Study Guide in Entrepreneurial Management FM-AA-CIA-15 Rev.

0 03-June-2020

HRDM ELEC 104: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

Module No. 1

ENTREPRENEURSHIP: ITS OPPORTUNITIES AND REWARDS

ENTREPRENEURSHIP: ITS OPPORTUNITIES AND REWARDS

MODULE OVERVIEW

This chapter focuses on the scope of the small business and entrepreneurship. It would also
discuss the different rewards entrepreneurs can achieve through their business. This chapter
would also recognize the importance of entrepreneurship to the economy and the community.
Generally, this module will help students grasps the definitions, objectives, phases and
functions of entrepreneurial management and entrepreneurship, specifically, in the small
business.

LEARNING OBJECTIVES

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know of thisabout
chapter, students
MSMEs in themust be able to:
Philippines,
1. Understand
check this out: the scope of small business
2. Learn the differences between small business and high-growth ventures
https://dict.gov.ph/wp-content/uploads/2016/07/8.-
3. Discover the rewards entrepreneurs can achieved through their businesses
SMEs-in-the-Philippines-_Empowering-LGUs-through-
4. Be able to dispel key myths about small businesses
ICT-Partnership-with-SUCs.pdf
5. Identify actions key to becoming a small business owner
6. Understand how small business are important to our economy and your community

LEARNING CONTENTS

ENTREPRENEURIAL MANAGEMENT
According to the Global Entrepreneurship Institute, Entrepreneurial Management as the
practice of taking entrepreneurial knowledge and utilizing it for increasing the effectiveness of
new business venturing as well as small- and medium-sized businesses. Entrepreneur,
however, is an individual who creates a new business, bearing most of the risks and enjoying
most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new
ideas, goods, services, and business/or procedures.
According to the Asian Development Bank, small and medium enterprises (SMEs) are the
backbone of Asian economies, making up 98% of all enterprises and 66% of the national labor
force from 2007-2012. In the Philippines, Small and Medium Enterprise are defined as any
enterprise with 10 to 199 employees and/or assets valued from P3 million to P100 million.
SMEs and micro enterprises combined make up 99.6% of establishments in the country.
Therefore, despite of the limited size of this type of business, SMEs are very important in our
economy, both in the local and national arena.
We use the popular broad definition of entrepreneur – anyone who owns a business is an
entrepreneur. This of course, means anyone who is a small business owner is an entrepreneur.
It also means that self-employed, anyone who work for himself or herself instead of for
others, is also an entrepreneur. Within the population of entrepreneurs, it is sometimes useful
to split out through these certain groups:
1. Founders. People who create or start new business
2. Franchise. A prepacked business bought, rented, or leased from a company called a
franchisor.
https://cashmart.ph/franchising-business-in-the-philippines/
3. Buyers. People who purchase an existing business
4. Heir. A person who become
an owner through inheriting
or being given a stake in a
family business.

STARTING AN
ENTREPRENEURIAL SMALL BUSINESS: FOUR KEY IDEAS

PANGASINAN STATE UNIVERSITY 1

Study Guide in Entrepreneurial Management FM-AA-CIA-15 Rev. 0 03-June-2020

HRDM ELEC 104: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

1. Believe that you can do. This belief in yourself is called self-efficacy. Those who
believe in themselves and in the passion of their beliefs are more likely to keep at it
until they succeed.
2. Planning + Action = Success. A plan without action is futile. Actions without plans
are usually wasted. Success comes from having the right sort of plan to get you
3. Help Helps. Successful entrepreneurs learn from other entrepreneurs, from experts in
their chosen field, from potential customers, or even from their professors. Remember,
those help succeed bigger and more often.
4. Do well. Do Good. In the long run, you will depend on partners, investors, customers,
and neighbors. If you always remember, you try to do well in your business, you’ll feel
better about your business and life, and those around you will too.

ENTREPRENEURS AND FIRM GROWTH STRATEGIES

The overall growth strategy describes the kind of business the owner or owners would like to
have, from the perspective of how fast and to what level they would like the firm to grow.
There are four generic growth strategies that account for nearly all businesses: There are four
generic growth strategies that account for nearly all businesses:

1. Lifestyle or part-time firms. A small business primarily intended to provide partial or

subsistence financial support for the existing lifestyle of the owner, most often through
operations that fit the owner’s schedule and way of working.
2. Traditional Small Business. A firm intended to provide a living to the owner, and
operating in a manner and on a schedule consistent with other firms in the industry
and market.
3. High-performing Small Business. A firm intended to provide the owner with high
income through sales or profits superior to those of the traditional small business.
4. High-growth Venture. A firm started wit the intent of eventually going public,
following the pattern of growth and operations of a big business.

REWARDING FOR STARTING A SMALL BUSINESS

Why become an entrepreneur? If you said, “For the money,” or, “To do things my way,” you’d
be right, but these are only a few of the reasons behind owning your own firm. We know that
people go where they feel they have the best chance of getting the rewards they value most.
Nearly all entrepreneurs talk about three key rewards – flexibility, a livable income, and
personal growth. There are two other rewards – building wealth and creating products, which
entrepreneurs mention more often than working people in general. There are also rewards
that entrepreneur mentioned less often than working people in general. These are social
rewards, like respect or admiration of others, or power over others, and family rewards, like
continuing a family tradition in business. The three most popular types of rewards for small
business owners are growth, flexibility and income.

1. Growth Rewards. What people get from facing and beating challenges
2. Income Rewards. The money made by owning one’s own business
3. Flexibility Rewards. The ability of business owners to structure life in the way that
suits their needs best

PANGASINAN STATE UNIVERSITY 2

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HRDM ELEC 104: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

Flexibility
"To have greater flexibility for my personal and family life

Universally Mentioned Income

Rewards To give myself, my spouse, and children financial security

Growth
To continue to grow and learn as a person

Wealth
"To have a chance to build great wealth or a very high
Occasionally income
Mentioned Rewards
Product
"To develop an idea for a product"

Recognition
"To achieve something and get recognition"

Admiration
"To be respected by my friends"
Rarely Mentioned
Rewards Power
"To lead and motivate others"

Family
"To continue a family tradition"

MYTHS ABOUT SMALL BUSINESS

Over the years, small business experts in academe and government have studied small
business and potential entrepreneurs and learned that a lot of the challenges scaring people
away from small business are the stuff of urban legends. These myths includes the following:
1. There’s not enough financing. – bootstrapping. Crowdfunding.
2. You can’t start businesses during a recession.
3. To make profits, you need to make something.
4. If you fail, you can never try again.
5. Students (or moms or some other group) don’t have the skills to start a
business.

PANGASINAN STATE UNIVERSITY 3

Study Guide in Entrepreneurial Management FM-AA-CIA-15 Rev. 0 03-June-2020

HRDM ELEC 104: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

Myths like these holds back many potential entrepreneurs. Knowing the truth is a powerful
way to keep up your motivation for the undeniably tough work of starting your own business.
When you encounter doomsayer, check out facts and do research.

GETTING STARTED NOW: ENTRY COMPETENCIES

There are million things you could do to start a business, but which ones are best? Sometimes
the answer will come to you in the form of an opportunity or offer, and sometimes you’ll need
to take the first steps yourself. To start a business, you need four elements to come together –
boundary, resources, intention and exchange. This is referred to as the BRIE model.
1. Boundary. Something that sets it up as a firm, and sets it off from the buying or
selling or bartering we all do occasionally.
2. Resources. Include the product or service to be offered, informational resources on
markets and running a business, financial resources, and human resources.
3. Intention. The desire to start a business and is the most frequently occurring element
of the BRIE Model.
4. Exchange. This refers to moving resources, goods, or services to others in exchange
for money or there resources.

Boundary Resources
Your Small Business
Intention Exchange

SMALL BUSINESS AND THE ECONOMY

It has been already discussed why small business is important for the individuals for whom
income, growth, and flexibility were among the most important rewards of ownership. But you
also need to know that small business is vitally important to your community and even to our
economy. Part of this comes from new things small business contribute to the economy,
particularly new jobs, and innovations, as well as the basics that small businesses provide for
all of us – jobs, taxes, and product or services.

New Jobs
In the 2019 study conducted by the Department of Trade and Industry, MSMEs generated a
total of 5,510,760 jobs or 62.4% of the country’s total employment. Small business is the
engine of job generation, but it is important for existing jobs, too. Small business employ
millions of Filipino, providing wages and salaries.
One reason why small business are a key employer is because they are more willing than most
large business to offer jobs to people with atypical work histories or needs, like people new to
the workforce, people with uneven employment histories, and people looking for part-time
work.

Innovations
Small business is a key element of every nation’s economy because it offers a very special
environment in which the new can come into being. Small business owners are freer of the
judgment and social constraints of workers elsewhere. Austrian economist Joseph Schumpeter
labeled this process creative destruction. It refers to the way that newly created goods,
services, or firms can hurt existing goods, services, or firms.
Why do so many innovations come from small business? Remember that most people going
into small business mention flexibility as a key reward, such as the flexibility to do the work
they think is important. Small business owners are freer of the judgments and social
constraints of workers elsewhere.

New Opportunities

PANGASINAN STATE UNIVERSITY 4

Study Guide in Entrepreneurial Management FM-AA-CIA-15 Rev. 0 03-June-2020

HRDM ELEC 104: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

People who own their business are presented with tremendous opportunities - not only to
improve their life and wealth, but also to help them move into and upward in the economy and
society of the Philippines.

Small businesses offer communities another type of opportunity—the opportunity to goods

and services. Imagine a neighborhood or town without a grocery store or a pharmacy. In
important ways, the town would not seem like a real community. A small grocery, drugstore,
hardware store, or gas station might be able to use its low overhead and capacity to adapt to
local needs (e.g., a grocery store stocking a lot of fishing supplies to appeal to visiting fishing
enthusiasts) to make a profit where larger chain stores could not. For a city, municipality, or
even barangays, to be able to stand on its own, it needs a variety of small businesses.

Small business also provide opportunities to large business and entrepreneurial high-growth
firms. High growth firms’ ventures and big businesses are like giant boat, and where the boat
sails, the economy sails along too. But for the boat to work, it has to be supported by deep
water. The ocean supporting the boat consist of thousands of small businesses.

Aspects of Global Entrepreneurship

There is a pattern to which countries are likely to have rates of entrepreneurship, and which
will have lower rates.
1. Factor-driven Economy. A nation where the major forces for jobs, revenues, and
taxes come from farming or extractive industries like forestry, mining or oil production.
2. Efficiency-driven Economy. A nation where industrialization is becoming the major
force providing jobs, revenues, and taxes, and where minimizing cost while maximizing
productivity (i.e. efficiency) is a major goal.
3. Innovation-driven Economy. A economy where the major forces for jobs, revenues,
and taxes come from high-value-added production based on new ideas and
technologies and from professional services based on higher education.

One other important difference across countries is the amounts of two types of
entrepreneurship.
1. Opportunity-driven Entrepreneurship. Creating a firm to improve one’s income or
a product or service.
2. Necessity-driven Entrepreneurship. Creating a firms as an alternative to
unemployment.

Another approach that has grown dramatically this past decade is using E-commerce,
particularly like Ebay and Amazon, or Lazada and Shopee. E-commerce is the general term
for conducting business on the internet. The formal title for this is Virtual Instant Global
Entrepreneurship (VIGE), a process that uses internet to quickly create business with a
worldwide reach.

Challenge and the Entrepreneurial Way

Entrepreneurs’ stories usually tell us about challenges faced and overcome. What is
fascinating if you hear enough stories is that there some strategies that are used again and
again. These strategies are the following:
1. If you don’t succeed the first time, try, try, again. This is called the strategy of
perseverance or the behavior of continued effort to achieve a goal.
2. Scale back. Maybe you have an idea, but can’t get the resources to get it started. Try
scaling it back to the level of resources you currently available.
3. Bird in the hand. Instead of planning a firm and then looking for resources, start with
the resources you already have and think about what is the best use you can make of
them.
4. Pivot. Go ahead and start the business in a way you can and look for better
oportunites as you go along.
5. Take it on the road. Sometimes the place you live isn’t the best market for your
products or services.

PANGASINAN STATE UNIVERSITY 5

Study Guide in Entrepreneurial Management FM-AA-CIA-15 Rev. 0 03-June-2020

HRDM ELEC 104: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

6. Ask for help. Today everyone can harness the wisdom of crowds, whether it is asking
your personal and group connections on Facebook for ideas, advice, opinions or
donations. Crowdsourcing is the techniques often based on internet to get opinions or
ideas through the collective involvement of others.
7. Plan to earn. Think through your capabilities, prospects, and passions to find the best
idea for you, and then plan for action to make it happen.

LEARNING POINTS

In this chapter we have considered come key ideas and myths about small business. We have
seen the work of founders of small business that stayed small and those that started small and
grew larger. Either way, when small businesses are created, nearly every part of our society
benefits - through new jobs, new ideas and the new opportunities created for individuals,
communities and the economy. The key element in getting small business started is helping
people who have the intention to start a business take the steps to get it done, and that is the
goal of this course.

LEARNING ACTIVITIES

Activity Number 1
Experiential Exercises. (10points)
1. Go through the list of reasons why people engage in self-employment, and identify which of
this reason best fit you. Explain.
2. Interview, through online or phone call, local entrepreneurs, asked about their reasons in
engaging in small business and see how you can relate your life later if given the chance to
have your own business.

Activity Number 2
Group work (30 points)
1. Research online on the experience of successful Filipino Entrepreneurs who started small.
Know their history, and how you would learn from them. Presentations will be next meeting.

REFERENCES
 Entrepreneur. (2021, July 1). Investopia.
https://www.investopedia.com/terms/e/entrepreneur.asp

 https://www.dti.gov.ph/resources/msme-statistics/

 MSMES. (2013). Asian Development Bank.

https://www.adb.org//sites/default/files/pub/2014/asia-sme-finance-monitor-2013.pdf

 SMEs in the Philippines (2016, July 8). Department of Communications and

Information Technology. https://dict.gov.ph/wp-content/uploads/2016/07/8.-SMEs-in-

PANGASINAN STATE UNIVERSITY 6

Study Guide in Entrepreneurial Management FM-AA-CIA-15 Rev. 0 03-June-2020

HRDM ELEC 104: Entrepreneurial Management Module 1: Entrepreneurship: Its Opportunities And Rewards

the-Philippines-_Empowering-LGUs-through-ICT-Partnership-with-SUCs.pdf

 Hisrich, Deters, Shephered. ENTREPRENEURSHIP, McGraw-Hill Education, 2020

 Burton, ENTREPRENEURSHIP: Starting and Operating a Business, Larsen and

Keller Education, 2020

 Katz, Green. ENTREPRENEURIAL SMALL BUSINESS, Fifth Edition, McGraw-Hill Irwin,

2018

PANGASINAN STATE UNIVERSITY 7