entrepreneurship

Lesson 1: Entrepreneurial Theory

Entrepreneurship
• Entrepreneur – someone who starts a
business
• Entrepreneurship – the process of how they
find ideas, innovate, and get their business
running

The word entrepreneur comes from the French word

entreprende, which is usually translated to
“undertaker” or “adventurer.”

Entrepreneurship
 Entrepreneurship:
definitions across history
• 1755: Richard Cantillon – first used “entrepreneur” in his book, Essay on the
Nature of Commerce, applying it to traders who bought products at a certain
price and sold them at a higher price
• 1803: Jean-Baptiste Say – defined “entrepreneur” as someone who increases
the value of a resource in his Treatise on Political Economy

Entrepreneurship
 Entrepreneurship:
definitions across history
• 1911: Joseph Schumpeter – gave a more modern definition in his book, Theory of
Economic Development: “the [entrepreneur] destroys the existing economic order
by introducing new products and services, by creating new forms of organization,
or by exploiting new materials”
• Modern times: Peter Drucker – defines the entrepreneur as someone who always
searches for change, responds to it, and uses it as an opportunity

Entrepreneurship
 Roles of entrepreneurs
in society and economics
Entrepreneurs create jobs for people.
An entrepreneur may do all the work by
themselves in the beginning, but as the
business grows, they will be able to hire others
or provide business to other suppliers.

Entrepreneurship
 Roles of entrepreneurs
in society and economics
Entrepreneurs open new markets because of
the new products they create.
Take, for example, an apple farmer who can only
serve nearby villages who can buy his fresh
apples. If an entrepreneur processes these apples
into bottled juice that can be transported to other
cities, a whole new market segment will be
opened.

Entrepreneurship
 Roles of entrepreneurs
in society and economics
Entrepreneurs help with economic
development with their taxes.
Companies contribute to the national income.
Aside from creating jobs for people, the
company taxes also allow the government to
spend more on public services and projects.

Entrepreneurship
What makes one entrepreneurial?
The day-to-day tasks of entrepreneurs and managers are very similar.
What makes an entrepreneur different?
• Innovation – entrepreneurs think of ways to introduce revolutionary methods to
change an industry
• Influence – entrepreneurs influence others
• “First-mover advantage” – entrepreneurs look for ways to gain a big 'head start' in
a market that makes it difficult for competitors to catch up

Entrepreneurship
Myths about entrepreneurs
• They take wild risks – intelligent entrepreneurs understand the risks they
are trying to make
• They control their time – people think entrepreneurs have “more time” for
themselves because they don’t have to follow a company schedule
• They make more money than employees – not necessarily, as many top
company executives get high salaries, big bonuses, and retirement benefits

Entrepreneurship
Common mistakes of new entrepreneurs
• They try to sell their product or service to everyone – they should be clear
about who their target segment is
• They behave as freelancers – they should create jobs for other people, not just
themselves
• They do not pay themselves – they should keep personal and business money
separate, paying a set salary instead of freely dipping into business funds

Entrepreneurship
entrepreneurship
Lesson 2: Business Ideation
Business ideas
The first step to starting a business is to figure out what product or service
you will offer.

• Business opportunity – based on a market need (e.g., an increased demand

for daing na bangus)
• Business idea – a new or novel concept (e.g., selling unique flavors of daing
na bangus)

Entrepreneurship
 Internal sources of
business ideas
Possible business ideas can come from your:
• Education
• Work experience
• Crisis or challenges
• Hobbies
• Talents

Entrepreneurship
 Internal sources of
business ideas
Education
• Courses you take in school or practical courses

Work Experience
• On-the-job experiences that teach you
necessary skills to start your own business

Entrepreneurship
 Internal sources of
business ideas
Crisis or challenges
• Personal problems you wish to solve that can
turn into business ideas

The important thing here is one's perspective:

when crisis comes, one needs to look at
the possibilities.

Entrepreneurship
 Internal sources of
business ideas
Hobbies
• Activities that you enjoy and do in your free
time

Talents
• Special skills that you have and can further
develop

Entrepreneurship
 EXTERNAL sources of
business ideas
More business ideas can come from what's
going on around us, such as:
• Political policies
• Economics
• Social characteristics of the market
• Technology
• Environment

Entrepreneurship
 external sources of
business ideas
Political Policies
• Local or national policies can be a source of
business ideas

At the same time, it is important to know

national and local laws so your business can
operate legally and comply with regulations.

Entrepreneurship
 external sources of
business ideas
Economics
• General economic conditions that are related
to needs that have to be met

Social
• Characteristics and behaviors of a particular
group of people that are also related to needs
that can be met

Entrepreneurship
 external sources of
business ideas
Technology
• New technology that open new markets and
new businesses

Environment
• Climate change and environmental policies

Entrepreneurship
entrepreneurship
Lesson 3: Finding the Value Proposition
 Creating a
value proposition

A value proposition is the benefit or

value that companies give to
customers through their products
and services.

Entrepreneurship
 Creating a
value proposition
• To provide a concrete benefit or value, you
need to know the market segment you serve.
• A market segment is group of customers with
the same characteristics or needs.
• It is important to identify a market segment
because no product or service can satisfy
everyone.

Entrepreneurship
 customer persona:
a face to your segment
• A customer persona is like a fictional
character that represents the market segment.
• It will help you recognize key traits that affect
your customer's decision to buy your product,
such as:
• Gender, age
• Motivation for buying
• Influences
• Where they shop
• What media platforms they use
Entrepreneurship
 Finding a value
proposition canvas
There are two ways to create a value proposition:
• Start with the product
• Start with the customer

Entrepreneurship
 Finding a value
proposition canvas
Product-driven
• Look at product features and strengths,
how it can help customers, and how it
stands out from competitors.

Entrepreneurship
 Finding a value
proposition canvas
Customer-driven
• Look at customers' needs and behaviors,
and use your observations to develop a
product around what they need and want.

Entrepreneurship
Value proposition canvas questions
1. Persona Fill in the name of your persona. Which customer segment do you have in mind for this proposition?
2. Job-to-be-done What are the jobs your customer is trying to get done in work or life? These could be both functional
and social. What basic needs do your customers have (emotional and/or personal)?
3. Gains What would make your customer happy? What outcomes do they expect and what would exceed
their expectations? Think of the social benefits, functional, and financial gains.
4. Pains What is annoying or troubling your customer? What is preventing them from getting the job done?
What is hindering your customer’s activities?
5. Gain creators What can you offer your customers to help them fulfill the gains? Be concrete (in quantity and
quality)
6. Pain relievers How can you help your customers relieve their pains? Be explicit about how you can help.
7. Products & Services What products and services can you offer your customer so they can get their job done?

Entrepreneurship
Sample customer persona
Joanna, a young entrepreneur, wants to start a small fashion boutique that sells clothes for
“females aged 16-19 years old.” After interviewing several teens, she created this persona for
her target segment:

1. Persona Ingrid, 17 years old, high school student

2. Job-to-be-done Wants to have nice clothes for going out, but does not want to spend much
3. Gains Happy if she can buy the latest fashion and save money at the same time
4. Pains The mall is too far and would need to spend for transportation to go there
5. Gain creators Wants to feel pretty and save money at the same time
6. Pain relievers Stylish and comfortable clothes within her budget. Willing to spend P300 on clothes
7. Products & Services Sell clothes in a neighborhood fashion boutique

Entrepreneurship
Value proposition statement
Your analysis of the customer persona and how your products
meet the needs must be summarized in a value proposition.
To (target segment and need), our (brand/product) is
(concept/category) that (difference).

Joanna’s value proposition for her fashion boutique will be:

To high school teenagers, our clothes are trendy and

fashionable that are reasonably priced and can be
purchased conveniently.

Entrepreneurship
entrepreneurship
Lesson 4: Market Size
 Market size

After identifying the market

segment, an entrepreneur estimates
the market size, or the number of
customers they expect to reach.

Entrepreneurship
Market size estimation

Entrepreneurship
Market size estimation
Joanna’s fashion boutique
operates in a city with a total
population of 10,000 people.
There are only 4,000 females aged
16-19 years old — this is Joanna's
potential market.

The potential market is the portion of the

population who fit in the market segment.

Entrepreneurship
Market size estimation

Of the 4,000 females, only 1,000 live

within 3 kilometers of her store and
are more likely to shop there because
it is convenient for them. This is the
available market.

The available market is the portion of the

potential market who are in the entrepreneur's
capacity to reach.

Entrepreneurship
Market size estimation

Joanna conducts a quick survey of

10% of the available market (or 100
people). She found out that 70% said
they are willing to buy her products.
This is a rough estimate of her target
market.

The target market refers to those who

fit the market segment, are within
reach and may be interested in the
product or service.

Entrepreneurship
entrepreneurship
Lesson 5: Business Model Development
Business models
• After entrepreneurs establish a value proposition, a market segment, and a
market size, they must think about how to support the value proposition and
make a profit. This is found in the business model.
• The business model is a document that explains the nature of your business,
and how you plan to make it profitable.
• This includes important details, from how you will sell your products or
services, structure your team, and manage finances.

Entrepreneurship
Business model components
1. Customer Segments
• List the segments you want to serve.
2. Value Proposition
• Describe your products and services, and how they are different from your
competitors.
• Are you cheaper?
• Are you more convenient?
• Do you have better performance?
• Do you offer customization?
• Do you have better service?

Entrepreneurship
Business model components
3. Revenue Streams
• Describe your sources of income, or the means by which your business makes
money.
• Examples include: creating items or manufacturing, buying and selling
finished goods, leasing out items for a certain amount of time.
4. Channels
• Describe how you communicate with your customer.
• Examples include TV, radio, social media, internet, or print (newspaper,
magazine, billboard).

Entrepreneurship
Business model components
5. Distribution
• Describe how and where you will deliver your product or service.
• Examples are retail outlets, websites or online shops, or through direct sellers.
6. Customer Relationships
• Describe how you want to serve your customers.
• Examples include responding to customer inquiries through email or messaging
apps.
7. Key Activities
• Describe the important operational activities to keep your business running.
• These activities will help identify your operational costs later on.

Entrepreneurship
Business model components
8. Key Resources
• These are the people, knowledge, means, and money you need to run your
business.
• Money – How much money will you invest for buying and selling?
• Man – What should you know about your business and industry?
• Machine – What machineries do you need to keep your business running?
• Methods – What special processes/techniques are important to your business and
value proposition?

Entrepreneurship
Business model components
9. Key Partners
• List the groups or partners that are important for your resources and
activities.
• An example is an outsourcing company that provides manpower and
janitorial services to another company.
10. Cost Structure
• List your top costs by looking at activities and resources.
• Different business models will have different costs (e.g., a manufacturer will
have different costs and expenses compared to a trader).

Entrepreneurship
Bmi business model canvas

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entrepreneurship
Lesson 6: Marketing Strategy and Brand Name
 Marketing strategy
and brand name
• The marketing strategy and brand name give
your business a face and a personality.
• This is the point where you finalize the product
characteristics.

Entrepreneurship
product
• Refers to a physical product, service,
person, or event
• Meets a customer need, and provides
good customer experience

The “levels” of product experience are the

core benefit, actual product, and the
augmented product.

Entrepreneurship
price
Four Methods for Calculating Pricing
• Customer value-based pricing – how customers
perceive a product’s value, typically done for
luxury/specialty items
• Good value-based pricing – less expensive
version of brand names
• Value added pricing – add more benefits instead
of lowering costs
• Cost plus pricing – compute for fixed or variable
costs, then add a profit margin

Entrepreneurship
price
Business Type-Based Pricing
• Product line pricing – offer products for different
markets
• Optional pricing – offer optional accessories with the
main product
• Captive product pricing – sell main product at a low
price, and earn from consumable items customers will
need to buy in the future
• By-product pricing – sell the by-product to earn more
money from it
• Product bundling – sell several products together

Entrepreneurship
place
• Where your product will be available
• Also called the distribution channel

The channel affects the price, packaging,

and how the product will be displayed.

Entrepreneurship
promotions
• Used to communicate the qualities and
benefits of your product or service to your
target segment
• Results in sales revenue and branding, when
done well

Branding gives your product or service a

unique identity, so that your consumers will
recognize it and remember it the next time
they need a product or service like yours.

Entrepreneurship
entrepreneurship
Lesson 7: Start-up: Growing Your Business
Lean start up model
• Planning a business is just the beginning of
an entrepreneur’s journey, as this plan needs
to be put into action.
• Eric Ries, creator of the Lean Start Up
Model, believed that too many start-ups
spend too much time trying to perfect a
product without even showing it to
customers, only to find out too late that
customers dislike or don’t need it.

Entrepreneurship
Lean start up model

BUILD

MEASURE LEARN

Entrepreneurship
BUILD THE PROTOTYPE
• Build a prototype or the minimum viable
product (MVP).
• The MVP is based on assumptions you have
about your market and what they want or need.
• It is the MVP that tests if these assumptions are
correct.

The Minimum Viable Product is a version of a

product that has enough features to attract early
customers who can give you feedback.

Entrepreneurship
Measure through data
• Gather and track data like the number of sales
made in a month or the number of satisfied
customers.
• This data will guide your decisions about your
product or service, and can be an important
source of learning about your business.

Entrepreneurship
Learn and get ideas
• Based on your data, you will be led to ask what
features of your product or service you should
throw or keep.
• Keep what makes the product successful.
• Throw whatever the market dislikes.

The goal is to fail fast so you can learn fast.

When you learn fast and apply your learnings,
you come up with a better version of your product.

Entrepreneurship
entrepreneurship
Lesson 8: Innovation
Product innovation
THINK ABOUT THIS…
• Analog cellphones from the 1990s were
heavy, bulky, had a 6-hour maximum battery
life, and could only be used to make calls.
• Today’s smartphones are smaller, lighter, and
can be used in many ways — they have touch
screens, fingerprint recognition, and powerful
cameras.

Entrepreneurship
Product innovation
• The cellphone is an example of product
innovation.
• Innovation is the act or process of improving
or making change.
• For customers, innovation is purposeful and
has a practical benefit.
• For entrepreneurs, innovation leads to wealth.

Entrepreneurship
 areas of
product innovation
Four areas where you can find innovation:
• Unexpected occurrence
• Incongruities
• Changes in process
• Changes in the industry and market structure

Entrepreneurship
 Unexpected occurrence
• Refers to results that are not expected or
foreseen

In the 1930s, IBM developed modern accounting

machines for banks, but they did not find success in
banks. It was the New York Public Library that bought
several machines instead. Businesses only started to
get interested in modern computing machines 15
years later.

Entrepreneurship
 Unexpected occurrence
• May also include unexpected failures

The Ford Edsel was the most carefully-designed car,

yet it still failed to attract buyers. The team later found
out that people wanted lifestyle cars for their color,
design, and speed, which they then applied to their
upcoming- more successful - product: the Ford
Mustang.

Entrepreneurship
 incongruities
• Refer to differences between what is and
what should be

There will soon be a rise in cashier-less markets, so

those in the supermarket business may use this
innovation in their business model.

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 changes in process
• Refer changes or shifts in the way things
are done

When people first started selling online, it was

common for sellers to post product pictures then
arrange meetups with the buyer. There was no easy
way to pay sellers and delivery services were
expensive. Now, there are many online payment
methods and delivery is affordable. What will happen
to sellers who don’t adapt to this change?

Entrepreneurship
 Changes in the industry
and market structure
• Other changes affecting the industry
and markets at large

The advent of the Internet changed many industries

and their structures. Some stores disappeared because
it was more convenient for people to use the virtual
versions of their products, such as music on tapes, CDs
and records versus streaming music online.

Entrepreneurship