SENIOR HIGH SCHOO

COURSE MODULE
ENTREPRENEURSHIP
FIRST SEMESTER
1ST QUARTER
SY 2020-2021

Module 5: Gate 1: Money, Model, Mentors

Topic: Partnership and Mentors

Learning Outcomes:
At the end of the lesson the learners are able to
 Understand why Partners are Needed
 Understand the three Series of Investment
 What is the ROI (Return on Investment) expected?
 Answer questions investors need to ask
 Know how to choose a mentor

Learning Activity:
The learners in their respective groupmate in product proposal shall discuss:
1. is partnership essential for your proposed idea?
2. Does the proposed idea need mentoring from a specific Entrepreneur business man/woman?

Resources:
Expected ROI
https://visionedgemarketing.com/expected-roi-for-your-marketing-plan-how-to-do-it/
#MentormeRobert
https://youtu.be/p4miETh5M14

Introduction (with core value/Character integration)

Socializing, Communicating, and Collaborating are the free resources of every individual. Each person possesses
an idea, has their own strengths and weaknesses, and skilled in a specific area. These are some of the characteristics
that makes us human capable of many possibilities. Our differences are not disadvantages, rather it is a key for a
bigger concept, idea, or potential for a much better outcome. The more different we are from one another, the more
we learn from each other.
A person with an idea has so much potential and could unlock many opportunities. Some ideas work just fine
even without help from others. But two different individual with mutual ideas, if they collaborate, much more could
be thought of, much more could be done, and much more could be reached. Humans are natural social creatures.
We always needed help from other to help us learn and adapt to our needs and environment. In this lesson we will
talk about why Partners are needed in Entrepreneurship and how having a mentor can greatly help the entrepreneur
achieve his/her objectives and goals.
Body (with real life application: current issues)

Why Partners are needed?

The right partners can provide the needed initial funding, opening doors to further fund and spread
financial risk, creating immediate credibility and making the entrepreneur highly accountable. They can
open their own network of contacts to be accessible to the entrepreneur, as well as provide mentorship,
preferably not just at a professional level (operational and strategic issues of the company) but also at a
personal (personal growth) level. An important bonus is the fair valuation as well as stock ownership that
can be awarded back to the entrepreneur once the investment of the investors has been recovered. It is
therefore not wise for entrepreneurs to get partners only for funding purposes, throwing away multiple
benefits that partners can put on the table as value-added.
(But partnership also comes with some issues and partners must be clear with roles and
responsibilities, how decisions will be made, who will be the main workhorse, and who is prepared and
has the time and talent to do what is needed for the business. These should be revisited regularly or as
the need for clarity arises.)

Benefits of Having Great Partners:

1. Provide immediate feedback on strengths and weaknesses of plans.
2. Help give operational and strategical directions
3. Provide additional funding
4. Spread out financial risk.
5. Narrow your knowledge Gap.
6. Offer immediate credibility to your company.
7. Open their network of contacts to you (key suppliers, customers) to lower costs or raise revenues.
8. Give an assurance of fairness on dealing with valuation and stock ownership, specially after recovering
investment.
9. Mentorship on a professional level
10.Mentorship on a personal level

Outside Investors and your Company’s worth

If outside investors would be needed, discipline is needed and the entrepreneurs

cannot do the business leisurely as investors expect the entrepreneur to work hard for long hours to grow
fast, attain goals, be better than competition and be market leader.

Outside investors are usually willing to pay a premium to be an investor, but the amount of
premium is dependent on the status of the company, how profitable the company really typically with
price earning or PE ratio based on EBITDA or Earnings Before Income Tax, Depreciation and
Amortization), the projected future of the company as well as the industry focus of the outside investors
who may have preference for specific industries the have expertise on. Hence, the founding entrepreneur
must be or must learn to be the industry expert. The table below shows three series on how investors
view a company they are investing in and the investment premium they will likely be willing to make.
(table 1.1)
Serie Revenu Profit Description Risk Level Investment
s e Premium
A NO NO Product or High None or
Service exist but Lowest
no business
operation
B YES NO Business exist Moderate Case-to-Case
with revenue but can be
generation but attractive if
lack either investment
revenue sources will leapfrog
or productivity volume way
scale to be beyond
profitable breakeven
point.
C YES YES Company is Low Highest
operating with
both revenue
and profit
increasing.

Note that series A is not yet a business but only an idea. Eduardo Saverin, then a Harvard junior
invested in Harvard sophomore Mark Zuckerberg's idea of "The Facebook" (the original name of
Facebook) and became its chief finance officer. Valuation of the company went up subsequently when
Facebook started accepting
advertising revenues even without reaching profitability (series B), and higher valuation attained when
Facebook had both revenue and profit (series C), becoming a unicorn, or a company with high valuation
of at least US$1 billion.
It does not mean Series B companies are not worth much as its run rate (annualized or
extrapolated sales projection based on latest month or quarter sales), growth rate, cash flow, and
barriers to entry are typically taken into consideration to determine attractiveness of investment and
potential to recover investment as a business or as a potential synergy with the investors' existing
businesses.
In the Philippines, an example of series C with both revenue and profit is Mang Inasal, which
was established by Edgar Sia II in lloilo in 2003 but was bought by Jollibee in 2010 for P3 billion,
representing 70% of the company (the balance of the 30% stake was sold for P2 billion in 2016
exercising Edgar Sia's option outlined in the Jollibee purchase agreement). Not bad considering Mang
Inasal was capitalized at P2 million from a loan. In 2010, Mang Inasal already had 303 stores having an
EBITDA of P520 million, operating with soaring revenue, rising profit, speedy scale and was a big threat
to Jollibee.
EBITDA is earnings before interest, taxes, depreciation and amortization, an. indicator of
financial performance where interest, taxes, depreciation and amortization are added back to net profit to
create a more realistic comparison of profitability among industries. A high EBITDA means a company is
capable to keep its earnings at good level via efficient processes that have kept certain expenses low.
 What is the ROI expected?

Note that the best investment is always the one with that gives the highest return on investment (ROI) that
also pays out dividends consistent with investors goals. This is because and investment may gain substantially but
unless an investor gets dividend, the investor will not benefit from the gain unless they sell stocks.
Dividends allow real cash that can be reinvested elsewhere or simply be enjoyed as fruit of labor. To have
reasonable ROI, the amount of money invested must gain more than what is available when simply placed in the
bank or in financial instruments, like treasury bills, or preferred stocks of companies. Industries also have average
ROI so entrepreneurs must be conscious of the philosophy of being “Better than before, Better than others, Better
than expected”.

Questions investors need to ask (table 1.2)

Inter-related Goal Key Questions they ask themselves
factors for
Investors to
maximize ROI
Market To determine if  Is the market/industry big with lots of unserved market?
there is a scalable  Can it be scaled fast?
and sustainable  Are there customers waiting?
market  Are there exclusive agreements?

Product To determine if  Is the value proposition (product and price) compelling to the
the value customers to keep buying?
proposition is  Is the product technology already available?
compelling and  Is there a potential source of competitive advantage, i.e. barrier
ownable for competitive entry (patent, copywrite, etc)?
 Is the margin good for better cash flow
People To determine if  Has the entrepreneur done well in the past?
the entrepreneur  Is the entrepreneur committed and is the right person for the
is trustworthy and job? (experience, behavior, full-time)
believable  Does my intuition feel good about working with the
entrepreneur? (EQ, win-win attitude realistic projection, etc)
ROI To determine if  Are uncertainties negated? (Govt. rules, legal cases, patent, etc)
beyond market,  Is the timing right?
product, and  Are tensions controllable? (cost, license, manpower needs,
people, it is a good inventories, receivables, etc)
investment  Is it a good deal?

Choosing Mentors
A mentor is a trusted and experienced adviser who interested in the success of the mentee. He/She does
this by investing time to be a sounding board, to listen and understand context, ask questions, give sound advice,
offer alternative opinions, opening windows of opportunities and lessening risks of the mentee.
Mentors are not the same as people who just answers your questions; they should ideally inspire the
mentee with their own credentials and successful experience in the business. Mentorship is important because it
helps the mentee to see what he/she could not see at the moment. and mentorship should not be limited to one
person. There are 4 different types of mentors that entrepreneurs need to consider.

(table 1.3)
 Types of Role of mentor Example for a start-up
Mentor needed for the entrepreneurs advertising agency
Operational Guides on matters related to present operations, Client acquisition,
especially key factors for success that the firm Presentation, Execution
should do exceptionally well
Functional Guide on matters related to support functional Accounting, Tax, Human
areas on which the entrepreneur may need some resource
advice
Personal Guides on matters relate to personal growth Work-Life Harmony
Strategic Guides on matters related to the future vision of Consulting, Services
the entrepreneur

8 Qualities of Great Mentors

1. Interested in the success of the mentee
2. Invested time to listen and understand the different situations of the mentee
3. Provide advice, both business and personal
4. Help mentees by tapping into mentors’ network
5. Open doors of opportunities
6. Lessen risk by calling attention to such areas
7. Inspire the mentee
8. Sincerely desire that the entrepreneurs succeeds and be even better than them

Summary and Conclusion

The best way to invest in a relationship with a seasoned entrepreneur as potential mentor is when the mentee
does not need mentorship yet. Start small relationships to build trust without asking for a formal mentorship yet.
Trust is important into a mentor-mentee relationship, and trust can only be gained through time when the mentor
would be willing to share time, experience, contact, and even sometimes, money to the mentee.

Assessment
1. Using table 1.3 (Mentors), create your own version of the table. Fill up the box base on your real-
life experiences from the people whom you considered as your mentor and how they helped you.
(60 pts)
Types of Name of your Role of mentor
Mentor mentor for the student
needed
Operational
Functional
Personal
Strategic
Essay (300 words) 20pts each
2. How is collaboration helpful for an entrepreneur?
3. In your opinion, is it a necessary requirement for entrepreneurs to have a mentor before they start-
up a business?
4. (TO BE SUBMITTED IN CANVAS DEADLINE ON OCTOBER 10, 2020)

References
ENTREPRENEURSHIP by Josiah Go
 Prepared by:
Keith Bryan S. Javier
Subject Teacher

Checked by:

Dr. Emmeline T. Arel

Principal, High School Department
Supervising Dean, Basic Education Department

Noted By:

Dr. Emmeline T. Arel

Supervising Dean, Basic Education Department