PATHWAYS TO

SUCCESS
Study Guide in

ENTREPRENUERIAL
MIND
COURSE GUIDE IN SS 11
ENTREPRENUERIAL MIND
“Successful entrepreneurs are hard working people. They spend a
lot of time, energy and other resources working on their businesses to

achieve the desired results. Additionally, they inspect to get what they

expect. In most cases, they think big and strategically ”.

I. University

Vision: A research University Advancing Quality Education towards Societal Transformation

and Global Recognition.

Mission: WVSU is commits to develop life-long learners empowered to generate knowledge

and technology, and transform communities as an agents of change.

Core Values: Excellence Creative and Innovation Service

Institutional Outcomes for Instruction (BOR Resolution 79-202):

A Taga West...

• is a creative and critical thinker

• is an effective and responsible communicator
• is technologically -skilled
• has teaming and collaborative skills
• is socially responsible and has strong national identity
• is globally competitive
• is self-directed, competent, and accountable professionals
• has uncompromising personal and professional ethical standards
• can utilize lifelong learning skills for personal development and excellence in
professional practice.

11. College/Campus
College/Campus Outcomes: Innovative, responsible and committed individuals
• Possess efficient communication skills
• Educationally adaptable to the changing demands of time
• Excellent in teacher education program and other areas of specialization
•
MARILOU L. LATOZA – Instructor
•
SS 113 Entrepreneurial Mind

i
II. Program/Degree : Bachelor of Hospitality Management

III. Program/Degree Outcomes: Based on CMO No. 62, s. 2017

Common to Tourism and Hospitality Discipline

1. Demonstrate knowledge of tourism industry, local tourism products and services.
2. Interpret and apply relevant laws related to tourism industry.
3. Observe and perform risk mitigation activities.
4. Utilize information technology applications for tourism and hospitality
5. Manage and market a service-oriented business organization.
6. Demonstrate administrative and managerial skills in a service-oriented business
organization.
7. Prepare and monitor industry specific financial transaction and reports.
8. Perform human capital development function of a tourism-oriented organization.
9. Utilize various communication channels proficiently in dealing with guests and
colleagues.

A graduate of Bachelor of Science in Hospitality Management should be able

to but not limited to:
1. Produce food products and services complying with enterprise standards.
2. Apply management skills in F & B service and operations.
3. Perform and provide full guest cycle services for front office.
4. Perform and maintain various housekeeping services for guest and facility
operations.
5. Plan and implement a risk management program to provide a safe and secure
workplace.
6. Provide food and beverage service and manage the operation seamlessly based on
industry standards.

IV. Course No. SS113 Course Title: Entrepreneurial Minds Prerequisites: None
VII. School Year/Semester: 2021-2022 (First Semester)
VIII. Course Description: This course provides a meaning and attributes of entrepreneurship (e.g.,
innovativeness, risk-taking, and self-reliance), the social role and impact of entrepreneurship.
IX. Course Credit/Unit: 3 units (54 hrs. Lecture)
X. Course Outcome: At the end of the semester, the students must have:
1) Understand the key elements of the entrepreneurial mind, and how to align personal goals
with that mindset.
2) Use critical thinking skills to identify and evaluate entrepreneurial opportunities, manage
risks and learn from the results of evaluating the process.
3) Understand the process that enables entrepreneurs with limited resources to transform
simple ideas into sustainable success.
4) Understand and apply fundamental aspects of entrepreneurial thinking across disciplines
and as a means of personal development.
5) Establish goals, identify resources and determinethe steps required to address those goals.
6) Use critical inquiry skills to identify, interview and generally build relationships with local
innovators, entrepreneurs and other community leaders.

ii
 NOTE TO THE STUDENTS

An investment in knowledge pays the best interest.

– Benjamin Franklin

Today’s students are busier than ever. Between studying, nurturing GPAs, and
engaging in extracurriculars, students can be so overburdened that the idea of
embarking into the world of entrepreneurship can seem like a distant dream.

According to Greenberg, entrepreneurship is an essential life skill and it’s never too soon
to get started. As he sees it, adapting the proper mindset and learning the basic principles of
entrepreneurship can transform students into successful business owners. But it all starts with
how you define “entrepreneur.”

“An entrepreneur is a problem seeker, a problem solver, and an innovator,” says

Greenberg. “I don’t think entrepreneurship is limited to those who start organizations or
ventures. More than anything, an entrepreneur is a person that can add value, whether they
create something themselves or work for a company.”

This course provides a meaning and attributes of entrepreneurship (e.g.,

innovativeness, risk-taking, and self-reliance), the social role and impact of
entrepreneurship. The students are expected to: (a) understand the key elements of
the entrepreneurial mind, and how to align personal goals with that mind-set, (b) use
critical thinking skills to identify and evaluate entrepreneurial opportunities, manage
risks and learn from the results of evaluating the process; (c) understand the process
that enables entrepreneurs with limited resources to transform simple ideas into
sustainable success; (d) understand and apply fundamental aspects of entrepreneurial
thinking across disciplines and as a means of personal development; (e) establish goals,
identify resources and determine the steps required to address those goals, and; (f) use
critical inquiry skills to identify, interview and generally build relationships with local
innovators, entrepreneurs and other community leaders.

The Author

iii
 HOW TO NAVIGATE THROUGH THIS GUIDE
For your convenience and easy understanding of the different parts of this study guide,
take note of the following:

Indicates the Unit Number and title

Presents the pre-activity for the unit

Indicates the lesson number and title

Gives the introduction to the lesson

A guide question that helps the student

in his study of the lesson

iv
 Presentation of the lesson

Unit test are provided to

assess student’s
knowledge of the
preceding lessons

v
 FOR IMMEDIATE CONCERNS

For your questions or clarifications, kindly visit my email;

daymarilou05@gmail.com or Messenger.

Don’t forget to state your course, year and section before asking any
question.

Be courteous.

Note: This online group is exclusive only to classes SS 113 under

Marilou L. Latoza - Instructor

vi
 TABLE OF CONTENTS

Note to the Students iii

How to Navigate Through this Guide iv
For Immediate Concerns viii
Table of Contents ix

UNIT 1: COURSE OVERVIEW 1

Let’s Get Started 2

Lesson 1 INTRODUCTION TO THE

ENTREPRENEURIAL MIND 3
4
What is entrepreneurship?
Importance of Entrepreneurship 7
What is an Entrepreneur? 8
Activity 1: 11
What are the Characteristics of an 12
Entrepreneur?
Myths About Entrepreneur 15
How to Become an Entrepreneur? 16
Ethical Considerations in Entrepreneurship 20
Activity 2 22
Activity 3 23

LESSON 2 THE STUDENT AS

ENTREPRENEUR: A SELF EVALUATION 25
26
Let’s Get Started
How Entrepreneurial Are You? 27
HOW TO: Identify your Personal
Entrepreneurial Competencies 29
Activity 4 36

LESSON 3 ECONOMIC DEVELOPMENT

AND ENTREPRENEURSHIP 37
39
The Theory of Economic Development
Models for Growth of Entrepreneurship 41
Globalization and Entrepreneurship 43
Activity 5 46
Activity 6 48

UNIT ASSESSMENT 49

vii
UNIT 2: INSIDE THE ENTREPRENEURIAL 52
MIND: FROM IDEAS TO REALITY
Let’s Get Started 53

LESSON 1 CREATIVITY, INNOVATION

and ENTREPRENEURSHIP 54
55
What is Ideation?
Entrepreneurial Activity 59
Innovation and Entrepreneurship 60

LESSON 2 THE INTELLECTUAL PROPERTY

PROTECTION 64
65
The Importance of Protecting Intellectual
Property
Types of Intellectual Properties 66

UNIT ASSESSMENT 68

UNIT 3: CREATING ENTERPRISE 70

Let’s Get Started 71

LESSON 1 IDENTIFYING BUSINESS 72

OPPORTUNITIES
73
The Search for Business Opportunities
Activity 7 75
Strengths, Weaknesses, Opportunities, Threats 76
Business Industries/Opportunities 80
Activity 8 82

LESSON 2 FORMS OF BUSINESS 84

ORGANIZATIONS
85
Types of Company Structures in the
Philippines
Where to Register a Corporation? 88
Cooperatives in the Philipines 89
There are different kinds of cooperatives 90
Activity 9 91

UNIT ASSESSMENT 92

UNIT 4: DEVELOPING A BUSINESS PLAN 94

LESSON 1 THE BUSINESS PLAN 95

96

viii
What is a Business Plan?
Why is Business Plan Important? 96
Components of a Business Plan 99
Traditional Business Plan Format 99
How to Organize Your Business Plan 101
Why a Feasibility Study is Important for Any
Business 102
Activity 10 103
Activity 11 104

UNIT 5: GETTING READY: STARTING THE

BUSINESS 106
Let’s Get Started 107

LESSON 1 UNDERSTANDING CAPITAL 108

109
Understanding Capital
Types of Capital 110
Cash v. Money 110
Sources of Capital 111
Activity 12 113

LESSON 2 GETTING THE RIGHT NAME

FOR YOUR BUSINESS 114
115
What is Business Name?
How to Choose Your Business Name? 115
Activity 13 117

LESSON 3 REGISTERING YOUR 118

BUSINESS
119
Why Register your Business?
Six Reasons You Should Register with the BIR? 119
Steps in Registering your Business in the
Philippines 121
Activity 14 122

UNIT ASSESSMENT 123

UNIT 6: CASE STUDY 125

ix
 ONE
COURSE OVERVIEW

OBJECTIVES
At the end of the unit, the student must have:

➢ defined entrepreneurial mind and entrepreneurship in the context of small and

medium-scale industries
➢ discussed theories that ex-lain how countries grow economically
➢ discussed the relationship between entrepreneurship and economic growth in the
community
➢ explained the socio-economic benefits from entrepreneurship
➢ identified entrepreneurial competencies

1
LET’S GET STARTED
The illustration below is called a word cloud, which consists of a word and/or
group of words related to "Entrepreneurs" and "Entrepreneurship." After studying this
word cloud complete the exercise that follows.

Select four words and/or three groups of words from the illustration below. For
each word or group of words, write a sentence to describe what those words have to do
with entrepreneurship or entrepreneurs.

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3
 LESSON 1

INTRODUCTION
TO THE
ENTREPRENEURIAL
MIND

The road to entrepreneurship is often a treacherous one filled with unexpected

detours, roadblocks and dead ends. There are lots of sleepless nights, plans that don't
work out, funding that doesn't come through and customers that never materialize. It can
be so challenging to launch a business that it may make you wonder why anyone willingly
sets out on such a path.

Despite all of these hardships, every year, thousands of entrepreneurs embark on

this journey determined to bring their vision to fruition and fill a need they see in society.
They open brick-and-mortar businesses, launch tech startups or bring a new product or
service into the marketplace.

FOCUS QUESTION

What is entrepreneurship?

4
What is Entrepreneurship?

The idea of entrepreneurship was first

introduced in the 1700’s, and the meaning has
evolved ever since.

An entrepreneur is an individual who

starts and runs a business with limited
resources and planning, and is responsible
for all the risks and rewards of his or her
business venture. The business idea usually
encompasses a new product or service rather
than an existing business model.

Such entrepreneurial ventures target high returns with an equally high level of
uncertainty. The entrepreneur is willing to risk his or her financial security and career,
spending time as well as capital on an uncertain venture, arranging for the necessary
capital, raw materials, manufacturing locations and skilled employees. Marketing, sales
and distribution are other important aspects which are controlled by the entrepreneur.

Even if some of these functions are outsourced, the risk is still carried by the
entrepreneur. This makes entrepreneurship different from inheriting and/or running an
existing business, working for a startup or entrepreneur for a salary, being a
commissioned agent, or selling already available goods or services as a franchisee or
dealership.

Entrepreneurship refers to the concept of developing and managing a business

venture in order to gain profit by taking several risks in the corporate world. Simply put,
entrepreneurship is the willingness to start a new business. Entrepreneurship has played a
vital role in the economic development of the expanding global marketplace.

Joseph Schumpeter (1883-1950) focused on how the entrepreneur's drive for

innovation and improvement creates upheaval and change. Schumpeter viewed
entrepreneurship as a force of "creative destruction." The entrepreneur carries out
"creative destruction" or making a "new combination," thereby helping render "old ways
obsolete. The established ways of doing business are destroyed by the creation of new
and better way to do them.

Business expert Peter Drucker (1909-2005) took this idea further, describing the
entrepreneur as someone who actually searches for change, responds to it and exploits
change as an opportunity.

Howard H. Stevenson propounded entrepreneurship as the "process of creating or

seizing an opportunity, and pursuing it regardless of the resources currently controlled."
Rick Goossen, on the other hand, define entrepreneurship as "At Harvard, we define
entrepreneurship as the pursuit of opportunities without regard for the resources
controlled."

5
 Professor Stevenson, who has co-authored one of the leading textbooks in the
field, Business Ventures and the Entrepreneur, through six editions (Roberts, Stevenson,
Marshall, and llamermesh, eds. New York: McGraw-Jlill/jrwin, spells out four ten_ ets on
entrepreneurship.

These are as follows:

✓ Entrepreneurship flourishes in communities where resources are mobile.

✓ Entrepreneurship is greater when successful members of a community
reinvest excess capital in the projects of other community members.
✓ Entrepreneurship flourishes in communities in which success of other
community members is celebrated rather than derided.
✓ Entrepreneurship is greater in communities that see change as positive
rather than negative.

As quoted from Rick Goossen's interview with Stevenson, three tenets of teaching
are the basic philosophies that every educator who teaches entrepreneurship should hold
true:

"One of Stevenson's three tenets of

teaching entrepreneurship at Harvard is to convey
to students that entrepreneurship i: an
opportunity-focused orientation to general
management, one which is applicable in many
situations, regardless of near-term career
aspirations. He encourages students that an
entrepreneurial career may be a more interesting
alternative to a standard-issue investment banking
or management consulting job. According to his
philosophy, students can learn that "controlling
your own life is something an entrepreneur does."
Stevenson believes students need to be exposed to
an entrepreneur-friendly culture and positive
entrepreneurial role models.

Finally, entrepreneurship is like having children: it requires a moment of

enthusiasm, followed by decades of hard work, in order to be successful. As Stevenson
expresses, Harvard Business School teaches three simple attitudes: "Every situation can
be improved; you can make a difference, no matter how minimal your power or your
current resources; and, experts and experience may be wrong. While the world has its
share of problems, if I solve them for other people, I will make money—and just because I
don't presently have the resources, doesn't mean I shouldn't try to solve the problem."

In essence, Stevenson's teaching approach is, "Don't tell me what you would do
ifyou were God; instead, what are you going to do as a product manager with inadequate
power and resources?" He also advises students, "If somebody tells you it hasn't been
done that way before.

6
IMPORTANCE OF ENTREPRENEURSHIP
The impact of entrepreneurship capital is stronger than that of knowledge capital.
Evidence indicates that entrepreneurial capital plays a very important role in the
production function model presented.

The following are six reasons why entrepreneurship capital is important to the
economy:

1. Entrepreneurs Create New Businesses. Path-breaking offerings by

entrepreneurs, in the form of new goods and services, result in new
employment, which can produce a cascading effect or virtuous circle in the
economy. The stimulation of related businesses or sectors that support the
new venture add to further economic development.

For example, a few IT companies founded the Indian IT industry in the 1990s
as a backend programmers' hub. Soon the industry gathered pace in its own
programmers’ domain. But more importantly, millions from other sectors
benefitted from it.

Businesses in associated industries, like call centre operations, network

maintenance companies and hardware providers, flourished. Education and
training institutes nurtured a new class of IT workers offering better, high-
paying jobs. Infrastructure development organizations and even real estate
companies capitalized on this growth as workers migrated to employment hubs
seeking new improved lives.

Similarly, future development efforts in underdeveloped countries will require

robust logistics support, capital investment from buildings to paper clips and a
qualified workforce. From the highly qualified programmer to the construction
worker, the entrepreneur enables benefits across a broad spectrum of the
economy.

2. Entrepreneurs Add to National Income. Entrepreneurial ventures literally

generate new wealth. Existing businesses may remain confined to the scope of
existing markets and may hit the glass ceiling in terms of income. New and
improved offerings, products or technologies from entrepreneurs enable new
markets to be developed and new wealth created.

Additionally, the cascading effect of increased employment and higher earnings

contribute to better national income in form of higher tax revenue and higher
government spending. This revenue can be used by the government to invest
in other, struggling sectors and human capital.

Although it may make a few existing players redundant, the government can
soften the blow by redirecting surplus wealth to retrain workers.

3. Entrepreneurs Also Create Social Change. Through their unique offerings

of new goods and services, entrepreneurs break away from tradition and

7
 indirectly support freedom by reducing dependence on obsolete systems and
technologies. Overall, this results in an improved quality of life, greater morale
and economic freedom.

For example, the water supply in a water-scarce region will, at times, force
people to stop working to collect water. This will impact their business,
productivity and income. Imagine an innovative, automatic, low-cost, flow-
based pump that can fill in people's home water containers automatically.

Such an installation will ensure people are able to focus on their core jobs
without worrying about a basic necessity like carrying water. More time to
devote to work means economic growth.

For a more contemporary example, smartphones and their smart apps have
revolutionized work and play across the globe. Smartphones are not exclusive
to rich countries or rich people either. As the growth of China's smartphone
market and its smartphone industry show, technological entrepreneurship will
have profound, long lasting impacts on the entire human race.

Moreover, the globalization of tech means entrepreneurs in lesser-developed

countries have access to the same tools as their counterparts in richer
countries. They also have the advantage of a lower cost of living, so a young
individual entrepreneur from an underdeveloped country can take on the might
of the multi-million-dollar existing product from a developed country.

4. Community Development. Entrepreneurs regularly nurture entrepreneurial

ventures by other like-minded individuals. They also invest in community
projects and provide financial support to local charities. This enables further
development beyond their own ventures.

Some famous entrepreneurs, like Bill Gates, have used their money to finance
good causes, from education to public health. The qualities that make one an
entrepreneur are the same qualities that motivate entrepreneurs to take it
forward.

What is an Entrepreneur?

An entrepreneur is someone who is willing to work for himself and by himself.

There are several different meanings of the term entrepreneurship.

An entrepreneur is a person who organizes and operates a business or businesses,

taking on greater than normal financial risks in order to do so. Like my dad, many small
business owners don’t embrace their identity as “entrepreneurs”. On the other hand, you
probably know someone who wears the title with pride.

Some people exclude those who own side businesses as “real entrepreneurs”.
Others talk broadly about entrepreneurs as anyone who starts a new business in any

8
capacity. And let’s not forget the “entrepreneurial tendencies” people can have without
owning a business that many companies today look for in the people they hire.

But is an independent freelancer an entrepreneur? What about a full-time Uber

driver? Someone who runs a stall at a fish market? Where do we draw the line, if there is
one to draw?

This wide range of interpretations, coupled with all the new ways for people to
make money on their own terms, begs the question: What exactly is an “entrepreneur”
today?

Entrepreneurs initiate and sustain the process of economic

development in the following ways:

1. Capital Formation: Entrepreneurs mobilize the idle savings of the

public through the issues of industrial securities. Investment of public
savings in industry results in productive utilization of national resources.
Rate of capital formation increases which is essential for rapid economic
growth. Thus, an entrepreneur is the creator of wealth.

2. Improvement in Per Capita Income: Entrepreneurs locate and

exploit opportunities. They convert the latent and idle resources like
land, labour and capital into national income and wealth in the form of
goods and services. They help to increase net national product and per
capita income in the country, which are important yardsticks for
measuring economic growth.

3. Generation of Employment: Entrepreneurs generate employment

both directly and indirectly. Directly, self-employment as an
entrepreneur offers the best way for independent and honorable life.
Indirectly, by setting up large and small scale business units they offer
jobs to millions. Thus, entrepreneurship helps to reduce the
unemployment problem in the country.

4. Balanced Regional Development: Entrepreneurs in the public and

private sectors help to remove regional disparities in economic
development. They set up industries in backward areas to avail various
concessions and subsidies offered by the central and state governments.

Public sector steel plants and private sector industries by Modis, Tatas,
Birlas and others have put the hitherto unknown places on the
international map.

9
 5. Improvement in Living Standards: Entrepreneurs set up industries
which remove scarcity of essential commodities and introduce new
products. Production of goods on mass scale and manufacture of
handicrafts, etc., in the small scale sector help to improve the standards
of life of a common man. These offer goods at lower costs and increase
variety in consumption.

6. Economic Independence: Entrepreneurship is essential for national

self-reliance. Industrialists help to manufacture indigenous substitutes of
hitherto imported products thereby reducing dependence on foreign
countries. Businessmen also export goods and services on a large scale
and thereby earn the scarce foreign exchange for the country.

Such import substitution and export promotion help to ensure the

economic independence of the country without which political
independence has little meaning.

7. Backward and Forward Linkages: An entrepreneur initiates change

which has a chain reaction. Setting up of an enterprise has several
backward and forward linkages. For example- the establishment of a
steel plant generates several ancillary units and expands the demand for
iron ore, coal, etc.

These are backward linkages. By increasing the supply of steel, the

plant facilitates the growth of machine building, tube making, utensil
manufacturing and such other units.

Entrepreneurs create an atmosphere of enthusiasm and convey a sense of

purpose. They give an organization its momentum. Entrepreneurial behavior is
critical to the long term vitality of every economy. The practice of entrepreneurship
is as important to established firms as it is to new ones.

KEY TAKEAWAYS

1. Entrepreneurs are individuals who undertake the organization of a new business

and the risks and rewards that come with it.

2. Entrepreneurs tend to be classified as those who take on high-growth, high-risk

innovations while small business owners oversee an established business with an
established product and customer base.

10
 ACTIVITY Entrepreneurship
Score

NAME

TEACHER

DATE
INSTRUCTIONS
Answer the following question briefly and concisely.

1. In your own words, what is entrepreneurship?

_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
______________________________________________

2. Define what entrepreneur is.

_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
______________________________________________

3. In your understanding, what is the essence of entrepreneurship to the

economic development?

_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
________________________________________________________________________

11
What are the Characteristics of an Entrepreneur?
There is a fine line between being a small business (SB) owner and an
entrepreneur—the roles actually have a lot in common—but there are distinct differences
that set them apart. Small businesses usually deal with known and established products
and services, while entrepreneurial ventures focus on new, innovative offerings. Because
of this, small business owners tend to deal with known risks and entrepreneurs
face unknown risks.

Limited growth with continued profitability is what is hoped for in most small
businesses, while entrepreneurial ventures target rapid growth and high returns. As a
result, entrepreneurial ventures generally impact economies and communities in a
significant manner, which also results in a cascading effect on other sectors, like job
creation. Small businesses are more limited in this perspective and remain confined to
their own domain and group.

There is no one-size-fits-all model for entrepreneurship. Broadly speaking,

entrepreneurship either originates from passion or from identifying suitable business
opportunities.

A person who is very passionate about developing electronic circuits may

(accidently) develop a great appliance. Such an individual may not necessarily have the
business thoughts in mind, but he is driven by pure passion. He doesn’t listen to anyone,
goes with his gut and one day develops a highly marketable product that offers extremely
high returns. He fits into the first category of passionate entrepreneurs.

A businessman with sharp business acumen sensing a profit opportunity with a

mix-n-match approach fits into the latter category.

Irrespective of the originating category, an entrepreneurial idea, if well nurtured

and correctly driven, can be transformed into a very profitable business venture.

Entrepreneurs ‘make money’ – meaning they

create value that did not previously exist rather than just
accumulating money via schemes and exploiting
weaknesses that take from another’s hard earned assets.
Following is the ‘A to Z’ of what we believe are the unique
and distinguishing aspects, skills and mind-sets of the
entrepreneur – the characteristics of an entrepreneur.

A – AMBITIOUS
A entrepreneur should have the powerful desire to achieve something and ambitious
about the goals that had been targeted to accomplish.

B – BRILLIANT
Every mind gets rewards for its brilliancy and excellent approaches to tackle the odds in
perfect time.

12
C – CALM
Calmness is something that gives one a positive and relaxed sensation in the tough times.

D – DEDICATED
A person who is dedicated towards life and determined for his up works can only slate the
glory in his board.

E –ENTHUSIASTIC
Energy in right direction can make anything in its favor, a enthusiastic person can turn
every stone for the organization’s goodwill.

F – FORESIGHTED
Let’s start from the beginning, what is the initial phase of any business. Yeah! A business
idea, it is a picture of future for which one works in present. Only fore sighting eyes can
see the difference between failures and success.

G – GOAL– ORIENTED
To be a focus and goal oriented is very important thing to pursue in one’s nature. Just
remember that “Framing the goals in the right courts can only lead to win points on score
card”

H – HONEST
When foundations are taken with honesty, the journey of crowning concludes to be more
nourished. Honesty is the basic moral value that we had been taught from the nursery
classes, as it is truly a necessary and most pleasant value that one can have.

I – INNOVATOR
Innovation and you!! All goes along with each other. Complex and outdated things are
never preferred by anyone. People are curious about NEW and serving the NEW is your
work.

J –JUDICIOUS
A firm walks on the path designed by YOU, being protected and logical about the
decisions and fair enough for the whole thing is a needed quality.

K – KINETIC ENERGY
According to science, kinetic energy is anything in motion. In entrepreneurship we say,
kinetic energy as the dreams in motion to shape reality.

L – LOYAL
Loyalty always reward sugar pocket out of bursting balloons. The one who is loyal to
organization is equally loyal to nation.

M – MOTIVATED MOVER
Motivation gives breath to soul for indulging oneself to the whole. A motivated mover can
inspire the individual, group, organization and also the universe.

13
N – NOVATURIENT
The person who has powerful desire of change in life and situation, such person can raise
high tides of creation and uniqueness in the ocean.

O – OPTIMISTIC
Optimistic approach is concerned issue for a psychological of potential entrepreneur.
Seeing the things 360° is very important and must have ingredient for a successful
entrepreneur.

P – PRECISE and PASSIONATE

Nothing goes far except preciseness Perfection is not impossible, the only thing required
for being PERFECT is to be PASSIONATE for the desires.

Q – QUICK DECISION MAKER

All the organization’s structure juggles upon decision making.

Delay or pendency in decision making leads to messed up situations and increase in cost
of the projects too

R – REALISTIC APPROACH
Dreams are must but finding that the dream has any realizable value or not is more
important. A person should rely on real environment and realistic approach so as to assure
feasibility.

S – STRATEGIC MIND
Making things profitable are in the hands of business minds. One should have pre
determined strategies for the situations likely to occur.

T – TRANSPARENCY
When you put a transparent sheath over the works, it become more likely to resort
customers BACK to you. Customer are the king and king should know every thing that is
must for him to know.

U – ULTIMATE FIGHTERS
Battles are part of life, one owes to fight the battles of roller coaster life by their own. An
entrepreneur is same like warrior who fights with own risk to win the crowns.

V – VERSATILE
Rigidness is equal to limitness. Versatility scopes the business much wider than expected
as you are not limited within the boundaries.

W – WEALTH CREATION
Just tell me one thing- why are we reading entrepreneurship?? I mean why we think of
doing business?? The reason is same – For profit. Everything in a business ends on
creating wealth. So, a entrepreneur should keep in mind that the decision he is going to
make should have enough worth.

14
X – The X FACTOR
What makes you different from other is THE X FACTOR. One should know the value of
self. So, just go and check out what’s your X FACTOR.??

Y – YIELDING INVESTMENTS
While employing funds, one shouldhave the proper engagement of knowing the probable
properties of present investments for gaining future endeavors.

Z –ZEAL FUL
An entrepreneur pens the picture of respect by grace, utmost zeal, passion and efficiency.
All the business need a standviz. the pillar of efforts.

Myths About Entrepreneurs

✓ Entrepreneurs take uncalculated and unknown risks without any

plans. This myth is partially true; entrepreneurs do take uncalculated and
unknown risks, but they keep resources, and plan as much as they can for dealing
with the unknown.

✓ Entrepreneurs start business with a revolutionary invention. This is also

partially true; not all entrepreneurial ventures are true breakthroughs. Most are
identifying and capitalizing on a mix-n-match approach. Google did not invent the
internet, McDonald's did not invent the cheeseburger, Starbucks did not invent
coffee. It’s the identification and capitalization of the idea and rapid growth rate
that makes the venture entrepreneurial.

✓ Entrepreneurs venture out only after gaining significant experience in

the industry. Most entrepreneurs are young, inexperienced individuals who follow
their passion.

✓ Entrepreneurs complete extensive research before taking the first

step. Unless an existing business is setting up a new business line on a new
concept, entrepreneurs start with very limited or no research. However, they do
have good awareness about the potential of their offering, which gives them the
confidence to assume the risk.

✓ Entrepreneurs start with sufficient capital. Capital is the foremost

requirement of any entrepreneurial venture. Most entrepreneurs fail to secure
sufficient capital from outside sources unless they have somehow proven
themselves or have a marketable prototype. Hence, most entrepreneurs start out
with insufficient capital with an aim to secure more along the way.

15
HOW TO BECOME AN ENTREPRENEUR?
If you're contemplating entrepreneurial activity, you should first identify which of
the above motivators serve as your guiding force. Then, consider if you have the specific
character traits and attributes that will enable you to thrive as an entrepreneur.

To help you determine if you've got what it takes, here's what 25 company
founders and business leaders told Business News Daily about what they think makes a
truly successful entrepreneur.

1. "Entrepreneurship is at the core of the American dream. It's about blazing

new trails, about believing in yourself, your mission, and inspiring others to
join you in the journey. What sets [entrepreeurs] apart is the will, courage
and sometimes recklessness to actually do it." – Derek Hutson, president
and CEO of Datical

2. "Entrepreneurship is a pursuit of a solution, a single relentless focus on

solving a problem or doing something drastically different from the way it is
done today. [It's] aiming to do something better than it's ever been done
before and constantly chasing improvement." – Blake Hutchinson, CEO and
small business expert at Flippa

3. "Entrepreneurship is … the constant hunger for making things better and

the idea that you are never satisfied with how things are." – Debbie
Roxarzade, founder and CEO of Rachel's Kitchen

4. "At its core, [entrepreneurship] is a mindset – a way of thinking and acting.

It is about imagining new ways to solve problems and create value.
Fundamentally, entrepreneurship is about ... the ability to recognize [and]
methodically analyze [an] opportunity and, ultimately, to capture [its]
value." – Bruce Bachenheimer, clinical professor of management and
executive director of the Entrepreneurship Lab at Pace University

5. "The most successful entrepreneurs are the ones who possess grit. Grit is
made up of persistence, passion and resilience. It's the passion to achieve
long-term goals, the courage to try again in the face of rejection, and the
will to do something better than it has been done before. The most
successful entrepreneurs tend to be gritty ones … they do not give up until
they exceed their goals. When the going gets tough and they get knocked
down, gritty entrepreneurs bounce right back up and try again." –Deborah
Sweeney, CEO of My Corporation
6. "The ability to listen, whether it be to the opinions of customers or
employees, is also integral to success. While ... you must have the
confidence to make your own choices, it is still incredibly important not to

16
 become detached from the people whose needs you are trying to meet." –
Tirath Kamdar, founder and CEO of TrueFacet

7. "Being an entrepreneur is like heading into uncharted territory. It's rarely

obvious what to do next, and you have to rely on yourself a lot when you
run into problems. There are many days when you feel like things will
never work out and you're operating at a loss for endless months. You
have to be able to stomach the roller coaster of emotions that comes
with striking out on your own." – Amanda Austin, founder and president
of Little Shop of Miniatures

8. "To be a successful entrepreneur, you must have a passion for learning –

from customers, employees and even competitors." – James Bedal,
president and CEO of Bare Metal Standard

9. "Entrepreneurship is, fundamentally, the art and science of

building profitable systems to help people in ways that other systems do
not. The core competency of the entrepreneur is not business acumen
or marketing ability but rather empathy – the ability to understand the
feelings and needs of others." –Logan Allec, CPA and owner of Money Done
Right

10. "Being a successful entrepreneur also means being a good leader.

Leadership is the ability to bring people to a place where they want to
follow you, not feel like they are forced to follow you. This takes investing
in your team personally. They must know you're not only going to hold
them accountable and drive them to be better, but [you will] also look out
for them when they are struggling. It's not transactional, it's a
relationship." – Steve Schwab, founder and CEO of Casago

11. "Entrepreneurship is the ability to recognize the bigger picture, find where
there's an opportunity to make someone's life better, design hypotheses
around these opportunities and continually test your assumptions. It's
experimentation: Some experiments will work; many others will fail. It is
not big exits, huge net worth or living a life of glamour. It's hard work and
persistence to leave the world a better place once your time here is done."
– Konrad Billetz, co-founder and co-CEO of Offset Solar

12. "A key skill an entrepreneur must possess is self-awareness.

An entrepreneur must know who they are and what they need. Self-
awareness is the first step for an entrepreneur to build their team." –
Krystal Nelson, founder of Impakt Consulting

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13. "[Entrepreneurs] have to be people-oriented. Your business will die without
a good team to back you up. Study management techniques, learn from
great leaders, [and] review where you're succeeding and failing so you can
help others improve. An entrepreneur has to be able to build a team who
cares about its work, and to do that, you have to care about how you
create your team." – Jonathan Barnett, president and CEO of Oxi Fresh
Carpet Cleaning

14. "To be a successful entrepreneur, you need perseverance. Most successful

business people or entrepreneurs have never given up on their idea. When
challenges arise, they have found innovative ways of overcoming them.
You must be able to adapt to changing economic conditions, and innovate
and embrace technological advances to keep your customers engaged.
These things take determination and a strong focus on the end goal." –
Stacey Kehoe, founder and director of communications of Brandlective
Communications

15. "Entrepreneurship is the mindset that allows you to see opportunity

everywhere. It could be a business idea, but it could also be seeing the
possibilities in the people who can help you grow that business. This ability
to see many options in every situation is critically important; there will be
unending challenges that will test your hustle." – Preeti Sriratana, co-
founder and chief strategy officer of Sweeten

16. "Entrepreneurs and business owners definitely need to get used to taking
risks … You have to get comfortable being uncomfortable. Trying to grow a
company or execute on an idea is difficult. It's not always going to be roses
and unicorns. At some point, you're going to run into issues, lose
customers and have financial constraints. It's at this point you need to get
back on the horse and take another risk, whether it's in the form of a new
product, new marketing campaign or a new customer recruitment
strategy." – Mathew Ross, co-founder and COO of Slumber Yard

17. "Successful entrepreneurs look past [the] 'quick buck' and instead look at
the bigger picture to ensure that each action made is going toward the
overall goal of the business or concept, whether or not that means getting
something in return at that moment." – Allen Dikker, founder and CEO
of Potatopia

18. "Being an entrepreneur is ingrained in one's identity. [It] is the culmination

of a certain set of characteristics: determination, creativity, the capacity to
risk, leadership and enthusiasm." – Eric Lupton, president of Life Saver Pool
Fence Systems

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19. "Entrepreneurship is an unavoidable life calling pursued by those who are
fortunate enough to take chances. [They are] optimistic enough to believe
in themselves, aware enough to see problems around them, stubborn
enough to keep going, and bold enough to act again and again.
Entrepreneurship is not something you do because you have an idea. It's
about having the creativity to question, the strength to believe and the
courage to move." – Jordan Fliegel, managing director of Techstars

20. "You may need to also be a bit of a contrarian. Sometimes it takes a person
who thinks differently than the herd to start something new and defy the
odds." – Akshay (Asher) Khanna, founder of CareClinic

21. "Entrepreneurship is seeing an opportunity and gathering the resources

to turn a possibility into a reality. It represents the freedom to envision
something new and to make it happen. It includes risk, but it also includes
the reward of creating a legacy." – Maia Haag, co-founder and president
of I See Me! Personalized Books and Gifts

22. "An entrepreneur must be able to accept failure. Everyone thinks they can
accept failure until they come face-to-face with failing at a major thing they
have put their everything into. To be a successful entrepreneur, you have
to be someone who is able to risk failure at the deepest personal levels." –
Steven Benson, founder and CEO of Badger Maps

23. "[Entrepreneurs] must be able to pivot. If something isn't working, keeping

at it won't make you successful. But changing your approach, changing
your business model, changing your plans to make it work is the power of
the pivot. You're adaptable regardless of what's thrown at you." – Michael
Maher, chief idea officer of Matters of the Cart

24. "Entrepreneurship is about always moving forward: never stopping, never

allowing self-doubt or fear to take over, and believing wholeheartedly that
even a wrong decision is better than no decision." –Adam Sherwin, founder
of Viakix

25. "Entrepreneurs are the dreamers and the visionaries. Without them,
the world stagnates and progress stops. Society needs entrepreneurs the
same way the body needs air." – Cynthia Kirkeby, founder and CVO
of Seasonally Fresh

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Ethical Considerations in Entrepreneurship

The most fundamental or essential ethical issues that businesses must face are
integrity and trust. A basic understanding of integrity includes the idea of conducting your
business affairs with honesty and a commitment to treating every customer fairly. When
customers think a company is exhibiting an unwavering commitment to ethical business
practices, a high level of trust can develop between the business and the people it seeks
to serve. A relationship of trust between you and your customers may be a key factor in
your company's success.

a. Diversity and the Respectful Workplace

Your current and potential employees are a diverse pool of people who deserve to
have their differences respected when they choose to work at your business. An ethical
response to diversity begins with recruiting a diverse workforce, enforces equal
opportunity in all training programs and is fulfilled when every employee is able to enjoy a
respectful workplace environment that values their contributions. Maximizing the value of
each employees' contribution is a key element in your business's success.

b. Decision-Making Issues

A useful method for exploring ethical dilemmas and identifying ethical courses of
action includes collecting the facts, evaluating any alternative actions, making a decision,
testing the decision for fairness and reflecting on the outcome. Ethical decision-making
processes should center on protecting employee and customer rights, making sure all
business operations are fair and just, protecting the common good, and making sure the
individual values and beliefs of workers are protected.

c. Compliance and Governance Issues

Businesses are expected to fully comply with environmental laws, federal and state
safety regulations, fiscal and monetary reporting statutes and all applicable civil rights
laws. For example, the Aluminum Company of America's (ALCOA) approach to compliance
ensures no one at the company may ask any employee to break the law or go against
company values, policies and procedures.

The company's commitment to compliance is shored up by its approach to

corporate governance: the company expects all ALCOA directors, officers and executives
to conduct business in accordance with its business conduct policies.

d. Nepotism

When you’re considering job candidates, it’s important that nepotism doesn’t drive
hiring practices. Not only is it unethical to hire a less qualified candidate purely because of
their relationship to you, you also do your company a disservice by not hiring the best
person for the job. Make the success of your company your primary goal and nepotism
will never be able to get a foothold.

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 e. Accidental” Copyright Infringement

Many new business owners are consciously unaware when they’re infringing on the
copyrights of other creatives, especially when it comes to using images and “everyone
knows it” content. Unfortunately, ignorance of the law here can be a costly mistake. If you
find yourself wanting to use something that you didn’t create yourself, it’s important to
get permission from the rightful owner.

f. Overworking Your Staff

Small businesses sometimes ask too much of their employees without noticing. It’s a
given that everyone on a small team will have to pull their weight and wear multiple hats,
but you need to be conscious of where to draw the line. For example, if you hire someone
for marketing, don’t just push them into a different department because you need support
there; it’s not what they signed up for.

g. Sexual Harrasment at Work

Here are some examples of sexual harassment in

the workplace and information on how to handle it if
you have been harassed at work.

➢ Sharing sexually inappropriate images or

videos, such as pornography or salacious
gifs, with co-workers
➢ Sending suggestive letters, notes, or emails
➢ Displaying inappropriate sexual images or posters in the workplace
➢ Telling lewd jokes, or sharing sexual anecdotes
➢ Making inappropriate sexual gestures
➢ Staring in a sexually suggestive or offensive manner, or whistling
➢ Making sexual comments about appearance, clothing, or body parts
➢ Inappropriate touching, including pinching, patting, rubbing, or purposefully
brushing up against another person
➢ Asking sexual questions, such as inquiries about someone's sexual history or
their sexual orientation
➢ Making offensive comments about someone's sexual orientation or gender
identity

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ACTIVITY
Becoming an Entrepreneur Score

NAME

TEACHER

DATE
INSTRUCTIONS Twenty five company founders and business leaders told
Business News Daily about what they think makes a truly
successful entrepreneur. Choose your top five and list them
below according to relevance in your personal life. Explain
your choices.

RANK

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ACTIVITY Characteristics of an Entrepreneur
Score

NAME

TEACHER

DATE
INSTRUCTIONS
Essay. Read and analyse the following questions carefully.
Write your answer on the space provided.

1. Of the characteristics A to Z, what is (are) the most important

characteristics a person should possess in order to become a successful
entrepreneur?

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 2. Why is ethics so important in business?

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3. What would you do if you are being asked to do lewd acts in exchange
for a higher position in your company?

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 LESSON 2

THE STUDENT AS
ENTREPRENEUR:
A
SELF EVALUATION

“When starting as an undergraduate student, I never considered myself an entrepreneur;

however, several mentors and entrepreneurs showed that following this life path can be
rewarding not only financially, but also in terms of developing life skills such as
negotiations, project management, time management, resilience and imagination.”

University students have never had it so good when it comes to

entrepreneurship. Universities are increasingly understanding how entrepreneurship can
add value to the students education, and are creating more opportunities for students to
become entrepreneurs.

FOCUS QUESTION

How to engage in entrepreneurship as a student?

25
LET’S GET STARTED
Entrepreneurial Self-Assessment Survey This is not a testl . This survey is for your
personal information. Please answer each of the following questions as honestly as
possible.

Strongly Agree 5
Somewhat Agree 3
Strongly Disagree 1

_____1. I am willing to work 50 hours or more per week regularly.

_____2. My family will support my going into business.
_____3. I am willing to accept both financial and career risks when necessary.
_____4. I don't need all the fringe benefits provided by conventional employment.
_____5. I would like to take full responsibility for the successes and failures of my
business.
_____6. I would experience more financial success by operating my own business.
_____7. I feel a great deal of pride when I complete a project successfully.
_____8. I have a high energy level that can be maintained over a long time.
_____9. I enjoy controlling my own work assignments & making all decisions affecting my
work.
____10. I believe that I am primarily responsible for my own successes and failures.
____11. I have a strong desire to achieve positive results even when it requires a great
deal of additional effort.
____12. I have a good understanding of how to manage a business.
____13. I can function in ambiguous situations.
____14. One or both of my parents were entrepreneurs.
____15. I believe that my abilities and skills are greater than those of most of my
coworkers.
____16. People trust me and consider me honest and reliable.
____17. I always try to complete every project I start, regardless of obstacles and
difficulties.
____18. I am willing to do something even when other people laugh or belittle me for
doing it.
____19. I can make decisions quickly.
____20. I have a good network of friends, professionals, and business acquaintances.

TOTAL:_____ Total the numbers you placed before the statements and enter the total in
the space provided.

The following list describes some common characteristics of an

entrepreneur. The number(s) after each characteristic indicates the related
statement(s) in the assessment form. This list interprets the form qualitatively.
Note that arriving at a conclusive portrait of a typical entrepreneur is very difficult.
Therefore, you may score low on the assessment and still succeed as an
entrepreneur.

26
Score Assessment

80 - 100 You have outstanding ability to be an entrepreneur.

60 - 79 You have satisfactory ability to be an entrepreneur.
40 - 59 Self-employment may not be an appropriate career for you.
0 - 39 You should probably avoid entrepreneurship.

How Entrepreneurial Are You?

“It’s about always being curious, and always pushing the envelope, and that means that y
ou’ve got to challenge the status quo.”

There are two types of people in the world. Entrepreneurs and everyone else.
Entrepreneurs are folks who create things. Entrepreneurs are folks who live on their own
terms. Entrepreneurs are a special group of people who have a passion for solving a
certain problem and then create something that fixes it. You might have what it takes to
be an entrepreneur but never really knew if it was a possibility.

You may have had thoughts about starting your own business but never quite
made the leap from the 9 to 5 into entrepreneurship. You may have thought of various
side hustle ideas but never brought them to life. You may have second guessed whether
or not you had what it takes when in reality, you had all the right signs.

Starting a business is a lot of work. Anyone who tells you it's not is either lying or
has never actually started one themselves. The hours are long, sacrifices are great and
you are assaulted with new problems and challenges every day with seemingly no end. If
you don't have the constitution to weather these things, your business could implode on
you faster than it started.

Clearly, entrepreneurship is not for everyone. But how do you know whether it’s
for you? You should start by asking yourself what it takes to be a leader because, for the
most part, you'll be doing a lot of the work up front by yourself. If you can't lead yourself
through start up, chances are you won't likely be able to lead your business and future
employees through growth and on to success.

27
 If you enjoy only a few actual hours of real work per day, the rest of the time
spent either looking busy or hanging out at the water cooler to catch up on TV talk, a
modest but steady paycheck and benefits and are okay with routine day-in and day-out,
stop reading here and go back to your cushy desk job. If you seek a challenge wrought
with risk but with tremendous potential reward both financially and morally, read on
friend, for you have something of what it takes to be a successful entrepreneur

McClelland developed the Empretec Methodology at Harvard University, basing it

on research findings that everyone has an inner motivation to improve. This ‘motive for
action’ is divided into three motivational categories: achievement, affiliation and power.
The 10 personal entrepreneurial competencies are:

1. Opportunity seeking and initiative. Entrepreneurs seek opportunities and take the
initiative to transform them into business situations.

2. Persistence. When most people tend to abandon an activity, successful entrepreneurs

stick with it.

3. Fulfilling commitments. Entrepreneurs keep their promises no matter how great the
personal sacrifice.

4. Quality and efficiency. Entrepreneurs try to do something better, faster or cheaper.

5. Calculated risk taking. Taking calculated risks is one of the primary concepts in
entrepreneurship.

6. Goal setting. This is the most important competency because none of the rest will
function without it. Entrepreneurs set goals and objectives that are meaningful and
challenging.

7. Information seeking. Entrepreneurs gather information about their clients, suppliers,

technologies and opportunities.

8. Systematic planning and monitoring. Systematic behaviour means acting in a

logical way. Planning is deciding what to do and monitoring means checking.

9. Persuasion and networking. Entrepreneurs influence other people to follow them or

do something for them.

10. Independence and self-confidence. Entrepreneurs have a quiet self-assurance in

their capability or potential to do something

Note: This guide has been developed to help people to put their learning into
practice. By reviewing the 10 Personal Entrepreneurial Competencies (PECs) that make
business people successful entrepreneurs, the guide provides with a practical tool that will
help them to assess their strengths and weaknesses.

28
HOW TO: Identify your Personal Entrepreneurial Competencies

The PECs questionnaire provides a self-assessment tool on how each one sizes up
to the common competencies identified by Management Systems International (MSI).
Understanding your PECs will be of great help in the detection and analysis of your strong
and weak points. Thus, these behavioural indicators are said to be useful in strengthening
the entrepreneurial potential.

Instructions:

1. This questionnaire consists of 55 statements. Read each statement and

decide how well it describes you. Be honest about yourself. Remember, no one does
anything very well, nor is it even good to do everything very well. Besides that, your
rating of the individual questions remains your secret and you may take this
questionnaire home.
2. Select one of the numbers below to indicate how well the statement
describes you:
5 - Always

3. Write the number you select on the line to the right of each statement.
Here is an example:
4. Some statements may be similar but no two are exactly alike.
5. Please answer all questions without exception!

______ 1. I look for things that need to be done.

______ 2. When faced with a difficult problem, I spend a lot of time trying to find a
solution.

______ 3. I complete my work on time.

______ 4. It bothers me when things are not done very well.

______ 5. I prefer situations in which I can control the outcomes as much as possible.

______ 6. I like to think about the future.

______ 7. When starting a new task or project, I gather a great deal of information
before going ahead.

______ 8. I plan a large project by breaking it down into smaller tasks.

______ 9. I get others to support my recommendations.

______ 10. I feel confident that I will succeed at whatever I try to do.

29
______ 11. No matter whom I'm talking to, I'm a good listener.

______ 12. I do things that need to be done before being asked to do so by others.

______ 13. I try several times to get people to do what I would like them to do.

______ 14. I keep the promises I make.

______ 15. My own work is better than that of other people I work with.

______ 16. I don't try something new without making sure I will succeed.

______ 17. It's a waste of time to worry about what to do with your life.

______ 18. I seek the advice of people who know a lot about the tasks I'm working
on.

______ 19. I think about the advantages and disadvantages of different ways of
accomplishing things.

______ 20. I do not spend much time thinking about how to influence others.

______ 21. I change my mind if others disagree strongly with me.

______ 22. I feel resentful when I don't get my way.

______ 23. I like challenges and new opportunities.

______ 24. When something gets in the way of what I'm trying to do, I keep on
trying to accomplish what I want.

______ 25. I am happy to do someone else's work if necessary to get the job done on
time.

______ 26. It bothers me when my time is wasted.

______ 27. I weigh my chances of succeeding or failing before I decide to do

something.

______ 28. The more specific I can be about what I want out of life, the more chance
I have to succeed.

______ 29. I take action without wasting time gathering information.

______ 30. I try to think of all the problems I may encounter and plan what to do if
each problem occurs.

______ 31. I get important people to help me accomplish my goals.

30
______ 32. When trying something difficult or challenging, I feel confident that I will
succeed.

______ 33. In the past, I have had failures.

______ 34. I prefer activities that I know well and with which I am comfortable.

______ 35. When faced with major difficulties, I quickly go on to other things.

______ 36. When I'm doing a job for someone, I make a special effort to make sure
that the person is happy with my work.

______ 37. I'm never entirely happy with the way in which things are done; I always
think there must be a better way.

______ 38. I do things that are risky.

______ 39. I have a very clear plan for my life.

______ 40. When working for a project for someone, I ask many questions to be sure
I understand what the person wants.

______ 41. I deal with problems as they arise rather than spend time to anticipate
them.

______ 42. In order to reach my goals, I think of solutions that benefit everyone
involved in the problem.
______ 43. I do very good work.

______ 44. There have been occasions when I took advantage of someone.

______ 45. I try things that are very new and different from what I have done before.

______ 46. I try several ways to overcome things that get in the way of reaching my
goals.

______ 47. My family and personal life are more important to me than work deadlines
I set for myself.

______ 48. I do find ways to complete tasks faster at work and at home.

______ 49. I do things that others consider risky.

______ 50. I am as concerned about meeting my weekly goals as I am for my yearly

goals.

______ 51. I go to several different sources to get information to help with tasks or
projects.

31
______ 52. If one approach to a problem does not work, I think of another approach.

______ 53. I am able to get people who have strong opinions or ideas to change their
minds.

______ 54. I stick with my decisions even if others disagree strongly with me.

______ 55. When I don't know something, I don't mind admitting it.

PECs SELF-RATING QUESTIONNAIRE

Scoring Sheet

Instructions

✓ When you’re done with the questions, transfer your rating to the PECs Scoring
Sheet as arranged in downward direction in parentheses.

✓ Enter the ratings from the completed questionnaire on the lines above the item
numbers in parentheses. Notice that the item numbers in each column are
consecutive. Item No. 2 is below item No. 1 and so forth.

✓ Do the addition and subtraction in each row to compute each PEC score. Watch
carefully the plusses (+) and minuses (-) to come up with the correct computation.
Check twice or thrice if you have obeyed this rule!

✓ Add all the PEC scores to compute the total score. USE THE GUIDE BELOW TO
INTERPRET YOUIR SCORES.

Interpreting Scores*

The highest corrected score is 25 per PECs item. The closer you are to 25
means you are strong in that particular PECs item. The average and median score is 12.5.
A score below 12.5 means a challenge or opportunity for improvement in that particular
PECs item. A below the average score calls for change of behavioural pattern.

Marking on the extreme left side (below 12) requires self-reflection and
figuring out changes needed to improve one’s personality. The PECs profile is dynamic,
meaning it is not set in stone and whatever challenges you may have could still be
improved on. Your PECs profile will be technically progressive once these challenges are
faced with self-confidence and are aligned to your business plan. In a larger sense, a
winning personality is considered a key factor whether you are fit to start or maintain a
business.

*Interpreting Score from Prof. Rolando Ramon C. Diaz. Head of Training and
Entrepreneurship Education Division (TEED), UP ISSI.

32
 Scoring Sheet

Rating of Statements Score PEC

______ + ______ + ______ - ______ + ______ +6 = ______ Opportunity

( 1) (12) (23) (34) (45) Seeking

______ + ______+ ______ - ______ + ______ + 6 = ______ Persistence

( 2) (13) (24) (35) (46)

______ + ______ + ______ + ______ - ______ + 6 = ______ Commitment to

( 3) (14) (25) (36) (47) Work Contract

______ + ______ + ______ + ______ - ______ + 6 = ______ Demand for

( 4) (15) (26) (37) (48) Quality & Efficiency

______ - ______ + ______ + ______ + ______ + 6 = ______ Risk Taking

( 5) (16) (27) (38) (49)

______ - ______ + ______ + ______ + ______ + 6 = ______ Goal Setting

( 6) (17) (28) (39) (50)

_____ + ______ - ______ + ______ + ______ + 6 = ______ Information

( 7) (18) (29) (40) (51) Seeking

______ + ______ + ______ - ______ + ______ + 6 = ______ Systematic

( 8) (19) (30) (41) (52) Planning &
Monitoring

______ - ______ + ______ + ______ + ______ + 6 = ______ Persuasion and

( 9) (20) (31) (42) (53) Networking

_
_____ - ______ + ______ + ______ + ______ + 6 = ______ Self-Confidence
(10) (21) (32) (43) (54)

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 Total PEC Score ______

Correction factor computation

______ - ______ - ______ - ______ + ______ + 18 = ______ Correction

(11) (22) (33) (44) (55) Factor

***Note that the correction factor is very important for the calculation of the final score.

PECs SELF-RATING QUESTIONNAIRE

Corrected Score Sheet

Instructions

1. The correction factor (the total of items 11, 22, 33, 44, and 55) is used
to determine whether or not a person tries a very favourable image of
himself. If the total score on this factor is 20 or greater, th en the total
score on the ten PECs must be corrected to provide a more accurate
assessment of the strengths of the PEC score for that individual.

2. Use these following numbers when figuring the corrected score:

If the correction factor is Subtract the following number

from each PEC score (correction
factor)

24 or 25 7

22 or 23 5

20 or 21 3

19 or less 0

3. Use the next page (Corrected Score Sheet) to correct each PEC score
before using the Profile Sheet.

34
 PECs SELF-RATING QUESTIONNAIRE
Corrected Score Sheet

PEC Corrected Score Original Correction Corrected

Score Factor Score
Opportunity Seeking

Persistence

Commitment to Work Contract

Demand for Quality and

Efficiency

Risk Taking

Goal Setting

Information Seeking

Systematic Planning and

Monitoring

Persuasion and Networking

Self-confidence

Corrected Score Test

35
ACTIVITY Characteristics of an Entrepreneur
Score

NAME

TEACHER

DATE
INSTRUCTIONS
Essay. Read and analyse the following questions carefully.
Write your answer on the space provided.

Based on the results of your Personal Entrepreneurial Competencies or PEC, do

you have what ita takes to be an entrepreneur?
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36
 LESSON 3

ECONOMIC
DEVELOPMENT
AND
ENTREPRENEURSHIP

An entrepreneur is someone who runs a business as a sole owner

with the aim of making profit even though they encounter a lot of
challenges. Theories of entrepreneurship are very essential as they help
to explain what entrepreneurship entails. In this article, you will find
valuable information about several theories of entrepreneurship.

FOCUS QUESTION

Which theory best explain what entrepreneurship is?

37
The Theory of Economic Development
Economic Theories

Economic entrepreneurship theories date back to the first half of the 1700s with
the work of Richard Cantillon, who introduced the idea of entrepreneurs as risk takers.
The classic, neoclassical and Austrian Market process schools of thought all pose
explanations for entrepreneurship that focus, for the most part, on economic conditions
and the opportunities they create. Economic theories of entrepreneurship tend to
receive significant criticism for failing to recognize the dynamic, open nature of market
systems, ignoring the unique nature of entrepreneurial activity and downplaying the
diverse contexts in which entrepreneurship occurs.

Schumpeter first reviews the basic economic concepts that describe the
recurring economic processes of a commercially organized state in which private
property, division of labor, and free competition prevail. These constitute what
Schumpeter calls "the circular flow of economic life," such as consumption, factors and
means of production, labor, value, prices, cost, exchange, money as a circulating
medium, and exchange value of money.

The principal focus of the book is advancing the idea that change (economic
development) is the key to explaining the features of a modern economy. Schumpeter
emphasizes that his work deals with economic dynamics or economic development,
not with theories of equilibrium or "circular flow" of a static economy, which have
formed the basis of traditional economics. Interest, profit, productive interest, and
business fluctuations, capital, credit, and entrepreneurs can better be explained by
reference to processes of development. A static economy would know no productive
interest, which has its source in the profits that arise from the process of development
(successful execution of new combinations).

The principal changes in a dynamic economy are due to technical innovations

in the production process. Schumpeter elaborates on the role of credit in economic
development; credit expansion affects the distribution of income and capital formation.
Bank credit detaches productive resources from their place in circular flow to new
productive combinations and innovations. Capitalism inherently depends upon
economic progress, development, innovation, and expansive activity, which would be
suppressed by inflexible monetary policy.

The essence of development consists in the introduction of innovations into the

system of production. This period of incorporation or adsorption is a period of
readjustment, which is the essence of depression. Both profits of booms and losses
from depression are part of the process of development. There is a distinction
between the processes of creating a new productive apparatus and the process of
merely operating it once it is created.

38
 Development is effected by the entrepreneur, who guides the diversion of the
factors of production into new combinations for better use; by recasting the
productive process, including the introduction of new machinery, and producing
products at less expense, the entrepreneur creates a surplus, which he claims as
profit.

The entrepreneur requires capital, which is found in the money market, and
for which the entrepreneur pays interest. The entrepreneur creates a model for
others to follow, and the appearance of numerous new entrepreneurs causes
depressions as the system struggles to achieve a new equilibrium. The
entrepreneurial profit then vanishes in the vortex of competition; the stage is set for
new combinations. Risk is not part of the entrepreneurial function; risk falls on the
provider of capital.

Resource-Based Theories

Resource-based theories focus on the way individuals leverage different types of

resources to get entrepreneurial efforts off the ground. Access to capital improves the
chances of getting a new venture off the ground, but entrepreneurs often start ventures
with little ready capital. Other types of resources entrepreneurs might leverage include
social networks and the information they provide, as well as human resources, such as
education. In some cases, the intangible elements of leadership the entrepreneur adds
to the mix operate as resource that a business cannot replace.

Psychological Theories

Psychological theories of entrepreneurship focus on the individual and the mental

or emotional elements that drive entrepreneurial individuals. A theory put forward by
psychologist David McCLelland, a Harvard emeritus professor, offers that entrepreneurs
possess a need for achievement that drives their activity. Julian Rotter, professor
emeritus at the University of Connecticut, put forward a locus of control theory. Rotter’s
theory holds that people with a strong internal locus of control believe their actions can
influence the external world and research suggests most entrepreneurs possess trait. A
final approach, though unsupported by research, suggests personality traits ranging
from creativity and resilience to optimism drive entrepreneurial behavior.

Sociological/Anthropological Theories

The sociological theory centers its explanation for entrepreneurship on the

various social contexts that enable the opportunities entrepreneurs leverage. Paul D.
Reynolds, a George Washington University research professor, singles out four such
contexts: social networks, a desire for a meaningful life, ethnic identification and social-
political environment factors. The anthropological model approaches the question of
entrepreneurship by placing it within the context of culture and examining how cultural
forces, such as social attitudes, shape both the perception of entrepreneurship and the
behaviors of entrepreneurs.

39
Opportunity-Based Theory

Prolific business management author, professor and corporate consultant, Peter

Drucker put forward an opportunity-based theory. Drucker contends that entrepreneurs
excel at seeing and taking advantage of possibilities created by social, technological and
cultural changes. For example, where a business that caters to senior citizens might
view a sudden influx of younger residents to a neighborhood as a potential death stroke,
an entrepreneur might see it as a chance to open a new club.

Need-Based Motivation

According to need-based theories, people's efforts go toward fulfilling their most

urgent needs. Maslow’s hierarchy of needs is perhaps the best-known theory in this
category. It suggests that needs drive behavior. Managers can motivate employees by
identifying their needs and helping satisfy them. There are five need categories:
physiological, safety, love, esteem and self-actualization. Basic needs must be met
before the individual will be motivated to seek higher order activities such as creative
work. Frederick Herzberg’s motivation-hygiene theory is another need-based theory.
According to him, people are driven by two sets of factors. Hygiene factors are part of
the job context and prevent dissatisfaction but do not motivate people. Working
conditions, salary and safety are among these factors. Motivators such as achievement
and recognition are intrinsic to the job. These factors encourage employees to work
harder.

Cognitive-Based Motivation

Cognitive theories of motivation suggest that behavior is determined by beliefs,

expectations, values and other mental conditions. For example, the expectancy-value
theory proposes that the amount of effort employees will expend on a task is the
product of their expectation of success at the task and the value they attach to it.
Attribution theory is another cognitive-based theory that explains how individuals
interpret events. People attribute causes to others’ behavior to understand why they
behave in a certain way. There are two types of attributions. An internal attribution
suggests that a person behaves in a certain way because of something about the person
such as attitude or personality. An external attribution suggests that the person behaves
that way because of something about the situation.

Intrinsic and Extrinsic Motivation

Intrinsically motivated people engage in an activity because they are interested

in and enjoy the activity. Extrinsically motivated individuals get involved in an activity
because of external reasons such as a reward. Some theories of motivation emphasize
these differences. For example, according to self-determination theory, extrinsic
incentives may even undermine performance at an inherently interesting activity. This is
because humans have a basic need for competence and self-determination. People seek
challenging activities and find these activities intrinsically motivating. Unnecessary
external control and negative competence feedback may harm this tendency.

40
Critique
Need-based theories try to motivate employees by helping fulfill their unmet
needs. A serious flaw with this approach is that it views the glass half-empty. Two
problems arise from this perspective. Firstly, organizational motivators do not always
help fulfill an employee’s needs, because work life is only one aspect of an employee’s
life. Secondly, the half-empty approach of motivation ignores the employee’s strengths.
External motivators may lead to the mentality that professional satisfaction is all there is
to well-being.

This may have a negative effect on other domains of an employee’s life such as
family life. On the other hand, critics of the cognitive-based theories contend that
motivation is need-based. They argue that people mostly behave in response to urgent
needs rather than cognitive factors.

MODELS FOR GROWTH OF ENTREPRENEURSHIP

1. Laissez-Faire Model of Entrepreneurship

The essence of this model is that government interference and regulation binders
economic development, the lack of which allows the entrepreneurs to become
competitive and create wealth therefrom. Example of model — Cayman Islands.

2. Positive Environment Model of Entrepreneurship

The philosophy behind this model is that government should play a role in
encouraging the small business sector, but this role should be limited to providing
a positive environment like adequate infrastructure, free trade agreements, low
level of taxation, etc. Example of model — Austria.

3. Strategic Interventionist Model of Entrepreneurship

This policy assumes that the State should have a strategy of promoting small
business through intervention by ensuring training, research, finance, marketing,
know-how and support. Example of model — Namibia.

4. Subsidized Interest Rate Model of Entrepreneurship

Providing subsidized interest rates to certain industries below market rate help a
few selected entrepreneurs whose enterprises subsequently develop into mega-
conglomerates. Example— South Korea, where only a few industries — Heavy
industries and chemicals are supported and the economy is dominated by a small
number of diversified mega conglomerates.

41
5. Egalitarian Model of Entrepreneurship

All borrowings by the entrepreneurs are at relatively high rates. High interest rates
are an incentive to be thrifty. Thus, encouraging saving than borrowing. Example
of the model — Taiwan.

6. Trade Facilitation Model of Entrepreneurship

It is an unique mercantilist model, focused on the internationalization of small and

medium-sized enterprise. Apart from tangible aid, the government facilitates
paper-work procedure and reduces bureaucratic constraints. Example of model —
Kenya.

7. Yugo-pluralist Model of Entrepreneurship

The policy changes were initiated at the local level. It could be a weak central
government and due to cultural heterogeneity. There is autonomy due to
decentralization of the federal system. Culture is an important determinant of
differences in the economic policy, which in turn contributed to regional disparity.
Example of the model Yugoslavia.

8. Doi-Moi Model of Entrepreneurship

The word literally means ‘renovation‘ or ‘new thinking‘. This is to help small
enterprise operate within a socialist system. Example of model — Vietnam.

9. Top-down reform Model of Entrepreneurship

The reforms come from the top levels of government, down to people. Several
governments declared a change from centrally planned economy to the one driven
by market forces. Example of model — German Democratic Republic.

10, Open-door reform Model of Entrepreneurship

The policy adopted is that of open door with major reforms of a completely
planned economy. It results in strong incentives to produce. Example is China,
where farmers are kept completely outside the planned sector of the economy in
order to promote entrepreneurship among them.

11, Indian model of Entrepreneurship

Indian model of Entrepreneurship is a combination of strategic internationalist and

subsidized interest rate. It has probably high entrepreneurial talents in the world.

42
 The above Entrepreneurship models show that each country has chosen a
particular model which it regards as the most appropriate to help its small business
sector.

GLOBALIZATION AND ENTREPRENEURSHIP

Entrepreneurship, the pursuit of opportunities despite lacking the necessary

resources at the outset, is often celebrated as a hero of the global economy. Globalisation,
on the other hand, is often criticised as a villain contributing to rising inequality.

Globalization led to major increases in worldwide trade and exchanges in an

increasingly open, integrated, and borderless international economy. There has been
remarkable growth in such trade and exchanges, not only in traditional international trade
in goods and services, but also in exchanges of currencies, in capital movements, in
technology transfer, in people moving through international travel and migration, and in
international flows of information and ideas (Intriligator, 2003:2).

Financial and industrial globalization is increasing substantially and is creating new

opportunities for both developed and developing countries. However developed and
developing countries basically have different expectations in this process. While
integration and globalization of the developing countries mean of initiating
industrialization, it means increase of the rate of industrialization for the developed
countries (İncekara and Savrul, 2012:24). For developing countries, this has led to both
positive and negative effects such as increased standard of living, access to new markets,
widening disparity in incomes, decreased employment.

Globalisation works hand in hand with entrepreneurship in three important ways.

First, globalisation facilitates technology entrepreneurship by fostering the rise of
innovation ecosystems. This might include engagement between new ventures, and large
multinational enterprises.

Nowadays, many multinationals have managers with job titles that include terms
like “startup engagement”. They compete to win the hearts, minds and ideas of new
ventures – which benefit from globalisation by gaining powerful partners.

Second, globalisation facilitates transnational entrepreneurship. Diaspora networks

of émigrés to various countries take what they have learnt in corporations and use it to
create their own businesses in the same or similar sectors.

In some cases, such as the Israeli and Indian technologist diasporas, these ethnic
communities support technology entrepreneurship. In others transnational ventures are
decidedly low-tech. A fascinating example is the large merchant community from the city
of Wenzhou in China’s Zhejiang Province.

The people of Wenzhou have a reputation for being among China’s most
successful entrepreneurs, particularly in manufacturing. This track record has been

43
continued by the large network of Wenzhou natives who have gone abroad, especially
those in continental Europe.

Apparel businesses in Italian cities such as Prato run by entrepreneurs from

Wenzhou appropriate the legitimacy of “made in Italy” garments and the cost advantages
associated with employing workers from Wenzhou. While local competitors are not always
pleased, this can be a useful mode of value creation with benefits for the local economy,
as long as local laws are respected.

Third, globalisation facilitates social entrepreneurship. This involves creating

wealth while simultaneously addressing vexing societal problems such as environmental
degradation, poverty and poor health

There are many unique opportunities for shared value creation when both for-
profit multinationals and non-profits such as NGOs and the United Nations work with
entrepreneurs. To illustrate, the United Nations Children’s Fund (UNICEF) launched a
competition in Accra, Ghana seeking to attract ideas for “game-changing” solutions
tackling challenges that children face. The eight selected social entrepreneurs, including
one who is developing an app to teach children to read, are now working in an incubator
managed by a partner-NGO.

Does this mean that globalisation is an unmitigated force for good? No, but it
would be foolish to overlook the potential globalisation has for good – via
entrepreneurship.

The globalization of economies has heightened the importance of entrepreneurial

action for creating wealth. Demographic shifts, liberalization of national economies and
attendant markets, institutional and state failures, and technological advances have
combined to increase the calls for more social consciousness within businesses (Zahra et
al, 2008:118). Audretsch (2007) argues that globalization has led to a shift from an
industrial to an entrepreneurial model of production. Globalization is interpreted as a level
shock in the supply of unskilled labour to the world economy, a decrease in the level of
political risk associated with foreign direct investment, and the widespread diffusion of
ICT.

References to the impact of country’s level of globalization on its level of

entrepreneurship can be found in based on comparing data measuring entrepreneurship
and globalization. The global business environment is changing dramatically. Traditionally,
competition in international markets has been the realm of large companies, while smaller
businesses remained local or regional in scope. However, the removal of government-
imposed barriers that segregated and protected domestic markets and recent
technological advances in manufacturing, transportation and telecommunications allows
even the smallest firms access to customers, suppliers and collaborators around the world.
Economic growth and innovation, both domestically and internationally, are fuelled
increasingly by small companies and/or entrepreneurial enterprises (Etemad and Wright,
2003:3).

Macro-economical alterations in a country due to globalization are likely to be

experienced differently by SMEs than large companies. SMEs have to operate within the

44
macroeconomic environment of domestic and international markets, and as such are
affected by changes in this environment. Among others, two socio-economic results of an
increased level of globalization in a country are enlarged inequality enhanced consumer
demand for variety. Both of these have been marked as determinants for higher levels of
entrepreneurship in a country (Vinig and Kluijver 2007:12).

The most important factors in the globalization of entrepreneurs are technology

and the falling costs of communications. The success of entrepreneurship is driven by
technological changes. These changes have democratized entrepreneurship and
entrepreneurs can come from anywhere in the world and can reach customers anywhere
from the day they open their doors (Haar, 2012:2). In this regard the patterns can provide
insights for the current situation of developing countries.

Although developed countries precede in technological superiority and high level of

customer service and / or high quality products patterns since most of their production
facilities have been settled in developing countries by entrepreneurship and technological
spill overs, developed countries gained too much competitive advantage in the last
decade.

In developed countries, economical infrastructure of most of them formed due to it

and at least in practice, it can be said to be rather new in developing countries. Due to
lack of capital accumulation, qualified human resources and social and political
substructure, the term remained a theatrical concept until recently and it can be accepted
that globalization phase launched the golden era of entrepreneurship especially in
developing countries. The participation of developing countries in the globalization process
created an opportunity for them to better utilize their comparative advantages, introduce
advanced technologies, foreign capital and management experience. It is also favourable
for eliminating monopolistic behaviours and strengthening market competition
(Shangquan, 2000:4-5) and entrepreneurs have played a major role in initiating the
process.

45
ACTIVITY
Theories of Entrepreneurship Score

NAME

TEACHER

DATE
INSTRUCTIONS
Essay. Read and analyse the following questions carefully.
Write your answer on the space provided.

In this lesson, we tackled the different theories of entrepreneurship. Choose

two theories and explain. Give specific activities that these theories can be
applied to.
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47
ACTIVITY
Entrepreneurship and Globalization Score

NAME

TEACHER

DATE
INSTRUCTIONS
Essay. Read and analyse the following questions carefully.
Write your answer on the space provided.

In your own words, what is the impact of globalization to entrepreneurship and

vice versa?
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48
UNIT ASSESSMENT

NAME
COURSE/YEAR/SECTION
DATE

A. True or False. Read ana nalyze the following statements carefully. Write TRUE if
the statement is correct and False if the statement is incorrect. Write your answer
before each number. (Two Pints each)

______________ 1. Entrepreneurs venture out only after gaining significant

experience in the industry. Most entrepreneurs are young, inexperienced
individuals who follow their passion.

_________________ 2. Entrepreneurs do have good awareness about the potential

of their offering, which gives them the confidence to assume the risk.

----------------------------- 3. Capital is the foremost requirement of any entrepreneurial

venture.

_________________4, Making things profitable are in the hands of business

minds. One should have pre-determined strategies for the situations likely to
occur.

_________________ 5. Battles are part of life, one owes to fight the battles of
roller coaster life by their own. An entrepreneur is same like warrior who fights
with own risk to win the crowns.

49
B. Matching Type: Match the entrepreneurial competencies in column A with their
meaning in column B. Write the letter of the correct answer on the space provided
before each number.

A B

____1. Creative A. makes wise decisions towards the set

objectives

____ 2. Profit-oriented B. strategic thinking and setting of goals

____ 3. Disciplined C. trusting in one’s ability

____ 4. Sound decision maker D. adoptable to change

____ 5. Possess people skills E. innovates to have an edge over other

competitors

____6. Excellent Planner F. solid dedication

____ 7. Confident G. skillful in record keeping

____8. Hardworking H. always sticks to the plan

____9. Ability to accept change I. work diligently

___10. Committed J. effective and efficient communication skills

and relates well to people

K. always looking for an opportunity to

have/earn income.

50
C. Define the following concepts. (Three points each)

1. Globalization-
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2. Entrepreneurship
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3. Capital
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4. Versatility
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5. Leadership
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51
 TWO
INSIDE THE
ENTREPRENEURIAL MIND:
FROM IDEAS TO REALITY

OBJECTIVES
At the end of the unit, the student must have:

✓ explained the differences among creativity, innovation, and entrepreneurship,

✓ describe why creativity and innovation are such an integral part of
entrepreneurship,
✓ understand how entrepreneurs can enhance the creativity of their employees as
we;; as their own creativity,
✓ described steps in the creative process,
✓ described the techniques for improving the creative process, and
✓ described the protection of intellectual property through patents, trademarks, and
copyrights..

52
LET’S GET STARTED
Below is a crossword puzzle. Enclosed are words related to the lesson title. Look
for five words that are relevant to our lesson title and define each using your own words.

O P P O R T U N I T Y Y
K L K T E R M O F O T U
B G N O I T A E D I Z X
U G H J B N S F V N V X
S P J D F R V I C N L V
I N C A S H T L N O O M
N D G H L A U G V V O
E E J A H A E N
S P F R S G E M N T N E
S A C A D O I O R I M Y
Y H K L O G B O O O K I
C O N T R A C T T N Y H

1. ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

2. ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

3. ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

4. ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

5. ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

53
 LESSON 1

CREATIVITY, INNOVATION
and
ENTREPRENEURSHIP

Drucker (1985) argued that innovation is the tool of entrepreneurship. In addition,

both innovation and entrepreneurship demand creativity. Creativity is a process by which
a symbolic domain in the culture is changed. New songs, new ideas, new machines are
what creativity is about Mihaly(1997). Creativity is the ability to make or otherwise bring
into existences something new, whether a new solution to a problem, a new method or
device, or a new artistic object or form. W

Wyckoff (1991) defines creativity as new and useful. Creativity is the act of seeing
things that everyone around us sees while making connections that no one else has
made. Creativity is moving from the known to the unknown. Culture exerts a negative
force on creativity according to Pearce (1974), however, “were it not for creativity, culture
itself would not be created.”

FOCUS QUESTION
Where and how do you generate ideas worth persuading into a business?

54
What Is Ideation?
Ideation refers to the process of developing and conveying prescriptive ideas to
others, typically in a business setting. It describes the sequence of thoughts—from the
original concept to implementation. Ideations can spring forth from past or present
knowledge, external influences, opinions, convictions, or principles. Ideation can be
expressed in graphical, written, or verbal terms.

Ideation is the creative process of generating new ideas, which can be

accomplished through a variety of ideation techniques, such as brainstorming and
prototyping. If done right, ideation is what helps founders and executives determine the
right problem to solve and how to solve it.

How Ideation Works

Simply put, ideation is the literal action of forming ideas, from their conception to
real-world application and implementation. Ideas and the act of ideating can come from
anyone tangentially or directly associated with a business or organization, including low-
level employees, managers, customers, partners, and stakeholders. Actual ideations can
be the result of brainstorming sessions, online forums, seminars, team-building exercises,
surveys, and social media platforms.

Ideation is a key component of any successful business. For example, Google

encourages employees to spend as much as 20% of their work hours meditating on new
ideas that personally intrigue them and potentially solve real problems. This focus on
ideation allows companies to become innovative or remain competitive, by increasing the
likelihood of new product rollouts, increased customer acquisition, and superior financial
performance.

Ideation plays a critical role in the design thinking process—a concept

popularized by global design firm IDEO. The goal of design thinking is to empathize with
customers, uncover the non-obvious pain points they’re experiencing, and learn more
about how the current solutions in the marketplace aren’t meeting users’ needs. It’s often
in those gaps where companies can spot the best business opportunities.

“Ideate” is the third phase of the design thinking process. It follows “Empathize,”
in which companies observe and engage with users to discover their frustrations and
needs, and then “Define,” where organizations begin to solidify the problem—not as they
see it, but as customers experienced it. From there, ideation can begin, and is when
companies start to leverage different techniques to come up with solutions to the
problem.
“Where you have a gap right now is to do the upfront better,” Marion says,
emphasizing the importance of ideation. “That entails giving employees the skills to better
understand opportunities, to apply different methods of getting information from potential
customers, and to achieve better brainstorming.”

An example of this is IDEO’s approach to reimagining the shopping cart. The firm
sent out two groups to learn firsthand what the people who use, make, and repair
shopping carts think about them. The groups interviewed experts and walked through

55
stores, taking photos and jotting down notes of how people were actually interacting with
the carts. Were customers manoeuvring them down every aisle, or could they benefit
from a removable basket? What child safety features needed to be implemented?

After gaining customer insights, the two teams were able to better brainstorm,
because they had personally experienced the customers’ pain points and knew which
areas to focus on, such as manoeuvrability, child safety, shopping behavior, and
maintenance cost. When IDEO landed on a final design, they knew they were closer to
solving the right problems, because they had put the customer first.

The Ideation Process

Although the ideation process does not necessarily have to conform to any one
universal model, there are general guidelines that people can follow to help them
maximize the effectiveness of ideation and the solutions it generates. First and foremost,
ideation does not necessarily start with a randomly generated thought. Instead, ideas are
reverse engineered to fit emergent problems. It is thus critically important to initially
clearly define the problem and understand its key underlying factors, such as industry
trends, business environments, customer needs, budget constraints, and any other causes
behind the vexing issue at hand.

Once key pain points are identified, as well as their root causes, brainstorming
sessions, and other collaborative pow-wows are initiated in an effort to crowd
source potential ideas and generate possible solutions to the problems being posed.
Ideally, these collaborations should blend the right brain and left brain thought processes,
because many problems require both creative and pragmatic approaches to cultivating
viable solutions.

These forums should invite open, unrestricted, and unencumbered dialogue, where
participants feel safe to float ideas without fear of ridicule. All ideas, from the deeply
academic to the wildly fanciful, should be enthusiastically embraced and should be treated
with equal fairness and open-mindedness.

The plethora of ideas generated during collaboration stages is then pared down to
one prevailing idea that can best drive the future actions of the group. This marquis idea
is tested against the problem and adjusted as needed. It is then tirelessly reworked,
retested and finessed until a potential solution is perfected. The idea is then implemented
in the real world, and if it’s deemed successful, the ideation process concludes.

Styles of ideation include the following:

✓ Problem solution. This straightforward method is where an individual

identifies a problem that he or she subsequently solves.
✓ Derivative idea. This involves making improvements to an existing idea.
✓ Symbiotic ideas. This is a collision of several incomplete ideas that
combine to create a fully-baked, holistic idea.

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Why Design Thinking
“Design thinking is a human-centered approach to innovation that draws from the
designer's toolkit to integrate the needs of people, the possibilities of technology, and the
requirements for business success.”— Tim Brown, CEO of IDEO

Thinking like a designer can transform the way organizations develop products,
services, processes, and strategy. This approach, which IDEO calls design thinking, brings
together what is desirable from a human point of view with what is technologically
feasible and economically viable. It also allows people who aren't trained as designers to
use creative tools to address a vast range of challenges.

✓ Feasibility- What is functionally possible within the foreseeable future?

✓ Desirability- What makes sense to people and for people?
✓ Viability- What is likely to become part of a sustainable business model

Design Thinking Approach

Design thinking relies on the human ability to be intuitive, to recognize patterns,

and to construct ideas that are emotionally meaningful as well as functional. The elements
of design thinking combine to form an iterative approach—one you can try out and adapt
to suit your needs. As IDEO founder David Kelley says, design thinking is not a linear
path, "it's a big mass of looping back to different places in the process."

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58
ENTREPRENEURIAL CREATIVITY
Creativity is considered a concept that is inherent in entrepreneurship. Creativity—
not the same with innovation, as we could say that innovation is applied creativity—is
regarded as putting all brilliant ideas together and thinking of ways to make it happen. It
interfaces with psychological factors; when the person feels euphoria and is in a good
mood, he/she tends to increase his/her creativity. Creativity is deemed an event of artistic
expression, although its impact on the real economy is not exactly determined.

The new observed conditions that result from the ever-changing environment,
globalization, the changing economic and political structures, new technologies,
specialized customer demands, and the emphasis on the quality of products and services
have led the economies to appreciate the factors shaping business development and
creativity in the increasingly competitive world markets.

Thus, in times—such as the recent ones—dominated by conditions of glaring

uncertainty and low nominal rates of return, creative cognition plays an important role as
it searches for the limited business opportunities and contributes to their successful
realization .

The firms and the organizations that appear to have a high-level long-term
performance are those that are more creative and innovative. Those firms and
organizations use innovative ideas from others in order to create something unique, thus
avoiding copying their ideas

How is entrepreneurial creativity shaped?

What are, however, the factors that shape entrepreneurial creativity, which in turn
is expected to promote entrepreneurship and lead to economic growth? Below, we
attempt to present a literature review of the most important factors that shape and
influence entrepreneurial creativity, as they are presented in the literature. These factors
are not necessarily related to one another, but their common feature is that they
constitute factors that affect entrepreneurial creativity, positively or negatively. In this
way, a model of economic development through entrepreneurial creativity—and its effects
on entrepreneurship—is formed.

These factors—their contribution to entrepreneurial creativity is analyzed below—

are as follows: (a) knowledge and education, (b) managing disrupting technologies, (c)
spill-over creativity, (d) the role of the cultural background and the personal
characteristics of individuals, (e) the motives and incentives, (f) managing resources, and
(g) the institutional background.

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Innovation and Entrepreneurship
The concepts of innovation and entrepreneurship are undeniably interrelated:

Innovation is the specific tool of entrepreneurs, the means by which they exploit
change as an opportunity for a different business or a different service. It is capable of
being presented as a discipline, capable of being learned, capable of being practiced.
Entrepreneurs need to search purposefully for the sources of innovation, the changes and
their symptoms that indicate opportunities for successful innovation. And they need to
know and to apply the principles of successful innovation (Drucker, 1985, p. 19).

Drucker (1985) argued that innovation should be viewed as an economic or social

phenomenon rather than a technological term. Innovation is not about making new
inventions, but rather about recognizing how to take advantage of opportunities and
changes: “Systematic innovation therefore consists in the purposeful and organized search
for changes, and in the systematic analysis of the opportunities such changes might offer
for economic or social innovation” (p. 35). This is consistent with Schumpeter’s (1934)
view that innovation arises from new combinations of materials and forces.
To better understand the interrelationship between innovation and entrepreneurship, we
will consider some of the building blocks for both innovation and successful
entrepreneurship.

Competencies and Core Competence

Competencies are the necessary ingredients for entrepreneurial competence:

Individual competencies are the combination of learnable behaviors that encompass
attitudes (wanting to do), skills (how to do), knowledge (what to do), practical
experiences (proven learning), and natural talents of a person in order to effectively
accomplish an explicit goal within a specific context.

Collective competencies are the synergistic combination of the individual

competencies of team members within organizations. There is a continuum that exists
from low-functioning teams to high-functioning teams. High-functioning teams, although
very rare, are those that apply collective competencies the most effectively (Matthews &
Brueggemann, 2015, p. 10).

Core competencies are those that are collectively held and that include “the
learnable behaviors the entire organization must practice in order to achieve competence
in relation to the organization’s purpose and its competitive environment. A core
competency encompasses the knowledge, skills, and technology that create unique
customer value” (Matthews & Brueggemann, 2015, p. 11):

Organizations need to identify what core competencies they need to cultivate in

their precious human resources in order to meet a competence level that rises above the
competition.

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 The three tests to identify a core competence are:

o First, a core competence provides potential access to a wide variety of

markets.
o Second a core competence should make a significant contribution to the
perceived benefit of the end product.
o Finally a core competence should be difficult for competitors to imitate
(Matthews & Brueggemann, 2015, p. 12).

Entrepreneurs must assess their and their organization’s individual competencies

to better understand how to fill competency gaps and build collective and core
competencies.

Elements of Innovation

Matthews and Brueggemann (2015) identified the following 12 elements of

innovation. They argued that innovation is best understood by first examining each of the
following elements.

Innovation Degrees

Incremental innovations are small-scale improvements on what is already being

done, often with the intention to improve efficiencies to reduce costs, or improve products
or services offered: “Both Six Sigma and Lean are well-regarded managerial quality
improvement programs that explicitly target the removal of many types of organizational
waste and variability…. An incremental innovation can be used to differentiate products
for marketing purposes” (Matthews & Brueggemann, 2015, p. 34).

Evolutionary innovations involve doing new things for existing customers and
markets, and also doing things that extend product offerings to new customers and new
markets (Matthews & Brueggemann, 2015).

\ Revolutionary innovations are when businesses pursue new products, businesses,

customers, and markets. The impacts from these types of innovations can be much higher
than from either incremental or evolutionary innovations (Matthews & Brueggemann,
2015).

Innovation Types

There are many types of innovations. “Organizing innovation into types makes it is
easier to understand how you can use multiple types of innovation simultaneously. The
fundamental innovation types include products, customer experiences, solutions, systems,
processes, and business and managerial models” (Matthews & Brueggemann, 2015, p.
37). Matthews and Brueggemann (2015) combined the innovation degrees with the
innovation types to develop The Innovation Matrix.

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Innovation Direction

Innovation direction is a concept that encompasses forward and reverse

innovation. Innovation direction is a notion that is based on the source and target of the
innovation. A forward innovation would have its source in country X and the target in
country X. A reverse innovation would have its source in country Y and later targeted to a
different country such as country X. Country X or Y could be a developed or developing
country (Matthews & Brueggemann, 2015, p. 40).

Innovation Risk

The entrepreneurial ecosystem described earlier in this book indicated that

individuals, firms, and organizations are interconnected in ways that impact each other.
According to Matthews and Brueggemann (2015), co-innovation risk occurs when multiple
actors in the ecosystem attempt to innovate, which leads to the possibility that a new
innovation developed by one company is ready at a different time than a dependent
second innovation developed by another firm. For example, it can be disastrous for a
computer hardware company to release a new product that is dependent upon new
software if the company developing that software does not make it available on time.

Adoption chain risk also occurs when multiple firms in the value chain are
simultaneously developing new products and services. If one firm, for example, releases a
product that must be serviced by a different company before that other company is
prepared to offer that service, the product release can fail (Matthews & Brueggemann,
2015).

Innovation Principles and Tenets

Both non-profit and for-profit organizations are governed by principles that dictate
how they operate. Non-profits often strive to alleviate social problems while for-profits
attempt to satisfy the desires of their shareholders. An increasing number of organizations
are adopting alternative measures of performance that include not only economic
outcomes, but also social and environmentally responsible results: a triple bottom line
(Kneiding & Tracey, 2009). This can—and should—lead to organizations redefining
themselves as pursuing the creation of shared value rather than just profits (Matthews &
Brueggemann, 2015; Porter & Kramer, 2011):

Companies must take the lead in bringing business and society back together. The
recognition is there among sophisticated business and thought leaders, and promising
elements of a new model are emerging. Yet we still lack an overall framework for guiding
these efforts, and most companies remain stuck in a “social responsibility” mindset in
which societal issues are at the periphery, not the core.

The solution lies in the principle of shared value, which involves creating economic
value in a way that also creates value for society by addressing its needs and challenges.
Businesses must reconnect company success with social progress. Shared value is not
social responsibility, philanthropy, or even sustainability, but a new way to achieve
economic success. It is not on the margin of what companies do but at the center. We
believe that it can give rise to the next major transformation of business thinking. …

62
The purpose of the corporation must be redefined as creating shared value, not just profit
per se. This will drive the next wave of innovation and productivity growth in the global
economy. It will also reshape capitalism and its relationship to society. Perhaps most
important of all, learning how to create shared value is our best chance to legitimize
business again (Porter & Kramer, 2011, p. 4).

Innovation Thresholds

Organizations should strive to achieve their innovation threshold:

An innovation threshold is a marker that each business sector needs to achieve in order to
be competitive. To thrive, an organization cannot under-innovate, while over-innovation
would be wasteful and ineffectual. Innovation thresholds range from low to high, and are
different for each business sector. Once an organization achieves the innovation
threshold, additional innovation may not matter (Matthews & Brueggemann, 2015, p. 52).

After achieving their innovation threshold such that more innovation might not
generate enough extra value to make the effort worthwhile, organizations must rely on
other innovation competencies. For example, some industries like insurance and airlines
have a relatively low product innovation threshold, so after reaching it they must rely on
other forms of innovation and entrepreneurship competencies “such as creativity, culture,
strategy, leadership, and technology” (Matthews & Brueggemann, 2015, p. 53) to further
advance their goals. Higher technology fields normally have higher product innovation
thresholds and can gain much by striving for more product innovations.

Innovation Criteria

Matthews and Bruggemann (2015) argue that a design should be judged based on
its desirability, feasibility, and viability: “An innovative design needs to be desirable,
feasible, and aligned with a sustainable business model” (Matthews & Brueggemann,
2015, p. 53).

Innovation Processes

Another element of innovation is the set of planned innovation processes that are
required to make innovation happen. These processes must balance the need to provide
customers with what they want with what is technologically feasible and financially viable.
One example of an innovation process is design thinkin

63
 LESSON 2

THE INTELLECTUAL
PROPERTY
PROTECTION

As your new invention comes to light, your initial thought may be to let the world
know. While shouting your success from the rooftops is appealing, before you do, you
need to consider how best to protect what you have worked so hard to develop.

Patents and copyrights can offer you some security, but don’t always mean that
your design is completely protected, as copies can certainly emerge. There are, however,
a number of other options available to you, each with their own strengths.

FOCUS QUESTION
What are the different ways to protect your ideas?

64
THE IMPORTANCE OF PROTECTING INTELLECTUAL PROPERTY
Intellectual property (IP) rights are valuable assets for your business -
possibly among the most important it possesses.

Why is it important to protect intellectual property rights?

Your IP rights are important because they can: set your business apart from
competitors be sold or licensed, providing an important revenue stream offer customers
something new and different form an essential part of your marketing or branding be
used as security for loans

You may be surprised at how many aspects of your business can be protected.
Your name and logo, designs, inventions, works of creative or intellectual effort or
trademarks that distinguish your business can all be types of IP. Some IP rights are
automatically safeguarded by IP law, but there are also other types of legal protection you
can apply for.

For many businesses, intellectual property protects more than just an idea or a
concept – it protects genuine business assets that may be integral to the core services of
the business and overall long-term viability.

Intellectual property can consist of many different areas, from logos and corporate
identity through to products, services and processes that differentiate your business
offering. It’s when these ideas are used without permission that an organisation can
suffer.

Almost all businesses have undoubtedly benefited from the internet, where
products, services and marketing communications can reach vast audiences at relatively
low costs - but this has also increased the chances of intellectual property theft.
Companies of all sizes are at risk of having their unique ideas, products or services
infringed upon, even if they are on the other side of the world, making intellectual
property protection more important than ever.

When you have a great idea for a product or service, there will always be people
who will want to duplicate your success and sell your ideas as their own. Depending on
individual circumstances, you can use patents, trademarks or copyrights – all of which
cover different areas of intellectual property. These can be used to prevent competitors or
anyone else from using your ideas for their own profit without your consent. Read more
about the forms of IP. IP protection applies to businesses of all sizes; even huge
corporations have had their ideas infringed upon and have made multi-million pound
lawsuits; just look at the on-going disputes between Apple and Samsung over their
smartphones.

If you are a small business, it’s very important to protect any unique products or
services that you own as competitors can use your success to take away market share,
resulting in slow growth or loss of revenue. Losing market share early on in a business’s
development can be devastating and time consuming if trying to chase up the guilty party

65
without any legal protection. It’s important to remember that no one else will check to see
if your intellectual property has been infringed; it’s your responsibility to ensure that no
one else is using your assets.

TYPES OF INTELLECTUAL PROPERTIES

On the national level, Republic Act 8293
or the Intellectual Property Code of the
Philippines (IP Code) covers intellectual
property and its protection. The IP Code
updated and consolidated the country's laws on
patents, trademarks and copyright in the light
of emerging global issues in the field of
intellectual property and in compliance with
commitments under international conventions
and treaties to which the country is a party
(Expressions of Creativity, IP Philippines).

Intellectual property has two categories: industrial property and copyright and
neighboring rights. Industrial property includes patents, trademarks and other marks,
geographic indications, utility models, industrial designs, topographies of integrated
circuits and trade secrets. On the other hand, copyrights and neighboring rights include
scientific, scholarly, artistic and literary works, examples of which are, musical works,
dramatic works, audio visual works, paintings and drawings, sculptures, photographic
works, architectural works, sound recordings, databases and computer software, and
other works embodied in Part IV (Law on Copyright) of RA 8293.

Most research outputs in UPLB are in the form of inventions, utility models,
industrial designs, computer programs, as well as literary, scholarly, and artistic works.
Under the IP Code, inventions are protected by patents; utility models and industrial
designs by their registration; and computer programs, literary, scholarly, and artistic
works by copyright.

Patent is an exclusive right granted by the State through the Intellectual Property
Office of the Philippines (IP Philippines) to a patent owner for a product, process, or an
improvement of product or process for a specified period in exchange of the full disclosure
of the invention.

Patentable invention offers a technical solution to a problem in any field of human

activity and must fulfill three basic criteria:

➢ Novelty or newness. This is determined through a search conducted by

an accredited patent office to determine if the invention is new, original,
and that no prior art exists over it. Prior art means everything which has
been made available to the public anywhere in the world, before the filing
date or the priority date of the application claiming the invention.

66
 ➢ Inventive Step. There must be an inventive step involved in creating the
invention. As such, the invention must not be obvious to a person skilled in
the art.

➢ Industrial Applicability. There must be some use for the invention. It

can be a practical solution to a problem that can benefit the public.

All three must be satisfied to obtain a patent. An invention has a term of

protection of 20 years from the filing date of application. A patent owner has the right to
prohibit any unauthorized person or entity from using, making, or selling his product or
process. The right can also be transferred or assigned through licensing contracts.

Utility model is also known as a petty patent. To qualify, the invention must be
new and industrially applicable. It has a term of protection of seven years, without
renewal.

Industrial Design. This consists of composition of lines or colors or any three-

dimensional forms which serve as a pattern for industrial products or handicrafts. An
industrial design has a term of protection of five years which can be renewed for two
consecutive periods of five years.

Layout Design of Circuits. The layout design or topography of circuits is

commonly used in microchips and semiconductor chips for manufacturing. It has a term of
protection of 10 years without renewal.

New Plant Varieties. To cover breeders' rights and protection of plant varieties,
the Plant Variety Protection Act as signed into law. In order to qualify, the plant varieties
should be new, distinct, uniform and table. The term of protection is 25 years from the
grant of Certificate of Plant Variety Protection or trees and vines. All other types, are
protected for 20 years from the grant of certificate.

Trademark may consists of words, names and first names, signatures,acronyms

among others. It serves as an indicator of source, a guarantee of quality, and an
advertising tool. The right to a trademark is granted when its owner registers it with the
IP Philippines. The trademarks has a 10-year protection renewable for succeeding periods
of 10 years.

Copyright is the exclusive and legally secured right given to creators or authors
for their literary and artistic works to prohibit or authorize the reproduction or copying of
the work. It allows the creator to derive economic or financial reward from the use of his
works by others and to claim authorship of a work and to have that authorship
recognized.

The term of protection covers the lifetime of the author and 50 years after his
death. Copyright application is filed with the Copyright Division of the National Library and
the Supreme Court Library.

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UNIT ASSESSMENT

NAME
COURSE/YEAR/SECTION
DATE

Score

A. Essay. Read, analyse and answer the following questions. Write your
answer on the space provided. Use extra sheet if needed.

1. What is an intellectual property?

2. Why is it important to register your business ideas?

3. What are the benefits of registering ideas?

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 4. What are the differences among trademark, copyright, patent and utility
model?

B. Supply the missing information. Below is a table on the different kinds

of intellectual properties. Provide at least FIVE (5) examples of things,
materials, products or ideas under each that can be registered for
protection.

PATENT

COPYRIGHT

TRADEMARK

UTILITY MODEL

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 THREE
CREATING ENTERPRISE

OBJECTIVES
At the end of the unit, the student must have:

✓ identified the three basic forms of business ownership

✓ discussed the advantages and disadvantages of each of the three patterns of
business ownership
✓ described resources available for researching one’s business plan,
✓ named common mistakes to avoid in business planning.

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LET’S GET STARTED
What is your dream business? How do you see yourself ten years after establishing
that business? Enumerate your plans in life. Write each plan in every dream cloud below.

Dream business: ___________________

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 LESSON 1

IDENTIFYING BUSINESS
OPPORTUNITIES

`A business opportunity, in the simplest terms, is a packaged business investment

that allows the buyer to begin a business. (Technically, all franchises are business
opportunities, but not all business opportunities are franchises.) Unlike a franchise,
however, the business opportunity seller typically exercises no control over the buyer's
business operations. In fact, in most business opportunity programs, there's no continuing
relationship between the seller and the buyer after the sale is made.

Although business opportunities offer less support than franchises, this could be an
advantage for you if you thrive on freedom. Typically, you won't be obligated to follow the
strict specifications and detailed program that franchisees must follow. With most business
opportunities, you would simply buy a set of equipment or materials, and then you can
operate the business any way and under any name you want. There are no ongoing
royalties in most cases, and no trademark rights are sold.

FOCUS QUESTION

What kind of business would you like to establish in the near future?

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THE SEARCH FOR BUSINESS OPPORTUNITIES
Business opportunities exist all around us, every moment of the day we come
across business opportunities, however, our abilities to identify them and the confidence
to seize them differs. The most important is to be able to identify them.

Business opportunities are high probabilities to offer a service or sell a product to

satisfy identified needs of people, families, and a society, in return for money. Yes, money
is the result of taking advantage of business opportunities. However, the focus should be
on providing great service or authentic and valuable products first before money starts
rolling in.

Distinction Between a Business Idea and a Business Opportunity.

Business ideas are not business opportunities. A business idea is a clue or feeling
that a certain solution, service or product will satisfy needs which for which customers are
willing to pay for. No matter how cutting-edge, modernistic a business idea may seem to
be if customers are not willing to pay for it, it is not a business opportunity. The
willingness of potential customers to pay for your solution to their problems is what
translates a business idea into a business opportunity. Your customers must see the value
in your business idea for it to become an opportunity.

Sources of Business Ideas

The general conception of the source of ideas is a moment of creative insight. That
moment when it suddenly hits you. The “Aha! moment”. Well, it’s true, but not all the
time.
Business ideas come through a more practical approach. You should be more
specific in your search for needs by focusing on a particular business industry. Usually,
there are always unsatisfied needs in business industries, even in well advanced and
mature industries.

The creation of new solutions in industries also creates more unsatisfied needs.
The key is to source for unsatisfied needs. Business opportunities lie within unsatisfied
needs.

FACTORS TO CONSIDER WHEN EVALUATING VIABLE BUSINESS

OPPORTUNITIES

An entrepreneur needs to determine whether the business idea they have in mind
is viable or not. When evaluating the viability of the business opportunity, the
following factors need to be taken into consideration:

• Potential for growth:

An opportunity is said to be viable, when it has the ability to grow and expand.

• Infrastructure:
Easy access to infrastructure such as technology, roads, water, electricity,

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telephone and postal services among others enables business enterprises easily
make orders for goods and deliver them hence reducing operating expenses. With
low operating expenses, profits can be maximized.

• Market for the goods and services:

An entrepreneur has to access potential and actual market for the goods and
services he would like to sell. There must be a clearly defined market if the
opportunity is to be considered.

• Rewarding to the investor:

The opportunity should be rewarding to the investor (cost-benefit consideration).
He should consider the expected returns against the expected cost to ensure that
the benefits outweigh the cost.

• Price structure:
One has to put into consideration the price-structure of the goods and services he
would like to offer. Goods and services, which are subjected to constant inflation,
are likely to change in terms of price.

• Competition and Competitive advantage:

Competition is regarded as a threat to business of similar kinds operating in a
similar location. Although competition is a threat, it is healthy in the sense that it
goes along the way in controlling price of goods offered. It is crucial for
entrepreneurs to consider opportunities where competition is not high as this will
enable them to get reasonable market share. They should venture where
competitive advantage is.

• Incentives:
Offered by the government and Non-Governmental Organizations, incentives are
legitimate business opportunities to exploit as they save on costs. E.g. duty free
importation of sugar and maize, tax waivers, e.t.c.

• Legal Consideration:
The new idea should be in line with the legal regulatory framework e.g. an idea to
sell drugs may not be viable because it is illegal.

• Financial viability:
The assessment of financial viability is of significant importance when looking at
the viability of the business. Capital investment requirements, break even analysis,
cash flow projections, profitability of the business have to be analyzed. This is
because they determine the sustenance of the business in the market-mix.

• Personnel, Training and Management:

Before starting a business, it is necessary to make an assessment of the required
personnel training and management. Look at the ability, cost of hiring and training
human resource. Management efficiency will enable the business to succeed.

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ACTIVITY
Business Ideas Score

NAME

TEACHER

DATE
INSTRUCTIONS Think of a business that you want to start in your barangay or
town. Using the factors to consider when evaluating viable
business opportunities, do you think your planned business is
feasible? Explain your answer below.

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 In order to evaluate your business opportunities properly, you should do a market
research.

Market Research is the process of gathering information about your business's

buyers personas, target audience, and customers to determine how viable and successful
your product or service would be among these people. Market research tells you where
these members of your audience and base of customers are conducting their own buyer
research about products and services similar to those you sell. It also tells you what's
trending in your industry, what your target audience and customers want and need out of
products and services like yours, and what's influencing their decisions to convert and
buy.

These are the steps on how to do a market research:

✓ Define your buyer persona.

✓ Identify a portion of that persona to engage.
✓ Engage your market research participants.
✓ Prepare your research questions.
✓ List your primary competitors.
✓ Summarize your findings

Strengths, Weaknesses, Opportunities, Threats

To be able to translate business opportunities into profit use the SWOT

(Strengths, Weaknesses, Opportunities, Threats). S.W.O.T. is an acronym that stands for
Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is an organized list
of your business’s greatest strengths, weaknesses, opportunities, and threats.

Strengths and weaknesses are internal to the company (think: reputation, patents,
location). You can change them over time but not without some work. Opportunities and
threats are external (think: suppliers, competitors, prices)—they are out there in the
market, happening whether you like it or not. You can’t change them.

Let's look at each area in more detail and consider what questions you could ask
as part of your analysis.

Strengths. Strengths are things that your organization does particularly well, or in
a way that distinguishes you from your competitors. Think about the advantages your
organization has over other organizations. These might be the motivation of your staff,
access to certain materials, or a strong set of manufacturing processes.

Your strengths are an integral part of your organization, so think about what
makes it "tick." What do you do better than anyone else? What values drive your
business? What unique or lowest-cost resources can you draw upon that others can't?
Identify and analyze your organization's Unique Selling Proposition (USP), and add
this to the Strengths section.

Then turn your perspective around and ask yourself what your competitors might
see as your strengths. What factors mean that you get the sale ahead of them?

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Remember, any aspect of your organization is only a strength if it brings you a clear
advantage. For example, if all of your competitors provide high-quality products, then a
high-quality production process is not a strength in your market: it's a necessity.

Weaknesses. Now it's time to consider your organization's weaknesses. Be

honest! A SWOT Analysis will only be valuable if you gather all the information you need.
So, it's best to be realistic now, and face any unpleasant truths as soon as possible.

Weaknesses, like strengths, are inherent features of your organization, so focus on

your people, resources, systems, and procedures. Think about what you could improve,
and the sorts of practices you should avoid.

Once again, imagine (or find out) how other people in your market see you. Do
they notice weaknesses that you tend to be blind to? Take time to examine how and why
your competitors are doing better than you. What are you lacking?

Opportunities. Opportunities are openings or chances for something positive to

happen, but you'll need to claim them for yourself!

They usually arise from situations outside your organization, and require an eye to
what might happen in the future. They might arise as developments in the market you
serve, or in the technology you use. Being able to spot and exploit opportunities can make
a huge difference to your organization's ability to compete and take the lead in your
market.

Think about good opportunities you can spot immediately. These don't need to be
game-changers: even small advantages can increase your organization's competitiveness.

What interesting market trends are you aware of, large or small, which could have
an impact? You should also watch out for changes in government policy related to your
field. And changes in social patterns, population profiles, and lifestyles can all throw up
interesting opportunities.

Threats. Threats include anything that can negatively affect your business from
the outside, such as supply chain problems, shifts in market requirements, or a shortage
of recruits. It's vital to anticipate threats and to take action against them before you
become a victim of them and your growth stalls.

Think about the obstacles you face in getting your product to market and selling.
You may notice that quality standards or specifications for your products are changing,
and that you'll need to change those products if you're to stay in the lead. Evolving
technology is an ever-present threat, as well as an opportunity!

Always consider what your competitors are doing, and whether you should be
changing your organization's emphasis to meet the challenge. But remember that what
they're doing might not be the right thing for you to do, and avoid copying them without
knowing how it will improve your position.

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 Be sure to explore whether your organization is especially exposed to external
challenges. Do you have bad debt or cash-flow problems, for example, that could make
you vulnerable to even small changes in your market? This is the kind of threat that can
seriously damage your business, so be alert.

You can employ a SWOT analysis before you commit to any sort of company
action, whether you are exploring new initiatives, revamping internal policies, considering
opportunities to pivot or altering a plan midway through its execution. Sometimes it's wise
to perform a general SWOT analysis just to check on the current landscape of your
business so you can improve business operations as needed. The analysis can show you
the key areas where your organization is performing optimally, as well as which
operations need adjustment.

Don't make the mistake of thinking about your business operations informally, in
hopes that they will all come together cohesively. By taking the time to put together a
formal SWOT analysis, you can see the whole picture of your business. From there, you
can discover ways to improve or eliminate your company's weaknesses and capitalize on
its strengths.

While the business owner should certainly be involved in creating a SWOT analysis,
it is often helpful to include other team members in the process. Ask for input from a
variety of team members and openly discuss any contributions made. The collective
knowledge of the team will allow you to adequately analyze your business from all sides..

A SWOT analysis focuses on the four elements of the acronym, allowing companies
to identify the forces influencing a strategy, action or initiative. Knowing these positive
and negative elements can help companies more effectively communicate what parts of a
plan need to be recognized.

When drafting a SWOT analysis, individuals typically create a table split into four
columns to list each impacting element side by side for comparison. Strengths and
weaknesses won't typically match listed opportunities and threats verbatim, although they
should correlate, since they are ultimately tied together.

Billy Bauer, managing director of Royce Leather, noted that pairing external
threats with internal weaknesses can highlight the most serious issues a company faces.
"Once you've identified your risks, you can then decide whether it is most appropriate to
eliminate the internal weakness by assigning company resources to fix the problems, or to
reduce the external threat by abandoning the threatened area of business and meeting it
after strengthening your business," said Bauer.

Internal factors

Strengths (S) and weaknesses (W) refer to internal factors, which are the
resources and experience readily available to you. These are some commonly considered
internal factors:

✓ Financial resources (funding, sources of income and investment

opportunities)

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 ✓ Physical resources (location, facilities and equipment)
✓ Human resources (employees, volunteers and target audiences)
✓ Access to natural resources, trademarks, patents and copyrights
✓ Current processes (employee programs, department hierarchies and
software systems)

External factors

External forces influence and affect every company, organization and individual.
Whether these factors are connected directly or indirectly to an opportunity (O) or threat
(T), it is important to note and document each one.

External factors are typically things you or your company do not control, such as
the following:

✓ Market trends (new products, technology advancements and shifts in

audience needs)
✓ Economic trends (local, national and international financial trends)
✓ Funding (donations, legislature and other sources)
✓ Demographics
✓ Relationships with suppliers and partners
✓ Political, environmental and economic regulations

After you create your SWOT framework and fill out your SWOT analysis, you will
need to come up with some recommendations and strategies based on the results. Linda
Pophal, owner and CEO of consulting firm Strategic Communications, said these strategies
should focus on leveraging strengths and opportunities to overcome weaknesses and
threats.

"This is actually the area of strategy development where organizations have an

opportunity to be most creative and where innovative ideas can emerge, but only if the
analysis has been appropriately prepared in the first place," said Pophal.

SWOT Analysis Example

Bryan Weaver, a partner at Scholefield Construction Law, was heavily involved in

creating a SWOT analysis for his firm. He provided Business News Daily with a sample
SWOT analysis template and example that was used in the firm's decision to expand its
practice to include dispute mediation services. His SWOT matrix included the following:

STRENGTHS WEAKNESSES
Construction law firm with staff members No one has been a mediator before or
who are trained in both law and been through any formal mediation
professional engineering/general training programs.
contracting. Their experience gives a One staff member has been a part
unique advantage. of mediations but not as a neutral
Small (three employees) – can change and party.
adapt quickly.

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 OPPORTUNITIES THREATS
Most commercial construction contracts Anyone can become a mediator, so
require mediation. Despite hundreds of other construction law firms could open
mediators in the marketplace, only a few up their own mediation service as well.
have actual construction experience. Most potential clients have a negative
For smaller disputes, mediators don't work impression of mediation, because they
as a team, only as individuals; Scholefield feel mediators don't understand or care
staff can offer anyone the advantage of a to understand the problem, and rush to
group of neutrals to evaluate a dispute resolve it.

Resulting strategy: Take mediation courses to eliminate weaknesses and launch

Scholefield Mediation, which uses name recognition with the law firm, and highlights that
the firm's construction and construction law experience makes it different.

"Our SWOT analysis forced us to methodically and objectively look at what we had
to work with and what the marketplace was offering," Weaver said. "We then crafted our
business plan to emphasize the advantages of our strongest features while exploiting
opportunities based on marketplace weaknesses."
Additional business analysis strategies

The SWOT analysis is a simple but comprehensive strategy for identifying not only
the weaknesses and threats of an action plan but also the strengths and opportunities it
makes possible. However, a SWOT analysis is just one tool in your business strategy.
Additional analytic tools to consider include the PEST analysis (political, economic, social
and technological), MOST analysis (mission, objective, strategies and tactics) and SCRS
analysis (strategy, current state, requirements and solution).

Consistent business analysis and strategic planning is the best way to keep track of
growth, strengths and weaknesses. Use a series of analysis strategies, like SWOT, in your
decision-making process to examine and execute strategies in a more balanced, in-depth
way.

Business Industries/Opportunities

When venturing into business it entails time and hard work. In the selection
process, one has to begin with choosing the right sector or industry.

Agricultural industry- The agriculture industry is one of the oldest types of

business industry. Agriculture industry consists of cultivating land, plants and breeding
animals to produce foods and other survival things. This industry is an integral part of
every country’s economy. The modernization in the agriculture industry took place in the
late 20th century, which is known as “Green Revolution”.

Construction Industry- The construction sector is indulged in designing,

building, constructing and maintaining the infrastructure. The construction industry can be
sub-divided into three categories such as heavy construction, general construction, and
specialized construction. Heavy construction includes the construction of bridges and
roads etc. General construction includes the building of residential places and commercial

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real estate. Specialized construction includes making electric and wood things required to
construct a building.

Food Industry comprises processing, preservation, conversion, and preservation

of eatable items. The raw material for the food industry is obtained from the agriculture
industry. Therefore, the food industry is dependent on the agriculture industry. After
processing food various chemicals and color are added to food items to preserve them for
a long time with maintaining their taste. The food industry has grown exponentially in the
past decade because in the fast-paced life people demand “ready – to – go” food.

Health Care Industry provides remedial, diagnostic, curative, preventive,

rehabilitative, therapeutic services to patients and to people in their old age. The main
goal of this industry is to revive and maintain the health of peoples. It is one of the fastest
growing industry. This type of business industry has great potential for investors
and entrepreneurs. Every country’s government spends a handsome amount of money to
this sector.

The Hospitality Industry is vast types of business industries. It provides

uncountable services to customers, so this industry is highly customer- oriented
industry. Customer satisfaction is the main objective of this industry. This industry is
exceptional, because the hospitality industry solely survives on “the want” of people, not
need like health care industry.

Manufacturing is the process of converting raw material and components into

the final product to sell in the marketplace for public consumption. Manufacture industry
has many categories, for example, food industry, petroleum industry, paper industry,
wood industry, leather industry, textile mill industry, apparel industry, transportation
equipment industry, electrical equipment industry etc.

The Transport Industry is one of the largest types of business industries. This
industry deals with the movement of humans, things and animals by various modes of
transportation. The main modes of transportation are air, land (Road and Rail) and water.
The transportation industry makes the largest part of any country’s economy.

Telecommunication Industry consists of companies which makes

communication possible worldwide through mobile phones, internet, cable or wirelessly. It
allows people to communicate using words, audio or video from any part of the world to
any part of the world. Smartphones can send information thousands of miles away within
seconds. The leading companies in the telecommunication industry are satellite
companies, internet service providers, wireless operator. Wireless internet has helped
other industries to generate great revenue.

Education Industry or education system is a group of school, colleges,

universities, institutes to provide learning, knowledge, skills, and a degree in various
fields. Educational institutes can broadly be divided into two categories public and private.
Public institutes are funded by government whereas private institutes run by a single
person or by a group of people.

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ACTIVITY
Business Industries/Opportunities Score

NAME

TEACHER

DATE
INSTRUCTIONS Choose four from the list of business industries. Think of a
particular business under each sector or industry. Using your
art materials, draw them below. Give a short description to
each business or sector.

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83
 LESSON 2

FORMS OF BUSINESS
ORGANIZATIONS

One of the first decisions that you’ll have to make as a business owners is how
your business should be structured. You need to know the advantages and disadvantages
of each of the different forms of business organization to make sure you’re making the
right decision for your new business.

All businesses must adopt some legal configuration that defines the rights and
liabilities of participants in the business’s ownership, control, personal liability, lifespan and
financial structure. The form of business determines which income tax return form to file
and the company’s and owners legal liabilities.

FOCUS QUESTION
What are the major business organizations?

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 Business organization is the single-most important choice you’ll make regarding
your company. What form your business adopts will affect a multitude of factors, many of
which will decide your company’s future. Aligning your goals to your business organization
type is an important step, so understanding the pros and cons of each type is crucial.

Your company’s form will affect:

✓ How you are taxed

✓ Your legal liability
✓ Costs of formation
✓ Operational costs

Types of Company Structures in the Philippines

A company structure is a group of people

organized for some profitable or charitable
purpose. Business entities include organizations
such as corporations, partnerships, charities,
trusts, and other forms of organization. Business
entities, just like individual persons, are subject to
taxation and must file a tax return.

One of the most important is the type of

legal structure you select for your company. Not only will this decision have an impact on
how much you pay in taxes, it will affect the amount of paperwork your business is
required to do, the personal liability you face and your ability to raise money.

In Philippines the most common types of businesses are sole proprietorships,

partnerships and corporation.

A. Sole Proprietorship

Sole Proprietorship is a business structure owned by an individual who has full

control/authority of its business and owns all the assets, personally owes answers to all
liabilities or suffers all losses but enjoys all the profits to the exclusion of others. A sole
proprietorship must apply for a business name and be registered with the Department of
Trade and Industry (DTI) – National Capital Region (NCR). In the provinces, application
may be filed with the DTI regional/provincial offices.

Pros

o The owner enjoys all the profits of the business: since it is owned by a
single person, he enjoys all the profits that the business accrues.
o Quick Decision Making: When it comes to making decisions about changing
the type or quantity of commodities that the business deals in, you do not
have to consult anyone.
o Easy to Manage: As a single business owner, it easy to manage your
business since there is no bureaucracy that you have to follow when
making decisions.

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 o Flexibility: This applies in terms of changing the commodities that you sell.
You can change them anytime you feel like as long as it is a general sole
proprietorship with freedom to sell any product.
o Easy to Start: Yes, this business type does not have very long legal
procedures to follow before it gets established.

Cons

o The owner incurs all the losses: In case of losses, the sole proprietor bares
all the burden solely.
o Unlimited liability: This means that in case the business runs bankrupt, the
assets of the business owner will be sold to clear off the debts.
o The business owner pays personal income taxes on the business net
profits.

B. Partnership

Under the Civil Code of the Philippines, a partnership is treated as juridical person,
having a separate legal personality from that of its members. Partnerships may either be
general partnerships, where the partners have unlimited liability for the debts and
obligation of the partnership, or limited partnerships, where one or more general partners
have unlimited liability and the limited partners have liability only up to the amount of
their capital contributions. It consists of two or more partners. A partnership with more
than Peso 3,000 capital must register with the Securities and Exchange Commission
(SEC).

Pros

o Easy to Start: Forming a general partnership usually takes a short time

since it does not involve long legal procedures.
o Requires less capital: The amount required to start off a partnership is not
equal to the amount you need to start a company. The amount of profits
are shared according to the ratio of capital contribution of each partner.
The higher the capital you contributed, the more the profits you enjoy.
o Consultation: The good thing with partnerships is that before arriving at a
final decision, there is always consultation between the partners. This leads
to better decisions that improve the business.
o Quick Decision Making: A partnership owned and operated by two people is
easy to make decisions that can enhance the performance of the business.
You don’t need to call a meeting to discuss arising issues, just a phone call
is enough.

Cons

o Unlimited liability: General partnerships means that all the partners have
unlimited liability. In case of business debts that the business is unable to
pay, the personal assets of the partners are at risk of getting sold in order
to clear off the debt.

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 o Internal Wrangles: Sometimes many partnerships do fail because of
internal conflicts or personal interests of a certain partner. The partners
have a burden of paying personal income taxes on the net profits of the
business.

Partnerships are recorded with the Securities & Exchange Commission (SEC). The
following requirements must be submitted with the SEC:

➢ Name Verification Slip with the reservation of the partnership name

➢ Articles of Partnership
➢ Registration Data Sheet
➢ Affidavit of a partner undertaking to change partnership name
➢ Certificate of Bank Deposit

If a partnership has foreign partners, the following additional requirements must

be filed:

➢ SEC Form No. F-105

➢ Bank certificate on the capital contribution of the partnersp
➢ For foreign partners who want to register their investments with the Bangko
Sentral ng Pilipinas, proof of the remittance

A partner has certain rights in the partnership. Thus, he has a share in the
profits of the partnership and has the right to a specific partnership property. As a
partner, he has a right to participate in the management, inspect partnership books
and can in fact, demand for a formal accounting. However, rights have corresponding
obligations. Hence, a partner is obligated to give his contribution and share in the
losses.

There are many types of partners, the common types of which are:

➢ General partner
➢ Industrial partner (one who furnishes labor or industry)
➢ Capitalist partner (one who give capital)
➢ Limited partner (one who is liable only to the extent of his contribution)

C. Corporation

Corporation is composed of juridical persons established under the Corporation

Code and regulated by the SEC with a personality separate and distinct from that of its
stockholders. The liability of the shareholders of a corporation is limited to the amount of
their share capital. It consists of at least five to 15 incorporators, each of whom must hold
at least one share and must be registered with the SEC.

Minimum paid up capital is Peso 5,000. A corporation can either be stock or non-
stock company regardless of nationality. Such company, if 60% Filipino – 40% foreign-
owned is considered a Filipino corporation; if more than 40% foreign-owned, it is
considered a domestic foreign-owned corporation.

87
 Pros

o One of the most attractive things about a corporation is that the owners
have limited liability. This means that in case of debts, the assets of the
owners are very safe and remains untouched by the creditors.
o There is a possibility to lower taxes especially when the owner and the
business share profits.
o At certain times, benefits may be deducted as business expenses.
o The ownership of a corporation is easily transferable. This means that in an
event whereby the current shareholders and directors foresee a dark
future, they might sell the corporation and hence avoid losing their capital
investment.

Cons

o It is very expensive compared to setting up simple business setups such as

sole proprietorship and partnerships.
o Starting a corporation involves a lot of paperwork. When it comes to legal
paperwork, the owner must file it with the secretary of state.
o A corporation operates as a separate legal entity and hence is entitled to
pay taxes.
o There is slow decision making in corporations since the directors have to be
consulted before any verdict is reached.
o Have you figured out what business structure suits your business? No
Pressure, if these information are still not enough vOffice can help you
decide what business entity your business need.

Two Kinds of Corporation

Stock Corporation. The capital of a stock corporation is divided into shares,

which are distributed to investors. In return, investors receive dividends and part of the
surplus profits computed based on the number of shares they hold.

Non-stock Corporation. A non-stock corporation does not issue shares of stock

to its members since the entity exists for charitable, educational, cultural, or other
equivalent purposes.

Where to Register a Corporation?

Here are the government agencies where you are required to register a
Corporation in the Philippines:

✓ Securities and Exchange Commission

✓ Local Government Units where your business is located:
✓ Barangay
✓ Mayor’s Office
✓ Bureau of Internal Revenue

88
Cooperatives in the Philippines

A cooperative is a duly registered

association of persons with a common bond
of interest, who have voluntarily joined
together to achieve a lawful common social
or economic end, making equitable to
contribution to the capital required and
accepting a fair share of the risks and
benefits of the undertaking in accordance
with universally accepted cooperative
principles.

The declared purpose of the law governing cooperatives (Republic Act 6938, also
known as the Cooperative Code of the Philippines) is to foster the creation and growth of
cooperatives as a practical vehicle for promoting self-reliance and harnessing people
power towards the attainment of economic development and social justice. The law
provides important benefits to the cooperative and its empowered members, based on our
experience in handling client-cooperatives.

The following are the declared principles of cooperativism:

1. Open and voluntary membership. Membership in a cooperative is

voluntary and available to all individuals regardless of their social,
political, racial or religious background or beliefs.

2. Democratic control. Cooperatives are democratic organizations. Their

affairs are administered by persons elected or appointed in a manner
agreed upon by the members. Members of primary cooperatives have
equal voting rights on a one-member-one-vote principle.

3. Limited interest in capital. Share capital shall receive a strictly limited

rate of interest.

4. Division of net surplus. Net surplus arising out of the operations of a

cooperative belongs to its members and shall be equitably distributed for
cooperative development common services, indivisible reserve fund, and
for limited interest on capital and/or patronage refund in the manner
provided by law.

5. Cooperative education. All cooperatives shall make provision for the

education of their members, officers and employees and of the general
public based on the principles of cooperation.

6. Cooperation among cooperatives. All cooperatives, in order to best

serve the interest of their members and communities, shall actively

89
 cooperate with other cooperatives at local, national, and international
levels.

There are different kinds of cooperatives.

In general, these are:

a. Credit cooperative, which promotes thrift and savings among its

members and creates funds in order to grant loans for productivity;

b. Consumer cooperative, the primary purpose of which is to procure and

distribute commodities to member and non-members;

c. Producers cooperative, which undertakes joint production whether

agricultural or industrial;

d. Service cooperative, which engages in medical, and dental care,

hospitalization, transportation, insurance, housing, labor, electric light
and power, communication and other services; and

e. Multi- purpose cooperative, which combines two or more of the business

activities of these different types of cooperatives.

In terms of membership, cooperatives are classified as:

(1) Primary, wherein the members are natural persons of legal age;

(2) Secondary, the members of which are primaries; and

(3) Tertiary, the member of which are secondaries upward to one or more
apex organizations.

Cooperatives whose members are cooperatives are called federations or

unions.

90
 ACTIVITY
Business Structures Score

NAME

TEACHER

DATE
INSTRUCTIONS Identify whether the following business are: a) Solo
Proprietorship; b) Partnership or c) Corporation. Write the
letter of your choice on the space provided before the
number.

____________________ 1. Allen, a student sells kakanin during Sundays. The capital of which
comes from his savings.

____________________ 2. Meralco, a power utility company is 44 % owned by Manuel Pangilinan

while the rest of the company’s shares are owned by other stock holders including Lopez Group.

____________________ 3. Friends, Ana a nd Dave, put up a Kiosk selling hotdogs and ice cream.

____________________ 4. Evelyn, a widower, established the largest grocery store in town last
year.
____________________ 5. Cheryl and Meer plan to buy and put up a franchise of Leylam’s
Shawarma at SaveMore Calinog.

____________________ 6. Antonio, is selling his specialty, Chicken Empanada, online.

____________________ 7. Rundy and Cherry own 50% stake in a computer shop.

____________________ 8. Jollibe

____________________ 9. Aliw Broadcasting is also known as TV5

____________________ 10. Mang Inasal is now majority owned by Jollibee Foods with lesser
shares from Capiz-native, Injap Sia and his family.

91
UNIT ASSESSMENT
NAME
COURSE/YEAR/SECTION
DATE

Score

A. Read, analyse and answer the following questions carefully. Write your
answers on the space provided. Use extra sheet if needed.

1. What are the different business industries or sectors located in your municipality?
Identify five and lists the different names of establishments as an example.

92
2. During this pandemic, which industry or sector will thrive and grow more? Explain your
answer.

3. If you are to establish a business this time, what would it be and will it be a single
proprietorship or partnership?

93
 FOUR
DEVELOPING A
BUSINESS PLAN

OBJECTIVES
At the end of the unit, the student must have:

✓ discussed the importance of a business plan;

✓ enumerated the components of a business plan;
✓ designed a production plan;
✓ determined the financial needs of the propose business plan, and;
✓ analyzed the feasibility of the propose business plan.

94
 LESSON 1

THE BUSINESS PLAN

Whether you've just started out or been running your business for years, business
planning can be the key to your success. Having a business plan:

a. can help you prioritise – it gives your business direction, defines your
objectives, maps out strategies to achieve your goals and helps you to manage
possible bumps in the road
b. gives you control over your business – the planning process helps you learn
about the different forces and factors that may affect your success. If you're
already in business, it helps you to step back and look at what's working and what
you can improve on
c. is vital to help you get finance – if you're seeking finance for your business,
you'll need to show banks and investors why they should invest in your business

FOCUS QUESTION

What are the steps in making a business plan?

95
What is a business plan?

Whether you’re starting a small business or exploring ways to expand an existing

one, a business plan is an important tool to help guide your decisions. Think of it as a
roadmap to success, providing greater clarity on all aspects of your business, from
marketing and finance to operations and product/service details.

While some owners may be tempted to jump directly into startup mode, writing a
business plan is a crucial first step for budding entrepreneurs to check the viability of a
business before investing too much time or money. The purpose of a business plan is to
help articulate a strategy for starting your business. It also provides insight on steps to be
taken, resources required for achieving your business goals and a timeline of anticipated
results.

For existing small businesses, a business plan should be updated annually as a

way to guide growth and navigate the expansion into new markets. Your plan should
include explicit objectives for hiring new employees, market analysis, financial projections,
and potential investors. The objectives should indicate how they’ll help your
business prosper and grow..

A business plan is a written

description of your business's future, a
document that tells what you plan to
do and how you plan to do it. If you jot
down a paragraph on the back of an
envelope describing your business
strategy, you've written a plan, or at
least the germ of one.

Business plans are like road maps; it’s possible to travel without one, but it will only
increase the likelihood of getting lost along the way. Rather than putting yourself in a
position where you may have to stop and ask for directions or even circle back and start
over, entrepreneurs often use business plans to help guide them. That’s because they
help business owners see the bigger picture, plan ahead, make important decisions, and
improve the overall likelihood of success.

Why is business plan important?

A well-written business plan is an important tool because it gives entrepreneurs

the ability to lay out their goals and track their progress as their business begins to grow.
Formulating a business plan should be the first thing done when starting a new business.
Business plans are also important for attracting investors so they can determine if your
business in on the right path and worth putting money into.

Though it may sound tedious and time-consuming, business plans are critical to
success. To outline the importance of business plans, here are 10-reasons why you need
one for your small business.

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1. To help you with critical decisions. While business plans have many purposes,
the primary importance of a business plan is that they help business owners make
better decisions.

Entrepreneurship is often an
endless exercise in decision making and
crisis management. Sitting down and
considering all the ramifications of any
given decision is a luxury that
entrepreneurs can’t always afford.
That’s where a business plan comes in.

Building a business plan allows

you to determine the answer to some of
the most critical business decisions
ahead of time. Creating a robust
business plan is a forcing function—you
have to sit down and think about major components of your business before you
get started, like your marketing strategy and what products you’ll sell. You answer
many tough questions before they arise. And thinking deeply about your core
strategies can also help you understand how those decisions will impact your
broader strategy.

2. To iron out the kinks. Putting together a business plan requires entrepreneurs
to ask themselves a lot of hard questions and take the time to come up with well-
researched and insightful answers. Even if the document itself were to disappear
as soon as it’s completed, the practice of writing it helps to articulate your vision in
realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes. According to the Small Business Administration,

only about half of small businesses are still around to celebrate their fifth birthday.
While there are many reasons why small businesses fail, many of the most
common are purposefully addressed in business plans.

4. To prove the viability of the business. Many businesses are created out of
passion, and while passion can be a great motivator, it’s not a great proof point.
Planning out exactly how you’re going to turn that vision into a successful business
is perhaps the most important step between concept and reality. Business plans
can help you confirm that your grand idea makes sound business sense.

A critical component of your business plan is the market

research section. Market research can offer deep insight into your customers,
your competitors, and your chosen industry. Not only can it enlighten
entrepreneurs who are starting up a new business, but it can also better inform
existing businesses on activities like marketing, advertising, and releasing new
products or services.

5. To set better objectives and benchmarks. Without a business plan, objectives

often become arbitrary, without much rhyme or reason behind them. Having a

97
 business plan can help make those benchmarks more intentional and
consequential. They can also help keep you accountable to your long-term vision
and strategy, and gain insights into how your strategy is (or isn’t) coming together
over time.

6. To communicate objectives and benchmarks. Whether you’re managing a

team of 100 or a team of two, you can’t always be there to make every decision
yourself. Think of the business plan like a substitute teacher, ready to answer
questions anytime there’s an absence.

7. To provide a guide for service providers. Small businesses typically

employ contractors, freelancers, and other professionals to help them with
individual tasks like accounting, marketing, legal assistance, and as consultants.
Having a business plan in place allows you to easily share relevant sections with
those you rely on to support the organization, while ensuring everyone is on the
same page.

8. To secure financing. If you’re planning on pitching to venture capitalists, borrowing

from a bank, or are considering selling your company in the future, you’re likely
going to need a business plan. After all, anyone that’s interested in putting money
into your company is going to want to know it’s in good hands and that it’s viable
in the long run.

Business plans are the most effective ways of proving that and are typically
a requirement for anyone seeking outside financing.

9. To better understand the broader landscape. No business is an island, and

while you might have a strong handle on everything happening under your own
roof, it’s equally important to understand the market terrain as well.

Writing a business plan can go a long way in helping you better understand your
competition and the market you’re operating in more broadly, illuminate consumer
trends and preferences, potential disruptions and other insights that aren’t always
plainly visible.

10. To reduce risk. Entrepreneurship is a risky business, but that risk becomes
significantly more manageable once tested against a well-crafted business plan.
Drawing up revenue and expense projections, devising logistics and operational
plans, and understanding the market and competitive landscape can all help
reduce the risk factor from an inherently precarious way to make a living.

Having a business plan allows you to leave less up to chance, make better
decisions, and enjoy the clearest possible view of the future of your company.

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Components of a Business Plan

Traditional business plans are more common, use a standard

structure, and encourage you to go into detail in each section. They
tend to require more work upfront and can be dozens of pages long.

This type of plan is very detailed, takes more time to write, and
is comprehensive. Lenders and investors commonly request this plan

Lean start-up business plans are less common but still

use a standard structure. They focus on summarizing only the most
important points of the key elements of your plan. They can take as
little as one hour to make and are typically only one page.

This type of plan is high-level focus, fast to write, and contains key elements only.
Some lenders and investors may ask for more information.
Traditional business plan format

Traditional Business Plan Format

You might prefer a traditional business plan format if you’re very detail oriented,
want a comprehensive plan, or plan to request financing from traditional sources.

When you write your business plan, you don’t have to stick to the exact business
plan outline. Instead, use the sections that make the most sense for your business and
your needs. Traditional business plans use some combination of these nine sections.

a. Executive summary. Briefly tell your reader what your company is and why it will
be successful. Include your mission statement, your product or service, and basic
information about your company’s leadership team, employees, and location. You
should also include financial information and high-level growth plans if you plan to
ask for financing.

b. Company description. Use your company description to provide detailed

information about your company. Go into detail about the problems your business
solves. Be specific, and list out the consumers, organization, or businesses your
company plans to serve.

Explain the competitive advantages that will make your business a success. Are
there experts on your team? Have you found the perfect location for your store?
Your company description is the place to boast about your strengths.

c. Market analysis. You'll need a good understanding of your industry outlook and
target market. Competitive research will show you what other businesses are
doing and what their strengths are. In your market research, look for trends and
themes. What do successful competitors do? Why does it work? Can you do it
better? Now's the time to answer these questions.

99
d. Organization and management. Tell your reader how your company will be
structured and who will run it. Describe the legal structure of your business. State
whether you have or intend to incorporate your business as a C or an S
corporation, form a general or limited partnership, or if you're a sole proprietor or
LLC.

Use an organizational chart to lay out who's in charge of what in your company.
Show how each person's unique experience will contribute to the success of your
venture. Consider including resumes and CVs of key members of your team.

e. Service or product line. Describe what you sell or what service you offer. Explain
how it benefits your customers and what the product lifecycle looks like. Share
your plans for intellectual property, like copyright or patent filings. If you're
doing research and development for your service or product, explain it in detail.

f. Marketing and sales. There's no single way to approach a marketing strategy.

Your strategy should evolve and change to fit your unique needs.

Your goal in this section is to describe how you'll attract and retain customers.
You'll also describe how a sale will actually happen. You'll refer to this section later
when you make financial projections, so make sure to thoroughly describe your
complete marketing and sales strategies.

g. Funding request. If you're asking for funding, this is where you'll outline your
funding requirements. Your goal is to clearly explain how much funding you’ll need
over the next five years and what you'll use it for.

Specify whether you want debt or equity, the terms you'd like applied, and the
length of time your request will cover. Give a detailed description of how you'll use
your funds. Specify if you need funds to buy equipment or materials, pay salaries,
or cover specific bills until revenue increases. Always include a description of your
future strategic financial plans, like paying off debt or selling your business.

h. Financial projections. Supplement your funding request with financial

projections. Your goal is to convince the reader that your business is stable and
will be a financial success.

If your business is already established, include income statements, balance sheets,

and cash flow statements for the last three to five years. If you have other
collateral you could put against a loan, make sure to list it now.

Provide a prospective financial outlook for the next five years. Include forecasted
income statements, balance sheets, cash flow statements, and capital expenditure
budgets. For the first year, be even more specific and use quarterly — or even
monthly — projections. Make sure to clearly explain your projections, and match
them to your funding requests.

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 This is a great place to use graphs and charts to tell the financial story of your
business

i. Appendix. Use your appendix to provide supporting documents or other materials

were specially requested. Common items to include are credit histories, resumes,
product pictures, letters of reference, licenses, permits, or patents, legal documents,
permits, and other contracts.

How to Organize Your Business Plan

There is no set order to your business plan, but, the Executive Summary, as an
overview, should come first. Beyond that, the order depends on your goals. If this plan is
to help you gather information and create your business roadmap, organize it the way
that helps you achieve your goals. It can help to have all similar content together, such as
all the material relating to markets (the Industry Overview, the Marketing Analysis, the
Competitive Analysis, and the Marketing Plan).

If your goal is to seek funding, organize the plan with a focus on leading with the
best first. If you have a stellar group of people serving on your new business's advisory
board, put that section directly after the Executive Summary. Highlighting your new
business's strengths will encourage your reader to continue reading your plan.

Add a Title Page and Table of Contents

After completing all the sections, don't forget to insert a title page at the beginning
of the plan followed by a table of contents listing each section with page numbers.

Table of Contents

1. Executive Summary................................ Page #

2. Business/Industry Overview................. Page #
3. Market Analysis........................................ Page #
4. The Competition...................................... Page #
5. Sales & Marketing Plan........................... Page #
6. Ownership and Management Plan....... Page #
7. Operating Plan.......................................... Page #
8. Financial Plan............................................ Page #
9. Appendices and Exhibits........................ Page #

The Appearance of Your Business Plan Matters Too

If the plan is just for you to keep you on track, create the plan in a way that helps
you achieve your goals. But if you're looking for funding or investors, the business plan is
a formal document, so it should look like one. Every aspect of your business plan should
impress your potential funding source. Pay attention to margins and formatting; make
sure it's spell checked and grammatically sound. If you're not good at this, pay someone
who is to do it. If you need printed copies, get them professionally printed and bound. As
always, looking successful is half the battle.

101
Why a Feasibility Study is Important for any Business

A feasibility study examines the practicability of a proposal, business venture or

idea. The principal function of this is to determine if the project will continue or not. In
business, feasibility studies work in a number of reasons.

The feasibility report will look at how a certain proposal can work in a long-term
basis or endure financial risks that may come. It is also helpful in recognizing potential
cash flow. Another important purpose is that it helps planners focus on the project and
narrow down the possibilities. Accordingly, a feasibility study can provide reasons not to
pursue the said project or proposal. When it comes to the operational aspect, the analysis
determines whether the plan has the necessary resources for it to be practicable. Truman
Mox will also help you figure out whether or not the people will support the subsequent
product or service. Additionally, you can have knowledge on the trends because a
feasibility study looks at the present-day market and studies the anticipated growth of
your target business sector.

Feasibility studies are prevalent in all business industries. Whether Hotel,

Hospitality, Restaurant, Real Estate, Medical, Office or Industrial. Getting a head start on\

Feasibility study from Truman Mox will ensure you save time and money on the
project. Truman Mox has been providing accurate and precise feasibility studies for
numerous industries. Find out more on how we can assist you obtain the necessary study
to ensure your project starts off on the right foot,

A feasibility study is simply an assessment of the practicality of a proposed plan or

project. As the name implies, these studies ask: Is this project feasible? Do we have the
people, tools, technology, and resources necessary for this project to succeed? Will the
project get us the return on investment (ROI) that we need and expect?

The goals of feasibility studies are as follows:

1. To understand thoroughly all aspects of a project, concept, or plan

2. To become aware of any potential problems that could occur while implementing
the project
3. To determine if, after considering all significant factors, the project is viable—that
is, worth undertaking

Steps for a Feasibility Study

1. Conduct a Preliminary Analysis. Begin by outlining your plan. ...

2. Prepare a Projected Income Statement. ...
3. Conduct a Market Survey, or Perform Market Research. ...
4. Plan Business Organization and Operations. ...
5. Prepare an Opening Day Balance Sheet. ...
6. Review and Analyze All Data. ...
7. Make a Go/No-Go Decision

102
ACTIVITY
Business Plan v. Feasibility Study Score

NAME

TEACHER

DATE
INSTRUCTIONS Answer the following questions.

1. Is there any difference between a business plan and a feasibility srudy?

2. What are the similarities and differences between the two?

SIMILARITIES DIFFERENCES

103
ACTIVITY
Score
BUSINESS PLAN

NAME

TEACHER

DATE
INSTRUCTIONS
Think of any business that you would like to venture to. Using
the format provided in this lesson, make a business plan for
your chosen business.

Business: ________________________

BUSINESS PLAN

104
105
 FIVE
GETTING READY:
STARTING THE
BUSINESS

OBJECTIVES
At the end of the unit, the student must have:

✓ Define what capital is and its kind;

✓ Enumerate sources of capital
✓ Identify the kind of source for each business;
✓ Identify the risk involve in each kind of source, and;
✓ apply the guidelines in starting up a business.

106
LET’S GET STARTED
Identify some words that you can associate with the given word: CAPITAL

CAPITAL

107
 LESSON 1

UNDERSTANDING
CAPITAL

Capital is a key part of running a business and growing an economy. Companies

have capital structures that include debt capital, equity capital, and working capital for
daily expenditures. Individuals hold capital and capital assets as part of their net worth.
How individuals and companies finance their working capital and invest their obtained
capital is critical for growth and return on investment.

Capital is typically cash or liquid assets held or obtained for expenditures. In

financial economics, the term may be expanded to include a company’s capital assets. In
general, capital can be a measurement of wealth and also a resource that provides for
increasing wealth through direct investment or capital project investments.

FOCUS QUESTION

Why iscapital essential in starting a business?

108
Understanding Capital
Capital is used to provide ongoing production of goods and services for creating
profit. Companies use capital to invest in all kinds of things for the purpose of creating
value for a firm. Labor and building expansions can be two areas where capital is often
allocated. By investing through the use of capital, a business or individual directs their
money toward investments that earn a higher return than the capital’s costs.

The financial capital economics definition can be analyzed by economists to

understand how capital in the economy is influencing economic growth. Economists watch
several metrics of capital including personal income and personal consumption from the
Commerce Department’s Personal Income and Outlays reports as well as investment
found in the quarterly Gross Domestic Product report.

Typically, business capital and financial capital are viewed from the perspective of
a company’s capital structure. In the United States, banks are required to hold a specified
amount of capital as a risk mitigation requirement (sometimes called economic capital) as
directed by the central banks and banking regulations. Other private companies have the
responsibility of assessing their own capital thresholds, capital assets, and capital needs
for corporate investment. Most of the financial capital analysis for businesses is done by
closely analyzing the balance sheet.

Capital is a term for financial assets, such as funds held in deposit accounts and/or
funds obtained from special financing sources. Capital can also be associated with capital
assets of a company that requires significant amounts of capital to finance or expand.
Capital can be held through financial assets or raised from debt or equity financing.
Businesses will typically focus on three types of business capital: working capital, equity
capital, and debt capital. In general, business capital is a core part of running a business
and financing capital intensive assets.

Capital assets are assets of a business found on either the current or long-term
portion of the balance sheet. Capital assets can include cash, cash equivalents, and
marketable securities as well as manufacturing equipment, production facilities, and
storage facilities.

Business Capital Structure

Businesses need a substantial amount of capital to operate and create profitable

returns. Balance sheet analysis is central to the review and assessment of business
capital. Split between assets, liabilities, and equity, a company’s balance sheet provides
for metric analysis of a capital structure. Debt financing provides a cash capital asset that
must be repaid over time through scheduled liabilities. Equity financing provides cash
capital that is also reported in the equity portion of the balance sheet with an expectation
of return for the investing shareholders. Debt capital typically comes with lower relative
rates of return alongside strict provisions for repayment. Some of the key metrics for
analyzing business capital include weighted average cost of capital, debt to equity, debt to
capital, and return on equity.

109
Types of Capital

Here are the top four types of capital in more detail:

a. Debt Capital. A business can acquire capital through the assumption of debt.
Debt capital can be obtained through private or government sources. Sources
of capital can include friends, family, financial institutions, online lenders, credit
card companies, insurance companies, and federal loan programs.

Individuals and companies must typically have an active credit history to obtain
debt capital. Debt capital requires regular repayment with interest. Interest will
vary depending on the type of capital obtained and the borrower’s credit
history.

b. Equity Capital. Equity capital can come in several forms. Typically distinctions
are made between private equity, public equity, and real estate equity. Private
and public equity will usually be structured in the form of shares. Public equity
capital raises occur when a company lists on a public market exchange and
receives equity capital from shareholders. Private equity is not raised in the
public markets. Private equity usually comes from select investors or owners

c. Working Capital. Working capital includes a company’s most liquid capital

assets available for fulfilling daily obligations. It is calculated on a regular basis
through the following two assessments:

Current Assets – Current Liabilities

Accounts Receivable + Inventory – Accounts Payable

Working capital measures a company's short-term liquidity—more specifically,

its ability to cover its debts, accounts payable, and other obligations that are
due within one year.

d. Trading Capital. Trading capital may be held by individuals or firms who

place a large number of trades on a daily basis. Trading capital refers to the
amount of money allotted to buy and sell various securities.

Investors may attempt to add to their trading capital by employing a variety of

trade optimization methods. These methods attempt to make the best use of
capital by determining the ideal percentage of funds to invest with each trade.
In particular, to be successful, it is important for traders to determine the
optimal cash reserves required for their investing strategies.

Capital vs. Money. At its core, capital is money. However, for financial and
business purposes capital is typically viewed from an operational and investment
perspective. Capital usually comes with a cost. For debt capital, this is the cost of interest
required in repayment. For equity capital, this is the cost of distributions made to
shareholders. Overall, capital is deployed to help shape a company's development
and growth.

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Sources of Capital
Many entrepreneurs do not know where to acquire funding when starting out or
expanding. If you know where to look, you'll find that there are many different sources for
entrepreneurs to raise capital.

However, not every source of capital is suitable for every business. An

entrepreneur should choose one which meets the capital structure that best fits their
business. A business' capital structure is the way that it is funded, either through debt
(loans) or equity (shares sold to investors) financing.

Financial backing usually includes loans, grants, or investor funding. Some of the
top ways to raise capital are through angel investors, venture capitalists, government
grants, and small business loans. There are other methods for financing such as credit
cards or invoice financing, but these should be used only if you need cash quickly and
know the risks involved.

a. .
Angel Investors Angel investors are generally individuals or groups who
provide capital from their personal assets to assist you with starting your
business. These types of investors are looking for startups that have good
potential for earnings.

Since they are investors, you'll be expected to present them with a portfolio
that is favorable. This differs from venture capitalists, who are more
interested in organizations that are already doing well but need more
sources of capital.

b. .
Venture Capitalists Venture capitalists (VCs) are usually groups of
individuals that provide capital through an organization they have
established. Generally, VCs like to fund companies that are already
somewhat established, and in need of more finances. However, VCs have
been known to sponsor startups that show significant promise.

VCs are looking for high returns on their investments (your business). This
is not unusual for investors, but some VCs may want to be involved in your
business decisions after they grant you some funding.

c. .
Small Business Loans The Small Business Administration (SBA) has
been established to assist business owners with their businesses. A small
business loan through SBA partner lenders, while competitive, are
guaranteed by the SBA and come with generally lower rates than
traditional loans.

Small business loans are not the only form of government assistance. A
source of capital often overlooked by entrepreneurs is government grants.

111
d. .
Government Grants The government offers grants through the SBA to
entrepreneurs who have research-related businesses. The most attractive
benefit of a grant is that it is free and you won't need to repay the
government.

e. .
Crowd-funding Crowdfunding is a method of raising funds from
individuals, using an internet-based platform. This method depends upon
the generosity of people, and upon the exposure your crowdfunding
campaign receives.

To have a successful crowdsourcing endeavor, you must be able to win the

crowd's support. They'll want to know why you need the money and may
want a reason to contribute. Create a reasonable monetary goal, and
decide on a reward for the crowd that assists you. This could be public
recognition for donations or letting them be the first ones to receive your
product.

f. .
Microloans These are small loans designed for small businesses and
startups. What makes these loans attractive is that they are short-term
loans with low-interest rates compared to traditional small business loans.

g. .
Invoice Factoring Sometimes referred to as invoice advances, invoice
factoring is a process where an entrepreneur agrees with a lender to sell
their invoices due, and let the lender collect future payment by the
customers.

This works by a lender purchasing your open invoices from you for a
reduced amount, then collecting the amount that is due. For example, if
you had a sale with receivables pending for $11,000 you could sell it to a
lender who might buy it for $9,000. You receive cash, and the lender
receives the $11,000 when it is paid.

This is a source of capital you might use if you were very much in need of
capital, as you would lose $2,000 in the transaction.

h. .
Credit Cards Many companies use personal and business credit cards to
finance immediate expenses. Credit cards are convenient when you don't
have the cash to make purchases at the moment.

If you do not have the means to make your monthly payments, credit cards
can exponentially increase your debt with high annual percentage rates

112
ACTIVITY
Sources of Capital Score

NAME

TEACHER

DATE
INSTRUCTIONS In this lesson, we’ve learned capital and its sources.
Enumerate the different sources of capital and identify the
pros and cons associated to each one of them.

Sources of Capital Pros Cons

113
 LESSON 2

GETTING THE RIGHT

NAME FOR YOUR
BUSINESS

You can’t have a business without a business name! But the process of choosing
the perfect business name that is both catchy and communicates what your business is
about is by no means easy. Businesses have failed in the past largely due to a name that
just didn’t work, so it’s important to get this right.

Choosing a good business name is very important if it’s going to be successful and
it’s key to differentiating you from your competitors. Customers associate a business name
with the value it provides to them.

FOCUS QUESTION

What is the best name for a business to thrive and grow?

114
What is Business Name?

Business Name (BN) shall refer to ANY name that is different from THE TRUE
NAME OF AN INDIVIDUAL WHICH IS USED OR SIGNED in connection with her/his
business on any written or printed receipts, including receipts for business taxes, duties
and fees and withdrawal or delivery receipts; any written or printed evidence of any
agreement or business transaction; and any sign or billboard conspicuously exhibited in
plain view in, or at the place of her/his business or elsewhere, announcing his /her
business.

How to Choose Your Business Name

Naming your business can be a stressful process. You want to choose a name that
will last and, if possible, will embody both your values and your company's distinguishing
characteristics. But screening long lists of names with a focus group composed of friends
and family can return mixed results.

Alternatively, a naming firm will ask questions to learn more about your culture
and what's unique about you--things you'll want to communicate to consumers. One thing
that Phillip Davis, the founder of Tungsten Branding, a Brevard, North Carolina-based
naming firm, asks entrepreneurs is "do you want to fit in or stand out?"

It seems straightforward. Who wouldn't want to stand out? But Davis explains that
some businesses are so concerned about gaining credibility in their field, often those in
financial services or consulting, that they will sacrifice an edgy or attention-getting name.
Here are some considerations in anming your business.

1. What is the Essene of Your Business? The best way to start the process of
choosing a name for your business is by reviewing the essence of your business.
Consider your mission statement, your business plan, and your unique selling
proposition. And don't forget to think about your target audience and what you
learned about it in your market research. Some questions that can guide you as
you choose a name for your business include:

What message do you want to portray through your business name?

What are your biggest priorities for your business name? Do you want it to be
easy to pronounce, different and unique, directly related to your products and
services, etc.?
What do you want people to think and feel when they see your business
name?
What is your business structure and will your business name use a related
abbreviation, such as Inc. or LLC?
What are the names of your competition? What do you like and dislike about
those business names?
Does the length of the name matter? If so, do you want a short name or a
longer name?

115
 2. Conduct a Brainstorming Session. Once you have a sense of what you want
your business name to represent, it's time to get creative. In fact, the more
creative and free-thinking you can be during this stage, the more ideas you will
generate, and the more possibilities you will have to choose from.

Conduct a series of brainstorming sessions, some with just you, some with a
colleague or partner, to come up with as many business name ideas as possible.
During your brainstorming, keep the essence of your business in mind, but also let
your ideas flow unrestricted. Some common ways to start a brainstorming session
include brain dumping, list-making, mind mapping, and word association.

Write down words associated with your business on slips of paper and then mix
and match in different combinations to generate business ideas.

3. Give It Time. Now that you have conducted your brainstorming session(s) and
have a list of possibilities, it's time to review and analyze your results. Go through
your list and remove any non-contenders, sort similar names, and mark the names
that immediately resonate with you. A few things to consider when assessing the
good names from the bad are:

Does the name indicate what your business is about? While there are plenty of
business names that don't reveal what they do, such as Google or Amazon, as
a small business owner, it's to your advantage to choose a name that tells
people what you're about.
Does it set you apart from your competition?3
Is it easy to remember?
Is it easy to pronounce?
Does it fit with your business tone and branding?

As you sift through your ideas, it's important to let your preconceptions and biases
settle before you create your shortlist of best possible business names.

When you have your shortlist of potential business names, walk away, do
something else, or sleep on it. Choosing a name for your business is a big decision as it
will eventually come to represent your brand. Let your ideas percolate for a day or two,
then come back to it and review them again. In many cases, after a brief hiatus, you will
return and instantly know which of your options is the right business name. And if none of
the possibilities feel right, start your brainstorming process again.

4. Check Availability. Before you decide on your business name, check to make
sure it's available. If the name is already in use, trademarked, or a domain name,
you'll want to reconsider using it. If your chosen business name is already
trademarked, you cannot use it without risking getting sued.

5. Register Your Business Name. Protect your business name by registering

it with your state authorities.. If your business is a sole proprietorship or a general
partnership, you generally don't need to register your business entity with the
state, but instead through the county and/or city where your business is located.

116
ACTIVITY
Business Name and Logo Score

NAME

TEACHER

DATE
INSTRUCTIONS Prepare your art materials. Think of any business name that
does not exist. Make it unique and authentic using your art
materials, create a logo for your business name. draw your
logo in the first box. On the second box, explain the
significance of your business name and logo

117
 LESSON 3

REGISTERING YOUR
BUSINESS

So, you’ve thought of an amazing idea for a business and you’re thinking of
starting your own. Great! Welcome to the world of entrepreneurship. Perhaps it started
out as a hobby or pastime that turned into something bigger, or there’s just a promising
business opportunity to be seized. Whatever the case, you’re going to want to register
your business to make sure you’re operating legally — clients and customers don’t want to
be dealing with a shady company, after all.

FOCUS QUESTION

What are the steps in registering a business?

118
Why Register your Business?
Registration with the Bureau of Internal
Revenue (BIR) may not be a concern for
enterprises that have been in business for a long
time. However, for those who are just starting
out or those who have operated their businesses
informally and held back registration for quite
some time, it’s certainly a task they should do as
soon as possible.

BIR registration is one of the most important prerequisites to doing business in the
Philippines. After all, you cannot operate without a tax identification number or TIN, which
you can only get through registration. This nine-digit number is assigned by the bureau to
every individual and corporate taxpayer in the country, one that they can use to identify
and track registrants, as well as to keep records of them.

Working under the Department of Finance, the BIR defines its duties and mandate
as follows: “assessment and collection of all national internal revenue taxes, fees, and
charges, and the enforcement of all forfeitures, penalties, and fines connected therewith,
including the execution of judgments in all cases decided in its favor by the Court of Tax
Appeals and the ordinary courts.”

Currently, more than half of the Philippine government’s revenues originate from
the BIR’s collections. This responsibility of collecting taxes through the just enforcement of
tax laws is ultimately carried out by the bureau for the noble purpose of nation-building
and elevating the lives of Filipinos.

Six reasons you should register with the BIR?

One might still need to be convinced to register with the BIR and it may help to
know what benefits a business can gain from BIR registration? Here’s a list of the most
important ones.

a. Skip Fines—and Possible Jail Time. Running a business is already challenging

enough as it is without the BIR nipping at your heels to add to the list of things
that you need to worry about. You can certainly try to be a tax evader, but that
doesn’t mean you won’t be facing consequences for making such a disreputable
choice. In fact, operating an unregistered business is an offense that carries
financial penalties and a prison sentence.

To be exact, the BIR notes that the penalty will be “fine of not less than PHP 5,000
but not more than PHP 20,000, and imprisonment of not less than 6 months but
not more than 2 years.” The actual fine will depend on where your business has
been operating, namely PHP 20,000 if your business is in the city, PHP 10,000 if in
a 1st class municipality, PHP 5,000 if in a 2nd class municipality, and PHP 2,000 if
in a 3rd class municipality.

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 While you might think that filing for a BIR Certificate of Registration is a waste of
time and effort, doing it as early as possible can actually take a load off your
shoulders in the long run.

b. Access to Essential Financial Services. Being BIR registered is also important if you
want to take advantage of any number of business-critical financial services. For
instance, you’ll certainly need your BIR Certificate of Registration (Form 2303) and
tax identification number if you want to open a corporate bank account for your
business. You’ll also need to be BIR registered if you intend to take out a bank
loan or if you want to file applications for other types of financing. First Circle, for
example, will only be able to underwrite your business for invoice
financing and purchase order financing if it is registered with government agencies
like the BIR.

c. Enjoy a Better Reputation among Customers

and Investors. Customers are likely to see your
business as a more reputable and trustworthy
enterprise if it is registered with government
agencies like the BIR. This is true whether
you’re operating a business-to-business (B2B)
enterprise or a business-to-consumer (B2C)
enterprise, but more so if you’re serving other
businesses. After all, other enterprises are likely
only going to be willing to enter into
transactions that involve huge sums of money if
you can offer official receipts, which, in turn,
you can only acquire if you’re already registered
with the BIR.

d. More Opportunities for Growth. Since customers will be more inclined to transact
with your business if it is BIR-registered and if they see it as a legitimate
enterprise that can provide official documents, then it stands to reason tha t you
can also leverage your status in order to land more contracts and more lucrative
projects. You’ll even be able to explore other opportunities in sectors or markets
that you haven’t tapped previously. For instance, you can submit bids
for government contracts, or you can also consider exporting your products to
clients based overseas.

e. More Confidence Promoting Your Business. Because you won’t be hiding under a
veil of secrecy for fear of being discovered and charged by the government for
operating an unlicensed business, you’ll certainly have more confidence marketing
your business. This can give you a tremendous advantage in terms of increasing
the visibility and reach of your company.

f. Contribute to the Country through your Taxes. The taxes that businesses like yours
pay the government are essential in the maintenance of the whole gamut of
government services offered in the country. They are used to fund schools,
hospitals, museums, libraries, government offices, uniformed services, and many
others.

120
Steps in Registering your Business in the Philippines
1. Register a business name at Department of Trade and Industry
a. Come-up with three (3) business names such as
XYZ Trading
XYZ Retail and Trading
XYZ Trading Enterprises

b. Search in the DTI’s website if there’s an existing name similar to yours.

If your business name is available, fill-up Business Name (BN)
Application Form.
c. Submit your completed BN application form to DTI’s offices/branch
d. Wait for your DTI Certificate of Registration. After acquiring a DTI
Certificate of Registration, you may now proceed and register to Local
Government Units (LGU), such as Barangay and Mayor’s Office:

2. Registration with Barangay

a. Go to the barangay where your business is located to secure and fill-up
application form
b. Submit your completed application form together with the following:

Certificate of Business Registration from DTI

Two (2) valid IDs
Proof of Address such as Contract of Lease (if rented) or
Certificate of Land Title (if owned)

c. Claim your Barangay Certificate of Business Registration

3. Register your business in the Mayor’s Office

a. Go to the municipal office where your business is located to secure and
fill-up application form
b. Submit your completed application form together with the following:

Certificate of Business Registration from DTI

Barangay Clearance Certificate
Two (2) valid IDs
Proof of Address such as Contract of Lease (if rented) or
Certificate of Land Title (if owned)

c. Claim you Mayor’s Business Permit and Licenses. When you already got
all the certificate and permits from DTI and LGUs, you may now
register to the Bureau of Internal Revenue (BIR)

4. Register your business in the Bureau of Internal Revenue (BIR)

a. Go to the Regional District Office (RDO) where your business is located
b. Fill-up the BIR Form 1901 – Application for Registration (for Sole
Proprietor)
c. Submit completed registration form together with the following:

121
 Certificate of Registration form DTI
Barangay Clearance
Mayor’s Business Permit
Proof of Address such as Contract of Lease (if rented) or
Certificate of Land Title (if owned)
Valid IDs, if applicable.

d. Pay the Registration Form (BIR Form 0605)

e. Register your book of accounts and receipts/invoices.
f. Claim your Certificate of Registration (BIR Form 2303)

After completing all the steps above, you can now focus in operating and
growing your business. If you are having a problem or too busy to do it, you can
also outsource it to us at a very affordable price.

ACTIVITY
Business Registration

NAME

TEACHER

DATE
INSTRUCTIONS Answer the following question concisely and briefly.

1. What is the economic benefit of registering your business?

122
UNIT ASSESSMENT
NAME
COURSE/YEAR/SECTION
DATE

Score

A. Enumeration. Enumerate the following:

1. The steps in naming a business

2. Reasons why you should register your business.

123
B. Define the following:

1. Crowd-funding.

2. Microloans

3. Invoice Factoring

4. Credit Cards

5. Bordereau of Internal Revenue

6. Department of trade and Industry

124
 C. True or False. Write TRUE if the statement is correct and FALSE if incorrect.
Write your answer before the number.

______________ 1. A strong business name should be simple

______________ 2. In creating your own business name, iy must be unique.

______________ 3. If today you're making belts, but your company might go into making
saddles and other things with leather, don't limit yourself to a name
that only speaks to belts

______________ 4. If your business is a company, you need to register the business

name at the time of registering your company

______________ 5. Don’t choose a business name that is too vague or too meaningful.

______________ 6. Invoice factoring is a process where an entrepreneur agrees with a

lender to sell their invoices due, and let the lender collect future
payment by the customers.

______________ 7. There is no need to register your business in the local government

unit

______________ 8. Registering your business contributes to the wealth of the state

______________ 9. Being BIR registered is also important if you want to take advantage
of any number of business-critical financial services.

______________ 10. Small Business Loans fund companies that are already somewhat
established

125
 SIX
CASE STUDY

OBJECTIVES
At the end of the unit, the student must have:

➢ motoivated in the field of entrepreneurship;

➢ inspired to become a successful entrepreneur, and;
➢ ppreciated the actual experiences of a successful entrepreneur

126
 CASE STUDY
Score

NAME

TEACHER

DATE
INSTRUCTIONS

Because of the COVID-19 pandemic, many had gone online to

sell different stuff in order to survive. Interview at least three
on-line sellers. Use the guide questions below as aid during
the interview. After the interview make a presentation,
analysis and conclusion.

GUIDE QUESTIONS

1. What motivates them to sell products on line?

2. What are the products usually sold on line?
3. How is the experience of online selling?
4. s online selling profitable?
5. What are the benefits of on line selling?
6. What are their advice to those who wants to start their own business?

POINTS TO REMEMBER

Parts of the Case Study

a. Introduction
b. Content
-profile of participants
Related literarture
-interview results
c. Analysis
d. Conclusion

127
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