Study Guide in Entrepreneurial Behavior & Competencies FM-AA-CIA-15 Rev.

0 03-June-2020

OA 113: Entrepreneurial Behavior & Competencies Module 1: Entrepreneurship: Its Opportunities And Rewards

Module No. 1

ENTREPRENEURSHIP: ITS OPPORTUNITIES AND REWARDS

ENTREPRENEURSHIP: ITS OPPORTUNITIES AND REWARDS

MODULE OVERVIEW

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

LEARNING OBJECTIVES

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

1. Understand the scope of small business
2. Learn the differences between small business and high-growth ventures
3. Discover the rewards entrepreneurs can achieved through their businesses
To 4.
knowBemore
ableabout MSMEs
to dispel in the Philippines,
key myths about smallcheck this out:
businesses
5. Identify actions key to becoming a small business owner
https://dict.gov.ph/wp-content/uploads/2016/07/8.-SMEs-in-the-
6. Understand how small business are important to our economy and your community
Philippines-_Empowering-LGUs-through-ICT-Partnership-with-
SUCs.pdf
LEARNING CONTENTS

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

STARTING AN ENTREPRENEURIAL SMALL BUSINESS: FOUR KEY IDEAS

1. Believe that you can do. This belief in yourself is called self-efficacy. Those who believe in themselves and
in the passion of their beliefs are
more likely to keep at it until they
succeed.
2. Planning + Action = Success. A
plan without action is futile. Actions
without plans are usually wasted.
Success comes from having the
right sort of plan to get you

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OA 113: Entrepreneurial Behavior & Competencies Module 1: Entrepreneurship: Its Opportunities And Rewards

3. Help Helps. Successful entrepreneurs learn from other entrepreneurs, from experts in their chosen field, from
potential customers, or even from their professors. Remember, those help succeed bigger and more often.
4. Do well. Do Good. In the long run, you will depend on partners, investors, customers, and neighbors. If you
always remember, you try to do well in your business, you’ll feel better about your business and life, and
those around you will too.

ENTREPRENEURS AND FIRM GROWTH STRATEGIES

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

REWARDING FOR STARTING A SMALL BUSINESS

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

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

Universally Mentioned Income

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

Growth
To continue to grow and learn as a person

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OA 113: Entrepreneurial Behavior & Competencies Module 1: Entrepreneurship: Its Opportunities And Rewards

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

Recognition
"To achieve something and get recognition"

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

Family
"To continue a family tradition"

MYTHS ABOUT SMALL BUSINESS

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

GETTING STARTED NOW: ENTRY COMPETENCIES

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

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OA 113: Entrepreneurial Behavior & Competencies Module 1: Entrepreneurship: Its Opportunities And Rewards

Boundary Resources
Your Small Business
Intention Exchange

SMALL BUSINESS AND THE ECONOMY

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

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

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

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

Aspects of Global Entrepreneurship

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

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

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OA 113: Entrepreneurial Behavior & Competencies Module 1: Entrepreneurship: Its Opportunities And Rewards

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

Challenge and the Entrepreneurial Way

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

LEARNING POINTS

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

LEARNING ACTIVITIES

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

Activity Number 2
Group work (30 points)
1. Research online on the experience of successful Filipino Entrepreneurs who started small. Know their history, and

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OA 113: Entrepreneurial Behavior & Competencies Module 1: Entrepreneurship: Its Opportunities And Rewards

how would you learn from them. (Names of successful entrepreneur will be provided by your instructor). Presentations
will be on the next meeting.

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

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

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

finance-monitor-2013.pdf

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

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

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

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

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