Organization and Management

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Special Topics in Management

By legal definition, small businesses are privately owned entities and

operated by small number of individuals with relatively low volume of
sales. It could be a corporation, a partnership or a sole proprietorship. In the
Philippines, small businesses thrive everywhere: from small sari-sari store
(convenience store type), bakeries, beauty parlors, dressmakers, food stands,
etc. In procedures in putting them up are the same as large scale businesses.
The backbone of Philippines local economy are these small businesses. They
require small capital and there is always a demand for any product and
service we could imagine in this highly populated archipelago. The
government has always been pushing the entrepreneur spirit among the
Filipinos, after all they are known for their ingeniousness and hard work.
Topic Outline:
• Small Business and Entrepreneurship
• Family Business Enterprise
• Starting a Business: Legal Forms and Requirements

Small Business Management and Entrepreneurship

What is Small Business?

A small business is a privately owned and operated business.

• A small business typically has a small number of employees.

In Philippines
Agency: Small and Medium Enterprise Development (SMED) Council.
Legal Definition: Small and Medium Enterprise Development (SMED)
Council Resolution No. 01 Series of 2003 dated 16 January 2003.
Interpretation:
MSMEs Defined
Micro, small, and medium enterprises (MSMEs) are defined as any business
activity/enterprise engaged in industry, agri-business/services, whether
single proprietorship, cooperative, partnership, or corporation whose total
assets, inclusive of those arising from loans but exclusive of the land on
which the particular business entity's office, plant and equipment are
situated, must have value falling under the following categories:

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 By Asset Size
Micro: Up to P3,000,000
Small: P3,000,001 - P15,000,000
Medium: P15,000,001 - P100,000,000
Large: above P100,000,000
Alternatively, MSMEs may also be categorized based on the number of
employees:
Micro: 1 - 9 employees
Small: 10 - 99 employees
Medium: 100 - 199 employees
Large: More than 200 employees
Agency: Philippine Congress.
Legal Definition:
“Magna Carta for Micro, Small and Medium Enterprises (Republic Act 6977,
as amended by RA 8289 and further amended by RA 9501 in 2008).
SEC. 3. Micro, Small and Medium Enterprises (MSMEs) as Beneficiaries. —
MSMEs shall be defined as any business activity or enterprise engaged in
industry, agribusiness and/or services, whether single proprietorship,
cooperative, partnership or corporation whose total assets, inclusive of those
arising from loans but exclusive of the land on which the particular business
entity’s office, plant and equipment are situated, must have value falling
under the following categories:
micro : not more than P3,000,000
small : P3,000,001 - P 15,000,000
medium : P15,000,001 - P100,000,000
“The above definitions shall be subject to review and adjustment by the
Micro, Small and Medium Enterprises Development (MSMED) Council under
Section 6 of this Act or upon recommendation of sectoral organizations
concerned, taking into account inflation and other eco nomic indicators. The
Council may use other variables such as number of employees, equity capital
and assets size. “The Council shall ensure that notwithstanding the plans and
programs set for MSMEs as a whole, there shall be set and implemented
other plans and programs varied and distinct from each other, according to
the specific needs of each sector, encouraging MSMEs to graduate from one
category to the next or even higher category.” (RA 9501 through Sec. 3
amended Sec. 3 of RA 6977, as amended by RA 8289)”

What is Entrepreneurship?
Entrepreneurship – the process of starting and operating your own
business.
Entrepreneur – the people who create, launch, organize and manage a new
business and take the risk of business ownership.
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What are the risks?

 Business failure
 Financial loss
 Loss of employment
 Loss of time
33% of all new businesses fail within 2 years. 50% fail within 4 years.
Advantages of Entrepreneurship
 Personal freedom and satisfaction
 Increased self-esteem and income

Important Personal Characteristics of Successful Entrepreneurs

They’re goal-oriented
Entrepreneurs are all about setting goals and putting their all into achieving
them; they’re determined to make their business succeed and will remove
any encumbrances that may stand in their way. They also tend to be strategic
in their game plans and always have a clear idea in mind of exactly what they
want to achieve and how they plan to achieve it.
They’re committed to their business
Entrepreneurs are not easily defeated; they view failure as an opportunity
for future success, and if they don’t succeed the first time, they’ll stay
committed to their business and will continue to try and try again until it
does succeed. A true entrepreneur doesn’t take ‘no’ for an answer.
They’re hands-on
Entrepreneurs are inherently proactive, and know that if something really
needs to get done, they should do it themselves. They’re ‘doers’, not thinkers,
and tend to have very exacting standards. They view their business as an
extension of themselves and like to be integral in its day-to-day operations—
even when they don’t have to be.
They thrive on uncertainty
Not only do they thrive on it—they also remain calm throughout it.
Sometimes things go wrong in business, but when you’re at the helm of a
company and making all the decisions, it’s essential to keep your cool in any
given situation. True entrepreneurs know this and secretly flourish and grow
in the wake of any challenges.
They continuously look for opportunities to improve
Entrepreneurs realize that every event or situation is a business opportunity,
and they’re constantly generating new and innovative ideas. They have the
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 ability to look at everything around them and focus it toward their goals in
an effort to improve their business.
They’re risk taker
A true entrepreneur doesn’t ask questions about whether or not they’ll
succeed—they truly believe they will. They exude this confidence in all
aspects of life, and as a bi-product, they’re never afraid to take risks due to
their unbinding faith that ultimately they will triumph.
They’re willing to listen and learn
The most important part of learning is listening—and a good entrepreneur
will do this in abundance.
They have great people skills
Entrepreneurs have strong communication skills, and it’s this strength that
enables them to effectively sell their product or service to clients and
customers. They’re also natural leaders with the ability to motivate, inspire
and influence those around them.
They’re inherently creative
This is one trait that, due to their very nature, entrepreneurial business
people have by the bucket load. They’re able to not only come up with
ingenious ideas, but also turn those ideas into profits.
They’re passionate and always full of positivity
Passion is perhaps the most important trait of the successful entrepreneur.
They genuinely love their job and are willing to put in those extra hours to
make their business grow; they get a genuine sense of pleasure from their
work that goes way beyond just cash.

Entrepreneurship Vs. Small Business

Many people use the terms “entrepreneur” and “small business owner”
synonymously. While they may have much in common, there are significant
differences between the entrepreneurial venture and the small business.
Entrepreneurial ventures differ from small businesses in these ways:
1. Amount of wealth creation – rather than simply generating an income
stream that replaces traditional employment, a successful
entrepreneurial venture creates substantial wealth.
2. Speed of wealth creation – while a successful small business can
generate several million pesos of profit over a lifetime, entrepreneurial
wealth creation often is rapid.
3. Risk – the risk of an entrepreneurial venture must be high, otherwise,
with the incentive of sure profits many entrepreneurs would be pursuing
the idea and the opportunity no longer would exist.
4. Innovation – entrepreneurship often involves substantial innovation
beyond what a small business might exhibit. This innovation gives the
venture the competitive advantage that results in wealth creation. The
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innovation may be in the product or service itself, or in the business

processes used to deliver it.

Advantages and Disadvantages of Small Business

Advantages:
• Can be managed and controlled by the owner.
• Often able to adapt quickly to meet changing customer needs.
• Offer personal service to customers.
• Find it easier to know each worker; many staff prefers to work for
smaller more “human” businesses.
• If family-owned the business culture is often informal. Employee’s well-
motivated and family members perform multiple roles.
Disadvantages:
• May have limited access to sources of finance.
• Owner has to carry a large burden of responsibility if unable to afford to
employ specialist managers.
• May not be diversified. Greater risks of negative impact of external
change.
• If family-owned, the original owner may restrict innovation, family
rivalries, and keeping control may take priority over business expansion.

Types of Entrepreneur
According to the type of business:
Business entrepreneurs: who start business units after developing ideas
for new products/services.
Trading entrepreneurs: who undertake buying & selling of goods, but not
engage in manufacturing.
Corporate entrepreneurs: who establish and manage corporate form of
organization which has separate legal existence.
Agricultural entrepreneurs: who undertake activities like raising and
marketing of crops, fertilizers and other allied activities.

Reasons to Become an Entrepreneur:

1. Creativity: Using your creativity and energy to achieve something that
inspires you can be very rewarding. Starting, running and growing a business
can provide a high level of satisfaction.
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2. Independence: The freedom that comes with operating a business can
lure many people. You don't need to convince your boss - you are the boss.
You make the products you believe in and you can offer the services your
clients want.
3. Solutions: You have a solution to a common problem or a big problem?
Whether the solution relates to the environment, communications, food or
services, wanting to see your solution used by all can be a driving factor to
becoming an entrepreneur.
4. Time: Entrepreneurs ultimately decide on their shifts and their pay
checks. Usually, the more hours you invest in your business, the more money
you will make. As an entrepreneur, you get to choose how you want to
balance work and personal time.
5. Money: Many businesses make enough profit to pay modest salaries, pay
bills and even grow. On the other hand, some start-ups turn into multi-
million peso enterprises. The possibilities are endless.

10 Biggest Challenges Facing Small Businesses

There are many problems that are encountered by business owners
throughout the course of managing their business. All entrepreneurs must be
prepared for solving problems that come their way. However, creating a
start-up is not an easy task.
New entrepreneurs are usually not prepared for the problems coming their
way. The first thing to do is to understand that problems are an everyday
part of every business and then face each problem with determination and a
proper solution.
Here are some common faced problems in new businesses and their
solutions.
1. Money
Money is known to be one of the major causes of problems that can lead
business to failure. For a new business, the biggest mistake is expecting
instant profit. Young and eager entrepreneurs start up a business with little
money, assuming they will earn big and then invest that money again in their
business. It is significant to understand that you cannot get an instant profit
at the start of your business. Experts advise not to expect much profit for at
least two years. Always prepare for the worst case scenario. Before starting a
business, ensure that you have enough money to sustain you at least up to
two years. Start slowly and patiently.
2. Time
The phrase ‘time is money’ holds true, especially for a business. It is essential
for new businesses to manage their time wisely. Planning everything in
advance and ensuring everything is done on time is very important for the
prosperity of any business. Ensure the schedule you are making is achievable
and stick to it. Give yourself enough time to perform a task with accuracy.
Plan your future projects. Make adjustments accordingly. Utilize calendar s
and planners to make sure you don’t miss an appointment or a deadline.
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Spending time effectively can actually save you money and even earn you
more revenue.
3. Lack of Knowledge/Skills
This is one of the top most mistakes made by entrepreneurs. It is important
that you have ample knowledge about the industry you are entering, your
competitors, your target market, current trends, advertising and marketing
techniques as well as financial know-how. You must possess the skills needed
to start up a new business. If you are not prepared, educate yourself. Do
proper research, ask other business owners, read relevant books and
websites. You may end up with a huge loss if you start your business without
having the required knowledge and skills.
4. Information Overload
The only thing constant is change! This phrase is true as well as change is
continuous and we witness it happening all around us. Today, information
keeps changing. New facts and data keeps emerging and replacing old beliefs
and trends. Due to this information overload, it gets difficult to find effective
solutions. It becomes a challenge for a new business to sort through this data
and come up with good decisions. However, one easy solution is to look for
the authenticity of the data. Check its references, and the writer. Learn to use
keywords to narrow a research topic. Start asking successful businessmen
about their experiences. Learn from them.
5. Lack of Direction and Planning
This problem prevails because of not creating a thorough and detailed
business plan. Many young entrepreneurs are so excited about setting up
their very own business that they fail to prepare a proper business plan. It
helps in focusing on the goal and mission of the business. It determines the
financial situation of the business, the roadmap to follow, market research
and analysis of the competition. A business plan is basically an investment to
your business.
6. Working in the Business rather than Working on the Business
Usually entrepreneurs get so worked up with the paperwork, satisfying
customers and doing all the necessary things in keeping the business
running. They fail to fulfill some other equally crucial tasks. It is important
that you take a day or even a few hours to analyze your business. Determine
which area needs attention, do an inventory review, review cash flow of your
business, review payrolls and employee benefits. It is also important to
update your corporate minutes, your contracts and your agreements with
stakeholders annually. Hold meetings with your managers and other
employees to connect with them.
7. Innovation
Unfortunately, there are many new start-up companies that stick to the age
old book rules. They don’t try to create an innovative culture, even majority
of the big businesses struggle with innovation. People get accustomed to the
work culture and they don’t think outside the box. Businessmen and
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employees stay away from change and resist whatever changes that take
place in the company. The best thing to do is to be open to innovation. When
bringing a change, ensure that all your employees are prepared for it. Discuss
it with them in a meeting, tell them how important it is to be innovative,
make them understand how beneficial it will be.
8. Trying to Do It Alone
Coping with everything alone is also one of the most common mistake new
business owners make. They believe that they can manage everything and
don’t need any advice or help form anyone. Initially, they do seem to be
successful in this strategy as the cost is low since they handle everything.
However, as the work starts growing gradually, the workload takes a toll on
the new entrepreneur. Mistakes start being made and the quality of work
starts decreasing. You may even start losing customers soon. This is why this
strategy is not successful in the long run. Hiring two to three employees is
more beneficial for a start up business. It is better to pay a small amount to
your workers than lose double the amount in the future.
9. Getting Clients
For a new business, it is difficult to attract prospects and retain customers.
With a small marketing and advertising budget, new entrepreneurs are
unable to reach out to a wider audience. Potential customers are usually
hesitant to going for a new business. They prefer going for companies that
have experience and a large customer following. However, the good news is
big companies charge more. There are many clients and customers who are
looking for companies that provide cheaper, but good quality service.
Providing excellent service to them will ensure that they remain your
customers and even recommend you to others.
10. Poor Marketing
Apart from a detailed business plan, a marketing plan is also important for
any business. Once you have a clear idea about your target market and your
competition, you can allocate a budget for advertising and promoting your
business and decide which medium to advertise through. You can also decide
your product pricing through target market analysis. Make sure you that
your pricing can be easily afforded by your target market and that your
advertising effectively reaches them.
What Causes Small Businesses to Fail?
The short answer is, regardless of the industry, failure is the result of either
the lack of management skills or lack of proper capitalization or both.
Eleven Common Causes of Failure:
Choosing a business that isn't very profitable. Even though you generate
lots of activity, the profits never materialize to the extent necessary to
sustain an on-going company.
Inadequate cash reserves. If you don't have enough cash to carry you
through the first six months or so before the business starts making money,
your prospects for Success are not good. Consider both business and
personal living expenses when determining how much cash you will need.
Failure to clearly define and understand your market, your customers,
and your customers‘ buying habits. Who are your customers? You should
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be able to clearly identify them in one or two sentences. How are you going
to reach them? Is your product or service seasonal? What will you do in the
off-season? How loyal are your potential customers to their current supplier?
Do customers keep coming back or do they just purchase from you one time?
Does it take a long time to close a sale or are your customers more driven by
impulse buying?
Failure to price your product or service correctly. You must clearly define
your pricing strategy. You can be the cheapest or you can be the best, but if
you try to do both, you'll fail.
Failure to adequately anticipate cash flow. When you are just starting out,
suppliers require quick payment for inventory (sometimes even COD). If you
sell your products on credit, the time between making the sale and getting
paid can be months. This two-way tug at your cash can pull you down if you
fail to plan for it.
Failure to anticipate or react to competition, technology, or other
changes in the marketplace. It is dangerous to assume that what you have
done in the past will always work. Challenge the factors that led to your
Success. Do you still do things the same way despite new market demands
and changing times? What is your competition doing differently? What new
technology is available? Be open to new ideas. Experiment. Those who fail to
do this end up becoming pawns to those who do.
Overgeneralization. Trying to do everything for everyone is a sure road to
ruin. Spreading yourself too thin diminishes quality. The market pays
excellent rewards for excellent results, average rewards for average results,
and below average rewards for below average results.
Overdependence on a single customer. At first, it looks great. But then you
realize you are at their mercy. Whenever you have one customer so big that
losing them would mean closing up shop, watch out. Having a large base of
small customers is much preferred.
Uncontrolled growth. Slow and steady wins every time. Dependable,
predictable growth is vastly superior to spurts and jumps in volume. Going
after all the business you can get drains your cash and actually reduces
overall profitability. You may incur significant up-front costs to finance large
inventories to meet new customer demand. Don't leverage yourself so far
that if the economy stumbles, you'll be unable to pay back your loans. When
you go after it all, you usually become less selective about customers and
products, both of which drain profits from your company.
Believing you can do everything yourself. One of the biggest challenges for
entrepreneurs is to let go. Let go of the attitude that you must have hands -on
control of all aspects of your business. Let go of the belief that only you can
make decisions. Concentrate on the most important problems or issues
facing your company. Let others help you out. Give your people responsibility
and authority.
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 Putting up with inadequate management. A common problem faced by
Successful companies is growing beyond management resources or skills. As
the company grows, you may surpass certain individuals' ability to manage
and plan. If a change becomes necessary, don't lower your standards just to
fill vacant positions or to accommodate someone within your organization.
Decide on the skills necessary for the position and insist the individual has
them.
So, the founder's attitude, ability to be objective, willingness to bring in
needed help, and share power are all crucial to success. "Most start-ups
make the mistake of falling in love with their product or service," says
Shukla. "Ultimately, it is this lack of self-criticism that causes many
companies, start-ups and their more mature counterparts, to fail. Start-ups
suffer this fate more often because there are more dreamers than doers."
I think that fact speaks for itself," says Jonathan Goldhill, a small-business
consultant and former director of an economic development center in
California's San Fernando Valley. "I would say that the primary reason for
failure of start-ups within three years is usually...management's failure
to act, or management's failure to react, or management's failure to
plan."
Other reasons why businesses fail in their early years include: poor business
location, poor customer service, unqualified/untrained employees, fraud,
lack of a proper business plan, and failure to seek outside professional
advice.
While poor management is cited most frequently as the reason
businesses fail, inadequate or ill-timed financing is a close
second. Whether you're starting a business or expanding one, sufficient
ready capital is essential. It is not, however, enough to simply have sufficient
financing; knowledge and planning are required to manage it well. These
qualities ensure that entrepreneurs avoid common mistakes like securing the
wrong type of financing, miscalculating the amount required, or
underestimating the cost of borrowing money.

Family Business Enterprise

• Family business is a corporation that is entirely owned and managed by
members of a single family.
• Family firm is a corporation that is entirely owned by members of single
family. It is also known as company owned, controlled and operated by
members of one or several families.
Family business is one in which one or more members of one or more families
have ownership, interest and significant commitment towards business.
Characteristics of Family Business:
• Family businesses are ideal in nature as they are loyal to the principles of the
founder and thus ensure uniformity in their operations.
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• Succession is one important decision which determines future effectiveness

in terms of company operation.
• Family business comprises of family members in business operations
ensuring effective utilization of in house talent in family.
• Single minded dedication of family members ensures survival of family
business through toughest times.
• Effectiveness and existence of family business is determined depending on
understanding persisting within the family.
• Family business may be comprised of one or more than one family in
business operations.
• Family members who are not contributing or not involved in business are
part of business.
• Family business values are reflection of values possessed and followed by
family members.
• Members of family have legal control over business.
Importance of Family Business:
• Contributing to economic development: family business play crucial role
in economic development of most of the countries. Retail sector, small scale
industry, and service sector are owned by family business.
• Spirit of entrepreneurship: family business as contributes towards
development and has been successful in country like Philippines it paves way
to various families to initiate and bring up new ventures in country.
• Philanthropy : family business in Philippines along with their development
have also concentrated towards welfare of general public by investing on
hospitals, educational institutions, construction of roads etc.
• Trust Lowers transaction cost: partnership and other forms of business
involving outsiders usually leads to conflict in long run. In case of family
business as all the parties in family are affected by loss incurred in company
do not involve any sought of conflict and difference in point of view arises
they try and solve it internally in the family ensuring business is not affected
by the same.
• Small, nimble and quick to react : as managing team size in family business
is small compare to other form of business decision making process involves
less period of time which helps to take timely decision.
• Information as source of advantage : as family business is private firm it is
not required to take decision in accordance with pressure from other sources
and strategies of business need not be revealed to outsiders of business.

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Types of Family Business

Figure 14.1 - Types of family Business

• Family owned business : is a profit organization were number of voting
shares, but not necessarily majority of shares are owned by members of
single extended family but significantly influenced by other members of
family.
• Family owned and managed business : is a profit organization were
number of voting shares, but not necessarily majority of shares are owned by
members of single extended family but significantly influenced b y other
members of family. In this business has active participation by one family
member in the top management of company so that one or more family
members have ultimate management control.
• Family owned and led company : is a profit organization were number of
voting shares, but not necessarily majority of shares are owned by members
of single extended family but significantly influenced by other members of
family. In this business has active participation by one family member in the
top management of company so that one or more family members have
ultimate management control. But in this method one member has major
influence on business activities who in charge of regulating activities of
business and members of family business.

Strategies for Improving Capability of Family Business

• Inculcate professionalism in family firms: professionalism in business
refers to retaining of effective talent in company, proper documentation of
business transaction, planning and implementation of efficient strategies for
success of business.
• Replenishing entrepreneurship: basically refers to expand existing
business and be role model for their families to open business of their own.
• Good management: refers to proper communication of information among
family members about present business and utilization of available resources
in business.
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• Ability to change: business environment is dynamic in nature for which

business have to renew their strategies on regular basis to meet demand of
changing situation to compete in market.
• Have strategic plan: situations of business are unpredictable in nature in
nature so present plans of business should be designed keeping in point
about future strategy in picture.
• Have active board of directors: refers to have competent employees in
business that can assess future requirements and accordingly management
business resources and take decisions in business.

Starting a Business: Legal Forms and Requirements

Business Operation:
Activities involved in the day to day functions of the business conducted for the
purpose of generating profits.

Business Plan:
Document that describes a business along with it’s objectives, strategies, the
market in which it operates and the businesses’ financial forecasts.
A business plan is a blue print of step by step process that would be followed to
convert business idea into successful business venture.
Business Plan Purposes:
• Plans for future
• Allocate resources
• Identify and prepare for problems and opportunities
• Useful for start up businesses applying for finance or growth
• Improves entrepreneur’s understanding of business and the market
Audience
• Banks, Financial lenders.
• Venture Capitalists: people who invest for a share of the business.
• Business Angels: people who invest in start up businesses which are high
risk, high growth market.
• Providers of grants
• Potential purchaser of the business

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Business Plan Process :

Idea generation: is the first step in the business planning process. This step
differentiates entrepreneur from usual business. An entrepreneur may come up
with new business idea or may bring in value addition to existing product in the
market. Sources of new idea for entrepreneurs are:
 Consumers/ customers
 Existing companies
 Research and development
 Employees
 Dealers, retailers.
Environmental scanning: once the entrepreneur is through the idea generation
stage, next entrepreneur is required to conduct environmental scanning which
includes analyzing external and internal environment that affects business idea.
1. External environment comprises of :
 Socio cultural appraisal : it gives brief overview about the culture and
tradition existing in society. It is comprised of values and beliefs of people
which determines the acceptance of product by customer in the market.
 Technological appraisal : it assess various technological options available
to convert an idea to product. It also provides an brief overview about
technological updates.
 Economic appraisal : it assess the status of the society in terms of economic
development, per capita income, national income, consumption pattern in
the business.
 Demographic appraisal : it assess the population pattern of given
geographic area. Which includes sex, age profile, distribution etc.
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 Economic appraisal : it assess the status of the society in terms of economic

development, per capita income, national income, consumption pattern in
the business.
 Demographic appraisal : it assess the population pattern of given
geographic area. Which includes sex, age profile, distribution etc.
 Government appraisal : it assess the various legislation, policies, incentives
formulated for particular industry. Flexibility of these rues determine ease
for entrepreneur in terms of opening venture in particular area.
2. Internal environment :
 Raw material: it refers to in terms of availability of raw material required
for the process of production. If the material availability is at distance place
and is very expensive then entrepreneur should give second thought to the
same.
 Production/ operation: it assesses the availability of various machineries,
equipment's, tools and techniques that would be required for production.
 Finance: it studies total requirement of finance in terms of start up expenses,
fixed expenses, running expenses etc.
 Market: refers to study on potential customer and target customers in
market.
 Human resource: refers to demand and supply of required human resource
in market and estimation of expenses to be incurred on human resource.
Feasibility analysis: refers to conducting detailed analysis in relation to every
aspect relevant to business and determining credibility of business.
 Market analysis: is conducted to estimate the demand and market share for
proposed product and service in future. Demand and market analysis is
based on factors like consumption pattern, availability of substitute goods
and services etc.
 Technical and operational analysis: is to assess operational ability of
proposed business enterprise. Technical or operational analysis collects data
on following parameters :
1. Material availability
2. Material requirement planning
3. Plant location
4. Plant capacity
5. Machinery and equipment.
 Marketing plan: lays down the strategies of marketing which can lead to
success of business plan. Strategies are in terms of marketing mix which
includes (product, price, place, promotion) which determines the potential
demand of customers for product in the market.
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  Production plan / operational plan: production plan is drafted for
manufacturing sector where as operation plan is designed for business into
service sector. It comprises of strategies on parameters such as location
layout, cost, availability of material, human resource etc.
 Organizational plan: defines type of ownership pattern in company, sole
trading concern, family business, private or public limited company etc.
 Financial plan: financial plan indicates the requirement of proposed
business enterprise. Which includes fund flow, cash flow statement,
breakeven point, projected ratio, projected balance sheet.
Project report preparation: project report is a written document that
describes step by step strategies involved in starting and running business.
Evaluation, control and review: as company operates in dynamic environment
company has to monitor and review strategies and policies to stay in line with
competition existing in market.

List of Business Permits and Licenses in the Philippines

People do business to make a living, serve their community, and pursue their
dreams. It is good to hear a person who’s taking risk to start his or her business,
whether small, medium or big. However, the process of starting and registering a
business can be one of the most crucial stages of doing business. Getting the
right permits and licenses should be done before running a business, otherwise,
you may end up operating a business without a license, which can be punishable
under certain business laws. That is why if you are an aspiring business person
or entrepreneur, and if you want to conform with the government’s rules on
establishing and legalizing a business, you have to be aware of the following list
of business permits and licenses in the Philippines.
Basic permits:
The following are the business permits and licenses that are generally required
to all business industries.
1. Barangay Clearance – The barangay clearance is a certificate that your
business complies with the requirements of the barangay where your
business is located. To get a barangay clearance, you may visit the barangay
office where your business is located.
2. DTI Business Name (BN) Registration Certificate – This is the certificate
of registration of your business trade name. It gives you the power to use
your registered business trade name for business operation. It also protects
your business name against being used and registered by other business
establishments. However, take note that DTI registration only gives you the
authority to use your business trade name, but it doesn’t give you the license
to start operating your business without getting the required licenses from
other government offices, such as BIR and Local Government Office (Mayor’s
Office).
3. SEC Certificate of Registration – Corporations (stock or non-stock) and
partnerships have to secure a certificate of incorporation or certificate of
partnership with the Securities and Exchange Commission (SEC) to be
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considered as legal or juridical entities. These certificates are also used as a

requirement for registering with the BIR, Mayor’s Office, and other
government offices. Take note that sole proprietorship businesses are not
registered with SEC, but they are registered with the DTI. To register with
SEC, you may reach the following SEC address and contact information.
SEC Building, Edsa, Greenhills, Mandaluyong City
Tel. Nos.: (+632) 726.0931 to 39
Email: mis@sec.gov.ph
Website: www.sec.gov.ph
or http://iregister.sec.gov.ph/MainServlet (for online registration)
4. Mayor’s Business Permit. Businesses have to secure a Mayor’s Business
Permit or the Local Government Office where their business are located and
operated. Requirements in obtaining a Mayor’s Business permit vary from
different cities or municipalities. This permit is also a requirement by the BIR
in issuing a BIR certificate of registration.
5. BIR Certificate of Registration. Any business must be registered with the
Bureau of Internal Revenue to comply with the Philippine tax requirements.
BIR registration will assign a TIN (Taxpayer Identification Number) to the
company or business owner, will give the business authority to print its
official receipts and invoices, and registered its books of accounts. To regis ter
with the BIR, you have to go to the BIR office which has the jurisdiction of the
place where your business is located.
6. SSS Employer’s Registration. Republic Act No. 8282 or otherwise known as
the Social Security Act of 1997 requires businesses or business owners who
use the services of another person or employees in business, trade, industry,
or any undertaking to be registered with the SSS (Social Security System).
7. Phil-Health Employer’s Registration. All businesses and employers are
also required to register with Phil-Health to enable them to provide social
health insurance coverage to their employees.
8. Pag-IBIG Employer’s Registration. Employers also have to register with the
Home Development Mutual Fund (HDMF) to secure their Pag-IBIG Employer
ID Number and to provide the required benefits to their employees, who
should be Fund members.
9. DOLE Registration. Businesses with five or more employees are encouraged
to register with the Department of Labor of Employment (DOLE) for the
purpose of monitoring their compliance with labor regulations. For
companies with 50 or more workers, they are required to register with
DOLE, under the Bureau of Local Employment which administers the
registration of establishments.
Special permits
The following are the special or secondary permits that are usually required for
business establishments with special operation or industry.
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10. Bangko Sentral ng Pilipinas (BSP) – for banks, financing companies,
pawnshops, money changers, and other financial institutions.
11. Bureau of Food and Drugs (BFAD) – for business related in the
manufacturing, trading, repacking, importing, exporting, distributing of any
products related to food and drugs.
12. Bureau of Animal Industry (BAI) – for business related to animals.
13. Bureau of Fisheries and Aquatic Resources (BFAR) – for business related
in fishing and aquatics products.
14. Bureau of Forest Development – for exporters of forest products (e.g. logs,
lumber products, plywood, etc.).
15. Bureau of Plant Industry (BPI) – for business related to plants and
vegetable crops.
16. Commission on Higher Education (CHED) and Department of Education
(DepEd) – for entities involved in providing education.
17. DTI-Bureau of Product Standards (BPS) – For commodity clearance for
producers, manufacturers or exporters, whose product quality after due
inspection, sampling, and testing, is found to meet established standards.
18. Fiber Industry Development Authority (FIDA) – for business related in
fiber producing products.
19. Forest Management Bureau (FMB) – for business related in lumber, logs,
and other wood product.
20. Garments and Textile Industry Development Office (GTIDO) – For all
manufacturers of garments and textile for exports.
21. Insurance Commission (IC) – for insurance and other IC regulated entities.
22. Intellectual Patent Office (IPO) – for registering your trademarks, logos,
slogans, processes and secret formulas.
23. National Food Authority (NFA) – for rice, corn and flour dealers.
24. National Subcontractors Exchange (SUBCONEX) – for those interested to
tie up with export oriented firms as sub-contractors/suppliers, provided they
fall under any of the following sectors: garments and handwoven fabrics,
gifts and house wares, furniture and fixtures, foot ware and leather goods,
fresh and processed foods, and jewelry.
25. National Tobacco Administration (NTA) – for business related to tobacco
products.
26. Philippine Coconut Authority (PCA) – for businesses related in grain-rice
farming and trading.
27. Technical Education and Skills Development Authority (TESDA) – for
institutions involve in technical education and skills development.
There are maybe other business permits that are required for certain types of
businesses aside from what we have listed and mentioned above. Legalizing
your business doesn’t only extend to registering it and securing a license or
permit. A legalized and compliant business is one that consistently complies with
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the government’s laws and regulations from registration, to operation, and until
cessation

References
http://www.in-the-philippines.com
http://www.webopedia.com
http://www.ifc.org
http://www.hiscox.com
http://www.quickmba.com
http://www.slideshare.net -
http://www.slideshare.net/greeshmamohanp/types-of-auntrepreneurs
http://canadabusiness.ca/blog/
http://gabrielataylor.com
http://www.moyak.coml
http://www.businessdictionary.com
http://businesstips.ph/

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