FOR CLASSROOM USED ONLY

INSTRUCTIONAL
MANUAL

IN

ENTREPRENEURIAL
MANAGEMENT

BY:

PROF.MA. LOURDES H. GOMEZ

PROF. ANNA LIZA G. ASISTOL
PROF. JACKYLIN G. PIDO
PROF. BENIGNO A. CASTILLO

1
 TABLE OF CONTENTS

CHAPTER 1
ENTREPRENEURIAL MANAGEMENT ---------------------------------------------------- 3 - 11

CHAPTER 2
THE NATURE OF SMALL BUSINESS ----------------------------------------------------- 12 - 16

CHAPTER 3
ETHICAL AND SOCIAL RESPONSIBILITIES OF THE ENTREPRENEUR --------- 17- 22

CHAPTER 4
ENTREPRENEURIAL PERNSONALITY ------------------------------------------------- 23 - 27

CHAPTER 5
SEARCH FOR SOUND BUSINESS IDEA ----------------------------------------------- 28 - 35

CHAPTER 6
BUSINESS PLAN ------------------------------------------------------------------------------ 36 - 45

CHAPTER 7
FORMS OF SMALL BUSINESS OWNERSHIP --------------------------------------- 46 - 50

CHAPTER 8
ORGANIZING, DIRECTING AND CONTROLLING THE SMALL BUSINESS ----- 51 - 58

CHAPTER 9
MARKETING THE SMALL BUUSINESS ------------------------------------------------ 59 - 63

CHAPTER 10
DETERMINING THE RIGHT LOCATION ------------------------------------------------ 64 - 67

CHAPTER 11
MANAGING SMALL BUSINESS RISK --------------------------------------------------- 68 - 73

CHAPTER 12
STRESS MANAGEMENT ------------------------------------------------------------------- 74 - 79

CHAPTER 13
STRATEGIC PLANNING FOR SMALL BUSINESS ----------------------------------- 80 - 83

CHAPTER 14
LIST OF FAMOUS FILIPINO ENTREPRENEURS AND THEIR BRANDS --------- 84 - 86

2
 CHAPTER 1
ENTREPRENEURIAL MANAGEMENT

WHAT IS ENTREPRENEURIAL MANAGEMENT?

The Entrepreneurship Management is the most important part of management,
especially for those enthusiastic people who have an idea of a start-up. It is
treated as one of the most important studies because entrepreneurship is one of
the top trending topics of the 21 st Century.  Further, the following is a brief
introduction to the entrepreneurship and its definition, importance and roles in
today’s business world.

The entrepreneurship is a process in which an individual or group of individuals

together perform certain tasks and risk their time as well as money. These
individuals are called entrepreneurs. Entrepreneurs search opportunities through
their exceptional skills and grow as fast as possible by utilizing innovative ideas
despite of having very few resources in control. There are two terms affiliated
with entrepreneurship at some point that are entrepreneurial ventures and small
business.

What is Entrepreneurship?
The entrepreneurship is a process in which an individual or group of individuals
together perform certain tasks and risk their time as well as money. These
individuals are called entrepreneurs. Entrepreneurs search opportunities through
their exceptional skills and grow as fast as possible by utilizing innovative ideas
despite of having very few resources in control. There are two terms affiliated
with entrepreneurship at some point that are entrepreneurial ventures and small
business. There is a great difference between both terms that is defined below.

Entrepreneurship: It is a very important component of a capitalist

economy like the Philippines. It thrives in economic systems that support
innovation and hard work. When entrepreneurs become successful, the nation is
immediately benefited.

3
 Entrepreneurship: Refers to the economic activity of a person who starts,
manages, and assumes the risk of a business enterprise. The person who
undertakes entrepreneurial activities is called an entrepreneur.

Entrepreneurship: It is a primary source of job creation, prosperity, and

economic competitiveness.

Entrepreneurship: Change the ads value to peoples’ lives, lies at the

heart of entrepreneurship.

Entrepreneurship: Is popularly understood as the setting up a new

business ventures.

Entrepreneurship: is central for enhancing the economic opportunity of

nations and organizations.

Entrepreneurship: is defined as the process of making money, earning

profits and increasing the wealth while posing characteristics such as risk taking,
management, leadership and innovation.

Entrepreneur: Identifies an economic need, considers offering a business

solution, proceeds to assemble the resources required, and assumes the risk of
either succeeding or failing.

Entrepreneur:is an owner of a business who invests his/her resources to

bring an idea to life, setting the direction that transforms that idea into reality,
thus providing and gaining value that balances effort, purpose and profit.

Entrepreneur: Create and exploit change, are innovative and have the
ability to mobilize resources to create value by invention of, or improvement of
exiting products or services.

Entrepreneur: Must be able to sustain the drive and energy required to

form something new and to manage the new enterprise.

4
The word entrepreneur has a French origin. It originated during the Middle Ages
when the term entrepreneur was applied to “the man in charge of the great

Entrepreneur performs the following specific functions:

1. To supply the necessary capital;

2. To organize production by buying and combining inputs like materials

and labor;

3. To decide on the rate of output, in the light of his expectations about

demand;

4. To bear the risk inherent to the ventures

5 Components of an Entrepreneur:

1. Owner who invests resources

What it involves – Entails risk taking

Key Factors for Success – Commitment

2. Brings an idea to life

What it involves – maximization entails defining the best options.

Key Factors for Success – Competency

3. Setting direction

What it involves – entails getting quality information and making choices

from these pieces of information, mindful of heuristics as well as biases in
decision making.

Key Factors for Success – Competency

4. making things happen

What it involves – Entails the need to ensure all the interdependent

elements are in harmony to attain defined goals

Key Factors for Success – Coordination

5
5. Adding value

What it involves – Entails financial understanding that the reward of

entrepreneurship needs to be much higher than putting cash in high yielding
financial investment, such as preferred shares with guaranteed dividend.

Key Factors for Success – Commitment

Innovator?

An innovator is a person who introduces either a new process, product,

service or business model to the marketplace that becomes commercially
successful.

2 essential elements of Innovation

a. It must be new (customer acceptance & critical mass of target

customers willing to pay for the innovation)

b. It must be a commercial success

Innovation may be defined as the introduction of a new method, procedure,

custom, device, among others.

Innovation could be any of the following:

a. new product

b. new process of production

c. substitution of a cheaper material in an unaltered product

d. reorganization of production, internal function or distribution

arrangement leading to efficiency.

e. Improvement in instruments or methods of doing innovation.

a. invention – discovery or devising of new products and processes

b. development – the process by which the ideas and principles generated

from the stage of invention are embodied in concrete products and techniques.
6
 c. innovation – refers to the actual introduction of a new product or
process.

Innovation, if it must be made successful, must provide value to the buyers over
and above those offered by competitors.

To achieve this, innovation must reduce costs or improve the quality of products
or services offered for sale.

Innovation, if it must be made successful, must provide value to the buyers over
and above those offered by competitors.

To achieve this, innovation must reduce costs or improve the quality of products
or services offered for sale.

Do you know that being Entrepreneurs are considered as the modern rock stars!
The richest people in the Philippines and in the World are mostly entrepreneurs

Entrepreneurship is also key to a healthy economy, and yet based on various

cited statistics, including one provided by Bureau of Small and Medium
Enterprise Development, the success ratio of micro, small and medium scale
enterprises (MSMEs) is typically less than 50%. And operating less than 4 yrs.

Why be an Entrepreneur?

 personal freedom or control of being the owner-boss, others expect

financial independence much larger than being an employee,
 personal growth from the boredom they have been doing in the past.
 powerful choice besides going abroad to earn for the family.

7
Malvin and Mae Hosena founded Follicles Salon in Las Piňas in 2012 with
250,000 capital. With 10 branches in less than six years (four company owned
while close friends franchised six)

Car owners became Grab Transport entrepreneurs

Online companies like Lazada, Zalora and Shopee. Educate digital start-up
companies, then distribute products.

Wealth Conversion Principle

Adding greater value to the firm

Potato Corner started in 1992 with a 36,000 from each of the four founding
partners who were all employed at that time.

the business use franchising, the best way to expand business using other
people money (OPM) as the cycle continues, more cash flow and wealth are
created.

The three general requisites to make the Wealth Conversion Principle come
alive.

Squad – before entrepreneur converts cash to inventories, they need to form a

team (or a squad), which includes his or her choice of business partners. (Human
resource challenge)

Spread – before inventories converts to receivables by way of transactions, they

need to ensure that the products sold are priced higher than the cost (spread or
margin) (Marketing Challenge)

Speed - in order for the entrepreneur to convert receivables back to cash by way
of collection, they need to create a system to manage account receivables
effectively also known as speed. (Operations and Financial Challenge)

Key Factors for Success identify the limited number of functions, activities,
factors or even bottlenecks that a business or enterprise must manage well to
attain prosperity.

8
Cs Keys Factors to Successful Entrepreneurship

a. Commitment is a strong drive to achieve goals and objectives through focus

and pro-active follow-through

b. Coordination is the organization of different people or groups coming from

variety functions to attain efficiency, effectiveness and/or impact

c. Competency is having a combination of ability, attitude and behavior to do a

particular role or job repetitively well.

4 Gate Model to Prosperity

The House of Prosperity offers financial independence, personal freedom

and the fulfillment of other desires of entrepreneurs.

Gates Interests and Expectations Gatekeepers

Preparation Profit and Dividend Owners and Stockholders

Marketing Quality and Good Price Customers

Execution High Pay and Work-Life

Harmony Employees

Self-Leadership Fulfillment Self

12 Ms to Successful Entrepreneurship

Gate 1 Preparation (reasonable intelligence quotient (IQ) in order to learn and

understand what it takes to make a business successful.

Money the cash component that creates the cycle of wealth conversion and
prosperity.

Butch Salvador was broke and had Php10.00 left to make ten photocopies of his
business leaflet. Left his marketing leaflets on windshields of ten cars with dents

9
which clearly needed some repair. One side of the leaflet was an offer to repair
automotive bumps, dents and scratches with the other side a price quotation of
what will be spent. One customer came from the ten leaflets and other come next
the starting point of Car Magic.

Model or the big picture plan to generate sales revenues, profit, cash flows,
growth, and how to scale up.

Mentors are the experienced advisers who can add value to the entrepreneur by
giving sound guidance to increase the competency, lessen the risks, and help
open more opportunities for the entrepreneur to succeed.

Mindset is about beliefs One must have a mindset to find a novel differentiation
or Unique Selling Proposition (USP) that solves a real problem, by not selling the
same thing as everybody else.

French Baker wanted to distinguish itself right from its inception. They
introduced see through fresh baking concepts and media advertising as well as
no end-day wastage via 50% discount 30 minutes before closing time to reinforce
their freshness positioning.

Market is the set of buyers that an entrepreneur focuses attention on, starting
from a beachhead market in the beginning and then adjacent market in the future
expansion.

AHEAD Tutorial focused on students doing well to change perception that

made tutorials something students looked forward to.

Message is the brand positioning that will be communicated to persuade the

target customers to buy.

CDO Foodsphere launched San Marino Corned Tuna in communicating

the rich taste of corned beef with the heath benefits of tuna.

Machinery is about organization structure that can deliver the value planned;
hence the organizational structure can only be identified after the value

10
proposition is formulated.

Methods are about systems and processes that allow the entrepreneur
information and control

Management Skills is about the ability to carry out the plans through people,
rewards and leadership

Mission is about purpose or the reason why the business exists beyond making
profit.

Mastery is about building capabilities, knowing the nuts and bolts of the business
well, and eliminating gaps in the know-how.

7 Competencies of Entrepreneurs

1. Risk appetite – sees rewards for taking on opportunities that have

potential positive (or negative) consequences. (Hustle Café)
2. Sensemaking – scanning the environment to detect and interpret what is
happening today in order to connect and take actions on potential future
outcomes. (Solar Philippines)
3. Customer Focus – choosing, initiating and sustaining relationships with
customers. (Mansmith and Fielders Inc)
4. Initiative – being proactive in taking prompt actions to attain objectives.
(Globe Telecom)
5. Influence – ability to use personal branding and interpersonal styles to
gain buy-in form constituents.
6. Adaptability – adjusting to external changes while initiating internal
changes to attain objectives.
7. Grit – persistency to attain long-term goals despite adversity.

Entrepreneurship Management is the most important part of management, especially

for those enthusiastic people who have an idea of a start-up. It is treated as one of
the most important studies because entrepreneurship is one of the top trending
topics of the 21st Century

11
 What is Entrepreneurship?

Entrepreneurship is a process in which an individual or group of individuals

together perform certain tasks and risk their time as well as money. These
individuals are called entrepreneurs.

Entrepreneurs search opportunities through their exceptional skills and grow

as fast as possible by utilizing innovative ideas despite having very few
resources in control. There are two terms affiliated with entrepreneurship at
some point that are entrepreneurial ventures and small businesses. There is
a great difference between both terms that are defined below.

Entrepreneurial Ventures

The entrepreneurial ventures are such organizations that explore

opportunities through having three factors in hand, i.e. innovative skills,
constant growth and profitability. These three factors are the main goals of
entrepreneurial ventures.

Small Businesses

The Small Businesses are such organizations that are owned, financed and
operated independently. The following are the main features of small
businesses.

 Fewer employees under 100

 Rare or not engagement with innovative ideas and modern trends
 Comprise little impact on the industry
 May be remain small by default or choice
 Importance of Entrepreneurship Management

12
 There are three things stated below, that define why entrepreneurship
management is important.

1. Innovation is a process of experimenting, changing, transforming, and

revolutionizing an entrepreneurial activity.
2. New Startups can contribute to reshaping the new firms through
performing sufficient duties with innovative practices that may result in
growth as well as the profitability of the entire firm.
3. Job Creation is another aspect that states the importance of
entrepreneurship. New startups may require new staff, so the outcome
will be much more beneficial for unemployed applicants.

Entrepreneurial Process

The entrepreneurial process comprises the following major factors.

1. Researching the Context: It covers society’s rules and regulations

and the realities of new economy that are associated with the work of
entrepreneurship directly or indirectly.
2. Identification of the opportunity and analyzing its advantages
3. Starting the Venture: It covers researching the feasibility, planning,
organizing, and launching of the ventures.
4. Venture Management: It refers to managing process, growth and
people.

What Do Entrepreneurs Do?

1. At first, an entrepreneur gets busy in examining the potential for the

venture and the issues that are associated with the start-up.
2. If the venture is completed and running smoothly, the next thing that
takes the attention of the entrepreneur is to manage it in a well-
organized order.
3. Eventually, the entrepreneur needs to plan and manage the growth of
the venture.

13
 Preparation for Operating Small Business

The preparation for operating a small business requires enough

concentration, time, and commitment. The most important factor in operating
a business is to have a business plan, which should be effective and efficient
enough to work appropriately. Regarding start-up, writing a business plan can
be very technical.

Writing a Business Plan

A Business Plan is an official document that is prepared or written by the

owner or the entrepreneur. It covers the vision of the owner, the nature of the
business, the types of products or services, competitor analysis and how the
company differs from its competitors, the goals of the company, strategies to
achieve certain goals, production and marketing of the products, the
management and finally, the financial sources of the business.

Besides, further necessary details are also included in the business plan. A
Business Plan is written or prepared for the following purposes:

 To think the real aspects of the business and the aspects that are
indirectly associated
 To get financing
 For measuring the progress
 For establishing credibility with others

Aside from all aspects, the plan should also provide a comparison of the
abilities of the entrepreneur with the criteria for the production and marketing
of a certain product or service. Further, the following terms lay in relation to
entrepreneurship.

14
 CHAPTER 2
THE NATURE OF SMALL BUSINESS

Business size is one factor that does not prevent one from engaging in
entrepreneurship. Since only a small number of people have capital large enough
to start a large enterprise, the bigger number of people with minimal resources
are forced to operate on a small-scale basis, if they decide on becoming
entrepreneurs.

15
What is a Small Business?

2 approaches to define what Small Business is.

Market share approach as one which is independently owned and operated

and which is not dominant in its field of operation.

The term “independently owned” means ownership is by a private individual, a

partnership or a corporation.

The term “not dominant” indicates that a small business does not control a
sizable share of its market.

When the total sale of a business firm is less than one percent of the total
demand for its products, the firm may be considered small business.

Total assets approach as one having total assets that fall within a certain
bracket. For example the Magna Carta for Small Enterprises (R.A. 6977)
indicates that the firm must have total assets valued at above 1.5million to 15
million to be considered small business.

If 1.5million and below will be classified as “microenterprises”

Market share approach

Adv. More appropriate. Because the target market share is an objective more
basic than other objectives.

Kinds of business according to size. 1. micro, 2. cottage, 3. small, 4. medium, &

5. large business.

Total Assets approach

Advantage simplified in terms of formulation and implementation of policy.

Dis Advantage Effect of inflation, because inflation alters the nominal value of
business assets and what may be previously considered small business may no
longer be classified as such

16
Types of Small Business

a. manufacturing business is one involved in the conversion of raw materials

into products needed by society. (bakeries, tricycle sidecar assembly shops,
bagoong manufacturers, restaurants and others.

b. service businesses are those provide services in one way or another.

They may be further classified into the following:

1. business services – provide service to other business. Examples are

accounting firm, janitorial service firms, security service firms, collection agencies
and the like. Types of Small Business

2. personal services – provide service to the person. Examples are tutoring

services, massage parlors, voice lesson, among others;

3. repair services – provide repair services to owners of various machinery

and appliances. Examples are auto repair shops, watch repair shops, plumbing
services, and others;

4. Entertainment and recreation – includes movie houses, resorts, billiard

pool centers, and the like.

5. Hotel and motels; and

6. Education services – include Montessori schools for children, high school,

correspondence schools, among others

Types of Small Business

c. wholesaling refers to the activities of persons or establishments which

sell to retailers and other merchants, and/or to industrial, institutional, and
commercial users, but who do not sell in large amounts to final consumers.
Example are soft drinks wholesalers in local areas, dealers of supplies and office
equipment, grains wholesalers and the like.

17
 d. retailing covers all activities involved in the sale of goods and/or
services to the final consumers. Examples are retail drugstores, fast food shops,
appliance stores, and others

General Construction Firms

Are those engaged in the construction of buildings whether for private

individuals or firms, or for the government.

Are those employing hundreds of thousands of people and they operate mostly
in the countryside.

Characteristics of Small Business

1. Independent management – the owner is also the manager

2. Small capital requirement – small business requires only small capital

and this can be supplied by a single or a few individuals

3. Mostly local operation – small business usually operates in a certain

locality although there are cases when the market is not confined to a local area.

Economic Importance of Small Business or Functions

1. providers of economic opportunities for entrepreneurs – people who do not

feel comfortable as employees have the option of engaging in small business
operation.

2. providers of products and services to consumers – the production of many

products and services is oftentimes not feasible with big and medium business
operation. These limited opportunities are naturally fitted for small perform this
task for them.

18
3. suppliers of products and services to other businesses – raw materials, semi
finished parts, finished components, or even labor which they cannot
economically produce.

4. distributors of products and services of other businesses- some manufacturers

do not have the ability to distribute their products and services.

5. supporters of government – by paying their taxes.

6. providers of employment – a large proportion of the labor force are employed

by small businesses.

Advantages of Operating a Small Business

1. be an employee – enjoys a fixed working schedule

2. be a professional or – may generate higher income through the effective

practice of his profession.

3. be a small business operator (SBO) – keeps long working hours and absorbs
whatever damages that happen as a result of his faulty decision making.

Afforded Benefits

1. opportunity to gain control over his own destiny

2. reach his full potential

3. reap unlimited profits and

4. make a contribution to society and receive recognition for his efforts.

Disadvantages of Operating a Small Business

Uncertainty of income

Risk of losing your entire capital investment

Lower quality of life until the business gets established

19
Complete responsibility

Having to serve undesirable customers

Paperwork and other chores

Long hours and demanding work condition

20
 CHAPTER 3
THE ETHICAL AND SOCIAL RESPONSIBILITIES OF THE
ENTREPRENEUR

The concern for society’s survival brought into the fore the need to adapt ethical
standards and socially responsible actions. The role of the entrepreneur in
propagating ethics and social responsibility in business cannot be
overemphasized.

What is Business Ethics

Ethics is the study of moral obligation involving the distinction between

right and wrong. As a consequence, the study of ethics paved the way for the
adaption of the general rules of conduct in society.

Social Responsibility is an ethical theory, in which individuals are accountable

for fulfilling their civic duty; the actions of an individual must benefit the whole of

society. In this way, there must be a balance between economic growth and the

welfare of society and the environment. Businesses must do more than provide

jobs and make a profit. They also are expected to run their business responsibly.

Ethical Responsibility are guidelines for human behavior and moral code by

which people live, conduct business and help people decide how to act in

situations where moral issues are involved.

What does it mean to be Ethical?

It is important for an entrepreneur to have clear ethics policies governing

ethical behavior because not everyone has the same standards.

Understanding your Values

The benefits of understanding your value systems are:

21
 a. You make better decisions because you base them on your values.

b. You are able to persuade others to agree with you when you are

confident about your values.

c. You usually do not regret decisions you make based on your

values.

What are business ethics?

A business owner without good business ethics can not expect his or her

employees to act ethically.

Are everyone ethics the same?

People do not share the same ethical values because not everyone has

high ethical standards, entrepreneurs need to create clear ethics policies.

Responsibility To Customers

Guidelines for the responsibility to customers include:

1. Do not mislead customers.

2. Give complete information regarding proper use.

3. Label unsafe products as such.

4. Offer the best quality products at the lowest prices.

Responsibility To Suppliers

1. Fair and equitable transactions Carries out fair and equitable transactions by

providing equal opportunities to all suppliers (and candidates) in and outside

in accordance with its internally established procedures.

2. Compliance with laws and social norms Comply with all relevant laws, social

norms, standards and treaties worldwide, including the protection of human

22
 rights, the prohibition of child labor, forced labor and discrimination, and

avoiding the use of conflict minerals, and respect for freedom of association, the

right to associate, and the right to collective bargaining, as well as ensure that

absolutely no contact is made with organized criminal elements. Therefore,

requires its suppliers to observe the same legal and social requirements.

3. Environmental protection To protect the global environment through

environmentally friendly procurement, which is based on the cooperation with

suppliers.

4. Strengthening partnership with suppliers Builds up relationship of trust with its

suppliers through reciprocal efforts, such as merging and complementing

mutual technological development abilities, supply chain cooperation,

compliance with laws and social norms and protection of the global

environment, which will benefit both parties.

5. Policies on supplier selection and transaction continuation Initiates and

continues transactions with suppliers based on comprehensive evaluation

criteria, which include compliance with laws and social norms, environmental

protection, proper information security, respect for intellectual property, sound

and stable corporate management, superior technological development ability,

right price and quality, stable supply capabilities and electronic transaction

systems.

6. Securing right price and quality To secure right price and quality in order to

provide its customers with stable supply of optimal products, which ensures that

gains the full confidence of customers around the world.

23
7. Prohibition of personal-interest relationships Does not allow any employees to

have personal-interest relationships with any suppliers.

RESPONSIBILITY OF STOCKHOLDERS

1. To ensure a reasonable rate of return overtime.

2. To work for the survival and the growth of the concern.

3. To build reputation and good will of the company.

4. To remain transparent and accountable.

RESPONSIBILITY OF GOVERNMENT

Government actions are essential for creating an enabling environment for

private sector development that diminishes risks, lowers costs and barriers of

operation, and raises rewards and opportunities for competitive and responsible

private enterprises. The challenge for governmental agencies in promoting

agenda is to identify priorities, raise awareness, create incentives and support,

and mobilize resources from cross-sectoral cooperation that are meaningful in

the national context, as well as building on existing initiatives and capacities. In

the period leading up to and following local government reorganization there

came to light a disturbingly large number of cases of corrupt behaviour by

officers and members of local authorities. As a consequence there has been

much speculation about the causes of this upsurge and the integrity of the public

service generally, but there has been relatively little discussion of some of the

wider ethical issues present in public service. This paper does not attempt to

establish either the causes or the extent of corrupt practices. It takes attitudes to

24
corruption as a starting point for looking at some of the ethical dilemmas that face

people in local government at the present time. It then considers how these

dilemmas may have come about and ways in which they might be made more

manageable. Governments at different levels can regulate the behaviour or

practice of business by defining minimum standards for business performance

embedded within the legal framework; establishing targets for business to

achieve; setting up enforcers and inspectorates to oversee business conduct;

promulgating codes or laws to confine undesirable business conduct; or imposing

license of operation or mandatory environmental friendly industrial systems.

Examples of this include establishing a minimum age for labour forces. (ii)

facilitating- Through facilitation, governments enable companies to

engage, to drive social and environmental improvements. Government may

provide tax incentives and penalties to promote responsible business; ensure

business can access information needed; facilitate understanding of minimum

legal requirements for issues relating to responsible business practice; include

CSR elements in related policy areas (such as industrial policy, trade policy,

environmental policy, and labour policy); offer capacity building, business

advisory services and technical assistance to business when needed; or, support

supply chain initiatives and voluntary certification.

25
CONTRIBUTING TO THE COMMUNITY

Many small businesses have found ways to be generous to the community,

including:

1. Being a socially responsible employer.

a. As a small business owner, you have a responsibility to treat your

employees fairly.

b. You can offer flextime, health care, telecommunicating, on-site child care

and assistance to employees with impairments.

c. Personal responsibility is the basis of social responsibility.

d. Responsible employees maintain high ethical standard when dealing

with coworkers, management and customers.

Ethical behavior required of entrepreneurs

a. the public

b. interest groups like Society of Prevention of Cruelty to Animals

26
Monetary factors

CHAPTER 4
ENTREPRENEURIAL PERSONALITY

Operating a business enterprise is a very challenging occupation. The rate of

failure among those who dared to make attempts is high. Only a small number of
them became successful and the levels of their success differ.

Clearly, entrepreneurship is not for everyone.

But, what determines success and failure? Some guides provide clues
and one of them indicates that one there are two complementary factors that
determine success or failure in an ent1repreneurship.

This factors are:

1. Environment

2. Personality of the entrepreneur

 
The environment as factor

27
An entrepreneurship will survive and grow in an environment that is friendly or
akin to it. Nature provides us with examples. For instance, giant clams thrive
ocean, but not in the river. These are so because clams are design to live in
saltwater and not in fresh water.

In the same light, entrepreneurships will survive and grow only in economic
environments of free enterprise.

In terms of support to entrepreneurships, economic environments differ from

place to place. To facilitate discussion, economic environment may be classified
as follows:

1. Fully supportive of Entrepreneurships

2. Moderately supportive of entrepreneurships

3. Not supportive of Entrepreneurships

The Entrepreneur’s Personality

Every person has a personality that is unique and different from others.

Personality types Entrepreneur’s Job Teacher’s Job Engineer’s Job

A perfect fit Moderate fit Unfit
       
B unfit Perfect fit Moderate fit
       
C moderate fit unfit Perfect fit

What is a personality?

Personality refers to the pattern of characteristics that distinguishes a person

from another

 Holland’s 6 personality types

1. REALISTIC

Prefers activities involving aggressive behavior and physical exertion

requiring skills, strength, and coordination.

2. INVESTIGATIVE

28
 Prefers to be analytical, curious, methodical, and precise.

3. ARTISTIC

Is expressive, nonconforming, original, and introspective.

4. SOCIAL

Enjoys working with and helping others and purposefully avoid systematic
activities involving tools and machinery.

5. ENTERPRISING

Enjoys verbal activities to influence others and to attain power and status.

6. CONVENTIONAL

Enjoys the systematic manipulation of data, filing of records, or

reproducing materials.

Characteristics of entrepreneurs

Drive – success in business becomes possible when the entrepreneur is self-

motivated to pursue his chosen course.

Thinking Ability – The entrepreneur’s job involves solving problems and making
decision.

Human Relations Ability

Three types of person will determine the survival and growth of the
company

Customer - makes the decision whether to prioritize the company or not.

Employee – Can be productive or loyal to the firm

Parties with various interest regarding to the firm can also be made to be
more cooperative and accommodating.

Ability to Communicate – The ability understand and be understood makes it

easier for the entrepreneur to transact business with customers, bankers, and
government officials.

29
Technical Knowledge – must at least be familiar with some knowledge about
how the various task are performed.

Reasonable risk taker – When a person starts a new venture, he has already
begun to assume the risk of business failure.

Type of Risk taker Level of risk taken Expected level of Benefits

Salaried Employee Low Low

Entrepreneur Moderate Moderate

Gambler High High

Self-Confident – A person cannot achieve much unless he has sufficient

confidence in himself.

Goal Setter

A goal performs the following function

1. It directs one’s attention to a specific target

2. It encourages one to exert effort toward achieving something specific

3. Encourages persistence

4. Fosters the creation of strategies and action plan

Accountable – the willingness of the subordinates to comply with the wishes of

the entrepreneur.

Innovative - A free enterprise economy like ours allows business enterprises to

flourish. This will depend, however, on how well the public is convinced to
patronize them.

Innovation may be the only way for the entrepreneur can achieve the ff.:

1. Penetrate the market.

2. Improve employee turnover.

30
 3. Reduce manufacturing cost.

4. Improve collection rate.

What motivates people to Become Entrepreneurs?

The Desire to be one’s own boss

Desire for financial rewards

Desire to create one’s own job security

Desire to improve one’s quality of life

The Entrepreneur and the Manager Distinguished

A major distinction between the entrepreneur and the manager is about

orientation. The Entrepreneur (also alternatively called promoter) feels confident
of his ability to seize a business opportunity regardless of the resources under
his current control. The manager (also alternatively called the trustee)
emphasizes the efficient utilization of resources.

31
 CHAPTER 5
THE SEARCH FOR A SOUND BUSINESS IDEA

The Product or Service offering may be improved in terms of:

1. Performance

2. Maintenance cost

32
3. Acquisition Cost

4. Salvage Value

5. Uses

What is a sound business idea?

The economic opportunity which is within the reach of the entrepreneur

and which will provide him with a desirable value.

Business Ideas differ in form. Examples are:

An old type of Business can be professionalized.

-Operations can be streamlined and better organized.

2. A standard product can be customized.

3. New technology can be adapted to manufacture an old product.

4. Imported products can be replaced by local products.

5. Business Operations can be internationalized.

Procedure in determining the best Business Ideas.

1. Preparation of the list of business ideas.

2. Screening

3. Final Selection

Methods of searching for ideas

Unanticipated means

When an entrepreneur finds business ideas without serious effort. 

Example:

1. Person’s work

2. Person’s hobbies

3. The person’s acquaintances

4. A chance event encountered by person

33
Deliberate search

A disadvantage of unanticipated means in idea generation is the difficulty

of ascertaining the exact date when the ideas will come pouring in. This type of
idea generation comes takes the form of the following:

1. using search questions

2. idea prompting

Screening generated ideas

The search for a sound business idea calls for the preparation of a list so
the best can be selected. Before selection is made, however, the ideas listed
must be screened first

Business ideas can be screened by:

1. Market feasibility

A. Stable and sufficient demand

A business idea will not last if there is not enough demand for whatever
product or service that is contemplated.

 B. Potential competitive strength of the team

The potential business idea must be strong enough to withstand the

competition.

Sources of market information

1. Prior studies of the market

2. Actual polls

3. Negotiations with prospective customer.

2. Technical Feasibility

34
 Business ideas oftentimes may appear easy to execute, but it is not really so
when converting them into real products and services.

 3. Financing feasibility

A. The preparation of financial statements such as:

*Income statement

* Balance sheet

* Cash flow statement

B. The determination and analysis of financial ratios.

 Projected financial statement – the forecast of something that will happen in the
future

Projected income statement – a financial record summarizing a firm’s planned or

expected financial performance over a given time period.

Projected balance sheet – shows the plan or expected financial position at a

given date

Projected cash flow statement – shows the planned or expected cash sale or
purchases.

Final Selection

1. Status quo – means all business ideas listed passed the adapted criteria

2. Short list – means some of the ideas were eliminated

3. zero listing – all ideas are eliminated.

Organizational culture and Creativity

Effective innovation assures the continuous survival and growth of the

enterprise.

A. Encouragement of creativity and risk taking

Creativity refers to the activities involves in finding solution to problems that

hinder the achievement of the firms objectives.

35
 Business idea is the output of activity. However, it will remain an idea until it is
tested. Testing an idea, however, will require a certain measure of risk taking.

B. Rewards for creativity

When creativity is rewarded there is an assurance that such creativity will

continue existing

 C. Open Communication

The free flowing exchange of ideas between the members of an organization.

 D. Allowance for Errors

It is not right to expect any activity to be devoid of any imperfections

 E. A Climate of Participation

When a person feels that the organization espouses participation, that person
will not hesitate to make a contribution to the creative efforts of the organization.

F. Structural Mechanism that aid creativity

The urge to create solutions to problems whom would be heeded by the

innovative person more easily if there are structural mechanisms within the
organization to support the exercise.

 G. Training in the creative process

Creative pursuits are a bit complicated and it will help if those expected to
perform such functions are properly trained.

Chapter 6 Strategic Planning for Small Business

What is Strategic Planning?

Refers to the process of determining primary objectives of the entrepreneurship

and then adopting courses of action and allocating resources to achieve those
objectives.

Three distinct steps

1. Determination of objectives

36
A. The mission Statement

The objectives of the firm are important components of Company’s strategic

planning activities.

Refers to the basic description of the fundamental nature, rationale, and

direction of the firm. It consist of three concerns:

*How the entrepreneur intends to use his sources

* How the entrepreneur expects to relate to the ever-changing

environment

* The kinds of values the entrepreneur intends to offer to his customers

B. Strategic Objectives

Refers to the specific performance targets that the entrepreneurship hopes to

accomplish.

2. Adoption of course of action

After the objectives are established, the entrepreneur must develop a strategy
which is alternately called “course of action”. A “STRATEGY” indicates how the
entrepreneur will attempt to accomplish the goals with the resources available.

In developing realistic strategies, the entrepreneur can make use of the most
popular tools:

A. SWOT Analysis

An organized method of assessing the strength, weaknesses, Opportunity and

Threats of the company.

B. Forecast of future Sales Performance

An estimate or Prediction of the future sales or income of the company.

3. Implementing Strategic Plans

Strategies are useless unless they are implemented. To put strategies into
action, the following activities are required:

37
1. Identifying the specific Methods

Strategies determine the best way to use the resources.

If “established branches in strategic locations” is a stated strategy, the tactical

plan to implement it may appear as it follows:

1. Identify strategic locations

2. Determine the potentials of the identified strategic locations

3. Set a timetable for installing updates.

2. Deploying the Resources

The specific aim of planning is to be able to deploy the right quality and quantity
of resources in the various activities required to achieve the objectives.

Fundamental Strategies for Small Business

1. Flexibility Strategy

It is very difficult for small business to effect changes in its environment because
its resources are usually limited.

2. Strategy of effectiveness

Effectiveness is sometimes sacrificed for the sake of efficiency.

3. Strategy of starting simple

In starting a new business venture, the entrepreneur often encounters problems

related to financing.

Strategy Concerns of small business

1. Is he organizing a new business?

2. Is he currently running an old business?

NEW BUSINESS

Refers to:

1. Acquiring an existing business

38
 2. Organizing a new business

3. Buying a franchise

Strategies for a going concern (Any of the following strategies are applicable to
small business)

1. Segment markets – The small business operator will have to identify the
market segment with which it has an expertise then compete.

2. Efficient use of research and development – It must concentrate its R and D

efforts to lowering processes cost or to bring new products to the market.

3. Think small – The small business can still be strong with being small.

Why small business operators ignore strategic planning

1. Lack of expertise

2. Inability to get started

3. Uncontrollable, often intangible variables

4. Resource poverty

5. Focus on daily operations

6. Failure to realize the importance of Strategic Planning

39
 CHAPTER 6
THE BUSINESS PLAN

What is a Business Plan?

A business plan is a document that helps small business owner determine what
resources are needed to achieve the objectives of the firm, and provides a
standard against which to evaluate results

Purpose of a Business Plan

1. Serves as management’s guide during the lifetime of the business
2. To fulfill the requirement for securing lenders and investors.

The plan as a guide

In the course of writing the business plan. The small business operator (SBO) is
afforded sufficient time to consider all factors relevant to operating the business.

A tool for securing funds

When the SBO needs initial or additional funding for his business venture, the
business plan is a handy means for convincing lenders and investors.

Revising the Plan

40
A business plan is prepared in consideration of the current and expected
situations. In the process of implementing the plan, however, the expected
development or changes in the environment may not happen fully or eventually.
When that happens revising the business plan is in order.

PART OF THE BUSINESS PLAN

I. Title page and Contents

1. The name of the Business
2. The name/s of the proponents (in this case SBO)
3. Address
4. Telephone number
5. e-mail and website address
6. date
7. the name of the person who prepared the business plan
II. Executive Summary (prepared after the business plan is written)

Portion of the plan which summarizes the plan and state the objectives of the
business. The following must be included:

1. the capital needs of the business

2. how the money will be use

3. what benefits will be derived by the business from the loan or

investment

4. in case of loan, how will it repaid its interest, and in case of outside
investment, how profits will be generated.

III. Description of the Business

1. A short Explanation of the industry

2. A description of the business

IV. Description of Product of service

41
1. The important feature of the product or service, such as the maintenance-free
feature of the product, or the home delivery service for products ordered through
the phone.

2. A detailed description of how the product is used

3. What makes the product or service different from others

V. Market Strategies

Refers to what the SBO plans to do to achieve the market objectives.

Market Strategies consist of the following:

1. Definition of the market

Determine which part of the market will be served by the firm.

2. Determination of the market share

A. Determine the number of prospects in the target market

B. Determine the number of times the product or Service is purchased by

the target Market

C. Figure out the potential number market

D. Determine the percentage of the potential annual Purchase

3. Positioning Strategy

Where firms identify a target market segment and develop a strategy mix to
address the desires of the segment.

**Positioning refers to how the firm differentiate it’s product or service from those
competitors.

 4. Pricing Strategy

42
How the firm prices its product or service.

A. Cost plus pricing – covers all cost, variables and fixed

B. Demand Pricing – is a method of pricing where the firm set prices

based on the buyers’ desires

C. Competitive Pricing – calls for a price setting base on the price charge
by the competitors

D.Mark up Pricing – is a form of cost-oriented pricing in which firm sets

prices by adding per unit merchandise cost, operating expenses and desired
profit.

5. Distribution Strategy

Refers to the process of moving goods and services from the firm to the buyers.

 Common Distribution Channels

1. Direct Sales – is the most effective channel, the plant move the goods directly
to the consumers

2. Original Equipment Manufacturers – involves selling a manufactured product

to another manufacturer, who incorporates the same to his product and later sold
as a finish product to the end user.

3. Manufacturer’s representatives – are wholesalers employed by one or several

and paid on commission according to quantity sold.

4. Wholesalers – those who sell to retailers until the goods reach the end user

5. Brokers – are a distributor who buys directly to distributors or wholesalers and

sells to retailers and end users

6. Retailers – sells directly to consumers

7. Direct mails – are printed materials used in targeted campaign to consumers.

6. Promotion Strategy

43
How the firm promotes its product or services

A. Advertising Aspect

1. Advertising budget

2. Positioning Message

3. First year’s media schedule

B. Packaging

C. Public Relations – publicity strategy of the firm

D. Sales Promotion – special sales, coupons, contest, premium awards, trade in.

E. Personal Sales

7. Analysis of the competition

The SBO will find it difficult to compete if his competitors are unknown to him

8. Operation and Management

How the firm will operate on a continuing basis. The plan must consist of the
following:

Organizational Structure – A well-defined organizational Structure is an important

element of a business plan

Operating Expenses – Projections of operating expenses. In determining

operating expenses labor and overhead must be considered. Overhead which
may be fixed or variable, includes the following:

1. Rent

2. Advertising and sales Promotions

3. Supplies

4. Utilities

5. Packaging and Shipping

6. Maintenance repair

44
7. Equipment leases

8. Payroll

9. Payroll taxes and benefits

10. Bad debts

11. Professional Services

12. Insurance

13. Loans

14. Depreciation

15. Travel

Capital Requirements

The business plan will not be complete unless a listing of capital equipment
needed to be purchased is drawn up

Cost of goods sold

The cost of goods of trading firms consist of products purchased for resale, while
cost of goods of manufacturing firms refer to the total expenses incurred in
manufacturing a product that are intended to be sold.

These expenses include the following:

1. Material

2. Labor

3. Overhead

VI. Financial Data

1. Income Statement

Shows the income, expenses and profits of a firm over a period of time.

45
 2. Balance
Sheet

Is a
type of
financial
Statement
that shows
the financial condition of the business as a given date.

A summary of the financial information about the business is contained in

the balance sheet and are broken down into three areas

A. Assets

46
Portion of the balance sheet that lists that assets form of the firm in order of
liquidity.

1. Current Assets

a. Cash – savings and short term investment accounts

b. Accounts Receivable – income derived from credit accounts

c. Inventory – refers to the inventory of materials used to

manufacture a product not yet sold

  2. Fixed Assets

Durable assets that last more than a year

a. Capital and Plant – book value of the all capital equipment.

b. Investment – investment account owned by the company that

cannot be converted to cash in less than a year.

B. Liabilities

Is classified as current or long term.

1. Accounts Payable – refers to all expenses incurred by the business that are
purchased by an open account from suppliers and are due for payments

2. Accrued Liabilities – operation expenses that are not yet paid

3. Taxes that are due and payable

Long term liabilities

1. Bonds Payable – are bonds due and payable over one year

2. Mortgage Payable – loans used for purchase of real estate.

3. Notes Payable – loans represent by a written document which is

payable for a period of over one year.

C. Owner’s Equity

Refers to how much the owner has in the business.

47
VII. Cash Flow Statement

It projects what the business plan means in terms of pesos. The following
are listed in cash flow statement

A. Cash – cash on hand in the firm

B. Cash Sales – Are income from sales paid by cash

C. Receivable – income collected from credited sales

D. Other Incomes – incomes derived from investment, interest on money

loan to borrowers and on cash derived from sales of assets

E. Total Income – The sum of each cash, cash sales, receivable and other
income.

F. Material or Merchandise – raw material used fro manufacturing

G. Direct Labor – labor required to manufacture

H. Overhead – all fixed and variable expenses

I. Marketing Expenses – salaries, commission, and other direct cost

J. R and D expenses – are labor expenses required to support the

research and Development efforts of the firm

48
 `K. G and A Expenses – required to support the General and
Administrative function of the firm

`L. Taxes – paid to the government

M. Capital – represents the fund requirements

N. Loan Payments – total payments made to reduce long-term debts

O. Total Expenses – Sum of materials, Labor Cost, R & D, G & A, Taxes,

Capital, and Loan Payments

P. Cash Flow – difference between total income and total expenses

Q. Cumulative Cash Flow – difference between current cash Flow and

previous cash flow

Supporting Documents

1. Owner’s Resume

2. Contracts with Suppliers

3. Contracts with customers or clients

4. Letter of Reference

5. letter of intent

6. copy of the firm’s lease

7. copy of copyright or patent acquired (If Applicable)

8. tax return for the past three years

49
 CHAPTER 7
FORMS OF SMALL BUSINESS OWNERSHIP

Sole Proprietorship

Business owned and operated by a single person

Advantages of Sole Proprietorship

1. Ease and cost of formation

Among the three forms, sole proprietorship is the easiest and least costly
to establish. The only requisites for its legal existence to commence are the
following:

A. The sole owner’s resolution to start operating

B. Getting the required permit and license

2. Secrecy

The sole proprietor has the advantage of keeping his intention secret

50
3. Distribution and Use of profits

He does not have to share his profits with anyone

4. Control of the Business

The power to control the business is vested solely to the single

proprietor

5. Government Regulation

Sole proprietor is spared from various government rules which covers

partnership and corporation

6. Tax

The net income of a sole proprietorship is regarded as personal income of

the sole owner and is taxed accordingly

7. Closing the business

Business can be dissolve on will.

Disadvantage of Sole Proprietorship

1. Possibility that the owner lack ability and experience

2. Difficulty in attracting and keeping good quality employees

3. Difficulty in raising additional capital

4. Life limited on the firm

5. Unlimited liability of the proprietor

Partnership

51
 A legal association between two or more persons as co-owners of an
unincorporated business

Advantages of Partnership

1. Ease of Formation

The only requirement before partnership start and operate is for the
partners to agree on basic aspects of the business

2. Pooling of Knowledge and skills

The combined knowledge and skills of the partners provide the

partnership with a distinct advantage.

3. More sources of capital

The combine resources of the partner provides larger source of funding

4. Ability to attract and retain employees

Partnerships offer partner status to valuable employees

5. Tax advantage

The income of the partnership is not taxed separately from the partner’s
income.

Disadvantage of Partnership

1. Unlimited Liability

Sometimes the remaining partner carries the burden of unlimited liability

2. Limited Life

When a partner dies or withdraws from the business, the partnership is

terminated

3. Potential Conflict between the partners

4. Difficulty in dissolving the business

52
 It may not be easy to divide whatever assets are left for distribution to the
partners as some of the assets may be fixed or immovable.

Types of Partnership

General Partnership

An association of two or more person, each with unlimited liability, and

who are actively involve in the business

Limited Partnership

An arrangement in which the liability of one or more partners are limited to

the amount of assets they invested in the business

Partnership Agreement

A document design to prevent or at least minimize disagreement between

partners. It usually covers the following:

1. Purpose of the business

2. terms of partnership

3. goals of the partners and partnership

4. financial contribution made by each partner at the beginning and during the
lifetime of the business

5. distribution of profits and losses

6. withdrawal of contributed assets or capital by partner

7. management powers and work responsibilities of each partner

8. provision for admitting new partners

9. provision for expelling a partners

10. provisions for continuing the business in the events of a partner’s death,
illness, disability and withdrawal

53
11. provisions for determining the value of a departing partner’s interest and
method of payment of that interest

12. methods of settling disputes through mediation or arbitration

13. duration of the agreement and the terms of dissolution of the business

Corporation

A legally chartered enterprise with most legal rights of a person, including

the right to conduct a business, to own, to sell property, to borrow money, and to
sue and be sued.

Advantages of Corporation

1. limited liability

The liability of a stockholder is limited to his shareholdings

2. Ease of Expansion

The authority granted to a corporation to sell its own share of stock

provide a means to pool large amount of funds

3. Ease of transferring ownership

If a stockholder loses interest in maintaining part ownership, he may

disassociate it by selling or donating his sales to another person

4. Relatively long life

Corporations are established to have a life up to 50 years and is

extendible for longer period

5. Greater Ability to hire specialized Management

Expanded operations make it possible to subdivide the overall task into

smaller specialized positions

Disadvantage of Corporations

1. More Expensive and complicate to organize

2. Double taxation

54
3. More extensive government restrictions and reporting requirements

4. Employees lack personal Identification and commitment

 
Disadvantage of Corporations

1. More Expensive and complicate to organize

2. Double taxation

3. More extensive government restrictions and reporting requirements

4. Employees lack personal Identification and commitment

CHAPTER 8
ORGANIZING. DIRECTING, AND CONTROLLING THE SMALL
BUSINESS

ORGANIZING THE SMALL BUSINESS

-Organizing is the means by which management blends human and

nonhuman resources through the design of a formal structure of tasks and
authority.

THE APPOPRIATE ORGANIZATIONAL STRUCTURE

Every enterprise has its own objective, so an appropriate organizational

structure must be adapted by each.

THE APPOPRIATE ORGANIZATIONAL STRUCTURE

Every enterprise has its own objective, so an appropriate organizational

structure must be adapted by each.

55
 The type of organization which has to be considered will depend on how
many persons are needed to assist in accomplishing the objectives of the firm.

Phase 1

OWNER

Phase 2

Owner-production labors- book keeper- counter sales person

Phase 3

Owner- supervisor-production labors- book keeper- counter sales person

Phase 4

Owner-production manager- finance officer- sales manager-counter sales

persons-field sales person-supervisor-supervisor-supervisor-production laborers-
production labors-production laborers

THE OWNER’S CONCERN IN THE ORGANZATIONAL STRUCTURE

In designing the firm’s organizational structure, the owner needs to consider the
following:

Activities necessary to reach the goals must be identified:

An analysis of the jobs to be performed must be made: and

The placement of people with the interest and qualifications in performing the
jobs.

The following concerns are reflected in the organizational structure:

SPECIALIZATION: The first task of the owner is to determine the total function of
the organization.

DEPARTMENTALIZATION: when jobs are grouped into working units, the

process is called departmentalization.

56
DELEGATION OF AUTHORITY: when an organization grows beyond phase
one(i.e., the man organization), some of the tasks will have to be assigned to
subordinates who will be delegated with commensurate authorities.

SPAN OF MANAGEMENT: The small business operator must be consider the

number of subordinates reporting to a supervisor or to himself.

HIERARCHY OF OBJECTIVES: An entrepreneurial venture is expected to

achieve a certain objective which most is related to the realization of profits.

DEGREE OF AUTHORITIES: authority is often required to be delegated to lower

level unitsif work is expected to be accomplished.

ADAPTING A SMALL BUSINESS ORGANIZATIONAL STRUCTURE

The organization is the vehicle by which the SBO or the entrepreneur will
achieve his business objectives.

THE FORMAL ORGANIZATION

Depending on the size and the nature of business, an organizational structure

will be adapted by the SBO or the entrepreneur.

Formal organizations are various types. They are the following:

LINE TYPE- The organization structure is based in the direct flow of authority
from the chief executive to the subordinates.

INDEPENDENT RETAIL STORE

OWNER

MANAGER

ASSISTANT MANAGER

DAILY WAGE EMPLOYEES

HOLLOW BLOCKS MANUFACTURING FIRM

57
OWNER/MANAGER

ASSISTANT

SUPERVISOR

LABORERS

FUNCTIONAL TYPE

The functional organization is one in which there are a number of functional

specialists supervising the activities of a single subordinate.

LINE AND STAFF TYPE.

This type of organization is characterized by line functions directly responsible for

the achievement of organizational objectives and which are indirectly influenced
by staff through advice, recommendations, research, and technical expertise.

COMMITTEE TYPE

A committee is a formal organizational group created to carry out a specific

organizational task.

THE INFORMAL ORGANIZATION

The performance of individual employees depends on how successful

management is in motivation work groups that are formally vested with authority.

The Importance Of Organizational Structure In Small Business

No matter how small or how new the enterprise is, some form of
organization must be established.

Many small business ventures will adapt the line structure due to the
following reasons:

Its simplicity is conducive to an immediate start-up in operations.

58
It is a good launching mechanism for the more sophisticated organizational
structures.

It is adaptable to small-scale operations as all employees will be fully occupied

with work.

Directing The Small Business

After the organizing phase, the task of implementing what has been
planned must be undertaken. The specific function called directing takes care of
actual implementation.

Directing refers to guiding and motivating employees top accomplish

organizational objectives.

The small business operator needs to use the following skills that are required for
effecting directing:

 communicating with subordinates;

 providing counseling services;
 motivating;
 maintaining discipline.

COMMUNICATING WITH SUBORDINATES

Communication plays an important role in the achievement of company

objectives.. it may be defines as a meaningful exchange of information through
messages.

Functions of Communication. The small business operator can use

communication as a tool to perform the following functions:

Information function- the SBO uses communication as a means to gather

information he needs for making decisions.

59
Motivational function- communication is used to motivate subordinates to
contributes to contribute to the achievement of company goals.

Control function- the clarifications provided through communication in terms of

duties, authority, and responsibilities lay the ground for effective control.

Emotive function- communication provides subordinates with an outlet for self-

expression.

The Communication Process. Communication is a process that involves the

following:

 Sender
 Encoder
 Medium
 Decoder
 Receiver 

PROVIDING COUNSELING SERVICES

There are certain instances when the actuations of some employees do

not jibe with the required activities to accomplish the company’s objectives.

MOTIVATING

It is widely accepted that motivated employees are crucial to the

achievement of enterprise objectives.

The popular methods and programs adapted to motivate employees consist of:

Improving the organization of the elements of a job

Modifying organizational behavior

Harnessing recognition and pride; and

Financial incentives.

60
MAINTAINING DISCIPLINE

Much as the small business owner likes to avoid negative actions, there
are instances where punishment and disciplinary measures are used to eliminate
undesired behavior and poor performance.

Any action directed towards an employee for failing to follow company rules,
standards, or policies is called discipline. Among the common reasons for
disciplining employees are the following:

 Loafing
 Absenteeism
 Fighting
 Falsifying records: and
 Insubordination

PROGRESSIVE DISCIPLINE. When the SBO applies corrective measures in

increasing degrees to get an employee to voluntarily correct inappropriate
behavior, the measure is called progressive discipline.

A typical progressive discipline procedure consists of the following:

1. Verbal warning- this is the first stage of disciplinary measures, where an

employee is told by the SBO or his supervisor about his or her undesirable
behavior.

2. Written warning- this is a warning in writing sent to an employee by the SBO,

saying that unless there is a positive change in the behavior of the employee, he
or she will be dismissed.

3.A one-day suspension- if after the written warning, the undesirable behavior is
repeated, a one-day absence without pay is prescribed.

4. A three-day suspension- the employee is suspended for three days without

pay if the undesirable behavior still continues.

61
5. Termination- the employee is terminated if his or her behavior is still not
improved.

CONTOLLING THE ORGANIZATION

Controlling is a very important management function. If the small business

is to succeed, this function must be exercised very well. Controlling refers to the
process of efficient performance to attain the objectives of the firm.

Controlling involves the following:

Establishing goals and standards;

Measuring performance against the established goals and standards; and

Reinforcing successes and correcting shortcomings.

KINDS OF CONTROL

Control consists of various types and those appropriate for small business will
depend on the stage of growth of the firm. They are the follows:

STAGE CONTROL TOOLS APPOPRIATE

1. START-UP Simple accounting
records and personal supervision

2. EARLY GROWTH Operational budgets

management by objectives

3. LATE GROWTH Greater use of budgets,

standard cost systems, use of
computer
More sophisticated
4. RESOURCES MATURITY In the late growth stage.

62
 use of control measures indicated

63
 CHAPTER 9
MARKETING THE SMALL BUSINESS

Marketing is that function concerned with planning and implementing the

conception, pricing, promotion, and distribution of products and services that will
satisfy the firm’s objectives

*Marketing Strategy is the general guide for SBO*

Market strategy planning – is a small business activity which seeks to find

attractive opportunities and develop profitable marketing strategies

IDENTIFICATION OF THE TARGET MARKET

Target Marketing – refers to the activity of selecting well-defined groups of

potential customers

A. Identification of the target market

Before deciding on the target market

1. Mass market company – sells good and services to a broad spectrum of

buyers

2. Market segment company – aims to sell to a single market

3. Multi-segment company – two or more distinct markets

Choosing the target market (consider the ff.:)

1. The goods or service category of the firm

2. firm’s goals

3. what competitors are doing

4. the size of various segments

5. the relative efficiency of each segment

64
 6. the resources required

7. other factors

B. Identifying the characteristics of the target market

Measuring the size of the target market

1. Number of potential customers

2. Population growth trend

Marketing Mix – refers to the set of marketing tools that the firm uses to pursue
its marketing objectives in the target market (Product, Price, Promotions, Place
aka 4Ps)

Product – can be tangible or intangible

Price – the amount of money paid by the customer to the business so the
customer can use the product

Place – When the firm wants to emphasize the place variable, it makes its
products available in the location and time required by the buyers

Promotion – Provision of required information so they can be persuaded to

buy.

*Personal Selling – face to face selling

*Mass Selling – Involves simultaneous persuading of large numbers of

prospects to buy the firm’s product

*Sales Promotion – coupons, raffle stubs and free samples

The importance of market research

Knowing the needs of the target customers will be very helpful in

designing the right marketing mix.

65
 Types of market research

1. Primary research – data gathering through:

Observation – collecting data by observing the action of a person or a

group

Survey Method – gathering data by interviewing people

Experimental method – involves observing the results of changing one

variable in a situation while holding other conditions constant

2. Secondary Research – data gathered through

Company’s records

Libraries

Government Agencies

Market Share forecasting

Market share refers to the individual firm’s sales as a percentage of the total
sales in a specific market.

To define the probable market share of the company the following must be
undertaken

1. Determine the physical limits of the target market area

2. Determine the potential sales of the target market considering its demographic
characteristics

3. Determine the purchasing power of the target market

4. Determine the total sales revenue of the industry in the target market area

5. Determine the percentage of the total sales that can be effectively served by
the company.

66
The company’s market share can be computed by using this formula

CMS = CS/TS

Where CMS = Company Share

CS = Company’s Sales

TIS = Total Industry Sales

 Potential Sales refers to the total sales that all competitors could achieve in that
particular market segment

Sales potential refers to the portion of market potential that the company could
expect to achieve under ideal conditions

Company Sales refers to the actual sales made by the company as opposed to
the potential sales of the company.

Forecasting Company Sales

1. Market-factor analysis – is a sales forecasting method that assumes the future

demand for a product is related to the behavior of certain market factors.

2. Survey of buyer intentions – is a sales forecasting method in which a

company asks a sample of current or potential customers how much of a
particular product they would buy at a given price during a specific period of time

3. Test marketing – is a method of sales forecasting in which a company markets

its new product in a limited marketing area, measures the sales, and then a
projection is made from that sample.

4. Past sales analysis – is a method of sales forecasting that applies a flat

percentage increase to the average volume achieved last year or the past few
years.

5. Trend Analysis – a statistical method of forecasting sales over the long term by
using regression analysis

67
6. Sales force composite – Is a method of forecasting sales that consist of
collecting from all sales people estimates of sales for territories assigned to them
during the future period of interest

7. Executive judgment – is a method of forecasting sales that consists of

obtaining opinions regarding future sales volume from one or more executives

68
 CHAPTER 10
DETERMINING THE RIGHT LOCATION
Right location – refers to the one which will bring the highest possible benefits to
the firm

Wrong location – the one which will bring the most disadvantages to the firm.

69
Steps in selecting a business Location to retailers

1. Choosing a viable country

A viable country means has the capacity to provide an adequate and

profitable sales volume for the small business

2. Selecting a trading country

3. Evaluating specific site

Economics – Areas with a stable economic base must be chosen by the SBO
rather than those without a stable economic base.

Population - information about the characteristics of the population relevant to

the location decision must be obtained.

70
Competition – No matter how large the area is, it can only support a certain
number of competing firm. If too many of the same type of business are located
in the area, they may have difficulties in obtaining sales volume

Composition of the trading area:

1. Primary trading area – is where 50 to 60 percent of retailer’s customers come

from.

2. Secondary trading – is where 20 to 25 percent of the firm’s customers

3. Fringe trading area – is where the remaining customers of the firm come from.

Types of Location:

The central business district (CBD) refers to an unplanned shopping area around
the geographic point at which all public transportation system converge.

Shopping Center – refers to a centrally owned/ or managed shopping district

which is planned, has balanced tenancy and is surrounded by parking facilities.

Free Standing retailer – is generally located along the major traffic arteries
without any adjacent retailers selling competing products to share traffic.

71
He drew up a list of prospective sites for his factory. The list contains of
the following information:

SITE LOCATION FEATURE

     

A  1 km from public market  300 sq2 vacant lot owned by

Marcelino
   200 meters away from national
highway  Lot inside subdivision
 
 4 km from public market    
B
 50 meters away from national  600 sq2 vacant lot owned by
 
highway Marcelino’s parents
  
   Surrounding lots are residential 
C
 8 km from public market    5,000 sq2 vacant lot owned by
Marcelino’s parents
 Along the city road and 3 meters
away from national highway  Surrounding lots are agricultural

   

A person who resides at the town proper and with three years’ experience as
supervisor in manufacturing food for students’ merienda has agreed to work for
Marcelino

72
 CHAPTER 11

MANAGING SMALL BUSINESS RISK

RISK MANAGEMENT

Risk management is a process in which businesses identify, assess and treat risks
that could potentially affect their business operations.

What is a risk?

A risk can be defined as an event or circumstance that has a negative

effect on your business, for example, the risk of having equipment or money stolen as
a result of poor security procedures. Types of risk vary from business to business.

You must decide on how much risk you are prepared to take in your business. Some
risks may be critical to your success; however, exposing your business to the wrong
types of risk may be harmful.

Risk refers to the uncertainty about loss or injury

Major types of Risk

1. Speculative Risk – involves a chance of either profit or loss

2. Pure risk – involves a threat of loss with no chance of profit.

Risk management – an organized strategy for protecting and conserving assets

and people

Methods of dealing with risk

1. Avoiding risk

Method wherein the source of risk is eliminated

2. Risk Reduction

73
 Refers to step undertaken to lessen the likelihood of loss

3. Assuming the risk

the company assumes the risk and gets ready for whatever loss will come.

4. Shifting risk to an insurance company

The process by which the firm, for a fee, agrees to pay another firm a sum
of money stated in a written contract when a loss occurs.

Types of insurance Coverage

I. Life Insurance Policies

Covers risk of losing one’s life, disability or sickness.

Types of life insurance policies (According to coverage)

1. Life policies – cover deaths due to any cause except suicide

2. Accident Policies – cover death due to accidents

3. Health Policies – covers medical expenses

Types of life insurance policies (According to other factors)

1. Term life insurance – pure insurance cover i.e., no other benefits are included
like accumulation of savings

2. whole life insurance Policy – provides the benefits when the assured dies.

Types of whole life policy

1. Limited payment policy – requires that the premium be for a stipulated period

2. Single premium policy – only one premium payment is made

3. Modified life insurance contracts – premiums are arrange so they are smaller
than average for the first 5 to 10 years

74
4. Variable life policy – has a clash value that fluctuates according to the yields
earn by a separate fund.

5. Adjustable life policy - one whose average can be increase or decrease by

changing either the premium payment or period of coverage

6. Universal Life Policy – combines terms insurance and investment

7. Endowment Life policy – builds a large cash value within a stated period of
years

Business uses of life insurance

1. use as a fringe benefit for employees

2. to protect firm against the financial problems caused by the loss of a key
person

3. to aid in transferring ownership rights

II. Non-Life insurance

Loses on properties owned by the firm due to fire, robbery, theft

Loses due to liability of claims of third parties

Fire Insurance – risk of loses due to fire may be covered with fire
insurance

A fire insurance policy may also provide coverage on allied risk such as

1. Earthquake fire

2. earthquake shock

3. windstorm, typhoon, flood

4. riot and strike damage and riot fire damage

5. explosion

75
 Motor car Insurance – if the firms own cars like automobile or delivery vans

Marine Insurance

General Liability Insurance

Fidelity bond – protects the SBO against the losses suffered as a result of
dishonesty on the part of employees.

Supply contract bond – guarantees the faithful performance of contacts for

furnishing supplies and materials at an agreed price

Performance bond – guarantees performance and may require a small firm from
a contractor who agreed to construct a building or a facility for the firm

Fidelity bond – protects the SBO against the losses suffered as a result of
dishonesty on the part of employees.

Supply contract bond – guarantees the faithful performance of contacts for

furnishing supplies and materials at an agreed price

Performance bond – guarantees performance and may require a small firm from
a contractor who agreed to construct a building or a facility for the firm

The most common business risk categories are:

 strategic –decisions concerning your business’ objectives
 compliance –the need to comply with laws, regulations, standards and codes
of practice
 financial –financial transactions, systems and structure of your business
 operational –your operational and administrative procedures
 environmental –external events that the business has little control over such
unfavourable weather or economic conditions
 reputational –the character or goodwill of the business.

Others include health and safety, project, equipment, security, technology,

stakeholder management and service delivery.

76
Preparing a Risk Management Plan

Your risk management plan should detail strategies for dealing with risks specific to
your business. It’s important to allocate time and resources to preparing your plan to
reduce the likelihood of an incident affecting your business.

You can develop a risk management plan by following these steps:

1. Identify the risk

Undertake a review of your business to identify potential risks. Some useful

techniques for identifying risks are:

Evaluate each function in your business and identify anything that could have a
negative impact on your business.
Review your records such as safety incidents or complaints to identify previous
issues.
Consider any external risks that could impact on your business.
Brainstorm with your staff.

Ask yourself ‘what if’:

you lost power?
your premises were damaged or not accessible?
your suppliers went out of business?
there was a natural disaster in your area?
one of your key staff members resigned or was injured at work?
your computer system was hacked?
your business documents were destroyed?

77
2. Manage Risk

Managing risks involves developing cost effective options to deal with them
including:

Avoid the risk - change your business process, equipment or material to achieve
a similar outcome but with less risk.
Reduce the risk - if a risk can’t be avoided reduce its likelihood and
consequence. This could include staff training, documenting procedures and
policies, complying with legislation, maintaining equipment, practicing
emergency procedures, keeping records safely secured and contingency
planning.
Transfer the risk - transfer some or all of the risk to another party through
contracting, insurance, partnerships or joint ventures.
Accept the risk – this may be your only option.

3. Monitor and Review

You should regularly monitor and review your risk management plan and ensure the
control measures and insurance cover is adequate. Discuss your risk management
plan with your insurer to check your coverage.

78
 CHAPTER 12

STRESS MANAGEMENT
How to manage stress and anxiety as an entrepreneur?

1. Exercise. I work 10 to 12 hour a day on average, so I try to start my day

with exercise
2. separate your work and sleep. I work late as many entrepeneurs do.
3. unload your to do list
4. set aside a catch all day
5. build your systems based on your strengths.
6. keep positive attitude
7. accept that there are events that you cannot control
8. be assertive instead of aggressive
9. learn and practice relaxation techniques, try meditation, yoga, or taichi
for stress management
10. eat healthy well-balance meals

11 Stress Management Tips and Techniques for Entrepreneurs

1. Try to figure out stress signals first:

Every individual person in this world has some sort of stress in their life.
Entrepreneurs are the one who faces most difficult stage of stress because they
have a life and a business to manage.

It often happens that an entrepreneur forgets about his personal life when it
comes to handling the business he created from his sweat and blood but the
problem is not their work, it is the stress they took to handle that situation.

If you want to beat the stress and have more control over your stress level then
see the first signal of stress and keep the strong hold on it so that you can
develop ways to deal with stress.

79
Stress generally comes with work so manage your work effectively and
understand how stress is occurring and affecting your life, that way you will know
when you are stressed. When you understand your stress level and signals you
can manage it more effectively without harming you in any way.

2. Be positive:

Positive thinking has the power to make the most difficult situation bearable. A
positive attitude helps you in enjoying every aspect of your life and you feel more
satisfied with your life. Positive thinking or positive attitude is a pain killer; it can
help you in dealing with most stressed and difficult situation without losing your
footing. Positive thinking and positive attitude for an entrepreneur are like a ray of
hope in the darkness when you can’t see one good thing in your life.

When an entrepreneur faces critical situation in his personal or professional life it

causes him stress and anxiety but to deal with such situation, positive thinking
and positive attitude towards life is what needed. Therefore make space for
positive thinking in your life, don’t take the unnecessary stress and try to deal
with a positive attitude to make things simple.

3. Try to be happy:

It happens so many times in our life, when difficult situations hit our life we start
to worry about consequences and that make a difficult time more difficult and
increase stress level. And also, you start to worry more and your mind become
foggy which make you unable to find any solutions. In this process of worrying
and solutions, a person might start going deep into a stressful zone which is
more dangerous even more than the difficult situation a person is facing.

Therefore, to avoid such things a person or an entrepreneur must think about

happy stuff in his professional life, remember all the good things he had done, all
the achievement and success he got in his professional life. For example, an

80
entrepreneur should think about when they completed the difficult task within the
time limit, their amazing workers, and his family with whom he has to spend
happiest moments in his life so that he can overcome that situation.

4. Take breaks:

Some of the entrepreneurs have a habit of obsessing about their duties and
responsibilities as an entrepreneur and they often forget that they also have a
home, family, friends and they too need a break from work. This kind of
obsession can be dangerous and injurious to their health as well as to their family
life. Therefore, to avoid situations like being stressed or crazy with work take a
break.

Taking break doesn’t mean go on holidays with your work. Taking break mean to
say no to work for at least few days in a month or two, take a weekly break to
keep you refreshing and motivated to work. Take a small break from your work
so you can enjoy other things in your life other than professional elements. It is
very much necessary for everyone to take a break or going for a holiday to create
better space in their life.

5. Implementing change in their daily routine:

Following same and old boring schedule can lead one to a stressful zone, which
is unhealthy for everybody. Similarly, when an entrepreneur maintains a perfectly
scheduled daily personal and professional life, then there is a possibility that he
gets bored with the same routine for every day and can experience a large
amount of stress in his life. Therefore, to come out of that stress zone an
entrepreneur need to make some changes to their daily routine like change
working hours, half day leave once in a while or outing with family, which
automatically makes them happy and excited to face the challenges of their life.

81
6. Incorporate a healthy lifestyle:

Eating healthy and being healthy or living a healthy life doesn’t mean that a
person needs to be conscious about his weight or anything else but leading a
healthy life is for their own benefit. Maintaining healthy habits like exercise and
eating healthy food helps in the long run and keep your stress level in check.
Therefore, to overcome stress an entrepreneur need to incorporate a healthy
lifestyle which includes healthy eating. This kind of healthy lifestyle creates better
space for positivity and happiness which reduces all kinds of stress in one’s life.

7. Share workload:

There is a possibility that entrepreneurs might experience some sort of additional

workload in their professional life because they have all the responsibilities on
their shoulders. Whenever an entrepreneur feels that he is experiencing a large
amount of work as compared to the rest which requires more time and skill, he
needs to increase his manpower.

Include experts in your team so that you have less workload and responsibilities.
Distribute responsibilities in your employees as per their expertise and
experience. Share your workload and distribute your hours for each and every
task. Sharing workload helps a lot in managing stress from excessive work.

8. Keep finances on track:

Some industrialists or leaders worry more about their financial elements than
anything in their life. Therefore, it is always better for those entrepreneurs that
instead of worrying about finances, they should invest their time thinking about
their profit ratio. Because sometimes when a person thinks more about his
financial position, then there is a possibility that he can experience more stress in

82
his professional career. Keeping your finance on track also helps in maintain
equal workflow and there are slim chances of finance issues when you manage
all your capital effectively.

9. Spend time with friends and peers:

Most of the times many of the businessman or entrepreneurs tend to become

very busy in their life and that is why they miss some of the beautiful moments in
their personal life. Therefore, it is always better for an entrepreneur that
whenever he experiences stress, then he should take a time out of his
professional life and try to invest those times with his friends and peers. This kind
of behavior can increase their level of peace and it automatically reduces stress
from their life.

10. Make special space for family life:

An entrepreneur is a human first than he is a businessman and he should never

forget that. For a normal human being family comes first, apply this trick of being
normal to keep your family time safe from your working hours.

Entrepreneurs have tendencies of forgetting about their family which causes

them unnecessary stress about lack of family time. So spend quality time with
your family and keep your family time separate from your work hours and follow
this hour schedule strictly. Your time with your family keeps you stress-free
and motivated to work, the quality time you spend with your spouse and children
keep your energy level high.

11. Pursue some sort of hobby:

Hobbies are the things we like to do in our free time. We all have so many
hobbies when we were kids but as we grow we forgot about our hobbies.

83
Hobbies can make anyone’s life more interesting and stress-free, every individual
have their own hobbies, likes, and dislike.

Having something interesting to do can do wonders in your life and every

entrepreneur needs to have at least one hobby to keep them busy other than
work, something they like and enjoy doing it.

Engaging in sports or joining a club can do for entrepreneurs without doing much
effort and these hobbies also help in maintaining your health as well as keep you
stress-free and relax.

Simple Ways to Live a Less Stressful Life: 

1. Don’t mix your personal and professional life together because it makes things
messier and causes you more stress

2. Do not take your responsibilities lightly and follow the task schedule as well as
create schedule for each work you do

3. Don’t take your work to your home because your home is your heaven where
you relax and refresh yourself

4. Don’t take your holidays or vacations lightly, make time for yourself.

5. Don’t work extra hours, do not make it your hobby to stay in the office late and
work because it is up to you to make your life complicated or keep it simple.

6. Do not take all the work in your hand, learn to trust your employees because
they are working for you and your are paying them to make your work easy.

7. Do not cut your workout schedule, your eating time and the time you spend
with your friends and peers.

84
 CHAPTER 13

STRATEGIC PLANNING FOR SMALL BUSINESS

What is Strategic Planning?

Refers to the process of determining primary objectives of the entrepreneurship

and then adopting courses of action and allocating resources to achieve those
objectives.

Three distinct steps

1. Determination of objectives

A. The mission Statement

The objectives of the firm are important components of Company’s strategic

planning activities.

Refers to the basic description of the fundamental nature, rationale, and

direction of the firm. It consist of three concerns:

*How the entrepreneur intends to use his sources

* How the entrepreneur expects to relate to the ever-changing

environment

* The kinds of values the entrepreneur intends to offer to his customers

B. Strategic Objectives

Refers to the specific performance targets that the entrepreneurship hopes to

accomplish.

2. Adoption of course of action

85
 After the objectives are established, the entrepreneur must develop a strategy
which is alternately called “course of action”. A “STRATEGY” indicates how the
entrepreneur will attempt to accomplish the goals with the resources available.

In developing realistic strategies, the entrepreneur can make use of the most
popular tools:

A. SWOT Analysis

An organized method of assessing the strength, weaknesses, Opportunity and

Threats of the company.

B. Forecast of future Sales Performance

An estimate or Prediction of the future sales or income of the company.

3. Implementing Strategic Plans

Strategies are useless unless they are implemented. To put strategies into
action, the following activities are required:

1. Identifying the specific Methods

Strategies determine the best way to use the resources.

If “established branches in strategic locations” is a stated strategy, the tactical

plan to implement it may appear as it follows:

1. Identify strategic locations

2. Determine the potentials of the identified strategic locations

3. Set a timetable for installing updates.

2. Deploying the Resources

The specific aim of planning is to be able to deploy the right quality and quantity
of resources in the various activities required to achieve the objectives.

86
Fundamental Strategies for Small Business

1. Flexibility Strategy

It is very difficult for small business to effect changes in its environment because
its resources are usually limited.

2. Strategy of effectiveness

Effectiveness is sometimes sacrificed for the sake of efficiency.

3. Strategy of starting simple

In starting a new business venture, the entrepreneur often encounters problems

related to financing.

Strategy Concerns of small business

1. Is he organizing a new business?

2. Is he currently running an old business?

NEW BUSINESS

Refers to

1. Acquiring an existing business

2. Organizing a new business

3. Buying a franchise

Strategies for a going concern (Any of the following strategies are applicable to
small business)

1. Segment markets – The small business operator will have to identify the
market segment with which it has an expertise then compete.

2. Efficient use of research and development – It must concentrate its R and D

efforts to lowering processes cost or to bring new products to the market.

87
3. Think small – The small business can still be strong with being small.

Why small business operators ignore strategic planning

1. Lack of expertise

2. Inability to get started

3. Uncontrollable, often intangible variables

4. Resource poverty

5. Focus on daily operations

6. Failure to realize the importance of Strategic Planning

88
 Chapter 14
LIST OF FAMOUS FILIPINO ENTREPRENEURS AND THEIR BRANDS

List of Famous Filipino Entrepreneurs and their Brands

Money and fame are two of the things that every person desires. However, when it
comes to great business and excellent entrepreneurship, being rich and famous is not
enough. Business aspirants should make a legacy, consisting of inspirations,
reputations, outstanding brands and companies that help people lives. To present some
of our country’s top business personalities, whom we can reflect, we have gathered
names of famous Filipino Entrepreneurs and their brands in the Philippines. In an
alphabetical order, you will find below a list of our nation’s prominent entrepreneurs and
business magnates.

1. Alfonso T. Yuchengco – Heads Yuchengco Group of Companies, Chairman of

Rizal Commercial Banking Corporation (RCBC), Chairman of the Mapua Institute
of Technology.

2. Alfredo M. Yao – Zest-O Corp. (Zest-O)

3. Amable R. Aguiluz V – AMA Institute of Computer Studies (AMA)

4. Axel Kornerup – Netopia Internet Café (Netopia)

5. Andrew Gotianun – runs the Filinvest Development Corporation.

6. Andrew Tan- runs the Alliance Global Group Inc. (AGI), Megaworld Corporation,
Emperador Distillers, Golden Arches Development Corporation – Possesses a
franchise of McDonald’s

7. Ben Chan – Bench Apparels (Bench)

8. Ben Colayco – Level Up

9. Bernie H. Liu – owner of Penshoppe

10. Bienvenido Tantoco, Sr – Rustans Department Stores and Supermarkets

11. Bryan Tiu – owner of Teriyaki Boy Restautant

89
 12. Betty Ang – President of privately held Monde Nissin, maker of instant noodles,
biscuits and snack foods (Lucky Me!, Monde and Bingo).

13. Cecilio Kwok Pedro – founder of Lamoiyan Corp. (Hapee toothpaste)

14. Dr.Rolando B. Hortaleza and Dra. Rosalinda Ang – Home Beauty Exclusives
(HBC)

15. Edgar Sia II – Founder of Mang Inasal (70% share acquired by Jolibee
Corporation in October 2010)

16. Emilio T. Yap – owns Manila Bulletin, chairman of the Manila Hotel and
Chairman Emeritus of Philtrust Bank

17. Felipe L. Gozon – current chief executive and chair of GMA Network Inc. (GMA
7)

18. Frederick Dy – chairman of the publicly-listed universal bank, Security Bank

Corporation

19. George Ty – founder of Metropolitan Bank and Trust Company (Metrobank)

20. Henry Lim Bon Liong – Sterling Paper Group of Companies

21. Henry Sy – founder of SM Group and chairman of SM Prime Holdings, Shoe

Mart (SM)

22. Jaime Zobel de Ayala – chairman emeritus of the Ayala Corporation (Ayala)

23. Jesus Tambunting – Chairman and CEO of Planters Development Bank

24. John Gokongwei – chairman of JG Summit Holdings, Cebu Pacific Air, Digital
Telecommunications (Sun Cellular), owns Universal Robina Corporation, controls
Robinsons Land and Malls (Robinsons)

25. Jon Ramon Aboitiz – President of the Aboitiz & Co., and Aboitiz Equity Ventures
Inc.
26. Jose S. Concepcion Jr. – CEO of RFM (Selecta Ice Cream, Swift Hotdogs,
Sunkist beverages, Fiesta Spaghetti, Vitwater)

27. Les Reyes – President and CEO of Reyes Hair Cutters

28. Lucio Tan – owns Asia Brewery, Tanduay Holdings, Fortune Tobacco, Philippine
Airlines (PAL)

90
 29. Manuel V Pangilinan – Chairman of the Philippine Long Distance Telephone
Company (PLDT), owner of ABC/TV5 network, Cignal Digital TV and Smart
Communications.

30. Oscar M. Lopez – Chairman Emeritus of the Lopez Holdings Corporation

(formerly known as Benpres Holdings Corporation).

31. Pacita ‘Chit’ Juan – Figaro Coffe Company

32. Ricky Reyes – founder of Ricky Reyes

33. Roberto R. Gandionco – Julie’s Franchise Corp.

34. Roberto S. Claudio – Toby’s Sports and Hobbies Salon

35. Rolando Hortaleza – Chairman of the Board and Chief Executive Officer of the
publicly-listed company, Splash Corporation

36. Rommel Juan – President of Binalot Fiesta FFoods

37. Sandy Javier – Andoks Litson Corporation (Andok’s)

38. Soccoro Ramos – founder of National Bookstore

39. Tess Ngan Tian – President and tresurer of Lots ‘A Pizza

40. Tony Tan Caktiong- Caktiong – founded the fast food chain Jollibee.

41. Victor Tan – Bobson Apparel

42. Vivian Que Azcona – President of Mercury Group (Mercury Drug Stores)
43. Washington Z. Sycip – cofounder of the Asian Institute of Management (AIM) and
Sycip Gorres Velayo and Company (SGV).

44. Wilfred Uytengsu Jr.- President and Chief Executive Officer Alaska Milk
Corporation

91
 EXERCISES
Chapter 1

Questions

1. What is the role of an entrepreneur in the society?

2. What are the two elements of innovation?

Enumeration

1. It is the most important part of management, especially for those

enthusiastic people who have an idea of a start up money
2. A process in which an individual or group of individuals together perform
certain tasks and risk their time as well as money.
3.
4.
5. 5 Components of an entrepreneur.
6. ( In order)
7.
8. The three general requisites to make the wealth conversation principle
9. Come alive.
10.
11.
12.
13.
14. Competencies of entrepreneur
15.
16.
17.
18.
19. Give at least 3 M's to successful entrepreneurship
20.

92
Chapter 2

Questions

1. If you were a small business owner, would you consider sharing the
company’s financial data with employees? Explain.
2. How do businesses and non profit organizations help create our standard
of living?

True or False

1. A small business manager and an entrepreneur perform the same

functions.
2. Entrepreneurs recognize an opportunity and start a business to take
advantage of it.
3. Entrepreneurship and small business management are processes, not
isolated incidents.
4. Financial risks, material risks, and psychological risks are all risks faced
by the entrepreneur.
5. Mergers, IPOs, and ESOPs are all forms that can be taken in the harvest
stage of the start up process model
6. A triggering event is a specific event or occurrence that sparks the
entrepreneur to proceed from thinking to doing.
7. In the end, every business will eventually reach the harvest stage.
8. Environmental factors are the traits possessed by the business owner that
affect the development of the small business.
9. Personal characteristics vary as a business evolves from one stage to
another.
10. There is only one factor that could be called a triggering event.
11. Personality characteristics are not useful in predicting who will be a
successful entrepreneur.
12. The primary reason most people go into business for themselves is to gain
the respect of others.

93
 13. Independence and control over their own lives are reasons many people
begin small businesses.
14. More than 50 percent of business owners started their own business in
order to earn large sum of money
15. Individuals who prefer steady pay and a normal nine-to-five work schedule
also tend to gravitate toward self-employment.
16. Income uncertainty is one of the most challenging aspects of starting a
new business.
17. The conclusion after more than 30 years of research on personal
characteristics is that successful entrepreneurs cannot be predicted.
18. The typical entrepreneur tends to accept moderate risk only after careful
examination.
19. The three most important characteristics that every successful
entrepreneur possesses are perseverance, needed technical skills, and a
deep belief in himself/herself.
20. Entrepreneurs tend to have a weaker internal locus of control than do
people in general.

94
Chapter 3

Questions

1. How is social responsibilities important to you as an entrepreneur?

2. What are the social responsibilities of an entrepreneur towards their
employees?
3. What are the responsibility of the customers to the supplier? Explain.

Fill in the blank

1. ________ must do more than provide jobs to make profit.

2. The benefits of ___________ your values systems are.
3. ______________ is an ethics theory in which individuals are accountable
for fulfilling their civic duty.
4. One of the motivation factors in monetary factors.
5. The term _____________ indicates that a small business does not control
a sizable share of its market.
6. _________ is the study of moral obligation involving the distinction
between right and wrong.
7. Being a __________ responsible employer.
8. There must be a balance between economic growth and the welfare of
__________ and the environment.
9. ______________________To protect the global environment through
environmentally friendly procurement, which is based on the cooperation
with suppliers.
10. Fair and equitable __________ Carries out fair and equitable transactions
by providing equal opportunities to all suppliers (and candidates) in and
outside in accordance with its internally established procedures.
11. Ethically Responsibility are guidelines for ____________ and moral code.
12. Through facilitation, governments enable companies to engage to drive
social and environmental __________________.

95
 13. ___________________________ Comply with all relevant laws, social
norms, standards and treaties worldwide, including the protection of
human rights, the prohibition of child labor etc.
14. _______________________ To secure right price and quality in order to
provide its customers with stable supply of optimal products, which
ensures that gains the full confidence of customers around the world.

Find the secret word using the first letter of your answers in each numbers
above.

1._____ 2._____ 3._____ 4._____ 5._____ 6._____ 7._____ 8._____

9._____ 10._____ 11._____ 12._____ 13._____ 14._____

96
Chapter 4

Questions for review and Discussion

1. Do you think entrepreneurship is not for everyone? Why or Why not?

2. Why is the environment considered to be a factor in the success or failure of

entrepreneur?

3. In terms of support of entrepreneurship, how may the environment be

classified?

4. What does “personality” mean? What does it include?

5. What personal traits are considered important to entrepreneur?

6. Describe self-confidence as a desirable trait of an entrepreneur.

7. What functions are performed by goals?

8. When is a person considered to be a “reasonable risk taker”?

9. What motivates people to become entrepreneurs?

Enumeration

1. Prefers activities involving aggressive behavior and physical exertion

requiring skills, strength, and coordination.
2. Is expressive, nonconforming, original, and introspective.
3. Enjoys working with and helping others and purposefully avoid systematic
activities involving tools and machinery.
4. Prefers to be analytical, curious, methodical, and precise.
5. Enjoys the systematic manipulation of data, filing of records, or
reproducing materials.
6. Enjoys verbal activities to influence others and to attain power and status.
7. success in business becomes possible when the entrepreneur is self-
motivated to pursue his chosen course.
8. The entrepreneur’s job involves solving problems and making decision.
9. makes the decision whether to prioritize the company.
97
 10. Can be productive or loyal to the firm

Case 4. Petra’s Cosmetics: I’ll Walk Alone

Service in the Military is a tradition the Bayaua family of Tuguegarao City,

Cagayan is very proud of. In fact, Sergio Bayaua was an officer with arank of
major in General Emilio Aguinaldo’s army during the Philippine Revoulution
against the Spaniards in 1898. His son Donato served as an officer in the
Philippine Army during the American regime and fought the Japanese in 1942.
Donato’s son, Fernando, also became an army officer and retired as a colonel.
These three prominent members of the Bayaua clan were recipients of medals
awarded for their bravery in the combat. Friends and neighbors regard them as
exemplary role models of their children and they think of them as the epitome of
machismo.

Just recently, however, Fernando’s sense of family pride was pricked when he
discovered that his teenage son, Pedro, was exhibiting unmanly behavior.
Fernando became furious when he saw Pedro applying makeup on his face.
Later, Fernando, also found out that his son displayed special interest in
cosmetics. Fernando’s classmate in high school, Miss Rosario Mariano confided
to him that his son was able to convince her to buy cosmetics in the amount of
P12, 500. It also turned out, later, that Pedro was able to convince nine ladies to
buy from him.

With Pedro’s interest in selling, he opted to enroll in business course. He tried to

support himself by selling cosmetics. This he did instead of applying for the
cadetship course at the Philippine Military Academy, the Alma mater of his father.
Fernando was disappointed enough to think that his son would not be successful
in anything that he does.

When Pedro graduated from college, he thought of formally starting her

career in entrepreneurship, just like his uncle Teodoro. Pedro thought of the

98
great emotional strain that torments his father. Nevertheless, he decided to learn
the nuances of how to successfully operate a cosmetics retail shop.

99
Chapter 5

Guide Question

Do you think Pedro’s personality will not be a hindrance to his dream of being a
successful entrepreneur?

Questions for review and discussion

1. What is a sound business idea?

2. What forms of business ideas may be provided as example?

3. How may business idea be generated?

4. In what way me be a person’s acquaintance be a source of business ideas?

5. What is the disadvantage of unanticipated means of generating business

ideas?

6. How may be the best ideas be determined?

7. What possible sources of information may be tapped to determine the market

feasibility of a business ideas?

8. How is the financial feasibility of a business idea determined?

9. What is meant by “innovation”? What are the types of innovation?

10. What kind of organizational culture supports innovation?

Case 5: Jupiter Drug

Mr. Delfin Dumlao has been working with Jupiter drug for the past five years. He
was promoted as supervisor three months ago.

Jupiter Drug is currently maintaining a branch each in five towns in the province
of Tarlac. The towns are Tarlac city, Camiling,Moncada, Paniqui and Conception.

100
The sole owner of Jupiter Drugs is Mr. Severo Lagayan and he is worried about
how to meet the growing competition among drugstores in the province of Tarlac.
His business is on its 13th year and he is not satisfied with what is currently
happening to the firm. He think Jupiter Drug is not growing as fast as it should.
He still remembers well how he established one branch after another every two
years. The fifth branch was establish three years ago but still he couldn’t put up a
sixth branch. He blames poor sales for his predicament.

Mr. Lagayan was a supervisor for a local branch of the development bank of the
Philippines. He resigned to engage in an entrepreneual career in the drugstore
business. He is a long-time member of the local council of the knights of
Columbus. On several occasions, he rejected nomination for the highest office of
the said council of the knights of Columbus. On several occasions, he rejected
nomination for the highest office of the said Council. He does not talk much, but
when he does, some people are perplexed.

Mr. Lagayan was fortunate because his business flourished during the first 10
years. On the 11th year, however, sales for his five outlets appeared to have
reach its peak. Sales decreased by 5% on the 12th year. Mr. Lagayan thinks the
decrease is largely due to the recent entry of competitors within his service area.

One day he called the managers and supervisors of the five branches to the
meeting to discuss the problem of declining sales. He ask opinions from the
participants but nobody dared to say anything except Mr. Delfin who was visibly
eager to share an idea. He raised his hand and was acknowledge but before he
could say anything, Mr. Lagayan, made a remark:

“I don’t think as a supervisor, you can be of much help. Please take your seat.”

Delfin was surprised and he could not believe what he just heard. He was
thinking of sharing some ideas that may be of help to Jupiter Drug.

101
Guide Questions:

1. What is your comment regarding Mr. Lagayan’s remarks?

2. What do you suggest?

Question for review and Discussion

1. What is “Strategic Planning”? Is it applicable to small business?

2. What is the “Mission Statement”? What are its concerns?

3. What are strategic objectives?

4. What is the meaning of strategy?

5. What tools are used for developing strategy?

6. What is meant by firm’s strengths?

7. What are opportunities?

8. How are sales forecast determined?

9. What activities are required to implement strategies?

10. What basic strategies are necessary for business?

102
Chapter 6

Guide Questions

1. What is a business Plan?

2. How important is the business plan to the owner? To the prospective investors
and lenders?

3. What are the purpose of business plan?

4. What are the usual parts of a business plan?

5. What are indicated in the executive summary of the business plan?

6. What activity are necessary before a market strategy is adapted?

7. Why is competitor analysis n important part of the business plan?

8. What components are indicated in the operation and management section part
of the business plan?

9. What is the relevance of income statement in business plan?

10. What supporting documents may be included in the business plan?

103
Word Search Puzzle

E C N A R U S N I N L O L O R
B N A S S E T S E S U L O V E
N R V K J A M R M A T D A E C
O H A M H M F O E G L P N R I
I U L N I J G S C N I W S N E
T R A V E L C I A N T Q R Y V
A Y A D V E R T I S I N G T A
I N V E N T O R Y U E X S I B
C G N I G A K C A P S I U L L
E L X L L O R Y A P Q U E I E
R O D O G P I O H L Z C A B E
P R A C S H I P P I N G P A L
E Y W Z H B A D D E B T S I S
D R E C I E V E C S T Q T L B

Rent Shipping
Advertising Packaging
Supplies Bad Debts
Utilities Receivable
Payroll Assets
Insurance. Liability
Loans Inventory
Depreciation Cash
Travel Income

Case 6

Sammy gathered relevant information he thought would be necessary in the

preparation of business plan. He considered hiring at least five experienced
mechanics. He started constructing the building where his office and services
facilities will be housed. He made sure that customers can contact him through
104
the telephone he installed in his office. In addition, he maintains a handy phone
so he can serve those whose cars are stalled somewhere.

Sammy stuck to his business plan and business was very encouraging during the
first three years. On the fourth year of his operation, a new motor repair shop
opened just across the highway of his shop. It was inevitable that some of his
customers would move over to his new competitor. Sammy did not anticipate the
threat now confronting his business. He was already entertaining the idea of
putting up another shop at the other end of commercial district. But now, it seems
that his dreams of opening another shop is slowly drifting away. With the entry of
the competitor, he is beginning to lose faith in the usefulness of the business
plan. He is apprehensive and he wants a quick advice.

Guide Questions

1. If you were a friend of Sammy, what would you tell him?

2. Is Sammy’s situation hopeless?

3. What did Sammy miss regarding his business plan?

Case 7: MP records: Dreaming

When he was 15 years old, Manuel Palisoc showed great interest in music. Three of his
classmates played electric guitar so well and he wanted so much to join them as
drummer in their weekly rehearsals. He could not be taken in because he did not know
how to play drums.

105
Manny did not get discourage, however, he thought he could be useful in some other
way. He tried very hard to find a good drummer and when he found one he convinced
his classmates to take him in. Since then, Manny act as an assistant troubleshooter for
the group. He saw to it that the group performed in school activities whenever possible.

His college studies interrupted Manny’s passion for music. After graduation, however, he
made serious moves to reform his old group and expose them to the public.

He negotiated for performances in prestigious night clubs and hotels. Regular

performance in TV shows became a routine for the group. Within a short period,
manny’s band became famous throughout the Philippines, and this became possible
because of Manny’s skill in managing them.

Realizing his talent for entertainment business, Manny decided to make it a full time job.
He invited other groups to join him. Some months later, he sent some of them for live
performances abroad.

Manny thought that his accomplishment will not be complete if he will not operate a
recording company and a radio station. He also see these business a compatible with
developing his wards. However, Manny also thinks that he does not have sufficient
money and talent to handle both type of businesses.

Somebody informed Manny that he has a former classmate who has three years of
experience in the recording business and other classmate has four years of experience
in broadcasting.

Manny agreed to see his former classmates. However, he wonders what information he
would like to have before he proposes anything to them. He also wants to know the
proposal he would offer just in case he gets the right information.

Guide Question: What will be your advice to Manny?

Match the column A with column B. Write your answer on the blank provided.

____1. A legally chartered enterprise with A. Distribution and Use

most legal rights of a person, including the right one to of Profits
conduct a business, to own, to sell property, to borrow money,
and to sue and be sued. B. Tax

106
____2. When a partner dies or withdraws from C. Government
the business, the partnership is terminated. Regulation
____3. Business can be dissolve on will. D. Control of the
____4. Business owned and operated by a single person Business
____5. Sometimes the remaining partner carries the E. Unlimited Liability
burden of unlimited liability. F. Limited Life
____6. The sole proprietor has the advantage of G. Closing the
keeping his intention secret. Business
____7. Sole proprietor is spared from various H. Sole
government rules which covers partnership and corporation Proprietorship
____8. The power to control the business is I. Corporation
vested solely to the single proprietor. J. Secrecy
____9. He does not have to share his profits with anyone.
____10. The net income of a sole proprietorship is
regarded as personal income of the sole owner and
is taxed accordingly.

Chapter 8

 QUESTIONS FOR REVIEW AND DISCUSSION

1. Is the organizing function applicable to small business? Why?

2. What is the most appropriate organizational structure for small
business?

107
 3. What must be considered by the SBO in designing the organizational
structure?
4. In what way is specialization useful to small business?
5. What are the various types of departmentalization?
6. What is a centralized organization? When is it appropriate?
7. What is the line type of organization? What is its main advantage?
8. What are the two types of committees? How are they different?
9. What are the informal organizations? Must the SBO be concerned with
them?
10. What particular skills are required in effective directing?

CASE 8. TWIN SISTERS NOODLE HOUSE: DON’T EVER LEAVE ME

The lady manager of a bank’s branch in Malolos City was amused to hear
her high school classmate, Mary Lou Andres, declare:

“In my noodle house business, I never use paper to communicate with my

subordinates. As soon as I hire anyone, I give him or her verbal instructions on
what I expect them to do. Once a week, I call everyone to a meeting and I relay
to them my general instructions for the week.”

Mary Lou and her twin sister, MaryAnn, jointly own and manager TWIN
SISTERS NOODLE HOUSE. Their main shop is located at Malolos with a
complement of nine employees composed of a supervisor, a cook, an assistant
cook, a cashier, two waiters, a driver, a security guard, and a janitor. At the
beginning, there were only three of them, the twins and a helper. They did all
they can to make the venture a viable concern. Between the three of them, they
performed the various functions related to cooking, purchasing, promoting,
maintaining cleanliness, and the like. As customers slowly poured in, they
gradually hired people until there were nine of them.

108
 Five years after their successful Malolos operations, the twins opened a
branch at a junction in Plaridel. Maryann took charge of managing the branch.
Within a few months, the branch showed potentials greater than the Malolos
main.

The twins were experiencing the joys of a successful venture when Mary
Lou suddenly took a leave to undergo surgery to remove gallstone in her system.
The situation forced MaryAnn to simultaneously manage the two outlets.

After a while, the cook in Malolos began to experience discomfort in

MaryAnn’s management style. He complained about the restrictive policies of
MaryAnn. He was scolded several times for doing what he normally did when
Mary Lou was supervising him. For instance, Mary Ann questioned the quality of
seasoning he applies on the food he cooks. He was also scolded for using
kitchen utensils on instances Mary Ann thought as inappropriate.

The cook started to harbor ill feelings toward Mary Ann. He thought he can
no longer work effectively under such conditions. When a job opening for another
restaurant was relayed to him by a friend, he applied. When he was informed that
he will be hired, he resigned from Twin Sisters Noodle House.

Guide Questions

Is there anything wrong with the set-up of the firm?

If you were Mary Ann, what will you do?

Chapter 9

Questions for review and discussion

1. Why is the application of marketing concept useful to small business?

2. What are contained in marketing strategy?

109
3. What steps are undertaken in target marketing?

4. What is a target market?

5. What information is required when matching the firm with the target market?

6. What controllable variables comprise the marketing mix?

7. What are the methods of conducting primary research?

8. What are the possible sources of secondary data?

9. How is the probable market share of the company determine?

10. What are the various methods of forecasting company sales?

CASE 9: Jesus beauty salon: Missing you

For five years, Mr. Jesus (Jess) Ualat worked as an assistant to a well-known
beauty salon entrepreneur. He was assigned to serve customers in one of his
employer’s shop in a big mall in Manila. The shop’s manager taught Jess the
various skills in serving the customers. He was just glad to learn everything from
manicure to facial treatment. The shop was always full of customers and the
manager knew that it was partly because of Jess.

Jess however had a childhood dream of putting up his own shop. When he felt
that he had learned enough, he bade his employer goodbye. He went straight to
his hometown, a hundred kilometers north of Manila, and put up his own shop:
Jesus Beauty Salon (JBS). His mother gave hi, sufficient money to fiancé his
business. He hired two assistants and quickly train them.

JBS is located at the city’s poblacion, along the national highway going to
Cagayan Valley. Across the highway in front of JBS is the city’s largest
elementary school. On the right side of JBS is a row of shops such as for air
conditioning service, car maintenance, car parts, and the like. On JBS’ left side
are a paint dealer, a car electricity service, a supplier of floor tiles among the
others.

110
The main commercial district where the banks, specialty stores, barber shops,
and grocery stores are located and is about 800 meters away from JBS.

After 10 months of operation, Jess started o have some doubts about the wisdom
of maintaining his business. There were very few customers coming in. When he
inquired from his friend who is also operating a beauty shop downtown, his friend
had he has more customers than he could handle. Jess believes that his shop
has better facilities and staff than his competitors but he cannot believe that he is
the one with a problem on insufficient demand.

Guide question:

1. If Jess missed anything that caused his problem, what is it?

2. Is it time for Jess to fold up?

Chapter 10

Questions for review and discussion

1. Why is selecting a location an important business decision?

2. What is a right location?

3. In selecting the province as location, what factors must be considered?

111
4. What does population growth trend indicate?

5. Why is competition an important factor in selecting city or town as business

location?

6. Why would it be difficult for a small business to succeed in town with

inadequate transportation facilities?

7. In choosing a viable community for a retailer, what factors must be

considered?

8. What is a trading area? What factors must be considered in selecting the most
appropriate trading area?

9. What is considered as a primary trading area?

10. What possible reasons may prevent the small manufacturing firm from
locating near its market?

CASE 10: Marilu Food Manufacturing: Three coins in the fountain

Mr. Marcelino Ilustre was a product of a public school system. From elementary
to college, the schools he attended were owned and controlled by the
government. Most of the students enrolled in public schools like Marcelino came
from poor families.

It was inevitable that many of the students become regular customers of the
school canteen where soft drinks and variety of foods in small packets are sold.
In most public elementary schools, popcorn, salted peanuts, dried squid, and
cheap cookies were popular choices. It was while Marcelino was in the
elementary where he became familiar with these type of merienda fare. He
strongly felt that one day he would be involved in producing better food for
students.

112
After graduating from college, Marcelino attempted to look for job but nobody
was interested to hire him. After months of deep thinking, he resolved to operate
his own business, even if it is only a small business.

Marcelino considered his boyhood dream of manufacturing food for students. His
customers will be school canteens of public schools in his town and probably
later those in other towns. He believes he could offer food products which are
better in terms of quality and taste, packing and priced just like the competition.

He drew up a list of prospective sites for his factory. The list contains of
the following information:

A person who resides at the town proper and with three years’ experience as
supervisor in manufacturing food for students’ merienda has agreed to work for
Marcelino

Guide Questions

1. What is the best site for Marcelino’s Business?

2. What additional information would be useful before Marcelino makes a

decision?

Chapter 11

Questions for review and discussion

1. What types of risk confronts small business?

2. What is risk management?

113
3. What are the methods of dealing with risk

4. What is risk assumption?

5. How may insurance coverages could be generally classified?

6. What are the types of life insurance policies

7. What is the difference between whole life policies and term life policies?

8. What is credit life insurance?

9. For what reasons are life insurance policies bought by business firms?

10. What allied risk may also be covered in fire insurance policy?

Down.

1. decisions concerning your business’ objectives

2. external events that the business has little control over such unfavourable
weather or economic conditions

Across.

3. the character or goodwill of the business.

4. the need to comply with laws, regulations, standards and codes of
practice.
5. your operational and administrative procedures.
6. financial transactions, systems and structure of your business.

Crossword

1.

2.

3.
114
Case 11: Rem Apparel: Alice Blue Gown

For the past 13 years, Ms. Remedios Olay operated her clothing shop located in
the middle of the city’s commercial district. Her merchandise consists of apparel
for men and women. Under her employ six salesladies. Her shop opens at 9:00
AM and closes at 6:00 PM. Among the clothing stores in the city, her shop is the
most successful. The recent opening of two giant malls did not affect the viability
of her firm. Many people are amazed at the outstanding performance of Ms.
Olay’s shop: The Rem Apparel.

Ms. Olay’s success can be attributed to her skill in defining what the customers
really want to buy from her. The products she displays in her shop are
considered elegant and stylish by her customers, most of whom are
professionals and middle level business and government executives.

She continued enjoying the patronage of her customers until one of her major
suppliers ceased operating due to the failing health of the owner. Ms. Olay got
worried and she began to consider manufacturing her own requirements.

She started to make preliminary moves to operate an apparel manufacturing

business. Her first step was to hire assistant who will initially help her prepare the
necessary documents to purchase a suitable lot where the factory will be located.
Her next move was to send her brightest employee to enroll in an apparel
designing course in a reputable vocational school in Manila. In addition to her
other experiences, the chosen employee had worked as a seamstress for three
years in a tailoring shop.

Ms. Olay is so enthusiastic and she plans to start operating in two years.

Guide Questions:

1. If you were asked to offer suggestions to Ms. Olay, what would it be?

2. Do you think Ms. Olay is on the right track?

115
Chapter 12

Questions

1. Does stress play a part in how business man conduct themselves? Why or why not?

2. What are some signs should look for to determine if they or their colleagues are
experiencing stress?

3. Give five more things you can do to effectively handle stressful situations.

Enumeration

1.

2.

3.

4.

5.

6. 11 Stress Management tips and technology for entrepreneurs

7. (In order)

8.

9.

10.

11.

12.

13.

14. Simple ways to live a lesson stressful life

15.

16.

116
17. Simple ways to live a lesson stressful life

18.

19. Give at least two situations are stressful and explain why that

20. situation are stressful.

117
Chapter 13

Questions

1. Why strategic planning is important for entrepreneur?

2. How does the strategic planning work in your business?
3. Give the steps of strategic planning. Define each.

Word Search Puzzle

F L E X I B I L I T Y S T R A T E G Y C D S
R U E N E R P E R T N E E G A S S E M E E T
A S F I N I T I A S E N D V K C A B U T T E
N S F I N A N C I A W T D L O G R U S S E K
C E I N V E S T P I S O L G O D I S K N R R
H C C L L A M S K N I H T H I N K I G O M A
I R I S T A T E G I C P L A N N I N G I I M
S U E L W M E R C H A D I S N I C E L T N T
E O N Y E O G N I T N U O C C A P S A P A N
Q S T W A A T E M G A J I P H A L S C O T E
U E R A K Z X M L O V E P O H L U Y E D I M
E R D N B I N E W B U S I N E S S E S A O G
E N T R E P R E N E U R S H I P S E I I N E
P E S E V I T C E J B O C I G E T A R T S S

Strategic Planning Resources Entrepreneur

SWOT Analysis Strategic Objectives Determination

Flexibility Strategy Segment Markets Entrepreneurship

New Business Business

Think Small Franchise

Chapter 14

118
Questions

1. What entrepreneurial tricks have you discovered to keep focused and productive in their
day-to-day busy schedule?
2. Do you believe there is some sort of pattern or formula to becoming a successful
entrepreneur?
3. What kind of culture exists in their organization, and how did they establish it?
4. What was their key driving force to become an entrepreneur?
5. What inspirations did you get from those people who succeed in their businesses?
6. Who is the most inspired you? Then explain.

119
 BIBLIOGRAPHY

Marife Agustin - Acierto , (2019), Entrepreneurial Management

Fajardo, Feliciano, (2009), Entrepreneurship

Medina, Roberto G. (2010), Entrepreneurship and Small Business Management

Go, Josiah (2011) Fundamentals of Marketing

Go, Josiah & Go, Chiqui E. (2012), Marketing Plan

https://businesstips.ph/list-of-famous-filipino-entrepreneurs-and-their-brands/
https://www.businessstudynotes.com/hrm/entrepreneurship-management-and-
its-importance/

120