ENTREPRENEURIAL MANAGEMENT

Example: probability of drawing a red ball from a jar containing 5

CHAPTER 1 red balls but with unknown number of white balls)
Introduction to Entrepreneurship and Its Historical Background  True Uncertainty or Knightian Uncertainty which is impossible to
estimate or predict statistically.
There are various meaning of entrepreneurship. However, the key Example: probability of drawing a red ball from a jar whose number
concept of the meaning is all about innovation. When an individual red balls is unknown as well as the number of colored balls.
creates new product, it is innovation. When he sells products in a different
approach or touch, it is also innovation. Being innovative can generate ENTREPRENEURSHIP ACCORDING TO JOSEPH A.
more jobs, incomes, goods and services. This means better economy and SCHUMPETER
higher standard of living for the people. However, the real contributions Joseph A. Schumpeter (1833-1950) took a different approach,
of entrepreneurship is measured in terms of the welfare and masses. emphasizing the role of innovation. According to Schumpeter, the
Entrepreneurship according to Professor Nathaniel Left, it is the entrepreneur is someone who carries out “new combinations” by such
capacity of innovation, investments and expansion in new markets, things as introducing new products or processes, identifying new export
products and techniques, The definition implies that individuals work markets or sources of supply, or creating new types of organization.
together, takes the risks and invest resources to make something new or Invention continues, however, and eventually there is a sufficient
unique, designing a new way to improve the existing products to create a stock of unexploited inventions to encourage courageous entrepreneurs to
new markets. However, entrepreneurship is not only applicable to begin innovation again. In this way, Schumpeter used entrepreneurship to
business enterprise or products. It can be also for services such as explain structural change, economic growth and business cycles, using a
hospitals, schools, and other social services institutions. Entrepreneurship combination of economic and psychological ideas.
is a mission. We must observe chances essentials to change. It create an
environment that leads to success or significance of failure. ENTREPRENEURSHIP ACCORDING TO HAYEK AND KIRZNER
The essence of low-level activity can be explained by the Austrian
Entrepreneurship approach of Frederick A. Hayek and Israel M. Kirzner. In the market
 process where an individual discovers, evaluates and exploits economy, price information is provided by entrepreneurs. While
opportunities independently. bureaucrats in a socialist economy have no incentive to discover prices for
 Is a culture that is not a fad; but a very promising career option that themselves entrepreneurs in a market economy are motivated to do so by
can prepare a person for a prosperous future and a nation that is profit opportunities.
progressive and prosperous as well.
Historical Perspective of Entrepreneurship
ENTREPRENEURSHIP According to Fajardo (2009)  Is a word borrowed from the French word entreprendre, which means
 Refers to a new or different ways of doing things, like technology, one who undertake.
marketing, human relations, and management.  it started in France after the French revolution.
 it started with capitalism and end of feudalism.
ENTREPRENEURSHIP ACCORDING TO CANTILLON  the word entrepreneur was coined by jean batiste say
Richard Cantillon (1697-1734), an Irish economist of French descent.  the classical capitalism which was propagated by Adam smith.
He said the term entrepreneur which most people recognize means as
some who organizes and assumes the risk of a business in return for profit. CLASSICAL CAPITALISM focuses on acquiring the most out of the
The term came into much wider use after John Stuart Mill existing resources and establishing equilibrium or balance.
popularized it in his 1848 classic, Principles of Political Economy. But IN early 20th century, Joseph Schumpeter, an economist used Say’s ideas
then all disappeared from the economics literature by the end of the as the groundwork of his book entitled The Theory of Economic Dynamics
nineteenth century. The reason is the mathematical models of economic
activity and behaviour, economist began to use the simplifying assumption ENTREPRENEURSHIP ACCORDING TO PETER DRUCKER
that all people in an economy have perfect information. The capacity and willingness to develop, organize and manage a
All economist who have written about it agree that at its core business venture along with any of its risks in order to make a profit.
entrepreneurship involves judgment. But if people has a perfect In economics, it combined with land, labor natural resources and capital
information there is no judgment that can produce profit.
According to Cantillon’s original formulation, the entrepreneur is a
specialist in taking a risk. He “ensures” workers by buying their products The Environment For Entrepreneurship
(or their labor services0 for resale before consumers have indicated how  A school environment that promotes quality education will surely
much they are willing to pay for them. attract quality teachers and quality students. In the same manner, an
The workers receives an assured income while the entrepreneur bears economic environment that adheres to certain activities like
the risk caused by price inflations in consumer markets. entrepreneurship will surely make it easy for entrepreneurs to survive
and grow.
Entrepreneurship according to Frank H. Knight  Among the three known economic systems, communism, socialism,
The idea of Cantillon was further refined by the U.S. economist Frank and capitalism, it is capitalism that is perceived to be conducive to
H. Knight (1885-1972) who distinguished between risk, which is entrepreneurial activities. In turn, it may be concluded that the
insurable, and uncertainty which is not. success of entrepreneurs assures the continuous survival and growth
Risk relates to recurring events whose relative frequency is known of capitalism
from past experiences, while uncertainty related to unique events whose
probability can only be subjectively estimated. A. Capitalism refers to the economic system in which the means of
In the case of restaurant owner, the risk is whether people would like production (land and tangible goods) are owned privately. Capitalism has
to eat in that restaurant thus making a profit. the following characteristics:
Changes affecting the marketing of consumer products generally fall 1. Private enterprise and freedom of choice
in the uncertainty category. Individual tastes, for example are affected by 2. Freedom to compete
group culture, which, in turn, depends on the fashion trends that are 3. Limited role of government
essentially unique. Insurance companies exploit the law of large numbers 4. Price set by the interaction of the economic forces of supply and
to reduce the overall burden of risks by “pooling” them. demand
Knights observed that while the entrepreneurship can “lay off” risks 5. Profit motive
much like insurance companies do, he is left to bear the uncertainties
himself. He is content to do this because his profit compensates him for B. Communism the direct opposite of capitalism is communism where the
the psychological cost involved. means of production are owned by the society as a whole Communism as
For Knight (1967) and Peter Drucker (1970) entrepreneurship is about an economic system characterized by the following:
taking risk. The behaviour of the entrepreneur reflects a kind of person 1. state ownership of economic resources
willing to put his or her career and financial security on the line and take 2. Social and economic equality
risks in the name of an idea, spending much time as well as capital on an 3. Central planning for economic and social activities
uncertain venture. 4. No freedom of competition
Communism is based on the goal of eliminating socioeconomic class-
Types of Uncertainty (Doubt) struggles by creating society in which everyone shares the benefits of
 Risk which is measurable statistically labor and the state controls all property and wealth.
Example: the probability of drawing a red ball from a jar containing Disadvantages of Communism
5 red balls and 5 white balls. a. The government owns all the businesses and properties
 Ambiguity which is hard to measure statistically b. No freedom of Speech
c. Large or geographically-broad populations tend to be diverse making a. PRODUCT FRANCHISING, dealership) (automotive
it difficult to maintain. b. SERVICE FRANCHISING (salon, spa, etc.)
c. BUSINESS FORMAT ((McDonald's)
C. Socialism is where the state owns only the essential industries like 4. CORPORATE ENTREPRENEURS AND INTRAPRENEURS - a
steel, utilities like water and power, transportation etc. All other types of driving force for the corporate world is "innovative or die". The concept of
business are left to private individuals. In terms of ownership and use of corporate entrepreneurs has been around for at least 20 years, it is also
economic resources for profit, the choice of the private individual is called intrapreneurship which involves the developing of new business
limited. ideas and the birthing of a new business activity within the context of large
and established companies.
Meaning of Entrepreneur 5. CREATIVE DISRUPTERS AND INNOVATORS - A brilliant
 is a word borrowed from the French word "entreprendre," one who entrepreneurial engineers look to technology to solve problems in ways
undertakes" - that is a "manager." An entrepreneur is an individual that "unlock value." They are visitors from the future, living among us
who is alert to profitable opportunities for the exchange of goods and here and now. It bring innovations that will have a deep impact on how we
services. It organizes, manages, directs and assumes the risk of a live, work, and think in the decades ahead.
business or enterprise. Being an entrepreneur is a lifestyle or an 6. EXTREME ENTREPRENEUR - entrepreneurship is the last frontier
attitude. It is not a calling for everyone, but rather a choice. where someone can explore individuality and pioneer a dream. John
 The Entrepreneurial expertise factors are the following: Risk- taking, Heinrich, German economist illustrate a entrepreneur part "explorer and
Problem Solving. Adaptability Leadership and Effective inventor." as Adventurer and entrepreneur are similar. willing to go where
communication, Financial Management, Marketing and sales Time most people wont's dare." You are
management and Strategic planning. 7. SOCIAL AND NON-PROFIT ENTREPRENEURS - David Packard,
co-founder of Hewlett-Packard believed that giving to the local
CHARACTERISTICS OF AN ENTREPRENEUR community was important. Social and non-profit entrepreneurs pursue
1. The entrepreneur is motivated by an overwhelming need for endeavors for the benefit of society have existed since ancient times. The
achievement and strong urge to build. word "philanthropy" is derived from a Greek word which means "lover or
2. The entrepreneur are tough, practical, people driven y needs of mankind". Today, it is believed that entrepreneurism and innovation can
independence and achievement. also help "spark positive social change".
3. They have insights, prone to brainstorms, deceptions, neatness and
resourcefulness strong CONTRIBUTION OF ENTREPRENEURS
4. They are clever, opportunistic, creative and unsentimental. 1. Develop new markets - markets are people who are willing and able to
5. Entrepreneurs exhibit extreme optimistic in their decision-making satisfy their needs. In Economics, it is called effective demand.
processes. Entrepreneurs are resources and creative. They create customers or buyers.
6. Entrepreneurs are prone to overconfidence and over generalizations. 2. Discover new sources of materials - Entrepreneurs are never satisfied
with on traditional or existing sources of materials. Due to innovative
HOW TO DEVELOP YOUR ABILITIES AS AN ENTREPRENEUR nature, they persist on discovering new sources of materials to improve
1. Get interested in creating something useful to the society/community. their enterprises.
2. Use your creative capacity to the fullest by being sensitive to what is 3. Mobilize Capital Resources- Entrepreneurs are the organizers and
beautiful and the day-to-day needs of the society/community. coordinators of the major factors of production such as land, labour and
3. Rely on yourself instead of being dependent on others. capital that mixed to create product or services, capital resources refer to
4. Be conscious and aware of your society/community's source of money, however, in economics, it represents machines, buildings, and
income other physical productive resources.
4. Introduce New Technologies, New Technologies and New Products -
TYPES OF ENTREPRENEURIAL BUSINESSES Aside for being innovators and reasonable risk takers, entrepreneurs took
1. MANUFACTURING BUSINESSES - produce the product they advantage of business opportunities and transform these into profit.
sell. Entrepreneurs introduce something new or something different that greatly
2. WHOLESALING BUSINESSES - sell products to other businesses contribute to the modernization of economies. Every year there are new
rather than the final consumer. technologies and products that satisfy human needs in a more convenient
3. RETAILING BUSINESSES - sells products direct to the people and pleasant way.
who use or consume them. 5. Create Employment - The biggest employer is the private business
4. SERVICE BUSINESSES - sell services rather than products. sector. Millions of jobs are provided by factories, service industries,
agricultural enterprises, and the numeral small-scale businesses.
OTHER BUSINESS AREAS
1. AGRICULTURAL BUSINESSES - generate fresh produce and Capital Resources for Entrepreneurs
other farm products such as wheat. 1. Human Capital
2. MINING AND EXTRACTING BUSINESSES - take resources like o This includes physical labor, one of the most importance resources
coal out of the ground so that they can be consume. which can be classified in number of ways, direct indirect labor, a or
recurring/nonrecurring, designated/non-designated, exempt/non-
SOME EXAMPLES OF TYPES OF BUSINESSES exempt, wage/salary, blue collar/management, union/non-union,
executive management and other employees. It also includes the
board of directors, professional service providers, and consultants on
the advisory board.
2. Opportunity capital
o It is an insight to the opportunity and particular know-how in solving
a problem. Also called intangibles and goodwill, it is the first of two
businesses assets that includes intellectual property like: parents,
trade secrets, trademarks, confidentiality agreement, exclusive
customer relationships, technological know-how, knowledge capital,
and relationship capital which is important for strategic partnerships
and outsourcing.
TYPES OF ENTREPRENEURS 3. Economic capital
1. SMALL BUSINESS, LIFESTYLE AND FAMILY o The second of two businesses assets is called tangibles. These two
ENTREPRENEUR - it is an individual who establishes and manages a types are 1) fixed assets like land, physical building, manufacturing
business for the principal purpose of furthering personal goals. (Retailing plant, office space and machinery (called property, plant and
is one which is extensive). equipment). 2) current assets which includes inventory, materials,
2. PROFESSIONAL FAST-GROWTH AND SERIAL direct materials and subcontract materials like components, parts,
ENTREPRENEURS - it is the backbone of the U.S. Economy. It assemblies produced by a supplier or vendor in accordance with
typically employs between 20 and 500 people and have a sales growth at designs and specifications.
least 20 percent each year for four years. 4. Financial Capital
3. FRANCHISE ENTREPRENEURS o This includes cash in the checking account, and cash equivalents like
Franchising - started in the 1840s. Franchising is where a franchisor is publicly traded stocks, bonds, sometimes account receivables from
offering franchisee exclusive rights in return for their payment of royalties marquee customers and personally secured loans made to the venture.
and conformance to standardized franchise increases the odds for survival 5. Entrepreneurial Capital
in as much as 90 percent over starting up independently operating o This includes the collective domain expertise, the execution
procedures. An entrepreneur buying into a franchise increases the odds for intelligence, the time and commitment, and combined intrinsic
survival in as much as 90 percent over starting up independently. motivation of a venture team. It is assembled to assume the risk and
TYPES OF FRANCHISING begin a new business enterprise in a specific space to accomplish a
 specific thing. It is the entrepreneur who quite often includes other 4. The ability to Manage Time. Entrepreneur should manage time it help
entrepreneurs, that creates and drives value out of unique. them to prioritize better and increase productivity
5. The ability to Adapt to the Changing Environment of Business.
Advantages of Entrepreneurship Entrepreneur should be willing to change behaviour and strategy as needed
1. Enormous personal financial gain to adjust to changing environment.
2. Self-employment, offering more jobs satisfaction and flexibility of
the workforce.
3. Employment for others often in better jobs. Entrepreneurial Management
4. Development of more especially in rural areas. industries,
5. Encouragement of the processing of local materials into finished ENTREPRENEURIAL MANAGEMENT
goods for domestic consumption as well as for export.  is the practice of taking entrepreneurial knowledge and utilizing for
6. Income generation increased economic growth. increase the effectiveness of new business venturing as well as small-
7. Healthy competition thus encourages higher quality products. medium-sized businesses.
8. More goods and services available.  It deals with ventures, innovation, strategies that will take idea into
9. Development of new markets market, and to make venture a successful business.
10. Promotion of the use of modern technology in small scale
manufacturing. DISTINCTIONS BETWEEN ENTREPRENEUR AND MANAGER
11. Encouragement of more researches/studies and development of The term “entrepreneur” is often contrasted with the term “manager”, as
modern machines and equipment for domestic consumption. they are the key persons in an enterprise that help in the organization,
12. Development of entrepreneurial qualities and attitudes among management, control and administration of the company. An entrepreneur
potential entrepreneurs to bring about significant changes in the rural is a person with an idea, skills, and courage to take any risk to pursue that
areas. idea, to turn it into reality. On the other hand, manager, as the name
13. Freedom from the dependency on the jobs offered by others. suggests, is the person who manages the operations and functions of the
14. The ability to have great accomplishments
15. Reduction of the informal economy. CHAPTER 2
16. Emigration of talent may be stopped by a better domestic
entrepreneurship climate. organization.
The main difference between Entrepreneur and Manager is their role in the
THE BEGINNING POINT TO ENTREPRENEURIAL SUCCESS organization. An entrepreneur is the owner of the company whereas a
1. Start to be on your own - An individual can never attain success in Manager is the employee of the company.
entrepreneurial activity unless he starts his own business and releases
himself as an employee for the rest of his life.
2. Explore the business environment - Find the things you can do best
and you must have the talent and interest in doing it.
3. Be in control - The entrepreneur must be in the driver seat of his
business Be in control of the operation as you develop people whom you
can work with dedication and with values the same as yours.
4. Have a good accountant or a trusted financial adviser - While you,
as an entrepreneur and busy with the management of the business, a good
accountant or financial adviser is needed to help you out in the financial
activities of the enterprise. They can help you to re-invest your money to
other profitable operation.
5. Seek the advice of the professionals - you are not a superman to know
all the legal and other matters related to the operation of the enterprise.
Seek the service of a legal consultant on matters with legal implications.

DESCRIPTION OF A SUCCESSFUL ENTREPRENEUR

Successful people in the field of business are creators of things with
differences. They are people with great ambition and are alert to the
environment that they can explore toward successful venture.
Most successful entrepreneurs are described to possess the
following profiles:
1. The entrepreneur has longs for independency
DIFFERENCE BETWEEN ENTREPRENEUR FROM MANAGER
2. The entrepreneur has a strong wish to succeed
3. The entrepreneur has a will power in decision making
4. The entrepreneur develops feedback mechanism for result
5. The entrepreneur is a result-driven person

MANAGERIAL SKILLS THAT MAKE A SUCCESSFUL

ENTREPRENEUR
Being hardworking and industrious are no guarantee in the making of
business activities while they play an important role in the success of the
enterprise. While many successful entrepreneurs have not gone to business
schools to acquire managerial theories in the management of the
enterprise, they have developed managerial skills through share
observation, or an inherent leadership ability and intelligence.

The Entrepreneur has the following managerial skills:

1. The ability to Plan and Conceptualize. Entrepreneurs always need to
start with the ends in mind and generate your own ideas by identifying
various opportunities based on the target audience and ensuring your goal
is SMART.
S-Specific
M-Measurable
A-Achievable
R Relevant
T-Timely
2. The ability to Organize the Resources of the Enterprise.
Entrepreneur should execute resource management properly, helping the
business by reducing costs, improve efficiencies, and boost productivity.
Seeing potential resource conflicts early may reduce risk.
3. The ability to Direct and Motivate People in the Organization.
Entrepreneur should be the most up-to-date people on their employees
work habits, making them the perfect person to monitor its people
  While a manager of a large organization has definitely more resources
at her disposal, her hands are tied when it comes to flexibility and
adaptability.
 Most of the time she is hampered because she has to follow each and
every processes of the organization to do her job
 Example: if she needs to hire new employee, she needs to approach
human resource department. If she wishes to purchase something for
her project, she will have to go to purchase department. With so
many processes, often a manager of a large organization will find her
job frustrating and difficult.

MANAGER OF
DIFFERENCES ENTREPRENEUR LARGE
ORGANIZATION

1. Customer Being very flexible Evaluated on

Handling and adaptive, will organization specific
and quickly move to parameters when it
Satisfaction resolve any customer comes to customer’s
issues. She/He will needs because of
able to delight them. The customer
customer as she/he too will not have
strive to do more than upper hand as they are
what customer dealing with
expects. organization almost
the same size or
sometimes more.
Customer satisfaction
mean sticking to
specification and
completing everything
on time.
2.Career Growth and Career growth is all There is a certain path.
Salary dependent on the Salaries are
growth of the venture. guaranteed at the end
If the venture of the month.
succeeds entrepreneur However, promotions
gets rewarded by lots are time bound and
of money (shares) and career growth cannot
premier positions be explosive
(CEO, Chairman).
However, if the
venture fails, it may
lead to loss of money,
and bankruptcy that
will lead to start from
the scratch.

3. Problem Solving Has a lot of more More concerned about

vs. Delivering challenges and issues delivering in specified
to handle. She/He is budget, time and
not only the facilitator quality.
but sometimes She is more of a
problem solver, a facilitator and
hand on kind of coordinator rather
person. Since her/him than a problem solver.
team is small, she has She manages large
to take care of more team and handle
than just complex interactions
“ An entrepreneur could be a manager but a manager cannot be an communication and it and
entrepreneur.” does get challenging Communications
at times. between teams and its
 An entrepreneur is intensely dedicated to develop business through members.
constant innovation. He may employ a manager in order to perform The main problem
some of his function such as setting objectives, policies, rules etc. A solving she does is
manager cannot replace an entrepreneur in spite of performing the removing bottlenecks
allotted duties because a manager has to work as per the guidelines in Communication.
laid down by the entrepreneur.
 On the downside, typical manager brings professionalism into Manager of Large Corporation
working of an organization. They bring fresh perspective, ideas and Advantages Disadvantages
approach to trouble shooting which can be invaluable. Project Execution Aspect Project Execution Aspect
1. She has sizable company 1. She is confined to more or less
ENTREPRENEUR VS. MANAGER OF A LARGE CORPORATION resources at disposal. one or two areas of expertise.
 Large organization and entrepreneurial ventures are totally different.
2. She manages large sized 2. Large bureaucracy of
Both have their own unique strength and weaknesses.
teams, interact with big clients organization sometimes become a
 Large organization can make things work because of their utter size, and gain better professional challenge
they fall short when it comes to experimentation and flexibility. experience than an entrepreneur
Entrepreneurial ventures can move faster than large organization but 3. She handles complex and 3. She cannot experiment a lot
lack resources as to streamline their processes. projects across geographies and is with processes and products
 If you are a manager who plans to become an entrepreneur or vice better equipped to handle cross offered by her organization.
versa, you need to know what are the advantages each has in terms of functional and geographical
resources at hand, flexibility and job role teams.
 Salary, Career & Growth Salary, Career & Growth worth in the venture; (2) through a willingness to take a cut in pay
Aspect Aspect because he or she will own a major piece of venture; (3) through the
1. She has more certainty of the Time bound promotion other big sacrifices in lifestyle and family circumstances.
employment 3. Commitment of Resources. The characteristics of a good
entrepreneur are a multi-staged commitment of resources and putting
2.She has more learning Predetermined increase in salary in minimum commitment at each stage or decision point.
opportunities from her and bonuses 4. Control of Resources. The ability of entrepreneur to know and
organization.
decide what resources are needed over time both human and material.
5. Management Structure. They contend that entrepreneur is
3. She has fixed and easy to Restrictive corporate environment
stereotyped as selfish and unique thus unable to manage. To be a
understand career path that subdues creativity and risk
taking mostly successful entrepreneur it is essential to have managerial skills. The
entrepreneurs born with these management skills come from a rare
4. Like any other employee, she Repetitive work breed of people with intelligence, great heart, and creative skills.
gets a salary at the end of ev ery They are visionary and self-confident, good communicators with
month unlimited energy, and have a strong passion for what they do. They
are directly involved in the dynamic, and very complex,
interrelationship between financial management and business
Manager of Large Corporation strategy.
Advantages Disadvantages
Project Execution Aspect Project Execution Aspect SEVEN STAGES IN THE ENTREPRENEURIAL CYCLE
1. Can design and modify 1. Non-existing processes can Stage 1: Opportunity Recognition
products and processes at will hamper project This “gestation” period is literally the “pre-start” analysis. It
often occurs over a considerable period of time ranging from one
2. Can delight customer with 2. Time spent on solving day to month to ten years. At this stage, it is important to research and
extra goods or deliveries day problem. understand the dimensions of the opportunity, the concept itself,
and determine how to decide whether it is attractive or
3. Flexible and adaptable 3. She needs to focus on non-
unattractive. The individuals need to look internally and see if
essential tasks such as
they
procurement, hiring, finance
which are taken care of by Stage 2: Opportunity Focusing
departments in large organization. According to Eugene Kleiner, “Focus is essential; there can be
the possibility of the business branching out later, but the first
Salary, Career & Growth Salary, Career & Growth phase of a company should be quite narrowly defined: “It is
Aspect Aspect important to include objective, outside viewpoints because
1. Salary comes very late, only Most of the time her personal different people can investigate the same opportunity and come
when organization is profitable money is on the line. to opposite conclusions.
A creative entrepreneur fells scattered and overwhelmed because
2. Makes a lot of money if Too many challenges can cause there are so many things can do with his business that he can’t
venture is successful burnouts. decide what to do first. Having so many ideas that slows him
down instead of helping him succeed.
3. Growth is explosive. On Spends lesser time spent with Focus on opportunities, not on ideas is how to run is own
success, she may become CEO family initially. successful business and still lead an incredibly satisfying life.
OR CHAIRMAN.
Stage 3: Commitment Of Resources
Entrepreneurship is a risky venture by nature It involves
Salary is not guaranteed
committing resources to a business enterprise in hopes of
securing profits on the venture. The types of risks involved in an
ENTREPRENEURIAL MANAGEMENT VS. CORPORATE entrepreneurial venture require a high level of commitment by
MANAGEMENT the entrepreneur.
One of the main reasons for small business failure is starting
with a lack of resources. This might include a shortfall of
 According to Robert Hisrich and Michael Peters, managing a new combination of financial and human capital. The strain that can
venture differs from managing an existing operation along five key befall an entrepreneur faced with financial pressures can have an
management issues: impact on both his personal and business life. This makes
access to sufficient capital resources, a key factor that aids your
1. Strategic Orientation. This stress the ability of the Entrepreneur to commitment to a small business enterprise.
be driven only by the perception of the opportunities that exist in his Stage 4: Market Entry
environments and not constrained by the resources at his disposal. Profitability and success define the market entry stage. The
Strategic management involves the formulation and implementation of the entrepreneur is committed with a very simple organizations, the
major goals and initiatives taken by a company’s top management on resources were correctly allocated according to business plan,
behalf of owners, based on consideration of resources and an assessment and the first sales were made. If the business model was
of the internal and external environments in which the organization profitable, reasonable objectives were met, and the venture was
competes. on track for attaining true economic health, then the entrepreneur
Prof. Michael Porter identifies three (3) principles underlying strategy: (1) can choose between a capital infusion for growth or remaining
creating a “unique and valuable market position”, (2) making trade-offs small with self-financing.
by choosing what not to do, and (3) creating “fit” by aligning company Stage 5: Full Launch and Growth
activities to with one another to support the chosen strategy. The entrepreneur needs to choose a particular high-growth
Corporate strategy involves answering a key question from a portfolio strategy. Upon considering such alternatives, quite often the
perspective: “What business should we be in? Business strategy involves entrepreneur chooses to remain small business and never passes
answering the question: “How shall we compete in this business? In this stage or perhaps opts to remain operating as a sole
management theory and practice, a further distinction is often made proprietor. Or the venture could remain small for the simple
between strategic management and operational management. Operational truth that not all small venture can or will become a big
management is concerned primarily with improving efficiency and company. They are not fast growth potential because there is not
controlling costs within the boundaries set by the organization’s theory. enough room in the market for growth.
According to Dave Kerpen (CEO, Likeable Business) there are seven tips
2. Commitment to Opportunity. The ability of an entrepreneur to for entrepreneurs ready to launch their first business:
pursue opportunity quickly as soon as it appears.  Have an Amazing Support system. Make sure that you have a
Commitment and determination are seen as more important than any few people in your life that you can go to, who know what
other factor that inspire an entrepreneur. It makes an entrepreneur you’re going through.
overcome incredible obstacles and also compensate enormously for  Expect the Unexpected. Taking a leap to start a company sets
other weaknesses. you up for the most intense ride you can possibly image.
Almost without any exception, entrepreneurs live under extreme, “Expect a rocky ride and you’ll be ahead of the game.”
constant pressure in starting their business, for them to stay alive, and  Make sure you have passion and perseverance. Choose a job
for them to grow. A new business requires top priority of you love and you will never have to work a day of your life.”
entrepreneur’s time, emotion, patient, and loyalty. The level of This saying has remarkable significance in the startup world.
entrepreneur’s commitment can be measured in several ways: (1)  Bring the Best People together. This may be the most
through a willingness to invest a substantial portion of his or her net important part of expanding a business. Seek out the most
 talented and hard-working people possible, and keep them Republic Act 6977 known as the Magna Carta for Small Enterprises –
happy. Small and Medium Enterprise an act to promote, develop, and assist small
 Set realistic goals and timeless. Regroup quarterly and make and medium scale enterprise through the creation of a small and medium
sure your business goals are on track. Set goals that are realistic enterprise development (SMED), engaged in the industry, agribusiness,
and measurable. This may be the difference between success and other services. These funds could be availed by the single
and failure. proprietorship, cooperatives, partnership and corporation.
 Make time to read a little each day. Reading can help spark
ideas that you can apply to your business and keep in mind
things that caused others to fail.
 Just Jump. The time will never feel quite right to start a
business. There will always be reasons, real and imagined, as to
why you should wait. The problem is that waiting gives the
devil time. If you have a good idea, believe in yourself and
prepare, you should take a leap. SMEs is generally a small and medium-sized enterprise provides a
Stage 6: Maturity and Expansion conducive business environment and easier access to finance.
 Venture is a market leader at cruising altitude. The growth becomes a a. Republic Act No. 6810 – the law establishes the Magna Carta for
natural extension of the venture through professional management Countryside and Barangay Business Enterprise, providing them
practices. This team is implementing the venture’s growth strategy exemptions from fettering rules and regulations and granting them
through a global expansion, acquisitions, and mergers as cash is incentives and benefits.
plentiful and inefficiencies are completely flushed out.
 Growth using a line expansion strategy involves developing and ENTREPRENEURIAL LEADERSHIP STYLE
offering ne or complementary products to your current market. 1. KNOW YOURSELF
Customers’ need change over time. The entrepreneur’s understanding Entrepreneurial leaders know who they are and what is meaningful to
of customers’ needs increases with experience. them. They have a purpose in life and work, knowing why they started
 Aside to listening to current customers, your experience in the their companies and why they lead them. They understand how their
marketplace allows to improve your product and services to satisfy business fir into their industry and their community.
new customers or solve additional customer’s problems. 2. HAVE A VISION AND BE ABLE TO ARTICULATE IT
Stage 7: Liquidity Event or Harvesting An entrepreneur leader must have a vision of what his or her business is all
There are six actions that successful entrepreneurs must take about: what it does, how it serves its stakeholders and where it is going.
before they undertake a liquidity event: The vision cannot be vague. An entrepreneurial leader must be able to
1. Build a “No Sale” Contingency Plan. Entrepreneur have articulate this vision, so that others are inspired and will join together to
to be prepared for a disappointing business valuation. It’s work together for a common goal
good to hope for the best, but be prepared to adjust your 3. DEVELOP EMPLOYEES AND HELP THEM GROW
expectation downward. Entrepreneurial leaders are committed to the people who work for them.
2. Plan for a Potential Capital Gains Tax Increase Next They help employees develop their own talents and skills. Employees
year. Entrepreneurs who are not far along in the process of make commitment to you when you make a commitment to them. An
executing a liquidity event have very little chance of getting entrepreneurial leader also knows that it’s essential to help employees
a transaction done before the year end. As a result, grow, so that the business can flourish into the future.
business sellers will need to plan for lower net proceeds in 4. LISTEN CAREFULLY
2019 and beyond, or push their sale dates forward to build Entrepreneurial leaders always listen to employees, clients, mentor, and
value. others. They make decisions based not only on their own understanding of
3. Set up an Advisory Team that has a long-term view. It is the facts and situations, but also based on what they are hearing from a
vital to have advisors who can shepherd you through the variety of sources. Therefore, they not only create productive workplaces,
rest of your life after a business sale is done. Build a team but they provide clients and customers with the products and services they
of advisors comprising a deal attorney, a deal investment need and demand
banker, a CPA, an estate attorney and a wealth manager. 5. IMPLEMENT NEW IDEAS
Entrepreneur also need an advisor who can put a An entrepreneurial leader is willing to innovate and take risks – in good
comprehensive plan in place that will make the capital from times and bad. The business climate is always changing. Being flexible
a liquidity event last for the rest of their lives. and finding opportunities to launch a new initiative, a new strategy, a new
4. Establish a cash flow plan that focuses on Goals on product or service is key to business success.
Liabilities. The key transition entrepreneurs have to make 6. TAKE GOOD CARE OF YOURSELF AND STAY CURIOUS
after a liquidity event is to go from having a steady stream Entrepreneurial leaders take time to themselves and for being with family
of income to making one lump sum last for a general-and and friends. They relish vacations, hobbies and interests outside of work.
hopefully beyond. This plan should map out all goals and An entrepreneurial leader needs time to contemplation – to be able to see
day-to-day concerns. Think of all goals as liabilities. his or her business through a different lens. But most importantly, they
5. Name a “Head Coach” for our Team of Advisors. Make stay curious. An entrepreneurial leader is always interested in what is
sure that there is a designated “first among equals” point going on in the world and never stops learning.
person to act as the head coach of your advisory team. This
person should be part of the process from the beginning Elements of Entrepreneurial Management
taking the lead from the outset and being plugged in with Entrepreneurial management is a means creatively finding a solution to a
the deal banker and deal attorney in the valuation process. specific problem. It stands over the following four pillars:
The wealth manager should be the head coach since he or o Pain or Problem: Without a problem, no innovation is possible.
she is typically concerned about the client’s broad, long- Thus, the entrepreneur identifies an unsolved issue for which the
term interests. consumers are ready to pay a certain amount.
6. Determine Equity Gifts. Once a business is in play o Idea: To resolve the consumers’ pain, the entrepreneur develops a
following a formal valuation process and/or signing of a suitable, profitable, feasible and enviable plan.
letter of intent, the value of its equity will almost certainly o Experiment: The idea so worked out needs to be tested first, thus
go up. Good planning possibly allows for tremendous experiment is another crucial element of entrepreneurial management.
intergenerational capital preservation down the line via tax o Solution: If the experiment succeeds, then it becomes the solution
savings. and a profitable business idea for the entrepreneur.

Factors In Determining Economic Growth Entrepreneurial Management Process

1. The Filipino values and culture 1. Empathize: Envisioning the whole concept from the consumers’
a. Love for imported goods perspective, helps the entrepreneur to determine whether it fulfils the
b. Our values of Bahala na customer demand optimally or not.
c. Our crab mentality 2. Define: Next step is to identify and articulate the consumer’s problem
d. The Mañana Habit which the entrepreneur intends to resolve through a business solution.
e. The value of time 3. Ideate: Now comes the part of contemplating the possible solutions
f. f. Fiesta and special occasions to this problem. Thus, several business ideas emerge at this stage of
2. Job opportunities / employment entrepreneurial management.
a. Employment is one great factor in economic development 4. Prototype: Out of these multiple ideas, the most unique and workable
b. Income opportunity in the countryside is still subsistence in solution is chosen. At this step, the business idea formulates and takes
nature a shape.
3. Availability of the needed capital
5. Test: Lastly, the prototype or the business idea is ready to experiment At modern times, there are many ways you can test the acceptability
on a group of selected people. This a crucial step to determine of your proposed business by using social media such as internet,
whether the product meets the consumer expectations or not. facebook, instagram, and others. However, before you embark on starting
your business, here are issues to be resolved, these are:
Importance of Entrepreneurial Management
o Startup Success: With the application of a systematic and well- What are your needs?
planned entrepreneurial management, a startup can shape into a  Financial needs
profitable venture.  Family goals
o Innovation and Creativity: Following a prototype set by others is  Personal goals
easy. But when it comes to entrepreneurial management, a sense of
uniqueness and innovation can take the business to another level. DEFINITION OF BUSINESS PLAN
o Optimum Resource Utilization: An organization employ many A business plan is the living structure of your company. It creates a
different types of resources like finance, raw material, manpower, pathway for success and lays out strategies for revenue, marketing, hiring,
technology, etc. All these can be excellently utilized through profit margins, competition and competitive advantages.
entrepreneurial management.
o Regional Development: When startups grow, the whole locality The Purpose of Business Plan
tends to move towards betterment. Therefore, entrepreneurial To motivate a entrepreneur to start up plunge to lay out your basic idea
management provides opportunities for industrialization, for the venture.
technological advancement and employment.
o Better Employment Opportunities: As we have already discussed A Business Plan has Three Basic Objectives
in the previous point, with the increasing number of companies, job 1. To identify the nature and the context of the business opportunity that
opportunities also multiply. is, why does such an opportunity exist
Thus, entrepreneurial management paves the way towards 2. To achieve the approach the entrepreneurs plan use to exploit the
employment of skilled, semi-skilled and unskilled labour in the opportunity
region. 3. To recognize factors that will determine whether the venture will be
o Higher Per Capita Income: The rising employment opportunities successful
contribute to a higher national income. Thus, the per capita income of
Two Basic Choices When It Comes to Writing a Business Plan
the country also enhances.
1. DEHYDRATED PLAN - is a short form of business plan presenting
o Capital Formation: Moreover, entrepreneurial management
only the most important issues and projection for the business
strengthens the whole capital structure of a country by promoting
2. THE COMPREHENSIVE PLAN - a full business plan that
activities like transportation, trade, commerce, etc.
provides an in-depth analysis of the critical factors that will determine
Also, the formation of various capital goods such as tools, vehicles,
a firm success or failure.
machinery and other equipment, escalates.
Preparing Business Plan
Entrepreneurial Risk Management
 Before you write a business plan, begin with the feasibility analysis to
Strategic Risk: The entrepreneur needs to ascertain the risk involved in
see if the basics are present.
the business strategy. It includes competition, public relations, alliances,
etc.  Once a feasibility analysis completed, it’s time to begin the process of
Economic Risk: Being aware of the economic ups and downs, such as writing a business plan.
recession, inflation, interest rate variations, economic cycles and  For this, two issues are of primary concern; the content and format of
government policies, is equally important for an entrepreneur. the plan and effectiveness of the written presentation.
Financial Risk: Finance acquisition is a major challenge for any
entrepreneur. Therefore, the fund requirement and its sources should be The business plan should give thorough consideration to the following
pre-planned for every stage of the business cycle. basic factors.
Market Risk: Determining the product’s acceptability, competitiveness  The needs of the society
and sustainability in the market are essential for mitigating the risk of  Availability of capital resources/Financing structure
failure.  Business inclination
People Risk: Forming a team of suitable personnel for goal  Clientele
accomplishment seems easy. But analyzing the team composition, roles  Availability of raw materials
and spirit from time to time is a complex task.  Nature of the product or service
Personal Risk: An entrepreneur’s life balance along with the business  Opportunity
entity is itself a great challenge. Commitment towards family, natives and  Critical resources
peers, when managed well with the new venture, leads to success.  Entrepreneurial team / human resources
Technical Risk: Technology is a game-changer in any business. Thus, an
entrepreneur needs to keep a track of the technological advancement in the Establishing A Business Plan
business cycle to maintain the worthiness of its products.  The search for business opportunity should start with the individual
entrepreneur. He has to find out the skills are and talent for that
“Business opportunities are like buses. There’s always another one particular type of business activity. His talents and skills are the
coming.” - Richard Branson beginning of his great investment in the trade. He must have the
passion for independence and willingness to work hard and long to
keep up with his dream of being an entrepreneur.
Develop A Business Plan
 Before venturing into the field of business, the new entrepreneur
should look into the following factors:
WHAT BUSINESS IDEA IS RIGHT FOR YOU?
1. Know your product or service
When determining the viability of STARTING YOUR OWN
2. Analyze the market potential
BUSINESS, you must consider how it will fit your financial, family and
3. Determine the marketing strategy
personal requirements. A business exists to make money so when you are
4. Know the competitors
thinking of going into business, you ask this question, “How much money
5. Do not set on your laurels
do you want or need to make?”. The business must earn at least enough to
cover its fixed business expenses including your reasonable salary to stay
ENVIRONMENTAL SCANNING
afloat.
 Environmental scanning is necessary because there are rapid
There are so many business ideas to choose from. Do not go after a
changes taking place in the environment that has great impact on the
business because you think it is “popular” or it is the hot business that is
working of the business firm. It is the process of gathering
making money for others and will therefore make money for you too.
information about events and their relationships within an
Most successful businesses stem from a hobby, an interest that you
organization’s internal and external environments. Environmental
enjoy doing, your interest; maybe in sports, beauty products, selling
Scanning purpose is to help the management determine the future
products or services that when taken seriously is a good business idea.
direction of the organization by identifying its strength weakness,
There are skill courses or product guide to enhance or develop your
opportunities and threats (SWOT).
interest and hobby into a potential business. The best way to gauge
 The following factors are contributory to the development of
CHAPTER 3 customer satisfactions:
1. Business Location for Small Entrepreneurs
acceptability is by conducting research of definite ideas. Research is very
 A retail outlet would need a site that is convenient to prospective
important in planning a business. It is one way to be sure that you don’t
customers in terms of parking space or availability of
choose a business that will end up wasting your time, energy and money.
transportation. A supermarket or an entertainment center would
 need ample parking are where customers would not worry on a. Available technology in Product Processing
where to leave their cars while enjoying their stay. The same b. The Source of Raw Material must be Abundant and at the Lower
could be true with a restaurant. Price
 In choosing a location, the following factors must be looked into c. Skilled Workers must be Available
by the entrepreneur: d. Capital Investment in Machinery and Operating Expenditures
a. Rent and Space e. Expertise and Technical Skills of the Management Team
b. Terms of Lease Agreement 2. Characteristics of Weak Product and Weak Management
c. Types of Goods or Merchandise a. Poor Quality and High Price
d. Income Level Of Prospective Customer b. Product Design and Appeal
e. Prospective Sales Volume c. Production Cost
f. Municipal or City Ordinance including taxes and fees d. Supply and Demand
g. Location of the Areas e. Weak product Management
3. Sustainable Product Opportunities in the Market:
2. Location for Small Industrial Plant or Manufacturing a. Product Demand
Facilities b. Presence of Poor Quality in the Market
Environmental factors in locating a manufacturing plant or c. Government Policies and Support
industrial facilities need to be studied carefully as plant location d. Liberal Credit Terms and Interest Rates
is a great factor in the investment of funds and its profitability in 4. Treats to Product Profitability and Market Expansion:
the long run. The industrial facility must be suitable to the kind a. Entrance of Competition
of operation. It must comply with government zoning b. The supply of raw materials will be limited as other competitors
regulations related to pollution and environmental laws. will be getting the same suppliers.
c. The Emergence of Leftwing Labor Unions
The following are important factors to consider: d. The Presence of Double Taxation
a. Land Area e. Peace and Order on the Area of Business Operation
b. Facilities for Expansion f. The Cost of Power Supply
c. Power and Utilities
d. Building and Other Utilities BASIC ELEMENTS OF BUSINESS PLAN
e. Plant Site Accessibility Every new business should have a business plan, but not all business plans
are alike. The content of a business plan for a small, home-based, single-
STRENGTHS, WEAKNESSESS, OPPORTUNITIES, AND owner business will differ from a business plan for a large corporation
THREATS (SWOT) with offices in many cities. But regardless of the business all business
● SWOT ANALYSIS is an entrepreneurial tool in determining the plans serve the same basic purposes. They should also contain the same
profitability of the business operation. Opportunities carries with it three basic components ---INTRODUCTORY MATERIALS, THE MAIN
some risk involved and this should be looked into carefully. Factors BODY, AND THE APPENDIX.
may affect Business success are internal and external Environment. 1. Introductory Elements
The strengths and weaknesses are internal factors to the entrepreneur  Cover Letter
while the opportunities and threats are external factors.  Title Page
 Table of Contents
A strength is something the company is good at doing. It is a quality that  Executive Summary
produces a competitive advantage for the company. A characteristic is said 2. Main Body
to be strength if it belongs to the internal environment and is expected to The main body of the business plan will contain the bulk of the
affect company operation in a positive manner. High technical expertise, information about the business idea. It provides details on how the
superior financial resources, good management labor relations, a well- business will succeed. The content of the main body composed of
developed and carefully thought out vision-mission, effective different business plan aspects such as:
advertisements, clean corporate image and reputation, and outstanding  Management Aspects
leadership are good examples of strength that a company may possess.  Marketing Aspects
A weakness is something that the company lacks. It is a quality that puts  Technical aspects
the company at a disadvantage. A quality is said to be a weakness if it
 Socio-Economic Aspects
belongs to the internal factor and has a detrimental effect on the company
 Financial Aspects
operations, financial performance, poor product quality and availability,
 Funding Request and Exit Strategy
uncooperative workers, low employee morale, duplication of work,
frequent machine breakdowns, inconsistent policies, and poor planning are 3. Appendix of Supporting Documents
example of weaknesses. It includes supporting documents that provide additional
An opportunity is a factor in external environment that is expected to work information and back up statements made in the body of the
favorably towards company operations. Improvement in the economy, report. Documents contained in the appendix includes:
high barriers to entry, high population growth rate, increase in purchasing  Tax returns of the business owner for the past three years
power, stable political leadership, strong confidence of investors are some  Personal financial statement of the owner
example of opportunities.  Copy of the proposed lease or purchase agreements for the
A threat, on the other hand, is a factor in the external environment that is building space
expected to have a negative effect on company operations. Political unrest,  Copy of licenses and other legal documents
presence of substitute products, dumping of low priced items from Asian  Copy of resume of the owners
neighbors, piracy, and pending oil price hike are example of threats.  Letters of recommendation
 Copies of letters of intent from suppliers
FACTORS AFFECTING BUSINESS  Copies of any large sales contracts you already negotiated.

BASIC PHASES OF BUSINESS PLAN

1. Management Structure and Component – It is designing the form
of ownership of the business in which at the outset is known to the
investors. It shall also define the organizational structure of the
organization and the operational system that must be put in to place.
It shall define the duties and responsibilities of the people in the
organizational structure. Management should organize different
operating departments and delegate corresponding authority.
2. Marketing and Distribution System – The Marketing and
Distribution study shall deal with product demand analysis. It should
show the competitive product advantage over existing product or
service and designing the marketing program of he enterprise. It
should analyze market share and system of Promotion, distribution,
advertising, media and other marketing mix strategies to ascertain
product market acceptance and patronage.
3. Production and Technology – Production and Technology Studies
refer to the need in making the product or service. This refers to the
machineries, plant location and other technical aspect in making of
The product must be evaluated along the following areas: the product. It shall describe the physical layout of the building and
1. Product strength in the market must have the following the equipment that will be used in production. For services, it shall
 specify equipment that will be used and the manpower needed to d. Machinery and Equipment – it involves the kind of machine to
render the activity. be used, it sources, spare parts, working guarantee, rated
4. Financial Management – The Financial Management aspect refers capacity per day, and the cost estimates involve in its purchased.
to the capital investment and sources of funding the operation of the e. Plant Location – a drawing or plant location in the vicinity map
business. It shall show financial projections over a period of one year as to its accessibility to supply or raw materials, and the
and five years program and shall determine the rate of return transport of finished product to the market. It must show
investments. advantages and other plus factors for employees and other
services.
GENERAL FORMAT OF A COMPREHENSIVE BUSINESS PLAN f. Building and Facilities – It must describe the type of building
I. INTRODUCTION that will be constructed or sketch of the building plan, electrical
The introduction contains the rationale and the background of the study plants, drainage, and other utilities. It must contain the cost
undertaken. It should include the importance of the project and the estimates involved and the total floor plan.
proponent’s background and their desire to establish the business. g. Raw Materials – It deals with the raw material requirements and
II. PROJECT SUMMARY its specification, long-term supply. It must also show alternative
A. Name of the firm suppliers of other sources.
B. Business Location h. Power Supply and Utilities – Utilities refers to the supply of
C. Brief Description of the Business electricity, water, and its availability in the processing of the
1. Brief history or how the business was organized product. It also has to do with environmental disposal of waste
2. Highlights of the findings in every phase of the business and compliance with government requirements. Drainage system
study has to comply with sanitary requirements imposed by municipal
III. MANAGEMENT AND PERSONNEL COMPONENTS and national laws.
o Vision, mission and goals i. Production Cost – This refers to the direct labor and
o Organizational structure administrative cost in the processing the products. Unit cost
o Job description and qualification must be computed as basis for pricing and marketing strategies.
o Work experience VI. FINANCIAL STUDIES
o Business policy A. For New Business Venture
o Compensation plan 1. Total Project Cost – This has to do with the entrepreneur fixed
cost and the working capital in the operation of the business.
o Recruitment and hiring
2. Capital Investment Required.
o Training and programs
3. Pre-operating cash flow and its relation to timetable – financial
o Personal uniform
projections for the first year of operation, for the five years
o Employee’s benefits operation in projected balance sheets and income statements.
IV. MARKETING STUDIES 4. Supporting Schedules in the financial Statements Income.
A. Market Profile – This refers to the market segmentation for the a. Collection Period for Projected Sales or Revenue
distribution of the product or service. The study must cover the possible b. Inventory Levels
users of the product and how to reach the particular market segments. c. Payments for Purchases and Expenses
B. Demand Analysis d. Production Costing, Administrative Expense and Cost of
1. Projected consumption in the first year of operation, then five Sales and other Projected Financial Expenses.
years and ten years operation. e. Projected Financial Estimates showing return investment,
2. Major segment users of the product and their location. return on equity, break-even analysis, and Price analysis.
C. Supply Analysis B. For Existing Project
1. Source of Product Supply 1. Audited Financial Statement – last 3 years
A. Foreign Suppliers 2. Balance Sheet
B. Local Suppliers 3. Income Statement
2. Factors Analysis of the Past and Future Supply Chain. 4. Cash Flow
D. Competitive Analysis 5. Fixed Asset, Capital Investments, Depreciation used in Capital
a. Selling Price – refers to the selling price of the product Assets.
b. Competitions – it refers to the competing products in the markets 6. Tax Assessment, Liabilities, and other Payables.
as to its quality and market acceptability. 7. Financial Trends and Ratio Analysis.
c. Distributions and Cost of Transportation – it refer to the transfer 8. Financial Cost for Administrative Expenses, Production, and
or movements of products from the producer to the ultimate Selling Expense.
user. 9. Financial projection for the next five years.
d. Channel of Product Distribution – A mean of reaching the target 10. Financial Analysis for the return of Investment, Return of
market or it is the method or strategy to penetrate a particular Equity, Break-even Analysis, Production Volume and Price
market segments. Analysis
e. General Competitive Practice – it is the analysis of how
competitors distribute the product to existing end users. FORMAT OF MICRO BUSINESS PLAN
E. Program analysis of Marketing Strategies  The objective of Business Plan it to assess, examine, analyze the
a. Geographic Segmentation Strategy – This refers to the place of viability or feasibility of the study. Business plan is the ticket to
target market and the approaches to penetrate the market niche. success. It is also a blueprint to success and document details what
b. Psychographic Strategy – the educational background and the you plan to do with your venture, and how exactly you want to
lifestyle of the target market. achieve them. It is your road map to your business.
c. Demographic Segmentation Strategy – it means to target market  Validate your business concept, instead of doing a business plan
as sex, age, income and the other personal factors of the target
outright. Identify the business SWOT, business planning begins
market.
before it has materialized on paper. Have clear goals, and end goals
d. Pricing Strategy – this has something to do with the price index
must be clear to you and to your team. Evaluate not only the business
of any pricing strategy that will attract customers.
idea but also your capacity to handle and nurture it.
e. Channel of Distribution – the choices could be retailers,
wholesalers, dealership, franchise, or direct marketing.
A. Executive Summary
f. Promotion and Advertising – media network, personal selling,
 Synopsis of your business plan so ideally, this part should be written
billboard, or any media penetration strategy.
last in order to include all the necessary information and target points
V. PRODUCTION
of the document. You must possess the ability to predict the financial
a. Product Specification – it tells about the product or service that
path of your venture in correlation to the present economy. If you
the entrepreneur will offer to its target market. It is an elaborate
external analysis tells you what you can and cannot do, your internal
presentation of the properties of the products and the benefits
analysis tells you what you are able or not able to do.
related therein. It is the service that will be offered to the target
B. Marketing Plan
consumer.
 Push or pull, you must be able to tell how fast or slow your product
b. Production Process – It is detailed layout of the production
will move in the market, whether it would make use of a push or pull
process as the product goes into the production line indicating
strategy or both. The push strategy tells how I will move my products
the flow process, materials and equipment to be used on normal
to the marketplace, while the pull strategy tells how I will make
timetable that the product will be finished.
customers ask for my product. The pull strategy promises, the push
c. Plant Rated Capacity – this refers to the volume of production
strategy outlines what makes the business stay.
per shift per day or monthly bases considering target market
C. Operations Plan
consumption. It must also make projections for five years
 It keeps track of the business performance for its conception down to
forecast and the technical factors involved.
its purchase. Determining the number of people to hire to keep your
 perspective business running smoothly is also a must. Managing your
inventory and computing the production costs are crucial at this point
so you can project possible profits.
 Gantt Chart
Gantt chart is a graphical depiction of a project schedule.
It's is a type of bar chart that shows the start and finish
dates of several elements of a project.

CHAPTER 4

 Business model Canvass

The business model canvas is a great tool to help you
understand a business model in a straightforward,
structured way. Using this canvas will lead to insights about
the customers you serve, what value propositions are
offered through what channels, and how your company
makes money

D. Financial Plan
 The income statement describes your company’s ability to generate
cash by computing for sales and expense. The balance sheet shows
your financial condition by accounting for your assets (cash,
receivables, inventory, equipment, property, investments) and
liabilities (account payable, salaries, taxes and bonds, notes and
mortgage payables.)
E. Operational Plan
 Operation Plan - An operational plan is a strategic document that
defines how different teams or departments like recruitment,
marketing, and finance, contribute to reaching different company
goals and objectives. It summarizes the daily activities required for
running a successful business.

FINANCIAL ASPECTS
IT DESCRIBES A BUSINESS’S HISTORICAL FINANCIAL STATE
AND FUTURE FINANCIAL PROJECTIONS.
➢ SOURCES AND FINANCING
➢ PROJECTED OPERATING EXPENSES
➢ PROJECTED SALES
➢ PROJECTED COST OF SALES
➢ PROJECTED INCOME STATEMENT
➢ PROJECTED BALANCE SHEET
➢ PROJECTED CASH FLOW STATEMENT