Module No.

1
ENTREPRENEURSHIP: ITS OPPORTUNITIES AND REWARDING FOR STARTING A SMALL BUSINESS
REWARDS
Nearly all entrepreneurs talk about three key rewards –
ENTREPRENEURIAL MANAGEMENT flexibility, a livable income, and personal growth. There are two
other rewards – building wealth and creating products, which
According to the Global Entrepreneurship Institute, entrepreneurs mention more often than working people in
Entrepreneurial Management as the practice of taking general. There are also rewards that entrepreneur mentioned
entrepreneurial knowledge and utilizing it for increasing the less often than working people in general. These are social
effectiveness of new business venturing as well as small- and rewards, like respect or admiration of others, or power over
medium-sized businesses. others, and family rewards, like continuing a family tradition in
Entrepreneur, however, is an individual who creates a new business. The three most popular types of rewards for
business, bearing most of the risks and enjoying most of the small business owners are growth, flexibility, and income.
rewards. The entrepreneur is commonly seen as an innovator,
a source of new ideas, goods, services, and business/or
procedures. 1. Growth Rewards. What people get from facing and
According to the Asian Development Bank, small and medium beating challenges?
enterprises (SMEs) are the backbone of Asian economies, 2. Income Rewards. The money made by owning one’s
making up 98% of all enterprises and 66% of the national labor own business.
force from 2007-2012. In the Philippines, Small and Medium 3. Flexibility Rewards. The ability of business owners
Enterprise are defined as any enterprise with 10 to 199 to structure life in the way that suits their needs best.
employees and/or assets valued from P3 million to P100
million. SMEs and micro enterprises combined make up 99.6% Universally Mentioned Rewards
of establishments in the country. Therefore, despite of the  Flexibility
limited size of this type of business, SMEs are very important in - "To have greater flexibility for my personal and
our economy, both in the local and national arena. family life.
We use the popular broad definition of entrepreneur – anyone  Income
who owns a business is an entrepreneur. This of course, - To give myself, my spouse, and children financial
means anyone who is a small business owner is an security
entrepreneur. It also means that self-employed, anyone who  Growth
work for himself or herself instead of for others, is also an - To continue to grow and learn as a person.
entrepreneur. Within the population of entrepreneurs, it is
sometimes useful to split out through these certain groups: Occasionally Mentioned Rewards
1. Founders. People who create or start new business.  Wealth
2. Franchise. A prepacked business bought, rented, or - "To have a chance to build great wealth or a very
leased from a company called a franchisor. high income.
3. Buyers. People who purchase an existing business  Product
4. Heir. A person who become an owner through - "To develop an idea for a product"
inheriting or being given a stake in a family business.
Rarely Mentioned Rewards
 Recognition
STARTING AND ENTREPRENEURIAL SMALL BUSINESS: - "To achieve something and get recognition."
FOUR KEY IDEAS  Admiration
- "To be respected by my friends"
1. Believe that you can do. This belief in yourself is  Power
called self-efficacy. Those who believe in themselves - "To lead and motivate others."
and in the passion of their beliefs are more likely to  Family
keep at it until they succeed. - "To continue a family tradition"
2. Planning + Action = Success. A plan without action
is futile. Actions without plans are usually wasted. MYTHS ABOUT SMALL BUSINESS
Success comes from having the right sort of plan to Over the years, small business experts in academe and
get you. government have studied small business and potential
3. Help Helps. Successful entrepreneurs learn from entrepreneurs and learned that a lot of the challenges scaring
other entrepreneurs, from experts in their chosen people away from small business are the stuff of urban
field, from potential customers, or even from their legends. These myths include the following:
professors. Remember, those help succeed bigger 1. There’s not enough financing.
and more often. 2. You can’t start businesses during a recession.
4. Do well. Do Good. In the long run, you will depend 3. To make profits, you need to make something.
on partners, investors, customers, and neighbors. If 4. If you fail, you can never try again.
you always remember, you try to do well in your 5. Students (or moms or some other group) don’t
business, you’ll feel better about your business and have the skills to start a business.
life, and those around you will too. Myths like these holds back many potential entrepreneurs.
Knowing the truth is a powerful way to keep up your motivation
ENTREPRENEURS AND FIRM GROWTH STRATEGIES for the undeniably tough work of starting your own business.
When you encounter doomsayer, check out facts and do
research.
The overall growth strategy describes the kind of business the
owner or owners would like to have, from the perspective of GETTING STARTED NOW: ENTRY COMPETENCIES
how fast and to what level they would like the firm to grow. There are million things you could do to start a business, but
There are four generic growth strategies that account for nearly which ones are best? Sometimes the answer will come to you
all businesses: in the form of an opportunity or offer, and sometimes you’ll
need to take the first steps yourself. To start a business, you
1. Lifestyle or part-time firms. A small business need four elements to come together – boundary, resources,
primarily intended to provide partial or subsistence intention, and exchange. This is referred to as the BRIE model.
financial support for the existing lifestyle of the owner, 1. Boundary. Something that sets it up as a firm and
most often through operations that fit the owner’s sets it off from the buying or selling or bartering we all
schedule and way of working. do occasionally.
2. Traditional Small Business. A firm intended to 2. Resources. Include the product or service to be
provide a living to the owner and operating in a offered, informational resources on markets and
manner and on a schedule consistent with other firms running a business, financial resources, and human
in the industry and market. resources.
3. High-performing Small Business. A firm intended to 3. Intention. The desire to start a business and is the
provide the owner with high income through sales or most frequently occurring element of the BRIE Model.
profits superior to those of the traditional small 4. Exchange. This refers to moving resources, goods, or
business. services to others in exchange for money or their
4. High-growth Venture. A firm started with the intent of resources.
eventually going public, following the pattern of growth
and operations of a big business.
SMALL BUSINESS AND THE ECONOMY
It has been already discussed why small business is important Another approach that has grown dramatically this past decade
for the individuals for whom income, growth, and flexibility were is using E-commerce, particularly like Ebay and Amazon, or
among the most important rewards of ownership. But you also Lazada and Shopee. E-commerce is the general term for
need to know that small business is vitally important to your conducting business on the internet. The formal title for this is
community and even to our economy. Part of this comes from Virtual Instant Global Entrepreneurship (VIGE), a process
new things small business contribute to the economy, that uses internet to quickly create business with a worldwide
particularly new jobs, and innovations, as well as the basics reach.
that small businesses provide for all of us – jobs, taxes, and
product or services. Challenge and the Entrepreneurial Way
Entrepreneurs’ stories usually tell us about challenges faced
New Jobs and overcome. What is fascinating if you hear enough stories
In the 2019 study conducted by the Department of Trade and is that there some strategies that are used again and again.
Industry, MSMEs generated a total of 5,510,760 jobs or 62.4% These strategies are the following:
of the country’s total employment. Small business is the engine
of job generation, but it is important for existing jobs, too. Small 1. If you don’t succeed the first time, try, try, again.
business employ millions of Filipinos, providing wages and This is called the strategy of perseverance or the
salaries. behavior of continued effort to achieve a goal.
One reason why small business is a key employer is because 2. Scale back. Maybe you have an idea but can’t get the
they are more willing than most large business to offer jobs to resources to get it started. Try scaling it back to the
people with atypical work histories or needs, like people new to level of resources you currently available.
the workforce, people with uneven employment histories, and 3. Bird in the hand. Instead of planning a firm and then
people looking for part-time work. looking for resources, start with the resources you
already have and think about what the best use is you
Innovations can make of them.
Small business is a key element of every nation’s economy 4. Pivot. Go ahead and start the business in a way you
because it offers a very special environment in which the new can and look for better opportunities as you go along.
can come into being. Small business owners are freer of the 5. Take it on the road. Sometimes the place you live
judgment and social constraints of workers elsewhere. isn’t the best market for your products or services.
Austrian economist Joseph Schumpeter labeled this 6. Ask for help. Today everyone can harness the
process creative destruction. It refers to the way that newly wisdom of crowds, whether it is asking your personal
created goods, services, or firms can hurt existing goods, and group connections on Facebook for ideas, advice,
services, or firms. opinions, or donations. Crowdsourcing is the
Why do so many innovations come from small business? techniques often based on internet to get opinions or
Remember that most people going into small business mention ideas through the collective involvement of others.
flexibility as a key reward, such as the flexibility to do the work 7. Plan to earn. Think through your capabilities,
they think is important. Small business owners are freer of the prospects, and passions to find the best idea for you,
judgments and social constraints of workers elsewhere. and then plan for action to make it happen.

New Opportunities
People who own their business are presented with tremendous
opportunities - not only to improve their life and wealth, but also Module No. 2
to help them move into and upward in the economy and society SMALL BUSINESS ENTREPRENEURS:
of the Philippines. CHARACTERISTICS AND COMPETENCIES

Small businesses offer communities another type of THE PSYCHOLOGY OF ENTREPRENEURS

opportunity—the opportunity to goods and services. Imagine a
neighborhood or town without a grocery store or a pharmacy. The Five Ps of Entrepreneurial Behavior
In important ways, the town would not seem like a real There are five aspects of behavior that most successful
community. A small grocery, drugstore, hardware store, or gas entrepreneurs display. These are not the only possible
station might be able to use its low overhead and capacity to behaviors that you could consider, but they are behaviors that
adapt to local needs (e.g., a grocery store stocking a lot of have been shown in the research to relate to success among
fishing supplies to appeal to visiting fishing enthusiasts) to entrepreneurs. The five behaviors include the following:
make a profit where larger chain stores could not. For a city, 1. Passion: Passion is an intense positive feeling the
municipality, or even barangays, to be able to stand on its own, entrepreneur has toward the business or even the
it needs a variety of small businesses. idea behind the business. It comes from being actively
involved in moving the business forward.
2. Perseverance: Perseverance is best thought of as a
Small business also provides opportunities to large business type of learned optimism, the ability to stick with some
and entrepreneurial high-growth firms. High growth firms’ activity even when it takes a long time, and when a
ventures and big businesses are like giant boat, and where the successful or unsuccessful outcome is not
boat sails, the economy sails along too. But for the boat to immediately known.
work, it must be supported by deep water. The ocean 3. Promotion–Prevention Focus: Most of us have
supporting the boat consist of thousands of small businesses. some mix of two internal focuses (also called our
regulatory focus), a promotion focus intent on
Aspects of Global Entrepreneurship maximizing gains, which gives us a bias toward
There is a pattern to which countries are likely to have rates of pursuing opportunities likely to lead to those gains,
entrepreneurship, and which will have lower rates. and a prevention focus intent on minimizing losses,
1. Factor-driven Economy. A nation where the major with a bias toward inaction or protective action. Being
forces for jobs, revenues, and taxes come from a successful entrepreneur involves balancing the two
farming or extractive industries like forestry, mining, or focuses.
oil production. 4. Planning Style: There is more than one way to plan.
2. Efficiency-driven Economy. A nation where In fact, there are five ways. Comprehensive
industrialization is becoming the major force providing planners take a long-term view, develop long-range
jobs, revenues, and taxes, and where minimizing cost plans for all aspects of the business, are comfortable
while maximizing productivity (i.e., efficiency) is a with planning, and act based on the plans they’ve
major goal. developed. Critical-point planners plan around the
3. Innovation-driven Economy. An economy where the most important aspect of the business first, act on it,
major forces for jobs, revenues, and taxes come from and then consider if additional plans are needed. It is
high-value-added production based on new ideas and not a very long-term approach to planning.
technologies and from professional services based on Opportunistic planners generally start with a goal
higher education. and look for opportunities to achieve it. Once they find
a good opportunity, even if it isn’t the one related to
One other important difference across countries is the amounts their original goal, they act on it, so it is very short
of two types of entrepreneurships. term in orientation. Reactive planners are completely
1. Opportunity-driven Entrepreneurship. Creating a passive, waiting for cues from the environment to
firm to improve one’s income or a product or service. determine what actions to take. Their focus is entirely
2. Necessity-driven Entrepreneurship. Creating a firm short term, and there is little in the way of goals
as an alternative to unemployment. driving their efforts. They can make the most of a
 situation because there is no other plan competing for Entrepreneurial Teams
their attention. Habit-based planners do not really While the classic image of the entrepreneurial small business
plan at all because their actions are dictated by their would involve the image of the solo entrepreneur, the modern
routines. They do today what they did yesterday. They reality is different. The majority of new businesses have a team
don’t plan, and they don’t even tend to react to of two or more co-owners, and the trend is toward even more
changes in their environments. businesses being developed by teams of entrepreneurs.
5. Professionalization: One hallmark of successful There are advantages to a team. When family members start a
entrepreneurs is that they usually do at least one thing business, they start with already knowing and trusting each
much better than average. That average is called a other. Teams are also likely to have more money, time, and
standard business practice and every industry has expertise to put into a business. If the team members live
them. Doing that level or better is what together, they can save even more for the business.
professionalization is all about. There are three levels When putting a team together it is important to work out key
of professionalization: expert business issues ahead of time. For example, team members might be
professionalization when most aspects of the putting different amounts of money or time into the business,
business meet or exceed the industry’s standards, but might be expecting identical returns, which creates an
specialized business professionalization when one equity problem.
or two aspects of the business are at this level, or There is a special case of organizational culture for start-ups,
minimalized business professionalization when called entrepreneurial culture. There are a variety of
none of the aspects of the business achieve the approaches to thinking about the specifics, but in the end,
industry standard. there are five key elements:
 Passion for the Mission.
Entrepreneurial Operational Competencies  Passion for the Team
All the aspects of the entrepreneurial personality depend on  Passion for the Customer
hard work, but there are other specific types of business-  Passion for Innovation
related expertise—called competencies—that appear  Passion for Fairness
repeatedly in successful entrepreneurs around the world.
1. Key Business Functions Activities common to all Family Businesses
businesses such as sales, operations (also called Family businesses are firm in which one family owns a majority
production), accounting, finance, and human stake and is involved in the daily management of the business.
resources. Some of the top companies in the Philippines are run by
2. Industry-Specific Knowledge. Activities, knowledge, families. SM Investments Corp. is owned by the family of the
and skills specific to businesses in a particular country’s richest family, the Sy Siblings., while Ayala Corp. is
industry. led by the Zobel family. LT Group is owned by the family of
3. Resource Competencies. The ability or skill of the tycoon Lucio Tan, while Aboitiz Equity Ventures is run by
entrepreneur at finding expendable components members of the Aboitiz clan.
necessary to the operation of the business such as Small, family-owned businesses have many advantages. If the
time, information, location, financing, raw materials, business is managed at the top by a group of tight-knit family
and expertise. members, communication-based integration can be more
4. Determination Competencies. Skills identified with effective and decision making can be easier and quicker.
the energy and focus needed to bring a business into There are two challenges typical to family businesses—role
existence. conflict and succession.
5. Opportunity Competencies. Skills necessary to 1. Role conflict describes the kind of problem that
identify and exploit elements of the business arises when people have multiple responsibilities,
environment that can lead to a profitable and such as parent and boss, and each makes different
sustainable business. demands on them. Role conflict breeds another
unending problem—the shortage of time.
The Entrepreneurial Life Cycle Entrepreneurs are among the most rushed people in
Like every person, every small business is unique. But just as the workforce. There are, however, a collection of
we all go through childhood and adolescence on the way to techniques for time management, which can help
adulthood, so do entrepreneurs’ small businesses. There is a meet the challenges of schedule overload. Consider
lot of predictability in this growth process and knowing the these basic methods:
developmental stages of the business life cycle can help you a. List
better understand your business and your career as a small b. 123 Prioritize
business owner. c. Delegate
1. Emergence. The first stage of the small business life d. Repeat
cycle, where the entrepreneur moves from thinking e. Strategize
about starting the business to actually starting the 2. When the current owners are ready to think about
business. what follows them, we get into succession — the
2. Existence. The second stage of the business life process of intergenerational transfer of a business.
cycle marked by the business being in operation but Often the lack of a clear succession plan is the death
not yet stable in terms of markets, operations, or knell for those family firms facing their first
finances. The problems of mastering these three intergenerational transition. If the founder dies,
areas form what are called the liabilities of newness becomes seriously ill, or is incapacitated before he or
for small businesses in their existence stage. she can groom a successor, the new family leader
3. Success. The third stage of the business life cycle may be suddenly thrust into the role before coming up
marked by the firm being established in its market, to speed on vital company information and developing
operation, and finances. Slack resources. Profits that needed skills. Also, in the absence of a succession
are available to be used to satisfy the preferences of plan, private and public dissension among various
the owner in how the business is run. factions of the family becomes more likely, negatively
4. Resource Maturity. The resource maturity stage is affecting operations within the firm, and may
the most typical fourth stage of the small business. It eventually cause the business to fail.
is characterized by relatively stable or slowly rising
sales and profits over several years. In a firm that has Second Career Entrepreneurs
a takeoff stage following the success stage, the A special group of entrepreneurs are called second career
resource maturity stage occurs after takeoff. entrepreneurs—people who begin their businesses after
5. Takeoff. This stage occurs after the success stage for having left, retired, or resigned from work. This can be work in
a small percentage of businesses. It is characterized the armed forces, in other profit or not-for-profit organizations,
by rapid growth (5–10 percent a month or more). or even when parents are no longer tied to caring for others at
When this growth levels off, the firm enters the home.
resource maturity stage. As increasing numbers of corporation’s merge, downsize,
reorganize, and/or close altogether, many firms are offering
THE SOCIOLOGY OF ENTREPRENEURS attractive retirement packages to encourage employees to
Entrepreneurs can be as strongly affected by their social or voluntarily leave the organization.90 Workers are opting to
sociological characteristics as by their personality accept generous offers to retire early (between ages 50
characteristics. These sociological characteristics relate to the and 64). People’s decisions of whether to return to work
social groups to which they belong. Family, gender, race, depend on their individual level of wealth (retirement
nationality, religion, age, and other types of group income and savings), their health, and their work experience,
memberships, such as being a member of a team or a veteran, as well as general economic conditions.
are typical examples. For some Filipinos, retiring early to become an entrepreneur
can help them get rich. However, it takes more than business
acumen to succeed. Those who do face two challenges— general, or for your industry or line of business in
adjusting to the entrepreneurial life and keeping personal particular.
finances out of the business.  Keeping notes on the things that bother you about the
way work is done now, or what bothers you about how
something has changed (whether a product, service,
MODULE NO. 3 or process you deal with), and periodically do some
SMALL BUSINESS ENVIRONMENT: fast research (typically searching on the web) on what
Managing External Relations causes it and how others feel about it.
 Subscribing to a couple of magazines or newsletters
THE ENVIRONMENT OF SMALL BUSINESS (online or hard copy) or online newsfeeds or blogs
Following the BRIE model in starting a business, the outside your area of business.
entrepreneur creates a boundary within the environment, Beyond trendspotting, the other key scanning ability is to find
setting his or her firm apart from the rest of the environment. the resources you need from the environment to build your
Environment is the sum of all the forces outside the firm or business. The key to identifying resources comes from the
entrepreneur. In doing this, the entrepreneur gives the firm an acronym PROFIT, which stands for the six types of resources:
organizational identity. Organizational identity is not just the 1. Property/Physical: Buildings, land, equipment, raw
name of a firm, but its basic description—what it does and materials
where it does this. It can include formal elements like a 2. Relational: Customers, networks, distributors, social
registration with the state, or a website or email account with capital
the firm’s name on it, or a telephone number in the firm’s 3. Organizational: Systems, structures, operational
name. procedures
In creating a firm using the BRIE model, the entrepreneur 4. Financial: Money, lines of credit, crowdfunding,
gathers resources from the environment. These can include bartering
information on how to do the business or whom to sell to, 5. Intellectual (also known as Human): Employees,
funding to run the business, space for the business, and raw contractors, advisers, consultants, and the skills the
materials for the business to use to make goods or deliver business needs or has.
services. If the environment is rich with resources as it is during 6. Technological: Patents, trademarks, ideas, copyrights,
economic boom times, it can be easy to gather what is needed. licenses, access to technology or expertise networks
In tougher times, such as during economic recessions,
gathering resources can be harder. As entrepreneurs face FIVE SKILLS FOR MANAGING RELATIONS WITH THE
resource constraints, they often learn to get by with less, or ENVIRONMENT
substitute a more readily obtained resource, or ask to borrow,
rent, or trade for the resource. These techniques are called Building Legitimacy
bootstrapping and are part of the culture of most successful
start-up. Legitimacy means that a firm is worthy of consideration or
doing business with because of the impressions or opinions of
customers, suppliers, investors, or competitors. Gaining
THE ELEMENTS OF THE SMALL BUSINESS legitimacy is one of the top challenges facing new small
ENVIRONMENT businesses, but it can be especially difficult for entrepreneurs
Environment is a difficult concept to consider because it is so seen as “different”—women, minorities, home-based
big. It literally includes the entire world outside yourself and businesses, businesses started by young people,
your business. As an entrepreneur, or entrepreneur-to-be, how entrepreneurs introducing a new technology, or people new to
do you go about understanding it, much less using it to help the area or industry.
focus and operate your business? The key is to have a model There are three general forms of legitimacy that you can
of the environment in mind, which can help you focus on a part develop:
of the world at a time.
1. Based on your people. Remember that often the
owner is the business in many people's minds. So, he
1. The Internal Environment of a firm consists of those or she is the most important element of social capital
people inside the boundary—the owner, any to customers and supporters of a business, such as
employees, and any other owners or board members bankers, lawyers, and suppliers. Having people in the
of the firm. As every company matures, it adds to its organization—an owner, employees, or even media
organizational culture a set of shared beliefs or basic spokespeople—whom customers know, and respect
assumptions that demonstrate how things get done. increases the firm’s legitimacy. Making sure the
Organizational culture also includes common, people of your business always work in the best,
accepted ways of dealing with problems and friendliest, and most professional way also helps build
challenges within a company. the business.
2. The External Environment consists of everything 2. Based on your product. The goal is to make sure
outside the firm’s boundary. When businesspeople the customer knows about the details of the product—
talk about “the environment” and they are not talking its high quality and environmental friendliness, its
about air, land, or water, this is the environment they competitive advantage, how to use it—and has the
are discussing. The easiest way to think about this assurance that it will be backed up by the firm.
very large entity is to break it into two parts. 3. Based on your organization. the final key legitimacy
a. Task Environment. A part of the external factor is promoting knowledge about the organization
environment made up of those components itself. This might focus on talking about the history or
that the firm deals with directly such as visibility the firm already enjoys. It might come from
customers, suppliers, consultants, media, published information that makes sure your firm looks
interest groups, and the like. like a substantial and professional business.
b. General Environment. A part of the external Whatever gives customers confidence in the quality
environment made up of sectors of major and survivability of the firm helps the selling process
forces that shape the people and institutions and in turn increases the all-important trust factor.
of the task and internal environments, such
as the economic sector or the demographic
sector. Developing a Social Network
Another basis for building social capital is through building a
social network. A social network is the entrepreneur’s
ENVIRONMENTAL SCANNING FOR SMALL BUSINESSES relationships and contacts with others. Social networking is a
Big corporations have whole departments focused on scanning way to work trust, reciprocity, and long-term relationships into
the environment and the firm’s competitors. Most small your day-to-day business operations. It’s a way to build your
businesses cannot afford to try that approach, but they can company’s expertise by convincing others to share their skills
benefit tremendously from even a small amount of and knowledge with your firm. The most successful owners are
environmental scanning. those who recognize that others have the expertise needed
There are several low-cost and relatively fast ways to monitor and establish relationships that give them the benefits of that
the environment. They include: expertise.
 Looking for trends and future-looking articles in the Reputation has a positive community impact; it increases trust
trade and professional press of your industry or those and creates a culture that enables people to make good
of members of your task environment. decisions. Social networking helps all those aspects of small
 Asking your customers, suppliers, banker, attorney, business by building your reputation as giving the most expert
and accountants what they see on the horizon for business goods or services and as being an important
business in general, for business in your community in community resource. Social networking can help your long-
term reputation as a business owner by showing others who business. He came up with a model widely used today, but it is
you are—a consistently top-notch community player. focused more on big business than small ones. Adapting his
Remember, social networking makes a difference in how you’ll approach 30 to small business, making ethical decisions
conduct business every day. It means asking for help when involves three steps:
you need it, respecting the other person’s time and expertise, 1. Define: Define the moral problem.
and most importantly being willing to reciprocate if asked. 2. Generate: Generate alternatives that could meet the
ethical, legal, and economic goals every business
must balance.
Mutuality is the idea and action of each person helping the 3. Implement: Pick the best alternative you and your
other. business can live with and implement it.
Building social capital through social networking involves giving
information, letting people know they belong, and providing
social support and approval. You have to take the time to build Caveat Emptor
and keep up your relationships with others in your network. You can still see an occasional entrepreneur, corporate
This is called networking, which means small business magnate, or economic pundit invoke the old Latin phrase
owners interacting with others in order to build relationships caveat emptor, let the buyer beware. It gets repeated because
useful to the business. it has popped up in legal cases, and the Latin makes it sound
impressive, but as a legal principle, it has been routinely
Handling a Crisis discredited. Caveat emptor is often the first line of defense by
While some challenges come slowly and give the small rip-off artists, frauds, and producers of shoddy merchandise.
business owner a chance to think about how to choose, all Using it as a defense puts the entrepreneur who uses it, and,
businesses sooner or later face some sort of crisis. A crisis is a usually by association, the whole small business community, in
situation that poses a major problem for the business or its a negative light.
people, in which the survival of the business is at stake, and Assuming you realize the caveat, emptor approach is not the
immediate action is necessary. For owners, knowing what to way to go, you may still need to make a decision you believe is
do during a crisis is a very specialized and emotionally ethical. Here are four proven philosophies to try when you
demanding form of decision making. Small business owners are thinking through alternatives to help you determine
are optimists about their businesses, and it can be wrenching how ethical the choices are.
when something goes wrong. 1. Am I treating others the way I would want to be
Although originally given for large businesses, the six steps to treated? You’ve probably heard of this one before.
follow can be readily adapted to small ones. The steps are: It’s the Golden Rule, and almost every major religious
1. Admit you’re in trouble—quickly. It is better to say, tradition in the world has some version of it.
“If there is a problem, I will find it and fix it,” than to 2. Is my solution the best thing for the most people
delay an admission until fact-finding is done. over the long term? You may have heard of an idea
2. Get to the scene as soon as possible. Your job? called utilitarianism. Basically, it means that the action
Show caring and accountability. resulting in the greatest good for the greatest number
3. Communicate facts you know (and those you of people is the right action to take.
don’t) to employees, customers, and suppliers. 3. What if everyone did what I want to do? What kind
4. Have one person serve as the firm’s of world would it be? Those questions in a nutshell
spokesperson. It is best if it can be the owner, but an are the idea of universalism, a code of right and
articulate employee, family member, or outside wrong that everyone can see and follow.
professional (e.g., lawyer) can stand in. 4. What if my decision were advertised on a
5. Separate crisis management from the everyday billboard? If you have tried ways to think this through
management of the firm. If you are doing both, try to and still can’t decide whether what you plan to do is
take time to do each separately. Delegate as much as ethical, try the billboard principle. As the name
possible of the everyday management to employees implies, this asks whether you’d be comfortable
or family while you concentrate on dealing with the having your decision (with your name, of course)
crisis.
advertised on a billboard for everyone you know to
6. Deal with the crisis quickly. Take steps to solve the
see.
problem and make the process of dealing with the
problem as open as possible.

Achieving Sustainability
Module 4
If you look at a management, entrepreneurship, or small
SMALL BUSINESS IDEAS:
business text from 10 years ago, you would be hard-pressed to
CREATIVITY, OPPORTUNITY & FEASIBILITY
see anything related to sustainability or green business. Those
elements we called corporeal forces in the general
IDEAS, OPPORTUNITIES AND BUSINESS
environment were taken for granted. Today, however, some of
The search and capture of new ideas is called opportunity
the negative effects of industrialization on the earth and the
recognition, which researchers believe might be the most
living species inhabiting earth are becoming apparent.
basic and important entrepreneurial behavior. The exact
Sustainable entrepreneurship is an approach to the
reasons why entrepreneurs seem to be better able to find ideas
operation of the firm, the line of business of the firm, or both,
that work is unclear. The notion of entrepreneurial alertness
which identifies or creates and then exploits opportunities to
is one that has captured the attention of scholars in the field.
make a profit in a manner that minimizes the depletion of
This phrase means that entrepreneurs have a special set of
natural resources, maximizes the use of recycled material,
observational and thinking skills that helps them identify good
improves the environment, or any combination of these
opportunities.
outcomes. Positive outcomes along these lines are described
as “greener,” so the approach is also sometimes called green
Opportunity Strategies
entrepreneurship.
1. Imitative strategy. An overall strategic approach in
which the entrepreneur does more or less what others
Making Ethical Decisions are already doing.
Ethics comprise a system of values people use to determine 2. Incremental strategy. Taking an idea and offering a
whether actions are right or wrong. We consider ethics in way to do something slightly better than it is done
determining whether a decision we are about to make is good presently.
or bad. And we make judgments about actions—something is 3. Radical innovation strategy. Rejecting existing
good or bad; someone is right or wrong— based upon our own ideas and presenting a way to do things differently.
personal ethics. An ethical dilemma occurs when a person’s
values are in conflict, making it unclear whether a decision One powerful but rarely used source of ideas are universities
we’re thinking about making is right or not. An ethical dilemma and government agencies. Both develop a tremendous range
also occurs when there are several different options for a of new technologies or refinements of existing technologies,
decision we have to make, and the best choice isn’t clear. Of but never do anything with them. What these organizations will
the five environment managing techniques discussed in this offer you is an arrangement called licensing. A license is a
section, making ethical decisions is undoubtedly the hardest. legal agreement granting you rights to use a particular piece of
Part of it is because the ethical problems that keep intellectual property (for example, a technology). In return, you
entrepreneurs up at night are ones where there is not a (the licensee) are required to pay the owner of the license (the
satisfying yes or no answer. licensor). These payments can consist of an upfront or annual
LaRue Hosmer was initially a professor of entrepreneurship flat licensing fee or a royalty, which is a payment per item
who came from a family logging business. He later turned his sold.
eye toward the challenge of making ethical decisions in
FROM IDEAS TO OPPORTUNITIES THROUGH CREATIVITY 1. People: Who are you? What is your (or your team’s)
You might have a viable business idea, but is it the best one to relevant experience or knowledge?
pursue? Are you sure you have the right approach for making 2. Offering: What are you offering? What is the
the most of the idea? Very often the first good idea an product or service or experience?
entrepreneur has is not necessarily the best one he or she will 3. Customer: Whom are you offering it to? Who is
have. Before committing yourself to one viable idea, it is a your customer? Who makes the buying decision?
good practice to take some time and see if you can take that How many buyers are there?
viable idea and innovate on it to create an even better—more 4. Value proposition: Why do they care? Why will it
profitable, more distinctive, harder to copy—idea. be important to the buyers/users? Why will they be
happier with your offering than their current
SCAMPER tool substitutes or alternatives?
One tool you can use to help you identify new opportunities is 5. Distinctive competencies: Do you have any key or
the SCAMPER. It is based on the work of Alex Osborne, a core science/technology or feature? Does your
pioneer in the field of creativity, who first coined the word idea have something special compared to competitors
brainstorming. The tool is known as SCAMPER, the acronym that is valuable to your customers or buyers (e.g.,
for a set of cues that trigger new ideas for your business. better technology, better quality, easier to buy or use,
1. Substitute: Think of what you might substitute for better support, new/better features, costs less, gives
something else to form a new idea. A feature that your firm an advantage over competitors, rare, costly
allows your customers to order directly from a Web for others to imitate, etc.)?
site rather than visiting your store or ordering by mail
is an example of substitution. Sometimes solutions MAKE SURE AN IDEA IS FEASIBLE
derived through SCAMPER cues are very “way out”
and lead people to some creative ideas for solving Feasibility. The extent to which an idea is viable and realistic
annoying problem. and the extent to which you are aware of internal (to your
2. Combine: Think of possible combinations you can business) and external (industry, market, and regulatory
make that result in something entirely different. Not environment) forces that could affect your business.
long ago, if you wanted to buy a book, you went to a Feasibility studies consist of careful investigation of five
store that typically carried only books, and if you primary areas: the overall business idea, the product/service,
wanted to buy a cup of coffee you went to a coffee the industry and market, financial projections (profitability), and
shop, and if you wanted to hear music you went to a the plan for future action. Within each of these areas you will
club or theater. examine the strengths and weaknesses (advantages and
3. Adapt: Think about what could be adapted from disadvantages) of your business opportunity.
products or services that already exist. Many In crafting a feasibility study, the goal is to assess if the idea
successful businesses are founded on the concept of can be profitably brought to market. The traditional problems
adaptation. It’s a popular innovation strategy that can facing new ideas are (1) the idea cannot be economically
be just as effective, and much more likely in the real made into a product or service; (2) the resulting product or
world, than business opportunities that are the result service works, but does not appeal to a large enough market
of radical innovations such as inventions. (or is not worth enough to them) to make the effort profitable;
4. Magnify or modify: Taking an existing product and and (3) the product or service works, has a market, and could
changing its appearance or adding more features or be profitable, but you need to get additional people, funding, or
increasing the hours your store is open or making its other resources to make the idea into a business. Notice that
advertising more dramatic are some ways you could each problem builds on the solution of the prior problem. As
magnify or modify your idea. with idea screenings, having no solution for one of these
5. Put to other uses: Think of ways you could generate problems may not spell the end of the process if you can use
a high number of opportunities for your product or creative solution approaches like SCAMPER (introduced
service beyond what it is traditionally used for. earlier in this chapter) to come up with a new way to resolve or
6. Eliminate: Search for opportunities that arise when sidestep problems.
you get rid of something or stop doing something
7. Rearrange or reverse. Overall, you have to ask WAYS TO KEEP ON BEING CREATIVE
yourself this question: How can I change, reorder, or Even if you are a solo small business owner, you can take
reverse the product or problem? What would I do if I steps to keep yourself in an innovative frame of mind. Here are
had to do this process in reverse? some techniques you can try as you practice the business
AVOID PITFALLS of innovation on your own:
There are five major pitfalls that business owners can become 1. Read magazines or trade journals outside your area.
victim to when trying to become more innovative. See if you 2. Invite someone you never included before to a
recognize the ones that apply to you and your business, so that meeting at which you are solving a problem or
you can sidestep them at every opportunity: searching for a new opportunity. Try a supplier or a
1. Identifying the wrong problem: When a problem friend who works in a different field.
doesn’t stay solved or an opportunity doesn’t pan out 3. Have a “scan the environment” day in which you
as expected, it could be that the wrong problem was discuss trends and happenings that could impact your
defined. business.
2. Judging ideas too quickly: At many business 4. Try a mini internship. Ask a colleague or friend if you
meetings when someone suggests a new idea or can spend a day at his or her business to see what
approach, often the first reaction you hear is, “We’ve you can learn that may be applicable to yours.
tried that before and it didn’t work,” “The boss will 5. Instead of trying to simply sell your product or service
never go for it,” “It’s not in the budget,” or the to customers, put yourself in their shoes and ask them
frequently heard, “Yes, but . . .” People tend to judge what frustrates them most or what problems they
ideas prematurely, before they take the time to ask, cannot seem to solve that relate to your business.
“What’s right about this idea?” or “How could this idea 6. Redesign your work environment. Get a room with a
be made better?” view. This doesn’t have to cost a bundle in remodeling
3. Stopping with the first good idea: The first good or even redecorating costs. Try to bring in some items
idea you come up with is rarely the best. That’s from nature and add color and inspirational objects or
because it was the easiest to think of, and so there is quotations.
little doubt that your competitors have already thought
of it, too.
4. Failing to act: good opportunities have a way of
coming into existence. It might be up to you to bring it
to the market.
5. Obeying rules that don’t exist: We sometimes put
obstacles in front of ourselves because we think we
can’t do something, when in fact there is no reason
we can’t.

SCREEN IDEAS
One of the simplest and fastest ways to screen ideas is what
we will call the RBI screen, named for Alex Bruton’s “Really Big
Idea”. RBI screen RBI stands for “Really Big Idea” and is a
fast technique for making initial assessments (called screens)
of prospective business ideas based on five questions.