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ENTREPRENEURSHIP
2nd QUARTER

Module 6:
4 M’s of Production and Business Model

Manpower
 Talks about human labor force involved in the manufacture of products.
 It is measured as the most serious and main factor of production. The entrepreneur
must determine, attain and match the most competent and skilled employees with
the jobs at the most appropriate time period.

Material
 Talks about raw materials necessary in the production of a product. Materials mainly
form part of the finished product. Just in case the resources are below standard, the
finished product will be of unsatisfactory as well.

Machine
 Discusses about manufacturing equipment used in the production of goods or
delivery of services.

Method
 Production method discusses the process or way of transforming raw materials to
finished products. The resources undergo some stages before it is finalized and
becomes set for delivery to the target buyers.

Product Description
 It is the promotion that explains what a product is and why it’s worth buying?
 The purpose of a product description is to provide customers with details around
the features and benefits of the product so they’re obliged to buy.

Prototyping
 A duplication of a product as it will be produced, which may contain such details as
color, graphics, packaging and directions. One of the important early steps in the
inventing process is making a prototype.

Prototype
 Pretesting of the product or service is similar to a sample of the product or service
given to the consumer free of cost in order that he/she may try the product before
committing to a purchase.

Benefits are the reasons why customers will decide to buy the products such as
affordability, efficiency or ease of use.
 The features of the product or service merely provide a descriptive fact about the
product or service. It is better to test your product prototype to meet customers’
needs and expectations; and for your product to be known and saleable.
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Supplier
 An entity that offers goods and services to another business.
 This entity is among of supply chain of a business, which may offer the main part of
the value contained within its products.
 Certain suppliers may even involve in drop shipping, where they ship goods directly
to the customers of the buyer.

Value chain
 is a method or activities by which a company adds value to an item, with production,
marketing, and the provision of after-sales service.

Supply chain
 is a structure of organizations, people, activities, data, and resources involved in
moving a product or service from supplier to customer.

Business Model
 describes the reasons of how an organization creates, delivers, and captures value in
economic, social, cultural or other contexts.
 The development of business model construction and variation is also called
business model innovation and forms a part of business plan.

Business Plan
 is an important tool for you to have an idea about the future of your business. Your
business plan will be your guide in the moment you will be implementing and
operating your business proposal.

The following are the components found in a Business Plan.

1. Introduction- this part discusses what is the business plan all about.
2. Executive Summary- is part of the business plan which is the first to be presented
but the last to be made.
3. Management Section- shows how you will manage your business and the people
you need to help you in your operations.
4. Marketing Section- shows the design of your product/service; pricing, where you
will sell and how you will introduce your product/service to your market.
5. Financial Section- shows the money needed for the business, how much you will
take in and how much you will pay out.
6. Production Section- shows the area, equipment and materials needed for the
business.
7. Competitive Analysis- is the strategy where you identify major competitors and
research their products, sales and marketing strategies.
8. Market- The persons who will buy the product or services
9. Organizational chart- is the diagram showing graphically the relation of one official
to another, or others of a company.
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Module 7:
Forecasting Revenues and Costs

Revenue
 is a result when sales exceed the cost to produce goods or render the services.

Cost
 refers to the amount of money used to produce or manufacture goods/merchandise
as well as costs incurred in selling the goods/merchandise.

Forecasting
 is a tool used in planning that aims to support management or a business owner in
its desire to adjust and cope up with uncertainties of the future.

Revenue
 is recognized when earned, whether paid in cash or charged to the account of the
customer.

Other terms related to revenue includes:

 Sales is used especially when the nature of business is merchandising or retail
 Service Income is used to record revenues earned by rendering services.

Internal and External factors that can affect the business:

1. The economic condition of the country
2. The competing businesses or competitors
3. The changes happening in the community
4. The internal aspects of the business

Forecasting Costs to be incurred

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Forecasting Costs to be incurred

Operating Expenses
 are the cost incur by the business in operating its business such as payment on internet
connection, utilities expense (electricity and water), salaries and wages of employees,
rentals of office building, delivery expenses and other miscellaneous expenses which
allows the business to continue its operation within a given time.

Cost and Expenses incurred by the Business:

Cost of Goods Sold / Cost of Sales

 refers to the amount of merchandise or goods sold by the business for a given period of
time.
 This is computed by adding the beginning inventory to the Net Amount of Purchases to
arrive with Cost of goods available for sale from which the Merchandise Inventory end is
subtracted.

Merchandise Inventory, beginning

 refers to goods and merchandise at the beginning of operation of business or accounting
period.

Merchandise Inventory, end

 refers to goods and merchandise left at the end of operation or accounting period.

Purchases
 refers to the merchandise or goods purchased. Example: Cost to buy each pair of Jeans
or t-shirt from a supplier.

Freight-in
 refers to amount paid to transport goods or merchandise purchased from the supplier to
the buyer. In this case, it is the buyer who shoulders these costs.

In a merchandising business such as Fit Mo’to Ready to Wear Online Selling Business, the
formula to compute for costs of goods sold is as follows:

Merchandise Inventory, beginning P XX.XX

Add: Net Cost of Purchases XX.XX
Freight-in XX.XX
Cost of Goods Available for Sale P XX.XX
Less: Merchandise Inventory, end XX.XX
Cost of Goods Sold P XX.XX
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Module 8:
Computation of Gross Profit
PROFIT
 is a financial gain from a transaction or from a period of investment or
business activity, usually calculated as income in excess of costs or as
the final value of an asset in excess of its initial value.
 It is a total revenue minus total expenses.
 It is the amount of money a business "makes" during a given accounting
period.
 To make your business gain more profit, begin by adding up all of the
money your business has made in a set period of time (either, quarterly,
yearly, monthly, etc.
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 Other sources, like products sold, services rendered, membership

payments, or, in the case of government agencies, taxes, fees, the sales
of resource rights, and so on.
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_______________________________ E N D OF 2nd Q U A R T E R _______________________________