FM-AA-CIA-15 Rev.

0 10-July-2020

Study Guide in ENTREPRENEURIAL MIND

Module No. 1

STUDY GUIDE FOR MODULE NO. ___ 1

Module 1: ENTREPRENEURSHIP: Its Opportunities and Rewards

MODULE OVERVIEW

This chapter focuses on the scope of 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 grasp the definitions, objectives, phases and functions of
entrepreneurial management and entrepreneurship, specifically, in small business.

MODULE LEARNING OBJECTIVES

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

1. Understand the scope of small business

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

LEARNING CONTENTS
.
ENTREPRENEURIAL MANAGEMENT

According to the Global Entrepreneurship Institute, Entrepreneurial Management is the practice of

taking entrepreneurial knowledge and utilizing it for increasing the effectiveness of new business venturing as
well as small- and medium-sized businesses. 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 Enterprise are defined as any enterprise with 10 to 199 employees
and/or assets valued from P3 million to P100 million. SMEs and micro enterprises combined make up 99.6%
of establishments in the country. Therefore, despite the limited size of this type of business, SMEs are very
important in our economy, both in the local and national arena.
We use the popular broad definition of entrepreneur – anyone who owns a business is an entrepreneur.
This of course, means anyone who is a small business owner is an entrepreneur. It also means that self-
employed, anyone who 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 new business

2. Franchise. A prepacked business bought, rented, or leased from a company called a franchisor.
https://cashmart.ph/franchising-business-in-the-philippines/
3. Buyers. People who purchase an existing business
4. Heir. A person who becomes an owner through inheriting or being given a stake in a family business.

STARTING AN ENTREPRENEURIAL SMALL BUSINESS: FOUR KEY IDEAS

To know more about MSMEs in the Philippines, check this out:
1. Believe that you can do. This
belief in yourself is called self-
https://dict.gov.ph/wp-content/uploads/2016/07/8.-SMEs- efficacy. Those who believe in
in-the-Philippines-_Empowering-LGUs-through-ICT- themselves and in the passion of
Partnership-with-SUCs.pdf their beliefs are more likely to keep
at it until they succeed.

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Study Guide in ENTREPRENEURIAL MIND

Module No. 1
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
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 operate 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 a high income through
sales or profits superior to those of the traditional small business.
4. High-growth Venture. A firm started with the intent of eventually going public, following the pattern of
growth and operations of a big business.

REWARDING FOR STARTING A SMALL BUSINESS

Why becomes 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 entrepreneurs mention 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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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 include 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 a
doomsayer, check out facts and do research.

GETTING STARTED NOW: ENTRY COMPETENCIES

There are a 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.

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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 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
their resources.

Boundary Resources
Your Small Business
Intention Exchange

SMALL BUSINESS AND THE ECONOMY

It has already been 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 products 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 is 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 buy 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 provides opportunities to large business and entrepreneurial high-growth firms.
High growth firms’ ventures and big businesses are like giant boats, and where the boat sails, the economy
sails along too. But for the boat to work, it must be supported by deep water. The ocean supporting the boat
consists of thousands of small businesses.

Aspects of Global Entrepreneurship

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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. An economy where the major forces for jobs, revenues, and taxes
come from high-value-added production based on new ideas and technologies and from professional
services based on higher education.

One other important difference across countries is the amounts of two types of entrepreneurships:

1. Opportunity-driven Entrepreneurship. Creating a firm to improve one’s income or a product or

service.
2. Necessity-driven Entrepreneurship. Creating a firm as an alternative to unemployment.

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 are 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 have 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 the best use is you can make of them.
4. Pivot. Go ahead and start the business in a way you can and look for better opportunities as you go
along.
5. Take it on the road. Sometimes the place you live in 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
technique often based on the 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 ACTIVITY

Activity Number 1
Experiential Exercises. (10points)

1. Go through the list of reasons people give for self-employment and identify which of the reason seem
to fit you. Explain why you identify with each reason.
2. Think about the 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)

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1. Research online on the experience of successful Filipino Entrepreneurs who started small. Know
their history, and how you would learn from them. (Names of successful entrepreneurs will be
provided by your instructor). Presentations will be on the next meeting.

SUMMARY

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.

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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