ENTREP Midterms PDF

Degree of Risk - Consider the degree of risk related to a Lesson 1 - Factors to Consider in Starting a Business specific business opportunity. A business is considered...

Degree of Risk - Consider the degree of risk related to a Lesson 1 - Factors to Consider in Starting a Business specific business opportunity. A business is considered risky when the probability or chances of failure is high. The critical phase in the entrepreneurial process is actualizing Research and Development - There should be a strong the entrepreneurial mindset after the opportunity research and development that should be undertaken. recognition. The government should provide adequate support to commercialize the R&D products. Starting a business is a positive decision on the part of the Personal Competencies - The personal competencies, as entrepreneur to exploit entrepreneurial opportunities which well as technical background, and related experiences are important and a worthwhile endeavor. needed to run the particular business are necessary to Some Reasons for an Entrepreneur to Have His/Her own start running the business. Business Availability of Resources - Resources such as raw materials, human resources, and machineries/equipment Financial Stability should be readily available for use. Self-Fulfillment To Help the Family Other Critical Factors for a New Venture Provide Employment to Other People Basic Feasibility of the Venture Competitive Advantages Several Ways to Start a New Venture Marketing of the Goods & Services A company recently formed wherein the founder establishes Production of Goods & Services a completely new business from scratch. Staffing Decision Buying an Existing Business Control of the Venture Acquiring either the shares of an existing company or all of Financing the Venture the assets of an enterprise Lesson 2- Identifying Business Opportunities Franchising The owner of a successful company, licenses its business to The identification of business opportunities is central and key others in exchange for an initial franchise fee and royalty in starting a business. payments. Entrepreneurial Opportunity is a favorable set of conditions Other Important Factors to Consider Before Starting a that will enable the entrepreneurs to create new products or Business services by combining resources that will result, not only to profit, but for the common good of the society and Focus and Direction - To have a very good objective grasp environment. of the business and where it will be headed many years from the start of the operation. Entrepreneurial firms either start because of EXTERNAL Sources of Capital - There are different sources of capital STIMULATION or INTERNAL STIMULATION. that can be used depending on the needs to start the Regardless of the source of stimulation to start a new venture.e business, it is said that opportunities are tough to spot. Good Network - Building good relationships and working with other people could help start the business. Opportunity recognition is not simply imitation or a different Legal Requirements - Important to know that laws and version of what is already in the market. regulations that govern the type of business that will be opened to avoid problems that can arise if legal An opportunity has four qualities requirements are overlooked. Attractive; Durable; EUSEBIO, C. J. XII - WATT | 1  Timely; and Micro Enterprise - It has an asset size not exceeding 50,000. It Anchored is usually a home-based enterprise, operating in makeshift or temporary quarters. The owner heads the enterprise and On a product/service/business that creates or adds value for employs from one to not more than 1- people to help its buyer or end-user. him/her. How do Entrepreneurs identify opportunities? - Examples of these are the self-employed vending food like taho, puto, or fish balls; those selling in the By Observing Trends - Trends like fashion, eating public market and those having sari-sari or rolling habits, people communication and recreation. It can stores. come from actual experiences or market studies. By Solving a Problem - Scouting for problems and Cottage Enterprise - It has an asset of 250,000 Php but not looking for solutions to solve it. exceeding 500,000 Php. It is a home-based business which is often managed and operated by the members of the family. The Opportunity Recognition Process - Examples of these are the subcontractors of footwear, like shoes and slippers; and good manufacturers of peanut butter/coco jam or pastillas, as well as decorative products like vases, candles, and lanterns. Small Enterprise - It has an asset of 500,000 Php but not exceeding 2.5 million. It is owned by an individual or group and has enough resources to continue operating. It employs 10 to 20 people. - Examples of these are groceries, bakeshops, beauty salons, medical/dental clinics, toy makers, jeepney manufacturers, and travel/tour agencies. Potential Sources of Opportunity Medium Enterprise - It has an asset of 5 million to less than The UNexpected 20 million. It is owned by a single individual, business The incongruous partners, or a corporation. It employs more than 20 to 100 The Process Need people. These workers are more skilled and possess technical Industry and Market Structures expertise to run the business with machines /equipment and Demographics utilize various quality control to make the products. Change - Examples of these are fine dining restaurants with New Knowledge branches, computer importer-dealers, garment manufacturers, human resource providers, and Lesson 3 - Types of Businesses Available to Entrepreneurs private educational institutions. Classifications of Enterprises Large Enterprise - It has an asset of 20 million or more. It is According to Size often owned and managed by a corporation. It is large in According to Forms of Ownership scope of operation and number of products or services that it According to Industry Classification offers to the market. It employs 100 or more workers who are hired on the basis of their expertise. According to Size (MCSML) It is based on its total assets or number of employees who - Its Board of Directors is responsible for its work for it. governance and it has a Chief Operating officer to EUSEBIO, C. J. XII - WATT | 2  oversee the implementation of directives of the attributes, and properties expressly authorized by or incident Board to its existence. They register with the Securities and Exchange Commission (SEC) According to Forms of Ownership Most of our businesses are in the form of single Advantages Disadvantages proprietorship. Risks and losses are shared Complicated setting-up Single Proprietorship - It is owned and usually managed by with the other shareholders process one person. They register with the Department of Trade and Industry (DTI). Additionally, this form dominates the retailing, Maximum flexibility for Individual stockholders may agriculture and service industries. growth have limited influence on management Advantages Disadvantages Limited liability of individual Tendency to institutionalize shareholders a bureaucracy Easy to set up Demanding on owner’s personal time Greater room for Strictly regulated and professionalism in supervised by the Decision-making left Growth limited by owner’s management government entirely to owner financial means Easy to raise capital Easy to dissolve Unlimited liability Assured of at least 50 years Retention of all profits Lack of stability of existence by law More flexibility Limited access to credit Cooperative - It is a duly registered association of persons, Tax Incentives and less Limited business skills and with common bond of interest, who have voluntarily joined government knowledge together to achieve a lawful common social or economic end, making equitable contribution to the capital required, and Partnership - It is an association of two or more persons who accepting a fair share of the risks and benefits of the act as co-owners of a business. Each partner contributes undertaking in accordance with the universally accepted money, prosperity, or service to the business. They register principle of the cooperatives. They register with the with Securities and Exchange Commission's (SEC). Cooperative Development Authority (CDA) Advantages Disadvantages Advantages Disadvantages Easy to set Relatively easy to Partnerships may be Least likely to be dissolved Shared control of the set up endangered by conflicts business between partners Limited liability Consensual decision making Check and balance A decision made by one maintained ith two or more partner in binding on all More people benefit from owners other partners the business Availability of more capital Generally, liability for debts Professional managers may and credit incurred is unlimited be employed by the members Retention of profits to fewer Lack of stability owners Corporation - It is an artificial being created by operation of law, having the right of succession, and the powers, EUSEBIO, C. J. XII - WATT | 3 According to Industry Classification Construction - This section includes the general construction and specialized construction activities for buildings and civil - Usually, starting entrepreneurs with limited capital engage in engineering orks. It includes new work, repair, additions and the retailing and trading business. They either produce goods alterations, the erection of prefabricated buildings or or services for the use of individuals, groups or organizations structures on the site, and also construction of a temporary in society. nature. Goods vs Services Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles - This section includes wholesale and retail side Goods - Are products that are processed from raw materials of any type of goods, and the rendering of services incidental that are consumable. These are things that people use, such to the sale of these goods. as clothes, shoes, tables, books, cosmetics, toys, jewelry, and many more. Transportation and Storage - This section includes the provision of passenger or freight transport, whether Services - They are activities which help that are demanded schedules or not, by rail, pipeline, road, water or air, and by consumers based on their needs and wants. Examples of associated activities, such as terminal and parking facilities, these services are medical, dental, banking, transportation, cargo handling, storage, etc. printing, publishing, insurance, education, and wellness programs. Accommodation and Good Service Activities - This section includes the provision of short-stay accommodation for Agriculture, Forestry, and Fishing - This section includes the visitors and other travelers, and the provision of complete exploitation of vegetal and animal natural resources, meals and drinks fit for immediate consumption. compromising the activities of growing crops, raising and breeding of animals, harvesting of timber and other plants, Information and COmmunication - This section includes animals, or animal products from a farm or their natural financial service activities, inducing insurance, re-insurance habitats. and pension funding, and activities to support financial services. Mining and Quarrying - This section includes the extraction of minerals occurring naturally as solids, liquids, or gasses. Real Estate Activities - This section includes acting as lessors, Extraction can be achieved by different methods, such as agents, and/or brokers in one or more of the following: selling underground or surface mining, well operation, seabed or buying real estate, renting real estate, and providing other mining, etc. estate services, such as appraising real estate or acting as real estate escrow agents. Manufacturing - This section includes the physical or chemical transformation of materials, substances, or Professional, Scientific and Technical Activities - This section components into new products. includes specialized professional, scientific and technical activities. These activities require a high degree of training, Electricity, Gas, Steam, and Air-Conditioning Supply - This and make specialized knowledge and skill available to users. section includes the activity of providing electric power, natural gas, steam hot water and the like through a Administrative and SUpport Service Activities - THis section permanent infrastructure (network) of lines, mains and pipes. includes a variety of activities that support general business operations. These activities' primary purpose is not the Water Supply: Sewerage, Waste Management and transfer of specialized knowledge. Remediation Activities - This section includes activities related to the management of various forms of waste, such as Arts, Entertainment and Recreation - This section includes a solid or non-solid industrial or household waste, as well as wide range of activities to meet varied cultural, contaminated sites. entertainment, and recreational interest of the general public, including live performances, operations of museums site, sports, gambling and recreation activities. EUSEBIO, C. J. XII - WATT | 4 Public Administration and Defense; Compulsory Social Finance Security - This section includes activities of governmental Government banks like the Development Bank of the nature, normally carried out by the public administration. This Philippines (DBP), Land Bank of the Philippines (LBP), Small includes the enactment and judicial interpretation of laws and Business Corporation (SCorp), Quedan and Rural Credit their pursuant regulations, etc. Corporation, Philippine Export-Import Bank, and the National LIvelihood Support Fund, have agreed in 2003 to simplify and Education - The section includes education at any level or for standardize lending procedures, lower interest rates, and any profession, oral or written, as wella s by radio and facilitate loan releases to small enterprises under a unified television or other means of communication. It includes scheme called SULONG. education by the different institutions in the regular school system at its different levels as well as adult education, Marketing literacy programmes, etc. The DTI, through its various agencies, provide marketing support to small enterprises by means of: Human Health and Social Work Activity - This section includes the provision of health and social work activities, Exposure in local and international trade fairs, involving a wide range of activities, starting from health care expositions, trade missions to various countries-trading provided by trained medical professionals in hospitals and partners, and other trade events through the Center for other facilities, up to social work activities without any International Trade Expositions and MIssions (CITEM) involvement of health care professionals. Provision of domestic trade database, including local suppliers, courtesy of the Bureau of Domestic Trade (BDT) Other Service Activities (As Residual Category) - This section Provision of export trade database and consultation includes the activities of membership organizations, the services by the Bureau of Export Trade Promotion (BETP) repair of computers and personal and household goods, and a and the bureau of International Trade Relations (BITR) variety of personal activities not covered elsewhere in the classification. Training and Human Resource Development The DTI in cooperation with local government units and local Lesson 4- Government Support and Legal Requirements industry associations, has set up SME Centers nationwide manned by business counselors who are trained to assist The small and medium enterprises (SMEs) are the lifeblood of entrepreneurs in their finance, marketing, technology, and the economy. Governments, past and present, have learned training needs. In terms of formal training, entrepreneurs may to make, and have made, entrepreneurship a priority in their check out the following services in SME Centers economic programs. Skills and other production-related training In the Philippines, the creation of millions of new Entrepreneurship, and managerial training, including entrepreneurs tops the 10-point economic agenda, and it also business improvement. includes the creation of millions of jobs through more Export Marketing Training opportunities to entrepreneurs and a tripling of loan amounts made available to SMEs. Product Development and Technology Assistance For assistance in product design and development, the agency Government Support to approach is the Product Development and Design Center of The Department of Trade and Industry report shows that the Philippines (PDDCP). For packaging design, testing and more than 50 government agencies offer support to the small analysis, it is the Packaging Research and Development Center businessman. The private section has also joined the “small (PRDC). ius beautiful” bandwagon - including industry chambers, trade associations, schools and universities, civic and On the other hand, the Department of Science and non-governmental organizations, and church-based groups. Technology (DOST) has a number of research and EUSEBIO, C. J. XII - WATT | 5 development institutes that undertake R&D for new products Registering with the Local Government and product innovations. All businesses, whatever the legal form, are required to Legal Requirements secure a mayor’s permit or municipal license from the city or municipality where they are located. A new enterprise has to be registered in various government agencies. The complexity of registration varies according to Lesson 5 - Business Planning the legal form of the business. Business Plan is also known as a venture plan. It is a step-by-step guide that will assist an entrepreneur in realizing Registering with the Department of Trade and Industry (DTI) their business idea and shows the profile of the business. The DIT-NCR and DTI Provincial Offices nationwide There is no universally accepted standard format or administer the registration of business names. structure of the business plan. If you are a single proprietor and your business is using a name other than your true name, that business name Outline of Business Plan should be registered. Registering with the Securities and Exchange Commission Chapter 1: Introduction (SEC) A. Proposed Name of the Business The SEC is the government agency that gives the business The formulation and drafting of the proposed business name enterprise its legal personality is not as simple as it sounds. It is a delicate and important Partnerships and corporations need to be registered with entrepreneurial task. Careful and in-depth planning is of the SEC. Single proprietorships need not register. prime importance. Registering with the Social Security System (SSS) The proposed business name must: An employer, or any person who uses the services of Reflect the business identity and image, another person in business, trade, industry, or any Promote the philosophical values and culture that undertaking must be registered here. business value the most, Social, civic, professional, charitable and other non-profit Profess the brand identity of the product, and organizations which hire the services of employees are Attract of influence the target consumers considered “employers.” B. Location of the Business Registering with the Cooperative Development Authority There are no rigid rules in the selection of the business (CDA) location. The basic entrepreneurial consideration is to place the proposed business in a strategic location that will assure All cooperatives are required to register with the CDA as competitive advantage. per REpublic Act 6938/6939 The following factors should be considered when deciding Registering with the Bureau of internal Revenue (BIR) on the location of the proposed business: Every business enterprise has to register with the BIR for Proximity to the target consumers taxation purposes. Distance from the sources of raw materials, labor, and utilities Registering with the Department of Labor and Employment Availability and cost of transportation (DOLE) Peace and order situation Presence of direct competitors Business establishments with one or more employees are Geographic and climatic conditions required to register with DOLE, the agency which monitors compliance with labor laws. EUSEBIO, C. J. XII - WATT | 6 Address of the Business Goal and Objectives are achievable outcomes that are It is important that the address of the business is correctly typically broad and long-term. written because all business correspondence are mailed to the business address. Objective defines the specific, measurable actions each team employee must take to achieve the overall goal. Raw materials and other supplies are also shipped by the ○ Objectives are the specific steps or actions you take seller to the designated business address. It is also necessary to reach your goal. for the business to have an email address to facilitate electronic communication between the business and the Goals are general statements of desired achievement for customers, suppliers, creditors, and other significant parties. areas like profit. D. Business Description Chapter 2: Marketing Plan A brief description of the business must include information The marketing plan studies the characteristics of your buyers about the type of product or service that the business intends as well as competitors in the market. It also presents the basis to produce or render. of your pricing policy. THe promotional strategies and the channel of distribution or place where you will sell your It also includes a brief information about the ultimate vision, product. mission, and objectives of the business. It also has the other products or services that the business plans to produce or Market Study is for studying the extent of your market share, render. the nature of competition and rival products, the prices of the rival products, and how competitors promote their goods in Developing a Product Description the market. A picture or sketch of the product with a brief description This chapter includes the 7Ps: the product, price, place of the parts promotion, people, physical evidence, and the process After-sales service (chapter 4) The edge of the product over those offered by competitors Product warranty Chapter 3: Organizational Plan Vision, Mission, Goals, and Objectives Forms of Business Owners The business plan must depict the fundamental Single/sole proprietorship - organized and managed by characteristics, nature, philosophical values, identity, and only one person. The proprietor has unlimited liability. image of the business. Partnership - Is formed by two or more persons. A Vision Statement is a written declaration clarifying your general partner has unlimited liability while a limited business’s meaning and purpose for stakeholders, especially partner has limited liability. employees. The formal way of communicating your business Corporation - Is a juridical entity owned by five or more goals and commitments to others. stockholders who have limited liability. Mission Statement- Is an action-based statement that Organizational Chart is a diagram that shows the relationship declares the purpose of an organization and how they serve and communication channels that exist within and among the their customers. It summarizes an organization's primary group of workers in the organization. It shows reports to goals, purpose, and values by answering the question, “Why whom it can be drawn vertically or horizontally using circles, does this organization exist?” squares or rectangles that are corrected by lines. EUSEBIO, C. J. XII - WATT | 7 May include the following: Contingencies - Expenses that the company has not foreseen while in the process of setting up the Key Personnel business. Workforce and Support Personnel Organizational Chart Onership, Capitalization, Compensation, and Incentives External and Management Support Chapter 4: Production Plan and Technical Plan This will show you how your product is going to be produced. After determining your target output, you should be able to identify the raw materials you need and where you ill get them. Equipment, machines, and tools must also be specified. The steps or workflow and the manpower requirements are described in a production plan. May include; Purpose of the product/service Product’s unique features Material requirements and source of supply Process and equipment that ill be used to manufacture the product/render the service Production/Service Process and Controls Distribution Logistics Regulatory and Other Compliance Issues Chapter 5: Financial Plan Considerations in determining the project costs Cost of Property, Plan, and Equipment - is the total cost to be incurred in the acquisition of company property such as Land, Buildings, Machines, Equipment, and Furniture. If the company is to rent a location, it must be included in the project cost. Organizational Cost - This will include the amount paid in getting various licenses and permits from different government agencies and the amount paid to professionals such as consultants, lawyers, and accountants. Initial working Capital - The amount of money needed for a certain period of time such as 3 to 6 months in order to support expenses the business will occur even if there is minimal revenue. EUSEBIO, C. J. XII - WATT | 8