BSBA 211 The Entrepreneurial Mind

Proverbs 23:4 Do not toil to acquire wealth; be discerning enough to desist.

WHAT IS ENTREPRENEURSHIP?
 “Activity of gathering, producing, and exchanging goods and services, with the advantage of
earning a living for oneself.” (Diaz & Fajardo, 2017)
 Entre (in between) + Prendre (to take) = “Entre prendre”, which means “to take in between”
 Entre (under) + Prendre (take) = “Entre Prendre”, which means “to undertake”
ELEMENTS OF ENTREPRENEURSHIP
 Entrepreneurial Spirit
o “inner strength that the entrepreneur acquires from what surrounds him”
 Risk-taking and Uncertainty
o Risk = “randomness with knowable probabilities”
o Uncertainty = “randomness with unknowable probabilities”
 Creativity and Innovation
o “Generation, variation or innovation, and uniqueness” is the process of creative
evolution. (Fisher, 2007)
 Competition
o “Taking the substance of an invention by imitating it and creatively improving it.”
Drucker (2011)
 Independence
o “Desire to make own decision, risks, and reap the rewards of the efforts.”

20th Century of Entrepreneurship

Entrepreneurship is the “replacement in whole or in part inferior innovations across markets and
industries, enthusiastically creating new products and business models.” – Joseph Alois Schumpeter
(1930)

The need for achievement is observed among entrepreneurs making them seek for both realistic and
challenging goals. – David Clarence McClelland (1961)

Entrepreneurship is the “maximization of opportunities” – Peter F. Drucker (1964)

“Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.” –

Howard H. Stevenson (1983)

ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT

Role of Entrepreneurship in the 21st Century
 Countries are becoming more reliant to specialized knowledge-driven goods and services
because of flexibility and creativity from entrepreneurs.
 Innovative entrepreneurship makes economic growth possible through new resources,
technology,
 Youth entrepreneurship has become a vital strategy among development organizations.
 Contributes to growth of employment creation.
 Need to improve regulations to combat crime, speculation, corruption, and financial crises to
take root.
 Neglect of people’s well-being such as its struggle to raise social and economic growth.
  Need for the state to support entrepreneurs.
 As products and services grow because of entrepreneurship, it helps improve the standard of
living, provide more job opportunities, prosperity, and economic growth.

Role of Government in Entrepreneurship Development

 Create an environment where entrepreneurship can grow.
 Policies, laws, regulations, and procedures should be simplified.
 Adoption of new information and communication technology.
 Open paths to empower young people, women, the disabled, members of indigenous
population, and unemployed.

Business Environment
When you start a project or business, you identify the environment. Learn to analyze and create
strategies to be on top of your problems. Know what you must do to overcome weaknesses.
-INTERNAL
Strengths- stable income, skilled workers, growth of customers, others
Weaknesses- weak management, corrupt leaders, obsolete faculties, others

-EXTERNAL
Social- religion, education, etc.
Political- gov’t corruption, kind of gov’t (democratic, communist)
Environment- climate, nature
Economic- growth of production, scarcity of resources
Technological- availability thereof.

WHAT IS ETHICS?
“The term ethics may refer to the philosophical study of the concepts of moral right and wrong and
moral good and bad, to any philosophical theory of what is morally right and wrong or morally good and
bad, and to any system or code of moral rules, principles, or values.” (Singer, 2021)

MORAL VIRTUE AND GOOD CHARACTER OF ENTREPRENEUR

 There must be constant practice and habits of ethical actions developed in a person.
 Ethical action should be practiced by the entrepreneur in all his dealings with the community
within the enterprise, and the community surrounding the enterprise including the market,
government agencies, and other stakeholders.
APPLICATIONG OF ETHICAL PRINCIPLES AND VALUES
1. Technical competence
2. Search for new and improved ways of work
3. Complete responsibility
4. Respect for the needs of those around him
5. Fair pricing
6. Rewards for good action
7. Correction for those doing wrong
8. Sound financial management
9. Efficient and rigorous business monitoring and reporting
10. Sharing financial success
11. Social responsibility
 12. Environment awareness

WHAT ARE THE EFFECTS OF ETHICAL PRACTICE?

 People will trust the entrepreneur and his/her business
 Good relationship with banks, suppliers, and the community.

CREATING ETHICAL STANDARD FOR ENTERPRISE

 Identify principles for fair business practice
 Check rules and regulations from government agencies, industry associations, and business
chambers for ethical standards
 Be flexible in dealing with standards, understand what lies behind each norm
 Write out specific statements of your ethical inclination
 Understand your stakeholders to draft your Code of Ethics
 Ask for opinions, suggestions, and recommendations for improvement from stakeholders
 Make a final draft of the Code of Ethics considering all the gathered suggestions and
recommendations
 Apply accepted Code of Ethics throughout the enterprise through written policies and
procedures
 Train everyone involved to make ethical decisions

FACTORS THAT INFLUENCE ENTERPRISE CHOICE

o Personality Factors
o This greatly influences an entrepreneur’s choice.
o A person’s values, traits, and mindset, coupled with the appetite for risk drive an entrepreneur to
success.
o Entrepreneurs are ready to spend personal time, talent, and resources for products or services that
people want to pay for.
o Cultural and Environmental Factors
o Culture provides a set of communally-held values, customs, and meanings.
o Cultural conditions which favor an entrepreneur influences the choice of what kind of enterprise
he/she will set up.
o A culture that encourages an entrepreneur to have the patience to see his efforts bear fruit is very
important.

The Manufacturer
Transforming raw materials into finished goods for subsequent marketing.
A manufacturer can be:
 Handicraft producer
 Cooked food producer
 Processor or subcontractor
The Trader
Buying and selling goods and services. Buy products from, and then sell it to localities.
Traders can be one of the following:
 Wholesaling
 Retailing-selling directly to end users
 Repacking
 E-trading
  Vending machine operation
The Solo Entrepreneur
A person can use his/her personal and specialized talent that others may not have such as the following:

 Event Organizing
 Show hosting, being a clown, magician, or fireworks specialist
 Writing of specialized reports
 Online consulting
 Online teaching
 Online book publishing
 Online business program creating
 Digital newsletter writing
 Lifestyle entrepreneurship
 Being a plumber, electrician, house painter, and similar service providers

The Street Entrepreneur

They are micro entrepreneurs selling various home articles and food items to motorists stuck in traffic or
bus riders at terminals and stations.
The Specialty Service Entrepreneur
This includes services such as the following:

 Beauty salons
 Barbershops
 Sauna and massage parlors
 Wellness and fitness centers
 Funeral shops
 Photocopying businesses
 Internet cafes
 Business process services

The Franchisee
A franchise is a form of business organization in which an established firm (franchisor) with an
established product or service are proven business model, allows another business (franchisee) to offer
the market the franchisor’s product or service for a fee(Royalty Fees).

Pros
 Can go to business without experience
 Product/service is already known
 Management system are already in place
 Continuing training and guidance and ads and promo support
 Facilities and equipment are effective
 Established system for maintenance and controls
 Easy access to financial assistance
 Higher success rate

Cons
 High capital needed
 Decisions must conform with franchisor
  Personal styles may not be agreeable with franchisor
 Extensive records-keeping
 Danger that franchisor may not deliver on promises in guidance and assistance

The Serial Entrepreneur

This entrepreneur constantly feel the urge to keep finding new products or services to offer to new or
untapped markets.

 Characteristics of serial entrepreneurs:

 They get restless after three or four years in a business
 Curious about their customers and always involve them in making decisions
 Have more fear of regret than fear of failure
 Start business while young
 Recognize failure in the current business and work to rectify it
 Want to start a new business after the previous has started running in a stable way
 Run two or three projects simultaneously
The Social Entrepreneur
 They are those who provide products and services with the overall desire of creating social
good, operating from the perspective of benefitting the people and the planet while earning
profit.
 They also engage in enterprise that uses business tools, disciplines, and strategies to pursue
social, environmental, and humanitarian objectives.
 Aims to develop business skills and knowledge of a community
 In social entrepreneurship, profit is often reinvested into the business rather than distribute it to
shareholders.
 People who are seeking to find meaning in their work are turning to social enterprise as a means
of combining their desire to help others with the pursuit of their ambition to succeed.
 Social entrepreneurs are innovators who focus on creating products and services that solve
social needs and problems.
 The goal is to make the world a better place and not to take market share nor create wealth
from the enterprise.

Factors of Success for Social Enterprises

 It must anticipate change and be prepared to act swiftly.
 Have strong business base and business orientation.
 Social aims must be explicit and always followed in making decisions.
 Ethical values must include commitment to local development goals, improvement of local skills
and talents, as well as sustainable, tangible, and accepted impacts on society, the environment,
and the economy.
 Social ownership must be tangible and palpable.

The Intrapreneur
 They may be a manager or a salaried employee who finds a way of making innovations in the
company where he or she works.
 They detect needs inside their firm and use individual initiative to take action to suggest an idea
and even start an in-house project.
 They lead in process improvement.
  They devise ways to infuse new elements to an already existing models and help the company
gain more strength.

Roles of Entrepreneur
 Visioning Role
 Implementation Role
 Counseling Role
 Evaluation Role

1. Visioning Role
 Process of producing breakthrough ideas and creative leadership. (Nooyen, et. al., 2014)
 “It is following the dream.” (Diaz & Fajardo, 2015)
 “Visioning is a participatory tool that brings citizens and stakeholders together and is
used to assist a group of stakeholders in developing a shared vision of the future.”
(Keller, n.d.)
2. Implementation Role
 Chief customer officer
o Creates great customer experience.
 Chief financial officer
o Knowledge about financial health.
 Chief people officer
o Takes care of the people surrounding the business.
 Chief executive officer
o Look over the whole enterprise from beginning to the future based on a clear
vision.
 Chief innovation officer
o Make the enterprise relevant and competitive to ensure long-term success and
sustainability.
3. Counseling Role
 Talking with a person in a way that helps that person solve a problem
 Helps to create conditions that will cause the person to improve his behavior.
 It Involves the following:
 Thinking
 Implementing
 Knowing human nature
 Timing
 Sincerity
 Compassion
 Kindness
4. Evaluation Role
 Measuring performance fairly and objectively
 Developing career goals for team members
Responsibilities of Entrepreneur
 Innovation
 Assumption of risk
 Research
 Management
 Overcoming resistance to change
 Catalyzing economic development

Innovation
 Develop new technology, products/services, and markets
 Doing new things or doing existing things differently
 Uses creative things to exploit opportunities in the market
 Always in search of something new

Assumptions of Risk
 Always prepared to assume losses as a result of introducing new ideas and projects.
 Takes initiatives to do new things and visit new frontiers

Management
 Planning
 Organizing
 Staffing
 Leading or Directing
 Controlling

Overcoming resistance to change

 Acceptance of ideas by members of the organization.

Catalyzing Economic Development

 Accelerating the pace of economic development by discovering new uses of available resources
and maximizing their use.

Social Motives and Competencies

 Need for Achievement (N-Ach)
 Motive: Achievement
 Competencies:
o Opportunity-seeking behavior
o Ability to find business opportunities where other people do not.
o Moderate risk-taking
o Calculate first the success rate of the project before taking any risks.
o High demand for efficiency and quality
o Ability to meet or surpass the existing standards of excellence in business.
o Commitment to work contract
o Ability to accept responsibility in completing a job.
o Persistence
o Ability to keep on doing something even when faced with difficulties.
 Need for Power (N-Pow)
 Motive: Power
 Competencies:
o Information-seeking
o Ability to seek and find the right and valuable information needed by the business.
o Goal setting
o Ability to plan to ensure the achievement of the company’s goal.
o Systematic planning and monitoring
o Monitoring continuously following up on whether the goals are being achieved.

 Need for Affiliation (N-Aff)

 Motive: Affiliation
 Competencies:
o Persuasion And Networking
o Ability To Make Other People Work For The Enterprise And Believe In What The
Entrepreneur Stands For.
o Ability To Create Strong Bonds With People Who May Be Involved In The Business And
Other Entrepreneurs Including Competitors.
o Self-Confidence
o Believes In Oneself And In One’s Ability To Get Things Done.

Five Ways to Tell if Someone is an Entrepreneur

 Not afraid to embrace the future and thinks destiny is in his hands.
 Embraces their brands and reputation.
 Willing to fall and rise again.
 Aware that establishing his passion will take a few attempts.
 Knows that passion is necessary in what he is doing.

Rewards Faced by the Entrepreneur

 Self-Fulfillment
 Personal Independence
 Financial Rewards
 Social Rewards

Risk and Challenges Faced by the Entrepreneur

 Risk of Failure
 Risk to Health and well-Being
 Social Risks
 Limited Access to Specialists and Consultants
 Hard and Demanding Work
Basic Accounting
“Accounting is the process of IDENTIFYING, RECORDING, and COMMUNICATING economic events of an
organization to interested users.” – (Weygandt, J., n.d.)

IDENTIFYING
 Involves selecting economic events that are relevant to a business transaction.
 The economic events of an organization are referred to as transactions.
 Examples of economic events or transactions of a bakery business:
o sales of bread and other bakery products
o purchases of flour that will be used for baking
o purchases of trucks needed to deliver the products
RECORDING
 This involves keeping a chronological diary of events that are measured in pesos.
 The diary referred to in the definition are the following:
o Journals
o Ledgers
COMMUNICATING
 Occurs through the preparation and distribution of financial and other accounting reports.

The Accounting Equation

Assets = Liabilities + Equity

The left side of the equation represents what the company owns.
The right side represents the claims of the different parties to the company’s assets.

Elements of the Accounting Equation

 Assets - are resources that an entity owns in order to derive some future benefit.
 Liabilities - are one of the claims of external parties from the entity.
 Equity - The equity reflects the residual claims or net assets of the owners of the entity.

ASSETS
 Cash - it is the money that we use comprising of the bills and coins we use in our everyday lives
in order to buy the goods that we want and avail the services that we need.
 Accounts Receivable - This represents amounts that are collectible from customers. They arise
when a business sell its goods or services on account or on credit.
 Inventories - goods which are normally held for sale by the store in its normal operations.
 Normal Balance = Debit
 Equipment – includes machinery, furniture, fixtures, vehicles, computers, electronic devices,
and office machines which are used to make a profit.
 Land and Building – are owned by the company so that they can use them for their business to
operate normally.
 Intangible Assets – these are assets that cannot be seen or touched. Example would be a
computer software used by a store for its operation.
LIABILITY
 Accounts Payable – are obligations to pay supplier/s after a certain number of days.
 Unearned Revenue – are obligations to customers for payments received before a service has
taken place.
 Normal Balance = Credit
EQUITY
 Capital – any contribution of the owner which increases the assets of the business or decreases
its liabilities will increase the capital account. On the other hand, withdrawals of cash for
personal use by the owners will decrease this account.
Normal Balance = Credit

 Revenues – are the total amount of income generated by the sale of goods and services related
to the primary operations of the business.
Normal Balance = Credit

 Expenses – are the money spent, or costs incurred, by a business in their effort to generate
revenues.
Normal Balance = Debit

The Double Entry Bookkeeping

“Double-entry bookkeeping is the concept that every accounting transaction impacts a company’s
finances in two ways. The general ledger is the record of the two sides of each transaction.” – The
Investopedia Team, 2021

“Double entry, a fundamental concept underlying present-day bookkeeping and accounting, states that
every financial transaction has equal and opposite effects in at least two different accounts. It is used to
satisfy the accounting equation.” – Hayes, 2021

The Accounting Cycle

1. Analyze Transactions or Documentation
2. Prepare Journal Entries
3. Post Journal Entries
4. Prepare Unadjusted Trial Balance
5. Make Adjusting Journal Entries
6. Prepare Adjusted Trial Balance
7. Prepare Financial Statements
8. Prepare Closing Entries
9. Prepare Post-closing Trial Balance
10. Create and Post Reversing Entries

Analyzing Transactions

 Identification and measurement of external transactions and internal events. At this stage, the
documents used by the business are analyzed whether it has financial impact or effect
 Only financial transactions are recorded and that the amount can be measured. These two
conditions must exist in order that a particular transaction is recognized or recorded. As defined,
financial transactions are those activities that changed the value of an asset liability or an equity
Financial Transactions
 Receipt of cash from a client as advanced payment to repair a computer. In this case (asset)
will increase. At the same time, the advances from client (liability) will also increase. The
advances from a client is a (liability) because the business has the obligation to render
future service to the client.
 Payment of electric bill is a financial transaction. this will decrease the cash (asset) and
reduce the income of the business at the same time
Non-financial Transactions
 Hiring and Termination of employees
 Recognition from the government as most outstanding business
 Death of Owner
Business Document
1. Official Receipt or Cash Receipt
 Issued by a company;
 Business receives money, a check.
 Printer Info Is important
 VAT and TIN number
2. Sales Invoice
 Document used when a service has been rendered
 Billing to your customer
 Only for 30 days
3. Check Voucher
 When a check is issued to pay a supplier
 Record of payment by a company
 Not required by the BIR