UNIT I: DEVELOPING A

BUSINESS PLAN

Module 1: Overview of Entrepreneurship

Learning Outcomes:

At the end of this module the learners can:

 Discuss the relevance of entrepreneurship in
general, including its economic importance.
 Define who is an entrepreneur.
 Explain the key concepts of common and core
competencies in entrepreneurship.
 Delineate clearly between entrepreneurship and
employment.
 Explore opportunities for entrepreneurship as a
career.
What is Entrepreneurship?

Entrepreneurship

It is a proactive process of developing a

business venture to make a profit.

It involves seeking opportunities for

market, establishing and operating a
business out of the opportunity, and
assessing its risks and rewards through
close monitoring of the operations.
Here are the societal and economic
benefits of entrepreneurship.

Entrepreneurship produces more jobs that

equate to an increase in national income.
Entrepreneurship amplifies economic
activities of different sectors of society.
Entrepreneurship introduces new and
innovative products and services.
Entrepreneurship improves people’s living
standards.
Entrepreneurship disperses the economic
power and creates equality.
Entrepreneurship controls the local wealth
and balances regional development.
Entrepreneurship reduces social conflicts
and political unrest.
Entrepreneurship elicits economic
independence and capital formation.
Who is an Entrepreneur?

The word “entrepreneur” has a French

origin and was coined from the words
entre, which means “between”, and
prendre, which means “to take”.
Who is an Entrepreneur?

Entrepreneur
A unique individual who has the innate
ability and extraordinary dedication to
establish and manage a business,
acknowledging all the risks and reaping
its rewards.
It entails a holistic business talent to be
considered one, ranging from product
and marketing expertise to operations
agility, and to financial proficiency.
Five levels of entrepreneurial
development – Action Coach

The self-employed
The manager
The leader
The investor
The true entrepreneur
Level 0 – The Employee
Almost everyone starts out here. However, for most people,
the time they spend as an employee is wasted. Most people
play the “employee” game by continually working harder,
longer hours, and getting more and more specialized. They
strive to learn more and more about their jobs, and they get
better and better at their work.
Very often they move from one company to another or from
one position to another. While they may be getting pay raises,
they usually continue to spend more than they earn throughout
the entire period.
People in this position also miss the entire point behind being
an employee: to learn. Get a job where your boss is a great
mentor so that you can build knowledge (while building capital
that you can use to invest in your own business).
Level 1 – The Self-Employed

Those who want a greater sense of freedom, along

with more responsibility and control over their lives,
typically make the jump from employee to self-
employed. However, many people at this level only
end up making a job for themselves. In addition,
they typically don’t trust anyone else to get the job
done, so they end up being trapped by the work that
they’ve created for themselves. The only real
difference now is that they have the headaches of
being both an employee and an employer.
Level 2 – The Manager

When a business grows, the owner typically needs to

hire some help. This is the stage when tasks can be
delegated to others. However, the mistake that most
people make at this level is hiring the wrong people
or not providing adequate training for the people
that they hire. As a result, they end up spending
their time putting out fires created by their
employees (while still trying to manage customers
and the business and still doing the work). Many
people at this stage feel that they are working hard
and getting nowhere.
Level 3 – The Owner/Leader

The next step in the journey is becoming the owner and leader
of the business. Until now, most people in business have only
been glorified employees.
Entrepreneurs get to this level by hiring people they trust to
manage the business for them so that they can instead focus
on growing the business and maximizing profits. Being a strong
leader is a critical component of this level because the leader
needs to inspire the team and to define the vision and direction
of the business. At this stage, they spend more time working
ON the business rather than IN the business.
At this stage, the income from the business becomes passive
income because the owner does not need to do much for the
business to run.
Level 4 – Investor

When a business can run profitably on its

own, then the owner can become an
investor. As an investor, a business owner
can make more money selling businesses
rather than running them. They achieve this
by buying businesses, building them up, and
then selling them to other people. This is the
stage where a business owner can start to
accumulate wealth.
Level 5 – The Entrepreneur

This is the level where true capitalists

operate. At this level, entrepreneurs make
money by raising capital and they use other
people’s money to build paper assets (like
stocks, shares, franchises, licenses, and
royalties). Think of it this way: True
entrepreneurs use other people’s money to
make money. Being at this level is the
ultimate goal of every business owner.
The world of entrepreneurship these days has
already evolved, and new terms are coined to suit
an entrepreneurs’ field of expertise. Here are
some:

Technopreneur
 An entrepreneur who puts technology at the core
of his or her business model.

Social entrepreneur
 One who takes advantage of the country’s social
problems and turn them to profitable
institutions with the intention of helping the
disadvantaged community rather than making a
profit.
Intrapreneur
 An entrepreneur in a large company or
corporation who is tasked to think, establish, and
run a new big idea or project.
 Intrapreneurs are usually the product managers
or the business development managers of a
company.

Extrapreneur
 An entrepreneur who hops from one company to
another to act as the innovation champion,
providing creative and efficient solutions
The Role of Entrepreneurs in the
Society

They innovate

They nurture healthy competition

They allow money to circulate

Common and Core Competencies in
Entrepreneurship

 Proactive
 Agents of change
 Risk takers
 Have a sharp eye for opportunities
 Sociable
 Networkers
 Decisive
 Balanced
 Innovative
Proactive- Entrepreneurs are reactive rather than passive.
They address issues, problems and challenges before they
come rather than when they already happened. They ensure
proper research is done.

Agents of Change - Entrepreneurs are innovation

champions. They see opportunities in hopeless and complex
situations.

Risk takers- Entrepreneurs will not be successful if they do

not take risks. By taking risk, entrepreneurs do not just grab
opportunities left and right.

Have a sharp eye for opportunities- Entrepreneurs have a

talent for recognizing an opportunity even by using the macro
level data only.
Sociable- Soft skills are one of the most important
competencies of entrepreneurs as these establish the
relationship with the most important assets of the company.

Networkers- They know the key people to connect with. It can

be an intimidating task, for it takes a lot of guts to pull it off.

Decisive- Entrepreneurs always have a decision about their

business. They do not settle for gray areas or unclear solutions.
They do not have an issue unsolved without a disposition.

Balanced- The minds of an entrepreneurs should have a

balance between the analytical and creative side. Entrepreneurs
always have "Eureka" moments and enjoy them.

Innovative-The minds of entrepreneurs are rich with big ideas

that can add value to their existing business or could become a
game changer in the industry or business where they belong.
Core Traits of Entrepreneurs

Leaders

 Communicators

Specialists

Problem solvers
Leader- Successful entrepreneurs always have a heart of a
leader. To be successful leaders, they must be a source of
inspiration for their employees.

Communicators- Entrepreneurs know how to use all forms of

communication to effectively share ideas and address certain
concerns with their customers or employees.

Specialists- Entrepreneurs are experts in their chosen business. They are

tactical and very keen with details.

Problem Solvers- Entrepreneurs possess critical thinking

skills and look at problems as challenges and puzzles that they
need to solve.
 Entrepreneurship or Employment
Pros and cons of entrepreneurship vs. employment

Important Career Entrepreneur Employee

Factors
1. Income  Income generated  Income generated actively
passively even when (i.e., on working hours
the entrepreneur is only); no work = no pay
resting  Income usually fixed per
 Opportunity income month and increases every
unlimited, depending year depending on the
on the success of the employee performance
business  Income earned whether
 Income only earned the business is successful
when the business is or unsuccessful
successful
 Important Career Entrepreneur Employee
Factors
2. Hiring and Firing,  Provides jobs; is the owner  Seeks for a job; is the one
Organizational Setup, and of the business and conducts applying for and is
Major Key Result Areas the talent selection interviewed by the
 Fully responsible for company’s hiring officers
serving customers, making  Has the goal of satisfying
the business only the employer or the
profitable/sustainable, and direct supervisor
providing employee  Fully dependent on the
satisfaction employer’s performance; is
 Has the power to disengage at risk of losing his or her
non-performing employees job if the company does not
applying the due process perform well; may find it
policy of disengaging difficult to just leave their
personnel below par employer if this is
 Can venture into expansion their only source of income
of business such as  Can only work for the
franchising and buying current employer
other similar businesses exclusively
 Important Career Entrepreneur Employee
Factors
3. Daily Tasks  Performs all necessary  Has routine tasks
variable tasks to and works on
establish and manage a regular or normal
startup business, which hours
usually takes most of the  Follows policies,
entrepreneur’s time; procedures, and
spend more hours on memoranda from
work than a regular the employer
employee and
sometimes gets no sleep
 Prepares policies,
procedures, and
memoranda for the
business
Important Career Entrepreneur Employee
Factors
4. Leisure Time  Has a flexible schedule Has limited number of
and Vacations and can take unlimited vacation days imposed
number of vacation by the employer
days (applicable only
if the business has
stabilized already)
5. Taxation  Taxed on the net  Taxed on the gross
income; can claim income; cannot use
taxable income expenses incurred
deductions for related to the job such
allowable expenses as food and
incurred by the transportation expenses
business to claim for
deductions from
 Important Career Entrepreneur Employee
Factors
6. Comfort Level at  Is comfortable in  May be comfortable
Work doing multiple and with routines and
challenging tasks minimal risks; may
and takes also be
accountability with comfortable in
the risks and profits working for the
of the business; company itself
does not want to be
confined in a box;
thinks outside the
box or sometimes
thinks there is no
box
Careers in Entrepreneurship

List of most common small businesses in the

Philippines:
Sari – sari store
Rice retailing
Food cart business
Printing business
Buy-and-sell business
Street food business
Careers in Entrepreneurship

Flea market business or tiangge

 Online selling business
 Cellphone loading business
Laundry and dry cleaning business
 Hair styling and makeup business
Spa, gym, and nail care business
Video and photography business
 Tutorial business
Careers in Entrepreneurship

Baking business
Web site development and design/blogging
Direct selling business
Car wash and car care business
Bar, café, and restaurant
Water station and LPG (liquefied petroleum
gas) station
Franchising

 A business arrangement wherein the

franchisor, who is the owner of the
business, acquires distribution centers
through the franchisees or the affiliated
dealers.
Entrepreneur Philippines’ franchise
business options in the
Philippines:

Franchise or Startup Businesses

Bakeries, bakeshops, and bread
products
Bars, cafes, and coffee shops
Beverage and confectionery
Car care
Clothing and accessories
Convenience stores
Fast food establishments and restaurants
Food and snacks
Gas stations/petroleum products
General merchandise and retail
Health and wellness (salon, massage, spa,
and gym)
Schools
Services (personal and business)
Waters stations
Other Additional Business Opportunities

Dealerships

Direct selling

Distributorship
DEALERSHIPS
A dealership is sometimes called a retail distributor.
It is similar to a distributorship, except that a dealer
usually sells only to the public. Unlike other types of
franchisees, including distributors, a dealer is not
usually restricted to carrying one product line. Most
commonly, this type of arrangement is found in the
automotive industry.
may also require regular onsite inspections of the
facility and regular customer and vendor feedback.
DIRECT SELLING
is a retail channel set up to market services and products
to consumers through personal or direct means. The
industry of direct selling is vast including jewelry, health,
food, cosmetics, insurance, accessories, homewares,
utilities and more. This channel differs from broader
mass-market retail avenues in an important way. The goal
is not only about bringing consumers directly in contact
with products.
DISTRIBUTORSHIPS
A distributor is an independent selling agent who has a
contract to sell the products of a manufacturer, but is
not entitled to use the manufacturer's trade name as
part of its trade name.
The contract may also limit the distributor to selling
only that company's goods, rather than marketing
different products and services from different firms.
The manufacturer sells the distributor the products at
wholesale prices.
A distributor is also sometimes referred to as a
wholesaler. Wholesalers resell the products to dealers.
I. Common and Core List of most common small Entrepreneur Philippines’
Competencies in businesses in the Philippines: franchise business options in
1. Entrepreneurship
Entrepreneurship • Sari – sari store the Philippines:
2. Entrepreneur • Rice retailing
1. Proactive Franchise or Startup
3. Intrapreneur • Food cart business Businesses
2. Agents of change
4. Technopreneur 3. Risk takers • Printing business  
5. Extrapreneur 4. Have a sharp eye • Buy-and-sell business • Bakeries, bakeshops, and
6. Problem Solvers for opportunities • Street food business bread products
7. Franchising 5. Sociable • Flea market business or • Bars, cafes, and coffee
6. Networkers tiangge shops
8. DIRECT SELLING
7. Decisive • Online selling business • Beverage and
9. distributor • Cellphone loading business
8. Balanced confectionery
10. DEALERSHIPS • Laundry and dry cleaning • Car care
9. Innovative
  business • Clothing and accessories
II. Five levels of Core Traits of • Hair styling and makeup • Convenience stores
entrepreneurial Entrepreneurs business • Drug stores and
development – 10. Leaders • Spa, gym, and nail care pharmacies
Action Coach 11. Communicators business • Fast food establishments
12. Specialists • Video and photography and restaurants
 
13. Problem solvers business • Food and snacks
1. The Employee • Tutorial business • Gas stations/petroleum
2. The self- • Baking business products
employed Other Additional • Web site development and • General merchandise and
3. The manager Business
design/blogging retail
4. The leader • Direct selling business • Health and wellness
Opportunities • Car wash and car care
5. The investor (salon, massage, spa, and
  business gym)
6. The true • Dealerships • Bar, café, and restaurant • Schools
entrepreneur • Direct selling • Water station and LPG • Services (personal and
• Distributorship (liquefied petroleum gas) business)
station • Waters stations