CHAPTER 1
CONCEPT OF ENTREPRENEURSHIP
“Opportunity comes from one person’s idea that influences other to take action.”
LEARNING OUTCOMES
An entrepreneur is an individual who is alert to profitable opportunities for the
exchange of goods or services. A street vendor in Divisoria takes the opportunity to make
profit by selling school supplies during the opening of the school. During Christmas, He or
she takes the opportunity of selling Christmas items and in other occasions, sell clothing
apparels at different seasons. A cell-phone repair man takes the opportunity of servicing
various cellular owners who cannot afford to buy new models.
An entrepreneur is one who organizes, manages, directs and assumes the risks of
a business or enterprise. Being an entrepreneur is a lifestyle or an attitude. It is not a calling
for everyone, but rather a choice.
1. Define what is an Entrepreneur;
2. Describe the key concepts in the making of an entrepreneur;
3. Identify the factors that develop entrepreneurial activities and successes;
4. Give the difference between a Manager and an Entrepreneur;
5. Discuss the development of entrepreneurship;
6. Elaborate the making of a Filipino entrepreneur and their profile; and
7. Discuss the challenges in entrepreneurship.
ENTREPRENEURSHIP
It is a science of converting processed ideas into a remarkable business venture.
According to Fajardo (2009), it is also a capacity for innovation, investment and expansion
in new market, products and techniques. This definition implies that an enterprise is at
work whenever an individual takes the risks and invests resources to make something
unique or something new, designs a new way of making something that already exists, or
creates new markets.
THE ENTREPRENEUR
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The fifteen (15) questions that a potential entrepreneur must ask himself or herself before
setting up a new business: a Yes or No answer is highly recommended.
1. Am I a planner, dreamer or a goal setter?
2. Do I offer a product that people want to buy?
3. Do I have enough resources to starts the business?
4. Will my business plan allow cash to flow as soon as possible?
5. Am I working around a tight budget for my expense?
6. Do I have good credit status?
7. Am I expecting too much too much from my revenues as a result of my hard work?
8. Am I ready to asses and measure everything before putting it out for the public?
9. Do I have strong people skills?
10. Do I enjoy making decisions an being in charge?
11. Am I good at short and long-range planning?
12. Am I willing to take initiative when confronted with difficult situations?
13. Am I flexible, and can adapt to changing circumstance?
14. Am I willing to take calculated risks?
15. Am I ready to learn and accept the mistakes that I might encounter along the way?
If you could answer yes to most of the questions, then you are probably ready to
become an entrepreneur. There are no correct answers for these questions regardless of
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your answer. These are some of the basic realities that you must face when starting a
business: demand for your product or service, cash flow, income potential, marketability
and flexibility. Be prepared to navigate the road to entrepreneurship and hurdle the
challenges and roadblocks along the way.
innovation and makes modifications to make the costumer aware that his product or
service is more superior to those offered by others.
THE ENTREPRENEURIAL SKILLS AND COMPETENCIES
Many entrepreneurs start small but with their managerial talents and persistence,
they exploit the opportunities available for their disposal. At the early stage, their growth
orientation is for expansion of their operation and they persistently pursue approaches
that differentiate them from other managers.
The entrepreneurial skills and competency factors are the following negotiating,
planning, risk assessment, purchasing, accounting, recruitment, training, selling,
controlling and dealing with emergencies
The Entrepreneur Starts Small to Become Big
THE MAKING OF AN ENTREPRENUER
The entrepreneur as a Missionary
The entrepreneur is a missionary who perceives opportunities inherent in the
exchange of goods with great desir6e for profit. The entrepreneur creates an environment
in which success is possible and the possibility of failure is controllable. The entrepreneur
is at work whenever he takes risk and invests his personal talents and resources to make
something new or different as costumers like to buy new and improve products.
Entrepreneur is Goal-Driven
An entrepreneur is goal-driven and self-confident as he exercises the locus of
control. He sets high goals and strives to attain the projected target and accomplishments.
He extracts compliance with set goals and activities to avoid the risk he foresees while
planning the activities and programs in the operation of the enterprise. He accepts
challenges and responsibility for results. He makes sure that people work based on
specified work programs and schedules.
The making of an entrepreneur is a dynamic process and approach. As an
approach, the entrepreneur considers the business opportunity as a chance to find new
ways to solve the problem rather solving the problem. A manager of an organization is
characterized as an adapter while the character of an entrepreneur is an innovator. The
manager employs discipline and precise methodical approach in solving business problems
while an innovator entrepreneur approaches the problem om a different angle as he
focuses on discovering problems and make new avenues for its solutions.
Entrepreneurship is a process that can be developed, learned and nurtured.
ENTREPRENEURSHIP AS A DYNAMIC PROCESS
The Entrepreneur is a Marketing Man
Entrepreneurship is a dynamic process of innovation and the establishment of new
opportunity for the creation of new venture. The small business owner entrepreneur in
the sense is self-employed and is different from an innovator entrepreneur. The real
entrepreneur is an individual with the greatest drive for expansion and growth and has
propensity to make a difference in terms of their achievements in profit and exploitation
of the resources for growth and business expansion.
The marketing environment in identified by the entrepreneur and thus, he
marshals his resources to pursue the opportunities and makes immediate action to exploit
his personal gain. The needs and wants of costumers are properly identified and these are
propelling reason for him to take the opportunity to make profit. He takes the lead for
The entrepreneur develops strategic plans and programs that will ascertain a
definite advantage over the others in their line of business. This is the reason why we see
people in the same line of business that others had gone miles over the others. The former
is a manager of this business while the latter is an entrepreneur.
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FACTORS THAT DEVELOP ENTREPRENEURIAL ACTIVITIES
1. The Entrepreneur Takes the Initiative
With his great interest to capitalize on the opportunity at hand, the entrepreneur
takes the initiative of venturing into business. With an amount of knowledge, he knows
that he can operate the venture with minimum risk. Armed with vigour and vitality he
plunges a profitable operation.
2. Organization of Capital Resources
While talents and ambition are great resources of the entrepreneur, financial and
human resources are important ingredients in the start of the organization. With his
savings and other financial resources, he starts operation on small scale together with his
trusted family members or friends he knew that could help him develop his dream
enterprise.
3. The Development of Administrative Machinery
the environment of the enterprise based on SWOT analysis so that the risk involve could
be seen before it happens. Forecasting environmental events are antidote to future
business risk.
PECULIAR CHARACTERISTICS OF MANAGERS IN SOLVING PROBLEMS
1. He develops systems and procedures that are precise based on current practices in an
industry.
2. The manager is interested in solving organizational problems rather than finding other
avenues in thesolution of the problems.
3. The manager calibrates in the refinement of policies and procedure and tends to revise
them to solveexisting problems.
4. He find ways and means to provide solutions and compliance to routine activities.
5. He is interested in details and sensitive to group cohesion and extract group cooperation
as a meansto group accomplishments.
The management is developed with organizational structure based on the need
of operation. Specific duties and responsibilities are assigned to individuals with talents
and skills that fit their respective position. It is based on the individual capacity to do the
job and not on personal connection with the entrepreneur.
CHARACTERISTICS OF AN INNOVATOR ENTREPRENEUR IN SOLVING PROBLEMS
4. The Development of Entrepreneurial Autonomy
The entrepreneur develops autonomy in the operation of the enterprise as he
takes the lead in all the activities of the organization especially in the early stage of
operation. His venture capitalized as he knows best the direction of the enterprise as he is
aware of the calculated risk involved. Locus of cost control must be in his hands.
5. The Development of SWOT Analysis
The avoidance of risk can be taken with careful analysis of the Strength,
Weaknesses, opportunities ang Threats of the organization. The entrepreneur must see
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1. He looks at the problem on different angels and finds means to circumvent the same.
2. He discovers the roots of the problem and develops avenues to better solve the
problem. Heformulates solutions and alternatives.
3. He develops basic assumptions and hypothesis related to current practices and makes
innovationsbased on careful analysis through SWOT.
4. The innovator entrepreneur is interested in the end results rather than the means to
achieve it. Hehas little tolerance for details and routine work.
5. He capitalizes on people with bright ideas and talents and gets their opinion and
consensus and withlittle regard for people with mediocre ideas.
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THE DEVELOPMENT OF ENTREPRENEURSHIP
The making of a Filipino entrepreneur
THE FOUNDATION OF NATIONAL BOOKSTORE
The making of a Filipino entrepreneur is a process of trial and error. The
colonization of the Filipino for more than 300 years is a great factor in the slow
development of entrepreneurial activity in the country. Our concept of owning a small
business like a sari-sari store, or a small tailoring shop, or a repair shop or market
distribution outlet already makes the person an entrepreneur. While this concept is true
to certain extent, entrepreneurship is more than being self-employed and making a living
out of the income to support family needs or a little of their wants.
The making of National Book Store is not a myth of fortune and honey. The
founder, Socorro Ramos, came from a poor family who sustained a living from selling
various items to support their basic needs. She was a working student while in high school
but because of her persistence and perseverance, she graduated with honors. Being a
working student was not a hindrance to her education as she painstakingly combined
studies with hard work.
The success of Filipino entrepreneur stands in a very shallow doundation. Most
Filipino business starts on a copy-cat syndrome. For example, Maria will start a sari-sari
store and here comes Pedro seeing the flourishing business of the Maria, opens store
opposite the other corner. Juana starts a barbeque stand on the corner and Petra ith
another outlet offering another variety of street foods. This is the scenery in most
Philippine business condition.
The food business outlet is one of the most abused and most prominent activities
of some Filipino business entrepreneurs, including that of small outlet in the distribution
of basic grocery and other items called sari-sari store or in some cases mini—grocery
stores. Some enterprising outlets include cellular phone load that adds to their income.
THE MAKING OF JOLLIBEE FOOD’S CORPORATION
The true Filipino entrepreneur is more than of that a copycat. While we consider
the success of Jollibee Corporation in the food industry, the founder is not a true Filipino
in strict sense of his origin. He has a Chinese blood, which he inherited his business acumen
from his parents who knew how business grow and prosper.
He started with an ice cream stand and later made it into an outlet for chicken joy
and other food items that answer the Filipino taste buds especially for children. His success
was based on his talent for innovation and finding a business that make him a multimillionaire.
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After high school, she worked as a sales clerk in Goodwill Bookstore owned by her
brother where she learned the rudiments of book business. Learning the hard way in not
an easy task and starting a business empire of national magnitude with more than 30
branches all throughout the country was a product of entrepreneurial acumen coupled
with determination and hard work.
Business capital for expansion and could come from savings and other sources. The
Ramos couple knew that they could expand their business with the savings that they had
and bought the present office of the store at Rizal Avenue in Santa Cruz, Manila where a
9-story was built. They built a building complex in Pasig where printing and other services
are being made.
With the help of their children, they went into vertical expansion by establishing
printing press to print local books and other office forms and supplies, they ventured on
other business activities and expand horizontally and vertically and made them of what
they are today. Their children were trained the same hard way and they are all successful,
fitted to inherit the new growing business empire.
LEONARDO SARAO, THE JEEPNEY KING
The success of the jeepney business is the making of a Filipino entrepreneur. Sarao
jeepneys abound in all terminals during the early period of transport development in the
country until copy-cats made jeepneys of similar styles. Leonardo Sarao, the jeepney king,
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started the business by being a helper mechanic until he established his repair shop from
meagre capital.
2. Personal attention and comprehensive awareness for the progress of the business is not
trusted onother people.
He then started buying second hand parts and engines from Japan and built
jeepneys that abound in most streets of the Metropolitan Manila and its suburbs. He
established jeepney factory with meagre capital and made savings to expand his
operations. He ventured into other business activities and success was not based on his
education but hard work and determination. All his children became professionals and are
now engaged in various business activities that made them of what they are today.
The entrepreneur must be in direct control of operation and not in indirect control.
He must be able to measure the desired results. He must personally verify the data and
financial figures spent and earned in the operation of the business.
The mentioned few successful stories of Filipino entrepreneurs will serve as a selfpropelling reason for us to think that the making of entrepreneurship is not served in silver
platter. The career of these few successful entrepreneurs were built with entrepreneurial
genius founded on slow and painstaking hard work. Their personal objective is not only to
generate money to sustain basic needs or wants but the greater drive for personal
fulfilment.
His word of wisdom is a contract to depend on. He looks at things in different
perspectives and approaches things with varied alternatives to attain what he wants. In
short, he is visionary, innovative, and unstoppable until he achieves the goal he sets for
himself.
THE CHALLENGES FOR ENTREPRENEURSHIP
The new generation of young entrepreneurs should look up the high standard of
values and character of entrepreneurs who got up the ladder of success. Success in
entrepreneurial activity is based on the inner compulsion to achieve the undeterred
difficulties. The values and character of JUAN TAMAD has no place in the world of
entrepreneurial vocabulary.
1. The new entrepreneur must be a doer and willing to work hard until he achieves the task
he wants forhimself.
He must possess the versatility for success and self-confidence that could be
overcome risk with his strong determination. The exploration of the total business
environment must be put into total perspective as it interplays with the development of
new opportunities and the risk attached to it.
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3. The new entrepreneur must have high sense of integrity that he stands firm on his
principles andideas.
4. Emotional stability is an important factor in the making of an entrepreneur.
While he is impatient for mediocre performance and lazy bones, his temper must
remain in control. Interpersonal relationships must be the banner in negotiations and
effective personal communication is the key factor in closing business deals.
5. The built in self- starting mechanism that drives an entrepreneur to success is his
executive ability tomanage people and resources. This executive ability refers to how he
plans, organizes, directs and controls the physical and material resources under his
disposal. Many entrepreneurs are describing to have shrewd judgment in character that
induced them to see things the way it should be. An entrepreneur has a passion for
excellences and mediocre performance has no place in his entrepreneurial vocabulary.
The new entrepreneurs and those who believe in their capacity for long hours of
work to get things done, spent 75 percent in planning innovations and putting them into
action. Dreams are built around creativity as he conceived original idea out of his
imagination.
The entrepreneur is like a multi-awarded artist with a handful of Trophy of
accomplishment equipped with inner drive in transforming idea into tangible reality.
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Sacrifice for long working hours and abandonment of personal life pleasures make the
entrepreneur achieve their target goals. They organize and develop their idea into
achievable activities and surpass the factor of risk.
The Philippines being a haven of opportunities is wide open for people who dream
to be rich and amass fortune as we have all the natural resources. Find the things you can
do best and you must have the talent and interest in doing it. Remember that the central
objective of any business is to produce the best goods and those that provide better
service.
With the talent you acquire in conducting feasibility studies in your college days or
those that you learned from experience, apply your knowledge in SWOT analysis. Consider
opportunities for expansion as business growth is possible under good management.
3. Be in control.
The entrepreneur must be in the driver seat of his business. You cannot trust your
business to somebody who does not own the ideals and aspiration of the enterprise. Be in
control of the operation as you develop people whom you can work with dedication and
with values the same as yours. Invest your time with people who are achievers and do not
lose your valuable time with losers.
THE STARTING POINT TO ENTREPRENEURIAL SUCCESS
1. Start to be on your own.
An individual can never attain success in entrepreneurial activity unless he starts
his own business and releases himself as an employee for the rest of his life. Income from
employment is never enough as it is good only until the 15th and end of the month. Never
have we found an ordinary employee who gets rich except those who are connected with
the government and amass wealth through graft and corruption.
You may start an employee, get new ideas and develop your own entrepreneurial
style from experience and education. Start dreaming and be independent. Learn so save
money and be sure to pit it in proper investment then make it as starting capital to operate
your enterprise. Make that money work for you as you think to make it grow bigger from
the dreams you have crafted out of your imagination for success.
2. Explore the business environment.
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Motivate people to excel and make their desire burning for success with their
accomplishments. Make them partners in decision making and develop their ego needs for
proper recognition. People are your assets that can help you propel success in your
business. Think that improving efficiency and effectiveness will create more space for
growth and development.
4. Have a good accountant or a trusted financial adviser.
While you, as an entrepreneur and busy with the management of the business, a
good accountant or financial adviser is needed to help you out in the financial activities of
the enterprise. They can help you re-invest your money to other profitable operation.
While trust and confidence can be given, you must also have the knowledge of the
entry in financial statements. Develop control procedures that you are still in command in
approving transaction involving money and its disbursements. While you economize your
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expenditure, be sure that every peso is spent wisely without sacrificing quality in products
or service.
5. Seek the advice of professionals.
You are not a superman to know all the legal and other matters related to the
operation of the enterprise. Seek the services of a legal consultant on matters with legal
implications. Have your income tax prepared by good accountant lawyers or certified
accountant on matters with legal implications. Have your income tax prepared by good
accountant lawyers or certified accountants that know how to deal with government
regulating body in terms of tax payments.
4. The entrepreneur is self-assured.
The entrepreneur could not easily be rattled by problems or uncertainties. He has
great trust in his capability to develop new things.
5. The entrepreneur seeks others’ opinion or makes researches.
He believes that a person who asks questions could only be fool for a minute but
one who asks no question could be fool for a lifetime.
ENTREPRENEURAL MANAGEMENT DEMANDS
PROFILE OF A SUCCESSFUL ENTREPRENEUR
Many successful entrepreneurs in the Philippines and those in foreign countries
are not making of known schools of management. Most entrepreneurs came from scratch
and have acquired managerial expertise in making business empires through shared hard
work and dedication. They possess characteristics and intelligence to make things happen
rather than wait for things to happen.
Successful people in the field of business are creators of things with difference.
They are no ordinary Juan Dela Cruz who we can be seen around the corner.
Most successful entrepreneurs are described to possess the following profiles.
1. The entrepreneurs has strong desire for independence.
1. The entrepreneurs is alert to opportunities and perceptive to make things happen.
The entrepreneur looks at things much ahead of other people. He sees things in
different way and develops strategies to make things happen the way he perceived it to
be.
An entrepreneur would not like to be attached to his employment. He seeks
independence and strives to develop his own business.
2. The entrepreneur develops strong drive to succeed.
2. The entrepreneur has the health and endurance to work long hours
Success is for people with the profound need to achieve their dreams and life
aspiration. Achievements are the ego of people with the inner desire for independence.
The dreamer entrepreneur could not stop working until he finds solutions to his perceived
idea.
3. The entrepreneur has strong determination in decision making.
3. The entrepreneur of flexibility and change.
The entrepreneur does not have a one-track mind. He finds new avenue or course
of action as he senses some danger zone with on his plans and programs.
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The strong personality of the entrepreneur carries with it the power to make
decisions. He is aware of developing new markets and creates new things to satisfy
costumers’ needs and wants.
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4. The entrepreneur develops feedback mechanism for results.
The development of feedback mechanism is important factor in the development
of successful business entrepreneur. He goes back to where he starts and finds out things
the way they are.
5. The entrepreneur is a result-driven individual.
Profit is the result of accomplishment. His achievements are the driving forces that
keep him awake for more opportunities.
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CHAPTER 2 ECONOMIC DEVELOPMENT OF ENTREPRENEURSHIP AND IT’S
COMPETENCIES
a. Love for imported products
The country’s colonization for centuries has developed in the Filipinos a culture of
dependence and love for foreign products. We still feel that imported products are
superior in quality and we look upon our own products as inferior.
LEARNING OUTCOMES
1. Describe the Philippine economic landscape in the present time;
2. Explain the different factors in determining economic growth;
3. Examine the contributory determinants in the making of an economy;
4. Discuss the role of employment as a contributory factor in economic development; and
5. Explain entrepreneurship and socio-economic development.
b. Our values of BAHALA NA
A true Filipino entrepreneur will not put his destiny in the hands of the BAHALA.
He must act with strong determination and push for development of his ideas. Innovation
and the creation of more goods and services are in the hands of an entrepreneur who has
the ability to make new and innovative products or create a new channel of their
distribution.
c. Our crab mentality
PHILIPPINE ECONOMIC LANDSCAPE IN THE PRESENT TIME
The Philippine Economic landscape remains to be the spring board of questions
when economic development is the focus of discussion. The leaders of this nation, aim
greatness for the Filipino people especially during the time of election.
1. Poverty is the making of its people and the kind of leaders that holds the wheels of
economic fortune.
2. Population explosion is another factor that contributes to the poverty of our nation.
Crab mentality is the action of people to pull down others who are about to get
out of the verge of poverty and reach for their success. Enviousness is the making of people
who could not think better for himself. There are many of us who destroy others yet when
we look at the mirror we are not better than them.
d. The MAÑANA HABIT
MAMAYA NA or BUKAS NA is a culture that is brought to us by the colonizers who
were fond of SIESTA after lunch time. We take time in stride wasting time. The real
entrepreneurs do not believe in siesta as they keep working until things are done according
to their plans.
FACTORS IN DETERMINING ECONOMIC GROWTH
e. The value of time
The following factors are contributory determinants to our slow growth in
economic development as a nation.
1. The Filipino values and culture.
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Relative to above discussion, is our lack of value to the precious time given to us,
24 hours a day and 364 days in a year. We are always late in the starts of the program,
coming to our classes, attending to office work and even in important meetings and
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appointment. WE take all the time in our hands, not thinking that the meaning of progress
rest in our value of this precious of time. f. Our values of HIYA
HIYA could be a positive value in dealing with business condition. It could be a
propelling reason for us to create better service and proper dealings in business
transaction. There are still many of us who make shortcuts in business dealings. Good in
its face value but with hidden agenda of fraud and deception.
g. Fiesta and social occasions
The celebration of Fiestas and Saints that we inherited from the Spanish colonizers
could be another factor in the slow development of our economy. People especially in the
country side would have all their savings spent in a day of the fiesta, entertaining guest,
only to find out the next day that there is no more rice to feed their children.
2. Job opportunities/Employment
Employment opportunities remain to be elusive among Filipinos. The industries in
the economic zones and other urban centers could not accommodate the growing
employable people. Most still receive minimum wages that barely support the needs of
five members of the family.
a. Employment is one great factor in economic development
The entrepreneur provides the necessary work for people that propel the
economic development of the nation. The money in circulation for wages and salaries will
help local industries to develop new products and services that generate more small and
medium enterprises.
shoreline could be developed into haven for fishery development if new methods and
technologies could have been put in place to supply the food of the nation.
3. Availability of Needed Capital
The banks are sources for limited capital for small and medium enterprises. These
resources are available in the banking institutions. The poor people are not aware of these
great opportunities and they do not know how to go about it to avail of the funds.
a. Republic Act 6977, Known as the Magna Carta for Small Enterprises provided the
necessary funds for the development of entrepreneurs in the countryside.
The Law of SMALL AND MEDIUM ENTERPRISES DEVELOPMENT COUNCIL has some
of the important powers that could develop the countryside and those of the local
enterprises described below:
1. To recommend to the President of the Philippines and Congress on policy matters
affecting small andmedium enterprises;
2. To coordinate and integrate various government and private sector activities relating to
small andmedium scale enterprises;
3. To monitor and determine the progress of various agencies geared towards the
development of thesector;
4. To provide appropriate policy guidelines and coordinate frame work in assisting relevant
governmentagencies in tapping of local and foreign funds or small and medium
enterprises;
5. To assist in the establishment of modern industrial estates outside the urban centers.
6. To promote the viability of small and medium enterprises by way of directing or assisting
relevantgovernment agencies in the national, regional and provincial levels towards the
following:
b. Income opportunity in the countryside is still subsistence in nature
Most people are still dependent on cold farming and fishing system. We have not
introduced modern farming technology and the proper culture of our fishery resources.
Our corals and fish sanctuary are damaged by destructive methods of fishing. Our vast
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a. Technical training courses and those related to business operation, like simple
accounting andbookkeeping;
b. Labour and management relation and improve working condition. Product
development and qualityassurance and product diversification.
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c. Improve production techniques and use of technology in production and the utilization
of indigenouscommunity resources and raw materials;
2. The number of employees should not be more than twenty (20) at any time for the
purpose ofundertaking a productive business enterprise that will help the economy in
the area;
d. Provision and assistance in the marketing and distribution of products;
3. The productive enterprises shall be principally engaged in the following activities: a.
e. Provide for concessional interest lower rates financing fees, and incentive for prompt
creditpayments, as well as arrangement trying amortization to business cash flows,
effective substitution of government guarantee cover on loans for barrower’s lack of
collateral;
f. It provides for the setting of a RELIEF SYSTEM for distress enterprises as preventive
bankruptcymeasures and the setting up of insurance against extraordinary disasters;
g. It provided for INTENSIVE INFORMATION CAMPAIGN and ENTREPRENEURAL
EDUCATION (the
intention of which is to give opportunity for all those with entrepreneurial talent and
interest);
h. The law provides easier access and uses of tax credits and other tax and duty incentives
as providedfor in OMNIBUS investment code and other laws;
I. Provision for product research and development and system of experimentation and
access to information on commercial technologies;
B. Republic Act No. 6810 is the establishing the Magna Carta for Countryside and
Barangay Business Enterprises, grating exemptions from any and ALL government rules
and regulations and other incentives and benefits and for other purposes.
The important provisions of this ACT are the following:
Professional Service
b. Retailing
c. Wholesaling or Trading of Commodities, Products, or Merchandise.
Based on the above discussions and the important provisions of the laws mentioned,
entrepreneurial activities in the local levels and the countryside have not developed when
all the opportunities were provided by the government for local entrepreneurs. We remain
to be poor and budding entrepreneurs continue to search for available funds to finance
their enterprises.
Analysis of prevailing conditions and the business laws that grant these incentives
points to following failures in the implementation program:
1. An honest political will to implement the program to develop the countryside and the
localentrepreneur.
2. Vested interest groups take advantage of the program by establishing
NONGOVERNMENT AGENCIESin the disguise of helping the lowly business sector but it
turned out that it is for their benefit.
3. Banks the lending institutions required so many Paper works beyond the
comprehension of smallbusinessmen who don’t have formal training as provided for the
law.
1. To achieve development of countryside business enterprises in the BARANGAY level
through theabsence of BUREITICAL RESTRICTIONS and granting of incentives and other
benefits;
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The entrepreneur mobilizes economic activity as the circulation of money which
pumps up the economic development of the community. Capital investment generates
profit. Profit, in return, is growth in investment base that will propel more business
activities.
5. The entrepreneur creates people empowerment and social mobility.
Entrepreneurial and Socio-Economic Development
The development of the nation economic activity is the making of small and
medium enterprises mostly located in the countryside.
The following are the contributions of the Entrepreneur in our Socio-Economic
Development:
Entrepreneurs accumulate financial resources that give them social power in the
community.
They can afford to buy some personal luxuries of life. They acquire new life style of travel
and pleasure. They make new houses and invest in real properties that make them
respected in the community.
6. The entrepreneur provides healthy competition.
Healthy competition provides people with choices of new products or better
services. Entrepreneur seeks better products and develops new ones that will satisfy their
target costumer.
1. The entrepreneur provides employment.
MANAGERIAL SKILLS THAT MAKES A SUCCESSFUL ENTREPRENEUR
Employments generates income and those employed pay taxes to the government
which in turn gives benefits to the social and educational needs of the greater population.
Being hardworking and industrious are no guarantee in the making of business
activities while they play an important role in the success of the enterprise.
2. The entrepreneur pays taxes.
The entrepreneur has the following managerial skills.
Entrepreneur pays taxes in the form of real state tax, sales tax, import and export
tax, and permits from the local and national government.
3. The entrepreneur provides new lifestyle and pleasures.
Product innovation and development is the making entrepreneurs. Mobile phone
is the newest contribution of the entrepreneur to make a new lifestyle for more Filipinos.
1. The ability to plan and conceptualize.
Conceptualization and planning go together. Good concepts need to be put in the
planning table to avoid the risk factor. The entrepreneur is able to forecast the future by
seeing to it has the risk involve are properly controlled.
2. The ability to organize the resources of the enterprise
4. The entrepreneur improves the capital base of the economy.
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A good business organization is based on around people and resources. An
entrepreneur works with others and needs people with the same values and working
ability. Efficiency and effectiveness in the work arena are the working of people with
dedication and talent to do the job properly.
Managerial Leadership is the ability to plan, organize, direct and control the
organization towards the goals and objective of the organization. It requires conceptual
skills in defining the direction of the business and the development of plans and programs
that will work effectively.
3. The ability to direct and motivate people in his organization.
2. Positive risk takers
People are like machines that need oil that will make them work smoothly and
efficiently and effectively. Machines will bug down if no oil is put into its chamber while in
operation.
The entrepreneur as a positive risk take, enjoys the challenges of putting his money
and time into a test. He calculates the various alternatives open to him and careful in the
choice of actions. The entrepreneur Gather complete data and makes careful analysis
before making decisions.
4. The ability to control.
3. Self-confidence and positive outlook
Controlling the whole operation is a difficult task for the entrepreneur. Safeguards
and control mechanism could put in place with carefully crafted policies and procedures.
Such policies and procedures must be carefully disseminated and understood by all who
will implement them.
The entrepreneur has strong belief in his capacity to make a difference in their
chosen field. They believe that achievements are guiding principles in man’s success as
faith drives them to do better. The entrepreneur believes in the Lord Almighty and that his
talents are God given gift that he must use for the well-being of mankind.
5. The ability to manage time.
4. Innovativeness and forward looking.
Time management is very essential ingredient to the success of an entrepreneur.
Because of the numerous activities to attend to the entrepreneur must be able to log on
his time schedule so that important activities could be attended on time.
The blazing path to entrepreneurial success is the courage to make innovations in
products or service. The entrepreneur refuses to stop at his achievements.
6. The ability to adapt to the changing environment of business.
5. Natural intelligence and decision making skills
Business today is fact changing with the advent of technology and innovation. The
new entrepreneur must be able to adapt to his changes in the business landscape for him
to go with the time of progress and expansion.
The entrepreneur’s natural intelligence is an important requirement in making
effective decisions. The entrepreneur has to make decisions as he cannot make things
happen without making a wise choice of alternatives.
The Decision Making Process:
CHARACTERISTICS OF AN ENTREPRENEUR
1. identify the problem.
1. Leadership and management abilities
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The risk involved in the management of the business has to be identified and
analyzed before solutions could be made. Relevant data and information must be
organized.
2. Gather the data that brought the plan.
Good and intelligent entrepreneur must be able to get the data that brought about
the problem. The solution to the problem is dependent on the data available at hand.
Correct information would give better solution. False are irrelevant data would not give
the best solution.
3. Analyze the data.
Not all information is relevant to the solution of the problem. Some data must be
discarded. The data must focus on the problem at hand.
ORGANIZING THE BUSINESS ENTERPRISE
The prospective entrepreneurs before going into the intricate filed of the business
world should first go into deep analysis of their personal and social attitudes. It is not only
material assets but personal values and characteristics. Before venturing into the field of
business, it is wise to develop entrepreneurial studied that will help determine the
feasibility of the project.
Some entrepreneurs failed because they are “plain copy cats” in putting the business
because the neighbor Juan makes money going into a Mini-grocery. The entrepreneur
must first evaluate his personal interest, experience in the chosen field, the technical skills
as well as his human skills are these are the vital component in the success of business.
Business forecasting the planning skill is another vital component that must be
addressed before making investments. Careful preparation is an essential factor in setting
the enterprise into motion. Investment in money and effort may go to waste without
adequate preparation and careful planning. The loss of money and time must be
prevented.
4. formulating alternative solutions.
The entrepreneur makes various alternative solutions to the problem at hand.
These solutions are subject to a series of analysis and he may need outside opinion.
5. Selecting the best alternative course of action.
After all the alternative courses of action hand been analyzed, the entrepreneur
makes the decision. The decision has to be implemented with the less possible risks in
terms of money, time and effort.
6. Implementing the best alternative.
The modern entrepreneur utilizes group efforts in solving business problems.
Problems and Solutions are best arrived when people who will be implementing the
decisions are properly consulted and their opinions and ideas are taken into account
before the final decision is implemented.
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ENTREPRENEURIAL STUDIES
The entrepreneur must see for himself the kind of management control and how
the business will be able to generate his projected profitable investment. He sees the wide
open market of opportunities and the possible problems before he plunges into the
intricate operation of the enterprise. Wise investment through a careful analysis of the
business environment would minimize business failures.
The following steps in the business formation have been done by entrepreneurs
that applied a more specific study of the business conditions. A business project either new
or an expansion, undertake a careful planning of the project which will serve as a guide in
the implementation.
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CHAPTER 3 DEVELOPING A BUSINESS PLAN
LEARNING OUTCOMES
Before venturing into the field of business, they new entrepreneur should look into
the following factors:
1. Know your product or service.
1.
Discuss the factors that should studied before venturing a new business;
2.
Explain the importance of environmental scanning;
3.
Explain the importance of selecting the proper business location;
First, one must believe on the product or service that one will offer to the
costumer. If it is a new idea or concept, then one must be able to convince that have a
unique product that would satisfy costumers’ needs and wants.
4.
Discuss the important role of SWOT analysis before starting the business;
2. Analyze the market potentials.
5.
Discuss the importance of a business formation;6. Give the different phases of a
business plan; and
7. Prepare a comprehensive business plan.
The entrepreneurs are not discouraged with the constraints along the causes of
our economic malady. It should be turned into positive not and new solutions must be
made to make them different from other individuals. There are lots of opportunities
entrepreneurs who are hardworking, creative and resourceful. Business opportunities are
wide open for people who would like to invest their money into gainful business activities.
They need to find out this new venture that interests them and how they can harness their
technical knowledge of the trade.
The search for business opportunity should start with the individual entrepreneur.
He has to find out the skills and talent for that particular type of business activity. His talent
and skills are beginning of his great investment in the trade. He must have the passion for
independence and willingness to work hard and long to keep up with his dream of being
an entrepreneur.
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The costumer base will determine the success of one business venture. The wider
the market potential, the more changes of growth and success.
3. determine the marketing strategy.
A unique product or service needs effective distribution strategy to get costumer
into the basket of demand potential. Continues supply determines product growth.
Costumers must have access to the product when they need it.
4. Know the competitors.
In launching a product existing competitors, one must know their strengths and
weaknesses. Develop new product and marketing strategy and turn their weaknesses as
new opportunity for the product.
5. Do not set your laurels.
The landscape of business is continuously changing. Your initial success in your
business activities needs more proactive analysis for expansion and growth and overcome
possible competitors. Develop advertising and promotion strategy to penetrate the wider
market.
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ENVIRONMENTAL SCANNING
The environmental of business is vast with opportunities and the entrepreneur
must have a greater look into this potential as well as the conditions prevailing in the
community. The entrepreneurs’ ultimate objective in diving into the business world is to
make profit. Investment in money and effort should generate financial gain for the
entrepreneur. To generate income for his product of service he must be able to deliver
customer satisfaction.
The following factors are contributory to the development of customer
satisfaction:
d. Income Level of Prospective Customer – The type of pedestrians and the income level
of costumer must be taken in to account. A good barber shop or a beauty salon with
facilities of air conditioning units and other amenities need to be located in the community
with higher income bracket.
e. Prospective Sales Volume – High density sales volume need to be located in shopping
areas where customers converse to buy essential goods. Lower sales volume could be
located in the community or secondary areas like subdivisions or the BARANGAY.
f.
Municipal or City Ordinances including taxes and fees – The location must not violate
city or municipal ordinances and the taxes and fees must be reasonable for the owners of
business. Excessive taxation will not encourage the growth of business in the area.
1. Business Location for Small Entrepreneurs
A retail outlet would need a site that is convenient to prospective costumer in
terms of parking space or availability and transportation. A restaurant or an entertainment
center would need ample parking area where costumers would not worry on where to
leave their cars while enjoying their stay. The same could be true with a grocery store.
In choosing the location, the following factors must be looked into by the entrepreneur:
a. Rent and Space – the cost of rent is a regular monthly expense and it must be
sustained with the possible income that will be generated. It is the operating cost that will
be added to the price to the product or service. The price input must be competitive
enough with those in the same location.
g. Location of the Areas – The area must be free from floods and other calamities that
will endanger the business. It must be free from fire hazards or other environmental
factors that will disturb the operation of the business.
2. Location for Small industrial Plant or Manufacturing Facilities
Environmental factors in locating a manufacturing plant or industrial facilities
need to be studied carefully as plant location is a great factor in the investment of funds
and its profitability in the long run. The industrial facility must be suitable to the kind of
operation. It must comply with government zoning regulation related to population and
environmental laws.
The following are important factors to consider:
b. Terms of Lease of Merchandise – The term of lease must be studied carefully as some
owners of space might take advantage of lessee. The owners increase the rent of the space
when the business condition becomes favorable and then take over the business.
c. Type of Goods or Merchandise – A convenient store is located where there are
pedestrians passing by. They need quick and easy access to the store and would not spend
a lot of time to purchase their goods.
a. Land Area – The contour of the land, its size, and shape must be suitable to the plant
site. It must be free from floods or other environmental hazards that will disturb operation.
b. Facilities and Expansion – The land area must have ample space for plant expansion
and provisions for parking facilities for customers and employees.
c. Power and utilities – availability of power supply and the cost of electricity involve in
the operation are great factors in the production of goods. Continuous power supply is
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needed to keep the plant in operation for its target production. Water supply is also
needed and the proper disposal of waste must be put in place to comply with
environmental law.
d. Building and Other Utilities – The building must be within the restrictions code of the
municipality or city. The utilities like canteens and other employees’ facilities must be put
in place in compliance with the labor code. Sidewalks and gutters are important
component in employees’ safety while in the plant site. Fire safety and hazards signs are
mandatory requirements.
e. Plant Site Accessibility – The plant site must be accessible to public or service
transport for its employees and valued customers. It must be near highways or
expressways to provide ease in travel time and reduce cost in he transport of raw materials
and finish product. Delay in transport systems and added cost that must be avoided.
c. Skilled Workers must be Available- Technology must have the component of
skilled workers that shall operate the machineries and other equipment. They may
need training in machine operation as quality products also come from skilled
workers.
d. Capital Investment in Machinery and Operating Expenditures – A starting
venture may have little investment in terms of machinery and equipment but
starting with small capital should generate profitable operation.
e. Expertise and technical Skills of the Management Team – A good product is
the making of well-conceive idea of the management team. Improvements in
products quality is a continuing process and it must be the management objective
to get customers patronage.
2. Characteristics of Weak products and Weak Management
STRENGHTS, WEAKNESSES, OPPORTUMITIES, AND THREATS (SWOT)
SWOT ANALYSIS is an entrepreneurial tool in the profitability of the business
operation. Opportunities carries with it some risk involved and this should be looked into
carefully. The strengths and weaknesses are internal factors to the entrepreneur while the
opportunities and threats are external factor.
The product must be evaluated along the following areas:
1. Product strength in the market must have the following:
a. Available technology in product processing – Technology is an important
component in producing the product as the economies of scale determines the
price index. The more products are produced, the lower the price it can be offered
to the market.
b. The Source of Raw Materials must be Abundant and at Lower Price – The
constant supply of raw materials is an important factor in the production of the
product. Cheap raw materials that are processed into good products would be able
to penetrate the market as its price could be competitive.
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a. Poor quality and High Price – the entrepreneur should not launch a
poor product in the market as it will surely fail to advance in the sales and
profit. It is not wise to invest in the production of poor products.
b. Product design and Appeal – Product design should appeal to
customers demand. Poor design of the product is making of people with
no technical expertise in handling the customer wants in terms of
features. Artistic designs are conceptualized and approved by the possible
users.
c. Product Cost – Production costs is the price determinant.
Entrepreneurs cannot make maximum profitability on products whose
production cost cannot survive market competition.
d. Supply and Demand – Intermittent supply to the market will make
customers shift to other products. The supply chain management must be
put in place to make products available to valued customers.
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e. Weak product Management – weak management is created when
people at the top of the organization fail to sustain a vigorous effort for
expansion and growth when management sets on his initial laurels and
ventured on vices and other extra activities that will lose his total
investment.
b. the supply of raw materials will be limited as other competitors will be
getting the samesupplier – As demand for raw materials become competitive in
prices, production inputs go higher and this will affect product pricing. Increased
production cost means changes in product price.
c. The Emergence of Leftwing Labour Unions – Many companies close shops
with the advent of labour unions with leftist philosophy as they want more wages
and benefits that the company could give.
3. Sustainable Product opportunities in the Market:
a. Product Demand – Product demand is the greatest opportunity of an
entrepreneur. Demand is the essence of profit and this must be sustained by the
entrepreneur before wide competition appeared in the market place.
b. Presence of Poor Quality in the Market – The presence of poor quality
product in the market place is an opportunity for the entrepreneur. The
alternative is on the side of the entrepreneur to supply the market with quality
product and sustain patronage.
c. Government Policies and Support – The government support to local
entrepreneur is an opportunity for grater expansion. The government should
support the local entrepreneur in terms of taxes and government activities.
d. Liberal Credit terms and Interest Rates – Liberal credit terms by banks and
other government institutions will generate expansion for the local entrepreneurs.
Banks and financing institutions serve as conduit of business in their expansion
program.
4. Treats to product and Market expansion:
a. Entrance of competition – The entrance of many competitors in the market
place will definitely give problem to entrepreneurs. Competition will reduce
profitability as the price has to be competitive with those in the market place.
d. The Presence of Double Taxation – The government already imposed a lot of
taxes to the entrepreneur. Honest businessmen could not profit in their
operations as there are lots of taxes that government would like to collect.
e. Peace and Order in the Area of Business Operation – Peace and order are
components of business growth. Criminality and killings would drive away
investors. Killing competitors by those ridding in tandem syndrome scares people
to go into business. Hold up gangs and robbery syndicates are not good to business
growth.
f.
The cost of Power Supply – Cost of production increases with the cost of
utilities like current and water. The government private partnership in the
operation of power and water utilities has increased the cost of power by about
400 percent.
The Entrepreneurs should look deeper into the following areas:
1. The management Team
Management must be able to set the direction of the enterprise with a clear
MISSION and VISION as the guiding tool for its plans and programs. Plans and programs
are tentative activities that will make a definite step towards the accomplishments of
target objectives. Objectives set into motion and goals of the enterprise to profitability.
The technical and manpower complements are important factors in the success of
the business.
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The entrepreneur cannot do the task alone as he needs people with the same outlook and
perseverance as he has, especially at the early stage of the business. They must work hard,
persistent and must focus on the vision and mission of the business.
2. The Production Process
Product specification must be maintained according to product standards that are
acceptable to costumer. Product quality is now the name of the game in business.
Customers are now aware of product quality and they must be able to get their money’s
worth. The physical properties must be attractive and mechanical or electronic component
must appeal to customers demand.
The management must look up into cheap available raw materials in the
production of goods. Good quality materials should not be sacrificed in terms of price as
poor quality will affect the production of quality products. Quality and price must be looked
into carefully by the management.
3. The Marketing Program
The marketing program needs demand analysis for the last 5 years as to the major
users of the product. A new product would need customer view point before it is launched
into the market. Product samples may be necessary at the initial stage so that customers’
tastes and preferences could be considered before mass production.
business empire as they knew how to invest their money in profitable operation. Savings
and wise investments are characteristics of successful business entrepreneur.
The internal source of capital will come from the savings and assets of the starting
entrepreneur. Liquid assets in cash or banks are the usual starting point. Real properties
and personal properties may be put in as guarantee for loans that may be used for
operating expenses.
THE IDENTIFICATION OF BUSINESS OPPORTUNITY
The entrepreneur’s desire to establish his business is visible idea yet it must come
into a test whether it is a visible business option. It needs a careful analysis of opportunity
evaluation. The entrepreneur who fails to evaluate his noble idea because of his eagerness
to plunge into the business world often discovers later that he has more problems to solve
and at times abandons the idea after spending his time and money.
The following steps will help the prospective entrepreneur evaluate the idea
before going into business.
1. The Starting Point of Conceiving the Idea of the type of Business
The demographic profile of the target customer must be taken into accounts as
the success of the product depends on the target customer. The target market must be
specified accordingly and their needs and wants must be satisfied. Customers would like
to have a lot of choices yet when they like product we turn them into regular customer.
4. The Financial Management
Venturing into a business needs financial resources. Money is needed to finance
the activities of business. Whatever capital is available determines the kind of business
operation. Many small entrepreneurs start with limited capital but they were able to make
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Conceiving a new product is a process of innovation and when this come into a
reality, the product must different from an existing product. New product needs customer
evaluation and his process needs exposure to the target market as to its economic value.
This new product must satisfy customers’ needs and wants. It needs market exposure and
public acceptance before it could take off the ground.
2. The Technical Feasibility and Time Frame
An idea is not only concentrated on one entrepreneur. The entrepreneur might
have conceived an idea that is also in the mind of other person. The case of cellular phone
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is a concrete example. Many companies tried the venture but the leader in the industry is
till NOKIA. Others begin to follow the strong completion emerged in the process but the
leading brand has taken off the ground before others followed tailing behind.
organizing, directing and controlling not only the people but also the resources under his
disposal.
2. The Desirability of the Business Concept
TIPS IN CHOOSING THE BUSINESS NAME
1. Easy to recall or remember – The business name must be understandable so it is easily
stored in the memory.
2. Pleasant meaning creates pleasant feelings – It produces positive or favorable feeling
upon saying or mentioning to the public.
3. Easy to pronounce – the business name must be cited as freely as it can be.
4. Easy to spell – The business name must be simple. Words that are used in everyday
communication will be an advantage.
5. Related to the product – The business name must describe the product. It represents
the features of the product.
The desirability of the business concept is usually born by the experience of the
entrepreneur from his previous employment or exposure. The take-off the business comes
from the idea generated for the prospected income.
3. The Feasibility of Implementation
The business project must be feasible whether it is an entirely new venture or an
expansion. It must be able to produce or sell products or services for an attractive rate of
return of investments to the entrepreneur. It requires intensive planning and analysis of
the market conditions prevailing in the community.
ORGANIZING THE BUSINESS ENTERPRISE
4. Forming the Business Enterprise
The prospective entrepreneurs before going into the intricate field of the business
world should first go into deep analysis of their personal and social attitudes. It is not
enough that you have the capital and resources to go into business as it involves not only
material assets but personal values and characteristics. Before venturing into the field of
business, It is wise to develop entrepreneurial studies that will help determine the
feasibility of the project.
The business form has to be studied accordingly to the availability of capital
investment that will go into the operation of the enterprise. The entrepreneur should also
look into his personal capability or running the business either alone or with a partner.
THE EVENT FORMATION PROCESS FOR ENTREPRENEURS
The analysis of the following steps will benefit the entrepreneur before going into
the field of business:
1. The Change in Life Path
The entrepreneurs must conceive the idea that going into business would mean a
great change in his lifestyle and working hours. He must be able to take responsibility and
lead others. He must be able to take the driver’s seat of the business in planning,
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5. Stability of Business Income and Profit
Profit and Business Income are two important factors that encourage an
entrepreneur to make the stability of the business become possible. An aggressive
entrepreneur would like to expand his business operation to generate more profit.
Money is the greatest factor in the operation of the enterprise that without it business
operation could not take off. The important savings of the entrepreneur must be put in
wise investments free from excessive risk. Business risk can be prevented or avoided if
properly planned and conceptualized.
BUSINESS PLAN
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An entrepreneur must see for himself the kind of management control and how
the business will be able to generate his projected profitable investment. He sees the wide
open market of opportunities and the possible problems before he plunges into the
intricate operation of the enterprise. Wise investment through a careful analysis of the
business environment would minimize business failure.
The marketing and Distribution Study shall deal with product demand analysis. It
should show the competitive product advantage over existing product or service and
designing the marketing program of the enterprise. It should analyze market share and
system of promotion, distribution, advertising media and other marketing mix strategies
to ascertain product market acceptance and patronage.
The following steps in the business formation have been done by entrepreneurs
that applied a more scientific study of the business conditions. A business project either
new or an expansion must undertake a careful planning of the project which will serve as
guide in the implementation.
3. Production and Technology
In creating or searching to business opportunities, one must consider the following
factors:
1. The needs of the society
2. Availability of capital resources
3. Business inclination
4. Clientele
5. Availability of raw materials
6. Human resources
7. Nature of product or service
Production and technology Studies refer to the need in making product or service.
This refers to the machineries, plan location, and other technical aspect in the making of
the product. It shall describe the physical layout of the building and the equipment that
will be used in production. For services, it shall specify the equipment that will be used and
the manpower needed to render the activity.
4. Financial Management
The Financial Management aspect refers to the capital investment and sources of
funding the operation of the business. It shall show financial projections over a period of
one year and five years program and shall determine the rate of return on investments. It
must be able to show the return on equity and break even sales as well as pricing sensitivity
test.
GENERAL FORMAT OD A COMPREHENSIVE BUSINESS PLAN
BASIC PHASES OF BUSINESS PLAN
I. INTRODUCTION
1. Management Structure and Component
The introduction contains the rationale and the background of the study
undertaken. It should include the importance of the project and the proponent’s
background and their desire to establish the business.
It is designing form of ownership of the business which at the outset is known to
the investors. It shall also define the organizational structure of the organization and the
operational system that must be put in place. It shall define the duties and responsibilities
of the people in the organizational structure. Management should organize different
operating departments and delegate corresponding authority.
2. Marketing and Distribution System
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II. PROJECT SUMMARY
A. Name of the Firm
B. Business Location
C. Brief Description of the Business
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1. Brief history or how the business was organized.
2. Highlights of the findings in every phase of the business study.
III. MANAGEMENT AND PERSONNEL COMPONENTS
IV. MARKETING STUDIES
A. Market Profile – This refers to the market segmentation for the distribution of the
product or service. The study must cover the possible users of the product and how to
reach the particular market segments.
B. Demand Analysis
1. Projected consumption in the first year of operation, then Five years and ten years
operation.
2. Major segment users of the product and their location.
E. Program Analysis of Marketing Strategies
1. Geographic Segmentation Strategy – This refers to the place of target market
and the approaches to penetrate the market niche.
2. Psychographic Strategy – The educational background and the lifestyle of target
market.
3. Demographic Segmentation Strategy – It means the target market as sex, age,
Income and the other personal factors of the target market.
4. Pricing Strategy – This has something to do with the price index of any pricing
strategy that will attract customers.
5. Channel of Distribution – The choices could be retailers, wholesalers, dealership,
franchise, or direct marketing.
6. Promotion and Advertising – Media network, personal selling, billboard, or any
media penetration strategy.
V. PRODUCTION
C. Supply Analysis
1. Source of Product Supply.
a. Foreign Suppliers
b. Local Suppliers
2. Factor Analysis of the past and Future Supply Chain.
D. competitive Analysis
1. Selling Price – This refers to the selling price of the product.
2. Competitions – It refers to the competing product in the markets as to its quality
and market acceptability.
3. Distribution and Cost of Transportation – It refers to the transfer or movements
of products from the producer to the ultimate user. The usage of different
vehicles and ways to transport the product should be easily defined.
4. Channel of Production Distributions – A mean of reaching the target market or
it is the method or strategy to penetrate a particular market segments.
5. General Competitive Practice – It is the analysis of how competitors distribute
the product to existing users.
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A. Product Specification – It tells about the product or service that the entrepreneur will
offer to its target market. It is an elaborate presentation of the properties of the products
and the benefits related therein. It is the service that will be offered to the target
consumer.
B. Production of Process – It is the detailed layout of the production process as the
products hoes into the production line indicating the flow process, materials and
equipment to be used and normal time table that the product will be finished.
C. Plant Related Capacity – This refers to the volume of production per shift per day or
a monthly basis considering target market consumption. It must also make projections for
five years forecast and the technical factors involved.
D. Machinery and Equipment – It involves the kind of machine to be used, its sources,
spare parts, working guarantees, rated capacity per day, and the cost estimates involved
in its purchase.
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E. Plant Location – A drawing or plant location and the vicinity map as to its accessibility
to supply or raw materials, and the transport of finished product to the market. It must
show advantages and other plus factors for employees and other services.
F. Building and Facilities – It must describe the type of building that will be constructed
or sketch of the building plan, electrical plants, drainage, and other utilities. It must contain
the cost estimates involved and the total floor plan.
G. Raw Materials – It deals with the raw material requirements and its specification, its
source, cost and terms of payment, availability and the possible long term supply. It must
also show alternative suppliers of other sources.
H. Power Supply and Utilities – Utilities refer to the supply of electricity, water, and its
availability in the processing of the product. It also has to do with environmental disposal
of waste and compliance with government requirements. Drainage system has to comply
with sanitary requirements imposed by municipal and national laws.
I.
Product Cost – This refers to the direct labor and administrative cost in the processing
the products. Unit cost must be computed as basis for pricing the marketing strategies.
d. Production Costing, Administrative Expense and Cost of Sales and other
ProjectedFinancial Expenses.
5. Projected Financial Estimates showing return on investments, return on equity,
break-evenanalysis, price analysis.
B. For Existing Project
1. Audited Financial Statement – last 3 years
a. Balance Sheet
b. Income Statement
c. Cash Flow
2. Fixed Assets, Capital Investments, Depreciation used in Capital Assets.
3. Tax Assessment, Liabilities, and other Payables.
4. Financial Trends and Ration Analysis.
5. Financial Cost for Administrative Expenses, Production and Selling Expense.
6. Financial Projection for the Next Five Years.
7. Financial Analysis for Return of Investment, Return of Equity, Break even
Analysis, ProductionVolume and Price Analysis.
MICRO BUSINESS PLAN
VI. FINANCIAL STUDIES
A. For New Business Venture
1. Total Project Cost – This has to do with the entrepreneur fixed cost and the
working capital inthe operation of the business.
2. Capital Investments Required.
3. Pre-operating cash flow and its relation to time-table – financial projections for
the first yearof operation, for the five year operation in projected balance sheets
and income statements.
4. Supporting Schedules in the Financial Statements and Income.
a. Collection Period for Projected Sales or Revenue
b. Inventory Levels
c. Payments for Purchases and Expenses
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The major objective of business plan is to assess, examine and analyze the viability
or feasibility of the study. Business plans is the ticket to success. It is also a blueprint to
success and document details what you plan to do with your business, according to
Elizabeth Manuel, Chief of the Trade Business Management Division of the government
run Philippine Trade Training Center.
A. Executive Summary
Synopsis of your business plan so ideally, this part should be written last in order
to include all the necessary information and target points of the document. You must
possess the ability to predict the financial path or your venture in correlation to the present
economy. If your external analysis tells you what you can and cannot do, your internal
analysis tells you are able or not able to do.
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B. Marketing Plan
Push or pull, you must be able to tell how fast or slow tour product will move in the
market, whether it would make use of a push or pull strategy or both. The push strategy
tells how I will move my products to the marketplace, while the pull strategy tells how I
will make customers ask for my product. The pull strategy promises, the push strategy
outlines what makes the business stay.
C. Operations Plan
Ernesto Pineda, director of the UP, Institute of Small Scale Industries, Defines the
operations plan as the company’s expected sales for the coming year and the costs of
running the business in general. It keeps track of the business performance for its
conception down to its purchase. Determining the number of people to hire to keep your
perspective business running smoothly is also a must. Managing your inventory and
computing the production costs ate crucial at this point so you can project possible profits.
D. Financial Plan
According to Dr. Ferreria, “you financial plan must show much money is needed to
generate sales; how much is going to be spent on a particular item; and how much will be
borrowed and paid” The income statement describes your company’s ability to generate
cash by computing for sales and expenses. The balance sheet shows your financial
condition by accounting for your assets (cash, receivables, inventory, equipment,
property, investments) and liabilities (accounts payable, salaries, taxes, and bonds, notes
and mortgage payables).
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CHAPTER 4 IDENTIFICATION OF TARGET MARKET
LEARNING OUTCOMES
1. Target market
2. Frequency of product purchase
3. Tendency for replacement needs versus expansion purchasing process
4. Estimates of market size, initial targeted geographic area, enterprise’s targeted market
share.
1. Identify the target market;
2. Determine the types of product; goods or services, consumer or industrial;
3. Relate the tips on identifying market problem;
Business-to-consumer markets include:
4. Solve research problem; and
5. Analyze market needs and barriers to entry.
Target market is the buyer of the product. According to Philip Kotler (p.d),a target market
is a welldefined set of customers whose needs the organization plans to satisfy. Business
sectors identify and describe them as the ultimate and final user of the product. Here, it
describes the potential customers as well as where, how, and why they are likely to be
found. The topic on how large the potential market can possibly grow as also discussed
here, including how to share of that local market can help in the expansion of this
study/business proposal.
The objective of this part is to determine which part of the total potential market
will be served by the firm. Considering that the market must be defined in terms of size,
demographics, growth prospects, trends and sales potential market and the total
aggregate sales of the competitors must be presented.
DESCRIPTION OF THE TARGET MARKET
1. Distinguish or determine the consumer from the customer.
2. Explore the benefits of the proposed product to the target market3.
How and why would the target market buy the product or service?
4. Is there a potential to increase the target market?
Business-to-business markets include:
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1. Demographic factors, such as income level, age range, gender, educational level,
ethnicity of the target market;
2. Psychographic factors of the target market;
3. Behavioral factors such as frequency of product purchase and shopping behavior of the
target market.
Categories of Consumer
1. Price Shoppers – This group is interested in the best deal for a product. They are
commonly called as PRAKTIKAL and price conscious.
2. Brand-Loyal Customers – This group believes that their present brands are superior
to others and are willing to pay fair prices for products just to acquire it.
3. Status Seekers – People who are interested in prestigious or called (signature) brands
or known product categories and willing to pay at any price.
4. Service or Feature Shoppers - This group seeks high value on customer service and
product features and will pay for them.
5. Convenience Shoppers – People who value nearby locations, long store hours and are
willing to pay for easier shopping.
NEW CONSUMER REALITIES IN 2016
(Source: ADOBO Magazine Issue 61 Jan-Feb 2016)
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According to the survey, 72% of consumers say they will respond to call-to-action
in marketing messages they receive within sight of the retailer and 23% of retail
marketers use some type of geo location marketing in their mobile marketing.
By conducting new market research projects, learner can discover problem or
opportunity. One could discover any of the following factors through problemidentification research:
Seamless Sensation – The online and offline experiences are intertwined as
consumers navigate their daily lives seamlessly, resonating with both physical and the
digital realm.
1. Brand image is the impression on the consumers’ mind of a brand’s total personality.
It developed over time through advertising campaigns with a consistent ideas, this
authenticated through the consumers’ direct experience.
2. Market characteristics describe attributes of the buyers in making decision related in
purchasing a certain product.
3. Market potential is the estimated maximum total sales revenue of all supplier of a
product in a marketduring a certain period.
4. Market share is a percentage of total sales volume in a market captured by a brand,
product or company.
IDENTIFY THE MARKET PROBLEM
In building product, entrepreneurs can meet customers’ needs. In identifying
market problem, the following can be considered:
1. Existing customers are the people who have already purchased the product you are
selling.
2. Target market users are the people in your target market who are not currently looking
for a solution.
3. Prospects are the people who have not yet purchased your product but have n intention
to B.
TIPS IN IDENTIFYING MARKET PROBLEM
1. Focusing only on innovation and competition
2. Focusing only on customer
3. Focusing only on revenue
HOW TO EVELUATE MARKET PROBLEMS?
PROBLEM-SOLVING RESEARCH
1. Distribution Research: It determines on how to transfer the product from the
manufacturer to ultimate user
2. Market Segmentation: They are group customers by similar characteristics or similar
purchase behaviors.
3. Pricing Research: It determines the ideal price for the product. Setting the price for the
product is one of the most important marketing steps.
4. Product Research: It tests the new or revised products or completing test marketing.
5. Promotional Research: It determines the best research in the area of disseminating
information.\
MARKET NEED ANALYSIS
1. Consider if the market problem is urgent, if yes, consider necessary actions by identifying
alternative courses of action (ACA) then enumerating their advantages and
disadvantages.
2. Evaluate if the market problem is pervasive or easily diffused, if yes think for a temporary
solution.]
3. Determine if the buyers will pay to have this problem solved.
PROBLEM-IDENTIFICATION RESEARCH
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Define the Market Need for New Business
In analyzing the market need, the following questions should be asked?
1. Who will get interested in my product?
2. Who does the market need or want?
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3. Who is buying the product? What and how much? Or how, where and why are they6
buying those goods or services?
This is the type of customers that are focused within the market. It focused on the
more qualitative side of the market analysis by looking at what drives the demand.
Determining the Marketability of the business is typically done in the context of
creating a business plan and performing an analysis of the competition. It requires
research in the area for marketability Consider whether the business offers a new
solution to an old problem or complements an emerging trend. Untapped markets that
are profitable are few. Understand the benefits that the product or service offers
compare to others. Focus on ‘benefits’ of what your product or service does.
3. Market Need
Investors must determine the needs of the market through analysis based from
research conducted focusing on their needs. Identify what the customer wants to classify
their needs.
4. Competition
MARKET ANALYSIS
A market analysis is a quantitative and qualitative assessment of a market ability
to respond positively. It looks into the size of the market both in volume and in value, the
various customer segments and buying patterns, the competition, and the economic
environment in terms of barriers to entry and regulation in the industry.
HOW TO DO A MARKET ANALYSIS?
This is to show the investors that company knows their target market. It is large enough
to build a sustainable business.
Determining the competitor’s positioning and describe their strengths and
weaknesses. Analyze competitors’ angle to the market In order to find a weaknesses that
company will be able to use in its own market positioning.
BARRIERS TO ENTRY
These are the hindrances or something material that block or intend to block
passage. It is a natural formation or structure that prevents or hinders movement or
action or even separates the new businesses.
The following activity can be recommended:
1. Demographics and Segmentation
Here are a few examples of barriers to entry:
Demographics is the statistical characteristics of human population (As age or
income) used especially to identify markets; a market or segment of the population
identified by demographic.
Segmentation is the process of dividing into segments with similar characteristics.
Markets are needed to slice it into different segments.
2. Target Market
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1. Investment (project that requires a huge investment)
2. Technology (application of the combination of scientific and engineering knowledge)
3. Brand (the huge marketing costs required to get to a certain level of appreciation)
4. Regulation (licenses and permits in particular)
5. Access to resources (exclusivity with suppliers, accessibility of suppliers)
6. Access to distribution channels (exclusively with distributors, availability of
intermediaries) 7. Location (place, venue where the business is located)
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CHAPTER 5 BRANDING STRATEGIES
LEARNING OUTCOMES
1. Define the meaning of brand name and product branding
2. Determine the appropriate strategies in branding and reasons for the existence of
brands
3. Discuss the structure of product, its prototype and patenting
4. Evaluate the prototype using qualitative evaluation technique
Advantages of Branding
1. Brands make it easy to identify the product or service.
2. It assures the buyer that they get the same quality of products.
3. It reduces price comparison.
4. It adds prestige to the product of the seller.
5. It helps in product market segmentation.
Selecting a Good Brand Name
1. It should suggest about the product or service
2. It must be easy to pronounce and remember
3. It must be simple and short
4. It must be distinct or different from others
5. It must be adaptable to new company product that may be added
6. It must be capable of registration and legal protection
BRAND NAME
BRANDING STRATEGIES
Based from Dr. Pereda from his book Principles of Marketing, a brand is name or
mark that is intended to identify the seller’s product and differentiate it from the product
of the competitors. A brand name consists of letters, words or numbers that can be read
or verbalized. A brand mark is the part of the brand that appears in the form of symbols
designed in distinctive lettering or colours.
The producers and middlemen are partners in the distribution of the products to
their target consumers. Their partnership is a long-life process of mutual concern and
cooperation for the development of customer satisfaction. Producers and middlemen
alike must choose strategies with respect to branding their product mixes and branding
for product saturation.
A brand mark is recognized by sight but cannot be expressed. A trade mark is a
brand that have been adopted by the seller and given legal protection. The trade mark is
protected by protection of law under the DTI. Branding protects the company from
imitations and fake products.
PRODUCT BRANDING
A brand is a name or mark that is intended to identify the seller’s product and
differentiate it from the product of the competitors. A brand name consists of letters,
words or numbers that can be read or verbalized. A brand mark is the part of the brand
that appears in the form of symbols designed in distinctive lettering or colours.
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