Entrepreneurship: Business Registration & Operations

• These study notes cover entrepreneurship concepts, focusing on business registration, operations management, and risk mitigation.

Sole Proprietorships

• Owned by one individual who has full control/authority.
• The owner has all business assets/profits and is personally liable for debts/losses.
• Registration is relatively easy and requires fewer formalities compared to corporations/partnerships.

Registering a Sole Proprietorship in the Philippines

• The owner must register their name with the Department of Trade and Industry (DTI).
• Secure local licenses/permits to start business operations.

Step-by-Step Registration Process

• Register the business name with the DTI to get a DTI Certificate of Registration.
• Register with the Barangay Office where the business is located for a Barangay Certificate of Business Registration.
• Register with the Mayor's Office for a Mayor's Permit.
• Register with the Bureau of Internal Revenue (BIR) to get a Certificate of Registration.
• BIR registration is critical for legitimizing the business, allowing legal issuance of official receipts and tax filing.
• DTI registration provides a legal identity and the right to use the business name.
• Business name registration is not a license to operate.
• All businesses must secure a mayor's permit/municipal license.
• Permits/licenses ensure compliance with standards and local requirements, varying across cities/municipalities.

Social Security System (SSS)

• Employers or those using another's services in business must register with the SSS.

Department of Labor and Employment (DOLE)

• Businesses with five or more employees are encouraged to register with the DOLE to monitor compliance with labor regulations.
• Registration is required for firms with 50+ workers, and the Bureau of Local Employment manages establishment registrations.

Elements of Business Operations: Input-Process-Output Model

• Creation of goods/services involves transforming inputs (capital, labor, information) into outputs using transformation processes.
• Measurements are taken during transformation to ensure desired output, with corrective action based on comparing results to pre-set standards.
• An output can become an input for another transformation.

4Ms of Operations Management

• huMan: Associates must have the skills and willingness to perform their duties safely, consistently, and effectively.
• Machine: Machines must produce safe and reliable output at the desired quality/rate without breakdowns or defects.
• Method: Standard work methods that ensure consistent, safe production should be in place.
• Material: Materials, which include information, raw materials, consumables and their quality must meet required specifications.
• There should be no defects or shortages.
• Excess handling/movement should be reduced/eliminated, with appropriate storage.

Management: Definition of a Manager

• Business managers oversee and supervise business activities/employees.
• They keep workers aligned with business goals.
• They are often responsible for a function or department, leading a team or supervisors.
• Other types of managers include product and project managers.

Functions of a Manager

• Planning: Management controls planning to enable smooth operation and involves defining goals and effective actions, requiring flexibility and coordination.
• Planning involves knowledge of company resources and future objectives.
• Organizing: Leadership controls the company's overall structure.
• Structure is the foundation for business operation.
• Involves designating tasks/responsibilities to skilled employees and developing organizational structure/chain of command.
• Organizational chart shows the relationships across an organization and each individual's role/responsibilities.
• Benefits include showing decision-making responsibilities, the chain of command, facilitating employee connections, visualizing changes, and highlighting brand values.
• Small businesses require organizational charts for clarity on roles, responsibilities, and performance metrics.
• The chart highlights everyone's key responsibilities.
• This holds them accountable and allows them to manage their workload without burning out.
• Staffing: Staffing controls recruitment/personnel needs by hiring the right people for objectives through training, development, appraisals, promotions, and transfers.
• Human resources management (HRM) manages employees to help the business achieve its strategic objectives.
• Recruitment brings applicants to a business with the goal of obtaining employees with talent.
• High-quality employees improve performance.
• Employee recruitment/selection lays the foundation for company interactions,.
• Solid organizations need a talented, ambitious workforce.
• Recruit the best personnel possible, because payroll is a significant expense.
• Analyse the activities/work performed to determine the number/types of jobs to fill.
• Job requirements improve the selection of applicants for positions.
• Prioritize filling a position in the business instead of focusing on rigid specifications of education, experience, background etc
• A job description describes work to be performed.
• Duties should minimize overlap but not create a "that's not my job" mentality.
• Small firms require technical competence, versatility, and flexibility.
• A statement of requirements is called a job specification.
• Coordinating: Involves the orderly arrangement of efforts to provide unity in the pursuit of a common goal.
• Departments must operate together so the organizational goals are achieved.
• It involves synchronization of different efforts so the planned objectives are achieved with minimum conflict.
• Controlling: This management function means everything is in place and operating successfully.
• It involves setting performance standards and monitoring employee output.
• Performance also affects the success of the organization
• It ensures effective/efficient utilization of resources to achieve goals, measuring deviation, which helps in taking correct actions.

Risk Management

• Business risk lowers profits.
• Threats on ability to achieve financial goals are business risk.
• Risks can stem from top leadership or management.
• Due to dependence on external factors, companies can't self-shelter from risk completely.
• The most companies mitigate overall risk
• Product Risk: Arises if a product can't be created
• Common for biotech firms unsure if they can produce a new drug
• Market Risk: Arises if the market develops differently than expected.
• Can happen when markets take too long to develop, and cash runs out while a company waits for customers.
• People Risk: Common issue in companies that depend on certain employees.
• Occurs when employee becomes a burden to the business, shares company secrets, or breaks the manager's trust.
• Financial Risk: Risk a company faces not having enough money.
• Especially present in finance companies with bad lending policies or poor investment policies.
• Competitive Risk: Risk a competing product/service beats the business.
• Common among online-based business (low costs and less ways of locking customers.)

Alternative Course of Action (ACA)

• ACA refers to different strategies or plans for addressing a business problem or opportunity.
• Multiple ACAs allow thorough evaluation of potential solutions, to help mitigate risks and maximize benefits.
• It improves decision-making.