ORGANIC

A G R I C U LT U R E
PRODUCER
Entrepreneurship Module 3
Presented By:
David Samuel Montojo
 CREATING THE
ENTERPRISE

01. Establishing
the Enterprise
02. Planning the
Enterprise
03. Investing 04. Valuating
CHAPTER 1: ESTABLISHING THE
ENTERPRISE
The learning objectives are as follows:
1.Learn the basic steps in establishing an enterprise

2.Identify the factors that contribute to a successful entrepreneurial

venture

3.Learn the importance of the preparation and development of a

good business plan

4.Determine the best organizational structure suited for the

enterprise
 A Very Good Business Plan
The next step for the entrepreneur is to have a very good
business plan. It is a wise thing to do in order to chart the
course of the business properly and to focus the efforts of the
entrepreneur.

The purpose of a business plan is to:

• First, entice partners, investors and bankers to fund a
business venture;

• Second, communicate what the enterprise is all about, what

market it wants to serve;

• Third, show what financial returns it could muster.

 BUSINESS PLAN

The business plan should contain important information

about the following:
• the business itself,
• the organizers,
• the management and technical people,
• the financial structure,
• its market potential,
• its target market,
• its projected sales, expenses and profits and
• its probable risks.
CHAPTER 2: PLANNING THE
ENTERPRISE
The learning objectives are as follows:

1.Learn how to write a business plan

2.Determine the different reasons for writing a business plan and

customize its content depending on the reason

3.Learn the importance of a well-thought out business plan and how

it can help the entrepreneur in operationalizing the business

Format of a Business Plan
 Format of a Business Plan

I.Introduction
A.The Business Concept and the Business Model
B.The Business Goals: Vision, Mission, Objectives and Performance Targets
C.The Business Offering and Justification

II.Executive Summary

III. The Business Proponents:

Organizers with their Capabilities and Contributions
 Format of a Business Plan

The Executive Summary contains everything that is relevant and important to

the business audience. It is a synthesis of the entire plan. It must contain the major
argumentations of the business proponent on why the business will work and
succeed. It should provide the business plan audience all the arguments on why
they should participate in the business venture.

It should then introduce and highlight the good qualities of:

1.the business proponents and their partners;

2.the enterprise organization and its capabilities;
3.the technology providers and their expertise and experience; and
4.the suppliers and all the major service providers
 Format of a Business Plan

IV. The Target Customer and the Main Value Proposition to the Customer

V. The Market, Market Justification based on the Industry Dynamics and the
Macro-Environmental Factors Affecting the Opportunities and Threats in the
Market, the Size, Potential and Realistic Share of the Market

VI. The Product and Service Offerings

 Format of a Business Plan

VII. The Enterprise Strategy and Enterprise Delivery Systems: Business

Competitiveness

VIII. The Financial Forecasts and Expected Returns, Risks and Contingencies

IX. Environmental and Regulatory Compliance

X. The Capital Structure and Financial Offering: Returns and Benefits to Investors,

Financiers and Business Partners

CHAPTER 3: INVESTING
The learning objectives are as follows:

1.Understand why investing is considered as the ultimate expression

of opportunity seizing
2.Identify the vital elements of the financial format of investing
3.Understand the principles behind the time value of money
4.Learn the basic steps in computing for payback period and the
different tools in obtaining the net present value and determine the
appropriate capital investment for a chosen project or enterprise
 INVESTING

The importance of undergoing the rigorous process of opportunity seeking

and screening is, it eventually leads to investing – the ultimate expression of
opportunity seizing.

Investing decision is comprised, not only of the money angle of investments,

but also the technology to be adopted, the people to be hired and managed, the
products to be designed and marketed, the marketing channels to be used, and the
suppliers to be tapped.
 INVESTING

The pre-investing activities include:

• Customer segment to target
• Right location
• Prices of materials, supplies, machinery, and equipment, furniture and fixtures,
vehicles
• Estimate and verify operating costs and expenses
• Check industry or market practices in order to determine distribution strategies
and selling prices
• Put investment elements together in a financial format
 INVESTING

The Financial Format of Investing is composed of three vital elements:

1.The first vital element involves capital investments. There are three major
components under capital investments:
• Fixed assets – plant, property and equipment needed in the project
• Current assets – working capital
• Capitalized organization and pre-operating expenses
2.The second vital component is to determine the production volume and sales
expected over the life of the project.
3.The third vital component is to determine the production cost and operating
expenses needed to produce the goods and services for sale.
 INVESTING

The Payback Period is the time when the investor/ entrepreneur is able to recover
his capital investment which normally counts over several years.
INVESTING
 INVESTING
Time Value of Money

There is, therefore, a time value of money. Depending on the yield expectations of
the entrepreneur, the present value of money would have a future value equivalent
to the present value of the money compounded over the future years at the
expected investment yield. This can be converted into a formula.
 INVESTING
Investment Yield Expectations

Different entrepreneurs have different yield expectations or rate of return

expectations from their investments. Some entrepreneurs are conservative. They
want safe and solid investments. But then again the returns they would get would
be small.
CHAPTER 4: VALUATING
The learning objectives are as follows:

1.Identify the different approaches to valuating an enterprise

2.Enumerate the several considerations in valuing the whole
company under the premise that the whole may be greater than the
sum of its parts
3.Determine the appropriate valuation approach based on what is
required by the enterprise
4.Understand the concept of due diligence and its importance in
making a sound business decision
5.Learn the conditions that create a good bargaining power
 VALUATION
the process that links risk and return to
determine the worth of an asset.
 Valuing the Parts

In valuing an enterprise, the obvious place to

start is to examine the assets or the different parts that
make up the enterprise. These assets are the
investments made by the enterprise in cash, accounts
receivable, inventories, land, buildings, machinery and
equipment, vehicles, furniture and fixtures and other
assets. These are the different parts that make the
whole enterprise run.
 Valuing the Whole

In valuing a business as a whole, it should be

regarded as a going concern that generates revenues,
incurs expenses and produces profits. One technique
in evaluation is to review the past earnings for the past
three to five years and assume that they will be the
same level of earnings in the next three to five years.
 Valuing the Opportunity

The seller may actually get a higher price for his property
or asset if the buyer wants that particular property or asset
because it is adjacent to him or her. In this situation, the seller
can jack the price up and the buyer would have to agree. In
another example, the seller may want to sell to his keenest
competitor. And the keenest competitor may want to buy
because, by doing so, the market share of the joint company
would actually be much, much higher. In this case, the seller
can actually command a premium price.
 Valuing the Distress
At the opposite end of the spectrum, instead of valuing for
opportunity there is valuing for distress. There are buyers who
lurk like vultures waiting to buy companies in distress. The
sellers may be willing to sell their properties, assets or
enterprises because they have an impending bankruptcy or
huge financial obligation to meet in a short period of time. In
such cases, oftentimes, the buyers would undercut the prices
way below the market price. And the sellers would have to sell.
THANKS
David Samuel Montojo
Entrepreneurship Mentor