Chapter 9.

Special Topics in Management

1. Small Business Management and Entrepreneurship-

A. Entrepreneurship is at the heart of every business. Every large company started out
as a small business, led by an entrepreneur. As our economy becomes more volatile,
having the skills and knowledge to start a new business may mean the difference
between prosperity and poverty.
B. Entrepreneurial skills are also in demand in established companies. Every business,
large or small, must be entrepreneurial just to survive. Innovative thinking has
replaced "do it our way" as the rallying cry of the corporation. Students who learn to
think independently flourish in chaotic environments and to keep cool under
pressure are in high demand.
C. The Entrepreneurship Sequence is designed to build entrepreneurial skills step by
step. Professors, not graduate students, teach classes. We embody a “hands-on”
philosophy of teaching, putting our students into real-life entrepreneurial situations.
Our program is rigorous, challenging, and most of all, fun.

2. FAMILY BUSINESS ENTERPRISE

Found virtually in every sector of the world’s economies, family enterprises are the most
common form of business entity in the world. Yet, their ownership, management, and family
composition create a complexity that requires special knowledge and skills in order to
understand them and to advise them effectively. Indeed, perhaps one of the most discussed
issues in the field today is how to define a family enterprise. There is no one definition for
family enterprise, but there are a few working definitions that have evolved over the years.
Learn more about these definitions and much more in Family Enterprise: Understanding
Families in Business and Families of Wealth, Wiley, 2013.

Definition 1
Family Firms are those in which multiple members of the same family are involved as major
owners or managers, either contemporaneously or over time (Miller, Le-Breton Miller,
Lester, Canella, “Are Family Firms Really Superior Performers,” Journal of Corporate Finance,
Vol. 13, Issue 5, 2007).

Definition 2
Family firms are those in which the family controls the business through involvement in
ownership and management positions. Family involvement in ownership (FIO) and family
involvement in management (FIM) is measured as the percentage of equity held by family
members and the percentage of a firm’s managers who are also family members (Sciascia
and Mazzola, Family Business Review, Vol. 21, Issue 4, 2008).

Definition 3
A family enterprise is an economic venture (enterprise group) in which two or more
members of a family (family group) have an interest in ownership (owners) and a
commitment to the continuation of the enterprise.

Definition 4
The family business is a business governed and/or managed with the intention to shape
and/or pursue the vision of the business held by a dominant coalition controlled by
members of the same family or a small number of families in a manner that is potentially
sustainable across generations of the family or families.

Definition 5
A firm of any size is a family business if:

1. The majority of decision-making rights are in the possession of the natural person(s) who
established the firm, or in the possession of the natural person(s) who has/have acquired
the share capital of the firm, or in the possession of their spouses, parents, child, or
children’s direct heirs.

2. The majority of decision-making rights are indirect or direct.

3. At least one representative of the family or kin is formally involved in the governance of
the firm.

4. Listed companies meet the definition of family enterprise if the person who established or
acquired the firm (share capital) or their families or descendants possess 25 percent of the
decision-making rights mandated by their share of capital (European Union definition 2009).

3. Starting a Business: Legal Forms and Requirements

Whether the type of enterprise you want to run in the Philippines is a sole proprietorship, a
partnership, or a corporation, the basic legal requirements of starting a business in the
Philippines are the following: 
 
1. Register the business with the corresponding department or agency
Sole proprietorships must be registered with the Department of Trade and Industry (DTI).
Partnerships and corporations, on the other hand, must be registered with the Securities
and Exchange Commission (SEC). The name of the business is also included in the
registration. 
 
2. Obtain a business permit
Head to the local government unit of the place you intend to operate your business in.
Secure a business or mayor’s permit. Each municipality has its own specific requirements
and procedures for the registration of businesses, so be sure to check the individual
websites of these areas for more information. 
 
Many of the basic requirements include:
DTI or SEC registration form
Barangay clearance
Zoning clearance
Sketch of the location
Land title or contract of lease
Community tax certificate
Public liability insurance
Occupancy permit
Sanitary permit
Environmental permit
Fire permit
Other additional documents or permits
 
3. Register with the Bureau of Internal Revenue (BIR)
After obtaining the necessary documents and permits, register the business with the Bureau
of Internal Revenue (BIR). Business owners need to get a Taxpayer Identification Number
(TIN) from the Revenue District Office (RDO) within the registered location of the business.
 
There are two kinds BIR forms you can fill out depending on the type of business you’re
starting. These forms are:
Form 1901 for people who are self-employed, single proprietors, or professionals
Form 1903 for partnerships and corporations
 
4. Registering with the SSS, PhilHealth, and Pag-IBIG Fund
If you hire employees, register them with the necessary government programs. The Social
Security System (SSS) is a social insurance program that collects the monthly contribution of
employees, along with the share of their employer. The SSS gives employees health and
retirement benefits from their monthly contributions, along with a variety of small loans. An
SSS membership is mandatory for all employees who are 60 years old and below.
 
The Philippine Health Insurance Corporation (PhilHealth) is another government agency that
requires monthly contributions from the employee and the employer.
 
The Home Development Mutual Fund (Pag-IBIG Fund) provides a variety of housing loans to
employees. Monthly contributions are deducted from the salary of the employee.
 
5. Additional requirements:
Aside from the requirements mentioned above, there are also other special requirements
that businesses need. These requirements depend on the nature of the business and their
corresponding industry. If you intend to open a school or offer training or education
programs, register with the Department of Education (DepEd). For businesses that sell food
products, register with the Bureau of Food and Drugs (BFAD).