ENTREP - BUSINESS IMPLEMENTATION

Question 1

The purposes of the business plan are:

3 ITEMS

Answer 1

1. Entice partners, investors, and bankers to fund a business venture.
2. Communicate what the enterprise is all about, what market it wants to serve.
3. Show what financial returns it could muster.

Question 2

The ____ must be very clear about the purpose in establishing the enterprise.

Answer 2

Entrepreneur

Question 3

Whether it is for generating profits or feeding the family, making a difference in the industry or actualizing the self, the purpose must be ____ ____ to motivate the entrepreneur.

Answer 3

compelling enough

Question 4

The enterprise must state its mission statement clearly for:

4 ITEMS

Answer 4

01 The sake of the customers being wooed;
02 The investors who need to know what they are getting into;
03 The financiers evaluating the enterprise; and
04 The government functionaries who must regulate the activities of industries and businesses.

Question 5

The business plan should contain important information about the following:

8 ITEMS

Answer 5

➢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.

Question 6

It should begin with business concept and the vision for the enterprise in the next three to five years.

Answer 6

Business Plan

Question 7

It should proceed to an enumeration of business objectives, key result areas, and performance indicator. An overall enterprise strategy should then be articulated to show how the performance could be attained.

Answer 7

Business Plan

Question 8

Business Plan should begin with business concept and the vision for the enterprise in the next ____ ____ ____ years.

Answer 8

three to five

Question 9

The business plan should contain an executive summary of the following:

9 ITEMS

Answer 9

1. The organizers and the key people behind the nosiness and why these people have the resources, talents, skills, and technology to achieve success;
2. The market being targeted and why there is enough market potential to justify the business;
3. How the business will be operated and organized, including all outsourcing, subcontracting, franchising, and licensing agreements;
4. The products or services to be offered and why they are right for the market;
5. The investment capital required for the business and what exactly it would be used for;
6. The technology, the technical expertise, the equipment, and material suppliers to be utilized;
7. The capital structure (short and long term debt, stockholders’ equity) of the business;
8. The operating budget, financial projections (income statement, balance sheet, cash flow), and return on investment prospects; and
9. The risks in the business and the contingency measures to counterpart them.

Question 10

The Business Plan must be able to estimate the capital required by the enterprise. The capital required would be dictated by the investment in the assets of the enterprise. These assets are composed of the following:

3 ITEMS

Answer 10

1. The current assets, which are short-lived assets. They are composed of cash, inventory, accounts receivables, and other current assets.
2. The long-lived or fixed assets. They are composed of property, plant, and equipment.
3. The other assets. They are composed of organizational and pre-operating expenses. Interest rate, therefore, is the obvious choice of
   the manager when asked to make a decision

Question 11

They are composed of cash, inventory, accounts receivables, and other current assets.

Answer 11

Current assets, which are short-lived assets

Question 12

They are composed of property, plant, and equipment.

Answer 12

Long-lived or fixed assets

Question 13

They are composed of organizational and pre-operating expenses. Interest rate, therefore, is the obvious choice of the manager when asked to make a decision.

Answer 13

Other assests

Question 14

The assets of the enterprise are financed
by its liabilities. These liabilities are
composed of:

3 ITEMS

Answer 14

• Current liabilities such as suppliers’ credit and other short-term credit;
• Long term debt; and
• Owner’s equity

Question 15

Types of Business Organization

Answer 15

Sole Proprietorship

Partnership
- General Partnership
- A Limited Partnership

Corporation
- Stock Corporation
- Non-Stock Non- Profit Corporation
- Close Corporation
- Corporate Sole

Question 16

The simplest and easiest enterprise to organize. The owner or the entrepreneur has sole control over the enterprise. He or she reaps all the profits and, also, all the losses. But he or she will also incur all the risk.

Answer 16

Sole Proprietorship

Question 17

Sole Proprietorship permits & clearances:

7 ITEMS

Answer 17

✓Barangay clearance
✓Fire safety clearance
✓Certificate of electrical inspection
✓Certificate of occupancy
✓Department of Trade and Industry (DTI) certificate
✓Lease contract if space is leased
✓Locational clearance

Question 18

If two or more persons bind themselves into a contract to contribute money, property, and expertise in a common venture with the intention of dividing the profits among themselves, then they would have entered into a ____

Answer 18

Partnership

Question 19

Composed of partners who are liable individually and collectively to all those who have claims against them.

Answer 19

General Partnership

Question 20

Consist of partners who have limited liabilities while others in the partnership have unlimited liabilities. A limited partner is not personally liable for all the obligations of the partnership beyond his or her prorated capital contribution to the partnership.

Answer 20

A Limited Partnership

Question 21

The partnership should obtain all the required government clearances, permits, and licenses. It should get:

Answer 21

• A bank certificate of deposit on the money contributions of the partners; and
• The approval for its partnership name form the Department of Trade and Industry.

Question 22

The third form of business organization. Like the partnership, the ____ also has a separate legal personality quite distinct from the investors who contributed money to the enterprise.

Answer 22

Corporation

Question 23

Four types of Corporation

Answer 23

• Stock Corporation
• Non-Stock Non- Profit Corporation
• Close Corporation
• Corporate Sole

Question 24

Issues capital stocks divided into shares (or proportions of the total capital).

Answer 24

Stock Corporation

Question 25

Is organized to carry out a purpose or purposes other than generating profits for investors.

Answer 25

Non-Stock Non-Profit Corporation

Question 26

Has articles of incorporation that limit the ownership of issued stocks to at most 20 persons.

Answer 26

Close Corporation

Question 27

It is a special form of corporation allowed by law, usually associated with the clergy.

Answer 27

Corporation Sole

Question 28

A **report that shows the financial activities** and performance of a business. It is used by lenders and investors to check a business’s financial health and earnings potential.

Answer 28

Financial Statement

Question 29

Focuses on the **revenue, expenses, gains, and losses of a company** during a ***particular period***.

Answer 29

Income statement

Question 30

There is usually a very close relationship between Sales and Cost of Sales (or Cost of Goods Sold). Many Companies, in determining their selling prices, conveniently add a specific percentage mark-up or margin to the Cost of Sales, thus establishing a predictable ratio between the two items. If an enterprise decides to slap a hundred percent mark-up on its Cost of Sales, the Sales figure will double the Cost of Sales. As a percentage, Cost of Sales will, therefore, be fifty percent of Sales.

Answer 30

Income Statement Forecasting

Question 31

A **financial report that summarizes the financial state of a business** at ***a point in time***. It provides an overview of the value of a business's assets, liabilities, and owner's equity.

Answer 31

Balance Sheet

Question 32

Forecasting what the Balance Sheet of an enterprise will look like in the future depends a lot on the future Sales. The Current Assets of the balance Sheet include Cash, Marketable Securities, Accounts Receivables, Inventories (Raw Materials, Work-in-Process, and Finished Goods), and other current Assets. Assets in the Balance Sheet must always equal liabilities and owners’ equity.

Answer 32

Balance Sheet Forecasting

Question 33

The **cash that *flows* into and out of various financial assets** for specific periods of time. It's usually measured on a monthly or quarterly basis. It doesn't measure the performance of any single asset but emphasizes how cash is moving.

Answer 33

Funds Flow

Question 34

The financial forecaster should compute for the increase or decrease in the different items found in the Assets and Liabilities columns, when comparing the actual or previous year’s Balance Sheet and the Pro Forma Balance Sheet. Decreases in Assets and increases in Liabilities are sources of funds, while increases in Assets and Decreases in Liabilities are uses of funds.

Answer 34

Funds Flow Forecasting

Question 35

Is a measurement of the amount of **cash that comes into and out** of your business in a particular period of time.

Answer 35

Cash Flow

Question 36

The entrepreneur or finance manager is concerned about the enterprise’s survival on a day-to-day basis as well as its long-term sustainability. Cash is a precious commodity that will make the enterprise live on and on. It is crucial, therefore, to monitor and budget the enterprise’s cash position on a daily, weekly, monthly, and yearly basis.

Answer 36

Cash Flow Forecasting

Question 37

This was introduced as a method to evaluate business investments.

Answer 37

Income and Cash payback period

Question 38

The ____ ____ ____ ____ ____ ____ ____ would help the entrepreneur get a firmer grip on the viability of his or her enterprise.

Answer 38

Construction and forecasting of Financial Statements