FACTORS TO CONSIDER IN

STARTING A BUSINESS
Learning Objectives
At the end of the lesson, the learners are expected to:
• Identify possible businesses one can venture;
• Discuss the factors to consider in starting a business;
• Explain the types of businesses available to
entrepreneurs;
• Discuss the government support available and legal
requirements needed to start a business.
• Perform task related to the topics discussed.
Introduction
• Starting a business is a positive decision on the part of the
entrepreneur to exploit entrepreneurial opportunities which
are important and a worthwhile endeavor.
• There are several other reasons, like financial stability, self-
fulfillment, helps the family, and provide employment to
others for an entrepreneur to have his/her own business.
• An entrepreneur has several ways to start a new venture.
 BUSINESS IDEAS
• A business venture starts with an idea. In coming up with a
business idea, there are internal and external considerations to
think about.
• Internal considerations include one’s personal goals and
interests, ideas from one’s observations of daily living
conditions, one’s educational background, and one’s skills and
training.
• External considerations include government support and
assistance, and industry growth prospects.
Possible businesses one can venture into:
1. Start-up enterprise – is a company which is recently formed,
where the founder establishes a completely new business from
scratch. One can survey the community and tailor a product or
service suited to the customers. It is just a matter of putting one’s
innate creativity in motion.
2. Buying an existing business is acquiring either the shares of
an existing company or all of the assets of the existing enterprise.
3. Franchising is when the “owner of the company that already has
a successful product/service, license its trademark, trade name
and methods of doing business to others in exchange for an
initial franchise fee and royalty payments.
Possible businesses one can venture into:
• Franchise is a reproduction of an existing business down to
the last detail. It is a business clone, but a recognized retail
franchise has the quality and consistency already known to
many – a definite competitive advantage. Examples are
Jollibee, Mang Inasal, Ricky Reyes Salon, 7-Eleven, Mini Stop,
Tapa King, etc.
• A food stall, a doughnut counter, or a shoe-repair shop that
carries a prestigious name would surely sell.
Possible businesses one can venture into:
4. Filling a vacuum – one can also find out if there are existing
laundry shops, water-refilling stations, or Internet cafes in
the neighborhood. Even if there are exiting outlets of these
sought-after goods and services, a little competition won’t
hurt.
5. Capitalizing on one’s skills – a hobby can actually translate
into a profitable business enterprise.
Factors to Consider in Starting a Business
• Focus and Direction – it is imperative to have a very good objective
grasp of the business and where it will be headed many years from
the start of operation.
• Sources of Capital - there are different sources of capital that can
be used depending on the needs to start the venture.
• Good Network – building good relationships and working with other
people could help start the business.
• Legal requirements – it is very important to know the laws and
regulations that govern the type of business that will be opened to
avoid major problems that can arise if legal requirements are
overlooked.
Factors to Consider in Starting a Business
• Degree of risk – consider the degree of risk related to a
specific business opportunity.
• Research and development – there should be a strong
research and development that should be undertaken.
• Personal competencies – like creativity, opportunity seeking,
self-confidence, persistence, commitment and risk-taking, as
well as technical background (accounting, personal computing)
and related experiences needed to run the particular business
are necessary to start running the business.
Factors to Consider in Starting a Business
• Availability of resources – resources pertain to raw materials,
human resources, and machineries/equipment.
• Other critical factors for a new venture
• Basic feasibility of the venture
• Competitive advantages of the venture
• Buyer decision in the venture
• Marketing of the goods and services
• Production of the goods and services
• Staffing decision in the venture
• Control of the venture
• Financing the venture
 Types of Businesses Available to Entrepreneurs
• According to Size
(based on total assets or number of employees – identified by the Department
of Trade and Industry (DTI) through the Bureau of Small and Medium
Enterprise Development (BSMED)

1. Micro Enterprise – it has an asset size not exceeding P50,000;

usually a home-based enterprise; operating in makeshift or
temporary quarters. The owner heads the enterprise and employs
from one to not more than 10 people to help him/her.
Examples are the self-employed vending food like taho, puto or
fishballs; those selling in the public market; and those having sari-
sari or rolling stores.
 Types of Businesses Available to Entrepreneurs
2. Cottage Enterprise – it has an asset of P250,000 but not
exceeding P500,000; it is a home-based business which is often
managed and operated by the members of the family. Examples
are the subcontractors of footwear like shoes and slippers; and
food manufacturers of peanut butter/coco jam or pastillas, as
well as decorative products like vases, candles and lanterns.
3. Small Enterprise – it has an asset of P500,000 but not
exceeding P2.5 million. It is owned by an individual or group
and has enough resources to continue operating. It employs 10
to 20 people.
 Types of Businesses Available to Entrepreneurs
Examples are groceries, bakeshops, beauty salons,
medical/dental clinics, toy makers, jeepney manufacturers, and
travel/tour agencies.
4. Medium Enterprise – it has an asset of P5 million to less than
P20 million and employs 100 or more workers. It is owned by a single
individual, business partners or a corporation. It employs more than
20 to 100 people. Workers are skilled and possess technical
expertise.
Examples are fine dining restaurants with branches, computer-
importer dealers, garment manufacturers, human resource providers,
and private educational institutions.
 Types of Businesses Available to Entrepreneurs
5. Large Enterprise – it has an asset of P20 million or more. It
is often owned and managed by a corporation. It employs 100
or more workers who are hired on the basis of their expertise.
Its Board of Directors is responsible for its governance and it
has Chief Operating Officer to oversee the implementation of
the directives of the Board.
Examples are the big fast food chains, large department
stores, big bookstores, family-owned commercial banks and
insurance companies.
 Types of Businesses Available to Entrepreneurs
• According to Forms of Ownership
1. Single Proprietorship – owned and usually managed by
one person. They register with the Department of Trade and
Industry (DTI).
2. Partnership – an association of two or more persons who
act as co-owners of a business. Each partner contributes
money, property or service to the business. They register with
Securities and Exchange Commission (SEC).
 Types of Businesses Available to Entrepreneurs
3. Corporation - an artificial being created by operation of law,
having the right of succession, and the powers, attributes and
properties expressly authorized by or incident to its existence. They
register with Securities and Exchange Commission (SEC).
4. Cooperative - a duly registered association of persons, with a
common bond of interest, who have voluntarily joined together to
achieve a common lawful social or economic end, making equitable
contribution the capital required, and accepting a fair share of the
risks and benefits of the undertaking in accordance with the
universally accepted principles of the cooperatives. They register with
the Cooperative Development Authority (CDA).
 Types of Businesses Available to Entrepreneurs
• According to Industry Classification
There are many types of businesses that produce goods and
services for the use individuals, groups or organizations in the society.
Goods are products that are processed from raw materials that are
consumable. Examples are clothes, shoes, tables, books, cosmetics,
toys, jewelry, and many more.
Services are activities which help are demanded by consumers
based on their needs and wants. Examples are medical, dental,
banking, transportation, printing, publishing, insurance, education and
wellness programs.
 Types of Businesses Available to Entrepreneurs
1. Agriculture, Forestry and Fishing – includes the exploitation of
vegetable, animal, and natural resources comprising the activities of
growing crops, raising and breeding animals, harvesting of timber
and other plants, animals or animal products from a farm of their
natural habitat.
2. Mining and Quarrying – includes the extraction of minerals
occurring naturally as solids (coal and ores), liquids (petroleum) or
gases (natural gas).
3.Manufacturing – includes the physical or chemical transformation
of materials, substances, or components into new products.
 Types of Businesses Available to Entrepreneurs
4. Electricity, Gas, Steam, and Air-Conditioning Supply – it includes the
activity of providing electric power, natural gas, steam, hot water and the like
through a permanent infrastructure (network) of lines, mains and pipes.
5. Water Supply; Sewerage, Waste Management and Remediation
Activities – includes activities related to management of various forms of
waste, such as solid or non-solid industrial or household waste, as well as
contaminated sites.
6. Construction – includes general construction and specialized
construction activities for buildings and civil engineering works. It includes
new work, repair, additions and alterations, the erection of prefabricated
buildings or structures on the site and also construction of a temporary
nature.
 Types of Businesses Available to Entrepreneurs
7. Wholesale and Retail Trade; Repair of Motor Vehicles and
Motorcycles- includes wholesale and retail sale of any type of goods
and the rendering services incidental to the sale of these goods.
8. Transportation and Storage – includes provision of passenger or
freight transport, whether scheduled or not, by rail, pipeline, road,
water or air associated activities such as terminal and parking
facilities, cargo handling, storage, etc.
9. Accommodation and Food Service Activities – includes the
provision of short-stay accommodation for visitors and other travelers
and the provision of complete meals and drinks fit for immediate
consumption.
 Types of Businesses Available to Entrepreneurs
10. Information and Communication – includes financial service
activities, including insurance, re-insurance and pension funding and
activities to support financial services.
11. Real Estate Activities – includes acting as lessors, agents,
and/or brokers in one or more of the following: selling or buying real
estate, renting real estate, providing other estate services such as
appraising real estate or acting as real estate escrow agents.
12. Professional, Scientific and Technical Activities – includes
specialized professional, scientific and technical activities. These
activities require a high degree of training, and make specialized
knowledge and skills available to users.
 Types of Businesses Available to Entrepreneurs
13. Administrative and Support Service Activities – includes
a variety of activities that support general business operations.
14. Arts, Entertainment, and Recreation – includes a wide
range of activities to meet varied cultural, entertainment and
recreational interests of the general public, including live
performances, operation of museum sites, sports, gaming and
recreation activities.
15. Public Administration and Defense; Compulsory Social
Security – includes activities of governmental nature; normally
carried out by the public administration.
 Types of Businesses Available to Entrepreneurs
16. Education - includes education at any level or for any profession, oral
or written as well as by radio and television or other means of
communication.
17. Human Health and Social Work Activities – includes provision of
health and social activities, involving a wide range of activities, starting from
health care provided by trained medical professionals in hospitals and other
facilities to social work activities without any involvement of health care
professionals.
18. Other Service Activities – includes the activities of membership
organizations the repair of computers and personal and household goods
and a variety of personal service activities not covered elsewhere in the
classification.
 Government Support
• The small and medium enterprises (SMEs) are the lifeblood of
the economy.
• Governments have learned to make and have made
entrepreneurship a priority in their economic programs.
• In the Philippines, the creation of millions of new entrepreneurs
tops the 10-point economic agenda, and it also includes the
creation of millions of job through more opportunities to
entrepreneurs and a tripling of loan amounts made available to
SME’s.
 Government Support
• Department of Trade and Industry
• The Small and Medium Enterprise Development Council (SMEDC) has
an array of programs to assist small businesses. These includes finance,
marketing, training and human resource development, and product
development and technology assistance.
• Government banks/Micro Financing Programs/SME Financing Programs
• Bureau of Domestic Trade (Marketing)
• TESDA/Cottage Industry Technology Center (Training & HRD)
• Department of Science and Technology (DOST)/Product Development
and Design Center of the Philippines (PDDCP)/Packaging Research and
Development Center (PRDC).
 Legal Requirements
A new enterprise has to be registered in various government
agencies.
• Department of Trade and Industry (DTI) – sole proprietorship
(business name)
• Securities and Exchange Commission (SEC) – partnership &
corporation
• Cooperative Development Authority (CDA) – for cooperative
• Social Security System (SSS) – an employer, or any person
who uses the services of another person in business, trade,
industry or any undertaking must be registered with the SSS.
 Legal Requirements
• Bureau of Internal Revenue (BIR) – every business
enterprise has to register with the BIR for taxation purposes.
• Department of Labor and Employment (DOLE) – business
establishments with one or more employees are required to
register with DOLE, the agency which monitors compliance
with labor laws.
• Mayor’s Permit or Municipal License – all businesses,
whatever the legal form, are required to secure these permits
from the city or municipality where they are located.
 Registering with Other Agencies
Depending on the type of products they manufacture or
handle and on their market orientation, firms are required by
law to register with other government agencies.
• Bureau of Food and Drugs (BFAD) – for manufacturers of
drugs, cosmetics and food products
• National Food Authority (NFA) – for rice, corn and flour
dealers
• Fiber Industry Development Authority (FIDA) – for
processors and traders of fibers and fiber products
 Registering with Other Agencies
• Bureau of Fisheries and Aquatic Resources (BFAR) – for
those engage in the export of fish and fish products, and other
aquatic products
• Bureau of Animal Industry (BAI) – for exporters of animals
and animal by-products
• Bureau of Plant Industry (BPI) - for exporters of plant and
plant products
• Forest Management Bureau – for exporters of forest
products (e.g., logs, lumber products, plywood, etc.)
 Registering with Other Agencies
• National Tobacco Administration – for those engaged in the production or export of
flue-cured Virginia-type tobacco, Burley tobacco, and Turkish/Oriental tobacco products
• Bureau of Product Standards (BPS) – for commodity clearance for producers,
manufacturers or exporters (Their products will be tested to ensure that they meet
established standards).
• Intellectual Property of the Philippines – for firms wishing to register patents and
trademarks
• DTI – Bureau of Trade Regulation and Consumer Protection (BTRCP) – for
enterprises engaged directly or indirectly in the servicing, repair or maintenance of
vehicles, engines and engineering works, electrical components, electronics,
airconditioning and refrigeration, office machines and data processing equipment,
medical and dental equipment. Technical personnel (mechanics or technicians) are also
with the scope of the BTRCP.