INTRODUCTION TO ENTREPRENEURSHIP

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KAAGAPAY SWUDENTS CIRCL
SAS 1

ENTREPRENEURSHIP
 is a dynamic process of vision, change, and creation that requires an application of
energy and passion towards the creation and implementation of new ideas and creative
solutions
 this process of innovation and new venture creation is accomplished through four major
dimensions: individual, organization, environment, and process

ENTREPRENEURS
 they have shaped the face of business and enterprise since the dawn of man
 from the first wheel to advent of the internet , these clever business people evolved for
centuries into their most recent reincarnation, the social media entrepreneur

THE EVOLUTION OF ENTREPRENEURS

 Neolithic
o the very first entrepreneur was the engineering cavemen
o better system of transportation and invented the wheel
 Classical Roman
o entrepreneurs are present in all open-air markets and shops
o they also expanded by selling food and clothing to soldiers in military camps
 Golden Age
o entrepreneurs came in west in 1840s to find gold
o they saw market potential on treasure hunters and diggers
 Utilitarian Entrepreneur
o tech-savvy entrepreneurs who based their business on electricity
o turned up their business into “larger than life” corporations
 Bill Gates (1980s-1990s)
o start-ups began navigation the internet
o any entrepreneur has a business card ended in “.com”
 Social Media Thinker
o social media entrepreneurs thrive on connectivity and social media colloquialism.

It is a common assumption that businessmen and entrepreneurs are the same, but both refer to
different individuals possessing a distinct approach to business. In the future, entrepreneurs can
become businessmen. However, between them there is a thin line difference. Let’s find out the
differences between a business and an entrepreneur in the example below:

KNOWING THE QUALITIES OF AN

ENTREPRENEUR
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 Being entrepreneurs requires specific skills.

  Some abilities might be naturally present, others can be learned or develop through
careful practice.
 Understanding the qualities needed by entrepreneur can help you grow to become a
better business leader.

CHARACTERISTICS

 Self-Motivation
o You need to be able to push yourself. You aren’t answerable to anyone else as
an entrepreneur, and that sometimes means that it’s hard to get moving without
anyone make you.
 Risk Tolerance
o Understanding calculated risks that are more likely to pay off is an important part
of being an entrepreneur. You’ll need to be willing to take a few risks to succeed.
 Flexibility
o Be willing to change as needed. Stay on top of your industry and be ready to
adopt changes in processes and products as they are needed.
 Passion
o Passion is what will help you find motivation when you are discouraged and it will
drive you forward. Passion is fuel for successful entrepreneurship.
 Management Skills and Knowledge
o Understand how money works so that you know where you stand , and so that
you run your business on sound principles
 Vision
o The best entrepreneurs have a vision as to what they want to achieve, how they
can accomplish their objectives, and who they need on their side to reach their
goals.
 Confidence
o They have to be confident both in themselves and in the products or services
they sell. If they believe in themselves, they will have the ability to stay the
course regardless of difficulties or discouragement.

WHAT ARE THE MOST IMPORTANT SKILLS ENTREPRENEURS NEED?

 Time Management
 Strategic Thinking
 Efficiency
 Communication
 Curiosity
 Finance
 Networking
 Branding
 Sales

SAS 3
IDENTIFYING ENTREPRENEUR’S PERSONALITY
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PERSONALITY
 it refers to the pattern of characteristics that distinguishes one person from another
 It includes the person’s traits, values, motives, genetic blueprints, attitudes, emotional
reactivity, abilities, self-image, intelligence, and visible behavior patterns

TYPES OF PERSONALITY

 Realistic
o this individual prefers activities involving aggressive behavior and physical
exertion requiring skill, strength, and coordination
 ex: chef, computer technicians
 Investigative
o this individual prefers to be analytical, curious, methodical, and precise
 ex: crime investigator, detective
 Artistic
 o this person is expressive, non-conforming, original, and introspective
 ex: songwriter, architect, painter
 Social
o this person enjoys working with and helping others and purposefully avoids
systematic activities involving tools and machineries
 ex: social worker, caregivers, teachers
 Enterprising
o this person enjoys verbal activities to influence others and to attain power and
status
 ex: managers, businessmen
 Conventional
o this person enjoys the systematic manipulation of data, filing of records, or
reproducing materials
 ex. accounting and government secretary

SAS 4

ENUMERATING THE DIFFERENT KINDS OF

BUSINESS
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BUSINESS
 also known as an enterprise, agency or firm, is an entity involved in the provision of
goods and/or services to consumers
 it is defined as an organization or enterprising entity engaged in commercial, industrial,
or professional activities

CLASSIFICATION OF BUSINESS

 Public Enterprises
o a business organization wholly or partly owned by the state and controlled
through a public authority
 ex: Land Bank of the Philippines
 Private Enterprises
o business or industry that is managed by the independent companies or private
individuals rather than by the state
 ex: globe telecoms, jollibee, sm city

BUSINESS ENTITY
 is an organization that uses economic resources to provide goods or services to
customers in exchange for money or other goods and services
 business organizations come in different types and in different forms of ownership

TYPES OF BUSINESS

 Service Business
o a service type of business provides intangible products
o service type firms offer professional skills, expertise, advice, and other similar
products
 ex: salons, repair shops, schools, banks, accounting firms, and
law firms
 Merchandising Business
o buys products at wholesale price and sells the same at retail price
o they are known as “buy and sell” businesses
o they make profit by selling the products at prices higher than their purchase costs
 ex: grocery stores, convenience stores, distributors, and other
resellers
 Manufacturing Business
o buys products with the intention of using them as materials in making a new
product
o there is a transformation of the products purchased
 ex: bags and clothing manufacturers
 DETERMINING FORMS AND FUNCTIONS OF
BUSINESS
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FORMS OF BUSINESS ORGANIZATION

 Sole Proprietorship
o is a business owned by only one person
o the owner faces unlimited liability; meaning, the creditors of the business may go
after the personal assets of the owner if the business cannot pay them
 Partnership
o is a business owned by two or more persons who contribute resources
o General partnerships, all partners have unlimited liability
o Limited partnerships, creditors cannot go after the personal assets of the
limited partners
 Corporation
o has a separate legal personality from its owners
o ownership in a stock corporation is represented by shares of stock
o The owners enjoy limited liability but have limited involvement in the company’s
operations

 Limited Liability Company (LLC)

o hybrid forms of business that has characteristics of both a corporation and a
partnership
o hybrid businesses are companies that may be classified in more than one type of
business. (ex. restaurant)
 Cooperative
o is a business organization owned by a group of individual and is operated for
their mutual benefit

FUNCTIONS OF BUSINESS

 Production Function
o is the creation of goods and services with the help of certain processes
 to meet the specified time schedule
 to fulfill the quantity requirements
 to produce at minimum cost
 Marketing Function
o process of getting goods and services into their hands of the consumer with a
view to satisfying the needs and desires
 To decide new product development
 Promotion
 Pricing
 Finance Function
o basically, responsible for three decisions and their proper implementations
 investment decisions
 to decide capital structure– fixed and working
 dividend decisions
 Human Resource Function
o it is concerned with increasing the effectiveness of human performance in any
organization
 selection and job analysis training
 promotion and transfer
 employee involvement
 UNDERSTANDING THE ETHICAL AND SOCIAL
RESPONSIBILITIES OF THE ENTREPRENEUR
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ETHICS
 is the study of moral obligation involving the distinction between right and wrong
 as a consequence, the study of ethics paved the way for adaption of general rules of
conduct in the society
 the rules about how entrepreneurs ought to have are referred to as business ethics

ETHICAL BEHAVIOR REQUIRED OF ENTREPRENEURS IS DETERMINED BY:

1) Public Image
 the activities of an entrepreneur towards the welfare of the society earn
goodwill and reputation for the business
2) Employee Satisfaction
 employees are the part of society
 if you satisfy your needs, then you are doing social work
3) Ethical Leadership
 it is the belief that what entrepreneur does has a strong influence on
employees
 If manager cheats, lies, steals, or manipulates, then they are sending wrong
signals to employees
4) Environment Management
 institutions can do many things to protect and preserve the natural
environment which includes plastic less business by giving paper bag,
creating eco-friendly product, by eliminating production
5) Consumer Awareness
 consumers have become very conscious about their rights
 if you are giving high quality products at cheap rate, that is kind of social
responsibility

SOCIAL RESPONSIBILITY OF AN ENTREPRENEUR TOWARDS DIFFERENT SECTIONS

OF THE SOCIETY

 Responsibilities Towards Employees

o fair wages and salaries
o skill development programs (training and seminar)
o good and safe work environment
o adequate basic facilities (electricity, hygienic toilets, etc.)
 Responsibilities Towards Customers
o charge reasonable price for products or services
o supply of right quality of goods in right quantity
o no use of manipulated or false advertisements
 Responsibilities Towards Shareholders
o a fair return on investment
o safety of invested capital
o regular and complete information about the performance and progress
 Responsibilities Towards Suppliers, Creditors
o maintain healthy and co-operative inter-business relationship
o provide accurate and relevant information to creditors
o prompt payment of interest on borrowed funds
 Responsibilities Towards Public
o creation of job opportunities
o improvement in living standards
o to make best use of society’s resources for their welfare
 Responsibilities Towards Government
o payment of corporate tax in correct amount with no manipulation
 o to encourage fair trade practices
o to avoid monopoly practices and to improve national income

IDENTIFYING THE ROLE OF BUSINESS IN THE

ECONOMY AND OPPORTUNITIES
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MARKET
 a place where buyers and sellers can meet to facilitate the exchange or transaction of
goods and services
 through markets, information is transmitted between buyers and sellers about:
o the goods and services desired by the consumers
o the price of those goods and services

ADAM SMITH’S LAISSEZ FAIRE DOCTRINE

 states that the market is a free market where the producers and consumers act in
accordance to their own interest
 “Give me that which I want, and you shall have which you want”

COORDINATION TRADE AND COMMERCE

 Trade
oa basic economic concept involving the buying and selling of goods and services,
with compensation paid by a buyer to a seller, or the exchange of goods or
services between parties
 Commerce
o the exchange of goods and services, especially on a large scale
o includes legal, economic, political, social, cultural and technological systems that
operate in a country or in international trade
o in the economic sense, "commerce" refers to the conduct of trade among
economic agents

PRODUCT OR SERVICE SPECIALIZATION

 businesses bring "specialized" people, equipment, and other resources together and
coordinate the production of goods and services

ECONOMIES OF SCALE

 when more units of a good or service can be produces on a larger scale, yet with (on
average) less cost input cost, economies of scale are achieved
 this means business grows and production units increased, a business will have a better
chance to decrease its cost

POSITIVE AND NEGATIVE EXTERNALITIES

 an externality is defined as a benefit or cost that is imposed on a third party, such as

society, other than the producer or consumer of a good and service or more simply and
economic side effects

BUSINESS OPPORTUNITY

 in the simplest terms, is a packaged business investment that allows the buyer to begin
a business

MOST COMMON TYPES OF BUSINESS OPPORTUNITY VENTURES

 Distributorship
 o involves entering into an agreement to offer and sell the product of another,
without being entitled to use the manufacturer's trade name as part of the agent's
trade name
 Rack Jobbing
o the agent or buyer enters into an agreement with the parent company to market
their goods to various stores by means of strategically-located store racks
 Vending Machine Routes
o the business-person must buy the machines as well as the merchandise being
sold in them, operator typically pays the location owner a percentage based on
sales

EVALUATING BUSINESS MODELS

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BUSINESS MODEL
 a description of how your business makes money
 it's how you deliver value to your customers at an appropriate cost
 can be broken into three parts:
o what to produce?
 design, raw materials, manufacturing, labor, and so on
o how to produce?
 marketing, distribution, delivering a service, and processing the sale
o how much to produce?
 pricing strategy, payment methods, payment timing, and so on

 you don’t have to invent an entirely business model to start a business

 in fact, vast majority of businesses uses existing business models and refines them to
find a competitive edge
KINDS OF BUSINESS MODEL

 Advertising
o the fundamentals of the model revolve around creating content that people want
to read or watch and then displaying advertising to your readers or viewers
 Affiliate
o the affiliate model uses links embedded in content instead of visual
advertisements that are easily identifiable
 Brokerage
o connect buyers and sellers and help facilitate a transaction
o they charge a fee for each transaction to either the buyer or the seller and
sometimes both
 Franchise
o you are selling the recipe for starting and running a successful business to
someone else
o you're often also selling access to a national brand and support services that help
the new franchise owner get up and running
 Marketplaces
 o allow sellers to list items for sale and provide customers with easy tools for
connecting to sellers
 Pay-as-you-go
o instead of pre-purchasing a certain amount of something, such as electricity or
cell phone minutes, customers get charged for actual usage at the end of a billing
period
 Leasing
o like renting
o at the end of a lease agreement, a customer needs to return the product that
they were renting from you

9DEFINING SMALL BUSINESS AND ITS STRATEGIC

PLANNING
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SMALL BUSINESS

 Minute/Microenterprise
o employing nine people or fewer, and having a balance sheet or turnover less
than a certain amount (e.g. €2 million or PhP 3 million)
 Trading Units
o in the stock market, most stocks trade in a lot size of 100 shares, although some
higher priced stocks may trade in lots of 10 shares
o each market has its own lot size
 Small and mid-size enterprises (SMEs)
o are businesses that maintain revenues, assets or a number of employees below
a certain threshold
o has less than 250 employees
 Medium Enterprise
o has an annual turnover greater than 1 Billion euros
o has at least 100 to 490 employees
 Large Enterprise
o checks at least one of the following two conditions:
 has at least 50 to 1000 employees

STRATEGIC PLANNING FOR SMALL BUSINESS

 without a strategy, a business lacks the direction it needs to be successful

 if you want to work smarter rather than harder and grow with purpose, strategic planning
is a necessity
 strategic planning for a small business doesn't need to be as time-consuming or detailed
as planning for a large company, but your plan does need to identify what you want to
accomplish and how you intend to achieve those goals
 Eliminate distractions
 Involve your team members
 Know who you are
 Understand your current situation - SWOT (strengths, weaknesses, opportunities,
threats)
 Set both long- and short-term goals
 Create a plan to achieve your goals
 Focus on execution
 Keep your plan flexible
SAS 11

THE IMPORTANCE OF KNOWING THE TARGET

MARKET
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TARGET MARKET
 a group of customers within a business's serviceable available market at which a
business aims its marketing efforts and resources
  a subset of the total market for a product or service

HOW TO DEFINE YOUR TARGET MARKET?

 Look at your current customer base.

o Who are your current customers, and why do they buy from you?
o Look for common characteristics and interests.
o Which ones bring in the most business?
o It is very likely that other people like them could also benefit from your
product/service.
 Check out your competition.
o Who are your competitors targeting?
o Who are their current customers?
o Don't go after the same market. You may find a niche market that they are
overlooking.
 Analyze your product/service
o Write out a list of each feature of your product or service.
o Next to each feature, list the benefits it provides (and the benefits of those
benefits)
 Choose specific demographics to target
o Figure out not only who has a need for your product or service, but also who is
most likely to buy it.
o Think about the following factors:
 Age
 Location
 Gender
 Education level
 Marital or family status
 Occupation
 Income level
 Ethnic background
 Consider the psychographics of your target
o Psychographics are the more personal characteristics of a person, including:
 Personality
 Behavior
 Attitudes
 Interests/hobbies
 Values
 Lifestyles
 Evaluate your decision
o Once you've decided on a target market, be sure to consider these questions:
 Are there enough people who fit my criteria?
 Will my target really benefit from my product/service? Will they see a
need for it?
 Do I understand what drives my target to make decisions?
 Can they afford my product/service?
 Can I reach them with my message? Are they easily accessible?

THE IMPORTANCE OF KNOWING THE TARGET MARKET

 Target Marketing Finds Growth Potential

o a small group of consumers can offer the firm a large opportunity to grow sales
 Target Marketing Builds Interest
o the importance of a target audience is that consumers in a target market share
various characteristics that make them more likely than other consumers to show
interest in the firm's offering
 Target Marketing Creates Brand Loyalty
o promotional resources can be concentrated on a target market , while the
advertising message is designed specifically to resonate with consumers in that
group
 Target Marketing Keeps Firms Competitive
o the company can establish itself as an expert on the wants and needs of that
group
o able to react quickly to changes in their interests or opinions, and keep a careful
eye on attempts by other firms to lure those customers away