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Who is an entrepreneur?
• Starts something new
• Takes risk
• An innovator
• Developing something unique
An entrepreneur is defined (at reference.com) as, "a person who organizes and manages any enterprise, esp.
a business, usually with considerable initiative and risk".
CHARACTERISTICS OF AN ENTREPRENEUR
• An entrepreneur is somebody who has IDEAS and makes this ideas happen or come to life.
• An entrepreneur must have some BUSINESS SKILLS, skills of organizing and running a business.
• An entrepreneur is somebody who assumes and calculate RISKS and is willing to invest his resources
in a business undertaking he himself conceptualized.
• An entrepreneur DESIRES TO MAKE PROFIT, spot opportunities and turn these opportunities into
profitable business ventures.
OTHER IMPORTANT CHARACTERISTICS OF AN ENTREPRENEUR
Creativity
Independence
Hard work
Perseverance
Need of luck
ROLES OF AN ENTREPRENEUR
Perceives opportunities in the environment
Take risks
Mobilizes capital
Introduces innovation
Organize labor and production
Makes decision
Plans ahead
Sells his product for a profit.
TRAITS OF AN ENTREPRENEUR
• Identify and Evaluate the Opportunity.
• Develop a Business Plan.
• Resources Required.
• Manage the enterprise.
WHAT IS ENTREPRENEURSHIP?
ENTREPRENEURSHIP
Refers to the ability of an individual to determine and come up with the proper combination of the
resources available in his environment and transform this into an output of either goods or services,
and obtain a fair profit at the price the entrepreneur sets.
The capacity and willingness to develop, organize and manage a business venture along with any of
its risks in order to make a profit.
The word 'entrepreneur' derives from the French expression ‘to take up.’
'Entrepreneur' refers to the trait of taking up new ideas, products and concepts in the marketplace.
ENTREPRENEURSHIP 1
The Entrepreneurial Decision Process
.
CONTRIBUTION OF ENTREPRENEURSHIP TO THE ECONOMY
Entrepreneurship employs the various resources present in the economy
Entrepreneurship need manpower for their business operations
It said that entrepreneurship is the backbone of the economy
Entrepreneurs has the ability to innovate goods and services
Entrepreneurs has the ability to gain international popularity and prestige for their country.
Entrepreneurs are willing to take risks that the society will otherwise hesitant to take
Entrepreneurs also profoundly inspire budding and potential entrepreneurs
Principles of Entrepreneurship
1. Be a Solution Provider - You must note that entrepreneurship is not about profitability at first but
it’s about providing solutions.
“Look for a way to make life easy for others”
2. Have a Vision - “Vision is the art of seeing what is invisible to others”. Have a defined purpose and
pursue it.
“Successful entrepreneurs are those that were able to transform their vision into reality”
3. Choose the Right Team - When assembling your team, it is imperative to gather a team with the
same mindset and attitude towards achieving a common goal. Your team must be motivated and
dedicated.
“Good team work builds speed”
4. Viable Product/Service - Your business should easily be accessible to your target customers. Always
give your customers room for feedback or suggestions on how your product/service can be better.
“Good products most times sell itself”
5. Capital - Good business plan always draw investors. Capital should be your least worry when you
have a solution. Entrepreneurship is all about solution. When your idea is great, you can easily get
investors or government loan.
“Capital isn’t scarce, vision is”
6. Accountability - As an entrepreneur, you are accountable to the success or failure of your business,
not your employees, investors or advisors.
“Accountability breeds responsibility”
7. Growth and Marketing - Every successful business grew over the years. Success in business is not a
one-time event; it is an on-going process. You must give room for growth. Do not be content with
the success of yesterday; always strive to beat your own record.
“Without continual growth and progress, such words as improvement, achievement, and success
have no meaning”
8. Know Your Customer - Your customer base determines the life of your business.
“Always treat your customers as special guests”
9. Priorities - For success in business, you must categorize things in order of importance. Set your
priorities based on your goals and do not deviate. Your investors should not make you lose focus on
your dream. Your target should always be defined.
“Things which matters most must never be at the mercy of things which matter least”.
10. Never Give Up - If you persist, you will have no choice than to succeed. In entrepreneurship,
persistence and determination is supreme.
“Never, Never, Never Give Up”
Business plan is a formal document that clearly defines a business idea and its feasibility. It is often used for
planning a new venture, a business expansion, and reviewing a business’s success or failure. It is most often
used as a tool for investors, bankers, venture capitalists, and angels in acquiring startup capital.
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ENTREPRENEUR
Risk taking business person
Somebody who initiates or finances new commercial enterprises.
A person who starts a business and is willing to risk loss in order to make money.
BUSINESS PLAN
Plan of future strategy.
A plan that sets out the future strategy and financial development of a business, usually covering a
period of several years.
Business plan is a written document prepared by entrepreneur that describes all the relevant external
and internal elements involved in starting new venture. It is an integration of functional plans such
as marketing, finance, manufacturing and human resource plan.
A business plan is a blue print of step by step process that would be followed to convert business idea
into successful business venture.
It serves the entrepreneur who set a navigational course.
It serves investors and cautious financiers.
It serves the managers and staff of the organization so that they will know the strategies and
programs of the enterprise.
It serves the entrepreneur who set a navigational course.
It serves investors and cautious financiers.
It serves the managers and staff of the organization so that they will know the strategies and
programs of the enterprise.
ENTREPRENEURSHIP 4
OPPORTUNITY SEEKING
Entrepreneurs are innovative opportunity seekers.
They have endless curiosity to discover new or different ideas and see whether these ideas will work
in the marketplace.
Entrepreneurs create value by introducing new products or services or better ways of making them.
They tinker on improving their operational capability by employing new technologies that will bring
them greater efficiency, better economies, and even enable them to reach unparalleled superiority.
They expand their reach by creating new markets or maximizing existing market reach.
Entrepreneurs may totally change the prevailing business paradigm by rendering it obsolete through
the introduction of disruptive technologies, processes, and systems.
Essential to an entrepreneur’s opportunity seeking are the:
A. Entrepreneurial Mind Frame
Allows the entrepreneur to see things in a very positive and optimistic light in the midst of crisis or
difficult situations.
Instead of being discouraged, the entrepreneur is able to use these problematic situations as
inspiration in creating something innovative.
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The Executive Summary
1. It contains everything that is relevant and important to the business audience. It is a synthesis of the
entire plan.
The Executive Summary should then introduce and highlight the good qualities of:
a. The business proponents and their partners;
b. The enterprise organization and its capabilities;
c. The technology providers and their expertise and experience; and
d. The suppliers and all major service providers.
2. It describes the products/services of the enterprise, their features and attributes, and why they are
the right ones to deliver to the customers.
3. It should then proceed to discuss and justify the Enterprise Strategy and Enterprise Delivery System
Enterprise Strategy builds and develops the game plan for attaining competitiveness.
Enterprise Delivery System is the entire process of converting input (resources) into output
and these output into outcomes.
4. It should render all the major institutional, market, operations, and organizational strategies
previously cited into financial strategies forecasts.
5. Investments requirements should be presented along with the summaries of the projected income
statements, balance sheets, cash flows, and funds flow and their analyses and conclusions.
6. It also contains a section on the environmental and regulatory compliance of the proposed business,
as well as the more proactive programs to become a more responsible corporate citizen.
7. It should present the capital structure of the proposed business and show how this structure will
respond to the investment programs and financial forecasts of the enterprise.
It can only be written last in order to capture the findings and insights of the other parts,
but for presentation purposes, it is placed in the first part of the business plan.
Market Demand and Supply, Industry Dynamics, and Macro Environmental Factors
The business plan should estimate the total market supply and demand for the product offerings of
the enterprise.
The business plan should then determine the major critical factors that influence this market demand
and supply.
Business plan should then forecast the future demand and supply once the critical factors or
variables are determined.
The business plan should discuss the major trends and changing patterns in the macro –
environment, which would have significant impacts on the relevant industry and the behavior of
customers.
SOURCES OF OPPORTUNITIES
A. Macro Environmental Sources of Opportunities
5 CATEGORIES (SPEET)
1. SOCIO-CULTURAL ENVIRONMENT
Includes the demographics and cultural dimensions that govern the relevant
entrepreneurial behavior.
The structure, social status, and dynamics of the population at large, as well as the
people’s beliefs, tastes, customs and traditions dictate the major parameters of market
behavior.
2. POLITICAL ENVIRONMENT
Defines the governance system of the country or the local area of business.
It includes all the laws, rules and regulations on allowable and disallowable business
practices.
ENTREPRENEURSHIP 6
3. ECONOMIC ENVIRONMENT
Mainly driven by supply and demand forces.
It is the same factor that drives the interest and foreign exchange rates to fluctuate with
the movement of the market forces.
4. ECOLOGICAL ENVIRONMENT
Includes all natural resources and the ecosystem that defines the habitat of man, animals,
plants and minerals.
5. TECHNOLOGICAL ENVIRONMENT
Makes or breaks competing participants in any industry.
New scientific and technological discoveries often lead to the launch and
commercialization of new products with superior attributes or to rendering the old ones
obsolete.
B. Industry Sources of Opportunities
- The proper classification of what industry the enterprise is competing in is important if the
entrepreneur’s intention is to define who are the relevant customers. Who are the direct
and indirect competitors and what are the critical characteristics of the market as to the
quality of products or services to be delivered.
Participants in the Industry includes:
1. Rivals or competitors in a particular type of business
2. Suppliers of input to rivals as well as suppliers of machinery or equipment, supplier of
manpower and expertise and suppliers of merchandize
3. Consumer market segments being served by rivals or competitors
4. Substitute products or services, which costumers shift or turn to.
5. All other support and enabling industries
C. Market sources of Opportunities
- It can be discovered from increased or decreased demand as well as higher or lower supply.
Equally important is the monitoring of the prevalence of product substitute and their
market impact on the existing players of the industry.
Micromarket - refers to the specific target market segment of a particular enterprise. These are the
target customers that represent the immediate customers of an enterprise, or those who are currently
buying the goods and services offered by the enterprise and its direct competitors.
Customer Preferences, Piques, and Perceptions - this refers to the tastes of particular groups of
people, a product or service must be able to win the battle for the customer’s mind.
D. Other Sources of Opportunities
As an opportunity seeker, the entrepreneur will surely discover other sources of
opportunities. Unexpected successes or failures can lead to good opportunities.
Another source of opportunity is the entrepreneur’s own set of skills or expertise or hobby.
New knowledge as well as new technology can be the source of highly innovative
opportunities.
- Customer preference change over time
- People’s taste in clothes, music, shoes, entertainment, dance, sports, hobbies and even
careers have evolved over the years
- What piques customers is a great source of opportunities
- Before the customer is won over, there is first a battle for the mind. Next, there is a
battle for the heart. Finally, there is a battle for the wallet.
- The longer the customer wants to use the product, the greater the chances of creating
lasting loyalty.
- Opportunities bound in shaping consumer perceptions or occupying spaces in their
minds or places in their hearts that have not yet been filled.
- New inventions, new systems and work processes, new insights about the human
psyche, new applications for old knowledge, new revelations about how the physical
ENTREPRENEURSHIP 7
world works, new interpretations, new combinations based on the convergence of
previous technologies, new outlooks about how life should be led and a host of other
new things are sources of opportunities
- Determining personal preferences and competences lay the foundation for a new
business venture
- Unexpected occurrences in both the external and internal environment of the
enterprise indicate that significant changes are happening and opportunities are
sprouting
OPPORTUNITY SCREENING
It is important to come up with a short list of a few very promising opportunities, which could be scrutinized
in detail
• Personal Screening
1. Do I have the drive to pursue this business opportunity to the end?
2. Will I spend all my time, effort and money to make the business opportunity to work?
3. Will I sacrifice my existing lifestyle, endure emotional hardship, and forego my usual
comforts to succeed in this business opportunity?
THE 12 R's of OPPORTUNITY SCREENING
1. RELEVANCE to vision, mission and objectives of the entrepreneur. The opportunity must be
aligned with what you have as your personal vision, mission and objectives for the enterprise
you want to set up.
2. RESONANCE to values. The opportunity must match the values and desired virtues that you have
or wish to impart.
3. REINFORCEMENT OF ENTREPRENEURIAL INTERESTS. Opportunity must resonate with the
entrepreneur's personal interests, talents, and skills
4. REVENUES. It is important to determine the sales potential of the products or services you want
to offer. There must be an enough market out there to grab and nurture for growth
5. RESPONSIVENESS to customer needs and wants. If opportunity that you want to pursue addresses
the unfulfilled or undeserved needs and wants of customers, then you have a better chance of
succeeding
6. REACH. Opportunities that have good chances of expanding through branches, distributorships,
dealerships, or franchise outlets in order to attain rapid growth are better opportunities
7. RANGE. the opportunity can potentially lead to a wide range of possible products service
offerings, thus, tapping many market segments of the industry
8. REVOLUTIONARY IMPACT. If you think that opportunity will most likely be the "next big thing'
or even a game changer that will revolutionize the industry, then there is a big potential for the
chosen opportunity
9. RETURNS. It is a fact that products with low cost of production and operations but are sold in
higher prices will definitely yield the highest returns on investments. Returns can also be
intangible: meaning they come in the form of high profile recognition or image projection
10. RELATIVE EASE OF IMPLEMENTATION. Will the opportunity be relatively easy to implement for
the entrepreneur or will there be a lot of obstacles and competency gaps to overcome?
11. RESOURCES REQUIRED. Opportunities requiring fewer resources from the entrepreneur may be
more favored than those requiring more resources
12. RISKS. In an entrepreneurial endeavor, there will always be risks. Some opportunities carry more
risks than others.
ENTREPRENEURSHIP 8
The Pre-Feasibility Study
The next step is to conduct a pre-feasibility study to ascertain the viability of the opportunity. The
idea is to focus on a few key items that could make or break the business concept.
Factors to consider in a pre-feasibility study
• Market potential or Prospect
• Availability and appropriateness of technology
• Project investment and detailed cost estimates
• Financial forecast and determination of financial feasibility
MARKET POTENTIAL & PROSPECTS
• is based on the estimated number of possible customers who might avail of the product or service.
Factors to consider of a buying customer
1. Their purchasing power or disposable income
2. Their proximity or accessibility to the goods or services
3. Their individual desires and preferences
4. Their age or generational grouping
5. Their social, cultural, or ethnic background
6. Their peer group preferences
7. Their gender
8. The season of the year
9. Their personal identification with trend setters
10. Their educational attainment
11. Their technical proficiency and product expertise
12. Their motivational impetus
13. Their lifestyle preferences
14. Their susceptibility to certain advertising and promotional appeals
Segmenting the market
• Using the set of demographics (e.g., age, gender, place of residence, income class, etc.) will be the
most basic approach in determining the target segment.
Assessing Competition
• In order to assess one's strengths and weaknesses, there must be a comparison made with the closest
competitors. Profiling these competitors will help the entrepreneur gauge their strengths and
weaknesses and it will enable them to create a strategy.
TECHNOLOGY ASSESSMENT AND OPERATIONS VIABILITY
• the entrepreneur must go to the intricacies of detailing the operations that will be required by the
business, which also includes technology assessment.
4 Target Customer Expectations affecting the scale and complexity of an enterprise's operations:
1. Quantities demanded. This would determine the need capacity of operations.
2. Quality specifications demanded. This would dictate the following:
a. Quality of input or raw materials
b. Quality assurance process in transforming input to output
c. Quality output that meet the operations, standards set
d. Quality outcomes for the customers who will be looking for specific results
3. Delivery expectations. Knowing how much, how frequent and when to deliver to customers
4. Price expectations. The selling price of the product or service would be evaluated by the customers
according to the value they would receive (in terms of quality, delivery and quantity) and this
value added should be matched against competitors.
INVESTMENT REQUIREMENTS AND PRODUCTION/SERVICING COSTS
• The entrepreneur needs to determine how much money is needed to start the business opportunity
with consideration to the technologies and operating levels required.
ENTREPRENEURSHIP 9
3 Investments that need to be funded:
1. Pre-Operating Cost.
• these are the cost related to the preparation for the launch of the business
2. Production/Service Facilities Investment
• This refers to the long-term investment in land, machinery, equipment, computer, software,
furniture, vehicles, etc.
3. Working Capital Investment
• this include the investment needed to operationalize the business, composed of cash, accounts
receivables and inventories (raw materials, work-in process and finished goods).
Operating Expenses include the following:
a. Employee salaries, wages and benefits
b. Rent and lease expense
c. Utilities
d. Transportation
e. Fees and Licenses
f. Commissions
g. Office supplies, etc.
In effect, this part of the pre-feasibility study asks two questions:
1. Do I have enough resources to cover the necessary investments?
2. Would my sales estimates be significantly higher than my monthly production/service cost in order
to produce profits?
FINANCIAL FORECAST AND DETERMINATION OF FINANCIAL FEASIBILITY
- This refers to the monetary transactions that the business is expected to engage in. Ultimately, the end
result of the financial forecasts will indicate the feasibility of the enterprise.
FINANCIAL STATEMENT
a. Income Statement
b. Balance Sheet
c. Cash Flow Statement
d. Funds Flow Statement
INCOME STATEMENT
• Marketing Strategy and action program should translate into revenue or sales forecast
• Operations Strategy and the production or service delivery program should translate into forecasts
of cost of goods produced
• The rest of the Enterprise Delivery System should translate into forecast of operating and non-
operating expenses
• Income Statement is a financial statement that measures the enterprise's performance in terms of
revenue and expenses over a certain period.
• The formula for Income Statement is:
REVENUES − EXPENSES = INCOME / (LOSS)
BALANCE SHEET
• The resources mobilized and held by the enterprise are translated into forecast which shows the
investments in the form of assets and their corresponding financing in the form of liabilities.
• Assets - represent all the investment in the enterprise including the initial investments that you
considered in the pre-feasibility study. This includes cash (in bank or cash on hand), accounts
receivables, inventory of goods, equipment and machinery, facilities, vehicles, etc.
• Liabilities - represent the enterprise' debts to suppliers, to banks, to government, to employees and
other financiers
• Stockholder's Equity - represent the investors' investments in the stock (or share) of the business
ENTREPRENEURSHIP 10
BALANCE SHEET EQUATION
ASSETS = LIABILITIES + EQUITY
• The equation means that the resources invested into the enterprise in the form of liabilities and
stockholder's equity must be equal to the total value of the assets or the enterprise itself.
FINANCIAL RATIOS AND MEASUREMENTS
Income Payback Period
𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
PAYBACK PERIOD = 𝐴𝑛𝑛𝑢𝑎𝑙 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑎𝑓𝑡𝑒𝑟 𝑇𝑎𝑥
FEASIBILITY STUDY
• it is a more comprehensive and more detailed than a pre-feasibility study
• it requires a more vigorous approach
• it is prepared to convince bankers and investors to put money into the business opportunity
Factors to consider in writing a FEASIBILITY STUDY
1. A more in-depth study of market potential to ensure that the business proposal will reach the
forecasted sales figures
2. Proof that the product or service being offered has the right design, attributes, specifications and
preference features
3. Proof that the entrepreneur and his or her team have the necessary experience, skills and
capabilities to maximize the venture's chance of success
OPPORTUNITY SEIZING
The critical factors may change depending on what market segment the enterprise is addressing.
It is important for the entrepreneur to establish the positioning of the business enterprise in the
marketplace.
CONCEPTUALIZING THE PRODUCT OR SERVICE OFFERING
After making an assessment of the competing products, the entrepreneur must then conceptualize his or
her own products.
CONCEPT is an idealized abstraction of the product or service being offered to the preferred market of the
entrepreneur
DESIGNING means that the entrepreneur must render the concept and translate it into its very physical
and very real dimensions (measurement). This entails building the prototype of the product that will be
ready for actual testing by the entrepreneur and then later on, the potential customers through focus
group discussion (FGD), surveys, product demonstration sessions, and the like.
The next thing an entrepreneur must do is to assess how much resources are available in order to seize the
opportunity and what kind of organizational set up will work best for this kind of opportunity.
ENTREPRENEURSHIP 11
IMPLEMENTING, ORGANIZING AND FINANCING
Good planning and good programming are essential to have a good implementation.
The entrepreneur must begin with the end mind or his or her desired end results, for the chosen
opportunity
END RESULTS refer to the final outcomes of the business, such as highly satisfied customers, huge sales
realized, large profit generated, etc.
A good planner and programmer must make several important choices to achieve the desired end results
1. Choose the correct technology
2. Choose the right people
3. Design the operating workflow that would assure the effective, economical and efficient
production of the output.
4. To specify the systems and procedures that would govern the enterprise, motivate and discipline
the work force and satisfy the customers
5. To design the organizational architecture that would allow the people function at their best.
ENTREPRENEURSHIP 12
ENTREPRENEURSHIP 13