Lesson 7 - G12 entrepreneur FORECASTING.pptx

fotecasting a topic about entrep

1. Forecasting the Revenues of the Business

2. Have you tried estimating the time that it takes you to travel from home to school? How close were your estimates compared to the actual time? Did your estimate fell short compared to the actual time? On the other hand, does your actual time exceed your estimates? What do you think were the factors that might have contributed in arriving later than your estimated time? What do you think were the factors that might have contributed in getting you early to school? Estimated Time Actual Time

3. What is Revenue? after realizing the potential for profit of his/her business concept, the next step is to estimate how much the revenue is on daily, monthly and annual basis . Revenue is a result when sales exceed the cost to produce goods or render the services. Revenue is recognized when earned, whether paid in cash or charged to the account of the customer . Other terms related to revenue includes Sales and Service Income. Sales is used especially when the nature of business is merchandising or retail, while Service Income is used to record revenues earned by rendering services.omer .

4. These factors should serve as basis in forecasting revenues of the business.

5. The economic condition of the country. When the economy grows, its growth is experienced by the consumers. Consumers are more likely to buy products and services. The entrepreneur must be able to identify the overall health of the economy in order to make informed estimates. A healthy economy makes good business.

6. The competing businesses or competitors. Observe how your competitors are doing business. Since you share the same market with them, information about the number of products sold daily or the number of items they are carrying will give you the idea as to how much your competitors are selling. This will give you a benchmark on how much products you need to stock your business in order to cope up with the customer demand. This will also give you a better estimate as to how much market share is available for you to exploit.

7. Changes happening in the community Changes’ happening in the environment such as customer demographic, lifestyle and buying behavior gives the entrepreneur a better perspective about the market. The entrepreneur should always be keen in adapting to these changes in order to sustain the business. For example, teens usually follow popular celebrities especially in their fashion trend. Being able to anticipate these changes allows the entrepreneur to maximize sales potential.

8. The internal aspect of the business Another factor that affects forecasting revenues in the business itself. Plant capacity often plays a very important role in forecasting. For example, a “ Puto ” maker can only make 250 pieces of puto every day; therefore he/she can only sell as much as 250 pieces of puto every day. The number of products manufactured and made depends on the capacity of the plant, availability of raw materials and labor and also the number of salespersons determines the amount of revenues earned by an entrepreneur.

9. Now that all factors affecting forecasting revenues are identified, you can now calculate and project potential revenues of your chosen business. The next table shows an example of revenues forecasted in a Ready to Wear Online Selling Business

10. Example: Ms. Fashion Nista recently opened her dream business and named Fit Mo’to Ready to Wear Online Selling Business, an online selling business which specializes in ready to wear clothes for teens and young adults. Based on her initial interview among several online selling businesses, the average number of t-shirts sold every day is 10 and the average pair of fashion jeans sold every day is 6 . From the information gathered, Ms. Nista projected the revenue of her Fit Mo’to Ready to Wear Online Selling Business.

11. She gets her supplies at a local RTW dealer in the city. The cost per piece of t-shirt is 90 pesos , while a pair of fashion jeans costs 230 pesos per piece . She then adds a 50 percent mark up to every piece of RTW sold . Mark Up Price = ( Cost x desired mark up percentage) Mark Up for T-shirt = ( 90.00 x .50 ) Mark Up for T-shirt = 45.00

12. Mark up refers to the amount added to the cost to come up with the selling price. The formula for getting the mark up price is as follows : In calculating for the selling price, the formula is as follows: Selling Price = Cost + Mark Up Selling Price = 90.00 + 45.00 Selling Price for T-shirt = 135.00

13. Table 1 shows the projected daily revenue of Ms. Nista’s online selling business. Computations regarding the projected revenue is presented in letters in upper case A, B, C, D, and E. Table 1 Projected Daily Revenue Fit Mo'to Ready to Wear Online Selling Business TYPE OF RTW’s Cost per unit (A) Mark-up 50% (B) Selling Price (C) Projected Volume (D) Projected Revenue (E) Average no. of item sold daily (Daily) (A) (B) + ( A x .50) ( C ) +( A + B) (D) (E) = ( C X D) T-Shirts 90.00 45.00 135.00 10 1,350.00 Jeans 230.0 115.00 345.00 6 2,070.00 Total 320.00 160.00 480.00 16 3,420

14. Table 2 shows the projected monthly and yearly revenue of Ms. Nista’s online selling business. Computations about the monthly revenue is calculated by multipying daily revenues by 30 days ( 1 month ). Example, in table 1 the daily revenue is 3,420.00. To get the monthly projected revenue it is multiplied by 30 days. Therefore, Projected Monthly Revenue = Projected daily revenue x 30 days Projected Monthly Revenue = 3,420.00 x 30 Projected Monthly Revenue = 102,600.00

15. On the other hand, the projected yearly revenue is computed by multiplying the monthly revenue by 12 months. The calculation for projected yearly revenue is as follows. Projected Yearly Revenue = Projected daily revenue x 365 days Projected Yearly Revenue = 3,420.00 x 365 Projected Yearly Revenue = 1,248,300.00

16. Table 2 Projected Monthly and Yearly Revenue Fit Mo'to Ready to Wear Online Selling Business TYPE OF RTW’s Selling Price Projected Volume Projected Revenue Projected Volume Projected Revenue Average no. of item sold yearly Average No. of items sold (Monthly) (Yearly) (Monthly) (C) = ( A+B) F = ( D x 30 days) G = ( C x F ) H = (D x 365 days) I = ( C X H) T-Shirts 135.00 300 40,500.00 3,650 492,750.00 Jeans 345.00 180 62,100.00 2,190 755,550.00 Total 480.00 480 102,600. 00 5,840 1,248,300.00

17. Table 3 shows the projected monthly revenues covering one year of operation. The table shows an average increase of revenue every month by 5 percent except June, July to October and December. While the month of June has twice the increase from previous month, 10 percent. Let us consider that months covering July to October are considered to be Off-Peak months, therefore sales from July to October are expected to decrease. It is assumed that there is no increase in revenue from July to August while from August to October the decrease in revenues is 5 percent from previous month. Since revenues from sales of RTW’s are considered to be seasonal, it assumed that there is 10 percent increase in revenue from November to December.

18. Computation for assumed increase of revenue on specific months is as follows: Projected Monthly Revenue (Increase) = Revenue (January) x 5 % increase Projected Monthly Revenue (Increase) = 102,600.00 x .05 Projected Monthly Revenue (Increase) = 5,130.00 Projected Revenue for February = Revenue (January) + Amount of increase Projected Revenue for February = 102,600.00 + 5,130.00 Projected Revenue for February = 107,730.00

19. On the other hand, decrease in revenue is computed as follows : Projected Monthly Revenue (Decrease) = Revenue (August) x 5 % increase Projected Monthly Revenue (Increase) = 144,041.14 x .05 Projected Monthly Revenue (Increase) = 7,202.06 Projected Revenue for September = Revenue (August) - Amount of decrease Projected Revenue for September = 144,041.14 – 7,202.06 Projected Revenue for September = 136,839.08

20. Table 3 Projected Monthly Revenue Fit Mo'to Ready to Wear Online Selling Business MONTH JANUARY FEBRUARY MARCH APRIL MAY JUNE REVENUE 102,600.00 107,730.00 113,116.50 118,772.33 124,710.94 137,182.04 MONTH JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER REVENUE 144,041.14 136,839.08 136,839.08 129,997.13 136,496.98 150,146.69

21. Important Assumptions : February to May Increase of 5% from previous revenue June Increase of 10% from previous revenue July to August The same Revenue September to October Loss 5% from previous revenue November Increase 5% from previous revenue December Increase 10% from previous revenue

22. Ms. Cassa Nova wanted to project the Revenue of her Graham ball business. She sold it 30 pcs per day. She gets her products at a local MV supplier in her town. The cost per piece of Graham ball is 10.00 . She then adds a 5 percent mark up to every piece of MV sold.

23. Table 1 shows the projected daily revenue of Ms. CASSA NOVA GRAHAM BALL BUSINESS. Computations regarding the projected revenue is presented in letters in upper case A, B, C, D, and E. Table 1 Projected Daily Revenue Graham Ball Business TYPE OF MV’s Cost per unit (A) Mark-up 50% (B) Selling Price (C) Projected Volume (D) Projected Revenue (E) Average no. of item sold daily (Daily) (A) (B) = ( A x .50) ( C ) = ( A + B) (D) (E) = ( C X D) Graham Ball Total

24. Table 2 Projected Monthly and Yearly Revenue Graham Ball Business TYPE OF MV’s Selling Price Projected Volume Projected Revenue Projected Volume Projected Revenue Average no. of item sold yearly Average No. of items sold (Monthly) (Yearly) (Monthly) (C) = ( A+B) F = ( D x 30 days) G = ( C x F ) H = (D x 365 days) I = ( C X H) Graham Ball Total

25. For table 3 Assume that her Revenue from January to June May increase of 5 percent and July to October May decrease of 3 percent, November to December might increase to 10 percent due to buying behavior, lifestyle and Demographic of her target market, and events or seasons.

26. Table 3 Projected Monthly Revenue Graham Ball Business MONTH JANUARY FEBRUARY MARCH APRIL MAY JUNE REVENUE MONTH JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER REVENUE

27. Table 1 shows the projected daily revenue of Ms. CASSA NOVA GRAHAM BALL BUSINESS. Computations regarding the projected revenue is presented in letters in upper case A, B, C, D, and E. Table 1 Projected Daily Revenue Graham Ball Business TYPE OF MV’s Cost per unit (A) Mark-up 50% (B) Selling Price (C) Projected Volume (D) Projected Revenue (E) Average no. of item sold daily (Daily) (A) (B) + ( A x .50) ( C ) +( A + B) (D) (E) = ( C X D) Graham Ball 10 5 15 30 450 Total 10 5 15 30 450

28. Table 2 Projected Monthly and Yearly Revenue Graham Ball Business TYPE OF MV’s Selling Price Projected Volume Projected Revenue Projected Volume Projected Revenue Average no. of item sold yearly Average No. of items sold (Monthly) (Yearly) (Monthly) (C) = ( A+B) F = ( D x 30 days) G = ( C x F ) H = (D x 365 days) I = ( C X H) Graham Ball 15 900 13,500 10,950 164,250 Total 15 900 13,500 10,950 164,250

29. Table 3 Projected Monthly Revenue Graham Ball Business MONTH JANUARY FEBRUARY MARCH APRIL MAY JUNE REVENUE 13,500 14,175 14,883.75 15,627.94 16,409.34 17,229.81 MONTH JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER REVENUE 16,712.91 16,211.52 15,725.17 15,253.41 16,778.75 18,456.63

30. Ms. Cassa Nova wanted to project the Revenue of her Graham ball business. She sold it 30 pcs per day. She gets her products at a local MV supplier in her town. The cost per piece of Graham ball is 15.00 . She then adds a 60 percent mark up to every piece of MV sold . For table 3 Assume that her Revenue from January to June May increase of 10 percent and July to October May decrease of 8 percent, November to December might increase to 20 percent due to buying behavior, lifestyle and Demographic of her target market, and events or seasons.

31. Help Mr. Hope Full in Forecasting his revenue. Project his daily, monthly and yearly revenue. Draw and answer table 1, 2 and 3. Round off the decimals in a whole number and or 2 decimals if it cannot be round off. Don't forget peso sign in writing the amount. Without peso sign means wrong. Given : Mr. Hope Full open a business of ShaSwaBur , Always on your budget taste. He offer Shawarma , Shake in different flavors and Burger. His budget spent in Shawarma is worth of 50.00 each, Shake is 30.00 each while in Burger is worth of 40.00 each. He sold 20pcs Shawarma , 40pcs Shake and burger everyday. His Mark up percentage is 40%. According to his forecasting His business will increase 20% except to a month of March, May, June, August, September and october while on December it will might increase in twice. It will might decrease also in10% due to the seasons, buying behavior and the economic ability to his Business Geographic

32. Table 1 Projected Daily Revenue SHASWABUR Business TYPE OF MV’s Cost per unit (A) Mark-up 50% (B) Selling Price (C) Projected Volume (D) Projected Revenue (E) Average no. of item sold daily (Daily) (A) (B) + ( A x .50) ( C ) +( A + B) (D) (E) = ( C X D) Shake 30 5 15 30 450 Burger 40 Total 120 5 15 30 450 Shawarma 50 50 50 50 50

33. Table 2 Projected Monthly and Yearly Revenue SHASWABUR Business TYPE OF MV’s Selling Price Projected Volume Projected Revenue Projected Volume Projected Revenue Average no. of item sold yearly Average No. of items sold (Monthly) (Yearly) (Monthly) (C) = ( A+B) F = ( D x 30 days) G = ( C x F ) H = (D x 365 days) I = ( C X H) Graham Ball 15 900 13,500 10,950 164,250 Total 15 900 13,500 10,950 164,250

34. Table 3 Projected Monthly Revenue Graham Ball Business MONTH JANUARY FEBRUARY MARCH APRIL MAY JUNE REVENUE 13,500 14,175 14,883.75 15,627.94 16,409.34 17,229.81 MONTH JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER REVENUE 16,712.91 16,211.52 15,725.17 15,253.41 16,778.75 18,456.63

35. Table 2 Projected Monthly and Yearly Revenue and cost SHASWABUR Business TYPE OF MV’s Selling Price Projected Volume Projected Revenue Projected Volume Projected Revenue Average no. of item sold yearly Average No. of items sold (Monthly) (Yearly) (Monthly) (C) = ( A+B) F = ( D x 30 days) G = ( C x F ) H = (D x 365 days) I = ( C X H) Graham Ball 15 900 13,500 10,950 164,250 Total 15 900 13,500 10,950 164,250

36. Example: Mr. Crab recently opened his dream business and named Crabby Fatty , an online selling business which specializes in ready to serve an affordable and yet delicious burger and Ham. Based on his initial interview among several online selling businesses, the average number of burger sold every day is 15 and the average sold every day of Ham is 10 . From the information gathered, Mr. Crab projected the revenue of His Crabby Fatty Online Selling Business . he gets his Products at a local JMI dealer in the city. The cost per piece of his finish burger is 40 pesos , while his ham costs 60 pesos per piece . She then adds a 50 percent mark up to every piece of JMI sold .

37. Since Mr. Crab get her stocks from online dealer, there is no je need to stock more stocks. Therefore there is no Merchandise inventory beginning as well as merchandise inventory,end . Mr. Crab spent 50 pesos to every 6 pcs of the products as cost in transporting the goods from the supplier to the seller. Mr. Crabs also recording his operating expenses such as internet connection, Transportation, and other Miscellaneous expense. He spent 400.00 for internet, 800 for transporation and 600.00 for his Mis.expense every month. Since his products is considered as timely his revenue increase at 50% monthly but considered decreasing at 40% in a month of July, August, September and October due to the storms.

38. Products Cost per unit Mark-up Percentage Selling Price Item Sold daily Projected Revenue daily Item Sold Month ly Projected Revenue Monthly Projected cost daily Projected cost monhtly Freight-In COGS Available for sale

39. Aling Maria sells bibingka in her neighbourhood , every day she can sell 45 pieces of bibingka at 25 pesos each. How much is her daily revenue? 1,125.00

40. Aling Martha sells bibingka in her neighbourhood , every day she can sell 45 pieces of bibingka at 25 pesos each. How much is her monthly revenue? 33,750.00

41. Assuming that you have 197,025.00 and has a operating expense for internet worth of 1,000 and worth of 1,900 for Miscellaneous expense. How much is your Net Profit. 194,125.00

42. Lino is a Manggo vendor selling at the local public market. He gets his products from a supplier at 1,325 pesos per sack and sells it at 2,253 sack to his customers. How much mark-up was Lino adding to his selling price? 928.00

43. Aling Martha sells bibingka in her neighbourhood , she gets her bibingka at its cost per unit of 20.00. every day she can sell 45 pieces of bibingka at 25 pesos each. How much is her monthly Cost of purchase? 27,000.00

44. Rio sold 5 pairs of pairs of Skirt. Suppose Rio purchased the 5 pairs of Skirt and Blouse at P 350.00 each and pays P70.00 each freight. Calculate how much is the cost of goods sold ? 2,100.00

45. Imagine you have, projected cost of good sold (COGS) worth of 92,975.00 and projected 290,000.000 for Revenue. How much is your Gross Profit? 197,025.00

46. Rhea purchased 5 Phones for P 6000.00 each. According to her calculation, P 2,400 shall be added to the cost as mark-up. How much is the selling price of each phone? 8,400.00