Topic: MASTERING THE SET-UP a.

LAWAY – commission-based, like Insurance agents, real estate

Subject: Entrepreneurship
_____________________________________________
IMPLEMENTATION
 Business planning
 Identifying location
 Look for financing
 Seeking assistance
 Registering your business
 Hiring and training people
Business Planning
What are the resources that I would need
for my business?
All you have to remember is: I – P – O
which stands for INPUT, PROCESSOR, and OUTPUT
INPUT = Money, Materials, Manpower
PROCESSOR = Machine, Methods, Manpower
OUTPUT = Goods and/or Services
The I-P-O Framework
Step 1: Analyze customer needs and find out how these should be
translated into the desired OUTPUT PRODUCT.
OUTPUT PRODUCT – defined in terms of Physical properties;
Chemical properties; Timing (when and how often); Place (where
needed); Quantity (how much)
Step 2: INPUT = Find the raw materials that match or contribute to
the specifications of the OUPUT PRODUCT.
Step 3: PROCESSOR = Determine the following elements which lie
at the heart of the framework and convert input to output:
- Process (Intermittent, batch, continuous)
- Equipment (general purpose, specialized)
- Manpower (operator and maintenance)
- Technology (established or innovation)
Sources of Capital
brokers, memorial/ pre-need plan ‘entrepreneurs.’
– Jobber/runner, act as salespersons of big merchants and sell to
retailers on commission basis.
– BUYER’S CREDIT
b. IKOT – Going into trading is the most common way to start a
business without capital. All you need is for your supplier to trust
you that you will pay the amount of goods that you have
acquired on credit terms.
– SUPPLIER’S CREDIT = consignment
= or use credit card to purchase
c. PAWIS – means using your special skill or talent. You can
charge a professional fee on a lump sum or per hour basis.
Save the fees and use them as start-up capital for your dream
business.
Remember – Dream Big, Start small … using Laway, Ikot and/or
Pawis.
2. If NOT ENOUGH MONEY, THEN USE THE
“MAKE OR BUY” TECHNIQUE
The common mindset is that you need to spend a lot for equipment.
But do you really need to buy all the machines/equipment needed to
produce your product?
Not really, you can choose to make or just buy the product initially.
 If you do not have enough money, another option is to BEG,
BORROW, then BUY
(Hingi-Hiram-Haggle)
Most home-based businesses are easy to set up because most of
the things needed to produce your products are readily available. All
you have to do is BEG or BORROW the equipment.
 All you have to do is ASK (Hingi or Hiram) and you shall receive.
 In case you need to BUY some equipment, make sure that you
HAGGLE!
HAGGLING means:
1. Lease to Buy
2. Buy Deferred
3. Buy Installment
4. Buy at a Discount
3. If JUST ENOUGH MONEY, THEN USE OPM “OTHER
PEOPLE’S MONEY”
Why not use your own ● Cash on hand? ● Savings?
● Assets? ● Retirement Fund?
Use them as leverage for BANK LOANS, meaning your savings will
only be used as “collateral” for your loan.

Other entrep.-friendly sources of OPM:

 Own savings ● Parents, family members, very close friends
 Family and friends ● Your local cooperative
 Government agencies (DOST, DTI, DSWD, DOLE, ● Company savings and loans associations (paluwagan)
OWWA, etc.) ● Microfinance institutions in your area.
 Microfinance institutions (PCFC) ● Loan programs from gov’t. agencies, gov’t. banks, quasi-finance
 Pawnshops corporations
 Cooperatives (OCCI, etc. GUIDELINES IN LOCATING YOUR BUSINESS
 Non-government organizations (NGO’s)  Raw materials Market
 Lending investors  Transportation Labor
 “5/6”; “Bombay”  Utilities Community/local government
START-UP CAPITAL  Site
 Most new businesses do not make a profit immediately Hiring and Training Personnel
 Money is needed to pay for items such as electricity, wages and  No matter how small your business operation is, you cannot
materials. Without this, business will fail expect to do everything yourself.
 Investment and working capital  As a manager, hire the right employees, train them well and
RAISING START-UP CAPITAL motivate them to do their very best at work.
 Own savings _____________________________________________
 Proceeds from selling idle properties Topic: Business Planning
 Borrowing from friends, or relatives
 Borrowing from banks and other financial institutions What is a Business Plan?
 Special loans or grants from the government  How does one start a business? The first task is to conceive a
How Much Money Do I Need to Start? business idea and then translate the idea into a business plan.
Common myth:  business plan is a detailed account of what course the business
“I need capital (money) to start a business” - FALSE! is to undertake, complete with objectives and goals; product
Three situations: description and target clients; sales, production and net income
● NO MONEY projections/targets; cost and expense estimates; marketing and
● NOT ENOUGH MONEY promotional efforts; and investment capital requirements. 
● JUST ENOUGH MONEY
1. If NO MONEY (Starting a business without capital)
Then use: LAWAY, IKOT and/or PAWIS
 A business plan is not something that is prepared once and then
followed. An enterprise is always subject to changes in the
environment.
A carefully thought out and prepared business plan:
o serves to assure the entrepreneur that all relevant questions
have been considered;
o enables the entrepreneur to organize and initiate his/her
business operations in an orderly fashion;
o gives the entrepreneur more confidence in what he/she will do;
o provides the general direction on where the business will go
tomorrow, a week, a month, a year or even 10 years hence;
o will be especially useful in decision-making through critical
expansion and diversification periods;
o shows how much money is needed, what is it needed for and
when, and for how long it will be required in the business;
o can reduce the risk of failure arising from undercapitalization,
early cash flow problems, excessive and unplanned
expenditures; and
o Enables the entrepreneur to set targets and in time
consequently allow him/her to evaluate his/her business' actual
performance against set targets.

Writing Out a Business Plan

 The business plan is composed of several components, namely:
timetable, objective, the marketing, production, organizational
and financial aspects of the prospective business undertaking.
Areas to be covered under each component of the business plan
1. Introduction and general background of the project. Why the
project was chosen, objective(s), nature of the project's output
and its uses.
2. Marketing. Includes product range; specifications; product mix;
projected demand; target market; competition; and selling
strategy.
3. Production. Should include the location and layout of plant
facility; process; equipment required with the description; power
requirement; utilities requirement; plant capacity; raw material
sources; and land and building requirements.
4. Organization. Should include details on staffing complement --
number and required skills; place of business; and form of
business organization.
5. Implementation Schedule. Timetable showing the different
points in time within which the different phases of the project are
to be carried out.
6. Financial. Must include calculation of initial investment
requirement; operating requirements and costs; working capital
estimate; projected sales and production programme; total
project cost; project financing sources; profitability at 100%
capacity utilization; breakeven analysis; projected Balance
Sheet, Income Statement and Cash Flow Statement.
When Setting Objectives . . .
 The objective of each business undertaking should be set at the
beginning. It is advisable to have would-be entrepreneurs
consider setting their objective the SMART way. That is,
 S-pecific as to what it is the entrepreneur wants to
achieve.
 M-easurable in quantifiable terms.
 A-ttainable given the entrepreneur's abilities and
resources.
 R-ealistic enough to aim for.
 T-ime-bound to span a fixed period.
 By doing so, objectives will be expressed in explicit, definite and
quantifiable terms. The objective would have answered the
questions: "What is to be achieved? How much is to be
achieved? And when is it to be achieved?"
 For example, the objective "to increase the return on
investment" is not as satisfactory as "increase the return on
investment to 12 percent by the end of the 2nd year".
 Objectives should be realistic