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WEEK 1: OVERVIEW OF ENTREPRENEURSHIP

ENTREPRENEURSHIP

- Is a proactive process of developing a business venture to make a profit; It involves seeking


opportunities for a market, establishing and operating a business out of the opportunity, and assessing
its risks and reward through close monitoring of the operations.

SOCIETAL AND ECONOMIC BENEFITS OF ENTREPRENEURSHIP

1. Entrepreneurship produces more jobs that equate to an increase in national income.


2. Entrepreneurship amplifies economic activities of different sectors of society.
3. Entrepreneurship introduces new and innovative products and services.
4. Entrepreneurship improves people’s living standard.
5. Entrepreneurship disperses the economic power and creates equality.
6. Entrepreneurship controls the local wealth and balances regional development.
7. Entrepreneurship reduces social conflicts and political unrest.
8. Entrepreneurship elicits economic independence and capital formation.

ENTREPRENEUR

- The word “entrepreneur” has a French origin and was coined the words entre, which means “between”
and prendre, which means “to take”.
- Is a unique individual who has the innate ability and extraordinary dedication to establish and manage
a business, acknowledging all the risks and reaping its rewards.

According to Action Coach, there are five levels of entrepreneurial development.

1. SELF-EMPLOYED- Self-employed persons are, simply put, not comfortable with the routines of a desk
job.
2. THE MANAGER- In this level, entrepreneurs feels the need to step up and ask some help from the
people around them. They delegate and hire potential employees to do the work, however they may
have the tendency to get more people who do not know the exact needs and requirements of the job.
3. THE LEADER- Entrepreneurs in this level already enjoy seeing their people flourish, stepping up and
producing great results with minimal supervision.
4. THE INVESTOR- They look for more opportunities for their business to grow, They may either purchase
one or two businesses that can potentially add value to the company.
5. THE TRUE ENTREPRENEUR- True entrepreneurs, based on their experiences, now aim for quality and
excellence in their work.

ENTREPRENEUR’S FIELD OR EXPERTISE

1. TECHNOPRENEUR- Who puts technology at the core of his business model.


2. SOCIAL ENTREPRENEUR- Is the one who takes advantage of the country’s social problems and turn
them to profitable institutions with the intention of helping the disadvantaged community rather than
making a profit.
3. INTRAPRENEUR- Is an entrepreneur in a large company or corporation who is tasked to think,
establish, and run a new big idea or project.
4. EXTRAPRENEUR- Is an entrepreneur who hops from one company to another to act as the innovation
champion, providing creative and efficient solutions.

COMMON AND CORE COMPETENCIES IN ENTREPRENEURSHIP

- To be considered a successful entrepreneur, he must possess common entrepreneurial competencies


that are needed all throughout the entrepreneurship careers. At the same time, he should also possess
core competencies that are needed for business sustainability.

COMMON TRAITS THAT ENTREPRENUERS SHOULD ALWAYS HAVE.

1. PROACTIVE- Entrepreneurs are reactive rather than passive.


2. AGENTS OF CHANGE- Entrepreneurs are innovation champions.
3. RISK TAKERS- Entrepreneurs will not be successful if they do not take risks.
4. HAVE A SHARP EYE FOR OPPORTUNITIES- Entrepreneurs have a talent for recognizing an opportunity
even by using the macrolevel data only.
5. SOCIABLE- Soft skills are one of the most important competencies of entrepreneurs as these establish
the relationship with the most important assets of the company—its people and its customers.
6. NETWORKERS- A networker knows the key people to connect with.
7. DECISIVE- Entrepreneurs always have a decision about their business.
8. BALANCED- The minds of entrepreneurs should have a balance between the analytical and the creative
sides.
9. INNOVATIVE- The minds of entrepreneurs are rich with big ideas that can add value to their existing
business.

TRAITS THAT THE ENTREPRENEURS SHOULD DEVELOP IN MANAGING AND RUNNING THE BUSINESS.

1. LEADERS- They must be very humble, approachable, friendly, and also know how to listen to people’s
concern.
2. COMMUNICATORS- Entrepreneurs know how to use all forms of communication to effectively share
ideas and address certain concerns with their customers or employee.
3. SPECIALISTS- Entrepreneurs are experts in their chosen business. They are tactical and very keen with
details.
4. PROBLEM SOLVERS- Entrepreneurs possess critical thinking skills and look problems as challenges or
puzzles that they need to solve.
ENTREPRENEURSHIP OR EMPLOYMENT

IMPORTANT CAREER ENTREPRENEUR EMPLOYEE


FACTORS
1. Income  Income generated passively even  Income generated actively
when the entrepreneur is resting.  Income usually fixed per month
 Opportunity income unlimited, and increase every year
depending on the success of the depending on the employer and
business. employee’s performance
 Income only earned when the  Income earned whether the
business is successful business is successful or
unsuccessful.
2. Hiring and Firing,  Provides Job  Seeks for a job
Organizational Setup,  Fully responsible for serving  Has the goal of satisfying only the
and Major Key results customers, making the business employer or the direct supervisor
areas profitable/sustainable, and providing  Fully dependent on the
employee satisfaction. employer’s performance.
 Has the power to disengage  Can only work for the current
nonperforming employees applying employer exclusively
the due process policy of disengaging
personnel.
 Can venture into expansion of
business such as franchising and
buying other similar businesses
3. Daily Task  Performs all necessary variable tasks  Has routine tasks and works on
to establish and manage a start-up regular or normal hours
business, which usually takes most of  Follow policies, procedures, and
the entrepreneur’s time; spend more memoranda from the employer.
hours on work than a regular
employee and sometimes gets no
sleep.
 Prepares policies, procedures, and
memoranda for the business.
4. Leisure Time and  Has a flexible schedule and can take  Has a limited number of vacation
Vacations unlimited number of vacation days days imposed by the employer
5. Taxation  Taxed on the net income; can claim  Taxed on the gross income;
taxable income deductions for cannot use expenses incurred
allowable expenses incurred by the related to the job such s food
business and transportation expenses to
claim for deductions from
taxable income.
6. Comfort Level at  Is comfortable in doing multiple and  May be comfortable with
Work challenging tasks and takes routines and minimal risks; may
accountability with the risks and also be comfortable in working
profits of the business; does not want for the company itself.
to be confined in a box; thinks outside
the box or sometimes thinks there is
no box.
CAREERS IN ENTREPRENEURSHIP

Common small businesses in the Philippines

1. Sari-sari store 9. Cell phone Loading Business


2. Rice Retailing 10. Laundry and Dry Cleaning Business
3. Food cart Business 11. Hair Styling and makeup Business
4. Printing Business 12. Spa, Gym, and Nail care Business
5. Buy-and-sell Business 13. Video and Photography Business
6. Street Food Business 14. Tutorial Business
7. Flea Market Business or Tiange 15. Baking Business
8. Online Selling Business 16. Web site Development and Design/Blogging

WEEK 2: RECOGNIZING THE POTENTIAL MARKET

ENTREPRENEURIAL PROCESS

- is a step-by-step procedure in establishing any kind of business that an entrepreneur has to undergo.

1. Opportunity Spotting and Assessment –Entrepreneurs at this point take note of interesting trends in
their environment by gathering information from various sources like the customers as market needs
originate from them, co-entrepreneurs by observing their problems encountered, and from the
feedback of distribution or business partners. Entrepreneur’s toughest job is to carefully assess the
opportunity through estimation of opportunity length, capitalization required, threats, profitability and
calculation of real and perceived value. Furthermore, assess if opportunity is aligned with personal
goals.
2. Developing a Business Plan – Business plan is a comprehensive paper that details marketing,
operational, human resource, financial, strategic direction and tactics of the business.
3. Determining the Capital needed – under this process is calculation of resources needed to established
business and compare against current resources.
4. Running the Business – the implementation phase. The entrepreneur should have a control and
monitoring system to serve as a check and balance of the formulated plans.

SCANNING THE MARKET ENVIRONMENT

- Involves understanding the intricacies of microenvironment, macroenvironment, and internal


environment. It allows the entrepreneur to recognize opportunities and how market arena works.

SEEKING, SCREENING, AND SEIZING

 S1: Seeking the Opportunity –Opportunity seeking is the first step and is the most difficult process of
all due to the number of options. Opportunity is an entrepreneur’sbusiness idea that can potentially
become a commercial product or service in the future. This step involves the development of new
ideas from various sources as follows:
1. Macroenvironmental Sources
a. STEEPLED – this is a mnemonic for sociocultural, technological, economic, environmental,
political, legal, ethical and demographic factors.
b. Industry – this is the source of current trend on what is happening in the industry where the
future business will belong to.
c. New discovery or knowledge – new trends that can be the core business model of a new
venture
d. Futuristic opportunities – projected new opportunities that can possibly affect the new
business while it is running
2. Micromarket
a. Consumer preferences, interests, and perception – these are the current needs and wants of
potential customers that should be discovered right away. Need is difference between current
situation versus desired condition; on the other hand, want is a product or service that can
perfectly suit the need.
b. Competitors – recognizing competitors will aid the entrepreneur to develop a product or
service that will stand out from the competition.
c. Unexpected opportunities from customers – Existing problems and bottlenecks often give rise
to unexpected opportunity. Entrepreneurs usually do is be on top of the situation and change
the market’s perception of a product or service or new market.
d. Talents, hobbies, skills and expertise – Business opportunities do not just come from outside
forces, but also from within the entrepreneur in the form of his talents, hobbies, skills and/or
interests.
e. Irritants in the marketplace such as deterrents, problems, complaints, and delays – when
customers are already sick and tired of same old issue, that is an opportunity to entrepreneur
to come in and make difference.
f. Location – Entrepreneurs have to look at their ecosystem and they will be able to spot a
business opportunity.

METHODS OF GENERATING IDEAS

1. Focused group discussion (FGD) – a moderator handles a very open, free-flowing, and in-depth
discussion with a group who can provide insightful ideas that will fill a market need.
2. Brainstorming – is an activity that allows the participants to share creative ideas.
3. Brainwriting or Internet brainstorming – same as brainstorming but the channel used is not face-to-
face but in writing or online.
4. Problem inventory analysis – quite similar to FGD except the participants are already given an
inventory of product or service problems.
WEEK 3

MACROENVIRONMENTAL SOURCES: EXAMPLES OF FINDINGS

STEEPLED Analysis – the focus of this is scan only on the macroenvironment.

1. Socio-cultural factors – these represent general view of locality’s traditions, customs, beliefs, norms
and perceptions. (E.g. religion and beliefs, buying habits, attitude toward imported goods and etc.)
2. Technological factors – these are composed of innovation of an existing technology or an invention of a
new one mostly on applied science and engineering research. (E.g. rate of technological change,
legislation about technology, access to newest technology, internet infrastructure and penetration.)
3. Economic factors – includes income, expenses and resources that can influence the cost of doing
business and generating income. (Growth rate, inflation rates, unemployment trends, labor costs)
4. Environmental of ecological factors –Entrepreneur will know if the business venture will be suited with
the environmental conditions in his or her locality. (E.g. waste management, laws regulating pollution)
5. Political factors – government policies and administrations, which can have a strong effect in the
entrepreneur’s business. (E.g. tax policy, government stability and likely changes)
6. Legal factors – are government laws and regulations that can restrict or allow business activities.
7. Ethical factors - these are guides on how to properly run business, including resources.
8. Demographic factors – these are the characteristics of the people in the target market

S2: SCREENING THE OPPORTUNITY

- Opportunity screening is the process of cautiously selecting the best opportunity. Aligned with his
internal intent, i.e. the main objective it will accomplish in entrepreneur’s life, and the external intent,
which will address to compelling needs of the target market. Riskappetite refers to the entrepreneur’s
tolerance of business risk. Detailed here are the most important elements in a compelling opportunity:
1. Has superior value to customer.
2. Solves compelling problem, issue, a need or a want.
3. Is a potential cash cow.
4. Matches with the entrepreneur’s skills, resources, and risk appetite.

THE OPPORTUNITY ATTRACTIVENESS TEST (OAT) (Youngleson, 2009)

- Aims to assist entrepreneurs in ensuring that the opportunity that they will vejt8re into is an attractive
and feasible prospect.
- It is designed to detail each entrepreneurial aspect into small chunks to come up with a sound
entrepreneurial decision
1. The “concept” and the “strategy.”
2. Opportunity metrics
3.
S3: SEIZING THE OPPORTUNITY

- “pushing through”

Innovation - is the process of positively improving an existing product or service. It is key driver for economic
growth.

3 Types of Innovations according to degree of distinctiveness.

1. Breakthrough innovation – occur infrequently as these establish the platform in which future
innovations in an area are developed.
2. Technological innovation – technological advancements of an existing products or service.
3. Ordinary innovation – commonly originating from market analysis and technology pull instead of a
technology push.

Product or Service Planning and Development Process

Five Key Stages

1. Idea Stage
2. Concept Stage
3. Product Development Stage
4. Test Marketing Stage

WEEK 4: MARKETING PLAN

VALUE PROPOSITION AND UNIQUE SELLING PPROPOSITION

Before focusing on the topics of value proposition and unique selling proposition, you must first know the
marketing process. In nutshell, marketing is all about knowing the customers. Next, you study what the customers wants
or desire for you to build a unique selling proposition. From there, it is imperative to identify the most strategic market
or group to tap.

A Value Proposition (VP) simply states why a customer should buy a certain product or service. Customers are
very specific when it comes to their needs and their desired benefits, so the value proposition cater to those particular
needs.

The following are some tips for the entrepreneur on how to create an effective value proposition to the target
customer:

1. Prepare a situation analysis that details the problems of the customers.


2. Make your value proposition straight to the point, simple, and specific.
3. Highlight the value of your product or service so that customers will easily get what benefits you can provide.
4. Adapt to the language of your market.
5. Add credibility- enhancing elements such as actual testimonials from customers, partners, and other
stakeholders, putting specific assurance elements and social acceptability metrics found in social media or press
materials.

A Unique Selling Proposition refers to how you will sell the product or service to your customers.
The following are some tips for the entrepreneur on how to create an effective unique selling proposition to the
target market:

1. Identify and rank the uniqueness of the product or service attribute.


2. Be very specific
3. KISS(keep it short and simple)

Marketing Research
Is a comprehensive process of understanding the customers’ intricacies and the industry they revolve in
Market Size
Is simply the size the arena where the entrepreneur’s business will play. It is the approximation of the number of
buyers and sellers in a market.

Customer Requirements

Are specific features and characteristics that the customers need from a product or a service. It is in these
customer requirements that business opportunities originate.

WEEK 5

PRIMARY AND SECONDARY TARGET MARKET

The entrepreneur can tap a primary target market and a secondary target market as resources are limited during
the startup stage. With this, the probability of success is higher as the entrepreneurs can focus to sell to the identified
customers groups. Market Intelligence, which includes customer profiling, drives the entrepreneur on what correct
strategies and tactics to employ. This can only be obtained through a meticulous market segmentation process. Market
Segmentation is the process of grouping similar or homogeneous customers according to demographic, psychographic,
geographic and behaviour.

 Demographic Segmentation- also called socioeconomic segmentation is the process of grouping customers
according to the relevant socioeconomic variables for the business venture.
 Income range and the social class of the entrepreneurs are very important factors for the entrepreneur
to consider because these represent the purchasing power of the market.
 Occupation should also be considered not just to determine the customers’ income but also their daily
routine where goods and services can be properly positioned.
 Gender and age group are data must be mined because the life cycle of customers and their gender
influence their buying behaviour.
 Regional and ethnicity also should be taken to account because these affect the way they buy products
or avail of service.
 Psychographic Segmentation is a process of grouping customers according to their perceptions, way of life,
motivations, and inclinations.
 Perception is a process wherein an individual receives external stimuli using the five senses of hearing,
touching, smelling, seeing and tasting.
 Physiological Motivationsinvolve the needs of the person.
 Aspirations are what the customer wants to achieve.
 Deprivation involves the customer’s recognition of certain voids to fill.
 Geographic Segmentation is simply grouping customers according to their location.
 Behavioural Segmentation is the process of grouping the customers according to their actions.
 Occasions drastically affect the customers’ buying behaviour.
 Desired Benefits in behavioural segmentation is efficient because the entrepreneur determines the
exact needs of the customers and offer the most suited product or service for them.
 Loyalty is the result of maintaining satisfied customers.
 Usage of products or Availment of Service is also a behaviour segmentation factor that describes to the
entrepreneur how often a product is being used or the service is being availed.

TALKING TO YOUR CUSTOMERS

Marketing Research will not be complete without talking directly to the target customers.

 Qualitative Research includes identifying the written or spoken opinions of customers.


 Quantitative Research involves analysing the customers’ preference by using relevant statistics.

THE INTERVIEW

Is one of the most reliable and credible ways of getting relevant information from the target customers. It is a
face to face contact between the researchers and a respondent where the researchers asks pertinent questions that will
give him significant pieces of information about the problem that he will solve.

 Sampling is the selection of respondents that statistically represent the total population.
 Unstructured Interview is an informal type of interview and does not follow a specific set of questions.
 Structured Interviews employs a specific set of questions and produces quantitative data.

THE FOCUS GROUP DISCUSSION

Is commonly used by market researchers to capture qualitative results from target customers. It is a process of
mining customers and noncustomer experience and insights about a specific product or service.

OBSERVATION

Is one of the preferred and practical methods of generating ideas because the researcher documents the
behavioural patterns of people or of objects or events without necessarily requiring them to participate in the research
process.

 Human Observer records information as it occurs or as it happens using his or her five senses.
 Machine Observer employs an equipment to record the information needed.

TRADITION AND ONLINE SURVEYS

When it comes to quantitative research, taking surveys is essential. It is the process of getting answers from a
sample of respondents derived from particular populations.

 Sampling Technique- A Sample is a percentage of a specific population carefully chosen by the researcher to
generally represent the whole population.
 Probability Sampling is a technique wherein samples are given equitable chances or nonzero chances of
being selected from a population. The researcher needs to apply randomization, wherein he or she
needs to assure that every sample has an equal representation for the selection process to be unbiased.
 Nonprobability Sampling, on the other hand, does not give the samples equal chances being selected,
because samples are instead selected according to their accessibility or personal choice of the
researchers.
 Sample Size the researchers must be able to calculate first the appropriate sample size in conducting the survey;
otherwise, if the sample size is too large, he or she will waste his or her capital and time, whereas a sample size
that is too small will lead to imprecise results.
 Questionnaire Blueprint

WEEK 6

The Marketing Mix: The 7Ps of Marketing

Marketing Mix- is a widely accepted strategic marketing tool that combines the original 4Ps (Product, place, price,
promotion) with the additional 3Ps (People, packaging, and process) in formulating marketing tactics for a product or
service.

Product- is any physical good, service, or idea that is created by an entrepreneur or an innovator in serving the needs of
the customers and addressing their existing problems.

Three Level Concepts of Products

Level 1: Core Benefits of the Product or Service


Level2: Physical Characteristics of the Product or Service.
Level 3: Augmented Benefits of a Product or Service

Place-refers to a location or the medium of transaction. A strategic location depends on the nature of the business and
the primary target market.
Price- is the peso value that the entrepreneur assigns to a certain product or service after considering its costs,
competition, objectives, positioning, and target market.

Pricing Strategies
1. Bundling
2. Penetration Pricing
3. Skimming
4. Competitive Pricing
5. Product Line Pricing
6. Psychological Pricing
7. Premium Pricing
8. Optional Pricing
9. Cost-based Pricing
10. Cost Plus Pricing

Promotion – involves presenting the products or services to the public and how these can address public’s needs and
wants.

Promotional Tools
1. Advertising
2. Selling
3. Sales Promotion
4. Public relations
People – how employee serve the customer is a determining factor in customer’s buying behaviour.

Packaging – overall identification of the product. First element that customer see in a product.

Process – is defined as a step-by-step procedure or activity workflow that the entrepreneur follows to efficiently serve
customers.
Brand- refers to the identity of a company, of a product, of a service, or of an entrepreneur himself or herself
Brand Management- is the supervision of the tangible and intangible elements of brand.
Branding-Is the process of integrating the strategies formed from the marketing mix to give an identity to the product or
service.

Week 7: Product Development, Operations, and Financial Plan

Fundamentals of Product Development


Product Development – is the process of developing, testing, and commercializing a product of service with the ultimate
objective of solving the problem of the primary target market.

Product or Service Description – simply describes how product or service works and how it will benefit customer.

Creating Prototype – A prototype, It is a preliminary model or sample of new product or service that is created to test a
product concept or service process.

Testing the Prototype – vital process before an actual product or service is launched to the market, it will uncover the
final loopholes that need to be fixed before commercialization.

Testing Methods
1. Focus group discussion
2. Legality and ethical test – compliance with license and permit to operate
3. Safety test – must ensure that it is safe to use.
4. Product costing test – finalize cost involved
5. Component test – each component must be tested independently.
6. Competitor’s product/service test
Week 8

The 4 Ms of Operation
Methods
– the method 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 and distribution of
goods.

Manufacturing – the process of translating raw materials into finished goods that are acceptable to customer’s
standard. Consisting of three elements:
 Inputs – materials or ingredients
 Process – transformation phase
 Output – final product

Service Delivery Process – Service entrepreneurs must prepare detailed flowchart of the service a.k.a service blueprint.
Service Bottleneck –part of the process where there is apparent inefficiency and wastage.

Distribution Method – is the process of bringing the products and services to customer
Distribution Channel/ Supply Chain – involves middlemen/distributors because distribution is most of the time
not directly forward to customers.

Payment Process – payment method may involve pautang/ payable, cash, credit or debit cards.

Manpower
- A business depending on scale may need to hire people in order to help in daily operations.

Job Description – enumerates the duties and responsibilities of the potential employee, including the scope, limitations,
and terms and conditions of employment.
Employee Qualification
1. Educational Background
2. Work Experience
3. Skill and Knowledge
4. Work Attitude
Machines
– can be described as the best friend of manpower in producing goods and offering services; physical equipment and
technology.

Telecommunications and Information Technology


 Landline phones
 Mobile phones
 Laptop and desktop computers
 POS machine
 Software
 Website
Material
– raw materials, supplies used in products or providing service.
Outsourcing-is the process of appointing third party manufacturer to do the manufacturing operations of the business.
Logistics- Entrepreneurs can also venture into distributing their products on their own without the aid of a distributor or
agent.
Warehousing-is storing the finished goods manufactured in a facility until they are distributed to end users.
Transportation- will also be major cost in logistics management. It is the process of efficiently transferring the products
to retailers or consumers.
Distribution Hub- is where the entrepreneur/ manufacturer combines the goods before delivery to retailers or end
consumers.
Inventory-should also be tracked religiously by the entrepreneur. Each of the inventories in the warehouse, distribution
hub, and manufacturing sites should be monitored.
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 three “green
lights” or the positive signals that can help entrepreneurs develop ideal business models and eventually succeed. On the
other end, there are three “red lights” or negative signals that entrepreneurs should be wary of.
The Green Lights
1. Target High Volume Customers.
2. Offer products or service with great value.
3. Offer Products or services with reasonable profits.
The Red Lights
1. Satisfying the Customers becomes too costly and irrational.
a. Warranty
b. After Sales Cost
2. Being a Market leader is difficult to sustain.
3. Return on investments takes too long and too small.
WEEK 9
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
familiar with numbers.
Capital is the money that will be allocated by the entrepreneur to establish a business.
Collateral refers to a 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 defaults.
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 produce the product or render the service. Revenue is considered earned when the product is already sold
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 customers already paid in advance.
1. The economy and the external primary target market.
2. The External Competitors
a. Direct Competitors
b. Indirect Competitors
3. The Internal Business
Computation of Gross Revenue
Steps:
1. Compute for the market universe or total market.
2. Compute the Market share of the Competitors
3. Plan to capture remaining market share.
4. Prepare a realistic five-year projected annual revenue
Income Statement
Is a financial statement that details the computation of net revenue by deducting cost of sales, expenses, and
taxes from the gross revenue generated.
Balance Sheet
Is a core financial statement that describes the financial position of the business. A balance sheet is composed of
three elements: assets, liabilities and owners’ equity or capital. Assets represent the resources of the business that are
expected to have future economic value. Assets are divided into current assets, which are mostly the liquid assets that
can be exchanged to cash for more than one year, and noncurrent assets, which are long term assets, that can be
converted to cash more than one year. Liabilities are the business owes to another person. Owner’s Equity or Capital is
the funds allocated by the entrepreneur to run the business.

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