ENTREP REVIEWER

MSME Statistics (Micro, Small, and Medium

Enterprises)

Exports Contribution of MSMEs

- MSMEs account for 25%of the country’s total
exports revenue. It is also estimated that 60% of all
exporters in the country belong to the MSME category.
MSMEs are able to contribute in exports through
subcontracting arrangement with large firms, or as
suppliers to exporting companies.

Entrepreneurship and its Contribution to the Economy:

 GDP Booster (Gross Domestic Product)
 Problem-addressing innovations
 Selection of goods and services

DTI and Negosyo Centers

- as of December 2015, there are 144 Negosyo
Centers which are geared towards promoting the ease of
doing business facilitating access to services for micro, small,
and medium enterprises.
Roles of Negosyo Centers
 Business registration assistance
 Business advisory services
 Business information
 Access to market linkages

DTI and Industry Cluster Strategy

- the six national priority clusters which are
predominantly agri-based industries have contributed
significant outcome in terms of bottomline indicators.
Priority Industries
 Rubber
 Coco coir
 Coffee
 Cacao
 Processed fruits and nuts
 Tourism support industries

Other Contributions of DTI to Entrepreneurship

 Trainings and Seminars
 Business consultations
 Trade fair
 Supplier linkages

Institutions Assisting Entrepreneurs

 AIM - Asian Center for Entrepreneurship (ACE)
 Center of Small Entrepreneurs (CSE)
 Philippine Center for Entrepreneurship (PCE)
 Philippine Business for Social Progress (PBSP)
 Philippine Chamber of Commerce and Industry (PCCI)
 Philippine Exporter’s Confederation (PHILEXPORT )
 Philippine Small and Medium Business Development
 Foundation (PHILSMED)
Creating an Entrepreneurial Mindset - Failure is an
option! By Roger Cowdrey
Chapter 1- What is an Entrepreneur?
Entrepreneur came from the 13th century French verb
‘entreprendre’, meaning to undertake or do something.
Entrepreneur was then related to business during the 16 th
century, risk (business venture had no guarantee of profit)
was added in the 18th century, while the knowledge and
management skills were added in the 19th century-- this
model assumes that success is measured in terms of return of
investment (ROI) or profit or some other financial
measurement.
 However, it is clear that it is possible to have
entrepreneurs that do not maximize profit or
return on investment.
-- ‘Anthaprerna’ a word in Sanskrit that
means self- motivation.
 Entrepreneurship
“The pursuit of opportunity without regard to the
resources recently controlled.”
~ Howard Stevenson, Harvard Business School
 Entrepreneurs need to have:
- a clear and achievable vision
- a vision where all the resources may not be
in their control
-self-awareness
- confidence
- self-motivation
- a willingness to take calculated risks
- a willingness to listen to others
- a lack of fear of failure
- a willingness to work hard
Chapter 2: What stops people behaving in an
entrepreneurial way?
 Hierarchical Organizational Structure : one of the
biggest inhibitors of self-awareness, free thinking,
and risk taking; where those at the top hold all of
the power and where those lower down are
dependent on those above.
 Middle ages: power was determined by land
ownership and this is in turn was determined by
rewards to knights for a successful battle; because
of this, the army sat the top of the hierarchical
tree.
 The system was sustained by people knowing and
accepting their place within the hierarchy. The
payment to the landowner was based on
percentage, working harder meant paying more to
the landowner.
 Western religion had also operated a hierarchical
structure that lead up to the ultimate power at the
top who was never to be questioned.
 Industrial Revolution
- brought the need to improve the education of the
masses, but because of cultural conditioning of the past,
this opportunity was missed and further re-enforced
than changed things.
 Maslow’s Hierarchy of Needs
- people need to have reached the state of self-
esteem before they fell confident enough to move to self-
actualization that is necessary for entrepreneurial change.
 Education of the masses
- seen as a threat to their power and safety
- changes were made; but it did not damage the
status quo but supplied skills for business owners of
the time
- first moves in improving education:
 Sunday schools where people were taught to
read the bible on their day off
 Schools of Industry where they were taught
spinning, sewing, shoe making, wool carding
and laundry work
 ‘Academic schools ’ where they were taught
elementary reading, writing, and arithmetic (3
Rs) by rote so that one teacher could teach
hundreds of students at a time, mass
producing education rather like an industrial
factory
 Universities and serious education were for
the privileged , the rich and powerful.
 The education system we see is based on the
university as the pinnacle of achievement
with the schools below the university
contributing to getting people to the next
stage of the pyramid.
 This protects those at the top of the pyramid
and assumes that academic success is the way
to success.
 There were people who believed that too
much learning was harmful for the brain
(Malcom Gladwell, Outliers)-- out of 1741
cases of insanity, 205 were caused by over
studying.
 Sunday school was removed
 School days were shortened
 Holidays were extended
 The model that developed the present
western school year was based on the
agricultural model pre-industrial revolution.
 Legislation
 - it started out with the intention of
improving conditions of the people of the
government but it has turned into a legislation that
restricts many of the activities at the top of
Maslow’s Hierarchy.
 The ‘play it safe’ mentality
- the overriding factor in decision making is
influenced by short-term gains
- they put the assessment hierarchy over the
top of the process
Chapter 4: Developing a Clear Vision
 Rebellious teenagers
- term for young people who don’t follow the
accepted norms and attempt to forget their own
vision.
 Peer pressure
- plays a part in establishing your vision
- people want you to conform to the norms
of the group
 Constructing a lifeline
- high points in your life will have similar
patterns, as well as the low points of your life
- make note of what you learn about yourself
and how you have been living your life until now
 Understanding your work and leisure values
- this aims to help you answer questions
about what you want from your life such as:
 How do I like to spend my time?
 Where do I want to live and work?
 How important is money, status,
security, etc.?
 Your work values
Developing a Clear Vision
Clear Achievable Vision
 Very few have a clear vision that we created ourselves
 How do you see yourselves 10 years from now?
 Mostly, they are not visions but expectations of others
(parents, teachers, and friends)
How Important is a Vision?
Everything happens twice:
 First: in the mind
 Second: in reality
 Examples: Arnold Schwarzenegger and Michael
Jordan
Clear Achievable Vision
Visualization
- Creating and controlling mental imagery that we see
 if we visualize something that we want to
occur, it’s going to continue in our mind.
- training your brain that it has had this experience so
when you actually go and do that thing it becomes easier
because your brain has been there before.
 We can make more mental repetitions that
makes us more confident and makes it easier
for us to perform.
Importance:
-it gives clarity on where you want to go
- Vision is your “compelling why” that will get you
through the hard stuff.
Emotional Cycle of Change
1. Uninformed Optimism
- The stage is the most exciting stage. You imagine
the benefits but have not experienced any of the costs.
Uninformed optimism sits above the line the land of
positive emotion. You see all of the benefits of the
change and none of the downside. You brainstorm and
strategize for the future.
2. Informed Pessimism
- Uninformed optimism doesn’t usually last long.
As you learn the reality of what it takes to change, positive
emotions quickly sour with pessimism starting to set in. This
stage is a shift to a negative emotional state. Here, the
benefits don’t seem as real, important, immediate, and the
costs of change is apparent. People question if the change is
really worth the effort. You start looking for reasons to
abandon the effort. But it gets worse.
3. Valley of Despair
- The lowest point of the emotional cycle is the
entrance to the valley of despair. This is when people give up.
The pain of change is felt and the benefits seem far away and
unimportant. The quickest way to the end of discomfort is to
quit and go back to the way you did things before the change
was introduced. The past doesn’t seem so bad at this stage.
- If you quit here, you end back up at stage one and
will have to start all over again. You will be able to persevere
if you know why you’re making the change and have a
compelling future vision of what you want to achieve.
4. Informed Optimism
- The possibility of success increases and you are
back In the positive emotional zone. The benefits of your
actions are starting to bear fruit and the cost of change is
feeling worth it. The key here is not to stop but keep going.
5. Success and Fulfillment
- It is the final state of the emotional cycle of
change. Here, the benefits of your new behaviors
are fully experienced and the cost of change is
perceived as now worth it. The actions that were
once difficult and uncomfortable are now routine.
Goal Setting
 The process of identifying something that you want
to accomplish and establishing measurable goals
and timeframes.
  In involves the development of an action plan
designed to motivate and guide a person or group
towards a goal.
 Goal setting can be guided by goal- setting criteria
(or rules) such as the BeSMART criteria
BeSMART criteria:
Be-gin with the end in mind
Goals should be:
Specific
- Goals should be well-defined. Vague goals are
unhelpful because they don’t provide specific direction.
Measurable
- Goals should include precise amounts so you
would know if you have been successful in achieving your
goal.
Attainable
- Make sure that it is possible to achieve goals you
set. If you set a goal that is not possible to achieve, you will
only demoralize yourself.
Realistic
- Make sure your goals matter to you and that it
aligns with your other relevant goals. We should know our
limitations like doing everything at once.
Timebound
- Goals should have a deadline. By setting a
deadline, your sense of urgency increases and achievement
will come quicker.
 Some business titans had lost one or both parents
at a very young age, and were hence forced by
circumstances to step up and help provide for the
family in a tangible manner (John Gokongwei Jr.)
Design thinking
“to create meaningful innovations, you need to know about
your users and care about their lives.”
 Empathize mode
- empathy is the center-piece of human-centered design
process. The Empathize mode is the work you do to
understand people, within the context of your design
challenge.
 Why Empathize?
- as a design thinker, the problems you are trying to
solve are rarely your own.
 How to Empathize:
 Observe: helps you learn about what
they need, do, and say; some of the
most powerful realizations come from
the noticing a disconnect between what
someone says and what he does
 Engage: some call this ‘interviewing’ but
it should feel like a conversation; keep
the conversation loosely bounded;
always ask ‘why’ to uncover a deeper
meaning
 Watch and listen: You should combine
observation and engagement; ask
someone to show you how they
complete a task, and use the
environment to prompt deeper
questions.
 Transition: Empathize to Define
- get all the information out of your head and onto
a wall where you can start to make connections--
pictures, post-its with quotes, maps of journeys--
anything that captures impressions and information
about your user.
 Define
“Framing the right problem is the only way to
create the right solution.”
- all about bringing clarity and focus to the design
space
- the goal of the define mode is to create a
meaningful and actionable problem statement -- we call
this the point of view ; it is a guiding statement that
focuses on insights and needs of a particular user or
composite character
- it is a critical part of the design process because it
results in your point of view: the explicit expression of
the problem you are striving to address; your POV
defines the right challenge to address
- the define mode is sense making
 How to define:
 Develop an understanding of the type of
person you’re designing for-- your user.
 Synthesize and select a limited set of
needs that you think are important to
fulfill
 Work to express insights you developed
through the synthesis of information
 Articulate a point of view by combining
the three elements: user, need, and
insight -- as an actionable problem
statement that will drive the rest of your
design work.
 A good point of view:
- provides focus and rames the
problem
- inspires our team
- Informs criteria for evaluating
competing ideas
- empowers your team to make
decisions independently in parallel
- captures the hearts and minds of
people you meet
- saves you from the impossible
tasks of developing concepts that are all
things to all people (should be discrete,
not broad)
 Transition: Define to Ideate
- create a list of “How- Might- We…?”
brainstorming topics that flow from your problem
statement
 Ideate
“it’s not about coming up with the ‘right’ idea, it’s
 about generating he broadest range of possibilities.”
 Ideate mode is the design process in which
you concentrate on idea generation. It
represents the ‘going wide’ in terms of
concepts and outcomes.
 Why Ideate?
- you ideate in order to transition from
identifying problems to creating solutions for your
users.
- about pushing for a widest possible range of
ideas from which you can select
 How to ideate
- combine your conscious and unconscious
mind
- you can also build-- prototyping itself can be
an ideation techniques
- more ideation techniques: mind mapping,
sketching, body storming
 Transition: Ideate to prototype
 Prototype
“Build to think and test to learn.”
- the iterative generation of artifacts intended to
answer questions that get you closer to the final
solution.
- a prototype can be anything tat a user can
interact with
 Why prototype?
- to ideate and problem-solve
- to communicate
- to start a conversation
- to fail quickly and cheaply
- to test possibilities
- to manage the solution-building process
 How to prototype:
- start building
- don’t spend too long on one prototype
- identify a variable
- build with the user in mind
 Transition: Prototype to test
 Test
“testing is an opportunity to learn about your
solution and user.”
- you solicit feedback for the prototypes you have
created from users
- another opportunity to understand your user
- always prototype as if you know you’re right, but
test as if you know you’re wrong
 Why test?
- to refine prototypes and solutions
- to learn more about your user
- to refine your POV
 How to test:
- show, don’t tell
- create experiences
- ask users to compare
 Iteration and making the process your own.
- Iterate by both cycling through the process
multiple times. And also by iterating within a step.
Business Start-ups
- making your business legit!
1. Choosing the legal form of business
Advantages:
- least expensive
- most manageable
- complete control over decisions
Disadvantages:
- unlimited liability since they assume all the debts
of the business
- hard to obtain capital
- not that attractive for highly skilled employees
because of low chance to advance in careers
- demanding the owners personal time
 Partnership
- ownership of the business is shared by two or
more members
- partners agree on how decisions will be made and
how profits and losses will be shared
- partners agree on how future partners will be
admitted and how disputes will be resolved legally
- common examples are law firms and accounting
firms
 Types of Partnerships
General partnership - partners have unlimited
liability for the debts and obligations of the
partnership
Limited partnership - one or more general
partners have unlimited liability and the limited
partners have liability that is only up to the amount
equal to their capital contributions.
Advantages:
- wider capital base
- diversified skills and resources
- expansion is easier
- employees may be attracted by the incentive of
becoming a partner later on
- check and balances
Disadvantages:
- liability for all obligations stemming from the
decisions of other partners
- issues in responsibilities and liabilities
- limited life of partnership because of general
instability (a partnership is dissolved upon the death of
a partner or whenever a partner bolts out)
 Corporation
- has a distinct personality from its owners
- a corporation can enter into contracts, secure
loans, sue and be sued, hire employees, and pay taxes
- a corporation has a minimum of five and a
maximum of fifteen owners who are called share
holders
- each share holder owns a part of the company
and has some authority over its direction
- shareholders elect a board of directors who
oversee the major policies and decisions of the
corporation
- regulated by SEC
- total shares depend on the capital shareholders
have invested into the company
- the minimum paid up capital required of
corporation in the Philippines is P 5,000
 Types of Corporation
Stock Corporation - has capital stock divided into
shared dividends; surplus profits are given to
shareholders
Non-stock Corporation - does on issue share of
 stock and is established primarily for public
interest such as a foundation for charitable,
educational, social, cultural, and other similar
purposes.
Advantages:
- limited liability to its shareholders
- can do tax avoidance techniques
- death or withdrawal of one shareholder does not
result in its dissolution
Disadvantages:
- more difficult to create, organize, and manage
- more permits and legal requirements
- unless you own sufficient number of shares to
control the corporation, you’ll most likely be left with no
participation in the management
2. Finding Location
- the numerous factors you have to consider in
choosing a suitable location are:
 Proximity to target markets
 Availability and quality of raw materials and
supplies
 Accessibility to consumers and transportation
 Zoning and local ordinances
 Availability of power and fuel sources
 Taxation - municipal taxes and fees rates
3. Hiring and Selecting Personnel
- you may start out on a small scale with only one
member of your family. But if the business grows, the
time will come when you must select and train
personnel
 Tests to consider in screening applicants:
- mental ability test
- aptitude test
- personality test
4. Raising the Capital Needed
- you not only need money to start your business
but to carry on the business until it is self-supporting
 Sources of Capital:
 Your personal funds and property
 Loans or investments in cash or in kind from
family members, friends, partners, or
stockholders
 Good deals with suppliers
 Financing from banks and other financial
institutions
5. Registration of the Business
 Basic Business Permits and Clearances
 Barangay clearance
 DTI Business Name Registration
 Mayor’s Business Permit
 BIR Certificate of Registration
 SSS Employer’s Registration
 Philhealth Employer’s Registration
 PAG-IBIG Employer’s Registration
 Barangay Clearance
- this certifies that the business complies with the
requirements of the barangay where the business is located
 SEC Certificate of Registration
- corporations and partnerships have to secure a
certificate of incorporation or certificate of partnership with
SEC to be considered legal or judicial entities
- also used as a requirement for registering with
the BIR, mayor’s office, and other government offices
 Mayor’s Business Permit
- business permit from the local government office
where the business is located
- requirement for the issuance of the BIR
Registration
 BIR Certificate of Recognition
- business register with the BIR to comply with the
Philippine tax requirements
- the company/ business owner is assigned a tax
identification number
 SSS Employer’s Registration
- Republic Act no. 8282 or the Social Security Act of
1997 requires business owners who engage the services
of employees to be registered with the SSS
 PhilHealth Employer’s Registration
- all businesses are required to register with
PhilHealth to enable them to provide social health
insurance coverage for their employees
 Pag-IBIG Employer’s Registration
- business owners have to register with the Home
Development Mutual Fund to secure their Pag-IBIG
Employer ID Number and provide benefits to their
employees.
 DOLE Registration
- business with five but not more than 50
employees should register with the Department of Labor and
Employment for monitoring their compliance with labor
regulations.
- For companies with 50 or more, they are required
to register with the Bureau of Local Employment or DOLE
“Unsuccessful people make decisions based on their
current situations. Successful people make decisions based on
where they want to be.”
“Life isn’t fair. It never will be. Quit trying to make it fair.
You don’t need it to be fair. Go make life unfair to your
advantages.”
~ Robert Kiyosaki