Prototype (d q sure if kasama)

Prototype

- Representation of a product or idea – a simple model made by one’s self, a

3D printout, or a highly refined version produced by a prototyping firm.
- Likely to be built, assessed, and tested before a product comes to market.
- Prototyping lets one correct design faults and get feedback from potential
customers on product usability and performance
- A good prototype can also help attract funding as it gives potential
investors an idea of what your product looks like and what it can do.

STEPS TO CREATE A PROTOTYPE

1. Select the type of prototype

a. Be clear about why you need your prototype

assess your product form and appearance - for market-testing and

to make certain you are happy with the overall design

test function - to physically test parts to check they work and have
been designed correctly

check fit - to make sure all designed components fit together

correctly

use prototyping as a form of low volume production

b. Decide what you can afford to spend.

- Professional prototyping costs vary depending on the size and
complexity of the product or component you are producing.
- Ask for quotes and details of timescales from prototype
manufacturers.
c. Make basic models to assess the appearance and functionality of
your idea.
- Assemble simple models using basic materials such as wood,
cardboard and foam, or a 3D printed version of your design, to
make sure your idea works.
- Models together with simple sketches, can help you evaluate
the appearance and ergonomics of your product idea
d. Consider CAD (computer-aided design) for meeting your needs.
- CAD software creates three-dimensional models that can be
viewed on a computer screen.
 - Solid modelers (such as Solid works and Siemens Explore NX)
are useful for evaluating how a product or part will be
engineered.
- Surface modelers (such as Rhino) are better for looking at
surfaces and external appearance.
e. Think about getting help to create a detailed prototype.
- It is to be presented to investors or companies or to be used
for market research purposes.
- Make something that works and looks as close as possible to
the finished product while avoiding unnecessary costs.
- You will probably need professional assistance from a product
designer or prototyping specialist. It is essential to protect
your idea when seeking external help.
f. Only make a pre-production prototype at a late stage in the
development process.
- A pre-production prototype is manufactured using processes
representative of actual production methods. It is fully
functional and looks very much like the final product.

2. Plan your prototype

- Check safety or performance standards that your product might have to
meet. Certain products, such as electrical goods and items that need to be
fire-resistant, must meet safety standards. A product designer with
experience in your sector can advise you.

a. Make sure the intellectual property in your invention is fully

protected.
- If you do not have a patent or registered design in place, ask
anyone you approach to sign a one-page confidentiality or
non-disclosure agreement (NDA).
- This will not be sufficient if the prototype is going to be
displayed in an exhibition or a publication.
b. Decide how many prototypes you are likely to need.
- If you are having prototypes made professionally, it may be
cheaper to produce several samples at the same time,
depending on the prototyping process used.
c. Consider how your prototype is likely to be assessed and tested by
others.
- Some products may be tested so vigorously that they could be
redundant afterwards.
 - You might also get an independent testing body to run tests
and write a report or get the product certified against relevant
standards.

3. Fund your prototype

a. You may be able to fund basic prototypes from existing funds or

borrowings.
- A bank loan may be enough to cover the development of
early-stage prototypes. Your business plan needs to show that
your idea is a strong commercial proposition and that you will
be able to repay the loan.
- Be clear about the amount of investments when it comes to
family and friends.
- Get agreements drawn up professionally.
b. Investigate possible grants and awards.
- Funding can help you test an idea, develop a new product,
process or service, or work on collaborative projects.
c. Consider equity investment or forming a commercial partnership.
- For more sophisticated, pre-production prototypes, you are
likely to need investment from business angels or venture
capital firms. Alternatively, you could look for a commercial
partner to help you develop your idea.
- You will need clear evidence that your idea has strong
commercial potential, including a good early-stage prototype
or CAD graphics.
d. Think about bringing outside specialists in as partners in return for
a cut of profits.
- Some product designers and prototyping companies might
consider this if your idea has clear commercial potential.
- You need to be sure it will make financial sense for your
business.

4. Get your prototype made

a. If you lack design expertise, find a suitable designer to design your
product.
- Designers can assess feasibility and aesthetics, spot potential
problems and suggest alternatives.
b. Search for a prototype manufacturer that can handle your
requirements.
 - Make sure that a prototyping manufacturer can produce the
complexity of the prototype you require.
- Ask what processes and equipment are available and make
certain that these will be suitable for creating your prototype.
c. Consider whether a university could do your prototyping work.
- Universities may be able to make prototypes at a lower cost
than a manufacturer or prototyping specialist.
d. Get your prototype made.
- You will need to supply the prototype manufacturer with an
outline, CAD data and detailed drawings of your product idea.
Drawings will need to be converted into 3DCAD, which has cost
implications.

5. Present your prototype

a. Think carefully before approaching big market players.
- Most big companies have their own R&D teams and will be
working on new ideas all the time. They may not want to see
your ideas in case they are later accused of infringing your
intellectual property.
b. Set out clear rules for anyone you leave your prototype with.
- Companies interested in your idea are likely to want to hold
onto your prototype to look at it more closely. If you do not
have patent or registered-design protection in place, make
sure the company signs a confidentiality agreement.
c. Think about creating a video of how your product works.
- This can be useful if someone is unable to attend a
face-to-face meeting or if your product has a long operating
cycle, for example.
d. Use any feedback to improve your idea.
- Feedback from potential investors or companies that might be
interested in licensing, buying or manufacturing your product
can help you to refine your product idea.

TEST YOUR PROTOTYPES: HOW TO GATHER FEEDBACK AND MAXIMIZE LEARNING

Six Best Practice Tips for Gathering Feedback on Your Prototypes

1. Ways to Solicit Feedback

- How you solicit feedback depends largely on what type of prototype
you have built.
- Interviews with users get them to talk about their thinking process
while using the prototype. When presented with alternatives, they can
compare various prototypes and tell you what they liked and disliked
about each version.
 - Use the “I Like, I Wish, What If” method to solicit honest feedback in
testing sessions.
2. Test Your Prototypes on the Right People
- Whom you test your prototypes on will affect the usefulness and
relevance of their feedback:

- Teammates: simple and rough feedback on early stage

- Extreme users: Product users on top of regular users; help uncover

some problems and relevant issues that affect regular users,
because the extreme users tend to be more vocal about their love (or
dislike) of doing things related to your prototype

- Stakeholders: Internal stakeholders, manufacturers, retailers and

distributors will each have their own criteria for building, making or
shipping a product or service, and can have an impact on the
success of your idea. Gathering feedback from these stakeholders
will prevent your team from receiving a nasty shock when you realize
your developed product is not as feasible.

3. Ask the Right Questions

- Before prototype testing and feedback gathering, be sure about
what you are testing for.
- After interview sessions, focus on finding the positive and negative
feedback relating to usability.
4. Be Neutral When Presenting Your Ideas
- Highlight both the positive and negative aspects of your solution,
and refrain from trying to sell your idea.
- Do not defend your product from negative feedback.
- Be ready to dismantle, change, or even abandon an idea when
needed.
5. Adapt While Testing
- Adopt a flexible mindset while testing prototypes.
- Feel free to deviate from planned scripts and improvise during the
testing session.
6. Let the User Contribute Ideas
- Allow users to contribute ideas that build on your prototypes.
- Ask users how the product or service could be improved for them.

Three Methods for Maximizing Learning from Testing

Methods you can use to provide some structure and organization to your
feedback-gathering process:

1. Feedback Capture Grid

 - It may be used during the test to capture feedback from users
systematically, or after the test when organizing the various
feedback gathered.
- Divide a sheet of paper into four quadrants and label as follows.
- Note down questions that the users have asked as well as new
questions the test session raised.
2. I Like, I Wish, What If
- This method invites the user (or your team-mates, during a
discussion session) to provide open feedback by coming up with
three kinds of statements.
- It frames the feedback in a constructive and positive manner,
enabling an open discussion or absorption of his or her feedback.
3. Sharing Inspiring Stories
- Stories are powerful tools that you can use to inspire yourself and
your team to think of solutions.
- Getting together with the rest of your team and sharing inspiring
stories with one another is a very useful activity.
- Capturing what resonates with you and your team-mates can help
identify ideas and feelings that your team can work on when thinking
of new solutions.
4. Build, Gather Feedback, Iterate
- Put the new information into use in your next iterations of prototype
ideas.
- Develop a habit with your team where you actively integrate what you
have learnt back into your process, and consciously develop new
iterations of your solutions as you move forward

What is Forecasting?

● It is the process of predicting the future based on the past and present data
and analysis of trends.

● Its purpose is to establish benchmarks and some certainty around financials

as a business faces its future and the decisions it needs to make to survive and
prosper.
● Monthly or weekly forecasts may be necessary when starting your business,
experiencing rapid growth, or having financial difficulties. Regular forecasts allow
you to closely monitor your finances and develop strategies to fix problems
before they become major issues.
Importance of forecasting revenue
● It establishes goals and sales targets.
● It forces you to know your numbers.
● It focuses the business on the future by learning from its past.
● Accurate forecasts improve future business planning and decision making.

Financial forecasts may include the following:

1. Start-up Costs
The start-up capital is the amount of money that is needed to buy the facilities
and equipment, to register and license the business and get the necessary
certificates.
Working capital includes the costs of raw materials, packaging, staff training,
product promotion etc. that have to be made before the business begins to
generate income from sales of the product.

The start-up capital and initial working capital are calculated to determine
whether the entrepreneur’s savings (known as the owner’s equity) will be sufficient
to start the business without a loan.

The requirement for working capital also continues as the business develops and
a ‘Cash flow’ should be prepared. Requirements for working capital will differ
among types of business. This is because of the seasonal nature of the raw
materials needed and other ingredients. Below is an example of Start-up Costs
forecast for burger production

Start-up cost Amount in Pesos

Renovation of space for the store 10,000.00

Equipment 13,500.00

Registration of business 2,500.00

Business License 2,500.00

Hygiene inspection and certificate 2,500.00

Raw materials and ingredients for 4 9,275.00

weeks production
 Packaging (minimum order) 2,00.00

Staff training (equivalent to income 15,000.00

from 2 weeks’ production value)

Initial Production promotion 2,500.00

Staff salaries for 6 weeks 36,000.00

TOTAL 95,775.00

Adapted from Entrepreneurship by Angelo A. De Guzman pp. 54

2. Operating Costs

Operating costs are also known as expenses. There are two types of operating or
production costs. those expenses that have to be paid even if no production
takes place are called fixed costs and those that depend on the amount of food
that is produced are the variable costs.

If you are starting a new business, base your forecast on market research and
industry benchmarks. If you are already operating a business, use records from
previous years to assist you. Make sure you allow for any likely changes, such as
an increase in costs or employing additional staff.

3. Sales

A sales forecast is an essential tool for managing a business of any size. It is a

month-by-month forecast of the level of sales you expect to achieve. Most
businesses draw up a sales forecast once a year. It is calculated as Selling price
per unit multiplied by the number of units sold.

4. Cost of Goods Sold

If you sell physical products you will need to forecast how much it costs to
produce or stock them. The COGS forecast relates to your sales forecast. If you
are forecasting an increase in sales, the cost of producing the goods will also
increase (you will need to purchase more components or stock).
To forecast COGS you will need to include all the direct costs associated with
production and preparation for sale. These may include:

a. the wholesale cost of buying completed goods, raw materials or parts

b. Packaging
c. freight and freight insurance
d. commissions paid on sales
e. direct labor costs used to manufacture the product

5. Cash Flow

A cash flow forecast estimates the amount of money you expect to flow in
(receipts) and out (payments) of your business, including projected income and
expenses. A forecast is usually done over a 12 month period but could also cover
a shorter period, such as a month.

Cash flow forecasts can help you identify when you may have extra cash available
or experience shortages, so you can make the right decisions for your business.

It is important to review your cash flow forecast regularly against actual results. A
forecast can provide warning signs that may help you to avoid future financial
problems. Watch out if your cash payments are more than cash receipts – you will
run out of money.

Computing for Profits

The formula for solving profit is fairly simple. The formula is profit (p) equals
revenue (r) minus total costs (c). The process of organizing revenue and costs and
assessing profit typically falls to accountants in the preparation of a company's
income statement. Revenue is usually the first line on the statement. Taking out
the costs of goods sold, you arrive at gross profit. One step further, subtracting
fixed costs, gets you operating profit. Once irregular revenue and expenses are
added, you get bottom-line net profit.

Formula for profit:

Profit = Revenue – Total Costs

If you know the revenue and profit figures you can work out the total costs by
doing

Profit – Revenue = Total Costs

If you know the total costs and profit figures you can work out the revenue by

Total costs + Profit = Revenue

If you don’t have the total costs

Total costs = Fixed costs + variable costs

Remember, fixed costs stay the same!

Keeping Business Records

Business Records

- refer to any document or data that relate to business operations such as

financial statements, recipes, invoices, contracts, and tax filings.

Essential Practice for Several Reasons

1. It helps you monitor business’ financial health by tracking revenue,

expenses, and profits.
2. It enables you to comply with legal and regulatory requirements such tax
laws, labor laws, and environmental regulations.
3. It provides you valuable information, for making decisions about your
business.

Bookkeeping

- process of recording financial transactions of a business on a day-to-day

basis

Bookkeeper

- person in charge of recording, maintaining, and updating business records

from financial transactions using account title.
- uses the Book of Accounts to record business transactions.

Book of Accounts is composed of a journal and ledger.

- Journal - book of original entry

- Ledger - book of final entry

Accounting
 - Analysis and interpretation of financial data to provide insights and make
informed decisions.
- uses information from bookkeeping to prepare financial statements,
analyze financial data, and provide advice to management.
- ensures that financial records comply with accounting standards and
regulations.

Importance of Accounting according to Freshbooks Cloud Accounting

a. Recording transaction
b. Budgeting and planning
c. Decision making
d. Business performance
e. Financial position
f. Liquidity
g. Financing
h. Control
i. Legal requirements

Types of Accounts

Assets - cash and resources owned by the business (e.g. accounts receivable,
inventory)

Liabilities - obligations and debts owed by the business (e.g. accounts payable,
loans)

Revenues and Income - money earned by the business, usually through sales
expenses or expenditures.

Expenses or expenditures - cash that flows out from the business to pay for some
item or service (e.g. salaries, utilities)

Equity - value remaining after liabilities are subtracted from assets, representing
the owner’s held interest in the business (e.g. stocks, retained earnings)

Basic Steps in Setting up a Filing System for Business Records:

1. Separate business and personal expenses.

2. Choose between single entry or double entry.
- Single entry - no inventory or employees, single proprietorship
- Double entry - where it comes from and where it goes, debit and
credit always equal each other
3. Choosing between cash v.s. accrual
4. Choose a bookkeeping system - manual using Excel or paper, or use an
accounting software
 5. Categorize transactions - understand what you’re spending on
6. Organize and store documents - keeping records for years, storing them
digitally
7. Make it a habit.

Performing Key Bookkeeping Tasks

Definition of Terms

General Journal - is the most basic journal which provides columns for date,
account titles, explanations, folio or references, and a separate column for debit
and credit entries.

General Ledger - is a group of all accounts that can be found in the chart of all
accounts. These accounts will be reflected in the trial balance as a summary of all
financial activities that have taken place as recorded in the general journal and
subsidiary ledgers.

Subsidiary Ledgers - is a group of accounts directly associated with the general

ledger. This record is created to maintain individual accounts for customers and
vendors whose cash is not being used as a medium of exchange when purchasing
or selling merchandise.

Account Receivable Ledger - is a sub-ledger which records all credit sales made
by a business. It segregates a record of all amounts invoiced to customers into
one location. A typical transaction entered into e accounts receivable ledger
which records all account receivables, followed at a later date by a payment
transaction from a customer that eliminates the accounts receivable. It is a
subsidiary ledger which records a customer’s accounts in the business.

Account Payable Ledger - contains the detail for all invoices received from
suppliers. It is used as a subsidiary ledger, from which summary-level information
is periodically posted to the general ledger. Having a separate accounts payable
ledger keeps a large amount of detailed payables transactions from cluttering up
the general ledger.

Debit - The left-hand side also known as “Value Received”. Cash or non-cash items
received must be recorded in the debit column. This means that the debit balance
has increased.
Credit - The right-hand side also known as “Value Parted WIth”. The cash or
non-cash items given must be recorded in the credit column. This means that the
credit balance has increased.

The Rules of Debit and Credit

The rules of debit and credit are essential to ensure accurate recording and
sound decision making. Debit is abbreviated as DR while CR for credit. It is a
deemed requirement that the bookkeeper should be able to master the normal
balance of each account title being used in the process of recording.

The following steps will be undertaken in determining account balances for every
account title such as cash, account receivable, etc.:

1. Add all the debit side to generate total debit.

2. Add all the credit side to generate total credit.
3. Subtract total debit to the total credit.
4. Determine the balance of each account.

T-account - The most convenient and fastest way of posting journal entries to the
ledger. It is divided into two sides: the debit side (left-hand side) which shows the
value received and the credit side (right-hand side) which shows the value parted
with. An account title is written above the T-account.

To strengthen understanding about posting of journal entries o the general

ledger, create a T-account and label them with the account title and group them
according to:

Asset - it is the first account of the five major accounts which refers to resources
with economic value that an individual, corporation, or country owns or controls
with the expectation that it will provide a future benefit. It represents an economic
resource for a company or represents an access that other individuals or firms
do not have. An economic resource is something that is scarce and has the ability
to produce economic benefit by generating cash inflows or decreasing cash
outflows.

Liability - It refers to something a person or company owes, usually a sum of

money. Liabilities are settled overtime through the transfer of economic benefits
including money, goods, or services. Liabilities include loans, accounts payable,
mortgages, deferred revenues, and accrued expenses. It is an obligation between
one party and another not yet completed or paid for.

Owner’s Equity - shareholder’s equity (or owner’s equity for privately held
companies). It is a degree of residual ownership in a firm or asset after
subtracting all liabilities associated with that asset.
Revenue - The money brought into a company by its business activities. It is
commonly known as service income or fees, sales, and sales discount.

Expense - It refers to the cost of operations that a company incurs to generate

revenue. Common expenses include payments to suppliers, employee wages,
factory leases, and equipment depreciation.

Trial Balance - a list of all ledger accounts with closed or final balances on a
certain period arranged according to the assets, liabilities, capital, revenue, and
expense. The debit and credit columns must be equal in total amount.

Adjusting Entry

- An entry made to update the financial data already recorded.

- It helps the bookkeeper capture all financial events that happened over a
period of time within the accounting cycle.
- It is essential in keeping the financial record updated where the
bookkeeper can examine accounts that need to be updated.

Five Basic Sources of Adjusting Entries:

1. Depreciation expense
2. Deferred expenses of prepaid expenses
3. Deferred income of unearned income
4. Accrued expenses of accrued liabilities
5. Accrued income or accrued assets
6. Depreciation
- method of allocating the cost of an asset to an expense over the
accounting periods that make up the asset’s useful life.
- E.g. of assets subject to depreciation: store, office, building, and
transportation equipment (these types of assets lose their ability to
useful service as time passes.
- decrease in the usefulness of these types of assets.
- Land is not subject to depreciation because the value of land mostly
increases as time passes.

Formula:

Where:

Acquisition cost - the actual cost of the asset acquired

Salvage value - the selling price of the asset upon reaching the useful life

Useful life - the economic or productive life of the asset written in months or
years.

7. Deferred expenses or prepaid expenses

- Items that have been initially recorded as assets but are expected to
become expenses over time or through the operations of the
business.
- In order to recognize the correct amount of expenses, prepayments
shall be amortized weekly, semi-monthly, or monthly depending on
its nature and purpose.
8. Deferred income or unearned income
- Items that have been initially recorded as liabilities but are expected
to become income over time or through the operations of the
business.
9. Accrued expenses or accrued liabilities
- Items of expenses that have been incurred but have not been
recorded and paid.
10. Accrued income or accrued assets
- Income items that have been earned but have not been recorded
and paid by the customer. These are receivables of the business.