ENTREPRENEURSHIP- STUDY MATERIAL AND NOTES, 2019-

2020
School/University: Valencia National High School
Course/Strand: For all Senior High School Strands

 Buyers
 Sellers
 Bystanders
 Observers

Why do you think there are lots of people in the market?

What are their purposes in going to the market?

 Some are buyers, sellers and others are observers.

 Entrepreneurship – the act of observing correct practices in managing and operating a self-
owned wealth, creating business enterprise.
 The person  entrepreneur

- When they become successful they inspire social development

- Entrepreneur can change the way we live and work.

What is the relevance of Entrepreneurship in our country?

What is the relevance of Entrepreneurship to individual?

 Entrepreneur who is a business leader looks and puts them into effect in posturing economic
growth.
 It is important to individual to live comfortably in life.

What subjects are having the topic of entrepreneurship?

 Management
 There are many entrepreneurs in the country

Skills – are considered as the personal abilities to do things well

What kind of skills should be developed in deliberate and systematic fashion by person who has an
intense desire of becoming a successful entrepreneur?

- Entrepreneurial skills such as cognitive, technical and interpersonal skills.

Cognitive skills- mental ability of the entrepreneur to learn new things, generates the new ideas, and
expresses knowledge in both oral and written forms.

1. Ability to understand written materials

2. Ability to learn and apply new information
3. Ability to solve problems systematically
4. Ability to create new ideas
5. Ability to innovate new products and procedures or methods

Technical skills – focus mainly on the mechanical or practical aspect of a person rather than his/her
abstract or theoretical thinking.

1. Information technology
2. Feasibility study and business plan preparation
3. Technical writing skills
4. Marketing
5. Management and finance

Interpersonal skills – basically about the relationship/interaction of the entrepreneur with the workers,
suppliers, creditors, prospective customers and others.

What is competency?

- Is a person who aspires to become a successful entrepreneur and possess, internalize the character
traits that are common among successful entrepreneurs.

State the difference between small business and ordinary business

Small business
– Business or enterprise that correctly adopts and practices the principles of entrepreneurship
Ordinary small business
– Business enterprise managed and operated by an owner who is not an advocate of and does not
practice the concepts and principles of entrepreneurship.

What have you observed around, at home, in school and in the community?
 At home, e-product (basic daily needs to be bought like foods, soap and others)
 At home, services (transportation to pro- cure the basic daily needs)
 In school, products (paper, and others)
 In school, services ( snacks and others)
 In the community, products (basic daily needs)
 In the community, services ( volunteering and others)

 Have you observe the problems of your neighbors in terms of procuring their basic needs?
 Far from market to buy
  In the community where you belong, either rural or urban community, what are the problems
being observed?
 In urban – pollution, factory exhaustion and others
 In rural – transportation and others

Why do individuals have basic needs in their daily life activities?

 Because it is necessary for all of us to go on living healthy and to live comfortably with the
family

Why is there a need to satisfy these basic needs?

 Because everybody needs it to go on with our daily life activities

What will happen of some of these needs is not satisfied?

 It will result to a feeling of discomfort, dissatisfaction and imbalance of our daily life activities

If the needs are satisfied, how do the individual feels?

 It is just natural that we feel happy and contented if our daily needs are satisfied

How will you determine the products or services that can help solve the problem being observed?

 By being observant of what you have seen around you at home, in school or in the community

Are the products or services that had chosen had the existing problem being?

 Yes because it is based from our observation around the most people in need of that particular
product or services

What is opportunity seeking?

They have endless curiosity to discover new on different ideas and see whether these
ideas will work in the market place.
What is screening opportunity?

 Is the process by which entrepreneurs evaluate innovative product ideas, strategies, and
marketing trends

12 hours of screening
1. Relevance
 2. Resonance to values
3. Reinforcement Entrepreneurial Interest
4. Revenues
5. Responsiveness
6. Reach for the opportunities
7. Range
8. Revolutionary impact
9. Returns
10. Relative ease of implementation
11. Resources required
12. Risk

Seizing Opportunity

- After opportunity

- Ready for seizing

- Final stage

- The more you know about your market, the better you will be able to determine customer needs and
wants

7 basic questions that you must ask in preparation for any major market research
Why – purpose and objective for conducting the market research
What – determines the scope and the limitations of the market research to be conducted
When – determine the time and timing of the research
Where – pinpoints the relevant location of the market research
How – determines the methodology to be used for the market research
Which – determines which segment of the market must be studied; this must be the market
segment that the entrepreneurs is eyeing
Who – identifies who among the members of the selected market segments will participate

Opportunity Seeking

 Are the entrepreneurial mind frames, heart flame and gut game.
 Mind frame

 allows the entrepreneur to see things in a very positive and optimistic light in the
midst of crisis
Heart Flame

 commonality between an inventor and an entrepreneur

Passion

 great desire to attain a vision or fulfill a mission

Gut game

 ability of the entrepreneur to sense without using the 5 senses

SOURCES OF OPPORTUNITIES
Macro environment – refers to the big on macro forces that affects the area, the industry and the market
which the enterprise belongs to.

5 categories
1. Socio- cultural environment
 Demographics and cultural dimensions that govern the relevant entrepreneurial endeavor:
beliefs, tastes, customs and traditions
2. Environment
 governance system of the country or local business such as laws, rules and regulations that
govern business practices: permits, approval and licenses
3. Economic Environment
 Supply and demand forces mainly drive the macroeconomic environment
4. Ecological Environment
 Natural resources and the ecosystem, habitat of men, animals, plants and minerals
5. Technological Environment
 New technology with new products and not obsolete

Graphs – shows the visual patterns that are not easily seen in a table

3 commonly used graph

  Histogram
 Frequency Polygon
 Pie Chart

Histogram or bar graph- consists of a series of rectangles or bars

Frequency Polygon – constructed by making the frequencies on the vertical axis with a dot corresponding
to the values on the horizontal axis

Pie chart – a circular graph divided into sections that represent the relative frequencies of the group

Focus group discussion – is one of the most common qualitative research tools. An interview of the
facilitator of a small group that normally last for one hour and one half

4 key decisions to be made:

 Responded selection
 Sample size
 Data gathering
 Data analysis

RESPONDENTS SELECTION INCLUDES:

1. Definition of the respondents

2. Classification of the respondents
3. Screening of the respondents

Data Gathering Methods in FGD

1. Selection and preparation of the venue and equipment

2. Formulation of the discussion agenda
3. Skillful facilitator

Data analysis includes:

1. Integration of the information gathered

2. Some observations on respondent behavior
3. Listing of recommendations and report writing

9 steps in Conducting FGD

1. Develop the research problem. What is the research all about
 2. Determine the participants’ profile who are the most knowledgeable/most relevant participants
3. Determine the appropriate token or compensation for the participants
4. Develop participant screener questionnaire
5. Recruit the participants
6. Select a good facilitators reaction guide
7. Arrange for the venue and logistic
8. Analyze the results of the FGD

Observation Technique – probably one of the best ways of gathering data about customers in their natural
setting without having to talk to them

1. The needed information must be observable or inferable from the behavior

2. The subject matter contains some sensitivity that need detached observation
3. The behaviors of interest must be repetitive, frequent, or predictable in some manner
4. The behavior of interest must be of a relatively short duration

Advantage of Observation: It allows the researcher

1. To see what customers actually do rather than rely on what they say they do
2. Observe customers in the natural setting
3. It does not subject the researcher to unwillingness of customers
4. Some information are better gathered quickly and accurately through observation

Disadvantage of Observation Research: only see the outside behavior of the customer

1. Cannot get the reasons behind the behavior

2. Focus only on the “Here and now”
3. Border on the unethical because the respondents have not agreed to be observed

2 types of observation

1. Human observation
- Observe the events as they happen

2. Mechanical observations

- Record events for later analysis

Guidelines in conducting observation research

1. Determine – the pre-observation objectives

 2. Prepare – pre- observation tips
3. Prepare and clarify observation points and issues
4. Prepare observation materials
5. Focus on what you want to observe

a. Customer demographic (gender/people)

b. Customer buying behavior (amount/volume)
c. Customer

Observation proper

a. Observe keenly and listen intently

b. Be mindful of the surroundings
c. Be alert for obvious movement
d. Be sensitive to subtle movement

Post- observation tip

a. Review your notes

b. Make sure that the flow is correct
c. Tabulate what needs to be tabulated
d. Interpret and analyze your data
e. Make a formal report

SURVEY RESEARCH

Survey is the most important for in-depth quantitative research

Respondents – are asked a variety of questions which are often about their personal information, their
motivation and their behavior

Survey can be conducted via telephone, personal and mail interview. The most type of survey research is
the usage, attitude and image.

THREE IMPORTANT CONCERNS IN PLANNING A SURVEY

1. Sample technique
2. Getting the sample size
3. Designing the questionnaire

Questionnaire – proves to be the most sensitive phase

Questionnaire design (some basic rules)

  Elicit all necessary information required in the research
 Clear and definite
 Cover one topic at a time
 Neutral manner
 Translated into dialect that are familiar to respondents

Sampling Techniques Classification

1. Probability – respondents are randomly selected from a population such as lottery method
2. Non- Probability – refers to the technique that is resorted to “when it is difficult to estimate the
population of the study such as convenience purpose, quotation and snowball

BASIC SAMPLING SIZE DETERMINATION

1. Data variability of a population dispersion of the data or how widely spread the data is from
central point
2. Confidence level in the estimation process. The higher the confidence level desired the bigger the
sample size needed
3. Error in the result of the estimation process – the less the error margin desired the bigger is
required sample size. It expressed as plus or minus certain percentage

METHODS CUSTOMER PROVIDING

A. Demographic Classification such as:

1. Age
2. Income class
3. Social classes/reference groups
4. Ethnic background
5. Religious belief
6. Occupations
7. Domiciles- homes

Income levels determine the purchasing power of customers. It classify according to income classes

1. ( Class A) high income class

2. ( Class B) upper middle income
3. ( Class C) middle income class
4. ( Class D) lower middle income class
5. ( Class E) low income class

Ethnic Background and Religious Beliefs

 Affect the cultural beliefs of people such as the food they eat
Social changes and Reference groups

 Dictate what acceptable or unacceptable behavior is. These groups are often including family,
friends and societal affiliations.

Occupations

 Such as those of factory foremen, doctors, taxi drivers, nurses and teachers. Also determine what
kinds of goods and services these people would buy.

Domiciles

 For habitats or areas of residence and environmental surroundings, often times, define and limit
the choices.

Psychographics

 Defines the customers motivations, perceptions, preferences and lifestyle

Motivation

 Goes to the rooks of customer’s needs and wants and dislikes

Market Aggregation – a group, body or mass composed of many distinct parts or individuals.
Entrepreneurs prefer to deal in commodities like rice, bread and water that appeal to market aggregation
rather than market segmentation.

Market Segmentation – customers with similar needs and wants and similar willingness and ability to pay
can be grouped into one customer segment and can produce products and services that are highly
specialized for any type of consumer segment.

Market Mapping – refers to grouping customers and products according to certain market variables.
Entrepreneur can use one for a combination of demographics, psychographics and technologies to create a
market map.

Marketing plans are designed to capture market share and defeat competitors

Seven Ps of Marketing Plans

 A. Positioning – in the context of a marketing battle plan, has three overlapping objectives
positioning has an enterprise perspective

1. Positioning – has a competitive perspective and customer’s perspective. The stronger the overlap
is in these three perspectives, the more defined the positioning of an enterprise is in the market
place.

Competitive landscape of the Enterprise

A. latitudinal – lays out what is important to the different customer segments from their differing
points of view.

B. Longitudinal – in the market map represents the product features and attributes of competitors in
the marketplace

Products – the tangible good or the intangible service that the enterprise offers to its customers in order
to satisfy their needs and to produce their expected results. It is usually identified with their brand names
to distinguish them from other products in the market

FOUR GENERAL TYPES OF PRODUCT IN THE MARKET

A. Breakthrough Products
 Offer completely new performance at half the co-marketing breakthrough products need a higher
level of customer education and orientation

B. Different Products
 Claim a new space in the mind of the customer different from the space occupied by existing
products and additional benefits on special aspects of the product.

C. Copycat Products
 Will not make much impression on the customer’s mind. The marketer should make up for the
lack of mental space by offering more physical space in the shelves, lower prices easier access
promotional freebies and the like.

Four types of Corporation

1. Stock Corporation – issues capital stocks divided into shares (or proportions of the total capital)
2. Non- stock non- profit corporation – is organized to carry out a purpose(s) other than generating
profits for investors. They have social mission and its concerned by board of trustees
3. Close Corporation – a special form of corporation allowed by law, usually associated with the
clergy. A trusteeship that it set up for the purpose of administering and managing the affairs,
property, and temporalities of a church or group of clergy

Merry band of men and women

- After establishing the enterprise, the entrepreneur must meticulously screen and hire men and women
who foster the cause and share the commitment of the enterprise. Good character and competence must be
the two major criteria for hiring people.

Sole proprietorship
- The simplest and easiest enterprise to organize and it is mandated by law to register the business with
the proper authorities.

Clearances that must be obtained

1. Barangay
2. Fire safety
3. Electrical inspection
4. Certificate of occupancy
5. DTI certificate
6. Lease contract if

Preparing, analyzing and forecasting financial statements, quantifying the business plan

Raw materials
Supplier’s
and supplies
credit

Land, Building,
Bank loans Machinery, Equipment,
Cash
Furniture, Fixtures,
Vehicles
Stockholders’
equity

Cash – will be spent to buy power and water, which would be used in all aspect

Works in process inventory- are the raw materials that process in the factory

Finished goods Inventory - when goods are completed

Some of the operating expenses in the company

 1. Salaries
2. Supplies
3. Travel allowance
4. Electricity
5. Water bill
6. Rental

Three types of Costs

1. Product Cost – the cost of making the product

2. Cost of Goods Sold – the finished goods when sold
3. Period Costs – the selling general, and administrative expenses

Four MS of Production

 The most critical factors in the whole production system are the inputs and the transaction
process.

Four MS

 Manpower
 Method
 Machine
 Materials

1. Manpower – refers to the human workforce involved in the manufacture of products. It is

considered as the most critical and important factor of production. The entrepreneur must
determine and acquire the most qualified employees with the jobs.

Manpower Criteria that must be considered

1. Educational qualifications and experience required for the job

2. Status of employment, whether permanent or temporary
3. Number of workers required for the job
4. Skills and expertise required for the job
5. Appropriate time the worker is needed
6. Conduct of Background checking and issuance of requirements
7. Amount of salary or wages and other mandatory benefits
8. Availability of potential workers in the community

2. Method or Production Method – refers to the process or technique of converting raw materials to
finished products. The raw material undergoes several stages before it is completed and becomes
ready for delivery to the target consumers

Selection of the method of production

 1. Product to produce
2. Mode of production
3. Manufacturing equipment to use
4. Required skills to do work

Product to produce

Product – is the output of the whole production process. It should be valuable and beneficial to the
consumers and should satisfy their basic needs and wants. It can be heterogeneous or homogenous
product.

Heterogeneous Product – dissimilar characteristics, parts, and physical appearance. It can be easily
identified from other products

Homogeneous Product – physical appearance and taste that can hardly be distinguished from that of the
other products

Mode of Production – refers to how the product will be produced

USEFUL OF PRODUCTIONS SYSTEM

1. Intermittent product System

2. Continuous Production System
3. Just- in- time Production System

The Intermittent Production System – adopted when the production process is basically short and the
machines are frequently changed

ENTREPRENEUR USED THE FOLLOWING:

A. Project Method – substantial in size and is bounded b specific time to complete it

B. Job Order Method – completed by single employee
C. Batch Method - undergoes several stages, and the product is transferred from one worker to
another

Features of Intermittent Production System

1. There is a variety of products to be manufactures

2. The production flow is not continuous
3. The production is dependent on the orders of customers
4. The volume of production is not material
5. The machines are for general purposes
6. The sequence of operations is based on them product

The continuous Production System – is adopted the demand for the product is considered constant. It is
not based on the order of customers but for the stocking of inventories.
Features of the Continuous Production

1. The process is continuous

2. It is not based on the customer’s order but on the anticipated demand
3. It is considered standardized
4. It is usually homogenous
5. It produces large quantities

Just in time production system – goods are produced just in time when the market needs or demands for
them. Raw materials will be produced just in time for the actual production to start and the delivery
equipment will be required in the production plant just in time when the products are about to be
completed.

Machine – refers to the manufacturing equipment used in the production of goods or delivery of services

Important Elements of the Type of Equipment to Purchase

1. Types of production to be produced

2. Production system to be adopted
3. Cost of the equipment
4. Capacity of the equipment
5. Availability of spare parts in the local market
6. Efficient of the equipment
7. The skills required in running the equipment

Materials – refers to the raw materials needed in the production of a product. It is basically form part
of the finished product, example; wood or lumber is a raw material

Important factors in a selection of materials

1. Cost
2. Quality
3. Availability
4. Credibility of supplies
5. Waste that the raw material may produce

The Physical Environment

  It is known as natural environment and composed of natural elements that are inherited in the
earth. It is divided into climate, physical resources and wild life.

PHYSICAL OR NATURAL ENVIRONMENT

The Physical
Environment

Physical New Climate

business
Resources

Wildlife

Climate – a condition in a particular region in the Philippines where the business will be established must
be evaluated

Physical Resources – the availability of raw materials is another major factor that can influence the
success or failure of the business venture

Wildlife – wild plants and animals in the forest are continuously abused

Prototype

 An early sample model, or release of a product built to test a concept or process on to act as a
thing to be replicated or learned from. A term used in a variety of contexts, including semantics,
design, electronics and software programming.

Four steps to get the First Prototype

1. Create – a concept sketch. The first step toward turning your idea into reality is getting it down on
paper.
2. Develop – a virtual prototype
3. Build – a physical prototype
4. Locate – a manufacturer

How to choose the supplier for the business

  Set the criteria. Create a list of the supplier’s selection criteria that companies need to fulfill to be
able to provide you with the item the company need.
 Define your process. Identify the methods that you will use to find suitable suppliers
 Call for bids
 Evaluate the bid submissions
 Monitor the supplier performance

Value chain – is a process in which a company adds value to its raw materials to products eventually sold
to consumers. It gives the companies a competitive advantage in the industry

Supply chain – leads an important measure for ensuring the long term success of your organization

Before you hire and benefit from great employees, you need to streamlined recruiting and hiring system.
One of the best ways to recruit the candidates is to incentive them to come to you.

THE NEED FOR BUSINESS PLAN

Business Plan is prepared using scientific approach in determining possible business situations
considering the different perspectives of people who are interested in the business. It is actually the
roadmap of the navy business. The only single written documents what must be prepared before opening
the new business.

Feasibility Study – serves as the forerunner of the business plan. In general two major tests are conducted
every time a new business idea is created, namely the test of possibility and the test of feasibility.

Test of Possibility – on the new business idea should have positive result

Test of Feasibility – can be conducted next to test of possibility. The primary objective of feasibility study
is to determine whether the proposed business is feasible or not in all areas.

If the outcome of the feasibility study is positive, then the entrepreneur prepares the business plan

Business plan
Defined as detailed and integrated written documents that describe the various activities involved
in the opening and operating a new entrepreneurial venture.

Major parts of the Business plan

1. Introduction
2. Executive Summary
3. Environmental Analysis
4. Organizational Plan
5. Business description
6. Production Plan
7. Operation Plan
 8. Marketing Plan
9. Financial Plan
10. Appendix

Introduction – present the general perspective of the business. It may consist of one or two pages. It
includes the following

1. Proposed name of the business

2. Address of the owner of the business
3. Name of the owner or owners
4. Description of the Business
5. Location of the Business
6. Funding requirement and source

Proposed name of the business – the formulation and drafting of the proposed business name is not as
simple as it sounds.

The proposed business name must

1. Reflect the business identity and image

2. Promote the philosophical values and culture that the business value the most
3. Profess the brand identity of the product
4. Attract or influence the target consumers

Address of the Business

Address of the business is correctly written because all business correspondence are mailed to the
business address

Name of the owner

Must be properly stated id it sole proprietorship

In case the venture is partnership the names of the partners including the liabilities

Incorporation

Are persons who originally formed the corporation

Description of the business

Must include information about the type of product or service that the business intends to produce
or provide. The mission, vision and objectives of the business

Location of the business

There are no rigid rules in the selection of the business location since several variables affect the
selection of the business location

Factors should be considered when deciding on the location

 1. Proximity to the target consumers
2. Distance from the sources of raw materials, labors and utilities
3. Availability and cost of transportation
4. Peace and order situation
5. Presence of direct competition
6. The geographic and climatic condition

ORGANIZATIONAL PLAN PROVIDES A DETAILED DESCRIPTION OF THE BUSINESS IN

PERSONS OF THE FOLLOWING:

1. Form of Business Organization

2. Liability of the owner
3. Organizational Structure
4. Roles and Responsibility
5. Salary Requirements

The production Plan usually includes the following:

1. Production Schedule
2. Production Process
3. Processing Plant and Equipment
4. Sources of Materials

Production Schedule presents the total number of goods to be produces and the expected time to
produce them. It is usually affected by the following:

1. Demand for the Product

2. Availability of Resources
3. Capacity of the Plant

Business Plan Outline

A. Title Page
B. Table of Contents
C. List of Tables
D. List of Figures
E. List of Appendices
F. Introduction
G. Executive Summary
H. Environmental Analysis
I. Business Description
J. Organizational Plan
K. Production Plan
L. Operation Plan
M. Marketing Plan
N. Financial Plan
O. Appendix

Executive Summary
 1. Vision, Mission, Goals, Objectives
2. Business Model
3. Business/ Product Position
4. Wealth Improvement

Business Description

1. Product Description
2. Equipment/ Materials Needed
3. Size of the Business
4. Personnel Requirement

Organizational Plan

1. Form of Business Organization

2. Liability of the Owner
3. Organizational Structure
4. Role of the Owner
5. Proposed Salary

Production Plan

1. Production Schedule
2. Production Process
3. Equipment Required
4. Sources of Materials
5. Estimated Production Cost

Operational Plan

1. Evaluation of Suppliers
2. Purchase Procedure
3. Storage and Inventory Control
4. Sales Procedure

Financial Plan

1. Major Assumptions
2. Projected Statement of Comprehensive Income
3. Projected Statement of Cash Flow
4. Projected Statement of Changes of Equity
5. Projected Statement of Financial Position
6. Financial Statement Analysis

How to develop and ideal Business Model?

1. Size the Product Value

2. Acquire High Value Customers
3. Ensure Sufficiency High Margins
4. See if the product is the best
5. Ensure customer satisfaction
6. Decide on the channel and distribution
7. Maintain Market Position
 8. Formulate funding strategy

Business Revenue Forecast – an essential part of future business planning

Revenue Forecasting – not intended to give exact figures for yearly earning

Forecasting – refers to the process of using current and historic

Cost Forecast – process that can use to adapt cost planning to constantly changing circumstances

Gross Profit – sales cost of goods sold

Gross Profit/sales – gross Profit Margin

Mark up Percentage – selling price- cost to produce/ cost to produce

Assets – refers to economic resources of an enterprise that are recognized and measurement in conformity
with generally accepted accounting principles. There are properties, property rights, cash, receivables,
equipment, furniture and others.

Liabilities – are the economic obligations of an enterprise that are recognized and measured in
conformity with generally accepted accounting principles. These are claims of creditors, internal and
external accounts payable, notes payable, accrued expenses, loans payable, SSs, taxes payable.

Rental Income – describes the income arising from lease or rent of property

Sales – describe the sale of goods or products to the consumers

Expenses Account Titles

Salaries/Wages – describes the expenses payments

Store supplies expense – describe the expenses on store supplies

Taxes/Licenses – describes on permits

Utilities Expense – describes the expenses on light and water

Travelling Expense – describes the expenses on transportation

Business Documents
1. Purchase order – official business document issued by the buyer to the seller of goods
2. Invoice – commercial document issued by the seller to the buyer
3. Official Receipt – a commercial document that indicates payment
4. Delivery Receipt – a document that serves as an evidence that the goods or services are received
5. Receiving Report – a document used within the business upon receipt of the goods shipped by the
courier or forwarder
 6. Check – a document that orders a payment of money from the current account maintained in the
bank
7. Voucher – an internal business document that authorize the incurrence or payment of obligations

Simple Bookkeeping
Remember the following fundamental Concepts in bookkeeping:

1. Support all transactions with business documents

2. Record the transactions using the two- column journal
3. Use the proper account title
4. Observe the guidelines when using the two column journal