INTRODUCTION TO

BUSINESS
IMPLEMENTATION
 After much seeking and screening of
entrepreneural opportunities the critical
decision to seize one particular opportunity
culminates in the establishment of an
enterprise. Presumably, all the market research
has been done and the desired customer
segment
has been targeted. Presumably, the final
location has been chosen and the new product
Enterprise must state its mission statement clearly
for:
•the sake of the customers being wooed;
•the investors who need to know what they are
getting into;
•the financiers evaluating the enterprise; and
•the government functionaries who must
regulate the activities of industries and
businesses.
9.2A Very Compelling Vision
The entrepreneur must establish an enterprise based on a
very exciting business concept leading to a grand vision. If
the business is just like any other business in the
marketplace, customers will not take notice. The
entrepreneur must offer something new, something
appealing, and something different that says, “Take
notice, I’m arriving with a bang!”
Case Example 20: A Business Proposition: The Palamigan Ice Maker and Freezer

Rodmark Barriga and his business partner, VIP Isada, designed and developed a
portable one-ton ice making and freezing machine using the second fastest
technology available in the market at a price that many micro and social
entrepreneurs could afford (Php350,000 excluding delivery costs). The partners
targeted several market segments for their product (which could also be offered at
various capacities, say 1.3 tons or more). Based on their initial buyers, the partners
lined up the following potential buyers: 1) micro- entrepreneurs plying their trade
in urbanized areas who could use the machine to provide ice for itinerant sellers of
fruit juices or to make ice candy and ice drops for consumers fond of such sweets;
2) remote fishing communities that have a demand for ice to preserve their fish
catch; 3) wholesale financiers such as micro-financing institutions (MFIs) and social
investors (Sis) who have been and are attracted to the new product. The first two
market segments are retail customers who must raise their own financing to
purchase th
9.3 Not by Any Other Name
Next, the entrepreneur must choose a very fitting name
for the enterprise. A good name identifies the company
very well. It communicates what the company is all
about, what its products are all about. The entrepreneur
must think long and hard about the name because he or
she has to live with it for a very long time. Thus, the
company name must project its much desired image
9.4 A Company of Angels
In livelihood undertakings or micro-enterprises, it is common for
entrepreneurs to embark on a business venture as a “lone wolf,”
not needing the capital nor expertise of others. At best, it may
be a “mom and pop” affair.
For small, medium, and large enterprises, the entrepreneur
needs the capital, the expertise, or both. The choice of business
partners here is a very critical one. A mistake would mean years
of internal squabbling. Thus, the entrepreneur must choose the
“company of angels,” partners who are well-meaning and like-
minded
9.5 A Very Good Business Plan

The next step for the entrepreneur is to have a very good

business plan. It is a wise thing to do in order to chart the
course of the business properly and to focus the efforts of
the entrepreneur. In Chapter 2 of this book, the
entrepreneur was asked to prepare an outline of the
business plan and keep it handy for any revision and
adjustment that needs to be done along the way.
The purposes of a business plan are:

1. entice partners, investors, and bankers to fund a business

venture;

2. communicate what the enterprise is all about, what market it

wants to serve, how it will produce the goods or render the
services, who will manage and operate the enterprise, and how
the enterprise will comply with legal, safety, health, and
environmental requirements; and
The business plan should contain important information about
the following:

•the business itself;

•the organizers;
•the management and technical people;
•he financial structure;
•its market potential;
•its target market;
•its projected sales, expenses, and profits; and
•its probable risks and contingency plans.
The business plan should begin with the business concept
and the vision for the enterprise in the next three to five
years.
It should then declare the business purpose or the
mission statement of the enterprise. This could be
accompanied by a statement of values or business
philosophy. The business plan should proceed to an
enumeration of business objectives, key result areas, and
performance indicators. An overall enterprise strategy
should then be articulated to show how the performance
indicators could be attained.
Next, the business plan should contain an executive summary of the
following:

1. the organizers and the key people behind the business and why these
people have the resources, talents, skills, and technology to achieve
success;
2. the market being targeted and why there is enough market potential
to justify the business;
3. the products or services to be offered and why they are right for the
market;
4. how the business will be operated and organized, including all
outsourcing, subcontracting, franchising, and licensing agreements;
5. the investment capital required for the business and what exactly it
6. the technology, the technical expertise, the equipment,
and materials suppliers to be utilized;
7. the capital structure (short and long-term debt,
stockholders’ equity) of the business;
8. the operating budget, financial projections (income
statement, balance sheet, cash flow) and Return on
Investment prospects; and
9. the risks in the business and the contingency measures
to counteract them.
9.6 Organizing and Structuring the Enterprise

The business plan must be able to estimate the

capital required by the enterprise. The capital
required would be dictated by the investment in
the assets of the enterprise. These assets are
composed of the following:
1. The Current Assets which are short-lived. They are
composed of cash, inventory, accounts receivables, and
other current assets;
2. The long-lived or Fixed Assets. They are composed of
property, plant and equipment, vehicles, furniture and
fixtures, etc.; and
3. The other assets are composed of organizational and
pre-operating expenses.
The assets of the enterprise are financed by its liabilities.
These liabilities are composed.
The sole proprietorship is mandated by law
to register the business with the proper
authorities. All businesses, in whatever
legal form, are required to secure a
mayor’s permit or municipal license before
they can operate in a locality. Before
getting this permit,
Before getting this permit, there are clearances that must
be obtained. These are:

•barangay clearance;
•fire safety clearance;
•certificate of electrical inspection;
•certificate of occupancy;
•Department of Trade and Industry certificate;
•lease contract if space is leased; and
There may be additional requirements depending on
the type of business and the ordinances issued by
the concerned local government.
It is, likewise, the responsibility of any enterprise to
register its business with the Bureau of Internal
Revenue (BIR) for taxation purposes. The official
receipts of the enterprise must also be registered
with the BIR. For a sole proprietorship, the tax
identification number or TIN of the entrepreneur
serves as the enterprise TIN.
If two or more persons bind themselves into a contract to
contribute money, property, and expertise in a common
venture with the intention of dividing the profits among
themselves, then they would have entered into a
partnership.

A partnership is vested with its own legal personality quite

distinct and separate from its individual members. Thus, a
partnership venture can own its own assets. It can incur
its own liabilities. It can sue and it can get sued.
A minimum of the number of persons in a partnership. There
are two types of partnerships based on the liability of the
partners. Two persons can constitute a

General partnership - is composed of partners who are liable

collectively to all those who have claims against them. Claimants
can run after all the personal assets of all the partners.
Individually and
limited partnership-consists of partners who have limited
liabilities while others in the partnership would have
unlimited liabilities. A limited partner is not personally
liable for his or her prorated capital contribution to the
partnership. The law requires that there must be at least
one general partner in a limited partnership to assume
the unlimited liabilities. The limited partnership must add
the word “limited” to its partnership name.
The partnership should obtain all the required
government clearances, permits, and licenses. It
should get:

•a bank certificate of deposit on the monetary

contributions of the partners and
•the approval for its partnership name from the
Department of Trade and Industry.
•Having obtained these documents, it should
register and file its Articles of Partnership with
the Securities and Exchange Commission (SEC).
Needless to say, the partnership must also
register with the Social Security System (SSS)
and the BIR, as well as other government
instrumentalities that may have jurisdiction
over its type of business.
The corporate form of business allows various combinations of
funds to be raised from financiers and investors. Thus, bigger
businesses favor the corporate form of business. This is due to
its limited liability and flexibility in financing terms obtained.
There are four types of corporations.

1. Stock Corporation. The Stock Corporation issues capital stocks

divided into shares (or proportions of the total capital). Based on
the submission of Articles of Incorporation to the SEC, the
corporation is authorized to raise capital that has a
corresponding number of shares.
2. Non-stock Non-profit Corporation. The Non-stock
Corporation is organized to carry out a purpose or
purposes other than generating profits for investors.
The Non-stock Corporation usually has a social
mission. Hence, all the surpluses (or profit
equivalents) generated by the corporation are not
distributed to the funders in the form of dividends.
3. Close Corporation. The Close Corporation has
Articles of incorporation that limits the restrictions
on ownership of issued stocks to at most twenty
persons. There are strict the transfer of stocks. The
stocks cannot be listed in any stock exchange nor
can any public offering of shares be made.
4. Corporation Sole. A Corporation Sole is a special
form of corporation allowed by law, Corporation Sole
Acone clerigy, The Corporation Sole is a trusteeship
that is set up for the purpose of administering and
managing the affairs, property, and temporalities of
a church or group of clergy.
The corporation must enter its name with the DTI and
register with the SEC SSS, BIR and all the other relevant
government entities. In contrast to the sole
proprietorship, where taxes are based on the total income
of the owner in a gradually increasing proportion of the
income, the corporation pays a stipulated percentage of
its income tax (35% of income before taxes in the
Philippines). Of course, other types of taxes are paid by
business enterprises such as the value-added tax, the real
estate tax, etc.
• The entrepreneur must make a decision. “Do I want
absolute control or do I want to become a very
wealthy person because of the high value of my
shares in the stock market?” Meanwhile, at the
start-up stage, who will the entrepreneur invite as
co-investors in the enterprise? It begins as an issue
of investor compatibility and investment flexibility
but, eventually, it will become an issue of control as
the enterprise grows and prospers.
9.7 A Merry Band of Men and Women
After establishing the enterprise, the entrepreneur
must meticulously screen and hire men and women
who foster the cause and share the commitment of
the enterprise. Good character and competence
must be the two major criteria for hiring people.
If the team is not fully equipped technically and
managerially, the small size of the organization
should allow the people to learn fast about:

•customers;
• operations;
• competition;
• financing needs; and teamwork.