Unit 2: The Business Plan
Lesson 4
The Business Plan Contents
(III): Enterprise Strategy,
Financial Forecasting,
Compliance, and Capital
Structure
Entrepreneurship
Senior High School Applied - Academic
Enterprise Strategy
Enterprise strategy
is a set of choices
and actions geared
toward gaining a
sustainable
competitive
advantage.
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Process of Enterprise Delivery
System
The enterprise delivery system involves
harnessing human, money, and physical
resources from well-selected suppliers.
These resources become the input that the
operations unit within the enterprise
delivery system will convert or transform
into output.
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Process of Enterprise Delivery
System
The output will be delivered to the
customers through the marketing unit of
the enterprise delivery system. The
marketing would include the right
packaging, pricing, promotion, selling and
distribution, and the location where the
target customers can best be found.
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How will the entrepreneur check
if the business will gain profit?
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Financial Forecast
It refers to the capital investment and
sources of funding in the operation of the
business. This section will show the
financial projections over a period of one
year and five-year program and shall
determine the rate of return of investment.
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● "It refers to the capital investment and
sources of funding in the operation of the
business..."
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Balance Sheet
The balance sheet shows the financial
position of the enterprise as of the given
period of time. It reflects the total assets,
liabilities, shareholders, and earnings
preserved to fund future operations or to
serve as funding for expansion.
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● What does the business owned and owe.
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Example: Balance Sheet
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Example: Balance Sheet
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Remember
You can use the balance sheet
to work out a way to meet your
financial obligations and
discover the most effective way
to use credit to finance your
operations.
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Income Statement
The income statement shows the revenues,
cost of goods sold, operating expenses,
other income and expenses, financing
costs, income taxes, and bottom-line
figures.
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● An income statement (also called a Profit
and Loss Statement) is a financial report
that shows if a business is making profit
or losing money over a specific period
(monthly, quarterly, yearly).
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○ Profit if income is more than
expenses
○ Loss if expenses are more than
income
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Example: Income Statement
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Cash Flow Statement
It is a projection of money receipts and
expense payments. It shows how and when
money flows through the business. It
provides verification of whether a company
has enough liquidity or money to pay its
expenses.
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•How much money came in?
•How much went out?
•Do we still have enough left to keep
the business running smoothly?
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Remember
A cash flow statement may be a
valuable measure of strength,
profit, and the long-run future
outlook for a company.
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Environmental and Regulatory
Compliance
The business plan should articulate the
laws and regulations governing the
business, and also on how the enterprise
operates. It should lay out the plans for
acquiring the required permits, licenses,
and authority to use proprietary intellectual
capital.
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Environmental and Regulatory
Compliance
1. Bureau of Internal Revenue - Tax Identification Number (TIN)
2. Barangay Clearance
3. Department of Trade and Industry - Business Name
Registration Certificate
4. Mayor’s Permit/ Business Permit
5. Sanitation Permit and Fire Clearance
6. Securities and Exchange Commission (SEC) Certificate
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Tip
The entrepreneur should identify first
what type of business will be
established so that he/she will know
the exact registrations and clearances
to secure.
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Capital Structure
The capital structure refers to the
combination of debt and equity to use as
the company's fund and finance its
operations.
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Capital Structure
Equity Capital
This form of capital refers to any money
put up and owned by the shareholders.
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Capital Structure
Types:
●Contributed capital (Paid in Capital) - It is the
money that was originally invested in the business
for shares of stock or ownership in return.
Comes From: Initial Capital Investment
●Retained capital (Retained Earnings) - These are
profits from previous years that have been secured
by the business and used for fund growth,
acquisitions, or expansion.
Comes from: Previous Years Profit
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Capital Structure
Types:
Long-term bonds -is a type of loan or debt
instrument where a business borrows money and
agrees to repay the principal after several years,
while paying regular interest to the lender or
bondholder until the loan matures.
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Capital Structure
Types:
Vendor financing - is a type of loan or credit
arrangement where a supplier (vendor) allows a
buyer (usually a business) to purchase goods or
services without paying upfront. Instead,
payment is delayed or spread out over time.
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Capital Structure
Types:
Policyholder float financing - In the case of
insurance firms, this often refers to cash that
does not belong to the business; however, it
earns an investment until an insurance claim has
been made.
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Remember
Different types of capital impose
different kinds of risks for a company.
For this reason, capital structure
affects the worth of a company, and so
a lot of analysis goes into deciding
what a company's best capital
structure should be.
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Wrap Up
Enterprise strategy is a set of choices and
actions geared towards gaining a sustainable
competitive advantage.
The financial forecast section of a
business plan refers to the capital
investment and sources of funding in the
operation of the business.
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Wrap Up
The business plan should articulate the laws
and regulations governing the business and its
operation through environmental and
regulatory compliance.
The capital structure refers to the
combination of debt and equity to use as
the company's fund and finance its
operations.
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Wrap Up
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.
“Capital Structure.” Investing Answers. Accessed April 1, 2020.
https://investinganswers.com/dictionary/c/capital-structure.
Kennon, Joshua. “Here Is a New Investor's Guide to Capital Structure and Why It
Matters.”
The Balance. Accessed April 1, 2020.
https://www.thebalance.com/an-introduction-to-capital-structure-357496.
Murphy, Chris B. “Understanding the Cash Flow Statement.” Investopedia. Accessed
April 1,
2020. https://www.investopedia.com/investing/what-is-a-cash-flow-statement/.
Peters, Michael & Robert Hisrich. Entrepreneurship 4th Edition. McGraw-Hill Book
Co., 1999.
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