MR.

RYAN LAZARO FUENTES

What is ENTREPRENEUR?
ENTREPRENEUR - one who undertakes an
endeavor.

This is the meaning of the French word

entrepreneur. It is really all about starting
something and making it prosper while
offering people the services and products
they need.

When you decide to become an entrepreneur

your life changes or at least it should. In order to
become a successful entrepreneur it is
important that you develop your
entrepreneurial skills through education,
networking and research.

Entrepreneurialism is a career long endeavor, but only for those who choose to stick with
it and develop their skills in their respective fields.

According to some theories, the entrepreneur is

one who is willing to bear the risk of a new venture
if there is a significant chance for profit. Other
economists emphasize the entrepreneur’s role
as an innovator who markets his innovation.
Still others say that entrepreneurs develop new
goods or processes that the market demands
and are not currently being supplied.

WHO CAN BE AN ENTREPRENEUR?

There is not one single quality or skill to define an entrepreneur.

Successful entrepreneurs come in various ages, gender, race and social status. They also
differ in education and experience. However, research indicates that most successful
entrepreneurs share certain personal attributes, including: creativity, dedication,
determination, flexibility, leadership, passion, self-confidence, and “smarts”.

o Creativity is the spark that drives the development of new products ideas or ways
to do business. It is the push for innovation and improvement.
 o Dedication is what motivates the person to work hard to get the endeavor off the
ground. Planning and ideas must be joined by hard work to succeed. Dedication
makes it happen.

o Determination is the extremely strong desire to achieve success. It includes

persistence and the ability to bounce back after rough times. It persuades the
entrepreneur to make the 10th phone call, after nine have yielded nothing. For the
true entrepreneur, money is not the motivation.

o Flexibility is the ability to move quickly in response to changing market needs. It is

being true to a dream while also being mindful of market realities.

A story is told about an entrepreneur who started a fancy shop selling only French
pastries. But customers wanted to buy muffins as well. Rather than risking the loss of
these customers, the entrepreneur modified his vision to accommodate these
needs.

o Leadership is the ability to create rules and to set goals. It is the capacity to follow
through to see that rules are followed and goals are accomplished.

o Passion is what gets entrepreneurs started and keeps them there. It gives
entrepreneurs the ability to convince others to believe in their vision. It can’t
substitute for planning, but it will help them to stay focused and to get others to
look at their plans.

o Self-confidence comes from thorough planning, which reduces uncertainty and the
level of risk. It also comes from expertise. Self-confidence gives the entrepreneur
the ability to listen without being easily swayed or intimidated.

o “Smarts” consists of common sense joined with knowledge or experience in a

related business or endeavor. The former gives a person good instincts, the latter,
expertise. Many people have smarts they don’t recognize. A person who
successfully keeps a household on a budget has organizational and financial
skills. Employment, education, and life experiences all contribute to smarts.

Every entrepreneur has these qualities in different degrees. However, many skills can be
learned. Or, someone can be hired who has strengths that the entrepreneur lacks.

The most important strategy is to be aware of strengths and to build on them.

 PART 2: RISKS AND BENEFITS

WHAT LEADS A PERSON TO STRIKE OUT ON HIS OWN AND START A BUSINESS?

Sometimes a person is frustrated with his or her current job and doesn’t see any better
career prospects on the horizon. Sometimes a person realises that his or her job is in
jeopardy. Some people are actually repulsed by the idea of working for someone else.
They object to a system where reward is often based on seniority rather than
accomplishment, or where they have to conform to a corporate culture. Other people
decide to become entrepreneurs because they are disillusioned by the bureaucracy or
politics involved in getting ahead in an established business or profession.

Those who are attracted to entrepreneurship by the advantages of starting “their own
thing”. These include:

o Entrepreneurs are their own bosses. They make the decisions. They choose whom
to do business with and what work they will do. They decide what hours to work, as
well as what to pay and whether to take vacations.

o Entrepreneurship offers a greater possibility of achieving significant financial rewards

than working for someone else.

o It provides the ability to be involved in the whole lifecycle of the business, from
concept to design and creation, from sales to business operations and
customer response.

o It offers the prestige of being the person in charge.

o It gives an individual the opportunity to build equity, which can be kept, sold, or
passed on to the next generation.

o Entrepreneurship creates an opportunity for a person to make a contribution.

Most new entrepreneurs help the local economy. A few—through their
innovations—contribute to society as a whole.

One example is entrepreneur Steve Jobs, who co-founded Apple in 1976, and the
subsequent revolution in desktop computers.

However, it is important to note that to every single advantage there is a matching

disadvantage which should be carefully analysed. Here is an example of the most
common pros and cons to entrepreneurship:
 SALARY
Advantage Disadvantage

Often people do not feel fully Becoming an entrepreneur means you

compensated for the work they do. have to leave behind the security of
Becoming an entrepreneur means being paid each month.
you can reap the benefits of all your
hard work.

FLEXIBILITY
Advantage Disadvantage

Having control over your work Although entrepreneurs benefit from a

schedule means that you can
choose when to take time off and
work the schedule that suits you best.
flexible schedule they often have to
work very long hours particularly in the
start-up phase. Furthermore
entrepreneurs’ work schedules are
never predictable and they must deal
with emergencies that may occur at
any time.

DECISIONS
Advantage Disadvantage

Entrepreneurs are able to make all Being responsible for all decisions can be
of the decisions relating to their quite stressful and handling such
company themselves; they have responsibility can be difficult.
complete control. This allows for a
huge degree of independence and
a chance to shape one’s own
career.

EXCITEMENT
Advantage Disadvantage
 Becoming an entrepreneur is a very There is also great risk attached to
exciting time, from the idea and start- entrepreneurship. The success or failure of
up to the development and realisation the business rests with the entrepreneur.
of the product or service.

After comparing the advantages and disadvantages, you will have to decide if you can
realistically handle the responsibility of running your own business. Being an
entrepreneur is a huge responsibility with many risks attached. In business decisions
should be carefully considered.

Risk assessment (giving thoughtful consideration to potential costs and benefits) and the
collection of relevant information are key to successful decision making.

Nothing splendid has ever been achieved except by those who dared believe that
something inside them was superior to circumstance.
 PART 3: HISTORIC BACKGROUND
One of the first entrepreneurs was Marco Polo. He had
ideas of trading with Asia in the 13th century and was
sure of how he could get there and the materials he
could trade. His expeditions were financed by venture
capitalists in Venice with an assurance that he would
share his profits with them. These loose associations
continued to flourish in Europe and other parts of the
world where people with money were willing to back
ideas and new schemes when they were convinced
that there was some pecuniary advantage in the
end.

Entrepreneurship first took off when production levels

exceeded local consumption and people were left with
surpluses of the things they produced, whether in the form of
agricultural produce, dairy products, livestock and quite a
few manufactured items.

This initially led to a barter system that allowed people exchanged things to satisfy their
own requirements. This further led to the development of the market place where people
gathered to barter or sell their excess production in order to profit themselves. This came
about with the realization that they could not wait indefinitely for a coincidence of wants
before they could barter their own products. Government agencies stepped into the act
in the 17th century and made capital available to people to finance production
ventures. The risk involved in such ventures was the sole responsibility of the
entrepreneur and they had to make a fixed payment to the government, irrespective
of any profit they made from the venture. Governments considered this as a source of
revenue.

The concept of entrepreneurship was first established in the 1700s. There are many
concepts and theories about its genesis. However, based on its key features, there were
three basic ideas that explain the appearance of entrepreneurial activity.

o The first focuses on the individual, in other words, entrepreneurial action is conceived
as a human attribute, such as the willingness to face uncertainty, accepting risks,
the need for achievement, which differentiate entrepreneurs from the rest of
society.

o The second fundamental idea emphasizes economic and environmental

factors that motivate and enable entrepreneurial activity, such as the
dimension of markets, the dynamic of technological changes, the structure of
the market or merely the industrial dynamic.
 o The third factor is linked to the functioning of institutions, culture and societal values.
This approach is not exclusive given that entrepreneurial activity is also a human
activity and does not spontaneously occur solely due to the economic
environment or technological, normative or demographic changes.

The present development of entrepreneurship started after the Second World War in the
1950’s when nations were looking to build up their economies from the ravages of the war.
People had new ideas for business or jobs as individuals and started in small ways with limited
capital to form businesses which went on to challenge the well established
companies.

In the 20th century, economist 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 “new combinations,” thereby helping render old industries obsolete. Established
ways of doing business are destroyed by the creation of new and better ways 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.
 What is a Business Plan?

A business plan is a written document that describes in detail how a business —

usually a startup — defines its objectives and how it is to go about achieving its
goals. A business plan lays out a written roadmap for the firm from each of a
marketing, financial, and operational standpoint. A business plan is also a road
map that provides directions so a business can plan its future and helps it avoid
bumps in the road. The time you spend making your business plan thorough and
accurate, and keeping it up-to-date, is an investment that pays big dividends in
the long term.

 First, it serves the entrepreneur who must set a navigational course.

 Second, it serves investors and cautious financiers.

 Third, it serves the managers and staff of the organization so that they
will know the strategies and programs of the enterprise.

The business plan must have a specific audience in mind and what is important
questions do this audience want answered. In order to aid the entrepreneur in
getting his or her business plan organized, the following format may be good start:

1. Introduction

 The Business Concept and the business model

 The Business Goals: Vision, Mission, Objectives and Performance Target

 The Business Offering and Justification

2. Executive Summary

3. The Business Proponents: Organizers with their Capabilities and

Contributions

4. The Target Customers and the Main Value Proposition to the Customers.

5. The Market, Market Justification, based on the industry Dynamics and the
Macro Environmental Factors Affecting the Opportunities and Threats in the
Market, the Size, Potential and Realistic Share of the Market.

6. The Product and Service Offerings

7. The Enterprise Strategy and Enterprise Delivery system: Business

Competitiveness

8. The Financial Forecasts and Expected Returns, Risks and Cntingencies

9. Environmental and Regulatory Compliance

 10. The Capital Structure and Financial Offering: Returns and Benefits to
Investors, Financiers and Business Partners

The Business Concept and The Business Model

A business concept contains the essence of the enterprise in a concise but

powerful manner. It stresses the value of the product offering to target customers
who would most likely buy it. A business concept contains the essence of the
enterprise in a concise but powerful manner. It stresses the value of the product
offering to target customers who would most likely buy it.

 How will the business raise revenues?

 What will be the cost of the enterprise products and other costs of doing
business?

 What will be the major investment of the enterprise?

 How will the enterprise finance the investment?

A business plan is a vehicle for describing the goals of the business and how
the goals can be reached over the coming years. To illustrate, let us examine
the vision of Double Happiness is an eatery in a bus terminal. It has three outlets
located at bus terminal. The vision of Double Happiness is “to establish a
commanding presence and market leadership as food chain servicing major
bus terminals in Central Luzon within the next five years”. For Double Happiness,
its mission statement is “to provide quality food and passenger convenience
services that would generate sufficient profits for the stockholders and improve
the lives of its employee.”

The Business Goals: Vision, Mission, Objectives and Performance Target

Objectives must be more specific than the vision and mission statement.

 For DH, their stated objectives are:

 To establish a strong market presence in Central Luzon.

 To earn good financial returns for its owner.

 To delight customers with high quality food and services; and

 To make DH a happy and rewarding place to work in.

1. To establish a strong market presence in Central Luzon

  KRA:

 Number of food outlets in major bust terminal in CL.

 Sales volume attained

 Market Share in CL.

2. To earn good financial returns for its owners.

 KRA:

 Amount of net profits realized for the next five years.

 Return on Equity

 Return on Assets

 Return on Sales

RETURN ON EQUITY

ROE = (NET INCOME)

(Shareholder’s Equity)

Example: Suppose there is a company with name XYZ Company and having an
annual net income of 4,000,000 PHP and average shareholders’ equity of
16,000,000 PHP. What is total return equity of XYZ Company?

 RETURN ON ASSETS
 ROA = (NET INCOME)

(Total Assets)

Example: If a business earns a net income of $10 million in current operations and
owns $50 million worth of assets as per balance sheet, what is return on assets?

 RETURN ON SALES

 ROA = (OPERATING PROFIT)

(NET SALES)

EXAMPLE:

Report

Earnings 3,500.00

Interest 230.00

Tax 190.00

Net Sales 15,400.00

Operating Profit 3,920.00

Return on Sales 0.25 or 25.45%

3. To delight customers with high quality food and services

  KRA:

 Growth in sales per outlet

 Percentage of repeat customers

 Number of customer commendations or complaints

 Award and recognition given by the community.

 Customer survey rating to a certain customer’s degree of

delight.

4. To make DH a happy and rewarding place to work in.

 KRA:

 Compensation and benefits of managers and workers are

above industry rates.

 Management and employee turnover.

 Number of job applicants compared to another similar

establishments.

THE EXECUTIVE SUMMARY

 The executive summary contains everything that is relevant and important to

he business audience. It is synthesis of the entire plan. It must contain the
major argumentations of the business proponent on why business will work
and succeed.

 It should provide the business plan audience all the arguments on why they
should participate in the business venture.

 The ES should then proceed to discuss and justify the enterprise strategy and
enterprise delivery system. The Enterprise Strategy builds and develops the
game plan for attaining competitiveness. Th enterprise delivery system is the
entire process of converting input into output and these output into
outcomes.

 The third section of business plan contains information about the business
proponents or stakeholders. There are four types of stakeholders.

The Target Customers and the Main Value Proposition

 The business proponent must be very precise about the target audience or
target customer.

 Knowing where the target customer are exactly concentrated, the business
plan should then pinpoint what the customers buy, how they buy, when they
 buy, where they buy and what convinces them to buy.

 Business plan pinpoints what the customers buy:

 how they buy

 when they buy

 where they buy

 what convinces them to buy

Market Demand and Supply

 The business plan should estimate the total market supply and demand for
the product offerings of the enterprise. The business plan should then
determine the major critical factors that influence this market demand and
supply.

Product/Service Offering: Description, Evolution, and Justification

 The sixth section of the business plan is the product /service offerings that
should contain a description, evolution and justification of the product /
service offerings.

Financial Forecasts: Expected Returns, Risks, and Contingencies

 The Financial Forecasts includes financial returns, the financial risk, and the
financial contingencies.

 The BP must translate everything that we have discussed so far into financial
forecast and outcomes.

 From the financial forecasts, the business plan should then calculate the
expected returns from the business. The important return calculators are the
following

 expected return of sales;

 expected return on assets or investments; and

 expected return on stockholders’ equity.

Environmental and Regulatory Compliance

 The business plan must articulate the laws, rules, and regulations governing
the business, and the industry that the enterprise is in. It should ascertain that
all the necessary permits, license and authority to use proprietary intellectual
capital had either been secured or would definitely be secured.
Capital Structure and Financial Offering: Returns and Benefits to Investors,
Financiers, and Partners

 The last section of the BP contains the capital structure and financial offerings
of the enterprise including some discussion on who are the investors, the
financiers and the partners enterprise.