AgEcon 27 Syllabus

LEARNING GUIDE
Introduction to Enterprise and Entrepreneurship

(Ag.Econ 27)
Prepared/Compiled by:
THEA ARBIE S. RIVERA

Course Facilitator
UNIT I
Course Orientation
Course No. AgEcon 27

Course Title Introduction to Enterprise and Entrepreneurship
Course Credit 3 units (2 hours per week lecture, 3 hours per week laboratory)
Pre-Requisite Econ 11
Course Description Basic concepts related to planning and starting an agricultural
enterprise with focus on farming as a business and role of farmers as
entrepreneurs, to include planning a business and preparing
business plans.
General Objectives At the end of the course, the students will be able to present a simple
business plan of an agricultural enterprise.
Specific Objectives Specifically, the students will be able to:
1. explain the importance of entrepreneurship
2. discuss the characteristics of a successful entrepreneur
3. differentiate approaches to enterprises or start a business
4. organize parts of a simple business plan
5. identify steps of starting a business
Course Outline
Unit Time Allotment
Lecture
Unit I Course Orientation 1 hour
A. University Vision, Mission and Core Values
B. Program and unit outcomes
C. Course outline and grading system
D. Terms and agreements of the course
Unit II Introduction to Entrepreneurship 4 hours
A. Entrepreneurship defined
B. Characteristics of an entrepreneur
C. The role of entrepreneurship in the economy
D. Farming as a business
Unit III The Farmer-Entrepreneur and His Enterprise 6 hours
A. Farmers as entrepreneurs
B. Types and approaches to enterprises
C. Enterprise growth concepts
Unit IV Planning a Business 8 hours
A. Importance of a Business Plan
B. Parts of a Business Plan
C. Market analysis
D. Financial requirements
E. Sources of capitalization
Unit V Starting the Agricultural Enterprise 3 hours
A. Business registration and legal requirements
B. Basic management concepts
Laboratory
Activity No. 1 Learning from Successful Entrepreneurs Week 2 & 3

Activity No. 2 Agricultural Enterprises in the Philippines Week 4 & 5
Activity No. 3.1 The Business Plan: Enterprise Vision and Week 6
Mission
Activity No. 3.2 The Business Plan: Markets and Marketing Week 7 & 8
Strategies
Activity No. 3.3 The Business Plan: Operations and Week 9
Management
Activity No. 3.4 The Business Plan: Financial Assumptions Week 10 & 11
Course Requirements/Conditions
Lecture
 Group reports
 Performance activities
 Students are expected to do self-study of prescribed topics, in the allotted time period, in
cases of class suspensions due to holidays and other university/college activities.
Laboratory
 Performance activities (Laboratory Activities)
 Oral and written presentation of simple business plan of an agricultural enterprise
 Long brown folder. Side leaf of the folder labeled with student name, section code and
laboratory schedule.
 Written activities should be submitted on scheduled date and time as announced.
 Ten points deduction for every late activity. It should be submitted personally to the laboratory
instructor.
Grading System
Lecture
 50 percent passing rate
 Comprises two-third (2/3) of the final course grade.
 Term Grade = 1/3 LABORATORY + 2/3 LECTURE
 FINAL COURSE GRADE = 1/3 MIDTERM + 2/3 FINAL TERM
Quizzes (Oral and Written) 30 percent
One-Hour Exam 30 percent
Term Exam 40 percent
_____________
Total 100 percent
Laboratory
 50 percent passing rate
 Comprises one-third (1/3) of the final course grade.
 Laboratory instructors/faculty will submit laboratory grade per term (Midterm and Final term)
to the lecture instructor/faculty.
Activities 50 percent
Term Exam 50 percent
_____________
Total 100 percent
Grading System
 University Rating System (Per BOR Resolution No.09, s.2015)
GRADE PERCENTAGE EQUIVALENT

1.00 94-100
1.25 88-93
1.50 82-87
1.75 76-81
2.00 70-75
2.25 64-69
2.50 58-63
2.75 52-57
3.00 50-51
4.00 30-49
5.00 29-below
INC Incomplete
References
Anderson, M. and J. Khedair. 2009. Successful business plans- get brilliant results fast.
Business Plans Services Ltd., Crimson Publishing, UK.
Central Mindanao University. 2011. CMU student handbook. Office of the Student Affairs.
Crofts, N. 2005. How to create and run your perfect business. Authentic Business. Capstone
Publishing Limited, UK.
Daft, R.L. 2005. Management, 7th edition. Thomson Asia Edition. South-Western, Thomson
Learning Asia Pte Ltd. Singapore.
Department of Trade and Industry. 2009. Micro, Small and Medium Enterprises. Accessed at
http://ww.dti.gov.ph/dti/index.php?p=321 on June 14, 2012.
Deakens, D. and M. Freel. 2010. Entrepreneurship and small firms. 5th edition, International
Edition. McGraw-Hill, Philippines.
de Wolf, P. and H. Schoorlemmer, (Eds.). 2007. Exploring the significance of entrepreneurship
in Agriculture. Research Institute of Organic Agriculture. Frick, Switzerland.
Ferrell, O.C. G. Hirt, and L. Ferrell. 2006. Business:A changing world, 5th edition. McGraw-
Hill/Irwin. New York.
Food and Agriculture Organization. 2006. Farm Planning and Management for Trainers of
Extension Workers- ASIA. 2006. United Nations. Rome.
Goldstein, B. 2007. The ultimate small business marketing toolkit. McGraw-Hill. New York.
Hiam, A. 2010. Business innovation for dummies. Wiley Publishing, Inc., Indianapolis, Indiana.
Hochmuth, R. et.al. Keys to successfully choosing enterprises that suit your small farm.
Accessed at http://edis.ifas.ufl.edu/hs338 on May 25, 2011.
Katz, J.A. and R.P. Green. 2007. Entrepreneurial small business. McGraw-Hill companies, Inc.
New York.
Kay, R.D. 2005. Farm management planning, control, and implementation. McGraw-Hill Book
Company, New York.
Lapid, D. P. and P. Sotto with NEGOSYO by Joey Conception. 2010. 21 steps on how to start
your own business. Philippine Center for Entrepreneurship. Vibal Publishing House, Inc.
Philippines.
McElwee, G. 2006. The enterprising farmer: a review of entrepreneurship in agriculture.
Accessed at http://www.rase.org.uk/what-we-do/publications/journal/2006/10-
q0po02if4.pdf on May 25, 2011.
MTD Training. 2010. Finance for non-financial managers. MTD Training & Ventus Publishing
ApS.
Nickels, W.G., J.M. McHugh and S.M. McHugh. 2005. Understanding business, 7th edition.
McGraw-Hill/Irwin. New York.
Quinones, A. and C. Samson. May 2012. Making social entrepreneurship work. The
Entrepreneur. Accessed at http://www.entrepreneur.com.ph/business-ideas/making-
social-entrepreneurship-work/page/1 on May 23, 2014.
Small Enterprises Research and Development Foundation (SERDEF). 2007. Introduction to
entrepreneurship. 2nd Revised Edition
Sobel, R. S. Entrepreneurship. Accessed at
http://www.econlib.org/library/Enc/Entrepreneurship.html on June 2011.
Timmons, J.A. and S. Spinelli, Jr. 2007. New venture creation- Entrepreneurship for the 21st
century, 7th Edition. McGraw-Hill Companies, Inc., New York.
Weihrich, H. and H. Koontz. 2005. Management: A global perspective, 11th edition.
International Edition. McGraw-Hill Education (Asia). Philippines.
Prepared by:
THEA ARBIE S. RIVERA

Instructor, Department of Agricultural Economics
Noted by:
HEIDE P. MAGADAN
Chairperson, Department of Agricultural Economics
UNIT II
INTRODUCTION TO ENTREPRENEURSHIP
Objectives
At the end of the unit, the students should be able to:
1. define entrepreneurship in own words;
2. explain at least one (1) unique characteristic of entrepreneurs;
3. enumerate contributions of entrepreneurship to the economy; and
4. discuss the importance of farming as a business.
A. Entrepreneurship Defined
The word “entrepreneur” originates from a thirteenth-century French verb, entreprendre,

meaning “to do something” or “to undertake”. It is also called by various names, e.g. adventurism,
risk taking; thrill seeking, innovating, etc. Various authors define entrepreneurship as follows:
The capacity for innovation, investment and expansion in new markets, products and
techniques. (Nathaniel Left)
It is a mission: perceiving opportunities in the changing worlds; creating a desire for

opportunities that arise; creating an environment in which success is possible and the
consequences of failure is tolerable. (Robert Hirsch)
Entrepreneurship is meant the function of seeking investment and production opportunity,

organizing an enterprise to undertake a new production process, raising capital, hiring labor,
arranging the supply of raw materials, finding site, introducing a new technique and commodities,
discovering new sources of raw materials and selecting top managers of day-to-day operations
of the enterprise. (Benjamin Higgins)
The ability to create and build something from practically nothing. (Jeffrey A. Timmons)
The process of discovering new ways of combining resources. (Russel Sobel)
The key concept of entrepreneurship is INNOVATION which refers to new or different ways
of doing things. Below are examples of innovations.
 An individual creating a new product
 New and efficient method of producing goods
 Selling products in a different approach
 Finding new markets
 Creating markets or demand creation
Learning Activity No. 1

How I Define Entrepreneurship
Further Reading
To better appreciate the course, start reading books and magazines on
entrepreneurship (e.g. The Entrepreneur).
Ag.Econ 27-Lecture Note 1

B. Characteristics of a Successful Entrepreneur
 Seeks opportunity
 Values persistence and perseverance (C&D)
 Responsible and committed
 Aims for efficiency and quality
 Willing to take risk
 Good planner and leader
 Creative and flexible
 Self-confident
 Hard working
 Energetic
 Has a need to achieve
 Independent
 Has integrity
 Business focus
 Delegator
 Knowledge seeker
 Promoter
 Relationship builder
Determinants of Successful Entrepreneurship

(by McElwee 2006)
1. Ability to conceptualize and plan- viewing all aspects of the business and foresee future
problems and opportunities.
2. Ability to manage others- management is getting things done by and through others.
3. Ability to manage time and to learn- being a generalist and willing to never stop learning.
4. Ability to adopt to change- being innovative, creative and quick to respond to changes.

“Are You Ready to Take the Risk?” materials from the Federal Reserve Bank of Kansas City.
Supplemental: Brainteaser images
Further Reading
To better appreciate the course, start reading books and magazines on
entrepreneurship (e.g. The Entrepreneur).
C. The Role of Entrepreneurship in the Economy
An economy is:
 Basically composed of three sectors: business firms, households and the government.
 There is interdependency in the three sectors, i.e. the strength or weakness of one sector
affects the other sectors.
 Market Economy- a free-enterprise economy, an entrepreneurial economy.
Contributions of entrepreneurship to the economy includes:

1. Rural industrialization
2. Rural development and decentralization of industries
3. Creation of employment and opportunities
4. Equitable income distribution
5. Value-adding activities
6. Develop new markets (effective demand)
7. Discover new sources of materials (comparative advantage)

8. Mobilize capital resources
9. Introduce new technologies, new industries and new products and trends (transforming
opportunities into profit)
10. Responsive to change
The thrust of entrepreneurship is to make individuals create their own job and employ people
instead of looking for a job and be an employee. Below are radical statements for discussion:
 Employees do not become rich: market vendors earn more income than office clerks
 It is in business where there is money and economic advantage
 The secret is using existing resources to the fullest advantage
People in engaging in small businesses have been the innovative backbone of most
economies providing products and services to benefit the consumer.
Further Reading
1. Statistical Data on Philippine Entrepreneurship in the previous year.
2. Description and facts on Philippine Micro, Small, and Medium enterprises.
Government support to entrepreneurs:

1. Peace and order
2. Political stability
3. Price stability
4. Taxes
5. Infrastructures
6. Education and training
7. Public administration
8. Production technology
9. Marketing assistance
10. Financial assistance
 Republic Act 6810. “The Magna Carta for Countryside and Barangay Business Enterprises
(Kalakalan 20)”
 Enacted July 24, 1989 under the administration of Corazon C. Aquino
 Grants Community Barangay Business enterprises (CBBE’s) exemptions from any and all
government rules and regulations and other incentives and benefits.
 Republic Act 9178. Barangay Micro Business Enterprises (BMBEs) Act 0f 2002
 The Act was signed into law by Pres. Gloria Macapagal-Arroyo on November 13, 2002.
 Incentives that BMBEs will be receiving:
 Income tax exemption from income arising from the operations of the enterprise
 Exemption from the coverage of the Minimum Wage Law (BMBE employees will still
receive the same social security and health care benefits as other employees)
 Priority to a special credit window
 Technology transfer, production & management training, and marketing assistance
programs for BMBEs beneficiaries
 Republic Act 9501. “Promote Entrepreneurship, Strengthening Development and Assistance

Programs to Micro, Small and Medium Scale Enterprises”
 Enacted May 23, 2008 under the administration of Gloria Macapagal-Arroyo
 Salient provisions:
 Strengthening of the Micro, Small and Medium Enterprise Development (MSMED)
Council
 10% mandatory allocation of credit resources (8% to micro enterprises and small
enterprises and 2% for medium enterprises) for a period of ten years

 Strengthening of the operations of Small Business Guarantee and Finance
Corporation (SB Corporation) with an increase of its authorized capital stock of P10
billion
 Formulation of a six-year MSMED Plan
 Institutionalizing the Celebration of the MSMED Week every second week of July
 Grant of Presidential Awards for Outstanding MSMEs
 Republic Act 10644. The Go Negosyo Act

 On 15 July 2014, President Benigno S. Aquino III signed into law RA 10644, otherwise
known as the Go Negosyo Act. The law was principally authored by the President’s cousin,
Senator Paolo Benigno “Bam” Aquino IV
 To strengthen Micro, Small and Medium sized Enterprises (“MSME”) in order to “facilitate
local job creation, production and trade in the country” by establishing Negosyo Centers
in every province city and municipality
D. Farming as a Business
“Entrepreneurship is connected with finding ways and means to create and develop a
profitable farm business… skills are competencies required to accomplish tasks and activities
related to the farm business” (de Wolf & Schoorlemmer, 2007). Farmers needs to rethink of their
roles and start acting as entrepreneurs in order to cope up with the “complexity of their farm
business”.
The Farm
 A piece of land where crops and animals are raised
 A parcel or parcels of land with an area of at least 1000 square meters used for the raising of
crops, fruits, vegetables, trees or other agricultural products of livestock, poultry and other
animals. A poultry farm must have at least 100 birds and 20 heads in the case of livestock
farm
 A basic managerial unit by which agriculture is carried on.
Various criteria used to classify farms for specific interest or purpose

1. With respect to Tenure
a. Owner-operated farms
b. Partly-owned farms
c. Tenanted farms
2. With respect to Economic Orientation
a. Kitchen-oriented farm
b. Market-oriented farm
3. With respect to Source of Labor and Management
a. Family farm
b. Plantation
c. Estate
4. With respect to Extent of Operation
a. Intensive farm
b. Extensive farm
5. With respect to Number of Enterprises
a. Specialized farm
b. Diversified farm
6. With respect to Source of Water for the Farm
a. Irrigated farm
b. Non-irrigated or Rain fed farm
7. With respect to Source of Power for the Farm
a. Mechanized farm
b. Non-mechanized farm
Universal Characteristics of Farming

1. The main process of farming is Biological and NOT Mechanical.
a. Farming is subject to high risk and uncertainty.
b. Farmers have low control over levels or rates of production.
c. Farm products are difficult to standardize.

2. Farming can be carried on the persons even with very limited or no formal education.
3. The home and the farm business are closely integrated.
4. Farming business requires relatively big amount of organizational capital.
5. Farm products tend to have inelastic demand and supply in the short-run.
Trends that affects Agribusinesses:

1. Globalization of the market
2. Land reform policy
3. Changing consumer demands
4. Changing supply chain
5. Changing environment
6. Growing demand for functions and services
7. Climate change
8. Rising energy prices
Trends within Agriculture:

1. Cost price reduction- related to economies of scale and bulk production
2. Adding value to agricultural products- related to niche markets
3. Diversification- related to non-agricultural niche markets
Further Reading
Read one (1) current news or events affecting Philippine Agriculture and
agribusinesses (example: globalization, ASEAN agreements, input prices,
etc.)
References
Crofts, N. 2005. How to create and run your perfect business. Authentic Business. Capstone Publishing Limited, UK.
Department of Trade and Industry. 2009. Micro, Small and Medium Enterprises. Accessed at http://ww.dti.gov.ph/dti/index.php?p=321 on June 14, 2012.
Deakens, D. and M. Freel. 2010. Entrepreneurship and small firms. 5th edition, International Edition. McGraw-Hill, Philippines.
de Wolf, P. and H. Schoorlemmer, (Eds.). 2007. Exploring the significance of entrepreneurship in Agriculture. Research Instit ute of Organic Agriculture.
Frick, Switzerland.
Food and Agriculture Organization. 2006. Farm Planning and Management for Trainers of Extension Workers- ASIA. United Nations. Rome.
Hiam, A. 2010. Business innovation for dummies. Wiley Publishing, Inc., Indianapolis, Indiana.
Hochmuth, R. et.al. Keys to successfully choosing enterprises that suit your small farm. Accessed at http://edis.ifas.ufl.edu/hs338 on May 25, 2011.
Katz, J.A. and R.P. Green. 2007. Entrepreneurial small business. McGraw-Hill companies, Inc. New York.
Lapid, D. P. and P. Sotto with NEGOSYO by Joey C*onception. 2010. 21 steps on how to start your own business. Philippine Center for Entrepreneurship.
Vibal Publishing House, Inc. Philippines.
McElwee, G. 2006. The enterprising farmer: a review of entrepreneurship in agriculture. Accessed at http://www.rase.org.uk/what-we-
do/publications/journal/2006/10-q0po02if4.pdf on May 25, 2011.
Quinones, A. and C. Samson. May 2012. Making social entrepreneurship work. The Entrepreneur. Accessed at
http://www.entrepreneur.com.ph/business-ideas/making-social-entrepreneurship-work/page/1 on May 23, 2014.
Sobel, R. S. Entrepreneurship. Accessed at http://www.econlib.org/library/Enc/Entrepreneurship.html on June 2011.
Timmons, J.A. and S. Spinelli, Jr. 2007. New venture creation- Entrepreneurship for the 21st century, 7th Edition. McGraw-Hill Companies, Inc., New
York.

UNIT III
THE FARMER ENTREPRENEUR AND HIS ENTERPRISES
Objectives
1. Identify success factors of farmer entrepreneurs.
2. Determine types and approaches to enterprises practiced in the Philippines.
3. Evaluate stages of growth of an agricultural enterprise.
A. Farmers as Entrepreneurs
Three-fold Role of a Farmer

1. As Producer
 To take care of plants and livestock in order to produce useful products
 The skill needed is mostly physical in nature
2. As Manager
 Involves making decisions or choices between different alternatives in the farm
 This skill is largely mental backed up by will
3. An Entrepreneur
 Innovative, creative, competitive, risk-taker
Seven Characteristics of a Successful Farm and Farmer

(Kallio and Kola 1999 as cited by McElwee 2006)
1. Profitable production is associated with continuous evaluation of production, income and
expenditures.
2. Constant development of cognitive and professional skills.
3. They benefit from a positive work ethics.
4. Goal-oriented operation i.e., the ability to set goals, to reach them and to set new ones.
5. Utilization of recent information that is relevant for the individual farmer’s own circumstances
and the needs of the farm.
6. Favorable starting points for the enterprise (meaning good condition of machinery, buildings,
land and an appropriate balance between pricing of product and investments in production).
7. Cooperation with others in the supply chain.
Five Groups of Farmers (de Lauwere et.al 2002 as cited by McElwee 2006)
1. Economic entrepreneurs- those who create significant economic change
2. Socially responsible entrepreneurs- those farmers who recognize that the financial success
of the farm needs to balance with a social and environmental role.
 Green Economy
 Improved human well-being and social equity while significantly reducing
environmental risks and ecological scarcities
 Low carbon, resource efficient and socially inclusive
 Social Entrepreneurship
 Aims to help society while generating profit
 An enterprise with a social mission
3. Traditional growers- those farmers who are able to be successful by focusing on an activity
which is ‘guaranteed’ to be successful;
4. New Growers- those farmers who diversify into new, but similar, areas of activity;
5. Doubting farmers- those farmers who are reluctant to embrace change.
Ethical Behavior for Entrepreneurs
Ethics- the fundamental moral values and behavioral standards that form the foundation for the
people of an organization as they make decisions and interact with stakeholders; the study of
right and wrong.
Business Ethics- involves the moral values and behavioral standards that entrepreneurs face as
they make decisions and solve problems.

The Philippines Code of Ethics for Business includes concerns towards:
1. Customers
2. Suppliers
3. Owners and other providers of capital
4. Local and National government
5. Society in general
6. Creating markets or demand creation
Social Responsibility- The obligations of businessmen to pursue their policies, to make those
decisions, or to follow those lines of actions which are desirable in terms of the objectives and
values of society (Howard Bowen).
Different Social Responsibilities:

1. Towards consumers- Eight (8) basic consumer rights (Department of Trade and Industry)
a. The right to basic needs- guarantees survival, adequate food, clothing, shelter, health
care, education and sanitation
b. The right to safety- the right to be protected against the marketing of goods or the provision
of services that is hazardous to health and life.
c. The right to information- the right to be protected against dishonest or misleading
advertising or labeling and the right to be given the facts and information needed to make
an informed choice.
d. The right to choose- the right to choose products at competitive prices with an assurance
of satisfactory quality.
e. The right to representation- the right to express consumer interests in making and
execution of government policies.
f. The right to redress- the right to be compensated for misrepresentation, shoddy goods or
unsatisfactory services.
g. The right to consumer education- the right to acquire the knowledge and skills necessary
to be an informed customer.
h. The right to a healthy environment- the right to live and work in an environment which is
neither threatening nor dangerous and which permits a life of dignity and well-being.
2. Towards the community
3. Other social responsibilities
a. employment
b. education and training
c. community development
B. Types of Enterprises and Approaches to Enterprises
B.1 Types of Farm Enterprises
Farm enterprises
 The specific crop and livestock production activities associated with the farm.
 The farm utilizes several inputs to produce outputs.
 A farm is made up of several enterprises.
Relationship between enterprises could be:

1. Competitive enterprises- Enterprises “compete” when they use the same scarce resources
2. Supplementary enterprises- Enterprises “supplement” one another when they use resources
that might otherwise not be used.
3. Complementary enterprises- Enterprises “complement” one another when they interact in a
supportive way.
Paths for Farm and Ranch Business
1. Low Volume, High Value Producers

 Due to lack of access to additional land and capital, the key to higher profits, for many
growers, is producing higher valued commodities.
 Promotion and marketing are critical for success.
 Margins may be increased through added processing and direct marketing.


Involves high production risks and uncertain markets but can be quite profitable even on
a small scale.
 Examples: asparagus, herbs, (variations in traditional commodities) like organic products
and seed crops.
2. High Volume, Low Margin Producers
 Many producers stick with traditional or familiar enterprises and simply expand production
as a means of increasing income.
3. Specialty Products and Service Providers
 This means specializing in just one or two skills and become one of the best at performing
them.
 The key component is making maximum use of expensive, highly specialized equipment
and facilities.
 Important factors of success include marketing the services of the business and interacting
with customers.
 Examples: custom harvesting, raising seed stock or replacement breeding stock, repairing
equipment, and applying pesticides and fertilizers.
4. Part-time Operators
 These are small-scale operations called “lifestyle” farms and run by people who enjoy
producing crops and livestock even if potential profits are low.
 The primary management concern is to limit financial risk and balance farm labor needs
with off-farm employment.
 A combination of farming and non-farm employment provides the most acceptable level
of financial security and job satisfaction for many families.
B.2 Micro, Small and Medium Enterprises
MSME Definition
 Micro, small, and medium enterprises (MSMEs) are defined as any business
activity/enterprise engaged in industry, agri-business/services, whether single proprietorship,
cooperative, partnership, or corporation (http://www.dti.gov.ph/dti/index.php?p=532)
 The definition states that total assets includes those arising from loans but exclusive of the
land on which the particular business entity's office, plant and equipment are situated.
Table 1 Classification of enterprises in the Philippines by asset size and number of

employees
Classification By Asset Size (in PhP) By Number of Employees

Micro Up to 3,000,000 1 to 9 employees
Small 3,000,001 to 15,000,000 10 to 99 employees
Medium 15,000,001 to 100,000,000 100 to 199 employees
Large above 100,000,000 More than 200 employees
*As defined under Small and Medium Enterprise Development (SMED) Council Resolution No.
01 Series of 2003 dated 16 January 2003
Features of Small Businesses

1. A small business is low in capital but high in labor intensity.
2. A small business is efficient in specialized skill or service.
3. A small business succeeds in small, isolated, or overlooked markets.
4. A small business often operates in unstable markets.
5. A small business is closer to the market place.
6. Generally, the owner of small businesses is also the managers.
7. Capital comes from the owner or small group.
8. The area of operation is small.
9. The size of the enterprise is small in relation to the industry.
Common Failures of Small Businesses

1. Lack of expertise
2. No product/marketing strategy
3. Over-optimism about market size

4. Understanding the start-up time
5. Lack of working capital
6. Start-up cost too high
7. Consequences of early growth
8. Mistaking cash for profit
9. Wrong location
10. Selecting and managing people
11. No management accounts
Enterprise Approaches
1. Starting from scratch
 Includes:
 Spotting a gap in the market
 Inventions and inventors
 New business opportunities
 Other people’ failures
2. Buying an existing business
 Reasons:
 To increase market share and eliminate competitors
 To broaden product range or give access to new markets
 To diversify into new markets by a acquiring the necessary management, marketing or
technical skills
 To get into another location
 To protect an important source of supply which could be under threat from a competitor
 To acquire additional staff, factory space or to get access to additional major customers
3. Family businesses
 "broadly defined as a business that had a significant family presence such as ownership
and management, but not necessarily both” (Deakens & Freel, 2010)
 Succession for some barely reached up to the 3 rd generation
 Examples: Marriot Chains of Hotels (J. Willard Marriot Jr and Sr.), Ford Motor Company
(Henry Ford), Tyson Foods, Levi-Strauss, Wal-Mart (Sam and Rob Walton), Cadbury
(Adrian Cadbury)
4. Franchising
 A company (the franchisor) grants others (the franchisees) the right and license (the
franchise) to sell a product or service and possibly to use the business system developed
by the company.
 A method of doing business based on a continuing relationship between the franchisor
and the franchisee.
 The person buying the franchise does not buy his own business. He buys a success
package from a company who shows him how to use it. The franchiser maintains a
substantial control over the business.
 Example: Largest franchised food service organization in 2005 is McDonald Corporation
of Ray Kroc and Anita Roddick (31, 000 restaurants, 119 countries)
Types of franchising:
a. Trade name franchising- the franchisee purchases the right to become identified with the
franchisor’s trade name (brand name) without distributing particular products exclusively
under the manufacturer’s name.
b. Product distribution franchising
 Licenses the franchisee to sell specific products under the manufacturer’s brand name
and trademark through a selective, limited distribution network.
 Similar to supplier-dealer relationship
 Commonly used to market automobiles, gasoline products, soft drinks, appliances and
cosmetics.
c. Business Format/Pure franchising
 Provides the franchisee with a complete business format, including a license for a trade
name, the product or services to be sold, the physical plant, the methods of operation, a
marketing strategy plan, a quality control process, a two-way communication system, and
the necessary business services.
 Purchasing the right to see all the elements of a fully integrated business operation.
 Commonly practiced in fast-food restaurants, lodging establishments, business service
firms, educational institutions, and beauty aids retailers.
Table 2 Advantages and disadvantages of franchising

Advantages Disadvantages
The franchise is usually based on a proven Proven track records have their price-
and tried and tested recipe for business successful franchise systems require very
success large investments by the franchisee
The franchisee can benefit from economies Although you can sell on to someone taking
of scale, (marketing, advertising, buying over your role as franchisee, the benefit may
supplies) be less than an owned enterprise
Market research may be undertaken by the Trading is limited by geographical area and
franchisor location, hence growth of the business will
be finite and limited
The franchisor may act as a business Problems may exist in the relationship with
mentor providing early-stage advice the franchisor, leading to financial disputes
Stationary and other business systems may Innovation may be limited because the
be provided as part of the franchise package franchise operates to a strict formula for
production and sales marketing
Benefits from the strong brand name
Franchise system are often favored by
banks due to the established track record
(Deakins & Freel, 2010)
C. Enterprise Growth
Churchill and Lewis Model of Firm Growth (Deakins & Freel, 2010)
Attribute Stage 1 Stage 2 Stage 3-D Stage 3-G Stage 4 Stage 5

Existence Survival Success- Success- Take-off Maturity
disengage growth
Management Direct Supervised Functional Functional Divisional Line and
style supervision supervision staff
Extent of Minimal to Minimal Basic Developing Maturing Extensive
formal style non-
existent
Major Existence Survival Maintaining Get Growth Return on
strategy profitable resources investment
status quo for growth
FURTHER READING
Check out “Creativity and Entrepreneurship in the Global Environment” at
http://www.hbs.edu/centennial/businesssummit/entrepreneurship/creativit
y-and-entrepreneurship-in-the-global-environment.html
References
Department of Trade and Industry. 2012. Micro, Small and Medium Enterprises. Accessed at http://ww.dti.gov.ph/dti/index.php?p=321 on June 14, 2012.
Deakens, D. and M. Freel. 2010. Entrepreneurship and small firms. 5th edition, International Edition. McGraw-Hill, Philippines.
de Wolf, P. and H. Schoorlemmer, (Eds.). 2007. Exploring the significance of entrepreneurship in Agriculture. Research Instit ute of Organic Agriculture.
Frick, Switzerland.
Hochmuth, R. et.al. Keys to successfully choosing enterprises that suit your small farm. Accessed at http://edis.ifas.ufl.edu/hs338 on May 25, 2011.
McElwee, G. 2006. The enterprising farmer: a review of entrepreneurship in agriculture. Accessed at http://www.rase.org.uk/what-we-
do/publications/journal/2006/10-q0po02if4.pdf on May 25, 2011.
Quinones, A. and C. Samson. May 2012. Making social entrepreneurship work. The Entrepreneur. Accessed at
http://www.entrepreneur.com.ph/business-ideas/making-social-entrepreneurship-work/page/1 on May 23, 2014.

UNIT IV
PLANNING A BUSINESS
Objectives
1. Recall the importance of a business plan.
2. Discuss the basic parts of a business plan.
3. Analyze the functions and entries of basic financial statements.
A. The Business Plan
Business Plan
 A document reflecting on how a business owner, manager or entrepreneur intends to organize
an entrepreneurial endeavor and implement activities necessary and sufficient for the venture
to succeed (Department of Agriculture, Forestry and Fisheries, 2011)
 A multi-purpose tool which helps you plan, finance, start, run, and possibly sell your business
(Hyppia, 1992).
 A tool used to examine the details critical to business success; articulate the merits,
requirements, risks, and potential rewards for the opportunity and how it will be seized.
 Written both by start-up enterprises and existing enterprises, for business partners, managers,
lenders and potential business buyers.
 Differs from a feasibility study. A feasibility study determines whether a certain decision is
viable, doable or profitable while a business plan plots the details on how, when and why things
are done, profits realized and objectives attained.
Importance of a Business Plan

(Department of Trade and Industry, 2010)
 Reduce risk of losing money invested
 Avoid costly mistakes
 Anticipate financial requirements
 Organized activities before hand
 Assess actual performance against set goals
 Apply for financing from lending institutions
Common mistakes in drafting business plans

(Department of Agriculture, Forestry and Fisheries, 2011)
 Less emphasis on cash flow projections
 Vague business plan
 Unrealistic assumptions- benchmark with existing and similar businesses or standard set by
credible agencies/organizations
 Ignoring risks
 Ignoring information on competitors
 Ignoring the role of suppliers
Vital information needed in considering an agricultural enterprise:

 Soil and water requirement
 Weather condition and climatic patterns of the area
 Sources of chemical and fertilizer inputs
 Crop production/rotation plan
 Production regulations in the area
 Source of technical advise
 Recommended production system or standards

B. Parts of a Business Plan
The parts and content of the business plan depends on the nature or purpose to which it is written.
Business plans are written either for start-up enterprises or for existing business with plans for
acquiring additional investments or capital. The parts of the business plan below will give
emphasis on start-up businesses.
Basic parts of a Business Plan:

1. Cover Page
2. Table of Contents
3. Executive Summary
4. Business Description
5. Marketing Plan
6. Organizational Plan
7. Production Plan
8. Financial Plan
9. Risk Management
Executive Summary
 A quick overview of the content of the whole business plan. The purpose is to give the reader
a brief picture of the enterprise as well as encourage them to read further.
 It is written after all the other parts of the business plan are in place and usually covers one
page.
 It highlights the main points from each major section of the business plan.
 Includes the business vision statement and the objectives
 Vision/Mission Statement
 A statement on where or what the enterprise hopes to be in the future.
 A long-term concept and sometimes reflect deeply held core values of the enterprise.
 Objectives
 Short term to medium term targets of the enterprise directed towards achieving its
vision/mission.
 Objectives are often formulated using the SMART format:
S Specific- a description of what to achieve; usually starts with a verb
M Measurable- with quantitative elements
A Attainable- the scope is within the ability of the enterprise to achieve
R Realistic- clear, understandable, and possible
T Time bound- a deadline to attain the target
Business Description
 This section provides a background of the enterprise and its current status.
 For start-ups, it includes a description of:
a. Brief history of the enterprise including why the enterprise exists and how it was conceived
b. Explanation of the type of business, how it will be registered and listing of its owners
c. Description of the location and its advantages
 Some business plans insert a tabular presentation of important information. Below is an
example template.
Enterprise name
Enterprise location/address
Products/service offered
Type of business
Proprietors
Start-up capital

Marketing Plan
 This portion of the business plan details the competitive edge of the enterprise and the product
it offer, its target market and how to bring this product to the hands of buyers.
 A good marketing plan is based on information from a market research including analysis of
the industry and existing competitors.
 SWOT analysis is used to determine the strengths and weaknesses of the enterprise itself and
the opportunities and threats in the external environment.
 Sub-sections in the marketing plan include:
a. Product description- describes the final product as to type, variety, quality, size, weight,
packaging, etc. and highlight its advantages and competitive edge
b. Market analysis- presents results of SWOT analysis, statistical data on market demand and
supply, and import and export situation.
c. Target market- specifically describes the buyers as to geographic, demographic, economic,
cultural, and psychographic characteristics (needs)
d. Competition- describes existing competitors, their product, location, number, price and
marketing strategies
e. Pricing strategy- describes the pricing method used, the estimated price per unit of the
product, number of units sold and estimated monthly/annual sales
f. Promotional strategy- refers to the message the enterprise wants to relay to the market, the
method of delivering the message and marketing/distribution channels to be used
Organizational Plan
 The part which determines the key people and identifies the work force and support personnel.
 This portion includes the function of ‘staffing’ and answers the question “Who will do What?”;
functional areas, specific tasks, qualifications needed to do the task and hiring the right person.
 This section includes presentation of the business structure (sole proprietorship, partnership,
corporation, cooperative), organizational chart and a table on the names of the owners, their
addresses, responsibilities and experience. Another table on the support personnel with the
qualification, number of individuals needed and the corresponding salaries and wages.
 Basic functional areas of management includes the following (Department of Trade and
Industry, 2010):
 Marketing
o Sale and delivery of products to buyers
o Delivery of products to distributors
o Promotion and advertising
o After-service support
 Production
o Product manufacture or service delivery
o Machine operation
o Repair and maintenance
o Quality control
o Raw material and finished product inventory
 Finance
o Bookkeeping
o Payroll preparation
o Settlement of payables and collection of receivables
o Petty cash management
 Administration
o Ordering of supplies
o Sales contract preparation and business permit renewal
o Keeping and maintenance of personnel records
o Business communications and inquiry
Production Plan
 Also termed as Technical Plan or Operational Plan
 This portion of the business plan details what and how the product/service is made/produced,
completed and delivered.
 Sub-sections in this plan include:

a. Product specification- describes the final product sold by the enterprise including estimated
volume of production
b. Production process- the step-by step description of how the final product is made (in tabular
or flow chart form)
c. Production machinery and equipment- a tabular listing of the type of machinery and
equipment needed in the production process, the number of units and cost per unit
d. Production materials- a tabular listing of all materials needed to make the final product in
one production process, number of units and cost per unit
e. Utilities, plant location and lay-out- indicates the sources of water, electric power, business
site and lay-out of the plant or farm
f. Production schedule- gives details on how the work is spread out in the next 12 months;
refers to cropping calendar in the case of horticultural or agronomic crops
g. Labor requirement- a tabular listing of direct and indirect labor needed in the production
process, the number of individuals, payment arrangement and salary/wages
Financial Plan
 The financial plan is structured to measure profitability and equity growth of the enterprise
(Perry & Overton, 2010).
 This section details the capital requirements of the enterprise which is classified into three (3):
a. Pre-operating capital- amount spent before the business begins to operate e.g. expenses
for business registration, license to franchise, payment to consultants, etc.
b. Working/Operating capital- reserve money needed to run the business until it becomes self-
sufficient e.g. amount to purchase supplies and materials, transportation, payment for labor,
water, and electricity
c. Fixed capital- generally includes one-time expense for business assets as land and land
improvement, building construction/renovation, tools/equipment/machinery, furnishing and
fixtures
 Major cost/expense category:
a. Pre-operating expense- expenditures incurred before the official operation of the enterprise
b. Production expense- consists of direct expenses and indirect expenses (or overhead costs)
o Direct expense- expense on raw materials (inputs) and direct labor who are involve in
the production activities
o Indirect (Overhead costs)- includes expenses not directly involved in production activities
e.g. salary of production supervisors and managers, water and electricity expense in
production, repair and maintenance, depreciation of assets used in production, real
estate tax and other materials (usually in small quantities) not directly becoming a part
of the product.
c. Marketing expense- involves cost of packaging materials, produce preparation, hauling, and
transportation, losses in marketing, storage costs, and commissions, depreciation of assets
used in marketing and promotional expense.
d. Administrative expense- expenses for facilitating activities in the enterprise as wages for
office staff, office telephone, water and electricity bills, office supplies, purchase of furniture
and fixtures, depreciation of assets in the office.
e. Financial expense- interests of short term and long-term credit and taxes (for corporation
and cooperatives).
 Sub-sections in the Financial Plan include:
a. Sales Projection- estimates the volume of production per cycle, selling price, and total sales.
Based from the estimates in the first year and assumptions set (changes number of units
produced and price), projection is done for three (3) years.
b. Cost Projection- included projection tables for pre-operating expenses, fixed capital and
depreciation, direct and indirect production costs, financial costs and marketing costs and
administrative cost (less depreciation of assets)
o Pre-Operating Expense- includes expenses on registering the business, acquiring
licenses and permits, pre-operation transportation, business plan preparation,
installation of facilities and initial promotional expense.
c. Sources of capital- enumerates how the enterprise will raise capital for its operation. Major
source of capital are debt and equity.
o Debt involves borrowing resources from formal or informal creditors with stipulations of
paying the principal in the future time either with or without interest (Jones, 2003). Debt
could be cash or non-cash.

o Equity is contribution of an individual in exchange for ownership of the enterprise who
will share with the profit later (Jones, 2003). This could be cash or non-cash.
d. Financial Statements- For start-up enterprises, “Pro-forma” statements are developed that
show projected income and growth based from research and industry standards.
e. Break-even Analysis- the break-even point is the level of activity at which the enterprise
neither earns a profit nor incurs a loss (Department of Trade and Industry, 2010).
o Break-even quantity = Total Fixed Cost / (Unit Price – Variable Cost Per Unit)
o Break-even price = Total Fixed Cost / [1-(Variable Cost Per Unit / Unit Price)]
 Income Statement
 A summary of revenue and expenses for a given period as a result of business operation.
 A financial tool to determine the profitability of an enterprise; how much and when will the
potential profit be realized.
 Also termed as Operating Statement or Profit or Loss Forecast
 Measures the difference between revenue and expense. A positive difference indicates
profit, or a positive net income, and a negative value indicates loss, or a negative net
income.
 In the accrual method, not all of the amounts shown in the income statement represent an
actual inflow of cash. This means revenues are recognized when they are earned, not when
cash is received, and expenses are realized when they are incurred, not when the cash is
paid.
 General Formula: Revenue – Expense = Net Income
 Major parts of an Income Statement:
a. Revenue- sales as a result of goods sold (including business assets)
b. Expense- costs incurred as a result of the revenue; includes production, marketing,
administrative and financial expenses; depreciation of fixed assets is excluded if there is
a separate entry for “Depreciation of Fixed Assets”.
c. Net Income- the difference between revenue and expense
d. Adjustments- as result of inventory changes in goods
 Below is an example of projected income statement for this course:
Projected Income Statement

TASR Agri-Enterprise
For the period Year 1 to Year 3
Items Pre- Year 1 Year 2 Year 3

Operation
Revenue
Sale from farm
products
Sale of capital assets
Total revenue
Expenses
Pre-operating expense
Production expense
(excluding depreciation)
Marketing expense
Administrative expense
Financial expense
Depreciation of fixed
assets
Total expenses
Net Income

 Cash Flow Statement
 A summary of projected cash inflows and cash outflows for an enterprise over a given period
of time.
 Estimates the flow of revenue into the enterprise and the flow of expenditures out of the
enterprise. These flows are important because they indicate when cash surpluses or
deficiencies will occur.
 Estimates the amount and timing of future borrowing needs and the ability of the enterprise
to repay these and other loans on time.
 General Formula: Total Cash Inflow – Total Cash Outflow = Net Cash Flow
 Major parts of Cash Flow Statement include:
a. Cash Inflow- refers to cash receipts of the enterprise for the period; entries may include;
o Beginning Cash Balance- amount of money forwarded or the Ending Cash Balance
from the previous year
o Loan Proceeds- amount borrowed from creditors for capital
o Owner’s Equity- amount invested by the proprietors
o Cash Sales- actual cash received from sale of products
o Added: Collection from Receivables
b. Cash Outflow- refers to cash expenses for the period; entries may include;
o Pre-Operating Expenses
o Fixed Capital- actual cash spent for the period on specific fixed assets
o Other cash expenses- includes production, marketing, administrative, and financial
(principal and interest paid for the period) expenses less depreciation of fixed asset
c. Net Cash Flow- refers to the difference of total cash inflow and total cash outflow
 Below is an example of projected cash flow statement for this course:
Projected Cash Flow Statement


Operation
Cash Inflow
Beginning cash balance
Loan proceeds
Owner’s equity
Cash sales
ADD: Collection from
receivables
Total cash inflow
Cash Outflow
Pre-operating expenses
Purchase of fixed
capital
Production expense
Marketing expense
Financial expense
Total cash outflow
Net Cash Flow

 Balance Sheet
 A systematic organization of everything “owned” and “owed’ by a business or individual at
a given period in time.
 Also termed as Net Worth Statement
 It provides a “snapshot” of a business’ financial position.
 Summarizes the financial condition of the business at a point in time.
 General Formula: Total Liabilities + Net Worth = Total Assets
 Major parts of Cash Flow Statement include:
a. Assets- refers to anything that has economic value that is under the control or ownership
of the enterprise. Economic value means it can be converted to cash in later period.
Assets are generally classified into Current and Non-current assets:
o Current assets- these are assets which impacts the enterprise within one year.
Current assets include cash, deposits and securities that can be easily converted to
cash and commodities that will generate cash within twelve months e.g. inventories
o Non-current assets- these are assets which impacts the business for more than one
year e.g. machinery, equipment, real estate property
b. Liabilities- these are financial obligations incurred by the enterprise or everything that
they owe to other entities. Liabilities are generally classified as Current and Non-current
liabilities:
o Current liabilities- refers to obligations that needs to be paid within one year e.g.
accounts payable and loan payments due within the year including interests
o Non-current liabilities- refers to obligations that are payable for more than one year
e.g. debt balance payable for the following years,
c. Net worth or Owner’s Equity- It represents the amount of money left for the owner of the
business should the assets be sold and all liabilities paid as of the date of the balance
sheet; changes only when the owner puts additional personal capital into the business,
withdraws capital from the business, or when the business shows a profit or loss. It also
includes changes in asset value due to changes in market prices.
 See example of projected balance sheet for this course.
Risk Management
 This section enumerates the weaknesses and threats indicated in the SWOT analysis and
present a discussion on how the enterprise will plan to address these risks.
 The table below can be used for guidance in the discussion.
Risks Solution

Projected Balance Sheet

Operation
Assets
Current assets
Cash
Account receivable
Total current assets
Non-current assets
Fixed assets less
depreciation
Total non-current
assets
TOTAL ASSETS
Liabilities
Current liabilities
Current portion of loans
payable
Interest payable
Total current liabilities
Non-current liabilities
Remaining long-term
loans
Total non-current
liabilities
Total Liabilities
Owner’s Equity
Retained earnings
Total Owner’s Equity
TOTAL LIABILITIES &
OWNER’S EQUITY
References
Department of Agriculture, Forestry and Fisheries. (2011). Agricultral business plan guidelines.
Republic of South Africa: Department of Agriculture, Forestry and Fisheries.
Department of Trade and Industry. (2010, August 1). Your guide to starting a small enterprise.
Makati City, Philippines: Department of Trade and Industry.
Department of Trade and Industry. (2012). Do you want to go into business? Makati City:
Department of Trade and Industry.
Jones, R. (2003). Building a business plan for your farm: Important first steps. Risk and Profit
Summer Conference. Manhattan, Kansas.
Perry, J., & Overton, R. (2010). Business planning for the agriculture sector: A guide to business
plan development for start-up to mid-size operation. Ithaca, NY: Cornell University.

UNIT V
BASIC MANAGEMENT CONCEPTS AND ISSUES
Objectives
1. Relate the importance of management in farm enterprises.
2. Contrast the various functions of management.
A. Farm Management and its Importance
Management is:
o “making decisions to increase profit”
o “making efficient use of available resources
o “using, managing, and allocating resources”
Farm Management
o Producing with limited available resources- how to combine resources in the best possible way in
order to assure the best outcome.
o Requires improved management skills to become more competitive as farming becomes more
market driven.
o Management principles applied to farming.
Importance of Farm Management

a. Changing prices
o Prices of inputs and outputs are constantly changing which affects the overall profitability of the
farm business. Profit depends on changing prices of inputs and outputs.
b. Changing resource availability
o Availability of capital, labor, irrigation water, quality seeds and planting materials and efficient
tools and equipment and changing climatic conditions.
c. Changing technologies
o Farmers should adopt those technologies where the production cost per unit is lowest so that
profit is maximized.
B. Functions of Management
Good farmer/entrepreneur need to learn from their day-to-day experience and recognize their
mistakes, become accountable for their actions and be willing to change their thinking based on
new information.
Elements in decisions:
1. Existence of a goal or goals
2. There are resources that can be used or allocated
3. These resources to be allocated have more than one possible uses

Steps in Decision-making Process
(Source: FAO, 2006)
Basic Functions of Management
(Source: FAO, 2006)
1. Diagnosis
o Involves analysis of the current situation of the farm and its enterprises and identifying
the constraints and opportunities to increase profitability
o Analyzing the causes of problems and identifying ways of overcoming them.
2. Planning
o Deciding the course of action (what to do, how to do it, when to do it, and who is going
to do it), policy and procedure, and assessing the future physical and financial
performance for each enterprise and for the farm as a whole.
o This is considered the most fundamental and important principle in management
o Essential elements/parts of a plan:
a. Situation analysis and rationale
b. Objectives
c. Activities and time table
d. Budget
e. Evaluation scheme
3. Implementation
a. Organizing- the process of departmentalizing; structuring and identifying the various job
positions necessary to attain the goals and objectives to prevent overlapping of rights and
responsibilities
b. Staffing- includes identifying qualification requirements, training and orientation,
performance evaluation and promotion or dismissal of personnel
c. Directing and Leading- this is the interpersonal aspect of management which includes
handling and relating to people in such a way that promotes efficiency, development and
peace and order among workers
4. Monitoring and Evaluation- involves checking on the actions and progress achieved by the farm
business
a. Monitoring- is a tool for evaluation the physical and financial performance of the farm
business. The results of monitoring are used as inputs in making decisions on the day-to-
day activities of the farm.

b. Evaluation- is used to assess the outcomes and impact of the farm business. It involves
making comparisons of the farm business performance over time and between farms. The
results of evaluations are used to identify strengths and weaknesses.
The whole process of management is repetitive and cyclical. In future planning,

weaknesses are corrected or minimized and strengths are highlighted. Results of evaluations
are useful for future planning and budgeting.
To Register at Department of Trade and Industry (DTI)

• Business Name Registration
Requirements:
1. Accomplishment Application form
2. Valid Gov’t. ID (1pc original)
If filled with representative

1. Authorization Letter
2. ID of Representative
• Business Permit Registration
1. Duly Accomplished Application Form
2. Barangay Business Clearance
3. Cedula
4. 2015 monthly returns submitted to BIR/Audited Financial Statement
5. Authorization Letter (if not the owner/taxpayer)
• Barangay Micro Business Enterprises (BMBE)
References
Daft, R.L. 2005. Management, 7th edition. Thomson Asia Edition. South-Western, Thomson Learning Asia
Pte Ltd. Singapore.
de Wolf, P. and H. Schoorlemmer, (Eds.). 2007. Exploring the significance of entrepreneurship in
Agriculture. Research Institute of Organic Agriculture. Frick, Switzerland.
Ferrell, O.C. G. Hirt, and L. Ferrell. 2006. Business: A changing world, 5 th edition. McGraw-Hill/Irwin. New
York.
Food and Agriculture Organization. 2006. Farm Planning and Management for Trainers of Extension
Workers- ASIA. 2006. United Nations. Rome.
Kay, R.D. 2005. Farm management planning, control, and implementation. McGraw-Hill Book Company,
New York.
McElwee, G. 2006. The enterprising farmer: a review of entrepreneurship in agriculture. Accessed at
http://www.rase.org.uk/what-we-do/publications/journal/2006/10-q0po02if4.pdf on May 25, 2011.
Nickels, W.G., J.M. McHugh and S.M. McHugh. 2005. Understanding business, 7 th edition. McGraw-
Hill/Irwin. New York.
Weihrich, H. and H. Koontz. 2005. Management: A global perspective, 11 th edition. International
Edition. McGraw-Hill Education (Asia). Philippines.

LABORATORY
ACTIVITIES
Ag.Econ 27- Laboratory Activity

Name: _____________________________ Date submitted:_________ Score:________
Section code: _______________________
Activity No. 1
LEARNING FROM SUCCESSFUL ENTREPRENEURS
Russel Sobel defines entrepreneurship as the “process of discovering new ways of

combining resources” and Nathaniel Left says it is the “capacity for innovation, investment and
expansion in new markets, products and techniques”. These authors see entrepreneurship
beyond the “the business as usual” attitude. They see entrepreneurship as something active and
dynamic and ever changing in the pursuit for profit and satisfaction. Jeffry Timmons further
emphasized entrepreneurship as the “ability to create and build something from practically
nothing”.
Entrepreneurs are indeed the backbone of the economy propelling economic growth
through production, employment generation, and export earnings, among others. With this the life
of entrepreneurs has always been deemed as exciting and full of adventures. It can be said that
their lives provide an example of alternative option from the routines of traditional employee life.
As exciting and rewarding as the lives of entrepreneurs may be, it is surprising that few
opt to follow their footsteps. One factor is people’s perception on the stakes of entrepreneurship.
Some say entrepreneurs are born not made. Successful entrepreneurs inherently possess the
traits that leads them to the top. Some, however, say it’s not all about the genes. Entrepreneurs
actually learned the skills through experience and education.
So what really takes to be a successful entrepreneur? What common characteristics do
they possess? This activity will guide you to identify these characteristics and skills by learning
from the life stories of successful entrepreneurs.
Objectives
At the end of the activity, the students are expected to:
1. enumerate common entrepreneurial traits/skills.
2. discuss at least (2) characteristics of successful entrepreneurs.
3. assess oneself for qualities of a successful entrepreneur .
Procedure
1. This is an individual activity to be submitted the following week.
2. From resources of the library and the internet, look for the life story of at least two (2) local or
international entrepreneurs.
3. Prepare a short narrative of their life story. Write this is a long bond paper. Indicate the
source/reference used. The narrative should contain the following parts:
Entrepreneur’s name
Enterprise name
Enterprise location
Brand name
Products/services provided
Life story
 History of the entrepreneur (birthplace, nationality, education, employment, etc.)
 Journey to success (early years of the enterprise, growth and current status)
Reference
4. Answer the guide questions.

5. The narratives will be shared in the laboratory class to be facilitated by the faculty-in-charge.
Questions
1. What characteristics do the entrepreneurs have that led them to success (provide at least
four)? Define the characteristics by comparing or differentiating it in the lives of the
entrepreneurs. 10 points

2. Among the characteristics enumerated above, which do you think is most essential? Why? 5
points
3. Take time to evaluate yourself. Do you think you have this characteristic? If YES, provide an
experience which you were able to exercise this trait. If NO, provide steps that you can take
towards acquiring this trait. 10 points
4. Based from your narrative, what do you think is the most important ingredient for success?
Why? 5 points
Grading criteria
This activity will be graded by the following criteria and points:
Criteria Total points allotted Actual points earned

Narrative (15 points each)
Substantial 5 points
Coherent 5 points
Grammatically sound 5 points
Answering the guide questions 30 points
Class participation (bonus points) 5 points
Total 60 points
___________________________________________________________________________
Section code: _______________________
Activity No. 2
AGRICULTURAL ENTERPRISES IN THE PHILIPPINES
The Agriculture sector is one of the major contributor to the Philippine Gross Domestic
Product. The sector ranked 10th in terms of percentage of enterprises established and 9 th in
employment generation in 2008 (National Statistics Office). The sector focuses on crop and
livestock production with raw materials as outputs. Processing and further marketing of raw farm
products are catered through various agribusinesses.
Although most MSMEs (Micro, Small, and Medium) are in the wholesale and retail trade
industries, growth in the agribusiness is promising given that the country has competitive
advantage in natural resources. The thrust is a paradigm shift from subsistence farming to market-
oriented farming. This requires farmers to be more than just producers but as entrepreneurs to
cope with changing trends in agribusinesses and market demand.
This activity will enable students to deepen their understanding on agribusinesses through
classifying enterprises and determining their success factors.
Objectives
1. classify agricultural enterprises by approach, asset size and number of employees.
2. identify current problems and challenges faced by various agribusinesses.
Procedure
1. This is an individual activity to be submitted the following meeting.
2. Data needed in this activity can be gathered from the internet or through personal interview of
local entrepreneurs engaged in agribusinesses.
3. Fill-in the Interview Questionnaire and answer the Interview Summary.
Activity Questions
1. What is meant by Agribusiness? (3 points)
2. What is an Enterprise? (2 points)
3. What possible agricultural enterprise or agribusiness would you want to engage into? Briefly
describe this enterprise? (5 points)
4. What are some preliminary steps you need to take to make this enterprise a reality? Provide
at least five (5) activities. (10 points)
5. What do you think are problems that you might encounter in starting and operating the
enterprise? (5 points)
Grading criteria
Criteria Points allotment Actual points earned

Completely filled interview 30 points
questionnaire
Activity questions 25 points
Class participation 5 points
Total 55 points
___________________________________________________________________________
Interview Questionnaire
Name of enterprise:
Address/Location:
What are the different products offered in your enterprise?
What year did you start operating as an enterprise?
What are your reasons for engaging in business?
What are your reasons for choosing this particular enterprise/business?
How much did you spend in starting the enterprise (PhP)?
What difficulties/problems did you encounter in starting the business?
How many employees do you have?
What are the major machinery/equipment/ appliances necessary for business operation?
How much does it cost to operate the business (PhP)?
What are the problems you encountered in operating the business?
What do you think are factors necessary for success in business?
___________________________________________________________________________
INTERVIEW SUMMARY
Classification of enterprise:
a. Asset size
b. Number of employees
Enterprise approach:
Enterprise relationship (for 2 or more
enterprises)
___________________________________________________________________________
Section code: _______________________
Activity No. 3.1

THE BUSINESS PLAN: ENTERPRISE VISION
Putting-up a small business is not an overnight activity. It is done through a series of

planning and preparation. The owner/entrepreneur has to consider himself, his product and his
environment (external factors) and all other necessary resources, available or lacking, in the
planning process. A successful entrepreneurial activity is first founded on the formation of a
business plan. How feasible is the proposed project? Is the product saleable? Can it compete in
the market? What makes it different from the existing products in the market? And how much risk
is at stake?
The first step to putting-up your own business is to prepare yourself and identify your bright
idea for a product/service. You must have the necessary attribute, attitude and drive to make your
dream into reality. One of the most important thing to do is to change the way you think; looking
at the positive and not dwell on the negative, focusing on solutions and not on problems and, to
constantly challenge yourself for change and improvement.
On the other hand, future growth and performance of an enterprise depends upon the
goals or objectives of the entrepreneur. There are entrepreneurs who venture into self-
employment “to pursue their own interests” and there are those who enter into small business
ownership because they have desires to develop their business, to achieve growth, expand
employment and grow into medium or large size firms. Goals and objectives, however, are
anchored on a clear vision.
A vision is a “mental picture” of how things can be. An entrepreneurial vision should
become a passion that drives you forward and gives purpose and meaning to your actions and
activities. It keeps you going when times get tough. Likewise, this vision needs to be
communicated and put to heart to every member of the enterprise.
The next activities will guide you to come up with a bright idea for business and be assured
that your bright idea will become a big hit in the market. These activities will focus on the
development of these bright ideas into a real product/service packaged in a simple business plan.
Objectives
1. identify bright ideas for a business.
2. select an innovative and potential product/service for an agricultural enterprise.
3. outline compelling reasons for starting an agricultural enterprise.
4. formulate vision and objectives for the proposed group enterprise.
Procedure
1. This is a group activity. Output from this activity forms the preliminary steps in the final
business plan. The activity will be submitted the following meeting.
2. Gather as a group (3 members each) and brainstorm for “bright ideas” for an agricultural
enterprise. Select top three (3) “bright ideas” for the group and list them in Table 3.1.1. Out of
the three bright ideas, further choose one (1) brightest idea and provide a description of the
product/service/enterprise itself. Write this in Table 3.1.2. Some questions to consider in
turning bright ideas to a potential feasible product/service:
a. What needs does the potential enterprise addresses?
b. Is the potential enterprise within the means of the group in terms of expertise, financial
capacity and time availability?
c. Is the potential enterprise innovative enough to compete in the market?
d. Is it economically and environmentally sustainable?
3. After finally selecting the best idea for an agricultural enterprise, next is the need to be clear
with your reason why you want to engage in such an enterprise? Your compelling reasons will
push you to move forward amidst obstacles and difficulties. In Table 3.1.3, write a narrative of
your reasons why you have chosen the enterprise. Be specific and make it personal, make it
compelling. Note that money is a reason, but it is not everything. Your reasons should motivate
you to act on them.
___________________________________________________________________________
Some entrepreneurs identify their reasons for starting a business through self-assessment
(looking within) and environmental scanning (looking outside). Looking within means
determining personal qualities, capabilities, interests, skills, experiences, resources and other
personal factors affecting the proposed enterprise. Looking outside, on the other hand, is
assessing the environment around you if it is conducive for entrepreneurship e.g.
infrastructure, topography, peace and order, government regulations, situations in the local
and international market, etc.
4. Imagine turning your bright ideas into a real enterprise. What future direction will you lead your
enterprise to? What should your enterprise be in the next 10 years? What value should be
instilled in the hearts of your employees and what should they look forward to? What message
will you want to communicate to your consumers? This is your business vision. Other
literatures refer to the vision statement as core values of an enterprise.
To come up with your enterprise vision statement, each member of the group should formulate
their own vision statement for the enterprise. After this, brainstorm as a group to come up with
a final vision statement for the proposed agricultural enterprise. Write your final vision
statement in Table 3.1.4.
Vision statements are vague and long-term in nature. Ideally, the vision is made clearer with
a mission statement, further specified with a set of objectives and operationalized in a series
of activities. In this simple business plan, students are required to formulate a general and at
least three (3) specific objectives that would lead to the attainment of the vision statement.
Write this in the second portion of Table 3.1.4.
A good objective follows the SMART criteria:

S- Specific
M- Measurable
A- Attainable
R- Realistic
T- Time-bound
Grading criteria
Criteria Point allotment Actual points earned

Bright ideas 6
Brightest idea 2
Enterprise description 10
Realistic 5
Clear 5
Compelling reasons 15
Need addressed 5
Internal assessment 5
External assessment 5
Clear Vision statement 5
SMART objectives 12
Class participation (extra points) 5
Total 50 points
___________________________________________________________________________
Activity Questions
1. Bright Ideas. What are your bright ideas that you can turn into a product/service that
addresses the needs/problems of consumers? Write at least three (3) bright business ideas
that you can think of. Note that these ideas are potential product or service for business.
Table 3.1.1 Bright ideas for an agricultural enterprise
BRIGHT IDEAS
1
2. Brightest Idea. Write your brightest idea and provide a good description of the
products/services of the agricultural enterprise.
Table 3.1.2 Description of the brightest idea of an agricultural enterprise.
BRIGHTEST IDEA
Enterprise Description:
___________________________________________________________________________
3. Compelling Reasons. Write a narrative of your compelling reasons for choosing the
agricultural enterprise.
Table 3.1.3 Compelling reasons for an agricultural enterprise.
OUR PERSONAL AND COMPELLING REASONS
___________________________________________________________________________
4. Clear Vision and Goals. Write your final vision statement and provide a general and specific
objectives to achieve this vision. Reflect at least three (3) specific objectives.
Table 3.1.4 Vision statement and goals of the agricultural enterprise.
OUR VISION STATEMENT
OUR ENTERPRISE OBJECTIVES

General Objective:
Specific Objectives:
___________________________________________________________________________
Names: ___________________________________________________________________
Date submitted: ___________ Section code: _______________ Score:__________
Activity No. 3.2

THE MARKETING PLAN
Marketing is the next crucial stage that potential entrepreneurs have to be concerned with.
This is the point to which physical products are converted to monetary form. Remember that
marketing is more than just selling, disposing or transferring of products to end consumers.
Rather, it includes the various steps of identifying the right market for the product, the right place
and time to sell and the right form of the product to meet customer satisfaction. The end goal is
satisfaction of the target market while making profit.
The marketing plan does not only analyses the target market. It also includes assessment
of the capabilities of the enterprise, its competitors and the whole industry itself. Output of market
research and SWOT analysis is useful in this aspect.
This activity will allow students to identify their right market and come-up with an
appropriate marketing strategy for their enterprise. Further, students will apply their knowledge of
the 4Ps in marketing.
Objectives
1. create a SWOT analysis for the enterprise.
2. discuss target market in terms of geographic, demographic, economic and psychographic
classification.
3. formulate promotional message and execution style.
4. estimate potential annual sales.
Procedure
1. This is a group activity and will be submitted in the next laboratory meeting.
2. The first step in the Market Plan is to analyze the internal and external environment of the
enterprise. This can be done using the tool called SWOT Analysis. SWOT stands for
Strengths, Weaknesses, Opportunities, and Threats. The Strengths looks at the different
aspects within the enterprise that are considered as ingredients for success or its strong
points. This could be the qualification or expertise of the owners or the uniqueness of the
product/services offered. Weaknesses refers to the internal aspects of the enterprise that are
not yet improved or exemplary relative to the competitors.
On the other hand, Opportunities and Threats refers to the external environment of the
enterprise. Opportunities can be found in the existing supply and demand in the market,
import-export data, government support programs and assistance, etc. Threats are the
possible risks the enterprise will face. Threats may include marketing strategy of competitors,
sources of raw materials, weather condition, and geographical location. Brainstorm among
group members in coming up with a SWOT Analysis using the template in Table 3.2.1. The
goal is to make sure that the strengths and opportunities outweighs the weaknesses and
threats.
3. The next step is to clearly identify the target market. Indicate and discuss the specifics of your
target market in Activity Question 2. Geographic refers to the details on where you can find
your market. Demographic refers to the specific market segment as to age, gender, civil
status, etc. Economic refers to the income level or the ability of your market to pay.
Psychographic refers to the preferences and tastes of your market and the needs and wants
that your product addresses. It answers the question why will your market buys?
4. Once you have identified your market, the next step is to let the market know about your
enterprise. Brainstorm on the promotional strategy you will use by identifying your promotional
message and execution style. Another method is to plot potential marketing channels for your
product.
5. The last step is to attach a price on your product. This refers to your pricing strategy. Recall
the pricing strategies you learn in the Marketing course and provide an estimate of your
___________________________________________________________________________
volume of production. Multiply your price with estimated units for sale and frequency of selling
to get the estimate annual sale. Provide details of this in Activity Question 4.
Grading criteria

SWOT analysis table 20
Supporting data on SWOT analysis 5
Clear target market 15
Realistic promotional strategy 10
Clear marketing channel 5
Realistic sale estimation 10
Class participation (extra points) 5
Total 65 points
___________________________________________________________________________
Activity Questions
1. SWOT Analysis. What do you think are the strengths and weaknesses of your enterprise and
the existing and future opportunities and threats around it? Fill-in the SWOT Analysis template
below and provide supporting data (reports, studies, statistics).
Table 3.2.1. The SWOT Analysis
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
Supporting statistics in tabular and graphical formats or list of references from journals and
published reports. Use separate sheet if necessary.
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
___________________________________________________________________________
2. Fill-in the questions below to specifically identify your market. Provide further explanation or
discussion if possible.
a. Who is your market? Describe the demographic and economic characteristics of the
market.
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
________________________________________
b. Where is your market? Discuss the coverage and scope of your market in terms of
geographical location.
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
_______________________________________
c. Why will your market buy? Enumerate and discuss the reasons why people will buy your
product.
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
________________________________________
3. Indicate and discuss below the promotional message and execution style your enterprise will
use as marketing strategy. Provide possible marketing channels of the product.
a. The Message
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________
b. The Execution Style

____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________
c. The Marketing Channel
___________________________________________________________________________
4. Provide a computation of your annual estimated sale.
a. Pricing strategy: ______________________________________________________

b. Price per unit and unit used: _____________________________________________
c. Estimated volume per production cycle: ____________________________________
d. Estimated frequency of production in a year: ________________________________
e. Estimated annual sale: _________________________________________________
___________________________________________________________________________
Names: ___________________________________________________________________
Activity No. 3.3

OPERATIONS AND MANAGEMENT
A good entrepreneur does not only concern himself/herself on continuously developing a

unique product that sells but also with the equally important daily operations and management of
the whole enterprise.
The business plan provides a detail of how products are produced and the necessary
inputs, process steps and quality control requirement. This information is found in the Production
Plan section of the business plan. Established production standards from credible agencies are
used as basis for production information such as number of hills per hectare or heads per cage
for livestock or poultry. This is to get a conservative estimate of input requirements and volume
of production per hectare per cycle or season.
Labor as an important input is identified in terms of number of man-days (MD), man-animal
days (MAD) or man-machine days (MMD) and cost per labor. Quantity and cost of material inputs
are enumerated. Further, entrepreneurs should be able to map the lay-out of the farm enterprise
from production area, post-harvest storage, farm entry and exit location, office and supplies
section, and irrigation and power facilities.
On the other hand, the Business plan also presents in detail how the enterprise will be
organized as to its human resource. This refers to identifying the key people of the enterprise,
their qualifications, responsibilities and compensation. The Organizational chart shows the
hierarchy of command in the enterprise. This is significant in establishing authority and
accountability among employees and offices.
This activity focuses on crafting the operational and organizational section of the Business
Plan.
Objectives
1. create a flow chart of the production process.
2. identify material inputs, tools and equipment for the enterprise.
3. determine labor requirement for production.
4. sketch the farm lay-out of the enterprise.
5. formulate organizational chart of the enterprise.
Procedure
1. This is a group activity and will be submitted in the next laboratory meeting.
2. Product Specification and Production Schedule. Product specification describes the final form
of the output ready for sale in terms of variety/breed, size or grade, weight, days-old and other
characteristics for quality control. This also includes the estimated volume of production per
cycle of production activity. Production schedule refers to the time period of production e.g.
from planting to harvesting (for crops). Specify the months or number of days per production
cycle and the number of cycles per year. Write these information in Activity Question 1- Table
3.3.1.
3. Production Process. Using references (books, production guides, internet search), creatively
draw the process flow of producing your product. Label each stages and provide a brief
description of each stage. Write this in Activity Question 2. See sample flow chart below. You
can choose other flow chart templates in Microsoft Word.
___________________________________________________________________________
Step 1
Step 2
Step 3
Step 4
Step 5
4. Tools and Equipment. In Activity Question 3- Table 3.3.2, list down the tools and equipment
your enterprise will need in order to produce your product. Indicate the number of units,
estimated cost per unit and total cost. Total cost is computed as the product of number units
and estimated cost per unit. Identify whether the tool or equipment will be purchased or rented.
5. Supplies and Materials. In Activity Question 4- Table 3.3.3, list down the material inputs (e.g.
seeds, fertilizers, chemicals, feeds, etc.) your enterprise will need in order to produce your
product. Indicate the number of units, estimated cost per unit, and total cost. Total cost is
computed as the product of number units and estimated cost per unit. Note that the quantity
of these materials should be close to the standard recommendation for one hectare production
(in the case of agronomic/horticultural crop).
6. Labor Requirement. In Activity Question 5- Table 3.3.4, list down the number of
individuals/animal/machine and days needed to accomplish each stage in the production
process. Indicate how and how much these workers will be paid, whether on daily basis or
monthly basis for regular workers. The total labor per activity is computed by multiplying
number of man/animal/machine with the number of days needed to accomplish the task. For
example, if the enterprise uses a rented tractor to plow a one hectare land the total labor is
equal to 1 MMD (1 Man-Machine times 1-day work).
7. Production Lay-out. Provide a sketch of the farm plan or lay-out indicating location of major
facilities such as irrigation facility, storage for materials, post-harvest facility, etc. Write this in
Activity Question 6.
8. Organizational Chart. In Activity Question 7, creatively present the organizational chart of the
enterprise. You can make use of available templates in Microsoft Word. Indicate the position
occupied, qualification and responsibilities of each key person in Table 3.3.5.
Grading criteria

Accurate product specification 5
Clear production schedule 5
Methodological production process 10
Completing Table 3.3.2 10
Farm lay-out 5
Clear organizational structure 10
Total 75 points
___________________________________________________________________________
Activity Questions
1. Product Specification and Production Schedule. How would you characterized the final form
of your product? What are your indicators for a quality output? When can you say that the
output is ready for sale? Write your answer in paragraph form at the upper portion of Table
3.3.1. What months of the year will you begin and end your production? How often do you
expect to harvest and sell your product? Write this in the lower portion of the table.
Table 3.3.1 Product specification and production schedule of the enterprise.
Product Specification
Production Schedule
___________________________________________________________________________
2. Production Process. What are the major stages in producing your product? How would you
describe each stage?
Flow chart of the production process
3. Tools and Equipment. What are the tools and equipment needed to produce your output?
Write this in the table below.
Table 3.3.2 List of tools and equipment for production.

Tool/Equipment Quantity Price per Total Cost Mode of Acquisition
Unit (PhP) (PhP) (purchase or rented)
Use extra sheets if necessary
___________________________________________________________________________
4. Supplies and Materials. What material inputs are needed to produce your output? Write this
in the table below.
Table 3.3.3 Material inputs for production.

Materials/supplies Quantity Price per Unit Total Cost
(PhP) (PhP)
5. Labor Requirement. How many individuals/animals/machine are needed to accomplish the

different production activities? How many days will they finish the task? How much will they
be paid? Write down your answers by filling the table below.
Table 3.3.4 Labor requirement of the enterprise.

Activity Type of Number of Number Total Payment Total
Labor individuals of days Labor per unit cost
(MD/ MAD/
MMD)
___________________________________________________________________________
6. Production Lay-out. How does the whole farm or production area look like? Where is the entry
and exit area? Where can you find the major facility and buildings? Draw your farm sketch in
the box below.
Farm sketch or lay-out of the enterprise
___________________________________________________________________________
7. Organizational Chart. How will the enterprise be organized in terms of its human resource?
Who are the key people in the enterprise? What is the hierarchy of command or authority
among these key people? Organize the hierarchy of command in an organizational chart.
The Organizational Structure of the Enterprise
What are the qualifications and responsibilities of key persons in the enterprise? How much will
be their monthly payment?
Table 3.3.5 Position, qualification and responsibilities of key persons in the enterprise.
Position Qualification Responsibilities Monthly salary
___________________________________________________________________________
Names: ___________________________________________________________________
Activity No. 3.4

FINANCIAL ASSUMPTIONS
A section on financial assumption has to be included in business plans for starting a

potential enterprise or for those applying for additional capital. This will enable entrepreneurs to
estimate and foresee possible flow of cash and financial condition of the enterprise through a
period of time. Also, lending institutions look at this section in considering their approval for capital
loans. These financial assumptions should give assurance of worth and profitability to interested
parties. The figures should be appealing but at the same time realistic, consistent and credible.
Objectives
1. detail sales projections.
2. project cost items for the whole enterprise.
3. identify sources of capital.
4. construct projected financial statements.
Procedure
This is a group activity and will be submitted in the next laboratory meeting.
1. Sales Projections. In Activity Question 1, provide details of estimated annual sales indicated
in the previous activity. Once the production cycle is determined, indicate the expected volume
of production to attain per cycle, price per unit of goods sold and the resulting total peso sales
in Table 3.4.1. The monthly heading in the table can be modified based on the determined
production cycle of the selected enterprise. Below the table are assumptions made as basis
for the figures. Assumptions might include possible changes in volume produced, changes in
price and mortality rate (for poultry/livestock). In Table 3.4.2, provide a projection of your sales
for three years. Make sure to indicate your assumptions. The projections are for the whole
enterprise and not on a per hectare basis.
2. Cost Projections. In Activity Question 2, provide yearly projections of categories of cost items
i.e. Pre-operating expenses, depreciation of fixed assets, production expenses, marketing
expenses and administrative expenses.
Pre-operating expenses are expenditures incurred before the formal operation of the
enterprise excluding purchases of fixed assets. This includes expenses for registering the
business, making the business plan, transportation expenses, attendances to trainings and
initial marketing efforts. Refer to the DTI website (Securing Business Permits and Business
Registrations) for necessary fees and payments for business registration (depending on type
of business). Write the pre-operating expenses in Table 3.4.3.
Depreciation is the decrease in the value of fixed or capital assets through time. In Table 3.4.4,
compute for the annual depreciation of the enterprises’ “purchased” fixed assets enumerated
in Activity 3.3, specifically Table 3.3.2. Make a three-year (3) projection of the total annual
depreciation of fixed assets using the Straight-line method. Exclude value of land.
Production expenses are expenditures incurred in “producing” the product. This is either direct
or indirect expenses. Direct costs include expenses for raw materials and direct labor. Indirect
expenses are those that do not readily become a part of the production process like
depreciation of production assets, salary of managers, taxes, repairs and maintenance and
utility bills. Payment for regular farm managers can be placed in the administrative expense.
Recall entries of Activity 3.3 particularly Table 3.3.3 and 3.3.4 and classify the items into direct
and indirect production expenses. Make cost projections for three (3) years and note the
corresponding assumptions (changes in price and quantity purchased). Write this in Table
3.4.5.
___________________________________________________________________________
Marketing expenses start from produce reparation, packaging, transportation, marketing
materials, labor and all other expenses incurred until the product reaches the hand of the first
line buyer. Payment for regular marketing managers can be placed in the administrative
expense. Refer to concepts of Agricultural Marketing in AgEcon 26 and lecture note in AgEcon
27. In Table 3.4.6, write your marketing expense projections for three (3) years. Note for
assumptions in the projection (changes in price and quantity purchased).
Administrative expenses refer to facilitating activities performed in the enterprise such as

payments for offices clerks and personnel, office supply, materials and utility bills. Payment
for production, marketing and financial managers can be placed in this section. This is very
evident if the enterprise has a formal administration office. Write the entries on administrative
expense in Table 3.4.7. Note for assumptions in the projection.
3. Sources of Capital. In Activity Question 3- Table 3.4.8, summarize the cost projections in the
previous tables for Year 1. Determine the source of funds in financing each cost entry either
from owner’s personal capital called Equity or from outside sources called Debt, e.g. banks,
friends, relatives, angel investors, banks and other lending/credit institutions. For debts,
indicate credit terms such as estimated year of payment and interest charged. In Table 3.4.9,
make a projection of debt repayments for three (3) years. Principal refers to the amount of
borrowed capital. Interest is the peso value of charged interest for the period. Total Payment
is the sum of portion of the principal paid and interest paid for the period. Outstanding balance
is the difference of the Principal debt and Total Payment for the period.
4. Projected Financial Statements. Using the tables generated in Activity Questions 1, 2, and 3,
fill-in the tables in Activity Question 4. Projected Income Statement in Table 3.4.10, Projected
Cash Flow Statement in Table 3.4.11, and Projected Balance in Table 3.4.12.
Grading criteria

Sales Projection 10
Pre-Operating Expense 10
Fixed Asset and Depreciation Schedule 10
Production Expense 10
Marketing Expense 10
Administrative Expense 10
Sources of Capital 10
Projected Income Statement 10
Projected Cash Flow Statement 10
Projected Balance Sheet 10
Total 100 points
Note: Faculty-in-charge to create rubric for score range from 1 to 10. Table entries vary per
enterprise commodity.
___________________________________________________________________________
Activity Questions
1. Sales Projections.
Table 3.4.1 Projected sales of the enterprise per month/cycle.

PROJECTED SALES PER CYCLE
Month
Item Jan Feb Mar Apr May June July Aug Sept Nov Dec TOTAL
Volume
Unit
Price
Total
Peso
Sales
Assumptions:
Table 3.4.2 Projected annual sales of the enterprise.

Item Year 1 Year 2 Year 3
Volume
Unit Price
Total Peso Sales
Assumptions:
1. All sold items are paid fully in cash. No credit payment.
2. Cost Projections
a. Pre-operating Expense
Table 3.4.3 Pre-operating expenses of the enterprise.

Items Amount
Total pre-operating expenses

___________________________________________________________________________
b. Fixed Asset and Depreciation Schedule
Table 3.4.4 Annual depreciation of fixed assets

Fixed Asset Total Cost Life Span Annual Depreciation Charges
(Qty x P) Year 1 Year 2 Year 3
TOTAL
c. Production Expense
Table 3.4.5 Production expenses of the enterprise.

Production Items Yearly Total Cost Projection (Quantity x
Price)
Year 1 Year 2 Year 3
Direct Costs
Indirect Costs
TOTAL PRODUCTION EXPENSE

Assumptions:
___________________________________________________________________________
d. Marketing Expense
Table 3.4.6 Marketing expenses of the enterprise.

Marketing Items Yearly Total Cost Projection (Quantity x
Price)
TOTAL MARKETING EXPENSE

Assumptions:
e. Administrative Expense
Table 3.4.7 Administrative expenses of the enterprise.

Administrative Items Yearly Total Cost Projection (Quantity x
Price)
TOTAL ADMINISTRATIVE EXPENSE
Assumptions:
___________________________________________________________________________
3. Sources of Capital
Table 3.4.8 Sources of funds for the enterprise.

Item Total Equity Debt
Expense (PhP) Principal Interest per Estimated Year
Annum (%) of Repayment
Pre-Operating
Expense
Fixed Investments
(excluding
depreciation)
Production Expense
(excluding
depreciation)
Marketing Expense
(excluding
depreciation)
Administrative Expense
(excluding
depreciation)
TOTAL
Table 3.4.9 Financing charges of debts.

Year Principal (PhP) Interest (PhP) Total Payment Outstanding Balance
Year 1
Year 2
Year 3
4. Projected Financial Statements
Table 3.4.10
Projected Income Statement

______________________________

Operation
Revenue
Sale from farm
products
Sale of capital assets
Total revenue
Expenses
Pre-operating expense
Production expense
Marketing expense
Financial expense
Depreciation of fixed
assets
Total expenses
Net Income
___________________________________________________________________________
Table 3.4.11
Projected Cash Flow Statement

__________________________

Operation
Cash Inflow
Beginning cash balance
Loan proceeds
Owner’s equity
Cash sales
ADD: Collection from
receivables
Total cash inflow
Cash Outflow
Pre-operating expenses
Purchase of fixed
capital
Production expense
Marketing expense
Financial expense
Total cash outflow
Net Cash Flow
___________________________________________________________________________
Table 3.4.12
Projected Balance Sheet

_________________________

Operation
Assets
Current assets
Cash
Account receivable
Total current assets
Non-current assets
Fixed assets less
depreciation
Total non-current
assets
TOTAL ASSETS
Liabilities
Current liabilities
Current portion of loans
payable
Interest payable
Total current liabilities
Non-current liabilities
Remaining long-term
loans
Total non-current
liabilities
Total Liabilities
Owner’s Equity
Retained earnings
Total Owner’s Equity
TOTAL LIABILITIES &
OWNER’S EQUITY
___________________________________________________________________________
LABORATORY TERM EXAMINATIONS
MIDTERM EXAM
From what the students learned in the lectures (Unit I and II) and laboratory activities
(Activity No. 1 to 3-B), the Midterm Examination will focus on actual interaction of successful local
entrepreneurs in the area of Agriculture and Agribusiness. This will allow them to verify the
classroom learning with real experiences of entrepreneurs and encourage and prepare them for
their simple Business Plan.
Hence, the Midterm examination will be in the form of a seminar, hosted and organized by
each laboratory class.
Objectives:
1. To acquaint with successful local entrepreneurs.
2. To identify different line of business in agriculture
3. To ascertain success factors in entrepreneurship.
Procedure:
1. Set a final date and time for the seminar. It will be a half-day seminar with the option of serving
snacks or lunch. The seminar should comprise of two (2) parts, a) the seminar proper wherein the
entrepreneurs are given time to share their line of business and success story, and b) the open
forum. All expenses (from invitation, decoration, food and tokens) will be divided among the
students.
2. Each group has two (2) major tasks: a) invite a successful local entrepreneur as resource person
and b) assignment in a particular working committee.
3. The local entrepreneur could either be involved in farming or agribusinesses. He/She should be
noted as successful in the community. The entrepreneurs should be informed and invited a week
earlier and be given a formal letter.
4. The working committees include:
a. Program committee- suggest a theme for the seminar, draft the program flow and run the whole
program proper.
b. Food committee- present what food to serve based from the class budget. From the class
decision, they will take care of the preparation (negotiation and arrangement) and serving of the
food, including the utensils.
c. Hall Preparation committee- in-charge of room booking, hall decoration and arrangement and
technical preparation (laptop, projector, and sound systems).
d. Invitation and Ushering committee- in-charge of drafting and preparation of invitation letter to
entrepreneurs, preparation of certificates and tokens, and ushering and assisting the guests
e. Finance committee- in-charge of collection and budgeting of the class funds, releasing and
recording of expenses and cash flow reporting the following regular class meeting.
Grade Component
a. Invited resource person- group points 30
b. Working committee output- group points 40
c. Attendance- individual points 20
d. Group leader’s rating- individual points 10
e. Plus points for questions raised in the open forum
----------------
100 point
FINAL TERM EXAM
The final term topics and activities in the lecture and laboratory are all geared towards
developing the final output of the course, a simple business plan. Hence, the final exam is written
of a business plan. The following are the details of the examination:
Format and Guidelines

1. Written Business Plan
a. Number of pages: Minimum of 15 pages, maximum of 30 pages
b. Line spacing: 1.5 between lines
c. Font style and size: Arial, 10
d. Margins: 1 inch in all sides (NORMAL)
e. Paper size: A4
f. Package: Use black paper clamps to fasten the whole report
___________________________________________________________________________
g. Order of content:
1. Title page
2. Table of Contents
3. Executive Summary
4. Vision and Background
5. Product/Service
6. Market, Competition, and Marketing Strategy
7. Production, Operations, and Management
8. Risks and Actions
9. Financial Assumptions
10. Milestones
2. Oral Presentation
a. Number of slides: Maximum of 15 slides (Including pictures/documentations)
b. Duration: Maximum of 10 minutes per presentation
Additional 5 minutes for Question and Answer
c. Attire: Business /office attire
d. Requirement: Format presentations in
Microsoft PowerPoint presentation 97-2003 format
Submit final presentations in CD-R (USB not allowed)
e. Tips:
1. Minimize animations/slide transitions
2. Use clear and big fonts, preferably 24 and above font size
3. Contrast slide and font color
4. Simplify contents of slide: use bullets, pictures, graphs and diagrams
5. Practice and master your presentation
Grade Component
1. Written Business Plan (by respective Laboratory instructor) 50%
a. Innovativeness (product creativity and uniqueness) 10%
b. Product viability (usefulness/importance/feasibility) 20%
c. Content and Depth
(complete, correct, and bulk of information provided) 35%
d. Writing skills (grammar/formats/clarity and coherence) 35%
______
100%
2. Oral Presentation (Average rating of 3 judges) 50%

a. Slide presentation (content, format/style) 10%
b. Delivery and Mastery 25%
c. Product presentation 25%
i. Appearance and packaging
ii. Palatability (food)
Features and durability (non-food)
d. Product Innovativeness and viability
(creativity, uniqueness, feasibility) 40%
______
100%
Ag.Econ 27- Learning Activity

LEADER’S RATING
Date submitted: _____________________________________________
Sec Code: _____________________________________________
Enterprise name/product: _____________________________________________
Rate the extent of participation of group members in producing the final written business plan
using the following range of scores:
Poorly participated 0-5

Fairly participated 6 - 10
Very good participation 11 - 15
Excellently participated 16 - 20
Group Members
Name Rating
Leader
1.
Members
1.
2.
3.
4.
Business Plan Criteria/Score

Criteria Allotted Points
points earned
Packaging and formats 5
Thorough executive summary 15
Clear business description 10
Realistic marketing plan 15
Appropriate organizational 10
plan
Accurate production plan 15
Logical financial plan 25
Sound risk management 5

TOTAL 100

LEADER’S RATING
Date submitted: _____________________________________

Sec Code: _________________________________________
Enterprise name/product: ______________________________
Rate the extent of participation of group members in producing the final written business plan
using the following range of scores:
Poorly participated 0-5

Fairly participated 6 - 10
Very good participation 11 - 15
Excellently participated 16 - 20
Group Members
Name Rating
Leader
2.
Members
5.
6.
7.
8.

LEARNING ACTIVITY

HOW I DEFINE ENTREPRENEURSHIP
Learning objective: Define entrepreneurship in own words

Learning output: Student own definition of entrepreneurship
Learning outcomes: Student understanding in the term entrepreneurship
Learning Assessment: Oral participation and written definition of entrepreneurship
Procedure:
1. Divide the class into groups.
2. Provide each group with two (2) cards containing definitions of entrepreneurship (Visual 1)
3. Instruct the groups to discuss among themselves and share their understanding of the
definitions. They should do this by following the guide questions (Handout 1). Time allotment
15 minutes.
4. After 15 minutes, the teacher will randomly ask two student per group of their own definition
of entrepreneurship.
5. The teacher further discusses the key words in the definitions.
6. At the end of the exercise, each student will write their own definition of entrepreneurship in
a one-fourth sheet of paper to be submitted before the class ends.
VISUAL 1- Entrepreneurship definition from various authors
The pursuit of opportunity beyond the The process of discovering new ways of
resources currently controlled. combining resources.
(Teresa M. Amabile) (Russel Sobel)
It is a mission: perceiving opportunities in the “Entrepreneurship is opportunity-

changing worlds; creating a desire for focused management. It is seeing
opportunities that arise; creating an opportunities that others don’t see, and
environment in which success is possible and most entrepreneurship requires
the consequences of failure is tolerable. creativity.”
(Robert Hirsch) (Teresa M. Amabile)
Entrepreneurship is meant the function of Entrepreneurship is the purposeful

seeking investment and production opportunity, activity of an individual or group of
organizing an enterprise to undertake a new associated individuals, undertaken to
production process, raising capital, hiring labor, initiate, maintain or aggrandize profit by
arranging the supply of raw materials, finding production or distribution of economic
site, introducing a new technique and goods or services.
commodities, discovering new sources of raw
materials and selecting top managers of day- (A.H Cole)
to-day operations of the enterprise.
(Benjamin Higgins)
Entrepreneurship is alertness to profit The ability to create and build

opportunities. something from practically nothing.
(Israel Kinner) (Jeffrey A. Timmons)

Entrepreneurship means the function of Entrepreneurship is connected with
foreseeing investment and production finding ways and means to create and
opportunity, organizing and enterprise to develop a profitable farm business.
undertake a new selecting top managers for
the day to day of an operation of an enterprise. (Pieter de Wolf and Herman
Schoorlemmer)
(Benjamin Higgins)
Entrepreneurship means the function of The capacity for innovation, investment

creating something new, organizing and co- and expansion in new markets, products
ordination and undertaking risk and handling and techniques.
economic uncertainty.
(Nathaniel Left)
(B. C. Tandon)
HANDOUT 1- Guide questions

1. What are some key terms/words/phrase in the definitions of entrepreneurship? What do they
mean? Discuss with the group.
2. What real life example can you think of that fits the authors’ definition of entrepreneurship?
3. How can you rephrase the author’s definition?

ARE YOU READY TO TAKE THE RISK?
Learning objective: Identify characteristics of successful entrepreneurs.

Learning output: Discussion of at least one (1) trait of an entrepreneur
Learning outcomes: Self-assessment of own traits to that of common traits in successful
entrepreneurs
Learning Assessment: Oral participation and written discussion of at least one (1) common
trait of entrepreneurs
Procedure:
Refer to source material “Are You Ready to Take the Risk?” of the Federal Reserve Bank of
Kansas City found at www.kansascityfed.org/education

Learning Activity No.3
HANDOUT 2- BUSINESS BUILDERS

Business Partners:
____________________________________________________________________________
____________________________________________________________________________
Business Name:
____________________________________________________________________________
Goods or services provided:

____________________________________________________________________________
Business Buster Problem:

____________________________________________________________________________
____________________________________________________________________________
Describe your group’s solution to the problem, using at least three of the entrepreneurial talents
discussed.
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
List the talents used in the problem solution:

____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________

The pursuit of opportunity beyond the resources currently Entrepreneurship is connected with finding
controlled. (Teresa M. Amabile) ways and means to create and develop a
profitable farm business. (Pieter de Wolf and
Herman Schoorlemmer)
It is a mission: perceiving opportunities in the changing “Entrepreneurship is opportunity-focused

worlds; creating a desire for opportunities that arise; creating management. It is seeing opportunities that
an environment in which success is possible and the others don’t see, and most entrepreneurship
consequences of failure is tolerable. (Robert Hirsch) requires creativity.” (Teresa M. Amabile)
Entrepreneurship is meant the function of seeking Entrepreneurship is the purposeful activity of

investment and production opportunity, organizing an an individual or group of associated
enterprise to undertake a new production process, raising individuals, undertaken to initiate, maintain or
capital, hiring labor, arranging the supply of raw materials, aggrandize profit by production or distribution
finding site, introducing a new technique and commodities, of economic goods or services. (A.H Cole)
discovering new sources of raw materials and selecting top
managers of day-to-day operations of the enterprise.
(Benjamin Higgins)
Entrepreneurship is alertness to profit opportunities. The ability to create and build something from
practically nothing. (Jeffrey A. Timmons)
(Israel Kinner)
Entrepreneurship means the function of foreseeing The process of discovering new ways of
investment and production opportunity, organizing and combining resources. (Russel Sobel)
enterprise to undertake a new selecting top managers for
the day to day of an operation of an enterprise. (Benjamin
Higgins)
Entrepreneurship means the function of creating something The capacity for innovation, investment and
new, organizing and co-ordination and undertaking risk and expansion in new markets, products and
handling economic uncertainty. techniques. (Nathaniel Left)
(B. C. Tandon)

UNIT II. A
Objective: Define entrepreneurship in own words.
Method: Group discussion and brainstorming (15min)
Learning Output: Student own definition of entrepreneurship
Learning Outcomes: Student understanding in the term entrepreneurship
Learning Assessment: Oral participation and written definition of entrepreneurship
Procedure:
1. Divide the class into groups.
2. Provide each group with two (2) cards containing definitions of entrepreneurship.
3. Instruct the groups to discuss among themselves and share their understanding of the
definitions. They should do this by following the guide questions.
4. After 15 minutes, the teacher will randomly ask two student per group of their own
definition of entrepreneurship.
5. The teacher further discuss the key words in the definitions.
6. At the end of the activity, each student will write their own definition of entrepreneurship
in a one-fourth sheet of paper to be submitted before the class ends.
Guide questions:
1. What are some key terms/words/phrase in the definitions of entrepreneurship? What do
they mean? Discuss with the group.
2. How can you rephrase the definitions?
3. Provide examples of activities that fits your definition of entrepreneurship.


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LEARNING GUIDE

Introduction to Enterprise and Entrepreneurship

THEA ARBIE S. RIVERA

Course No. AgEcon 27

Unit Time Allotment

Activity No. 1 Learning from Successful Entrepreneurs Week 2 & 3

GRADE PERCENTAGE EQUIVALENT

THEA ARBIE S. RIVERA

The word “entrepreneur” originates from a thirteenth-century French verb, entreprendre,

It is a mission: perceiving opportunities in the changing worlds; creating a desire for

Entrepreneurship is meant the function of seeking investment and production opportunity,

The process of discovering new ways of combining resources. (Russel Sobel)

Learning Activity No. 1

Ag.Econ 27-Lecture Note 1

Determinants of Successful Entrepreneurship

Learning Activity No. 2

C. The Role of Entrepreneurship in the Economy

Contributions of entrepreneurship to the economy includes:

Ag.Econ 27-Lecture Note 2

Government support to entrepreneurs:

 Republic Act 9501. “Promote Entrepreneurship, Strengthening Development and Assistance

Ag.Econ 27-Lecture Note 3

 Republic Act 10644. The Go Negosyo Act

Various criteria used to classify farms for specific interest or purpose

Universal Characteristics of Farming

Ag.Econ 27-Lecture Note 4

Trends that affects Agribusinesses:

Trends within Agriculture:

Ag.Econ 27-Lecture Note 5

Three-fold Role of a Farmer

Seven Characteristics of a Successful Farm and Farmer

Ethical Behavior for Entrepreneurs

Ag.Econ 27-Lecture Note 6

Different Social Responsibilities:

B. Types of Enterprises and Approaches to Enterprises

B.1 Types of Farm Enterprises

Relationship between enterprises could be:

Paths for Farm and Ranch Business

1. Low Volume, High Value Producers

Ag.Econ 27-Lecture Note 7

B.2 Micro, Small and Medium Enterprises

Table 1 Classification of enterprises in the Philippines by asset size and number of

Classification By Asset Size (in PhP) By Number of Employees

Features of Small Businesses

Common Failures of Small Businesses

Ag.Econ 27-Lecture Note 8

Ag.Econ 27-Lecture Note 9

Attribute Stage 1 Stage 2 Stage 3-D Stage 3-G Stage 4 Stage 5

Ag.Econ 27-Lecture Note 10

A. The Business Plan

Importance of a Business Plan

Common mistakes in drafting business plans

Vital information needed in considering an agricultural enterprise:

Ag.Econ 27-Lecture Note 11

Basic parts of a Business Plan:

Ag.Econ 27-Lecture Note 12

Ag.Econ 27-Lecture Note 13

Ag.Econ 27-Lecture Note 14

Projected Income Statement

Items Pre- Year 1 Year 2 Year 3

Ag.Econ 27-Lecture Note 15

Projected Cash Flow Statement

Items Pre- Year 1 Year 2 Year 3