poke, and prod until we get to the core of a brand. Then we get down to business. Here’s what that looks like.

1) Research & Discovery

This research helps us create a brand persona, a comprehensive picture of what the brand is. To do this, we ask many questions.

2. Who is the audience?

We also need to understand what a brand’s customers want to engage with.

 3. What is the existing brand?

Sometimes we’re building a brand identity entirely from scratch. Other times we’re updating a stale identity. Either way, we need a
full assessment of product name

4. Who is the competition?

Building a brand identity is all about differentiation: making a brand visible, relevant, and unique. Without a firm understanding of
the competitive landscape, it’s easy to blend in. This research is crucial to understand not just who the competition is but how the
brand compares, in perception and presentation.

5. Logo

 We go old-school here and bust out the pencils to free-sketch. As we go through iterations, we flesh out logo mark, core
shapes, and complementary imagery—all in black and white. As we receive feedback and iterate, we want to make sure that
the core imagery is powerful enough to deliver the message on its own, without the enhancement of color.
Marketing is communicating the value of a product, service or brand to customers, for the purpose of promoting or selling that
product, service, or brand.
Marketing techniques include choosing target markets through market analysis and market segmentation, as well as understanding
consumer behavior and advertising a product's value to the customer.

1. Product: The product is the primary – though not the only – component of the 7 Ps of the marketing mix. Marketing
consultants will consider carefully which features of the product are most likely to appeal to its target market, as well as
taking into account factors such as the life span of the product, and its potential for diversification and development.
2. Price: The price that is set for a product not only determines the amount of profit the business will be able to make from it
(and therefore how many units will need to be sold), but also affects the value of the product as perceived by the consumer.
Many consumers will use the product’s price as a means of judging its quality, and most will compare the price with that of
similar products before deciding which to purchase.
3. Place: Products are not only sold in shops – they may also be sold door-to-door, online, or in trade fairs or markets.
4. Promotion: This is an umbrella term, covering all the media by which a business informs customers about its product –
including advertising, public relations and sales promotion.
5. People: Knowing the customer is the linchpin of a successful marketing strategy – without accurate customer profiling, none
of the other 7 Ps of marketing mix can be correctly channeled, and the product may well fail to sell.
6. Positioning: One of the most important of the 7 Ps of marketing mix, positioning refers to a product’s status in relation to the
wider market, particularly how it lines up against competitors.
7. Packaging: This refers not just to the way in which a product is wrapped, but also to its overall presentation, and the way in
which its physical arrangement is designed to attract the customer.
Traditionally, the marketing mix was developed for the

NOTE: fast moving consumer goods sector, and there were 4 Ps: Product, Price, Promotion, and Place (or distribution). • As
service sectors have become more aware of marketing, this marketing mix has been developed to also include: People,
Process and Physical Evidence. Even if you think you only sell a product, so the original 4 Ps will suffice, it can be useful to
think how much of a service element there is to your business. Indeed, the goods-service continuum demonstrates that very
few products are purely goods and very few purely service.
Marketing mix : A set of controllable marketing tools that work together to achieve company's objectives. Which vary depending on
the company.

THE 4 P’s

When making decisions you need to consider:Product, Price, Placement and Promotion.

1st Decision: PRODUCT. Deal with specifications of actual goods or services and how it relates to what users need or
want. (What is it? With What? For What?)

Usually include supporting elements such as: warranties, guaranties and customer support.
Examples that determine the product.
•Brand name.
•Functionality.
•Styling.
•Quality.
•Safety.
•Packing.
•Repairs and Support.
•Warranty.
•Accessories and Services.

2nd Decision: PRICE. Decision for setting a price to a product depending on the product or service offered.
(+ Taxes.)
How Much is it?
Examples that determine the price.
•Price Strategy.
•Early payment Discounts.
•Seasonal Pricing.
•Retail Price.
•Volume Discounts
•Wholesale Pricing.
•Price Flexibility.
•Price Discrimination.
3rd Decision: PLACEMENT
Refers to how the product gets to the costumer.
How? Where can I find it?
Examples that determine the placement.
•Distribution Channels.
•Market Coverage.
•Inventory Management.
•Warehousing.
•Distribution Centers.
•Order Process.
•Transportation.
•Logistics.
4th Decision: PROMOTION
Represent the different aspects of marketing communication to sell something. How to send a message to the people?
Examples that determine the promotion.
•Promotional Strategy.
•Advertising.
•Personal Selling.
•Sales Force.
•Sales Promotion.
•Branding.
•Public Relations.
•Publicity.
•Marketing Budget.

NOTE: When making marketing decisions the MARKETING MIX should be considered. (Product, Price, Placement and
Promotion)

Remember that in the marketing mix just like in every other mix, the final object varies depending on the elements it is
made of.

SEGMENTATION

Segmentation means to divide the marketplace into parts, or segments, which are definable, accessible, actionable, and profitable and
have a growth potential. In other words, a company would find it impossible to target the entire market, because of time, cost and effort
restrictions. It needs to have a 'definable' segment - a mass of people who can be identified and targeted with reasonable effort, cost
and time.

Segmentation allows a seller to closely tailor his product to the needs, desires, uses and paying ability of customers. It allows sellers to
concentrate on their resources, money, time and effort on a profitable market, which will grow in numbers, usage and value.

Customer Segmentation: Geographic segmentation is the practice of segmenting a campaign’s target audience based on where they
are located. Segments can be as broad as a country or a region, or as narrow as one street of homes in a town.

Geographic segmentation is useful for both large and small businesses alike. Large businesses with international markets may choose
to offer products or services specifically for audiences in particular locations. For example, Home Depot may target US northeastern
states when advertising a sale on snow shovels. Presenting this ad to filipinos, for instance, would be irrelevant, unnecessary, and could
even desensitize the audience to future advertisements.

Particularly for small businesses, geographic segmentation can be used to target specific customers without wasting excess advertising
dollars on impressions that will not turn into leads. For example, a local bakery could present their ad to only people within the town they
are located.

Customer Segmentation:Demographic segmentation is segmenting the market based on certain characteristics of the audience.
Characteristics often include, but are certainly not limited to: race, ethnicity, age, gender, religious, education, income, marital status,
and occupation.

Also fairly easy to implement, demographic segmentation can be useful in a variety of ways. Luxury brands may choose to market to a
demographic consisting of people with household income > $200,000. Colleges may use messaging in their advertising that appeals to
17-22 year olds.

Demographic segmentation is even more efficient when targeting multiple segments at once. Bridge ran an email marketing campaign
where we targeted local (geographic) females (demographic: gender) aged 25-50 years old (demographic: age) with a household income
of less than $100,000 (demographic: income) and an interest in furniture (behavioral). Targeting several segmentations in conjunction
with one another led to over 440 sales for the local furniture retailer, driving more than $180,000 in revenue.

Customer Segmentation: Psychographic segmentation divides the market on principles such as lifestyle, values, social class, and
personality.
This type of customer segmentation is significantly more difficult to implement than geographic or demographic segmentation. To
properly segment the market based on psychographics, marketers must really take the time to get to know their current and past
customers. This includes clearly defining the ideal buyer persona for the product or service and developing relationships with the
customer base.

A prime example of psychographic segmentation is targeting those who are budget conscious. These people value a good deal and
tend to be smart shoppers. Target ads to this segment by appealing to their intrinsic budget-savvy personality.

Discount stores, like Wal-Mart, utilize this tactic nicely. Wal-Mart uses messaging like “Unbeatable Prices” and “Best Online Specials”
because it will resonate with the audience they are trying to reach.

Customer Segmentation: lBehavioral segmentation is similar to psychographic segmentation on the basis that it is less concrete than
demographic or geographic segmentation. Behavioral segmentation is the practice of dividing consumers into groups according to any
of the following attributes: usage, loyalties, awareness, occasions, knowledge, liking, and purchase patterns.

When segmenting based on occasions, companies can target consumers who are less price sensitive during times like graduation
season and the holiday season.

Target Market
Many businesses say they target "anyone interested in my services." Some say they target small-business owners, homeowners, or
stay-at-home moms. All of these targets are too general.

Targeting a specific market does not mean that you are excluding people who do not fit your criteria. Rather, target marketing allows
you to focus your marketing dollars and brand message on a specific market that is more likely to buy from you than other markets.
This is a much more affordable, efficient, and effective way to reach potential clients and generate business.

For example, an interior design company could choose to market to homeowners between the ages of 35 and 65 with incomes of
$150,000-plus in Baton Rouge, Louisiana. To define the market even further, the company could choose to target only those
interested in kitchen and bath remodeling and traditional styles. This market could be broken down into two niches: parents on the go
and retiring baby boomers.

With a clearly defined target audience, it is much easier to determine where and how to market your company. Here are some tips to
help you define your target market.

Look at your current customer base. Who are your current customers, and why do they buy from you? Look for common
characteristics and interests. Which ones bring in the most business? It is very likely that other people like them could also benefit
from your product/service.

Check out your competition. Who are your competitors targeting? Who are their current customers? Don't go after the same market.
You may find a niche market that they are overlooking.

Analyze your product/service. Write out a list of each feature of your product or service. Next to each feature, list the benefits it
provides (and the benefits of those benefits). For example, a graphic designer offers high-quality design services. The benefit is a
professional company image. A professional image will attract more customers because they see the company as professional and
trustworthy. So ultimately, the benefit of high-quality design is gaining more customers and making more money.

Once you have your benefits listed, make a list of people who have a need that your benefit fulfills. For example, a graphic designer
could choose to target businesses interested in increasing their client base. While this is still too general, you now have a base to start
from.

Choose specific demographics to target. Figure out not only who has a need for your product or service, but also who is most likely
to buy it. Think about the following factors:
 Age /Location/Gender/Income level/Education level/ Marital or family status/ Occupation

Consider the psychographics of your target. Psychographics are the more personal characteristics of a person, including:
 Personality/ Occupation/ Occupation Values/ Interests/hobbies/ Lifestyles/ Behavior
Determine how your product or service will fit into your target's lifestyle. How and when will your target use the product? What features
are most appealing to your target? What media does your target turn to for information? Does your target read the newspaper, search
online, or attend particular events?

Evaluate your decision.

Once you've decided on a target market, be sure to consider these questions:
 Are there enough people who fit my criteria?
 Will my target really benefit from my product/service? Will they see a need for it?
 Do I understand what drives my target to make decisions?
 Can they afford my product/service?
 Can I reach them with my message? Are they easily accessible?

Defining your target market is the hard part. Once you know who you are targeting, it is much easier to figure out which media you can
use to reach them and what marketing messages will resonate with them. Instead of sending direct mail to everyone in your ZIP code,
you can send it only to those who fit your criteria. Save money and get a better return on investment by defining your target audience.

MARKET NEEDS

1. Create a list of your customers' names and addresses. Find a way to collect customer names, addresses, phone numbers and
email addresses. Create a frequency card or loyalty program to collect names and addresses.

2. Reward your customers according to their purchases in the frequency program. Provide customers with discounts based on the
volume of their purchases, for example. Use the customer list, however, to construct your list of customer names and addresses.

3. Plan to conduct a survey among customers. Decide which methodology you will use to conduct the survey, including phone, mail or
email. Use phone or email surveys if you want to elicit the quickest response rate. Plan to survey at least 300 customers as this
sample size should provide you with reliable or predictable data.

4. Write a questionnaire for your survey. Include questions that ask the customers what features they need or want in products, or
services they need. Include questions related to the price range in which customers are willing to pay. Write questions that inquire
about new product requests from customers. Add a question that inquires how often customers purchase items from your store or
company. Include questions about each customer's sex, age, income, family size, education and career.

6. Analyze the data to determine the overall needs of your target market. Find out what additional products they may want, for
example. Use the cross-tabulations to create a customer profile of your best customers, then particularly focus on their needs.

SAMPLE MARKET NEEDS

Size of Market

You need to know how big your potential market is. This is the group of people who are likely to buy your product or service.For
example, if you want to sell a new weight-loss program, you may have a large market of 50,000 people in your area that are between
the ages of 25 and 65 who are trying to lose weight. If your weight-loss program required surgery, you are looking at group that's
smaller than the 50,000 who have a medical need, as prescribed by their doctor. This group size in the same geographical region
might only be 5,000.

Customer Profile

In order to determine the size, you need to understand who your ideal customer is. As described in the weight-loss example, knowing
if someone is trying to lose a few pounds to look better in a bikini is different from a diabetic who must lose 25 pounds to prevent
serious medical TREATMENT. The client who wants to look better at the beach is looking for products based on fulfilling her desire,
while the person who has a medical condition is looking for products based on fear of dying. You can't market the same way to both.

Cultural Components

A marketing plan should consider the geographic and cultural elements of your target group. These could have a significant difference
on how what the buyers want to buy or even how they buy it. For example, a bridal shop in a a barrio might not have the price as the
gown of that of a city.
Special Interests or Needs

As a business owner, you can learn about the size of your market, based on very specific information. Essentially you can segment
your market to enable you to develop marketing campaigns that target specific buyers. For example, if you own a pet store that caters
to parrot owners, you probably don't want to target cat owners. A cell phone accessory store that sells Apple products exclusively
doesn't want to waste marketing dollars on Android users and vice versa. Narrow your niche to be more successful.

COMPETITION
Understand your competitors

Knowing who your competitors are, and what they are offering, can help you to make your products, services and marketing stand
out. It will enable you to set your prices competitively and help you to respond to rival marketing campaigns with your own initiatives.

You can use this knowledge to create marketing strategies that take advantage of your competitors' weaknesses, and improve your
own business performance. You can also assess any threats posed by both new entrants to your market and current competitors.
This knowledge will help you to be realistic about how successful you can be.

Who are your competitors?

All businesses face competition. Even if you're the only restaurant in town you must compete with cinemas, bars and other businesses
where your customers will spend their money instead of with you. Competition is not just another business that might take money
away from you.
What you need to know about your competitors
Monitor the way your competitors do business. Look at:
 the products or services they provide and how they market them to customers
 the prices they charge
 how they distribute and deliver
 the devices they employ to enhance customer loyalty and what back-up service they offer
 whether they innovate - business methods as well as products
 how they use IT - for example, if they're technology-aware and offer a website and email
 who owns the business and what sort of person they are
 their media activities - check their website as well as local newspapers, radio, television and any outdoor advertising
Find out as much as possible about your competitors' customers, such as:
 who they are
 what products or services different customers buy from them
 what customers see as your competitors' strengths and weaknesses
 whether there are any long-standing customers
 if they've had an influx of customers recently
What they're planning to do
Try to go beyond what's happening now by investigating your competitors' business strategy, for example:
 what types of customer they're targeting
 what new products they're developing
 what financial resources they have

Learning about your competitors

Read about your competitors. Look for articles or ads in the trade press or mainstream publications. Read their marketing literature.
Check their entries in directories and phone books. If they are an online business, ask for a trial of their service.
Are they getting more publicity than you, perhaps through networking or sponsoring events?
Hearing about your competitors
Speak to your competitors. Phone them to ask for a copy of their brochure or get one of your staff or a friend to drop by and pick up
their marketing literature.You could ask for a price list or enquire what an off-the-shelf item might cost and if there's a discount for
volume. This will give you an idea at which point a competitor will discount and at what volume.
How to act on the competitor information you get
Evaluate the information you find about your competitors.
Draw up a list of everything that you've found out about your competitors, however small.Put the information into three
categories:what you can learn from and do better, what they're doing worse than you, what they're doing the same as you
BARRIERS TO ENTRY

Barriers to entry are obstacles that make it difficult to enter a given market. These hindrances may include government regulation
and patents, technology challenges, start-up costs, or education and licensing requirements. Let's discuss a few of the most common
barriers.
Types of Barriers to Entry
Government Regulation
The government may act as a barrier to entry into a certain market through restrictive licensing requirements or limiting the ability to
obtain raw materials.
Start-Up Costs
High start-up costs can keep new firms from entering an industry. Can you imagine trying to get into the car manufacturing business?
The amount of capital needed to buy the buildings, machinery, pay the workforce, and so on all serve as a barrier to entry.
Technology
Sometimes it is difficult to enter a particular field or business because the technology you need to be successful is protected by a
patent. Therefore, you can't use it or are left to try and develop a new technology that may require lots of money to develop.
Product Differentiation
Product differentiation can be accomplished through strong brand recognition, great customer service, or a network effect. If
customers perceive existing products as high quality, then a new business owner will need to spend extra money to educate
customers about the unique qualities and benefits of its specific products. The term network effect refers to the situation where a
product or service becomes more valuable as more people use it. Examples are Craigslist and eBay. As more buyers and sellers use
the site, the websites become more and more valuable to consumers. This makes it extremely difficult to start something that can
compete with these websites and lure customers away.
Access to Suppliers and Distribution Channels
When a new business cannot gain access to the needed raw materials, this represents a barrier to entry. Existing companies may
have exclusive long-term contracts with key suppliers that will make it difficult for a new entrant to operate in the industry.

REGULATIONS
There are two main types of government regulations: economic and social.
Economic regulation adjusts prices and conditions of the economy.
Social regulations protect the interests of the public, such as health and the environment, from economic activity.
Generally, social regulations have been highly popular since the 1960s, while economic regulations fell out of favor at that
time.

4M’S OF ENTREPRENEURS
1. MANPOWER
 General: Total supply of personnel available or engaged for a specific job or task.
 Economics: Total labor force of a nation, including both men and women. If there are more people than available jobs, it is
called manpower surplus; if available people are fewer than jobs, it is called manpower deficit.
 The role of Manpower in Business
 The role of Manpower in Business
Staff plays a pivotal role in any business venture. Without adequate and supportive manpower a business cannot
be successful. The staff should be well skilled and should be able to take on responsibilities with a lot of expertise.
Managers run the show. Entrepreneurs delegate work to them and expect them to act on their behalf.
2. METHOD
business method patent
 A business method patent is part of a larger family of patents known as utility patents, which protect inventions, formulas and
processes. A business method, which is considered to be a process under the law, often involves combining software
automation with more traditional business methodology.
 An established, habitual, logical, or prescribed practice or systematic process of achieving certain ends with accuracy and
efficiency, usually in an ordered sequence of fixed steps.
3. MACHINE
 General: Semi or fully automated device that magnifies human physical and/or mental capabilities in performing one or
more operations.
 Mechanics: Device that makes mechanical work easier by overcoming a resistance (load) at one end by application of
effort (force) at the other end.
 Systems: Purposefully organized set of components whose interconnections and inner workings are known or
apparent. The behavior of a properly functioning machine is entirely predictable:
its present state determines its next state, and the same inputs always yield the same outputs.
  Using a machine can really increase the production of your product and make them be higher quality and produced
faster.
 A machine is anything that is composed of one or more parts that will work to achieve a certain predetermined goal.
These tools and devices are powered in order to work. The sources of power can vary ranging from mechanical,
electrical, chemical, or thermal means. In order for a thing to be classified as a machine, human ingenuity must be
the reason behind it, and not a natural occurrence.
 The role of machines in the industrial processes is very crucial. They allow automation of work. This means faster
production and more accomplished work
4. MATERIALS
 Raw materials are materials or substances used in the primary production or manufacturing of goods.
Raw materials are often referred to as commodities, which are bought and sold on commodities exchanges
worldwide.
PROMOTIONAL MATERIALS
 Paper Marketing Materials. Examples: brochures, flyers, postcards, business cards, menus, sales sheets, etc.
 Promotional Marketing Materials. Examples: t-shirts, mugs, calendars, pens, gift certificates, event tickets,
keychains, etc.
-Stationery. ...
-Signs & Banners.
MARKETING MATERIALS

 Logo
 Business cards
 Website
 Social media
 Postcards/flyers

Net Profit Margin

 Net profit margin measures the profitability of your business. The formula is:
 Net profit margin = (net income / net sales) * 100 (We multiply by 100 to make the result a percentage)
 Let's say you have net income of 1000 and net sales of 10,000. What is your net profit margin?
 Well, we know net profit margin = (net income / net sales) * 100, so net profit margin must equal 1000 divided by
10,000 times 100.
 (1000 / 10,000) * 100
 (1000 / 10,000) = 0.1.
 The net profit margin equals 0.1 times 100.
 0.1 * 100
 So, the net profit margin in this example is equal to 10%.

Gross profit margin

 Gross profit margin measures the cost of production. The formula is:
 Gross profit margin = (gross profit / net sales) * 100.
 Let's say you have a gross profit of 1250 and a net sales of 37,500. What's your gross margin?
 Gross profit margin = (gross profit / net sales) * 100, so in this example
 Gross profit margin = (1250 / 37,500) * 100
 Therefore the gross profit margin equals 0.03 times 100.
  0.03 * 100
 Gross profit margin = 3%
 A gross margin of 3% means that out of each PESO you make in sales; you spend a little over 97 cents to
produce the product.
Operating Margin
 Operating margin tells you how much costs unrelated to producing the product for sale are cutting into
your profits. Costs unrelated to production can include such things as general business, staff and
administrative expenses of the business. Net operating margin is often referred to as your earnings before
interest and taxes or EBIT. The formula for this is:
 Operating margin = (operating profit / net sales) * 100
 Let's take a look at an example.
 You have an operating profit of 9,000 and net sales of 100,000. What is your operating margin? Well, we
know that operating margin = (operating profit / net sales) * 100, so:
 Operating margin = (9,000 / 100,000) * 100
 Operating margin equals 0.09 times 100
 0.09 * 100
 The operating margin equals 9%.
Forecasting “Prediction is very difficult,especially if it's about the
future.”-----Nils Bohrq
-is a tool used for predicting future demand based on past
demand information.

WHY IS FORECASTING IMPORTANT?

Demand for products and services is usually uncertain.
Forecasting can be used for…

• Strategic planning (long range planning)

• Finance and accounting (budgets and cost controls)
• Marketing (future sales, new products)
• Production and operations
WHAT IS FORECASTING ALL ABOUT

TYPES OF FORECASTING
QUALITATIVE METHOD- Rely on subjective opinions from one or more experts

• Qualitative forecasting techniques are sometimes referred to as

judgmental or subjective techniques because they rely more upon
opinion and less upon mathematics in their formulation.
Consumer/user survey method

• This method involves asking customers about their likely purchases

for the forecast period, sometimes referred to as the market research
method. For industrial products, where there are fewer customers,
such research is often carried out by the sales force on a face-to-
face basis. The only problem is that then you have to ascertain what
proportion of their likely purchases will accrue to your company.
Another problem is that customers (and salespeople) tend to be
optimistic when making predictions for the future. Both of these
problems can lead to the possibility of multiplied inaccuracies.
• Panels of executive opinion-This is sometimes called the jury method,
where specialists or experts are counseled who have knowledge of the
industry being examined. Such people can come from inside the
company and include marketing or financial personnel or indeed
persons who have a detailed knowledge of the industry. More often,
the experts will come from outside the company and can include
management consultants who operate within the particular industry.
Sometimes external people can include customers who are in a position
to advise from a buying company’s viewpoint. The panel thus normally
comprises a mixture of internal and external personnel.
 • Sales force Composite-This method involves each salesperson making a
product-by-product forecast for their particular sales territory.
Thus individual forecasts are built up to produce a company forecast;
this is sometimes termed a `grass-roots’ approach. Each
salesperson’s forecast must be agreed with the manager, and
divisional manager where appropriate, and eventually the sales
manager agrees the final composite forecast.

QUANTITATIVE METHOD-Rely on data and analytical techniques

Delphi Method-This method bears a resemblance to the `panel of executive
opinion’ method and the forecasting team is chosen using a similar set of
criteria. The main difference is that members do not meet in committee.
Bayesian decision theory-This technique has been placed under qualitative
techniques, although it is really a mixture of subjective and objective
techniques. It is not possible to describe the detailed workings of this
method within the confines of this text; indeed it is possible to devote a
whole text to the Bayesian technique alone.
Product testing and test marketing-This technique is of value for new or
modified products for which no previous sales figures exist and where it
is difficult to estimate likely demand. It is therefore prudent to
estimate likely demand for the product by testing it on a sample of the
market beforehand.
BUSINESS MODEL-describes the rationale of how an organization creates,
delivers and captures value
 KINDS OF FORECAST

1. Short-term forecasts. These are usually for periods up to three

months ahead and are really of use for tactical such as production
planning. The general trend of sales is less important here than
short-term fluctuations.
2. Medium-term forecasts. These have direct implications for planners.
They are of most importance in the area of business budgeting, the
starting point for which is the sales forecast. Thus if the sales
forecast is incorrect, then the entire budget is incorrect. If the
forecast is over-optimistic, then the company will have unsold stocks
which must be financed out of working capital. If the forecast is
pessimistic, then the firm may miss out on marketing opportunities
because it is not geared up to produce the extra goods required by
the market. More to the point is that when forecasting is left to
accountants, they will tend to err on the conservative side and
produce a forecast that is lower than the trend of sales, the
implications of which have just been described. This serves to re-
emphasize the point that sales forecasting is the responsibility of
the sales manager. Such medium-term forecasts are normally for one
year ahead.
3. Long-term forecasts. These are usually for periods of three years
and upwards depending upon the type of industry being considered. In
industries such as computer three years is considered long term,
whereas for steel manufacture ten years is a typical long-term
horizon. They are worked out from macro-environmental factors such
as government policy, economic trends, etc. Such forecasts are
needed mainly by financial accountants for long-term resource
implications and generally the concern of boards of directors. The
board must decide what its policy is to be in establishing the levels
of production needed to meet the forecasted demand, such decisions
might involve the construction of a new factory and the training of a
workforce.
 BUDGETING PURPOSE

• An organization needs to budget to ensure that expenditure does not

exceed planned income.
• Sales forecast is the starting point for business planning
activities.
• The company costing function takes the medium-term sales forecast as
its starting point, and from this budgets are allocated to
departments (or cost centres).
• Budgets state limits of spending; they are thus a means of control.
• The company can plan its profits based upon anticipated sales, minus
the cost of achieving those sales (which is represented in the total
budget for the organization).
• If the forecast is pessimistic and the company achieves more sales
than those forecast, then potential sales might be lost owing to
unprepared ness and insufficient working finance and facilities being
available to achieve those sales.
• If the forecast is optimistic and sales revenue does not match
anticipated sales then revenue problem will arise.
• The company will approach a lender, a bank or (which can be expensive
if interest rates are high).
• This factor is a prime cause of many business failures not necessary
because of bad products or bad sales force.
• Department budgets are not prepared by cost accountants.
• Cost accountants, in conjunction with general management, apportion
overall budgets for individual departments.
• Departmental manager prepares the overall departmental budget which
can be utilized in achieving the sales forecast.
• For instance, a marketing manager might decide that more needs to be
apportioned to advertising and less to the effort of selling in order
to achieve the forecasted sales.
• The manager therefore apportions the budget accordingly and may
concentrate upon image rather than product promotion; it is a matter
of deciding beforehand where the priority lies when planning for
marketing.
BUDGET DETERMINATION

• The sales department budget is merely the budget for running the
marketing function for the budget period ahead.
• Cost accountants split this sales department into three cost elements:
1. The Selling expense budget includes those costs directly attributable
to the selling process, e.g. sales personnel salaries and commission,
sales expenses and training.
2. The advertising budget includes those expenses directly attributable
to above-the-line promotion (e.g. television advertising), and below-
the-line promotion (.e.g a coupon redemption scheme). Methods of
ascertaining the level of such a budget are as follows:
3. A percentage of last year’s sales.
4. Parity with competitors, whereby smaller manufacturers take their cue
from a larger manufacturer and adjust their advertising budget in line
with the market leader.
5. The affordable method, where expenditure is allocated to advertising
after other cost centres have received their budgets. In other words,
if there is anything left over it goes to advertising.
6. The objective and task method calls for ascertainment of the
advertising expenditure needed to reach marketing objectives that have
been laid down in the marketing plan.
7. The return on investment method assumes that advertising is a tangible
item which extends beyond the budget period. It looks at advertising
expenditures as longer term investments and attempts to ascertain the
return on such expenditures.
8. The incremental method is similar to the previous method; it assumes
that the last unit of money spent on advertising should bring in an
equal unit of revenue.
9. Assumes that increasing sales will generate increasing promotion and
vice versa, whereas the converse might be the remedy, I.e. a cure for
falling sales might be to increase the advertising spend. (b) assumes
status quo within the marketplace. (c) does not really commend itself
because the assumption is that advertising is a necessary evil and
should only be entered into when other expenditures have been met. It
quite often happens in times of company squeezes that advertising is
the first item to be cut because of its intangibility. The cure for
the company ailment might rest in increased promotional awareness.
10. seems to make sense, but
accountants contend that marketing personnel will state marketing
objectives without due regard to their value and such objectives may
not sometimes be related to profits. (e) and (f) seem to make sense,
but the main difficulties are in measuring likely benefits such as
increased brand loyalty resulting from such advertising expenditures,
and determining when marginal revenue equals marginal expenditure. In
practice, firms often use a combination of methods, e.g. methods (d)
and (e), when deciding their advertising budget.
11. The administrative budget
represents the expenditure to be incurred in running the sales office.
Such expenses cover the costs of marketing research, sales
administration and support staff.
SALES BUDGET
Sales budget- the total revenue expected from all products that are
sold, and as such this affects all other aspects of the business.
Thus, the sales budget comes directly after the sales forecast.
Figure given below represents the way the cost accountants view the
budgeting procedure. From the sales budget comes the sales
department budget (or the total costs in administering the marketing
function. The production budget covers all the cost involved in
actually producing the products. The administrative budget covers
all other costs such as personnel, finance, etc and costs not
directly attributable to production and selling.
 BUDGET ALLOCATION

• Sales budget is the statement of projected sales by individual sales

people.
• The figure quoted are called the sales quota or sales targets in the
sales organizations.
• These quotas or targets are the individual performance targets for
individual territories allocated to individual salesman in an
organization.
• The incentives are linked to the above achievement of quotas or
targets.
• For the established firms the most common practice of budget
allocation is simply to increase or decrease last years individual
budgets or quotas by an appropriate percentage depending on the
changes overall sales budget.
• The sensible way to review each years individuals sales quota is
according to the given market conditions vis-à-vis competitors.
• The first step is to determine the sales potential of a territory.
• By accessing sales potential for territories and allowing for work
load the overall sales budget can be allocated in a fair manner.
SALES FORECAST-It is estimate of a company’s sale for a specified
future period. Sales forecasting provides the starting point for
assumptions used in various planning activities.It is used for the
short-term financial control systems.
Financial budget is dependant upon the sales forecast for the projected
revenue figures.
Human resource executives use sales forecasts to project staffing needs,
financial executives use it in establishing and controlling operating and
capital budgets, and production manager uses it to schedule purchasing and
production to control inventories.
SALES FORECASTING CONCEPT
Market Potential – it is the highest possible expected industry sales of a
good or service in a specified market segment for a given time period.
e.g. the market potential for the sales of antifreeze in New England might
be 20 millions gallons annually. (Based on buyers ability to buy and
willingness to buy)
Sales Potential – refers to an individual firms market share of the market
potential, where market share is defined as the percentage of market
controlled by a particular company or product. It is the maximum sales a
firm can hope to obtain
Sales Forecasts – is the sales estimate the company actually expects to
obtain, based on the market conditions, company resources, and the firms
marketing plan. The sales forecast is less then the sales potential since
it is based on realistic set of circumstances.
Sales Quota – is a sales goal assigned to a sales person, region or a
team. They are usually derived from the sales forecasts. Sales goals and
objectives sought by management.
Sales Budgets – a management plan for the expenditures to accomplish sales
goals.

PRODUCT LIFE CYCLE

 Introduction stage –There is no historical sales record and new
products have a high failure rate, so it very important to prepare
realistic estimate of potential sales, based on thorough marketing
research.
 Growth stage – if the product gains market acceptance. Sophisticated
mathematical models are used here to project market share and
estimate sales.
 Maturity and Decline stage – traditional forecasting techniques are
appropriate. Historical data can be analyzed statistically to project
sales.
SALES FORECASTING PROCEDURE
1. Preparing a forecast for general economic conditions
2. Preparing a forecast of industry sales
3. Preparing a forecast of the product or company sales
SALES BUDGETING-Estimating future levels of revenue, selling expenses, and
profit contributions of the sales function.
TYPES BUDGETING
Financial statement that outlines firms intended actions and the resulting
cash flow consequences. Most sales budgets covers a period of one year,
but they are often broken down into quarterly or even monthly targets.
 Sales budget – projection of revenue computed from forecast unit
sales and average prices.
 Selling expenses budget – approved amount that the department will
spend to obtain the revenues projected in the sales budget.
 Profit budget – merged sales budget and the selling expense budget to
determine gross profit.
MAJOR TYPES OF SELLING EXPENSE BUDGET
 Affordable methods– management determines what to spend on selling
after accounting for the cost of good sold and the desired profit
level.
 Percentage of sales method – the funding level is found by
multiplying the sales revenue by a given percentage. Budgeting is
based on anticipated rather then historical revenue.
  Competitive parity method – sales budgeting method based on the
competitive practices in an industry. They refer to either a specific
competitor or the industry average.
 Objective and task method – budget allocation is based on the
objective of the firm, tasks necessary to achieve those objectives,
and the expenses related to those tasks. It is known as zero-based
budgeting.
 Bidding system – in this the sales function competes with other
functions for limited funds available on the basis of payoffs.
 Return on investment (ROI) – some sales managers have begun to use
this financial management concept to chose between alternative
courses of action. ROI is determined by dividing net income by total
assets employed to earn the income.
SALES BUDGETING PROCEDURE
1. Situational Analysis – sales managers have to look at the
magnitude of past differences between budgeted and actual figures and
the reasons for these differences.
2. Identification of Problems and Opportunities the actual potential
threat and challenges has to be assessed and addressed to determine
the probabilities of occurrence their impact.
3. Development of Sales Forecast – manager is equipped to forecast
sales, using one of the various methods. Projections are made about
the anticipated levels of sales by territory, product or type of
account. It is expressed both in units and dollars.
4. Formulation of Sales Objectives – once the forecast has been
developed, sales force has to be told what sales target to strive and
what objectives to pursue.
5. Determination of Sales Tasks – sales manager and sales force have
to carry a broad array of sales activities, ranging from recruitment
to evaluation, and from prospecting to after sales service.
6. Specification of Resource Requirement – the resources that will be
required to implement the specified activities and achieve the
objectives.
7. Completion of Projections – here all the input and requests from
various units of the sales function are assembled and tied into a
comprehensive package.
8. Presentations and Review –present and defend its sales budget
proposal to the management.
9. Modification and revision – sales managers have to engage in a
series of compromise sessions. Here the sales targets and budgets
might be adjusted by the higher management, reflecting both to the
needs of the corporation and the true potential of the marketplace.
10. Budget approval – final levels are eventually approved and
authorized for both the sales and the selling expense budgets. Here
onwards budgets are reviewed periodically looking at the on going
market conditions and other external forces.

BREAK EVEN POINT- Fixed costs make less of a contribution when you make more
products. Need to sell enough product to cover costs = Break even point
CASH FLOW ANALYSIS-The flow of cash in to and out of a business that can be
net positive or negative.
PROFIT AND LOSS STATEMENT-Reports on expenses and income over a period of
time and displays Profit
WE NEED FINANCIAL PROJECTION:

a. To show investors you are unprofitable (or to forecast

profitability)
b. To show customers and suppliers you will still be around next
year. It may be required by law
STEPS IN ANALYZING PROJECTED FINANCIAL STATEMENTS.
-Test the reasonableness of forecast assumptions and their
internal consistency.
-Can be used to assess the sensitivity of firm’s liquidity and
leverage to key assumptions.
-Helps react quickly and efficiently to new announcements.
SELLING is an action which converts the product into cash
MARKETING -is the process of meeting and satisfying the customer needs.

SALES-A transaction between two parties where the buyer receives goods
tangible or intangible, services, and/or assets in exchange for money.
What is this?
PRODUCT- a service or an item where customers have the authority to
purchase or not.
AUDITis an appraisal function to examine and evaluate activities in an
organization, promoting effective control at reasonable cost.
BOOK KEEPING-recording, on a day-to-day basis, of the financial
transactions and information pertaining to a business. Tracking Financial
Activities is the true purposed of bookkeeping.
CASH BOOK-It is a simple record in which you can record all payments made
and incomes received. It is also system to help you organize your
finances.

WE NEED TO KEEP RECORDS

a. The maintenance of records for purposes of legal actions of
defense, administrative and historical needs, academic purposes,
and compliance requirements.
b. The maintenance of records for an appropriate length of time as
determined by the administrative, fiscal and legal needs of the
institution.
c. The reduction of direct and indirect costs of records storage
and management by the effective use of technology and off-site
storage options.
FINANCIAL STATEMENTaims to provide the right information, at the right
time, in the right order, to the right person, at the lowest possible
cost.
RECORD MANAGEMENT-combination of the three major reports on a business. It
will contain the cash flow statement, the income statement and the balance
sheet of the business.
BALANCE SHEET It reports a company's assets, liabilities and
shareholders' equity at a specific point in time, and provides a basis for
computing rates of return and evaluating its capital structure.
 PROFIT AND LOSS ACCOUNT -A financial statement that summarizes the
revenues, costs and expenses incurred during a specified period, usually a
fiscal quarter or year.
PROFIT-A financial benefit that is realized when the amount of revenue
gained from a business activity exceeds the expenses, costs and taxes
needed to sustain the activity.

OPPORTUNITY SCREENING
After opportunity seeking comes the rigorous process of opportunity screening because of the many opportunities possible
for the entrepreneurs it is important to come up with a very few promising opportunities.
 PERSONAL SCREEN- in screening opportunites the first has to consider his or her prefernces and
capabilites by asking the three basic questions

THE 3 BASIC QUESTIONS

 1. Do I have the drive to pursue this business opprtunity to an end
 2. Will I spend all my time, effory, and money to make the business opportunity work?
 3. Will I sacrifice my existing lifestyle, endure emotional hardship, and forgo my usual comforts to succeed in this
opportunity

THE 12R’s OF OPPORTUNITY SCREENING

1. Relevance – to vision and mission and objectives of the entrpreenur
 The opportunity must be alligned with what you have as your personal vision, mission, and objectives

2. Resonance – to valus other than vision, mission and objectives. A quality that makes something important
 The opportunity must then match the values and desired virtues that you have wish to impart

3. Reinforcement of entrpreneurial interests

how does opprtunity resonate
4. Revenues - in any entrepreneurial endeavor, it is important to determine the sales potential of the products or services
you want to offer. Is there a big enough market out there to grab and nurture the growth?

5. Responsiveness to customers needs and wants

If the opportunity that you want to pursue address the unfulfilled

6. Reach – opportunities that have good chances of expanding through branches

8. Range– the opportunity can potentially lead to a wide range of possible product or service offering, thus tapping
many market segments of the industy

9. Revolutionary impact – if you think that the opportunity will most likely big thing

10. Returns – it is the fact products with low costs of production and operations but are sold at higher prices will definitely
yield a higher return

11. Relative ease of implementation – will the opportunity be relatively easy to implement for the entrepreneur or will
there be a lot of obstacles to overcome?

12. Resources required = opportunities requiring fewer resources from the entrepreneur may be more favored than those
requiring more resources

13. Risks – in an entrpreneur endeavor there will always be risks, however some opportunities carry more risks than others
such as those high technological, market, financial, and people risks