Study Guide in Entrepreneurial Management FM-AA-CIA-15 Rev.

0 03-June-2020

FM ELEC 103: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

Module No. 1

ENTREPRENEURSHIP: ITS OPPORTUNITIES AND REWARDS

ENTREPRENEURSHIP: ITS OPPORTUNITIES AND REWARDS

MODULE OVERVIEW

This chapter focuses on the scope of the small business and entrepreneurship. It would also discuss the different
rewards entrepreneurs can achieve through their business. This chapter would also recognize the importance of
entrepreneurship to the economy and the community.
Generally, this module will help students grasps the definitions, objectives, phases and functions of
entrepreneurial management and entrepreneurship, specifically, in the small business.

LEARNING OBJECTIVES

At the end of this chapter, students must be able to:

1. Understand the scope of small business
2. Learn the differences between small business and high-growth ventures
3. Discover the rewards entrepreneurs can achieved through their businesses
4. Be able to dispel key myths about small businesses
5. Identify actions key to becoming a small business owner
6. Understand how small business are important to our economy and your community

LEARNING CONTENTS

ENTREPRENEURIAL MANAGEMENT

According to the Global Entrepreneurship Institute, Entrepreneurial Management as the practice of taking
entrepreneurial knowledge and utilizing it for increasing the effectiveness of new business venturing as well as
small- and medium-sized businesses. Entrepreneur, however, is an individual who creates a new business,
bearing most of the risks and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator,
a source of new ideas, goods, services, and business/or procedures.
According to the Asian Development Bank, small and medium enterprises (SMEs) are the backbone of Asian
economies, making up 98% of all enterprises and 66% of the national labor force from 2007-2012. In the
Philippines, Small and Medium Enterprise are defined as any enterprise with 10 to 199 employees and/or assets
valued from P3 million to P100 million. SMEs and micro enterprises combined make up 99.6% of establishments
in the country. Therefore, despite of the limited size of this type of business, SMEs are very important in our
economy, both in the local and national arena.
We use the popular broad definition of entrepreneur – anyone who owns a business is an entrepreneur. This of
course, means anyone who is a small business owner is an entrepreneur. It also means that self-employed,
anyone who work for himself or herself instead of for others, is also an entrepreneur. Within the population of
entrepreneurs, it is sometimes useful to split out through these certain groups:
1. Founders. People who create or start new business
2. Franchise. A prepacked business bought, rented, or leased from a company called a franchisor.
https://cashmart.ph/franchising-business-in-the-philippines/
3. Buyers. People who purchase an existing business
4. Heir. A person who become an owner through inheriting or being given a stake in a family business.

STARTING AN ENTREPRENEURIAL SMALL BUSINESS: FOUR KEY IDEAS

1. Believe that you can do. This belief in yourself is called self-efficacy. Those who believe in themselves
and in the passion of their beliefs are more likely to keep at it until they succeed.
2. Planning + Action = Success. A plan without action is futile. Actions without plans are usually wasted.
Success comes from having the right sort
To know more about MSMEs in the Philippines, check this out: of plan to get you
3. Help Helps. Successful
https://dict.gov.ph/wp-content/uploads/2016/07/8.-SMEs- entrepreneurs learn from other
in-the-Philippines-_Empowering-LGUs-through-ICT- entrepreneurs, from experts in their
Partnership-with-SUCs.pdf chosen field, from potential customers, or
even from their professors. Remember,
those help succeed bigger and more often.

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FM ELEC 103: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

4. Do well. Do Good. In the long run, you will depend on partners, investors, customers, and neighbors. If
you always remember, you try to do well in your business, you’ll feel better about your business and
life, and those around you will too.

ENTREPRENEURS AND FIRM GROWTH STRATEGIES

The overall growth strategy describes the kind of business the owner or owners would like to have, from the
perspective of how fast and to what level they would like the firm to grow. There are four generic growth
strategies that account for nearly all businesses: There are four generic growth strategies that account for nearly
all businesses:
1. Lifestyle or part-time firms. A small business primarily intended to provide partial or subsistence
financial support for the existing lifestyle of the owner, most often through operations that fit the owner’s
schedule and way of working.
2. Traditional Small Business. A firm intended to provide a living to the owner, and operating in a manner
and on a schedule consistent with other firms in the industry and market.
3. High-performing Small Business. A firm intended to provide the owner with high income through sales
or profits superior to those of the traditional small business.
4. High-growth Venture. A firm started wit the intent of eventually going public, following the pattern of
growth and operations of a big business.

REWARDING FOR STARTING A SMALL BUSINESS

Why become an entrepreneur? If you said, “For the money,” or, “To do things my way,” you’d be right, but these
are only a few of the reasons behind owning your own firm. We know that people go where they feel they have
the best chance of getting the rewards they value most. Nearly all entrepreneurs talk about three key rewards –
flexibility, a livable income, and personal growth. There are two other rewards – building wealth and creating
products, which entrepreneurs mention more often than working people in general. There are also rewards that
entrepreneur mentioned less often than working people in general. These are social rewards, like respect or
admiration of others, or power over others, and family rewards, like continuing a family tradition in business.
The three most popular types of rewards for small business owners are growth, flexibility and income.
1. Growth Rewards. What people get from facing and beating challenges
2. Income Rewards. The money made by owning one’s own business
3. Flexibility Rewards. The ability of business owners to structure life in the way that suits their needs best

Flexibility
"To have greater flexibility for my personal and family life

Universally Mentioned Income

Rewards To give myself, my spouse, and children financial security

Growth
To continue to grow and learn as a person

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FM ELEC 103: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

Wealth
"To have a chance to build great wealth or a very high
Occasionally income
Mentioned Rewards
Product
"To develop an idea for a product"

Recognition
"To achieve something and get recognition"

Admiration
"To be respected by my friends"
Rarely Mentioned
Rewards Power
"To lead and motivate others"

Family
"To continue a family tradition"

MYTHS ABOUT SMALL BUSINESS

Over the years, small business experts in academe and government have studied small business and potential
entrepreneurs and learned that a lot of the challenges scaring people away from small business are the stuff of
urban legends. These myths includes the following:
1. There’s not enough financing. – bootstrapping. Crowdfunding.
2. You can’t start businesses during a recession.
3. To make profits, you need to make something.
4. If you fail, you can never try again.
5. Students (or moms or some other group) don’t have the skills to start a business.
Myths like these holds back many potential entrepreneurs. Knowing the truth is a powerful way to keep up your
motivation for the undeniably tough work of starting your own business. When you encounter doomsayer, check
out facts and do research.

GETTING STARTED NOW: ENTRY COMPETENCIES

There are million things you could do to start a business, but which ones are best? Sometimes the answer will
come to you in the form of an opportunity or offer, and sometimes you’ll need to take the first steps yourself. To
start a business, you need four elements to come together – boundary, resources, intention and exchange. This
is referred to as the BRIE model.
1. Boundary. Something that sets it up as a firm, and sets it off from the buying or selling or bartering we
all do occasionally.
2. Resources. Include the product or service to be offered, informational resources on markets and running
a business, financial resources, and human resources.
3. Intention. The desire to start a business and is the most frequently occurring element of the BRIE Model.
4. Exchange. This refers to moving resources, goods, or services to others in exchange for money or there
resources.

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FM ELEC 103: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

Boundary Resources
Your Small Business
Intention Exchange

SMALL BUSINESS AND THE ECONOMY

It has been already discussed why small business is important for the individuals for whom income, growth, and
flexibility were among the most important rewards of ownership. But you also need to know that small business
is vitally important to your community and even to our economy. Part of this comes from new things small
business contribute to the economy, particularly new jobs, and innovations, as well as the basics that small
businesses provide for all of us – jobs, taxes, and product or services.

New Jobs
In the 2019 study conducted by the Department of Trade and Industry, MSMEs generated a total of 5,510,760
jobs or 62.4% of the country’s total employment. Small business is the engine of job generation, but it is important
for existing jobs, too. Small business employ millions of Filipino, providing wages and salaries.
One reason why small business are a key employer is because they are more willing than most large business
to offer jobs to people with atypical work histories or needs, like people new to the workforce, people with
uneven employment histories, and people looking for part-time work.

Innovations
Small business is a key element of every nation’s economy because it offers a very special environment in which
the new can come into being. Small business owners are freer of the judgment and social constraints of workers
elsewhere. Austrian economist Joseph Schumpeter labeled this process creative destruction. It refers to the way
that newly created goods, services, or firms can hurt existing goods, services, or firms.
Why do so many innovations come from small business? Remember that most people going into small business
mention flexibility as a key reward, such as the flexibility to do the work they think is important. Small business
owners are freer of the judgments and social constraints of workers elsewhere.

New Opportunities
People who own their business are presented with tremendous opportunities - not only to improve their life and
wealth, but also to help them move into and upward in the economy and society of the Philippines.
Small businesses offer communities another type of opportunity—the opportunity to goods and services.
Imagine a neighborhood or town without a grocery store or a pharmacy. In important ways, the town would not
seem like a real community. A small grocery, drugstore, hardware store, or gas station might be able to use its
low overhead and capacity to adapt to local needs (e.g., a grocery store stocking a lot of fishing supplies to
appeal to visiting fishing enthusiasts) to make a profit where larger chain stores could not. For a city, municipality,
or even barangays, to be able to stand on its own, it needs a variety of small businesses.
Small business also provide opportunities to large business and entrepreneurial high-growth firms. High growth
firms’ ventures and big businesses are like giant boat, and where the boat sails, the economy sails along too. But
for the boat to work, it has to be supported by deep water. The ocean supporting the boat consist of thousands
of small businesses.

Aspects of Global Entrepreneurship

There is a pattern to which countries are likely to have rates of entrepreneurship, and which will have lower
rates.
1. Factor-driven Economy. A nation where the major forces for jobs, revenues, and taxes come from
farming or extractive industries like forestry, mining or oil production.
2. Efficiency-driven Economy. A nation where industrialization is becoming the major force providing jobs,
revenues, and taxes, and where minimizing cost while maximizing productivity (i.e. efficiency) is a major
goal.
3. Innovation-driven Economy. y,s.,c,lsec.86

One other important difference across countries is the amounts of two types of entrepreneurship.
1. Opportunity-driven Entrepreneurship. Creating a firm to improve one’s income or a product or service.
2. Necessity-driven Entrepreneurship. Creating a firms as an alternative to unemployment.

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FM ELEC 103: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

Another approach that has grown dramatically this past decade is using E-commerce, particularly like Ebay and
Amazon, or Lazada and Shopee. E-commerce is the general term for conducting business on the internet. The
formal title for this is Virtual Instant Global Entrepreneurship (VIGE), a process that uses internet to quickly create
business with a worldwide reach.

Challenge and the Entrepreneurial Way

Entrepreneurs’ stories usually tell us about challenges faced and overcome. What is fascinating if you hear
enough stories is that there some strategies that are used again and again. These strategies are the following:
1. If you don’t succeed the first time, try, try, again. This is called the strategy of perseverance or the
behavior of continued effort to achieve a goal.
2. Scale back. Maybe you have an idea, but can’t get the resources to get it started. Try scaling it back to
the level of resources you currently available.
3. Bird in the hand. Instead of planning a firm and then looking for resources, start with the resources you
already have and think about what is the best use you can make of them.
4. Pivot. Go ahead and start the business in a way you can and look for better oportunites as you go along.
5. Take it on the road. Sometimes the place you live isn’t the best market for your products or services.
6. Ask for help. Today everyone can harness the wisdom of crowds, whether it is asking your personal and
group connections on Facebook for ideas, advice, opinions or donations. Crowdsourcing is the
techniques often based on internet to get opinions or ideas through the collective involvement of others.
7. Plan to earn. Think through your capabilities, prospects, and passions to find the best idea for you, and
then plan for action to make it happen.

LEARNING POINTS

In this chapter we have considered come key ideas and myths about small business. We have seen the work
of founders of small business that stayed small and those that started small and grew larger. Either way, when
small businesses are created, nearly every part of our society benefits - through new jobs, new ideas and the
new opportunities created for individuals, communities and the economy. The key element in getting small
business started is helping people who have the intention to start a business take the steps to get it done, and
that is the goal of this course.

LEARNING ACTIVITIES

Activity Number 1
Experiential Exercises. (10points)
1. Go through the list of reasons people give for going self-employment, and identify which of the reason seem
to fit you. Explain why you identify with each reason.
2. Think about list of reasons people give for becoming self-employed. Interview, through online or phone call,
local entrepreneurs about their reasons and see how your real life examples fit with those in the discussion.

Activity Number 2
Group work (30 points)
1. Research online on the experience of successful Filipino Entrepreneurs who started small. Know their history,
and how would you learn from them. Presentations will be on the next meeting.

PANGASINAN STATE UNIVERSITY 5

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FM ELEC 103: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

REFERENCES
● Entrepreneur. (2021, July 1). Investopia. https://www.investopedia.com/terms/e/entrepreneur.asp

● https://www.dti.gov.ph/resources/msme-statistics/

● MSMES. (2013). Asian Development Bank. https://www.adb.org//sites/default/files/pub/2014/asia-

sme-finance-monitor-2013.pdf

● SMEs in the Philippines (2016, July 8). Department of Communications and Information Technology.
https://dict.gov.ph/wp-content/uploads/2016/07/8.-SMEs-in-the-Philippines-_Empowering-LGUs-
through-ICT-Partnership-with-SUCs.pdf

● Hisrich, Deters, Shephered. ENTREPRENEURSHIP, McGraw-Hill Education, 2020

● Burton, ENTREPRENEURSHIP: Starting and Operating a Business, Larsen and Keller Education, 2020

● Katz, Green. ENTREPRENEURIAL SMALL BUSINESS, Fifth Edition, McGraw-Hill Irwin, 2018

PANGASINAN STATE UNIVERSITY 6