Entrep Training Mat

8/3/2019 Entrep Training Mat

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DONT LOOK FOR JOBS,

CREATE THEM !!!

BE AN ENTREPRENEUR!

By: HEGINIO A. BALDANO, CPA, MBA

DTI Masbate


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ENTREPRENEURSHIP

(How to Start Your Business)

By: HEGINIO A. BALDANO, CPA, MBA

DTI Masbate


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Entrepreneurship refers to theeconomic activity of a person who starts,manages, and assumes risk of a businessenterprise. The person who undertakes

entrepreneurial activities is called anEntrepreneur.


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an Entrepreneur identifies theECONOMIC NEED, considers offering aBUSINESS SOLUTION, proceeds to

assemble the RESOURCES required,

and assumes the RISK of eithersucceeding or failing.


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an Entrepreneur is referred tothat very enterprising individual thatincreased productivity from a low level

to a high level.

Adding value through innovative andingenious means. Being an

entrepreneur is not merely makingmoney out of any business. It is about

creating VALUE.


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Entrepreneurs exploreopportunities andcreateorganizations to make opportunitiesinto realities. The best entrepreneurs invent

new ways to live, work, and achieve.

Successful entrepreneurship blendsindependence and collaboration, vision andaction, the individual and the organization.Done right, it can be a great way to live.

Source: From e-Web@ St. Louis University Missouri, USA


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1. PRE-INVESTMENT EVALUATION

1a. Rewards of being an Entrepreneur

MAKE MONEY

SELF

SATISFACTION

BE YOUROWN BOSS

EXPRESS

CREATIVITY


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1b. Risks & Trials

The Risk of Failure

- Small business are prone to risks &possibility of failure;

- Single bad decision can causebankruptcy;

-1 out of 5 new businesses is doomed to fail(per UP-ISSI study) Unpredictable Business Conditions

- in fast growing economy, small businessmay not respond to opportunities due tofinancial readiness

- in slow economy, cash flow problem =dissi ation of resources


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1b. Risks & Trials, contd.

Long Hours of Hard Work-be ready to spend most of waking hours

immersed in business

-preoccupied in business at the expense

of private & family time

Unwanted Responsibilities

- management responsibilities- social responsibilities (workers,community, customers, pay decent wages,pay taxes, compete fairly


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1b. Personal Entrepreneurial Characteristics (PEC)

POWERCLUSTER

PLANNINGCLUSTER

ACHIEVEMENTCLUSTER

1. OpportunitySeeking

2. Persistence

3. Commitment to Work

4. Risk taking

5. Demand

forEfficiency

6. GoalSetting

7. Information Seeking

8. SystematicPlanningandMonitoring

9. PersuasionandNetworking

10. Self

Confidence


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Some practical procedures for setting up new business

STEP 1

STEP 2

STEP 3

Rethink Your Entire Business Idea.Remember: more than 2/3 of small businesses fail within 4 years.

Consider buying someone elses

business VS. starting a new one.

Before opening your business, try

working for someone operating

similar business.


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Practical Considerations And Skills

Factors to considerandask yourself:

Do you have enough time?How will the stress of starting a business affect your personal life?Can you deal with the financial uncertainty of not knowing your weekly

take-home pay?Most importantly, can you get the necessary start-up capital to open your

business, especially considering the large number of unexpected

expenses

you will face?

Basic Skills required:

know how to market, price, advertise, purchase, and distribute it. Youalso must negotiate for a lease, equipment, inventory, and services.

Furthermore, you need to understand cash management, finance, law,

tax, and insurance.

In short, you must become an expert in business.


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2. STEPS IN STARTING A BUSINESS

SelfAnalysis

Considerother

Factors

Product/Service ID

WriteBusiness

Plan

SecureFinancing

DetermineFinancial

Requirements

ChooseLocation

SecureRegistration

& Permits

Hire &Train

Personnel

START


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2a. Come-Up with Business Idea

Factors to consider..

INTERNAL FACTORS EXTERNALFACTORS

Personal interest government support

Knowledge/talent &assistance

Training/work experience taxincentives

Other considerations like

financing


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2b. Choosing the Line of Business

ProductIndustries

ProcessIndustries

Sub ContractingIndustries

ServiceIndustries

Manufactured productsintended either for massmarket or individualcustomers demand.Examples are garments,toys, shoes, canned goods,(for mass market); precision

instruments for industrialuse, made to order furniture(as specialized products)

Performs one or two operations inthe in the total manufacturingprocess, not strictly speaking of amanufacturer but rather aprocess enterprise. Theactivities that can performed canbe initial operations on rawmaterials (milling,

corrugating,sawing, or cutting ),final operations (fishing, assembly,packing, or binding), or skilled orprecision operations (embroidery,testing, woodcarving).

Manufacture of productcomponents or parts forother bigger companies.Bigger companies find itfaster & cheaper to subcontract. Drawback is ifsmall company is totallydependent on one bigprincipal or contractingcompany

Service enterprises includerepair and maintenance shops,printing & machine shops, foodcatering, Beauty parlors, dressand tailoring shops, recreationestabs. (like bowling alleys andbilliard halls), andentertainment enterprises (suchas theaters, disco and pubhouse). Retail & trading is oneof the most common type of

service business


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2b. How to prepare a Project Feasibility Study (PFS)

Why prepare a PFS?

Many companies prepare PFS in order to ascertain if the project, as

initially designed, will have a good chance of making profit if

implemented. It takes into consideration the environment in which

the business will operate or is currently operating and the resources

that will be put into the project.

Resources (5 Ms)

Manpower

Machinery & Equipment

Money

Moment/Time

Methods

Basic Phases

Marketing

Finance

Production

Management


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The following is the format of a project feasibility study in general

I. INTRODUCTION

II. SUMMARY OF THE PROJECT STUDY

III. PROPONENT, MGT. & PERSONNEL

IV. MARKET FEASIBILITY

V. PRODUCTION

VI. FINANCIAL FEASIBILITY


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2b. How to Make a Business Plan

What is a Business Plan?

an operational plan that defines actions what to do as well ashow and when to do it. Many entrepreneurs use their

business plan for the critical start-up and expansion so that

they will stay both on target and within the budget. It consists

of establishing goals for the business and completing the

procedures to reach these goals.In developing the plan, you should first ask yourself this

questions:

1. WHAT WOULD I LIKE THE BUSINESS TO BECOME A YEARFROM NOW?

2. WHAT CHANGES ARE TAKING PLACE IN THE BUSINESSAND HOW SHOULD I PREPARE FOR THEM?

3. HOW CAN I ATTAIN MY GOALS?

4. WHAT TIMETABLE SHOULD I FOLLOW IN ACCOMPLISHING

MY PLANS?


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Business Plan Format: Basic Steps to Follow

1

2

3

4

State YourObjectives

Describe

YourBusiness

DescribeYour

Product orServices

IdentifyYourPotential

Markets

IdentifyYourCompetitors

Consider

YourPricingPolicy

DetermineYourMarketing

Methods

DetermineYour KeyPersonnel

ID

MaterialRqmt &SupplySource

ID

Equipment &Process toUsePrepareSales

Forecast

PrepareBudget

Set YourPlan toWork

5

6

7

8

9

10

11

12

13


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3. ORGANIZING & FINANCING BUSINESS

3a. Choosing Form of Business

Form of Business

Organization

ADVANTAGES DISADVANTAGES

SINGLEPROPRIETORSHIP

-easy to set up

-Decision left entirely to

owner

-demands owners personal time

-growth limited to owners

financial means

PARTNERSHIP -relatively easy to set up

-check & balancemaintained with twoparties around

-any personal rift between partiesmay dissolve partnership

-Equal profit sharing despiteunequal attention and time given

by partners to business

CORPORATION -maximum flexibility forgrowth

-Limited liability ofindividual share holders

-Greater room forprofessionalism in

-complicated setting up process

-Individual stockholders may havelimited influence on management,

-Tendency to institutionalize a

bureaucracy


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3b. Choosing Business Location

Some guides in choosing location

1. KNOW THE POPULATION OF THE TRADING AREA.- Is the neighborhood starting to get run down?

- Is the population moving away? Or, is it new & on the way

up?

- Determine the purchasing power of the population, do they

own cars, big, affluent homes?

2. STUDY THE COMPETITION IN THE AREA

- What is the competition in the area you have picked? Howmany stores look prosperous?

- How many look as though they are barely getting by?

- How many similar stores went out of the business in this area

last year? How many new stores opened last year?

- What price line does competition carry?

- Which store or stores will be your biggest competitor?


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c. Study the location's accessibility

- Plan the location where it is accessible to your customers and

employees and, of course, to you. Ask yourself the following

questions:

- How close is the store to jeepney and bus routes and other

transportation facilities? Are there adequate parking spaces

near the store? Are the sidewalks in good repair? Is thestreet lighting good?

In addition, you must be able to recognize and guard

against those characteristics of particular sites which will

adversely affect the volume of business.

Among these are : smoke, dust, disagreeable odorsand noises, proximity to garages, hospitals, drinking places and

similar establishments; poor sidewalks; and old and worn-out buildings.

3b. Choosing Business Location


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3c. HIRING/TRAINING PERSONNEL

As employee manager, you must see to it that you have the rightemployees, train them well for the job you assign them to do andmotivate them so they are happy giving their best to the job.

1. PLAN YOUR PERSONNEL REQUIREMENTS2. RECRUIT PROSPECTIVE EMPLOYEES

3. SELECT THE RIGHT ONE

4. INTRODUCE NEW EMPLOYEES TO THEIR JOB

5. TRAIN EMPLOYEES PROPERLY

6. PAY YOUR EMPLOYEES FAIRLY


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3d RAISING THE NEEDED CAPITAL .

a) DETERMINE YOUR FINANCIAL REQUIREMENTS

1. Fixed Capital - Includes cost of land and building, or leasedeposits of them; cost of improving land or remodeling building;machinery and equipment; and furniture, furnishing and fixtures.

These are usually one-time expenses, meaning that they aregenerally good for the lifetime of the business.

2. Working Capital - This is the reserve money that you need tocarry on the business on a day-to-day basis until it becomes self-supporting - which may take about one to six months or even

longer. You need working capital to purchase your beginninginventories (raw materials), pay your workers, spend fortransportation and pay your telephone, electric, and water bills.

3. Pre-Operating Capital - Includes money that you spend inregistering your business, acquiring licenses of franchises or

paying a lawyer or a consultant In other words, these are all themoney that you spend even before your business begins to


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b) LOOK FOR SOURCES OF CAPITAL

Equity Capital. Equity capital is the amount of personal resources

which and - possibly your partner - have put into business plus theportion of the profits you plow back into the business. It also includesresources invested by other people into your companyRetained Funds. In the case where a business in on-going and hasundistributed profits, the accumulated cash may serve as a capitalsource. Provisions and reserves for specific and general purpose as

for general reserve fund, may be used temporarily to fill in the need forcapital.

Creditors Equity. If your require financing from outside sourcesthere are loan and credit packages available. These are:

Short-terms loans. These loans are financial obligations based on

short term, usually less than a year and are normally self-liquidating.

Merchant Credit (or Bills Purchase)

Terms Loans. Terms loans or immediate terms loans providecapital for periods from one to ten years and are available frombanks and other institutions.

A term loan is amortized, that is, paid back in installments overthe life of the loan agreement



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Other private sources of capital

Insurance companies. If your have a life insurance policy,the company that issued the policy is usually willing to loanamounts up to the cash of the policy at a relatively low interestrate.Mortgage Bankers. Mortgage bankers may be able to helpyou finance real estate or improvement of properties,

acquisition of machinery or fixed installments or constructioncapital needs. The mortgage banker brings together themoney source and the person who needs mortgage funds.Finance Companies. Finance Companies provide a widerange of corporate financing and leasing, accounts receivableand inventory financing, commercial, industrial and agricultural

loans, motor vehicle financing, sales and installmentsfinancing. Finance companies deal mostly in secured loans andwill often furnish capital to those borrowers where banks willnormally refuse.Individual money lenders. Friends or relatives extend loansin the spirit of "pakikisama" or camaraderie. There are also

unlicensed money lenders but beware of those who chargeusurious rates of interest, like the so-called "5-6 operators".



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What Lenders And Investors Look For? (The Cs Of

Credit)Capital is the money that you put into the business. It shows that youhave made a clear financial commitment and that you are willing to workhard over the long run. You should expect to invest at least P1 of yourmoney for every P3 that you borrow.

Cash Flow is the cash on hand from the business which you use torepay your debts as they come due. You must show investors how andwhen they will get back the money they lend you.

Collateral is the personal and business property that you are willing to"put on the line" for your business. It protects investors in the event that

you cannot repay your debts. Investors look for asserts that are easilyresold and that do not significantly decrease in value over time.

Capability is a measure of your success as a business operator.Profitable financial statements and a detailed business plan which showswhy you need to borrow money are the most persuasive means ofobtaining financing.

Character is the im ression ou make on a lender. Since lenders often


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1. How do you put a giraffe into a refrigerator?

2. How do you put an elephant into a refrigerator?

WRONG ANSWER: Open the refrigerator, put in the elephant and close the

refrigerator.

CORRECT ANSWER: Open the refrigerator, take out the giraffe, put in the

elephant and close the door. This tests your ability to think through the

repercussions of your actions.

THE CORRECT ANSWER IS: Open the refrigerator, put in the giraffe and close

the door. This questions tests whether you tend to do simple things in an

overly complicated way.


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3. The Lion King is hosting an animal conference. Allthe animals attend except one. Which animal did not

attend?

THE CORRECT ANSWER IS: The elephant. The elephant is in the

refrigerator. This tests your memory. OK, even if you did not answer

the first three questions correctly you still have one more chance to

show your abilities.

4. There is a river you must cross. But it is inhabited bycrocodiles. How do you manage to cross it?

THE CORRECT ANSWER IS:You swim across. All the crocodiles are

attending the Animal Meeting. This tests whether you learn quicklyfrom your mistakes.

According to Andersen Consulting Worldwide, around 90% of the professionals they tested

got all questions wrong. But many preschoolers got several correct answers. Anderson

Consulting says this conclusively disproves the theory that most professionals have the brains

of a four year old.

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