Module 4: product Development, Operations, and Financial Plan

At the end of this module, I can:

1. understand the fundamentals of product development.
a. develop a product or service description
b. create a prototype of the product or service
c. test the product prototype
d. validate the service description of the product with potential customers to determine its market
acceptability.
2. describe the 4Ms (method, man power, machine, materials) of operations in relation to the
business opportunity.
a. select/pinpoint potential suppliers of raw materials as well as technology/ machine requirements and other
inputs necessary for the production of the product or service.
b. discuss the value/supply chain in relation to the business enterprise
c. recruit qualified people for one’s business enterprise
[Link] the business model
4. forecast the revenues of the business
5. forecast the cost to be incurred
6. compute the profits
7. create the company’s five-year projected financial statements.
The business plan will not be complete if the operations and financial plan are not included.
These two play a crucial role in ensuring that the business is operationally feasible and financially
viable. Even if the marketing plan looks promising, the business will not be successful without a
detailed operations and financial plan. These two will tell if the big idea generated through product
development process is realistic.
This module will introduce you to the fundamentals of product development and the
operational requirements of a business represented by the 4Ms – manpower, method, machine, and
materials. You should learn the methods before commercializing a product or service. You will
understand how to identify and comply with the business requirements before running an enterprise .
You will also know the importance of crafting a business model as a blueprint of the business
operations. Last, you will be taught on how to account actual and future performance of a business
enterprise through reparation and analysis of financial statements.
Fundamental of Product Development
Before commercializing a new product or service, the entrepreneur must focus first on refining
the product or service and validate its market acceptability. This new product does not have to be a
totally new product. It can be a new product line from the existing business of the entrepreneur, a
product line expansion, an enhancement, or a repositioning of an existing product. 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, (2) creating a prototype, (3) testing
the prototype, and (4) validating the market.
Product or service Description
The product or service description simply describes how a product or service works and how
it benefits the customers. A clear product or service description is important because this will serve
as the blueprint of all business operations. Therefore, the entrepreneur has to take note of the
following regarding the product or service description:
[Link] should directly address the primary target market in a personal manner using everyday
language. The entrepreneur should put himself/herself in the customer’s shoes, where the product
description will be addressed to.
[Link] should highlight the features that will cater to the customer’s needs or address the customer’s
problem.
[Link] superlatives should be used for the product description. Motherhood statements such
as “world-class service or product excellence” may not matter to the customers at all.
Creating a Prototype of the Product or Service
After defining the product or service, you may now proceed with one of the most exciting
but also very challenging parts of product or service development: the creation of a prototype. A
prototype is a preliminary model or sample of a new product or service that is created to test a
product concept or service process. This is an exciting process for the entrepreneur because he/she
will be able to see that his/her ideas will soon become a tangible reality. The entrepreneur’s
creativity and ingenuity will be used in creating the prototype.
According to Entrepreneur ([Link]), creating a prototype lessens
implementation/commercialization risks and provides the entrepreneur a bunch of
advantages as follows:
[Link] a prototype enables the entrepreneur to engage in trial-and-error, provides room
for improvements, and refines the functionality of the product design or service process. It is
very expensive and risk-intensive to commercialize a product without creating a prototype.
[Link] a prototype provides the entrepreneur a window to test the performance and
specifications of various materials and service processes. Every detail of the product or service
should be scrutinized carefully, and all flaws be addressed right away before
commercialization.
3.A prototype helps the entrepreneur effectively describe the product or service to the product
team. Members of the product team include marketing, operations, engineers, suppliers,
business partners, and legal and human resources. It provides the product team the
information needed to create the right product or service as planned.
[Link] a prototype elicits respect from key stakeholders and customers. At the same time,
a prototype gives credibility to the entrepreneur. Some entrepreneur only present vague and
big ideas but no details as to its feasibility and implementation.
Creating a prototype is stage where the entrepreneur can experiment, develop, and make some
improvements in the potential product or service. The objective of the entrepreneur as this stage is to
verify if the product or service concept will work as the simplest, fastest, and cheapest way.
One technique for creating the best prototype is by studying the competitor’s product or
service. The entrepreneur will try to scrutinize the parts and functions, as well as the design and other
attributes of that product, in hopes that he or she will be able to address some problems in the
competitor’s products and come up with the most efficient and effective prototype. As for the services,
the entrepreneur may try availing the competitor’s services and will take note of their operations, such
as service delivery, location, facilities, and ambiance. He or she will then take note of the pros and cons
of the service to create a prototype, simulate the service by trying it with his or her friends or relatives,
and then get their feedback.
Some entrepreneurs create a video presentation or a miniature prototype, so they will be able
to explain the details, if the product is to be viewed by a panel of specialists (e.g., engineers,
developers, scientists). The scope should be related to the entrepreneur’s budget. After creating the
prototype, he or she should be ready to test it.
Testing product prototype
All the efforts exerted in the creation of a prototype will be put to waste if the prototype will not be
tested. Testing the prototype is a vital process before an actual product or service is launched to the
market. Testing the prototype will uncover the final loopholes that need to be fixed before
commercialization. It gives the entrepreneur a leeway to examine and scrutinize the prototype and
Provide feedback as to what can be improved before the launch. These improvements and
changes must be completed first before moving forward to the next step. For a prototype that has
already been refined, testing is for the last time after the changes have been made ill validate its
readiness for commercialization. The following testing methods are applied by the entrepreneur:
1. Focus group discussion- the participants will provide relevant insights about the new product
or service. The objective of the FGD is to identify errors, deficiencies, and issues that may
impede the success of the product. Participant also need to provide suggestions, and pratical
solutions on how to improve these deficiencies.
2. Legality and ethical test- prior for launching, the entrepreneur must ensure that the product
or service complies with all relevant laws and regulations and has a necessary license or
permit to operate a particular business. For example, food products must be cleared first with
the Bureau of food and drugs (BFAD) before manufacturing/production of goods or offering of
the service does not generate ethical issues such as being threats to health, safety, and
environment.
3. Safety test- The entrepreneur must ensure that the product is safe to use, safe to be consume
(food and beverages), and safe to be applied (cosmetics products). The product should not in
any way harm the customer or put the customer in peculiar situation. In services the
entrepreneur must ensure that the processes to performed by the service provider must not
be detrimental to the safety and health of the customer.
4. Product coasting test- The entrepreneur must examine every stage of the manufacturing
process or every process of the service blueprint to evaluate and finalize the costs involved.
This is the time when the entrepreneur can match the expected costs versus his/her budget.
Modification in the manufacturing process or service blueprint can still be made at this point to
align with the cost objective of the entrepreneur.
5. Component test- Each component of the product or service must be tested independently to
identify component failures for goods or service failures for services. Any failure identified
must be redesigned and tested again until it becomes fully operational and functional.
6. Competitors’ product/service test- The entrepreneur must test a similar line of products or
the competitors’ product or service itself to compare and get the best practices to be applied
to the new product or service.
Testing the product prototype is mandatory to ensure that the product or service will
not fail the customers and will deliver its definitive purpose. This will elicit customers
satisfaction and, eventually customer loyalty and retention. This is the time to approved that
the concept formulated by the entrepreneur will work and is feasible in real life. All the
mistakes accounted for and the improvements to be fixed should be performed first prior to
commercialization of the product or service.
Validation of Market Acceptability
Validation of market acceptability is the process of finding out if the intended primary target
market will be buying the product or availing the service. Market acceptability is a critical factor that
the entrepreneur must validate before launching the product or service, because this can strongly
suggest if the business will be successful or not. It either validates or disconfirms the perception of the
entrepreneur about the suitability of the chosen primary target market. It also test whether the value
proposition and unique selling proposition are appropriate there’s a need to improve on them. This is
also the time to deeply understand the value that the product or service brings to the customers and
their prospective purchase behavior, because it helps the entrepreneur build the relevant and
meaningful product or service. This process is the last step before the product or service can be
introduced to the market. The following objective questions are more likely to be answered in the
whole process of market acceptability validation:
1. Will the primary target market like the product or service?
2. Will the primary target market like the product or service when it is already in the market?
These questions can easily be answered if the entrepreneur will perform the following activities:
3. Use the most strategic marketing research too (FGD, survey, observation, interview, online survey,
e-mail, or a combination of these research tools), wherein the entrepreneur can get the most
relevant answer in the cheapest way possible.
2. Prepare relevant open-ended question that answer the objective above. Do not go around the bush and
be straight to the point. Keep the questions to a minimum because the target market got get bored and the
finish the whole questionnaire.
3. Find the market experts who also target the same market but are not directly competing with the
entrepreneur. For instance, a market expert sells cars to a specific market segment and it so happens that
an entrepreneur sells real estate. The entrepreneur can leverage on the knowledge of the market expert
regarding that market segment because they almost have the same demographic data requirements. The
entrepreneur can use these data to improve the product or service.
4. Collate all the data, analyse them, and prepare a summative report that answers the objective questions
that were mentioned earlier.
The 4ms of Operation
The operations plan in an important part of the business plan because it simply states the detail in
operating in business. Operations management, on the other hand, controls the implementation of the
business plan. A strong operations plan should have the four operational aspects─called 4ms of operations;
the methods, or the processes to be followed in effectively manufacturing or delivering product or service;
the manpower, or the right human resources who will handle certain business operations; the machines, or
the technology used in efficiently operating the business, and the materials to be used in creating a product
or performing a service, which includes supply chain management.
Methods
The methods aspect represent the day-to-day operations of a business. It describes how an
entrepreneur will run the business from all facets of the business such as the manufacturing of goods,
service delivery process, distribution of goods and services, logistic for delivery of goods, and inventory
management, to name a few. The entrepreneur has to be very detailed in formulating these processes and
must ensure that the customer experience will be pleasant and seamless. Internally, the processes must
also abide with industry standards and policies where the business belongs (e.g., ISO certification)
The entrepreneur must also set standard operating procedures (SOPs) both in manufacturing goods
and rendering of services. These SOPs must be monitored to validate compliance. The entrepreneur must
also critically consider the effects of these processes to the environment and to the public.
Manufacturing of goods (schaper and volery, 2004)
The entrepreneur who will engage in producing his or her own products will have to consider the
basic guidelines and principles in manufacturing. Manufacturing is the process of translating raw materials
onto finished goods that are acceptable to the customer’s standards. It consists of three elements:
• Inputs- the materials or ingredients to be used in creating the product
• Process- the transformation phase where inputs 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
The entrepreneur must also consider the most efficient manufacturing site in which
the manufacturing process will take place. Depending on the entrepreneur’s objective and
financial capacity, he/she can opt to have any of the following manufacturing sites:
• Home-based – Most starups do not have financial capacity to establish a manufacturing
site. Thus, their only option is to manufacture goods at home. This option is the
cheapest and highly flexible. The entrepreneur can start with products that are usually
manageable to be processed at home such as food products and customized clothes.
• Commercial space for rent – This is advisable if the business really requires a commercial
space for the processing of goods and if the home option is not viable anymore. A
commercial space gives the entrepreneur a more specialized and suited manufacturing
site than manufacturing at home. However, this is more expensive than manufacturing
at home and requires long-term commitment because the entrepreneur will need to
sign a lease agreement.
• Commercial space purchase – This option requires the biggest amount of capital
expenditure, but it also provides the entrepreneur substantial freedom and flexibility to
design and run the commercial space. Compared with renting, purchasing a commercial
space is considered more of an investment than an expose.
Once the entrepreneur has chosen a manufacturing site, he/she should consider location,
where the delivery of raw materials and finished goods will be conducted. The transportation
routes from or to the manufacturing site should be efficient, so that the delivery of raw materials
and finished goods will be seamless. The location should also be accessible to major types of
transport vehicles. Last, the location must operate in an environment-friendly manner so as not to
contribute to various types of pollution in the environment.
The internal layout or the floor plan of the manufacturing site must also be critically done
by the entrepreneur because it affects the efficiency of the business operation. Each space should
be maximized to save on manufacturing costs( specifically overhead costs). An efficient floor plan
illustrates how raw materials and finished goods can efficiently be transferred, processed, and
released from one processing unit to another. There are two options for the floor plan: (1) the
product-based layout, where the facilities are prearranged according to the flow of the
manufacturing operations, and (2) the process-based layout, where the facilities are grouped
according to their function.
Last, the entrepreneur must prepare a manufacturing process flow, which serves as a step-
by-step guide of the employees and the manufacturing equipment. The objective of the process
flow is to ensure that the right inputs are properly used in production, that the process is
performed according to the set standards, and that acceptable outputs are produced . Not having
a process flow will result in inconsistencies in the process, high expenses, and disagreements
among employees .
The entrepreneur’s ultimate objective for all the operational processes is to ensure that
maximum efficiency are met – from the requisition of materials to processing them into finished
goods up to the distribution to customers.
Service Delivery Process
The entrepreneur who will engage in a service business must be more meticulous when it
comes to the service delivery process. This is because services are intangible, and the only way the
customer can appreciate the service is by remembering how pleasant his/her experience was.
Moreover, a seamless service saves the entrepreneur a huge chunk in operational costs.
Service entrepreneur must prepare a detailed flowchart of the service business, which is also
called a service blueprint. Every process in the blueprint must be relevant to the service business to
minimize wastage. The service bottlenecks must be addressed immediately to avoid customer
complaints. Bottlenecks is a part of the process where there is an apparently inefficiency and where
the customer waits longer. The service entrepreneur must develop script that the service provider will
follow to serve the customers better and to establish standard processes.
In terms of the floor plan, the service entrepreneur must design it according to the most
efficient way in performing the service, which can be based on the internal structure of the service
business, service delivery requirements, or customer requirements. For example, a barber shop
should place the receptionist in front so that customers can easily inquire of the service that they will
avail.
Distribution Method
One of the basic processes to be considered thoroughly is the distribution process. Distribution
is the processes of bringing the products or services to customers. In selling physical goods, the
entrepreneur must plan the location, the processes, and the distribution of the products to the
customers. The entrepreneur mat also buy the finished goods from the manufacturers and plan how
to distribute them efficiently to target distribution centers or the customers. Distribution is not a
straight process from the entrepreneur to customers; thus, the term supply chain or distribution
channel was coined. The manufacturer will deliver the products to the distributors, to the wholesalers,
to the retailers, and then finally to customers. Each member in the supply chain will have a fair share
in the profits, which may be squeezed if the supply chain grows longer. This is why there is a tendency
to impose higher markups on the product price. It is now up to the entrepreneur on what distribution
channel strategies he/she will employ depending on the product or service he/she will offer.
As mentioned, there are certain people involved in the supply chain. First is the manufacturer.
The manufacturer handles the invention, development, and production of the product or service.
Entrepreneurs can be manufactures of a product or a service. Most often, budding entrepreneurs
become manufacturers when they introduce a new product. Most established products or services in
the market are owned by top corporations. The great thing about being a manufacturer is that
entrepreneurs can manage the entire supply chain. Manufacturers take charge of acquiring materials,
production and delivery schedules, product quality, and inventory or safety management.
Manufacturers also handle product delivery, marketing, and selling. Because of this, manufactures
often seek the help of distributors or agents for the distribution of goods.
Distributors are entrepreneurs who often buy products or services to the manufacturers
and sell them at a markup price to either wholesalers or retailers. Distributors buy the products
in bulk for discounted price. The bought products or services are now owned by the
distributors, so any damage, spoilage, or other liabilities to the product will be their sole
responsibility. Distributors become wholesalers when they sell the product to another
distributor.
Agents, on the other hand, don’t own the products or services because they do not buy
these from the manufacturer. Instead, they negotiate with buyers as to how much or how many
are to be sold, so the manufacturer will be able to deliver the goods directly to the buyer.
Agents get the commission for every product sold. Some agents to consignment, wherein
agents get the products in advance to demonstrate them live to the customers. If unsold,
agents just return the merchandise to the manufacturers. They are not held liable for any
damages or losses incurred.
Manufacturers turn to distributors when they have limited resources or they don’t have
people with expertise in selling the product. The distributor or agent can assist the
entrepreneur/manufacturer in the following: (1) sharing industry knowledge, behavior, and
activities of the primary target market, (2) pertinent rules and regulations imposed by the
government, (3) best practices in marketing and selling product, (4) best practices in operating
the business, and (5) their respective sticky relationship with business associates such as
suppliers, financial institutions, or retailers, to name a few.
Payment Process
The entrepreneur must also establish a seamless payment process. Generally, there are no
problems if the customers pay in cash. But there are instances when they do not want to pay in cash
and are usually attracted by flexible and payment terms such as credit cards, instalment plans, or a
simple accustomer-friendly counts payable or pautang. The entrepreneur must ensure that credit
payments are seamless and that the customers are aware of terms and conditions of the credit.
Some entrepreneurs put point-of-sale (POS) machines in their shops to accommodate those
who will pay through their credit or debit cards. For traditional ones, they put the credit purchase in
a ledger and indicate the due dates. Ones the due arrived, the entrepreneur has to collect payments
from the customers. The objective for all entrepreneurs is to ensure efficient collection of accounts
receivables and avoid bad debts. He/she must conduct due diligence first before allowing a
customer to purchase via credit.
Manpower
At the beginning of the entrepreneur’s business, he/she usually maximizes himself/herself ,
his/her partner, or his/her family members to handle all the aspects of the business. But as it grows,
the entrepreneur will need the expertise of qualified employees that can handle operational
functions, so that he/she will be free from daily activities and can thus focus on the strategic and
management functions of the business. The entrepreneur needs a plot a table of organization
based on his business objectives. Each position has to be relevant.
To verify if a position is really necessary, the entrepreneur must devise a detailed job
description and job qualifications of the future employee. This will be his/her basis in
deciding whether to hire an employee or not. The entrepreneur must be very keen in selecting
and hiring an employee. He/she must ensure that due diligence is performed to check the
background of the applicant. Manpower is one of the highest costs of operating a business but
is also the most instrumental to its success. Having the right people encompasses a myriad of
advantages.
Job Description
Job description enumerates the duties and responsibilities of the potential employee,
including the scope, limitations, and terms and conditions of employment. The heading of a
job description is the job title, which is the summary of what the employee will do. The
entrepreneur should devise a respectable and decent job title because the title boosts the self-
confidence of the employee.
After the job title is the compensation and benefit is the compensation and benefit
range, which details the potential salary and benefits that the employee will get. Next are the
duties, which clearly describe the job that the employee will assume with allowance for
flexibility. Duties are usually high-level descriptions only. Responsibilities and accountabilities
follow next, which must be communicated well to the employee so that he/she knows what to
expect with the job.
Work schedules, including work hours, must also be clearly indicated in the job description. The
specific days and working hours must be written so that the employee will be able to align the work
schedule with his/her personal schedule. Work schedules are highly driven by business
requirements (e.g., a security agency business will need to indicate the work schedules of the
security guards it will hire).

Employee Qualification
In hiring suitable employees for the job needed, entrepreneurs will have to look for the
following criteria:
1. Educational background- This gives the entrepreneur an idea on the degree of the
candidate’s knowledge of basic things. However, it is not the sole factor in selecting candidate.
2. Work experience- This will tell him/her what to expect from the applicant and what he/she
can potentially contribute to the business based on his/her past positions and experiences. This will
also establish the training needs of the candidate.
3. Specific skill or knowledge- This one is important especially on technical jobs that require
high proficiency. It will be easy for entrepreneurs to place highly skilled people into specialized jobs
because they can help right away. This is also less expensive because entrepreneurs don’t have to
train them thoroughly to acquire such skills. Examples of potential candidates that have specific
skills or knowledge are engineers, architects, accountants, and information technology specialist.
4. Work attitude- This deals with the worker’s integrity and how he/she deals with his/her coworkers,
bosses, and customers. Entrepreneur also need people with relationship skills because communication
is important in applying their expertise. A good work attitude involves being punctual, having good
leadership and communication skills, being a team player, making ethical decisions, obeying superiors,
and being passionate and dedicated to the company. Entrepreneurs, however, will decide what they
are looking for in selecting the candidate.
Preparatory Selection of Job Applicants
Once the job description and employee qualifications are finalized by the entrepreneur, he/she
now preselects a set of candidates for the positions required. When the business is already sizeable,
entrepreneurs usually establish a human resource (HR) department that will handle the selection and
recruitment of candidates. The entrepreneur can initially choose from his/her personal list trustworthy
people whom he/she thinks can contribute to the business venture. If this list does not exist, he/she
can turn to employment agencies or manpower agencies that can do the job.
Headhunters help companies find a set of people suited for their requirements. They usually
charge a finder’s fee once the entrepreneur has decided to accept an applicant. Manpower agencies,
on other hand, recruit temporary employees under a short contract, usually on a six-month period. The
entrepreneur can also opt to advertise job vacancies via print such as general circulation newspaper or
other publications if the intention is to promptly get a candidate from the public. If the intention is to
hire candidates with specific knowledge or skills, the entrepreneur must turn to magazines or
publications of the specific industry where the prospect belongs (e.g., The magazine blueprint if the
entrepreneur wants to hire architects)
One viable option is to consider recommendation and referrals from friends, relatives, or
business partners with an untainted reputation. Recommendations from those with doubtful
characters should of course not be considered by the entrepreneur. Another move is to look for
his or her business network, or the people whom the entrepreneur has worked with in the past.
This is a better way of preselecting the employee than the traditional way (interviews) because
the entrepreneur already knows the work ethics and qualifications of the potential employees.
Last, one of the revolutionary ways of preselecting potential employees is through digital
media. With the power of the internet, an entrepreneur can easily post job vacancies through his
or her web site, social media accounts, e-mails, online affiliates, search engines, podcasts, or
blogs. He or she can also choose the advertise via mobile through either short message service
(SMS) or mobile application, or simply mobile apps.
Selection of job applicants
Once the potential candidates are pooled, the entrepreneur must now do the difficult
task screening them and picking the most qualified and most suited for the job. Preliminary
screening can easily be done because the entrepreneur will just need to refer to the required
qualifications and eliminate those who did not qualify. The entrepreneur or the HR department
can now conduct a series of interviews for the shortlisted candidates with the objective of
getting the most qualified candidate for the job.
Some established businesses even conduct qualifying examinations in math, English,
and logic before they hire an employee. Some may give qualitative examinations or
psychology tests that require the candidates to answer in essay form or in multiple choice.
Here are some common questions being asked in an interview. However, it will be up to the
entrepreneur or the HR personnel to ask relevant questions to the interviewee.
1. What are your strengths that you can contribute to our organization?
2. What are your weakness that can prevent you from working effectively in our
organization?
3. What exactly did you in your previous job(s)? How will these past experiences contribute
to our organization?
4. What were your significant milestones in your previous job(s), and why do you consider
them as such?
5. Can you discuss the things you now about our organization? Why are you interested to
join our organization?
6. What are your career plans for the next five years if given the chance to work with our
organization?
7. Can you describe your work ethic? How do you work with a team and with your superior?
depending on the business requirements, the entrepreneur or the HR personnel will
ask more specific questions related to traveling out of town or overseas, working at night or
at odd hours, working on holidays and weekends, willingness to do other functions, and so
on. Both the entrepreneur promotes and the candidate must set realistic expectation for
both parties. In reality, the entrepreneur promotes the business to a candidate by starting
how good the company is and how great it is working for them. Conversely, the candidate
also sells himself/herself by citing his/her work experience or educational background. Both
parties should be aware of this in the interview process. Nevertheless, it will be up to the
entrepreneur or the hiring manager to decide based on the responses given by the candidate
and his/her credentials. Table 4.1 shows a list of basic requirements for a candidate to be
considered for specific positions.

Table 4.1. Educational background, specific skills or knowledge and work experience needed
in selected positions.
Position Educational background and specific Work experience
skills or knowledge
Operations manager for a retail store • Preferably has a degree in business ad Worked as a member of operations staff
major in operations management; having or as an operations manager in any
a master’s degree in business ad is plus industry
• Knowledgeable in MS office applications
and six sigma (a disciplined approach for
eliminating operational defects), and has
good leadership.

English teacher for foreigners • Has an education degree in English Worked as an English teacher in a
or languages university or worked in a call center as a
• Eloquent speaker and a good trainer
listener, patient with students,
adaptive to foreign cultures

Fast food crew • High school graduate Worked with a fast food chain or
• Physically fit, pleasing personality, restaurant; those without experience
customer-service oriented are still qualified because training will
be provided

Baker • At least a high school graduate and

win TESDA certification
• Physically fit, efficient, and fast
worker
Job offer justice 1/22/2020
once the entrepreneur or the hiring manger has been convinced already of the credentials
and the interview answers of the candidate, the job contract is now prepared. A job contract
generally summarizes the candidate’s employment with the business. It usually includes the
following details : (1) rank or position of the candidate, (2) a list of responsibilities or deliverables
and its scope and limitations, (3) the salary and benefits including vacation and sick leaves, (4)
work schedule, (5) probationary period if any qualifications to become a regular employee, (6) the
duration of the contract, and (7) resignation procedure (e.g., 30-day notice or leave immediately.)
Employee development
training people is one of the biggest investments of an entrepreneur or a businessman.
Therefore, he or she must devise strategies on how to keep employees satisfied working in the
company. Training starts with employee orientation. Employee orientation is usually one-to-two-
day sessions that summarizes the history of the business, its vision and mission, policies and
procedure, culture and norms of the business. This also includes introduction to the employees
and superiors, the tour of the work place, and the discussion of daily responsibilities and
accountabilities including key performance indicators (KPI) and key result areas (KRA) of the
employee. KPIs and KARs are the basis of the entrepreneur for rating the performance od the
employee- if the employee is exceeding expectations, meeting expectations, or seldom meeting
expectations.
For startup entrepreneurs whose budget are really tight, they usually conduct on-the-job
training (OJT) as the most practical tool in training the employee under a supervision of a team
leader or manager. This will spare the entrepreneur the cost of further classroom training
because the employee is already productive and exposed to thee real job an what he or she
experiences from on-the-job training will serve as learning investment. The manager’s role is to
closely supervise, train, and monitor the initial performance of the new employee and provide
him or her constructive feedback on how to efficiently and effectively deliver the job. There
should be a check and balance especially during the first few days of the OJT. Constructive
feedback should be given by the supervisor to the employee, and all errors committed should
be rectified immediately to prevent recurrence.
other practical options that the entrepreneur can use as training tools are the buddy
system and mentor-mentee training programs. The buddy system is a training program wherein
an expert team member is assigned to assist a new employee until his or her function. The
objective of the expert employee is to train the new employee until he or she masters the job.
The mentor-mentee program, on the other hand, is a training program for supervisors, wherein
they will be mentored by a senior executive or senior officer of the business. The objective is to
train the supervisor to handle key decisions and strategic tasks that will eventually become part
of his or her job once he or she climbs the organizational ladder. Entrepreneurs must prepare a
succession plan to ensure business operations still continue even in their absence or the
absence of key employees, or when they decide to retire or resign.
When the employees is already familiar on what he or she does on a daily basis and the supervisor already
noticed a substantial improvement in the employees’ performance, the entrepreneur or the management should now
take the employee to the next level. The entrepreneur can send the employee for further training through extensive
leadership training, part time or full-time bachelor’s or master’s degree programs, or short-term technical/specialized
courses.
One of the emerging and practical training development programs these days are enrolling in online learning
programs or webinars (seminar on the web). A webinar is a practical way of learning because the entrepreneur or the
employees does not need to go abroad or out town just to get the necessary training. It is also very flexible because
the entrepreneur can learn at his or her convenient time or place. The employee can also expand his or her horizons
and be rotated in different areas of the business (e.g., form marketing to operations or vice versa).
The entrepreneur can also conduct internal training programs led by component subject matter experts to
discuss the intricacies of each department to the newly hired employees. To keep abreast with the external factors,
the entrepreneur can send himself or herself or the employees to attend international or local symposia, workshops,
conferences, and seminars. Internally, the entrepreneur must also conduct annual strategic planning and include key
employees to devise tactics and strategies for the business in the next coming years.
Employee training and development is a major thrust of every entrepreneur because employees are the best
assets of a business enterprise. For one, this human resource aspect helps the business reduce costs; remember that
whenever employees commit errors as a result of lack training, the business incurs unnecessary cost. As a result of
employee training, productivity also increases because as the employee learn his or job every day, he or she becomes
more and more productive. Moreover, the full potential of employees are optimized especially when their skills and
talents are recognized. These will result in the increase in value-added contribution of the employees. Employees will
also feel important and needed, therefore, they will continue to be motivated and committed the business. Indirectly,
they also become brand ambassadors of the business who promote their products or services to their circle.
Another upside of training is that employees build camaraderie when put together in one
training session. This elicits smooth working relationships with one another, especially of the role of
one employee coincides with another employee. All of these result in a positive bottom line (net
income), because reduced costs and increase in productivity mean increase in revenues.
The greatest challenge for all entrepreneurs is constantly motivating and keeping high
performing employees. Because of their track record and achievements, they can easily transfer to
other competitors, which means all training investments to high-performing employees will be gone,
higher costs for training new employees, potential decrease in productivity, and customers transferring
to competitors as well. Therefore, the entrepreneurs and the HR department must devise an effective
talent management program to gain the employee’s loyalty. Here are several strategies for talent
management.
1. Providing employees with a very competitive salary package that includes guaranteed bonuses,
performance bonuses, commissions, and other monetary incentives.
2. Nonmonetary benefits such as medical coverage, different types of leaves (vacation leave, sick,
leave, emergency leave, birthday leave, maternity or paternity leave, study leave), decent and
notable job titles, flexibility in work schedule, awards and recognition for excellent performance,
inspirational leaders, transparency and fairness in employee performance evaluation, and channels
to which employees can provide constructive feedback without the risk of being fired.
3. Additional (optional) benefits such as annual trips (international or local), work-from-home
opportunities, scholarships, transportation and communication allowances, free meals and drinks,
Entrepreneurs must be able to be objective when evaluating the performance of
employees. They must be confused on the business objectives and if the employees are the able
to meet these objectives. They must do all possible strategies to save high-performing
employees because losing them outweighs the salaries and benefits that you will spend on
them. On the other hand, nonperforming employees must be motivated by the entrepreneur to
make them more productive, unless replacing tem in necessary or when these employees find
better career options. Nonperforming employees are a liability to the company.
Machines
Most businesses would not be able to operate without the aid of machines. Machines
can be described as “best friend” of manpower in producing goods and offering services. They
go hand in hand. Sometimes, machine can even replace employees. Machines have become one
of the 4Ms because they are a very important aspect of goods and service production, and they
have changed the way entrepreneurs conduct business. Machines are not only limited to
physical equipment but can also pertain to new technologies that help business operations
become standardized and seamless. Without machines, business operations will be
cumbersome, and with low quality.
Equipment and other facilities
Depending on the product that the entrepreneur produces or the service that he or she
offers, the facilities must be strategically placed in the manufacturing site or in the service
delivery area. The entrepreneur must prepare a facility plan the details the most economical
way to manufacture the product or offer the service by placing the facilities where they can be
efficiently used.
The sizes and shapes of the facilities and equipment affect the entire operations
process, so the site must adapt to how big or small the pieces of equipment are. The site must
also be conductive, well-ventilated, and well-lit, so that the employees can manage the
machines efficiently. There should be fire exits and safety reminders on how to use the facilities
to ensure safety of the employees. The equipment to be used should all be compliant with
safety requirements to prevent accidents.
For pieces of manufacturing equipment that are complicated to operate (including
delivery vehicles) the entrepreneur must ensure that the employee went through rigorous
training or certification to operate them. The entrepreneur must also allocate space for the
storage of equipment, including the parking of delivery vehicles. He or she must also be aware
of the power consumption of each of the equipment to analyze the cost of producing the
goods. Ultimately, the goal of the entrepreneur is to maximize the pieces of equipment to their
full capacity to minimize manufacturing or service delivery costs.
Telecommunications and Information technology
Regardless of any business the entrepreneur will venture into, telecommunications and
information technology equipment is mandatory. These pieces of equipment include mobile phones or
smartphones, tablet computers, phablets (phone and tablet in one), landline phones, laptops or desktop
computers, POS machines, software programs, and business web sites. These tools aid the entrepreneur
in making business processes fast and convenient. Here are the advantages of have telecommunications
and information technology equipment in a business:
• Landline phones- order-taking, telemarketing, and teleconferencing with business partners and
customers
• Mobile phones (smartphones, tablet computers, phablets)- mobile application for order-taking, mobile
application for payments, mobile marketing, social media marketing, teleconferencing with business
partners and customers, marketing research, mobile banking, and internet promotions.
• Laptop and desktop computers- order-taking, internet marketing, making conference calls with business
partners and customers, marketing research, online banking, preparing reports such as financial
statements, business case, inventory reports, and legal and compliance reports.
• POS machines- charging customers’ debit or credit card, tracking sales, storing data, analysing purchases
• Accounting and inventory software- accounting all business transactions and profitability, monitoring
sales and inventory.
• Web site- order-taking, 24/7 marketing, having online conversations with customers, tracking customer
activities online, collecting customer information
The responsibility of the entrepreneur is to protect this pieces of equipment physically and against
fraudsters who will be using these information to malign or steal from the business. These machines carry
confidential information. Therefore, they should be protected with strong passwords and used only by authorize
employees. Employees must be trained to keep every piece of important information confidential, including
passwords. Software programs must always be updated and checked against viruses and hackers. POS machines
must always be in working condition and must be referred to be banks when not properly working.
There must be a business continuity plan (BCP) should machines not work properly. The entrepreneur
must select reliable suppliers for these machines so what when contingencies arise, they may be able to provide
immediate replacements or repair them quickly. The entrepreneur can also negotiate with suppliers to provide
discounted prices for bulk purchases.
On the information technology side, the entrepreneur must appoint two or more reliable information
technology experts whom they can call whenever there are issues encountered in the software and computers.
Both physical and non physical equipment should be covered in the event of loss of property due to fortuitous
events and accidents, machine breakdown, manual faults, or interruptions of business.
Materials
whether the entrepreneur will offer products or cater services, he or she has pinpoint a number of
dependable suppliers of quality raw materials and supplies. The supplier must have a consistent and sufficient
amount of raw materials and supplies that can accommodate the demand of the entrepreneur. In short, the
selection of suppliers will not cause interruption in the production of goods or serving the customer. From the
onset, the entrepreneur should decide on what route to choose when it comes to materials requisitioning.
Options include the following: (1) manufacturing own products or offer services; (2) outsourcing of
manufacturing or service activities to a third party; and (3) purchasing own product or service from service from
In manufacturing the entrepreneur’s own products or offer services, a huge chunk of capital must be
prepared because all the expenses in manpower, machines feasibility thoroughly, as the risk is larger with this
option. A set of competent employees must be employed to handle the machines or service the customers.
But these challenges can be augmented because the entrepreneur can be very specific in the details that he or
she wants for the product or service. He or she can also closely monitor the quality of products or services,
strategically design the production or service blueprint, as well as its schedule, and more flexible in deciding on
the production quantity. On the marketing side, the entrepreneur will also have the opportunity to build his or
her own brand identity. Most importantly, the profits will all go to the entrepreneur or the manufacturer.
Outsourcing is the process of appointing a third party manufacturer to do manufacturing operations of
the business. These third party companies already have an expertise in handling and manufacturing these
products, supplies, or inventories, and because they manufacture, they produce goods in bulk. These drives
the companies to create products or services tailored to the entrepreneur’s needs at a lower cost. Some
outsource companies offer to provide the services for the entrepreneur.
Outsourcing provides the entrepreneur a chance to provide the operation details to the third party. No
changes in the brand name in identity will be implemented because the entrepreneur still holds the rights to
such. Outsourcing saves the entrepreneur from buying expensive machines, renting locations, or hiring
manpower, as the operational aspect of the business will be transferred to the third party. This scenario,
however, poses risks, especially when the outsource party closes its business, when it runs out of supplies,
when it breaches the service-level agreement, when it produces substandard products or services, or when
the service stops. The profits are also shared with the third party, which does not happen when the
entrepreneur creates the product in his or her own. Also, because it knows how the entrepreneur’s business
work, and the third party can easily shift to other companies.
The entrepreneur, therefore, must protect its product through a trademark or a patent,
and a noncompeting agreement or nondisclosure agreement. A patent is the right to protect the
entrepreneur regarding the product or service. A trademark, on the other hand, is a sign or
symbol that helps distinguish the product from others. A nondisclosure agreement (NDA) states
that the third party will be given full access to any confidential information provided that it
should not be disclosed to anyone else.
One option that an entrepreneur has is to make use of multiple outsource parties.
Having multiple outsource parties can be an advantage because of the following: (1) it helps
continue the operation even if one of the third party stops; (2) the entrepreneur will have
greater bargaining power on the price and scope of the product, and (3) the entrepreneur may
have a choice to switch to other parties if one of them does not perform well.
Purchasing finished products from a manufacturer or offering the services of another
company is another viable option for the entrepreneur. In this setup, the entrepreneur cannot
own the brand name of the product or service. Moreover, the manufacturer or the original
service is allowed to sell the entrepreneur’s competitors. In short, the entrepreneurs is just one
of the many distribution hubs of the manufacturer or the original service provider. This setup is
prevalent in distribution businesses, retailers, sari-sari stores, and franchises.
Same with outsourcing, buying finished products or offering servicer to another company
spares the entrepreneur of the costs of machines and full-time manpower. Therefore, the
entrepreneur can use his or her funds for the purposes. This setup also allows the entrepreneur
to buy and sell a broad range of finished products and established services. They usually
compete on the indirect aspects of the business such as customer experience or physical
attributes of their business. Another disadvantage is that the manufacturer or original service
provider can just easily take the entrepreneur off its list when it wants to. The manufacturer or
service provider can also charge unreasonable prices to the entrepreneur or, worse, go directly
to end customers and give them lower prices to bypass its relationship with the entrepreneur.
Logistics
Entrepreneurs/manufacturers can also venture into distributing their products on their
own without the aid of a distributor or agent. This is where the entrepreneur must understand
and implement and efficient logistics management. As discussed earlier, the
entrepreneur/manufacturer is responsible for manufacturing, warehousing, transportation,
inventory management, marketing, and selling the product or service.
Warehousing is storing the finished goods manufactured in a facility until they are
distributed to end users. Warehousing cost is usually substantial. Therefore, the entrepreneur
should think of ways on how to reduce the cost of warehousing by either buying an economical
warehouse or renting an inexpensive space.
Transportation will also be a major cost in logistics management. It is the process of efficiently
transferring the products to retailers or customers. The entrepreneur/manufacturer must purchase
energy-efficient vehicles that can carry a reasonable amount of merchandise to prevent inefficient
trips. The entrepreneur/manufacturer can also use the presence of distribution hubs. The distribution
hub is where the entrepreneur/manufacturer carries multiple products. Instead of delivering per
product to retail outlets, the entrepreneur/manufacturer can consolidate all the products needed by
the retail outlet and deliver just once.
Inventory should also be tracked religiously by the entrepreneur/manufacturer. Each of the
inventories in the warehouse, distribution hubs, and manufacturing sites should be monitored. The
law of supply and demand must always be taken into account. There should not be a surplus of
inventory especially if the entrepreneur is selling perishable goods. The entrepreneur must be
knowledgeable about the life span of the products that will be sold. The entrepreneur/manufacturer
must also ensure that there is enough space to store and stock inventory, depending on storage
requirements (e.g., product is required to be stored in cold temperature). To protect the products
from fortuitous events, the entrepreneur must insure them with a reliable insurance firm.
It can be surmised that the entrepreneur is not selling well if there are too many products left
after a long period of time in his/her inventory, or he/she is producing more than what is demanded
by the customers. The key with inventory management is understanding the historical and current
demand data as well as a future trends to avoid unnecessary costs in producing too many products.
Bear in mind that making too many products can incur manufacturing costs, storage costs, and costs
of spoilage.
The business model
According to Don Deebelak in his article “Developing a Great Business Model” on the
entrepreneur Web site, the entrepreneur must adapt the dynamics of traffic lights in developing the
business model. These are the 3 “green lights” or the positive signals that can help entrepreneurs
develop ideal business models and eventually succeed. On the other end, there are 3 “red lights” or
negative signals that entrepreneurs should be wary of.
The green lights
1. Target high-value customers. These customers are often misinterpret as affluent or high-end
customers, but this is not always the case. A high-value customer is (1) someone who is easy to
find, (2) someone who is willing to pay a price that will reasonably profit the entrepreneur, (3)
someone who is easy to persuade with the least promotional effort, and (4) someone who can
join the bandwagon of customers that, when consolidated, can generate a substantial amount of
revenues aligned with the profit objectives of the entrepreneur. Customer do not only mean end
customers or retail customers; they can also be partner retailers, distributors or corporate
customers. The entrepreneur’s objective is to find these customers. If unable to do so, he or she
can choose to tie up with strategic partners who fit the profile of a high-value customers.
2. Offer products or services with the great value. As discussed in Module 3, the value proposition
and unique value proposition should always kick in as compelling reasons for customers to
choose your product or your service. He or she must also devise an efficient distribution system
where the flow of goods or service delivery is convenient, fast, and available when needed.
He or she can also collaborate and synergize with relevant partners to offer excellent customer
experience to customers. The entrepreneur should also offer products or services with great
value coupled with attractive and reasonable prices as a result of lean manufacturing. Aside from
the core product or service, he or she can also provide customers with other related product or
services and customization options to complete the overall value of the product or service being
offered. With the influx of technological advancements such as the internet, third party
outsourcing, and synergies between businesses, the arena of the entrepreneurs around the
world has become ultracompetitive. Therefore, the entrepreneur must always be in the lookout
on whether his or her product or service still provides value or is already outpaced by the
competition.
3. Offer products or services with reasonable profits. There are two ways of achieving reasonable
profits: (1) increasing markup (2) decreasing operational costs. The most practical way to achieve
reasonable profits though is to decrease operational costs. This is because increasing the
markup, as compared with the prices of competitors, will decrease the attractiveness and
competitiveness of the product or service. Therefore, profitability cannot be maximized.
Decreasing the operational cost is a controllable strategy in increasing profits of the business as
lower cost means higher profit margin. As discussed in the 4Ms of operations, the entrepreneur
should (1) devise an efficient distribution system, (2) lessen unnecessary manpower efforts as
much as possible (3) apply lean manufacturing processes, and (4) add support products or
auxiliary services that can increase revenue without adding substantial cost.
The Red Lights
1. Satisfying the customer becomes too costly and irrational. The entrepreneur must calculate
the cost and profit associated with serving the customer before pursuing the business. There
are times when entrepreneurs are blinded by how big the profit margin can be for a sale of a
particular product or service. But little do they know that there are numerous associated
after sales costs that can even exceed the profit margin derived from the actual sale. In
marketing, the term lifetime value of a customer was coined to understand the potential
value that a customer can bring to the business in the long run. But there are obvious red
flags, which are collectively called customer satisfaction costs, that can impede the success of
an entrepreneur. These are as follows.
a) Warranty- because some products are not sturdy as they should be, the business will incur
unnecessary warranty costs that can even surpass the cost and profit margin of the margin.
b) After sales costs- some products or services require extensive technical support, installation,
and customer service. These after sales costs might even surpass the actual sales price of the
product or service.
Once the costs are identified, the entrepreneur will rectify the situation by transferring
the cost to another party or through outsourcing to lessen the cost of servicing the customers.
He can also instruct his sales team to just focus on business aspects that do not require too much
customer satisfaction.
2. Being a market leader is difficult to sustain. One of the characteristics of an ideal business model is
capitalizing on the business’ strature as a market leader through improving the features and benefits of
its existing products or services, adding new product lines or services, or expanding by tapping new
customers. However, there are signs that it will be difficult to sustain being a market leader if the following
conditions exist; (1) if there are major customers purchasing the entrepreneur’s product or services, (2) if
there are major players in the industry that control the majority of the distribution network, (3) if
technology has changed the way the entrepreneur operates the business, compelling him/her to invest on
rigorous product research and development, (4) if technology replaces the need for the entrepreneur’s
product or service, and (5) if the competitors can easily tap the market of the entrepreneur. Maintaining
the market position has a large dependency on the overall condition of the market.
3. Return on investment (ROI) takes to long and too small. Entrepreneurs did venture in a business
enterprise because they want to earn profits for the purpose of sustainably. ROI is very important to the
entrepreneur because it validates that the business is doing well and hat money is flowing in as expected
during the planning stage. An ideal business model is characterized by a reasonable ROI earned at the
right time and with the right amount. However, if reports sat that ROI is less than approximately 25% in
the first three years of business operations, it is a sign that the entrepreneur is not operating an ideal
business model. Another sign is that production of additional products or services requires an ample
amount of additional capital. Moreover, only less than 50% of the capital required will be allocated to
revenue-generating activities such as selling and manufacturing. It is also a red flag if the present capacity
is also not capable to produce or handle new commitments; therefore, additional investments must be
made again to accommodate the new demands. The last sign is the uncontrollable industry factor where
generally everyone in the industry always has unacceptable ROIs.
The financial plan
One of the most difficult parts of the business plan is the financial plan. Not all entrepreneurs
are adept with accounting procedures , rules, and reporting policies. However, there is no choice for
the entrepreneur but to be familiar with numbers. The sustainability of a . business depends on a
meticulous monitoring of finances. This is the portion of the business plan that speaks of the
product or service performance. It also provides the entrepreneur financial data such as liquidity,
cash flow, and financial standing of the business. The financial plan also gives the entrepreneur bases
for his or her decisions on financial matters such as offering credit terms to customers, applying for a
bank loan, expand, or sell the business. Without proper accounting of business activities and
transactions, the entrepreneur will be at loss on where his or her business is leading his or her.
Financial management begins when the entrepreneur starts to raise capital for the business
venture. Capital is the money the will be allocated by the entrepreneur to establish a business. If
shouldn’t be mixed with the personal money of the entrepreneur. A business is a separate entity and
should not be mixed with the personal finances of the entrepreneur.
A number of the entrepreneurs produce capital out of their personal savings. This money
came from a disciplined habit of consistently saving when the entrepreneur used to be an employee.
Some of the budding entrepreneurs borrow money from families or friends, whereas some look for
interested inventors or stakeholders. The entrepreneurs can also turn banks decisions on the
business performance (i.e., the net income of the business). Some starups may find it difficult to
secure a loan from banks because of the performance angle as one of the qualifications
Collateral refers to high value asset that is submitted by the business to the bank when
applying for a loan and will be subject for repossession if the business default. Regardless of
where the capital was sourced, putting this capital at risk one of the major reasons that most
entrepreneurs are afraid to engaged in a business venture. But those who take the risks also gain
the experience and use this experience to succeed. Not all entrepreneurs became successful the
first time they ventured into business. All of them experienced failures and used these failures to
their advantage.
Factors affecting estimation of revenue
A business opportunity can only be considered a real one when the entrepreneur
recognizes that the opportunity may bring him or her revenue. Revenue is the output of a sale
wherein the sales price exceeds the cost to procedure the product or render the service.
Revenue is considered earned when the product is already sold or service has been rendered
regardless if the business is paid in cash or credit. Revenue is considered deferred when the
product or service has not yet been delivered or sold but the customer already paid in advance.
After establishing that the business opportunity will really bring revenue, the next step is
to estimate how big the revenue is on annual basis. This will give the entrepreneur an inkling on
where his or her hard-earned money will go. It is not easy to estimate potential revenue, as it
requires a thorough analysis of external and internal factors that can affect the business. All of it
will appear realistic and will not mislead the entrepreneur.
1. The economy and the external primary target market. Similar to finding business opportunities,
estimating revenue is greatly affected by the entire economy and the behaviour of the primary
target market. The entrepreneur must be able to incorporate the overall health of the economy
and its estimation of projected revenue. He or she needs to know if the economy is either
booming, stable, or slowing down. However, there will be times when the overall economy is
not a reflection of what the entrepreneur’s primary target market is experiencing. Therefore,
the entrepreneur must also separate revenue estimation for the primary target market as to
whether it is booming, stable, or slowing down. For example, the overall Philippine economy is
growing but, the target of the entrepreneur A is the class D, and the economic condition of the
members of this socioeconomic class is still worsening. He or she must be able to reconcile
these and come up with realistic estimates.
2. The external competitors. The entrepreneur must devise a comprehensive competitive profile
matrix- a chart that details the relevant data of both direct and indirect competitors and how
these factors affect profitability. Direct competitors are those that offers exactly the same
product/product lines or services but influence or affect the entrepreneur’s market (e.g., if the
entrepreneurs sells softdrinks, his or he market share will affected by those who sell other
beverage products such as mineral water, iced tea, juices, or alcoholic drinks).
The entrepreneur must plot the strengths of each competitors, its financial data, and its
respective market share. A thorough analysis must be conducted to assess whether the
entrepreneur will really earn from the business opportunity.
When entering a market dominated by stronger and larger competitors, the challenge for the
entrepreneur is to come up with a highly differentiated product or service with a very strong
unique selling proposition. Otherwise, he or she will be “eaten alive” by these large players.
What these large players will do to beat a newbie in the market is reduce their prices leveraging
on economies of scales and still earn profit. To compete, there is no choice for the entrepreneur
but also reduce price, thereby greatly affecting profitability.
When entering a market with weaker or smaller competitors, the challenge is to compete with
them directly. Unlike the first one, however, there is a bigger chance here to succeed and take
away the market with no competitors.
The entrepreneur can also enter a market with no competitors. This rarely happens though;
these days, there are virtually no unique products or services, or there are only few
entrepreneurs who want to venture in an entirely different market that no one has tried yet. An
example of this is venturing in a war-stricken area where the risk is very high because the
entrepreneur has no competitors to share his or her market. Also, entrepreneurs can impose
unreasonable prices, as the buyers have no bargaining power because they have no choice.
Aside from basic financial data, the entrepreneur must also be vigilant in reviewing and assessing
the business and marketing strategies of the competitors must be emulated and altered a bit by
the entrepreneur, and those that were certified as ineffective must not be repeated to avoid
unnecessary losses. Understanding the strategies of the competitors allows the entrepreneur to