ENTREPRENEUR

PRODUCT DEVELOPMENT OPERATIONS AND FINANCIAL PLAN

PRODUCT DEVELOPMENT- Is the process of developing, testing and commercializing a product or

service with the ultimate objective of solving the problem of the primary target market.

It is composed of four sequential steps: 1.Developing a product or service description- Simply

describes how a product or service works and how it benefits the customers-

2.Creating a Prototype- is a preliminary model or sample of a new product or service that is created to
test a product concepts or service process.

3. Testing the Prototype-

TESTING METHODS

•Focus Group Discussion

•Legality and Ethical Test

•Safety Test

•Product Costing Test

•Component Test

•Competitors Product/Service Test

4. Validating the Market- Is the process of finding out the intended primary target market will be
buying the product or availing the service.

4MS OF OPERATIONS

METHODS- The methods aspects represent the day-to- day operations of a business.

-It describes how an entrepreneur will run the business.

Manufacturing- Is the process of translating raw materials into finished goods that are acceptable to
the customer's standards. •
It consists of the elements:

INPUTS- The materials or ingredients to be used in creating the product.

PROCESS- The transformation phase where input are processed by manpower and machines to come
up with the final product.

OUTPUT-The final product of the process stage, which is intended to be sold to target customers.

Manufacturing Sites:

•HOME-BASED

•COMMERCIAL SPACE FOR RENT

•COMMERCIAL SPACE PURCHASE

Service Delivery Process:

BLUEPRINT -Is a detailed flowchart of the service business.

BOTTLENECK- is a part of the process where there is an apparent inefficiency and where the customer
waits longer.

DISTRIBUTION METHOD/DISTRIBUTION- Is the process of bringing the products or services to

customers.

DISTRIBUTOR- Is an entrepreneur who often buys products or services to the manufacturers.

AGENTS- Don't own the products or services because they do not buy these from the manufacturer.

MANUFACTURER- Handles the invention, development and production of the product or service.

PAYMENT PROCESS

•CREDIT CARDS

•PAYABLE

•INSTALLMENT
•PLANS

•SIMPLE ACCOUNTS

•"PAUTANG"

•CASH

MANPOWER

JOB DISCRIPTION- enumerates the duties and responsibilities of the potential employee.

JOB TITLE- summary of what the employee will do.

COMPENSATION AND BENEFIT RANGE- details the potential salary and benefits that the employee
will get.

DUTIES- describe the job that the employee will assume with allowance for flexibility.

RESPONSIBILITIES AND ACCOUNTABILITIES- Idetails the expectation for the job.

WORK SCHEDULE-.includes work hours.

EMPLOYEE QUALIFICATIONS

EDUCATIONAL BACKGROUND- This gives entrepreneur an idea on the degree of the candidates
knowledge of basic things.

WORK EXPERIENCE- This will tell him or her what to expect from to applicant and what he or she can
potentially contribute.

SPECIFIC SKILL OR KNOWLEDGE- This one is important especially on technical jobs that requires high
proficiency.

WORK ATTITUDE- This deals with the workers integrity and how she or he deals with his or her
coworker.

PREPARATORY SELECTION OF THE JOB APPLICANT- once the description and employee
qualifications are finalized by the entrepreneur.

SELECTION OF JOB APPLICANTS- once the potential candidates are pooled, the entrepreneur must
now do the difficult task of screening and picking the most qualified and suited for the job.
JOB OFFER- One the entrepreneur or the hiring manager has been convinced already of the
credentials.

EMPLOYEE DEVELOPMENT

TRAINING- is one of the biggest investment of an entrepreneur or a businessman.

-Employee Orientation

-On the Job Training

-Buddy system

-Mentor Mentee Program

-Online Learning Programs/Webinars

-Internal Training Programs.

MACHINES- can be described as the "best friends" of manpower in producing goods and offering
services.

•TELECOMMUNICATIONS AND INFORMATION •TECHNOLOGY:

•LANDLINE PHONE

•MOBILE PHONE

•LAPTOP AND DESKTOP COMPUTERS

•POS MACHINE

•ACCOUNTING INVENTORY SOFTWARE

•WEBSITE

MATERIALS- Whether the entrepreneur will offer products or cater services, he or she has to pinpoint
a number of dependable suppliers.

OUTSOURCING- is the process of the appointing a third party manufacturer.

LOGISTICS:

WAREHOUSING- is the storing the finished goods manufactured in a facility.

TRANSPORTATION- it is the process of efficiency transferring the products

INVENTORY- should be tracked religiously entrepreneur/manufacturer.

THE BUSINESS METHOD:

GREEN LIGHT- postive signals

RED LIGHT- negative signals.

Financial Plan- one of the most difficult parts of the business plan.

-It is also providing the entrepreneur financial data such as liquidity, cash flow

Capital- is the money that will be allocated by the entrepreneur to establish a business.

Collateral- refers to a high value asset that is submitted by the business to the bank when applying for
a loan.

Revenue- is the output of a sale wherein the sales price exceeds the cost to produce the product or
render the service.

Direct competitors- are those that offer exactly the same product/product lines or services as the
entrepreneur.

Indirect competitors- are those that do not offer exactly the same products or services but influence
or affect the entrepreneur's market share.

COMPUTATION OF GROSS REVENUE:

Step 1: Compute for the market verse or total market.

Step 2: Compute the market share of the competitors.

Step 3: Plan to capture remaining market share.

Step 4: Prepare a realistic five-year projected annual revenue.

The two formulas that businesses use to calculate their earnings are:

•Gross revenue = (price per product or service) x (total number of products or services sold)

•Net revenue = (gross renue) - (cost of goods sold)

Income Statement- is a financial statement that details the computation of net revenue by deducting
cost of sales.

Balance sheet- is a core financial statement that describes the financial position of the business.

Balance Sheet Composed of Three Elements:

1. Assets- represent the resources of the business that are expected to have future economic value.

Current Assets- which are mostly the liquid assets that can be exchanged to cash within one year.

- are assets that can be converted into cash within one fiscal year or one operating cycle.

Non current Assets- which are long term assets that can be converted to cash for more than one year.

Fixed assets- are non-current assets that a company uses in its production or goods, and services that
have a life of more than one year.

2. Liabilities- are what the business owes to another person, financial institution, or any creditor.

-are claims against assets these are the existing debts and obligations.
-Are legally binding obligations that are payable to another person or entity.

Current Liabilities- are financial obligations of a business entity that are due and payable within a
year.

Non-Current Liabilities- refers to the financial obligations in a company's balance sheet are not
expected to be paid within one year.

3. Owner's equity or capital is the funds allocated by the entrepreneur to run the business.

Assets=Liabilities + Owner's Equity

Equity- refers to shareholders' equity or owner's equity, amout of money that will return.

Cash flow statement- is a financial statement that provides aggregate data regarding all cash inflows a
company receives