SCHOOL OF BUSINESS ADMINISTRATION AND ACCOUNTANCY

ENMGMT1 ENTREPRENEURIAL
MANAGEMENT 1

Prepared by:
A Self-regulated Learning Module
mmsalvino@[Link]

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 TABLE OF CONTENTS

I. COURSE CODE AND COURSE TITLE . . . . . . . 3

II. COURSE DESCRIPTION . . . . . . . . . 3

III. REQUIREMENT OF THE COURSE . . . . . . . . 3

IV. SUMMARY OF TOPICS (LESSONS) . . . . . . . . 3

V. LESSON PROPER

1. WEALTH CREATION AND MANAGEMENT AND ITS VALUE . . .

2. ORIGIN AND NATURE OF ENTREPRENEURSHIP . . . . .
3. THE PHILIPPINE ECONOMY . . . . . . . .
4. ATTRIBUTES, QUALITIES AND CHARACTERISTICS OF AN ENTREPRENEUR .
5. THE ETHICAL AND SOCIAL RESPONSIBILITIES OF THE ENTREPRENEUR .
6. THE NATURE OF SMALL BUSINESS . . . . . . .
7. SEARCH FOR BUSINESS OPPORTUNITY, IDEATION, AND CREATIVITY. .
8. THE BUSINESS PLAN I . . . . . . . . .
9. THE BUSINESS PLAN II . . . . . . . . .
10. THE BUSINESS PLAN III . . . . . . . . .
11. DETERMINING THE RIGHT LOCATION . . . . . .
12. FINANCING THE VENTURE . . . . . . . .
13. MANAGING SMALL BUSINESS RISK . . . . . . .
14. SOCIAL RESPONSIBILITY . . . . . . . .
15. FRANCHISING . . . . . . . . . .

REFERENCE . . . . . . . . . . .

I. COURSE CODE: ENMGMT1 ENTREPRENEURIAL MANAGEMENT1

II. COURSE DESCRIPTION

The course aims to teach the approach entrepreneurs use in identifying opportunity and creating new

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ventures; the analytic skills that are needed to practice this approach; and the background knowledge and
managerial skills that are necessary for dealing with the recurring issues involved in starting, growing, and
harnessing the value of new ventures. (updated from CMO39 s.2006, CMO18 s.2017)

III. REQUIREMENT OF THE COURSE:

The Student is required to submit a human resource plan with following content:
1. Recruitment policy aligned to Company Vision, Mission, Corporate Values, Objectives
2. SWOT (external/internal environment of the company) Analysis
3. Strategic Directions and Action Plan relating to human resources (One year only)
4. References

IV. SUMMARY OF LESSONS

WEEK NO. INCLUSIVE DATE TOPIC

WEALTH CREATION AND MANAGEMENT AND ITS
WK. 1 January 16 -20 VALUE
WK. 2 January 23- 27 ORIGIN AND NATURE OF ENTREPRENEURSHIP
WK. 3 Jan 30 -February 3 THE PHILIPPINE ECONOMY:
ATTRIBUTES, QUALITIES AND CHARACTERISTICS OF AN
WK. 4 February 6 -10 ENTREPRENEUR
THE ETHICAL AND SOCIAL RESPONSIBILITIES OF THE
WK. 5 February 13 - 17 ENTREPRENEUR
WK. 6 February 20- 23 FIRST GRADING EXAMINATION
WK. 7 Febr 27 - March 3 THE NATURE OF SMALL BUSINESS
SEARCH FOR BUSINESS OPPORTUNITY, IDEATION, AND
WK. 8 March 6 - 10 CREATIVITY

WK. 9 March 13 - 17 THE BUSINESS PLAN I

WK. 10 March 20 - 24 THE BUSINESS PLAN II

WK. 11 March 27 - 30 MIDTERM EXAMINATION

WK 12 April 3 - 5 THE BUSINESS PLAN III
WK13 April 11 - 14 DETERMINING THE RIGHT LOCATION

WK 14 April 17 - 21 FINANCING THE VENTURE

WK. 15 April 24 - 28 MANAGING SMALL BUSINESS RISK

WK. 16 May 2 - 5 SOCIAL RESPONSIBILITY

WK. 17 May 8 - 12 FRANCHISING

WK. 18 May 15 -18 FINAL EXAMINATION

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The following INFOGRAPHICS will hopefully guide us into a successful SELF-DIRECTED LEARNING:
([Link]

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 WK. 1 WEALTH CREATION AND MANAGEMENT AND ITS VALUE

1. OBJECTIVES OF THE LESSON – The student must be able to :

Gain a working understanding and exposed learners to the value of wealth creation and management.

2. LESSON PROPER –

Wealth creation means anything which could be owned and controlled, and have monitory value or
have the potential to create the monitory value. Assets could be tangible like a car, house, furniture, machinery
etc. or intangible like goodwill, copyrights, patents, trademarks etc. For a company, the land, the building,
machinery, inventory etc. are the wealth creation strategies. But the employees are not assets, though they have
the potential to create monitory value. Employees are not assets because the company don’t own them or have
sufficient control over them. They are called as resources of a company.
Some great people who understand finance in great depth see assets in a different way. For example: the
author of world famous book, rich dad poor dad, Mr. Robert Kiyosaki says that, anything which gives profit is
an asset and others are liabilities. Wealth creation example: the house in which an individual life is his liability
as that individual is not earning anything out of it, instead, he is paying for its maintenance and may be loan
EMIs. This house will behave as an asset when that individual sells it with a profit. A house which is giving rent
in the pocket of the owner is an asset which can be termed as one of the best ways of wealth creation strategies
and tactics.
In accounting, Assets = Liabilities + Capital. Assets are seen as current assets (have cash very handy;
liquid assets) and fixed assets (property, plant, and equipment; PPE). Assets can be classified as one of the type
of creating wealth for long term or as a part of your retirement planning.
WEALTH CREATION STRATEGIES AND IDEAS:
How to build wealth? This is one of the biggest question where people are looking for the answer. Here
we will present various ways of wealth creation strategies as well as wealth creation tips which will help you in
managing your personal finance as well as for retirement planning. Wealth creation and wealth accumulation is
the dream of all the people. Here are few of the wealth creation ideas by which people can create wealth and
accumulate wealth for their future protection.
1. Starting a Business:
These days, it seems like there is an entrepreneurship boom in many places. Everyone seems to start or
wants to start, at least, his own business. Business could be a very good asset if it is implemented well. For
return on investment, the sky is the limit. Though business is a very sensitive thing to deal with as risks are
very high and it requires heavy involvement of business owner, but if somehow it is set, then nothing is better
than a business when it comes to wealth creation as well as accumulation.
2. Deposits and Investments:
Deposits and Investments are those assets which make money grow without much involvement of the
owner. Most life insurance products are designed in such a way that the buyer could accumulate the money to
the maximum. For some policies, wealth accumulation is the prime focus. The deposits also help in increasing

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the money. Typical examples of assets under this head are – fixed deposits, recurring deposit.
Debentures, bonds, and mutual funds. Investing in gold and commodities is also a nice way to grow money
as they are less risky as compared to the stock market investment. This is one of the safest and low risk wealth
creation strategy.
3. Real Estate Assets:
One of the best wealth creation idea for a common man is assets in terms of real estate properties. Why
so? Because real estate properties are the most valued assets which people generally owns. Investing in real
estate could be one the best way to create assets and accumulate wealth. In last 50 years, the prices of real estate
properties have grown so fast that never happened before it. Millions of people are investing in real estate
properties. And many have taken real estate investment as their prime source of income. So, the potential is
very high in real estate investments.
4. Loan as an Asset:
In first glance, loan seems to be a liability, but it could be turned into an asset. There is huge possibility
that by using loan money, an individual can develop a system from which he can earn more than the loan
repayment. For example – starting a profitable business using loan money and buying a real estate property
which can give higher returns than the loan repayment. The loan could become assets when an individual is
taking a loan as well as an individual is giving a loan. When someone gives a loan to another person, then it is
an asset for the giver as he’ll earn interest out of it.
5. Trademarks, Patents, Copyrights:
The famous pharmaceutical company Pfizer has sold its patent product on prices 3 times more than the
competition. This happened because that company has got patent for its product because of which no other
company could claim that name. Hence, the products of that company are seen as brand product or original
product while products from companies in competition are taken as fake products. This is the power of wealth
creation and accumulation like patent, copy write and trademarks.
FORMS OF WEALTH
1. Financial Capital. Our society focuses a lot of attention on financial capital as it is our primary tool for
exchanging goods and services with others. Financial capital is more than just money, but also investments that
are traded on financial markets. When you invest money in a company, you are giving it “fuel” to achieve its
potential, and if all goes well, some of that potential is returned to you, financially. This requires the foresight to
understand what businesses will create value and grow in the long term. While money is important, our
generation faces unprecedented financial uncertainty that is also causing environmental and social instability.
We can no longer rely on building our security and wealth based solely on financial capital.

2. Material Capital. Material capital is just what it sounds like: non-living physical resources. From raw
materials like stone, metal, and fossil fuels, to infrastructure like our buildings and roads, to manufactured
things like our computer and our clothes, material capital is a common way we measure our wealth because we
can see it and we can count it. We invest in material capital by investing in tools that increase our productivity
or performance (books, laptops, warm clothes), that last and give value over a long time (good roads, solid
shoes), and that preserve the environment (reusable glass bottles), rather than buying things with a throwaway
mindset.

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3. Wisdom Capital. Wisdom can’t be bought, but it can be accumulated through the application of experience
and knowledge. Going to school and reading a book will give us knowledge but no wisdom. Investing in
wisdom capital is about using our knowledge and experience to achieve mastery, so we can create more value
for others with more insight and excellence. Visiting a foreign country, learning a new skill and practicing the
skill amongst professionals, or teaching something that you already know all build wisdom. In the words of
Dave Matthews: “You don’t have to be old to be wise, a bird doesn’t wait till he dies to fly.”

4. Nature Capital. From the Earth we come, and to the Earth we return, and in between, the Earth sustains us. It
sustains us with water and food we consume, the air we breathe, and the environment around us Nature capital
represents our water and our soil, the plants and animals, and ultimately the health of us and our planet. In a
consumer-culture, many of our actions are about extraction (meaning we take a lot from the environment). The
opposite is regeneration (meaning we give back to the environment), and there are more people now starting to
grow their own food and reduce their carbon footprint. One simple way to start investing in nature capital, is to
choose foods that are healthy even though they may not be as tasty - we can't do a lot in life, if we do not have
our health!

5. Spiritual Capital. Spiritual capital means many different things to different people. For some, it comes from a
practice of religion, and for others, it comes from a connection of self to a larger purpose - through being in
nature, dance, or art! Regardless of practice, spiritual capital guides our values, gives us passion, and cultivates
a level of mental and emotional resilience and peace when times are tough. Investing in spiritual capital is about
deepening our practice and being of service to others.

6. Social Capital. All the happiness research has found that the number one key to happiness is the quality of
our relationships. When we have social capital, we develop influence and connections among people that we
can trust. Investing in social capital is not about having more friends on Facebook or followers on Snapchat or
Instagram, but about building deep ties by being there for our friends and helping our community.

7. Time Capital. There is something that we all have in common, whether you are a student, Justin Bieber, or
the president of the United States - and that is, we all have 24 hours a day. How we use it makes all the
difference. Investing in building time capital is not only about having MORE time to do what is important to us,
but more crucially, the quality of time we spend on those important things. Take for example a couple going on
a dinner date, but are both glued to their phones and not talking to each other. While they are spending time
with each other, their attention is not present with each other. The currency of time is our attention. And what
we put our attention on, shapes our reality.
Reference: [Link]
[Link]

3. ASSESSMENT –
a. The student should submit an illustration and discussion on how he intends to create wealth using any of
the forms discussed.
b. The following rubric will be used to grade the work of the student.

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 SCORE CRITERIA

EXPERT Consistently does all or almost all of the following: Accurately interprets illustration. Identifies the salient
points in the wealth creation and management. Thoughtfully analyzes and evaluates major alternative
(44-50) points of view. Draws warranted, judicious, non-fallacious conclusions. Justifies key results and
procedures, explains assumptions and reasons. Accurately follows where evidence and reasons lead.

Does most or many of the following: Accurately interprets illustration. Identifies relevant arguments
ACCOMPLISHED relating to wealth creation and management. Offers analyses and evaluations of obvious alternative points
of view. Draws warranted, non-fallacious conclusions. Justifies some results or procedures, explains
(35-43)
reasons. Fair-mindedly follows where evidence and reasons lead.
Does most or many of the following: Misinterprets illustration. Fails to identify strong, relevant counter-
CAPABLE arguments relating to wealth creation and managements. Ignores or superficially evaluates obvious
(18-34) alternative points of view. Draws unwarranted or fallacious conclusions. Justifies few results or
procedures, seldom explains reasons. Regardless of the reasons, maintains or defends views based on self-
interest or preconceptions.
Consistently does all or almost all of the following: Offers biased interpretations of illustration or
BEGINNER information. Fails to identify or hastily dismisses strong, relevant counter-arguments in relation to wealth
creation and management. Ignores or superficially evaluates obvious points of view. Argues using
(1-17)
fallacious or irrelevant reasons, and unwarranted claims. Does not justify results or procedures, nor
explain reasons. Regardless of the evidence or reasons, maintains or defends views based on self-interest
or preconceptions.

WK. 2 ORIGIN AND NATURE OF ENTREPRENEURSHIP

1. OBJECTIVES OF THE LESSON – The student must be able to appreciate entrepreneurship as a career.

2. LESSON PROPER –

ENTREPRENEURSHIP
An entrepreneur is someone who organizes, manages, and assumes the risks of a business or enterprise.
An entrepreneur is an agent of change. Entrepreneurship is the process of discovering new ways of combining
resources. When the market value generated by this new combination of resources is greater than the market
value these resources can generate elsewhere individually or in some other combination, the entrepreneur makes
a profit. An entrepreneur who takes the resources necessary to produce a pair of jeans that can be sold for thirty
dollars and instead turns them into a denim backpack that sells for fifty dollars will earn a profit by increasing
the value those resources create. This comparison is possible because in competitive resource markets, an
entrepreneur’s costs of production are determined by the prices required to bid the necessary resources away
from alternative uses. Those prices will be equal to the value that the resources could create in their next-best
alternate uses. Because the price of purchasing resources measures this OPPORTUNITY COST— the value of the
forgone alternatives—the profit entrepreneurs make reflects the amount by which they have increased the value
generated by the resources under their control.
Entrepreneurs who make a loss, however, have reduced the value created by the resources under their
control; that is, those resources could have produced more value elsewhere. Losses mean that an entrepreneur
has essentially turned a fifty-dollar denim backpack into a thirty-dollar pair of jeans. This error in judgment is
part of the entrepreneurial learning, or discovery, process vital to the efficient operation of markets. The profit-

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and-loss system of CAPITALISM helps to quickly sort through the many new resource combinations
entrepreneurs discover. A vibrant, growing economy depends on the EFFICIENCY of the process by which new
ideas are quickly discovered, acted on, and labeled as successes or failures. Just as important as identifying
successes is making sure that failures are quickly extinguished, freeing poorly used resources to go elsewhere.
This is the positive side of business failure.
Successful entrepreneurs expand the size of the economic pie for everyone. Bill Gates, who as an
undergraduate at Harvard developed BASIC for the first microcomputer, went on to help found Microsoft in
1975. During the 1980s, IBM contracted with Gates to provide the operating system for its computers, a system
now known as MS-DOS. Gates procured the software from another firm, essentially turning the thirty-dollar
pair of jeans into a multibillion-dollar product. Microsoft’s Office and Windows operating software now run on
about 90 percent of the world’s computers. By making software that increases human PRODUCTIVITY, Gates
expanded our ability to generate output (and income), resulting in a higher standard of living for all.
Sam Walton, the founder of Wal-Mart, was another entrepreneur who touched millions of lives in a
positive way. His innovations in distribution warehouse centers and inventory control allowed Wal-Mart to
grow, in less than thirty years, from a single store in Arkansas to the nation’s largest retail chain. Shoppers
benefit from the low prices and convenient locations that Walton’s Wal-Marts provide. Along with other
entrepreneurs such as Ted Turner (CNN), Henry Ford (Ford automobiles), Ray Kroc (McDonald’s franchising),
and Fred Smith (FedEx), Walton significantly improved the everyday life of billions of people all over the
world.
The word “entrepreneur” originates from a thirteenth-century French verb, entreprendre, meaning “to do
something” or “to undertake.” By the sixteenth century, the noun form, entrepreneur, was being used to refer to
someone who undertakes a business venture. The first academic use of the word by an economist was likely in
1730 by Richard Cantillon, who identified the willingness to bear the personal financial risk of a business
venture as the defining characteristic of an entrepreneur.
In the early 1800s, economists JEAN-BAPTISTE SAY and JOHN STUART MILL further popularized the
academic usage of the word “entrepreneur.” Say stressed the role of the entrepreneur in creating value by
moving resources out of less productive areas and into more productive ones. Mill used the term “entrepreneur”
in his popular 1848 book, Principles of Political Economy, to refer to a person who assumes both the risk and
the management of a business. In this manner, Mill provided a clearer distinction than Cantillon between an
entrepreneur and other business owners (such as shareholders of a corporation) who assume financial risk but
do not actively participate in the day-to-day operations or management of the firm.
Two notable twentieth-century economists, JOSEPH SCHUMPETER and Israel Kirzner, further refined the
academic understanding of entrepreneurship. Schumpeter stressed the role of the entrepreneur as an innovator
who implements change in an economy by introducing new goods or new methods of production. In the
Schumpeterian view, the entrepreneur is a disruptive force in an economy. Schumpeter emphasized the
beneficial process of CREATIVE DESTRUCTION, in which the introduction of new products results in the
obsolescence or failure of others. The introduction of the compact disc and the corresponding disappearance of
the vinyl record is just one of many examples of creative destruction: cars, electricity, aircraft, and personal
computers are others. In contrast to Schumpeter’s view, Kirzner focused on entrepreneurship as a process of
discovery. Kirzner’s entrepreneur is a person who discovers previously unnoticed profit opportunities. The
entrepreneur’s discovery initiates a process in which these newly discovered profit opportunities are then acted
on in the marketplace until market COMPETITION eliminates the profit opportunity. Unlike Schumpeter’s

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disruptive force, Kirzner’s entrepreneur is an equilibrating force. An example of such an entrepreneur would be
someone in a college town who discovers that a recent increase in college enrollment has created a profit
opportunity in renovating houses and turning them into rental apartments. Economists in the modern AUSTRIAN
SCHOOL OF ECONOMICS have further refined and developed the ideas of Schumpeter and Kirzner.

During the 1980s and 1990s, state and local governments across the United States abandoned their
previous focus on attracting large manufacturing firms as the centerpiece of economic development policy and
instead shifted their focus to promoting entrepreneurship. This same period witnessed a dramatic increase in
empirical research on entrepreneurship. Some of these studies explore the effect of demographic and
socioeconomic factors on the likelihood of a person choosing to become an entrepreneur. Others explore the
impact of taxes on entrepreneurial activity. This literature is still hampered by the lack of a clear measure of
entrepreneurial activity at the U.S. state level. Scholars generally measure entrepreneurship by using numbers of
self-employed people; the deficiency in such a measure is that some people become self-employed partly to
avoid, or even evade, income and payroll taxes. Some studies find, for example, that higher income tax rates are
associated with higher rates of self-employment. This counterintuitive result is likely explained by the higher
tax rates encouraging more tax evasion through individuals filing taxes as self-employed. Economists have also
found that higher taxes on inheritance are associated with a lower likelihood of individuals becoming
entrepreneurs.
Some empirical studies have attempted to determine the contribution of entrepreneurial activity to
overall ECONOMIC GROWTH. The majority of the widely cited studies use international data, taking advantage
of the index of entrepreneurial activity for each country published annually in the Global Entrepreneurship
Monitor. These studies conclude that between one-third and one-half of the differences in economic growth
rates across countries can be explained by differing rates of entrepreneurial activity. Similar strong results have
been found at the state and local levels.
Infusions of venture capital funding, economists find, do not necessarily foster entrepreneurship. Capital
is more mobile than labor, and funding naturally flows to those areas where creative and potentially profitable
ideas are being generated. This means that promoting individual entrepreneurs is more important for economic
development policy than is attracting venture capital at the initial stages. While funding can increase the odds of
new business survival, it does not create new ideas. Funding follows ideas, not vice versa.
One of the largest remaining disagreements in the applied academic literature concerns what constitutes
entrepreneurship. Should a small-town housewife who opens her own day-care business be counted the same as
someone like Bill Gates or Sam Walton? If not, how are these different activities classified, and where do we
draw the line? This uncertainty has led to the terms “lifestyle” entrepreneur and “gazelle” (or “high growth”)
entrepreneur. Lifestyle entrepreneurs open their own businesses primarily for the nonmonetary benefits
associated with being their own bosses and setting their own schedules. Gazelle entrepreneurs often move from
one start-up business to another, with a well-defined growth plan and exit strategy. While this distinction seems
conceptually obvious, empirically separating these two groups is difficult when we cannot observe individual
motives. This becomes an even greater problem as researchers try to answer questions such as whether the
policies that promote urban entrepreneurship can also work in rural areas. Researchers on rural entrepreneurship
have recently shown that the INTERNET can make it easier for rural entrepreneurs to reach a larger market.
Because, as ADAM SMITH pointed out, specialization is limited by the extent of the market, rural entrepreneurs
can specialize more successfully when they can sell to a large number of online customers.
What is government’s role in promoting or stifling entrepreneurship? Because the early research on

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entrepreneurship was done mainly by non economists (mostly actual entrepreneurs and management faculty at
business schools), the prevailing belief was that new government programs were the best way to promote
entrepreneurship. Among the most popular proposals were government-managed loan funds, government
subsidies, government-funded business development centers, and entrepreneurial curriculum in public schools.
These programs, however, have generally failed. Government-funded and -managed loan funds, such as are
found in Maine, Minnesota, and Iowa, have suffered from the same poor incentives and political pressures that
plague so many other government agencies.
Reference: Sobel, R. (N.D.) Entrepreneurship. Retrieved on December 14, 2020 from:
[Link]

3. ASSESSMENT –

Take Google Forms quiz

WK. 3 THE PHILIPPINE ECONOMY:

1. OBJECTIVES OF THE LESSON – The student must be able to: Recognize the role of entrepreneurship in economic
development

2. LESSON PROPER –

THE PHILIPPINE ECONOMY

The Philippines is one of the most dynamic economies in the East Asia Pacific region ([Link],
2020). With increasing urbanization, a growing middle class, and a large and young population, the Philippines’
economic dynamism is rooted in strong consumer demand supported by a vibrant labor market and robust
remittances. Business activities are buoyant with notable performance in the services sector including the
business process outsourcing, real estate, and finance and insurance industries.

Sound economic fundamentals and a globally recognized competitive workforce reinforce the growth
momentum. Having sustained average annual growth of 6.4% between 2010-2019 from an average of 4.5%
between 2000-2009, the country is on its way from a lower middle-income country with a gross national income
per capita of US$3,850 in 2019 to an upper middle-income country (per capita income range of US$4,046–
$12,535) in the near term.

Real economic growth, however, has been challenged by the COVID-19 (coronavirus) outbreak and the
strict community quarantine measures imposed in the country. Growth is now projected to contract in 2020,
driven by significant declines in consumption and investment growth, and exacerbated by the sharp slowdown
in exports, tourism, and remittances. Nevertheless, economic growth is expected to rebound gradually in 2021-
2022 assuming a containment of the virus domestically and globally, and with more robust domestic activity
bolstered by greater consumer and business confidence and the public investment momentum.

In recent years, the Philippine economy has made progress in delivering inclusive growth, evidenced by
a decline in poverty rates and its Gini coefficient. Poverty declined from 23.3% in 2015 to 16.6% in 2018 while
the Gini coefficient declined from 44.9 to 42.7 over the same period. The ongoing increasing trend in real

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wages, which is expected to have a positive impact on household incomes—particularly those from the lower
income groups—will be hampered by the impact of the COVID-19, with negative consequences also for
poverty reduction in the Philippines.

HOW DOES AN ECONOMY GROW

l Keynesian theory. Government as the key role in the economic development

l Ricardian theory. Agriculture plays a major role in the economic development
l Harrod-domar theory. More products can be produced though machines
Entrepreneurial Role in the Economy. Offer faster method of distributing goods and services income,
jobs, goods and services and improves the quality of life
Development and Growth Theories: Kaldor theory and Laissez-Faire Theory. Technology is the key
factor in the production of goods and services the government should not interfere in economic activity
Innovation theory contributes more equitable distribution of income, utilizes and mobilizes resources to
make the country productive brings social benefits through the government stresses the role of innovators or
entrepreneurs in the economic development

3. ASSESSMENT – Quiz through Canvas

WK. 4 ATTRIBUTES, QUALITIES AND CHARACTERISTICS OF AN ENTREPRENEUR

1. OBJECTIVES OF THE LESSON – The student must be able to:

l Assess own entrepreneurial character and act with professional responsibility.

2. LESSON PROPER –

COMMON CHARACTERISTICS OF A GOOD ENTREPRENEUR

Creative and Innovative. Entrepreneurship requires creativity and innovation. Great entrepreneurs are
constantly coming up with inventive and new ideas for growing their companies. This creativity helps them stay
ahead of the competition and maintain a successful business. Innovation plays a vital part in the success of any
business, and entrepreneurs who can innovate are more likely to be successful. Business owners come up with
new products and services, find ways to reduce costs and improve the overall efficiency of their businesses.
These are all essential for success in the business world.

Focus on Growth and Learning. The business world is constantly changing, and successful entrepreneurs are
always looking for ways to grow and learn. They understand that it is crucial to improve their business to stay
ahead of the competition continuously. They also realize that learning is a lifelong process, and they are
constantly looking for ways to learn new skills and improve their knowledge. This focus on growth and learning
allows successful entrepreneurs to stay ahead of the curve and achieve success. A simple way to continue
learning and education as an entrepreneur is by enrolling in the best online MBA program they could find. An
MBA can help entrepreneurs learn new skills, improve their business knowledge, and network with other
successful entrepreneurs.

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Committed and Driven. Another critical characteristic of successful entrepreneurs is their commitment and
drive. They are determined to succeed and work hard to make their businesses successful. They are not afraid of
hard effort and constantly look for new methods to enhance their companies. In addition, successful
entrepreneurs have a strong desire to achieve their goals and are not easily discouraged. When things get hard,
they can push through the challenges and continue working towards their goals.

Persistent and Resilient. Successful entrepreneurs are also persistent and resilient. They do not fear failure
and can recover from disappointments. They are not hesitant to work hard and always look for new methods to
enhance their enterprises. They can discover a solution and move forward despite the hardships when they face
any problematic situation. This resilience helps them overcome challenges and obstacles that come their way. In
addition, successful entrepreneurs can stay focused and motivated during difficult times.

Strong Work Ethic. It is often asserted that success is determined by strenuous effort. It is especially true in
the business world, where success depends on working hard. Successful entrepreneurs have a strong work ethic,
which allows them to persevere through tough times and achieve their goals. High levels of productivity and
efficiency typically characterize businesses owned by successful entrepreneurs. Entrepreneurship requires a
strong work attitude to stay focused and passionate, which is critical for success.

Ability to Take Risks. Entrepreneurs who succeed are not afraid to take chances, which is essential in starting a
new venture. They understand that there is always a risk of failure, but they are willing to take that risk to
achieve their goals. They also understand that not every decision will succeed, but they are comfortable making
decisions and taking risks to learn from their mistakes. This willingness to take risks allows successful
entrepreneurs to move forward and achieve success. They understand the stakes involved in entrepreneurship
and are not afraid to put in the hard work required for success.

Leadership Skills. Successful entrepreneurs are often great leaders, and they understand the importance of
leading by example. They can motivate their team members and get the best out of them. They can also make
tough decisions when necessary, and they are not afraid to stand up for what they believe in. Leadership skills
allow successful entrepreneurs to build strong teams and achieve success. They are aware of the significance of
collaborating as a team to achieve shared objectives. Strong business leaders are critical for the success of any
business.

Flexibility. Successful entrepreneurs are flexible, and they can adapt to changing circumstances. They
understand that things will not always go according to plan, and they are willing to make necessary changes.
This flexibility allows them to overcome challenges and take advantage of new opportunities. Flexibility is
essential for entrepreneurs, as it will enable them to respond to the ever-changing environment of business.
They are open to feedback and willing to make changes to improve their business.

Communication Skills. Good communication is fundamental for the success of any business. Successful
entrepreneurs can communicate effectively with their team members, clients, and other business professionals.
They understand the importance of communication and know-how to get their message across clearly and
concisely. These communication skills allow successful entrepreneurs to build strong relationships and achieve
success. They understand that any successful business is based on solid relationships. To establish and maintain
strong relationships, great entrepreneurs possess effective communication skills.

Passionate about their business. A successful entrepreneur is always passionate about their business. They
have a strong emotional connection to their business, and they are constantly thinking about ways to improve it.
They are eager to help their customers, and they take pride in providing excellent service. This passion for their

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business allows successful entrepreneurs to overcome any obstacle they face. They give their business
everything they have, and they never give up. Their passion drives them to succeed, no matter what.

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3. ASSESSMENT –

a. The student is to submit results of entrepreneurial self assessment taken online.

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 WK. 5 THE ETHICAL AND SOCIAL RESPONSIBILITIES OF THE ENTREPRENEUR

1. OBJECTIVES OF THE LESSON – The student must be able to:

l Design a framework for ethical decisions
l Create strategies to prevent ethical problems in business
2. LESSON PROPER –

ETHICS AND SOCIAL RESPONSIBILITIES OF ENTREPRENEURS

An enterprise must earn profits for its own survival, for expansion, for bearing the risks and finally for
the prestige of its management. But profit cannot be the sole objective of the entrepreneur. An entrepreneur is
very much linked with society. Since any venture owes its existence to society, it has to function under the
overall control and discipline of the society. Any business, which is injurious to any segment of the society, can
neither be tolerated nor allowed to continue.
Every enterprise is required to perform and satisfy certain obligations which it owes to the society and
the performance of which is essential for its own survival and the well-being of the society. It is the obligation
of an enterprise which it owes to the different segments of the society that determine its objectives. Besides
earning profit, an entrepreneur has to satisfy the requirements of various other groups of people. Faced with
daily stressful situations and other difficulties, the possibility exists that the entrepreneur will establish a balance
between ethical exigencies, economic expediency, and social responsibility, a balance that differs from the point
at which the general business manager takes his or her moral stance. How much and what type of social
responsibility an organization should pursue has been a topic of heated debate for a number of years.
Social responsibility is the obligation of organizational decision makers to act in ways that recognize the
interrelatedness of business and society. Social responsibility assumes the existence of stakeholders, individuals
or groups of individuals who have a stake in or are significantly influenced by an organization’s actions and
who, in turn, can influence the organization. According to H.R. Brown, an entrepreneur, today, has an
obligation ‘to pursue those policies, to make those decisions or to follow those lines of action which are
desirable, in terms of the objectives and values of the society. The entrepreneur, therefore, has to include his
social obligations and social values as inputs into the decision and action process, along with organizational,
economic, technological and other relevant values and variables.
According to Koontz O’ Donnell “Social responsibility is the personal obligation of everyone as he acts
for his own interests, to assume that the rights and legitimate interests of all others are not impugned.” The
traditional view of social responsibility was that organizations existed solely to serve the interests of one
stakeholder group: Stockholder. However, the traditional - and purely economic - view of social responsibility
83 has given way to a belief that organizations have larger social role to play and a broader constituency to
serve than stock holders alone.
IMPORTANCE OF ETHICS AND SOCIAL RESPONSIBILITY IN ENTREPRENEURSHIP

Entrepreneurship is the process or steps followed in designing and managing or operating or running a
small business. Ethics means good behavior or conduct at work place or acceptable code of conduct. Social

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responsibility refers to how you relate with the public in a business setting. A combination of ethics and social
responsibility is important because of the following:
1. It promotes professionalism in the way you handle customers
2. it helps maintain good standards in terms of quantity and quality
3. It builds trust between customers and the business
4. promotes achieving of a common goals and maintaining customer network and relationships
5. Good ethics enhances high standards of customer service and expectations
It generally promotes customer satisfaction builds trusts and gives brand to the business

ASSESSMENT

a. The student should submit one page reaction paper on how firms manifest ethical and socially
responsible business decisions.

WK. 7 THE NATURE OF SMALL BUSINESS

1. OBJECTIVES OF THE LESSON – The student must be able to distinguish the types of small business.

2. LESSON PROPER –

SMALL BUSINESS

A business which functions on a small scale level involves less capital investment, less number of labour
and fewer machines to operate is known as a small business.

Small scale Industries or small business are the type of industries that produces goods and services on a
small scale. These industries play an important role in the economic development of a country. The owner
invests once on machinery, industries, and plants, or take is a lease or hire purchase. These industries do not
invest more than one crore. Few examples of small-scale industries are paper, toothpick, pen, bakeries, candles,
local chocolate, etc., industries and are mostly settled in an urban area as a separate unit.

Characteristics of Small Scale Industries

² Ownership: They have a single owner. So it is also known as a sole proprietorship.
² Management: All the management works are controlled by the owner.
² Limited Reach: They have restricted area of operation. So they may be a local shop or an industry located
in one area.
² Labor Intensive: Their dependency on technology is very little because they are dependent on labours and
manpower.
² Flexibility: Because they are small, they are open and flexible to sudden changes, unlike large industries.
² Resources: They utilize local and immediately available resources. They do better utilization of natural
resources and limited wastage.

Strengths of Small Business

v Spurs of innovation. Small businesses are the major sources of innovation in our civilization. Substantive
numbers of successful innovations are implemented by small businesses. They are the sources of new

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 materials, processes, ideas, services, and products that large business firms are reluctant to provide arc
being provided by small businesses. Thus, the small business acts as a spur of innovation lo millions of
entrepreneurs throughout the world.
v Checks monopoly. Small businesses encourage competition by checking the development of monopolies
by large businesses. It produces new products, methods, and services and so forth and checks large firms’
tendency to control the market. It also provides differentiated products that give the market a wide spectrum
of choices. Therefore, small businesses keep large firms on their toes.
v Creates employment. Small, young, high technology businesses create jobs at a much higher rate than do
older, large businesses.
v Empowers people. Small business has more intimate knowledge of its communities: therefore, take more
personal interest in them. It takes community projects. It produces people as well as goods and services. It
enables the community people to achieve a better-rounded balanced development than they could enjoy in
large organizations. It provides them a greater variety of learning experiences in work activities. People
have greater freedom in making decisions and in perforating a greater variety of activities. It lends zest and
interest to their work. It also trains people to become better leaders and to use their talents and energies
most effectively.
v Contributes to dross Domestic Products. Small business contributes to the national economy of every
country of the world significantly. It generates 54 percent of the sales revenues and 40 percent of the gross
national product.
v Higher financial performance. The small business earns higher returns on owners’ equity (ROE) than
large manufacture do. That is, for each dollar invested in the business, small business investors earn more
than do big-business [Link] small business cart respond quicker and at less cost to quickening
rate of change in products and services, processes, and markets. It has also become more attractive to
talented, individualistic men and women who successfully utilize the fund.
v Makes big business dependent. Small businesses provide business with many of the services, supplies,
and raw materials they need. General Motors, for example, buy from more than 10,000 suppliers, most of
whom are small. It is because bug businesses cannot supply product and services as cheaply as do small
businesses can effectively supply those goods and services cheaply whose sales volume is small, whose
sales demands close personal contact with customers, and whose supply requires meeting each Customer’
s-untrue [Link] also sell most of the products made by big manufacturers to consumers. Thus, bit;
businesses are dependent on small businesses for their very survival in many respects.
v Develops risk-takers and fosters flexibility. Small entrepreneurs have relative freedom to enter and leave
a business at will. They can start and grow, expand or contract, succeed, or fail as they feel comfortable
with the situation. This freedom is the essence of the free economy. It makes managers responsible for
customers, employees, investors, and the community. Moreover, they can switch their production readily
you meet changing market conditions, can adapt themselves quickly to chatty mu demands within their
fields and capacity, and even can chance field at low cost. This environment of small businesses helps
developing risk-takers in society and fosters flexibility in the practice of economic activities.
v Provides opportune grounds for women. Small businesses are the most opportune sources of self-
employment tor women.
v The seedbed for the new venture. Small business is the seedbed for new ventures throughout the world.
v Career for new graduates. Small business is the right venture for the new graduates who welcome the
challenge of innovative work, want to be decision-makers, want the freedom of owning a small business, or
want to have a financial incentive which one could never obtain by working for others.
v Ease of entry. Small business does not require much formality to start. Financial requirements are not high
too. Entrepreneurs can choose almost any line of business they like. This freedom of opportunity guarantees
them the right to launch their ventures.

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Reasons for the Failure of Small Business

Ø Inadequate management. The lack of managerial knowledge and skills is the vital cause of failure of the
largest number of small businesses. It is more evident in the case of expanding a situation. Anybody with
any academic background and experience can go for starling his/her small venture. No law can stop them
from entering into their ventures. It is not recognized that managerial expertise is a priori condition for
starting and operating a business. This deters them from recognizing, hire, and tap the talents they need to
survive and grow.
Ø Shortage of working capital. Working capital is the lifeblood of all business enterprises. Small businesses,
with a small capital base, faces a shortage of working capital to maintain a desirable level of operation. It
also thwarts its expansion and its capacity to avail profitable opportunities. Study shows that businesses that
start with loo little investment by owners have a greater chance of failure than businesses with adequate
investment by owners.
Ø Lack of balance. The significant reasons for such imbalance are the lack of coordination between
production and marketing, lack of proper record-keeping, lack of effective selling techniques, lack of
coping with the increasing complexity of internal management, and lack of balance between having too few
products so that sales are lost and diversifying too fast. These lacks of balance make small businesses
vulnerable to failure.
Ø Unabated entry. The chief reason for small business failure is the unabated entry. Any men and women
can enter into small business without any hindrance. They may have 20 years of experience in that line or
none at all. They may do a textbook job of searching their markets or plunge in with no information at all.
They may be millionaires or penniless. Yet regardless of their qualifications, the small business is open to
them.
Ø Lack of business experience. Small business run by people without prior industry experience is vulnerable
to failure. People with any track record start small businesses and could not cope with operational problems
and crises. Inexperience in a fine of operation makes decisions faulty and disastrous to the organizational
continuity.
Ø Fraud or Disaster. Small business is vulnerable to many situations due to its inability to 10 sustain the
damage. It may be caused by fraud, by fire, flood, burglary, criminal act, or by the death of owner-manager
or a key person of the business. It affects its continuity in the market or sometimes causes the death of the
firm.
Ø Insufficient inventory turnover. Small business faces inventory turnover problem that docs not only
blocks the working capital but also risks the business for product obsolescence. It also affects profit due to
lack of sales and deters the smooth progress of the operation of the business,
Ø Improper markup. Small business does not set its price policy with sufficient market information rather
goes on traditions cost-plus or competitive pricing. It sometimes does not cover the expected rates of return
necessary for maintaining the financial strengths of the firm. It is observed that small firms that fail, they
fail because of insufficient return on their investment.
Ø Wrong location. Location is more vital in some industries than in others depending on whether customers
must travel to the entrepreneur’s place of business or the entrepreneur must travel to customers, whether the
business offers a unique product or service with little competition, or even on whether convenience is a key
selling point. However, it is well recognized that the wrong location seriously affects the success of small
businesses.
Ø Poor credit-granting practice. Uncontrolled receivables or poor credit practices affect credit collection
and due position. It causes extra pressure on cash position and other working capital items; it also seriously
handicaps the firm to maintain the daily operation. Thus, many small businesses fail due to excessive
blocking of a fund with the debtors due to poor credit granting practice.
Ø Non-business family background. It was noted from literatures that business owners whose parents did

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 not own business have a greater chance of failure than the owners whose parents did own a business.
Ø Neglect. Little attention to the affairs of small businesses by the entrepreneur or owner-manager is a strong
reason for the failure of small [Link] businesses need absolute personal care, attention, and dose
supervision, as it does not sustain any set back of any kind. Therefore, many small businesses fail due to
neglect of their managing.
Ø Too much investment in fixed assets. Small businesses that have made an excessive investment in fixed
assets face the problem of operating funds. It also requires high operating expenditures and, thus, needs
high financial obligations too. This heavy-head structure stalls the operative capacity and causes the failure
of the small venture.
Ø Marketing inefficiency. The survival of the firm depends on generating sufficient sales from its market.
Market creation, maintenance, and expansion arc the pivotal tasks of small businesses. A study found that
business owners without marketing skills have a greater chance of failure than others with marketing skills.
Ø Inefficient succession. Lack of succession or inefficient succession is a strong reason for early death or
failure of small businesses. The majority of small businesses are sole-traders or partnership. The sudden
death of the entrepreneur or departure of partner/partners or incapability of entrepreneur calls for successors
to take up the business.
Ø Lack of planning. Small businesses that do not prepare business plans have a greater chance of failure than
businesses that do. There is general neglect in small businesses toward preparing a plan for that it loses its
focus. Many small businesses fail because of unplanned action. The success of small businesses depends on
careful handling and overcoming the above-mentioned situations. Every entrepreneur should rake necessary
measures to prevent these reasons to protect his/her entrepreneurial venture from failure.

Reference:

[Link] (n.d.) Small Business: Characteristics, Strengths, Reasons for Failure in Small Business.
Retrieved on December 12, 2020 from: [Link]

3. ASSESSMENT –
l Student take Google Forms or Quiz on Canvas

WK. 8 SEARCH FOR BUSINESS OPPORTUNITY, IDEATION, AND CREATIVITY

1. OBJECTIVES OF THE LESSON – The student must be able to create product idea from a business
opportunity.

2. LESSON PROPER –
Creativity, Innovation, and Invention

Concept Description

Creativity ability to develop something original, particularly an idea or a representation of an idea, with an
element of aesthetic flair

Innovation change that adds value to an existing product or service

Invention truly novel product, service, or process that, though based on ideas and products that have come
before, represents a leap, a creation truly novel and different

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 One way we can consider these three concepts is to relate them to design thinking. Design thinking is a
method to focus the design and development decisions of a product on the needs of the customer, typically
involving an empathy-driven process to define complex problems and create solutions that address those
problems. Complexity is key to design thinking. Straightforward problems that can be solved with enough
money and force do not require much design thinking. Creative design thinking and planning are about finding
new solutions for problems with several tricky variables in play.

Creativity

Entrepreneurial creativity and artistic creativity are not so different. You can find inspiration in your
favorite books, songs, and paintings, and you also can take inspiration from existing products and services. You
can find creative inspiration in nature, in conversations with other creative minds, and through formal ideation
exercises, for example, brainstorming. Ideation is the purposeful process of opening up your mind to new trains
of thought that branch out in all directions from a stated purpose or problem. Brainstorming, the generation of
ideas in an environment free of judgment or dissension with the goal of creating solutions, is just one of dozens
of methods for coming up with new ideas.

Innovation

Peter Drucker, the key point about innovation is that it is a response to both changes within markets and
changes from outside markets. Drucker summarized the sources of innovation into seven categories, as outlined.
Firms and individuals can innovate by seeking out and developing changes within markets or by focusing on
and cultivating creativity. Firms and individuals should be on the lookout for opportunities to innovate.
Drucker’s Seven Sources of Innovation:

Source Description

The unexpected Looking for new opportunities in the market; unexpected product
performance; unexpected new products as examples

The incongruity Discrepancies between what you think should be and what is reality

Process need Weaknesses in the organization, product, or service

Changes in industry/market New regulations; new technologies

Demographics Understanding needs and wants of target markets

Changes in perceptions Changes in perceptions of life events and values

New knowledge New technologies; advancements in thinking; new research

One innovation that demonstrates several of Drucker’s sources is the use of cashier kiosks in fast-food
restaurants. McDonald’s was one of the first to launch these self-serve kiosks. Historically, the company has
focused on operational efficiencies (doing more/better with less). In response to changes in the market, changes
in demographics, and process need, McDonald’s incorporated self-serve cashier stations into their stores. These
kiosks address the need of younger generations to interact more with technology and gives customers faster
service in most cases.

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 Disruptive innovation is a process that significantly affects the market by making a product or service
more affordable and/or accessible, so that it will be available to a much larger audience. One example of a
disruptive innovation is Uber and its impact on the taxicab industry. Uber’s innovative service, which targets
customers who might otherwise take a cab, has shaped the industry as whole by offering an alternative that
some deem superior to the typical cab ride.

One key to innovation within a given market space is to look for pain points, particularly in existing
products that fail to work as well as users expect them to. A pain point is a problem that people have with a
product or service that might be addressed by creating a modified version that solves the problem more
efficiently. For example, you might be interested in whether a local retail store carries a specific item without
actually going there to check. Most retailers now have a feature on their websites that allows you to determine
whether the product (and often how many units) is available at a specific store. This eliminates the need to go to
the location only to find that they are out of your favorite product. Once a pain point is identified in a firm’s
own product or in a competitor’s product, the firm can bring creativity to bear in finding and testing solutions
that sidestep or eliminate the pain, making the innovation marketable. This is one example of an incremental
innovation, an innovation that modifies an existing product or service.

In contrast, a pioneering innovation is one based on a new technology, a new advancement in the field, and/or
an advancement in a related field that leads to the development of a new product. Firms offering similar
products and services can undertake pioneering innovations, but pioneering the new product requires opening
up new market space and taking major risks.

Is a pioneering innovation an invention? A firm makes a pioneering innovation when it creates a product
or service arising from what it has done before. Pokémon GO is a great example of pioneering
innovation. Nintendo was struggling to keep pace with other gaming-related companies. The company, in
keeping with its core business of video games, came up with a new direction for the gaming industry. Pokémon
GO is known worldwide and is one of the most successful mobile games launched.23 It takes creativity to
explore a new direction, but not every pioneering innovation creates a distinctly new product or capability for
consumers and clients.

An example of an incremental innovation is the trash receptacle you find at fast-food restaurants. For
many years, trash cans in fast-food locations were placed in boxes behind swinging doors. The trash cans did
one job well: They hid the garbage from sight. But they created other problems: Often, the swinging doors
would get ketchup and other waste on them, surely a pain point. Newer trash receptacles in fast-food restaurants
have open fronts or open tops that enable people to dispose of their trash more neatly. The downside for
restaurants is that users can see and possibly smell the food waste, but if the restaurants change the trash bags
frequently, as is a good practice anyway, this innovation works relatively well.

Invention

An invention is a leap in capability beyond innovation. Some inventions combine several innovations
into something new. Invention certainly requires creativity, but it goes beyond coming up with new ideas,
combinations of thought, or variations on a theme. Inventors build. Developing something users and customers
view as an invention could be important to some entrepreneurs, because when a new product or service is
viewed as unique, it can create new markets. True inventiveness is often recognized in the marketplace, and it
can help build a valuable reputation and help establish market position if the company can build a future-
oriented corporate narrative around the invention.

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 Besides establishing a new market position, a true invention can have a social and cultural impact. At
the social level, a new invention can influence the ways institutions work. For example, the invention of desktop
computing put accounting and word processing into the hands of nearly every office worker. The ripple effects
spread to the school systems that educate and train the corporate workforce. Not long after the spread of desktop
computing, workers were expected to draft reports, run financial projections, and make appealing presentations.
Specializations or aspects of specialized jobs—such as typist, bookkeeper, corporate copywriter—became
necessary for almost everyone headed for corporate work. Colleges and eventually high schools saw software
training as essential for students of almost all skill levels. These additional capabilities added profitability and
efficiencies, but they also have increased job requirements for the average professional.

Some of the most successful inventions contain a mix of familiarity and innovation that is difficult to
achieve. With this mix, the rate of adoption can be accelerated because of the familiarity with the concept or
certain aspects of the product or service. As an example, the “videophone” was a concept that began to be
explored as early as the late 1800s. AT&T began extensive work on videophones during the 1920s. However,
the invention was not adopted because of a lack of familiarity with the idea of seeing someone on a screen and
communicating back and forth. Other factors included societal norms, size of the machine, and cost. It wasn’t
until the early 2000s that the invention started to take hold in the marketplace. The concept of a black box is that
activities are performed in a somewhat mysterious and ambiguous manner, with a serendipitous set of actions
connecting that result in a surprisingly beneficial manner. An example is Febreeze, a chemical combination that
binds molecules to eliminate odors. From a black box perspective, the chemical engineers did not intend to
create this product, but as they were working on creating another product, someone noticed that the product
they were working on removed odors, thus inadvertently creating a successful new product marketed as
Febreeze.

Reference:
[Link] (n.d.) Creativity, Innovation, and Invention: How They Different. Retrieved on December 11, 2020 from:
[Link]

3. ASSESSMENT – Student take Google Forms or Quiz on Canvas

WK. 9 THE BUSINESS PLAN I

1. OBJECTIVES OF THE LESSON – The student must be able to develop a skill in business planning.

2. LESSON PROPER –

BUSINESS PLANNING

Business plans are developed for both internal and external purposes. Internally, entrepreneurs develop
business plans to help put the pieces of their business together. The most common external purpose for a
business plan is to raise capital.

Internal Purposes

u defines the vision for the company

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u establishes the company’s strategy
u describes how the strategy will be implemented
u provides a framework for analysis of key issues
u provides a plan for the development of the business
u is a measurement and control tool
u helps the entrepreneur to be realistic and to put theories to the test

External Purposes

The business plan is often the main method of describing a company to external audiences such as
potential sources for financing and key personnel being recruited. It should assist outside parties to understand
the current status of the company, its opportunities, and its needs for resources such as capital and personnel. It
also provides the most complete source of information for valuation of the business.

Business plan is a formal document used for the long-range planning of a company’s operation. It
typically includes background information, financial information, and a summary of the business. Investors
nearly always request a formal business plan because it is an integral part of their evaluation of whether to
invest in a company. Although nothing in business is permanent, a business plan typically has components that
are more “set in stone” than a business model canvas, which is more commonly used as a first step in the
planning process and throughout the early stages of a nascent business. A business plan is likely to describe the
business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s
long-term goals and objectives. An in-depth formal business plan would follow at later stages after various
iterations to business model canvases. The business plan usually projects financial data over a three-year period
and is typically required by banks or other investors to secure funding. The business plan is a roadmap for the
company to follow over multiple years.

Business Planning Principles

Business Plan Communication Principles

As Hindle and Mainprize (2006) note, business plan writers must strive to communicate their expectations
about the nature of an uncertain future. However, the liabilities of newness make communicating the expected
future of new ventures difficult (more so than for existing businesses). They outline five communications
principles:

² Expectations. Translation of your vision of the venture and how it will perform into a format compatible
with the expectations of the readers. Communicate that

ü you have identified and understood the key success factors and risks
ü the projected market is large and you expect good market penetration
ü you have a strategy for commercialization, profitability, and market domination
ü you can establish and protect a proprietary and competitive position

² Milestones. Anchoring key events in the plan with specific financial and quantitative values. Communicate
that

ü your major plan objectives are in the form of financial targets

ü you have addressed the dual need for planning and flexibility

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 ü you understand the hazards of neglecting linkages between certain events
ü you understand the importance of quantitative values (rather than just chronological dates)

² Opportunities. Nothing lasts forever—things can change to impact the opportunity: tastes, preferences,
technological innovation, competitive landscape. Communicate these four aspects to distinguish the
business concept, distinctive competencies, and sustainable advantages:

ü the new combination upon which venture is built

ü magnitude of the opportunity or market size
ü market growth trends
ü venture’s value from the market (% of market share proposed or market share value in dollars)

² Context. Four key aspects describing context within which new venture is intended to function (internal and
external environment). Communicate

ü how the context will help or hinder the proposal

ü how the context may change & affect the business & the range of flexibility or response that is built
into the venture
ü what management can or will do in the event the context turns unfavourable
ü what management can do to affect the context in a positive way

THE STAGES OF BUSINESS PLAN DEVELOPMENT

Essential Initial Research

A business plan writer should analyze the environment in which they anticipate operating at each of the
societal, industry, market, and firm levels of analysis. This stage of planning, the essential initial research, is a
necessary first step to better understand the trends that will affect their business and the decisions they must
make to lay the groundwork for, and to improve their potential for success. In some cases, much of the essential
initial research should be included in the developing business plan as its own separate section to help build the
case for readers that there is a market need for the business being considered and that it stands a good chance of
being successful. In other cases, a business plan will be stronger when the components of the essential initial
research are distributed throughout the business plan as a way to provide support for the plans and strategies
outlined in the business plan. For example, the industry or market part of the essential initial research might
outline the pricing strategies used by identified competitors and might be best placed in the pricing strategy part
of the business plan to support the decision made to employ a particular pricing strategy.

Business Model

Inherent in any business plan is a description of the business model chosen by the entrepreneur as the
one that they feel will best ensure success. Based upon their essential initial research of the setting in which they
anticipate starting their business (their analysis from stage one) an entrepreneur should determine how each
element of their business model—including their revenue streams, cost structure, customer segments, value
propositions, key activities, key partners, and so on—might fit together to improve the potential success of their
business venture

For some types of ventures, at this stage an entrepreneur might launch a lean start-up and grow their
business by continually pivoting, or constantly adjusting their business model in response to the real-time

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signals they get from the markets’ reactions to their business operations. In many cases, however, an
entrepreneur will require a business plan. In those cases, their initial business model will provide the basis for
that plan.

Initial Business Plan Draft

The Business Plan Draft stage involves taking the knowledge and ideas developed during the first two
stages and organizing them into a business plan format. An approach preferred by many is to create a full draft
of the business plan with all of the sections, including the front part with the business description, vision,
mission, values, value proposition statement, preliminary set of goals, and possibly even a table of contents and
lists of tables and figures all set up using the software features enabling their automatic generation. Writing all
of the operations, human resources, marketing, and financial plans as part of the first draft ensures that all of
these parts can be appropriately and necessarily integrated. The business plan will tell the story of a planned
business startup in two ways by using primarily words along with some charts and graphs in the operations,
human resources, and marketing plans and in a second way through the financial plan. Both ways must tell the
same story.

Making Business Plan Realistic

The first draft of a business plan will almost never be realistic. As the entrepreneur writes the plan, it
will necessarily change as new information is gathered. Another factor that usually renders the first draft
unrealistic is the difficulty in making certain that the written part—in the front part of the plan along with the
operations, human resources, and marketing plans—tells the exact same story as the financial part does. This
stage of work involves making the necessary adjustments to the plan to make it as realistic as possible.

The Making Business Plan Realistic stage has two possible feedback loops. The first goes back to the
Initial Business Plan Draft stage in case the initial business plan needs to be significantly changed before it is
possible to adjust it so that it is realistic. The second feedback loop circles back to the Business Model stage if
the business developer need to rethink the business model. As shown in Figure 8 by its enclosure in
the progressive research box, the business plan developer might need conduct further research before finishing
the Making Business Plan Realistic stage and moving on to the Making Plan Appeal to Stakeholders stage.

Making Plan Appeal to Stakeholders and Desirable to the Entrepreneur

A business plan can be realistic without appealing to potential investors and other external stakeholders,
like employees, suppliers, and needed business partners. It might also be realistic (and possibly appealing to
stakeholders) without being desirable to the entrepreneur. During this stage the entrepreneur will keep the
business plan realistic as they adjust plans to appeal to potential investors and to themselves. If, for example,
investors will be required to finance the business start, some adjustments might need to be relatively extensive
to appeal to potential investors’ needs for an exit strategy from the business, to accommodate the rate of return
they expect from their investments, and to convince them that the entrepreneur can accomplish all that is
promised in the plan. In this case, and in others, the entrepreneur will also need to get what they want out of the
business to make it worthwhile for them to start and run it. So, this stage of adjustments to the developing
business plan might be fairly extensive, and they must be informed by a superior knowledge of what targeted
investors need from a business proposal before they will invest.

The caution with this stage is to balance the need to make realistic plans with the desire to meet the
entrepreneur’s goals while avoiding becoming discouraged enough to drop the idea of pursuing the business

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idea. If an entrepreneur is convinced that the proposed venture will satisfy a valid market need, there is often a
way to assemble the financing required to start and operate the business while also meeting the entrepreneur’s
most important goals. To do so, however, might require significant changes to the business model.

Finishing the Business Plan

The final stage involves putting all of the important finishing touches on the business plan so that it will
present well to potential investors and others. This involves making sure that the math and links between the
written and financial parts are accurate. It also involves ensuring that all the needed corrections are made to the
spelling, grammar, and formatting. The final set of goals should be written to appeal to the target readers and to
reflect what the business plan says. An executive summary should be written and included as a final step.

Suggested Executive Summary Components for Business Plan

Section Description

Company summary Brief overview (one to two paragraphs) of the problem, solution, and
potential customers

Customer analysis Description of potential customers and evidence they would purchase
product

Market analysis Size of market, target market, and share of market

Product or service Current state of product in development and evidence it is feasible

Intellectual property If applicable, information on patents, licenses, or other IP items

Competitive differentiation Describe the competition and your competitive advantage

Company founders, management Bios of key people showcasing their expertise and relevant experience
team, and/or advisor

Financials Projections of revenue, profit, and cash flow for three to five years

Amount of investment Funding request and how funds will be used

Marketing Plan

• It is a given that you must provide some assessment of the economic situation as it relates to your
business. For example, you might conclude that the current economic crisis will reduce the potential to
export your product and it may make it more difficult to acquire credit with which to operate your
business. Of course, conclusions such as these should be matched with your assessment as to how your
business will make the necessary adjustments to ensure it will thrive despite these challenges, or how it
will take advantage of any opportunities your assessment uncovers.
• You must provide an assessment of the industry coupled with descriptions of how your venture will
prosper in those circumstances. A common approach used to assess the industry is to apply Porter’s
(1985) Five Forces Model.

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 • If you apply the Five Forces Model, do so in the way in which it was meant to be used to avoid
significantly reducing its usefulness while also harming the viability of your industry analysis. This
model is meant to be used to consider the entire industry—not a subcomponent of it (and it usually
cannot be used to analyze a single organization).
• Your competitor analysis might fit within your assessment of the industry or it might be best as a section
within your marketing plan. Usually a fairly detailed description of your competitors is required,
including an analysis of their strengths and weaknesses. In some cases, your business may have direct
and indirect competitors to consider. Be certain to maintain credibility by demonstrating that you fully
understand the competitive environment.
• Assessments of the economic conditions and the state of the industry appear incomplete without
accompanying appraisals outlining the strategies the organization can/should employ to take advantage
of these economic and industry situations. So, depending upon how you have organized your work, it is
usually important to couple your appraisal of the economic and industry conditions with accompanying
strategies for your venture. This shows the reader that you not only understand the operating
environment, but that you have figured out how best to operate your business within that situation.

Market Analysis
• Usually contains customer profiles, constructed through primary and secondary research, for each
market targeted
• Contains detailed information on the major product benefits you will deliver to the markets
targeted
• Describes the methodology used and the relevant results from the primary market research done
• If there was little primary research completed, justifies why it is acceptable to have done little of
this kind of research and/or indicate what will be done and by when
• Includes a complete description of the secondary research conducted and the conclusions reached
• Describes potential customers
Competition
• Fully describes the nature of your competitors
• However, this information might fit instead under the market analysis section.
• Describes all your direct competitors
• Describes all your indirect competitors
• If you can, includes a competitor positioning map to show where your product will be positioned
relative to competitors’ products
Marketing Strategy. Covers all aspects of the marketing mix including the promotional decisions you have
made, product decisions, distribution decisions related to how you will deliver your product to the markets
targeted, and pricing decisions. This outlines how you plan to influence your targeted customers to buy from
you (what is the optimum marketing mix, and why is this one better than the alternatives)

Product Strategy. Identifies your product/service and why this particular product/service will appeal to your
targeted customers more than the alternatives. If your product or service is standardized, you will need to
compete on the basis of something else – like a more appealing price, having a superior location, better
branding, or improved service. If you can differentiate your product or service you might be able to compete on
the basis of better quality, more features, appealing style, or something else.

Pricing Strategy. Outlines your pricing strategies and explains what makes these strategies better than the
alternatives. If you intend to accept payment by credit card (which is probably a necessity for most companies),

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you should be aware of the fee you are charged as a percentage of the value of each transaction.

Identifies your sales forecasts and explains why are these realistic. Sales forecasts must be done on at
least a monthly basis if you are using a projected cash flow statement. These must be accompanied by
explanations designed to establish their credibility for readers of your business plan. Remember that many
readers will initially assume that your planned time frames are too long, your revenues are overstated, and you
have underestimated your expenses. Well crafted explanations for all of these numbers will help establish
credibility.

Distribution Strategy. Describes your distribution strategies and explains what makes these strategies better
than the alternatives. If you plan to use e-commerce, you should include all the costs associated with
maintaining a website and accepting payments over the Internet.

Promotions Strategy. Answers the following key questions: As a new entrant into the market, must you attract
your customers away from your competitors they currently buy from or will you be creating new customers for
your product or service (i.e. not attracting customers away from your competitors)?

If you are attracting customers away from competitors, how will these rivals respond to the threat you pose to
them?

If you intend to create new customers, how will you convince them to reallocate their dollars toward your
product or service (and away from other things they want to purchase)?

In what ways will you communicate with your targeted customers? When will you communicate with them?
What specific messages do you plan to convey to them? How much will this promotions plan cost?

Outlines the anticipated responses that competitors will have to your entrance into the market, especially if your
success depends upon these businesses losing customers to you. If your entry into the market will not be a threat
to direct competitors, it is likely you must convince potential customers to spend their money with you rather
than on what they had previously earmarked those dollars toward. In your business plan you must demonstrate
an awareness of these issues.

Maps out your promotional expenditures according to the method used and time frame. Consider listing the
promotional methods in rows on a spreadsheet with the columns representing weeks or months over probably
about 18 months from the time of your first promotional expenditure. This can end up being a schedule that
feeds the costs into your projected cash flow statement and from there into your projected income statements.

If you phone or visit newspapers, radio stations, or television stations seeking advertising costs, you must go
only after you have figured out details like on which days you would like to advertise, at what times on those
days, whether you want your print advertisements in color, and what size of print advertisements you want.

Carefully consider which promotional methods you will use. While using a medium like television may initially
sound appealing, it is very expensive unless your ad runs during the non-prime times. If you think this type of
medium might work for you, do a serious cost-benefit analysis to be sure.

Some promotional plans are developed around newspaper ads, promotional pamphlets, printing business cards,
and other more obvious mediums of promotion. Be certain to, include the costs of advertising in telephone
directories, sponsoring a little league soccer team, producing personalized pens and other promotional client

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give-always, donating items to charity auctions, printing and mailing client Christmas cards, and doing the
many things businesses find they do on-the-fly. Many businesses find it to be useful to join the local chamber of
commerce and relevant trade organizations with which to network. Some find that setting a booth up at a trade
fair helps launch their business.

If you are concerned you might have missed some of these promotional expenses, or if you want to have a
buffer in place in case you feel some of these opportunities are worthwhile when they arise, you should add
some discretionary money to your promotional budget. A problem some companies get into is planning out
their promotions in advance only to reallocate some of their newspaper advertisement money, for example,
toward some of these other surprise purposes resulting in less newspaper advertising than had been intended.

Reference:
[Link] (n.d) Business Planning. Retrieved on December 8, 2020 from: [Link]
[Link]/entrepreneurshipandinnovationtoolkit/chapter/chapter-5-business-planning/

3. ASSESSMENT –
l Student take Google Forms or Quiz on Canvas

WK. 10 THE BUSINESS PLAN II - OPERATIONS AND FINANCIAL PLAN

1. OBJECTIVES OF THE LESSON – The student must be able to establish a production and financial plan.

2. LESSON PROPER –
OPERATIONS PLAN
Answers several key questions:
ü What are your facility plans?
ü Where will your facility be located?
ü expressed as a set physical location
ü expressed as a set of requirements and characteristics
ü How large will your facility be and why must it be this size?
ü How much will it cost to buy or lease your facility?
ü What utility, parking, and other costs must you pay for this facility?
ü What expansion plans must be factored into the facility requirements?
ü What transportation and storage issues must be addressed by facility decisions?
ü What zoning and other legal issues must you deal with?
ü What will be the layout for your facility and how will this best accommodate customer and employee
requirements?
ü What constraints are you operating under that will restrict your capacity to produce and sell your
product?
ü Given these constraints, what is your operating capacity (in terms of production, sales, etc.)?
ü What is the workflow plan for your operation?
ü What work will your company do and what work will you outsource?

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Operations Timeline
ü When will you make the preparations, such as registering the business name and purchasing
equipment, to start the venture?
ü When will you begin operations and make your first sales?
ü When will other milestone events occur such as moving operations to a larger facility, offering a new
product line, hiring new key employees, and beginning to sell products internationally?
ü May include a graphical timeline showing when these milestone events have occurred and are expected
to occur

FINANCIAL PLAN
It is nearly certain you will need to make monthly cash flow projections from business inception to
possibly three years out. Your projections will show the months in which the activities shown on your fixed
capital and working capital schedules will occur. This is nearly the only way to clearly estimate your working
capital needs and, specifically, important things like the times when you will need to draw on or can pay down
your operating loans and the months when you will need to take out longer-term loans with which to purchase
your fixed assets. Without a tool like this you will be severely handicapped when talking with bankers about
your expected needs. They will want to know how large of a line of credit you will need and when you
anticipate needing to borrow longer-term money. It is only through doing cash flow projections will you be able
to answer these questions. This information is also needed to determine things like the changes to your required
loan payments and when you can take owner draws or pay dividends.
Your projected cash flows are also used to develop your projected income statements and balance sheets.
ü Pro forma Cash Flow Statements
ü Pro forma Income Statements
ü Pro forma Balance Sheets
ü Investment Analysis
ü Projected Financial Ratios and Industry Standard Ratios
Reference:
[Link] (n.d) Business Planning. Retrieved on December 8, 2020 from: [Link]
[Link]/entrepreneurshipandinnovationtoolkit/chapter/chapter-5-business-planning/

3. ASSESSMENT –
l Student take Google Forms or Quiz on Canvas

WK. 11 THE BUSINESS PLAN III - ORGANIZING THE ENTERPRISE

1. OBJECTIVES OF THE LESSON – The student must be able to distinguish legal forms of business
ownership and recognize the value of permits and licensing.

2. LESSON PROPER –

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 HUMAN RESOURCES PLAN

ü Answers key questions:

ü How do you describe your desired corporate culture?
ü What are the key positions within your organization?
ü How many employees will you have?
ü What characteristics define your desired employees?
ü What is your recruitment strategy? What processes will you apply to hire the employees you require?
ü What is your leadership strategy and why have you chosen this approach?
ü What performance appraisal and employee development methods will you use?
ü What is your organizational structure and why is this the best way for your company to be organized?
ü How will you pay each employee (wage, salary, commission, etc.)? How much will you pay each employee?
ü What are your payroll costs, including benefits?
ü What work will be outsourced and what work will be completed in-house?
ü Have you shown and described an organizational chart?

Recruitment and Retention Strategies

ü Includes how many employees are required at what times

ü Estimates time required to recruit needed employees
ü Estimates all recruitment costs including
ü employment advertisements
ü contracts with employment agency or search firms
ü travel and accommodations for potential employees to come for interviews
ü travel and accommodations for interviewers
ü facility, food, lost time, and other interviewing costs
ü relocation allowances for those hired including flights, moving companies, housing allowances, spousal
employment assistance, etc.
ü may include a schedule showing the costs of initial recruitment that then flows into your start-up expense
schedules

Leadership and Management Strategies

ü What is your leadership philosophy?

ü Why is it the most appropriate leadership approach for this venture?

Training

ü What training is required because of existing rules and regulations?

ü How will you ensure your employees are as capable as required?
ü In which of the following areas will you provide training for your employees?
ü Health and safety (legislation, WHMIS, first aid, defibulators, etc.)
ü Initial workplace orientation

Performance Appraisals. How will you manage your performance appraisal systems?

Health and Safety. Any legal requirements should be noted in this section (and also legal requirements for

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other issues that may be included in other parts of the plan)

Compensation.

ü Always completely justifies your planned employee compensation methods and amounts
ü Always includes all components of the compensation (CPP, EI, holiday pay, etc.)
ü Outlines how will you ensure both internal and external equity in your pay systems
ü Describes any incentive-based pay or profit sharing systems planned
ü May include a schedule here that shows the financial implications of your compensation strategy and
supports the cash flow and income statements shown later

Key Personnel. May include brief biographies of the key organizational people

Reference:
[Link] (n.d) Business Planning. Retrieved on December 8, 2020 from: [Link]
[Link]/entrepreneurshipandinnovationtoolkit/chapter/chapter-5-business-planning/

3. ASSESSMENT –
l Student take Google Forms or Quiz on Canvas
WK13 DETERMINING THE RIGHT LOCATION

1. OBJECTIVES OF THE LESSON – The student must be able to evaluate a strategic location.

2. LESSON PROPER –

FACILITY LOCATION - FACTORS INFLUENCING THE LOCATION

Facility Location is the right location for the manufacturing facility, it will have sufficient access to the
customers, workers, transportation, etc. Overall objective of an organization is to satisfy and delight customers
with its product and services. Therefore, for an organization it becomes important to have strategy formulated
around its manufacturing unit. A manufacturing unit is the place where all inputs such as raw material,
equipment, skilled labors, etc. come together and manufacture products for customers. One of the most critical
factors determining the success of the manufacturing unit is the location.

Facility location determination is a business critical strategic decision. There are several factors, which
determine the location of facility among them competition, cost and corresponding associated effects. Facility
location is a scientific process utilizing various techniques.

Location Selection Factors

For a company which operates in a global environment; cost, available infrastructure, labor skill,
government policies and environment are very important factors. A right location provides adequate access to
customers, skilled labors, transportation, etc. A right location ensures success of the organization in current
global competitive environment.

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² Industrialization. A geographic area becomes a focal point for various facility locations based on many
factors, parameters and issues. These factors are can be divided into primary factors and secondary factors.
A primary factor which leads to industrialization of a particular area for particular manufacturing of
products is material, labor and presence of similar manufacturing facilities. Secondary factors are available
of credit finance, communication infrastructure and insurance.

Errors in Location Selection

Facility location is critical for business continuity and success of the organization. So it is important to
avoid mistakes while making selection for a location. Errors in selection can be divided into two broad
categories behavioral and non-behavioral. Behavioral errors are decision made by executives of the company
where personal factors are considered before success of location, for example, movement of personal
establishment from hometown to new location facility. Non-behavioral errors include lack of proper
investigative practice and analysis, ignoring critical factors and characteristics of the industry.

Location Strategy

The goal of an organization is customer delight for that it needs access to the customers at minimum
possible cost. This is achieved by developing location strategy. Location strategy helps the company in
determining product offering, market, demand forecast in different markets, best location to access customers
and best manufacturing and service location.

Factors Influencing Facility Location

² Customer Proximity: Facility locations are selected closer to the customer as to reduce transportation cost
and decrease time in reaching the customer.
² Business Area: Presence of other similar manufacturing units around makes business area conducive for
facility establishment.
² Availability of Skill Labor: Education, experience and skill of available labor are another important, which
determines facility location.
² Free Trade Zone/Agreement: Free-trade zones promote the establishment of manufacturing facility by
providing incentives in custom duties and levies. On another hand free trade agreement is among countries
providing an incentive to establish business, in particular, country.
² Suppliers: Continuous and quality supply of the raw materials is another critical factor in determining the
location of manufacturing facility.
² Environmental Policy: In current globalized world pollution, control is very important, therefore
understanding of environmental policy for the facility location is another critical factor

Reference:

[Link] (n.d.) Facility Location. Retrieved on December 7, 2020 from:

[Link]

3. ASSESSMENT –
l Student take Google Forms or Quiz on Canvas

A Self-regulated Learning Module 35

 WK 14 FINANCING THE VENTURE

1. OBJECTIVES OF THE LESSON – The student must be able to determine sources of capital.

2. LESSON PROPER –

TYPICAL SOURCES OF FINANCING FOR START-UPS:

1. Personal investment. When starting a business, your first investor should be yourself—either with your own
cash or with collateral on your assets. This proves to investors and bankers that you have a long-term
commitment to your project and that you are ready to take risks.

2. Love money. This is money loaned by a spouse, parents, family or friends. Investors and bankers considers
this as "patient capital", which is money that will be repaid later as your business profits increase. When
borrowing love money, you should be aware that: Family and friends rarely have much capital; They may want
to have equity in your business; A business relationship with family or friends should never be taken lightly

3. Venture capital. The first thing to keep in mind is that venture capital is not necessarily for all
entrepreneurs. Right from the start, you should be aware that venture capitalists are looking for technology-
driven businesses and companies with high-growth potential in sectors such as information technology,
communications and biotechnology.

Venture capitalists take an equity position in the company to help it carry out a promising but higher risk
project. This involves giving up some ownership or equity in your business to an external party. Venture
capitalists also expect a healthy return on their investment, often generated when the business starts selling
shares to the public. Be sure to look for investors who bring relevant experience and knowledge to your
business.

4. Angels. Angels are generally wealthy individuals or retired company executives who invest directly in small
firms owned by others. They are often leaders in their own field who not only contribute their experience and
network of contacts but also their technical and/or management knowledge. Angels tend to finance the early
stages of the business with investments in the order of $25,000 to $100,000. Institutional venture capitalists
prefer larger investments, in the order of $1,000,000. In exchange for risking their money, they reserve the
right to supervise the company's management practices. In concrete terms, this often involves a seat on the
board of directors and an assurance of transparency.

5. Business incubators

Business incubators (or "accelerators") generally focus on the high-tech sector by providing support for
new businesses in various stages of development. However, there are also local economic development
incubators, which are focused on areas such as job creation, revitalization and hosting and sharing services.

Commonly, incubators will invite future businesses and other fledgling companies to share their
premises, as well as their administrative, logistical and technical resources. For example, an incubator might
share the use of its laboratories so that a new business can develop and test its products more cheaply before
beginning production.

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 Generally, the incubation phase can last up to two years. Once the product is ready, the business usually
leaves the incubator's premises to enter its industrial production phase and is on its own. Businesses that
receive this kind of support often operate within state-of-the-art sectors such as biotechnology, information
technology, multimedia, or industrial technology.

6. Government grants and subsidies

Government agencies provide financing such as grants and subsidies that may be available to your
business.

Criteria. Getting grants can be tough. There may be strong competition and the criteria for awards are often
stringent. Generally, most grants require you to match the funds you are being given and this amount varies
greatly, depending on the granter. For example, a research grant may require you to find only 40% of the total
cost.

Generally, you will need to provide:

ü A detailed project description

ü An explanation of the benefits of your project
ü A detailed work plan with full costs
ü Details of relevant experience and background on key managers
ü Completed application forms when appropriate

Most reviewers will assess your proposal based on the following criteria:

ü Significance
ü Approach
ü Innovation
ü Assessment of expertise
ü Need for the grant

Some of the problem areas where candidates fail to get grants include:

ü The research/work is not relevant

ü Ineligible geographic location
ü Applicants fail to communicate the relevance of their ideas
ü The proposal does not provide a strong rationale
ü The research plan is unfocused
ü There is an unrealistic amount of work
ü Funds are not matched

7. Bank loans

Bank loans are the most commonly used source of funding for small and medium-sized businesses.
Consider the fact that all banks offer different advantages, whether it's personalized service or customized
repayment. It's a good idea to shop around and find the bank that meets your specific needs.

In general, you should know bankers are looking for companies with a sound track record and that have

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excellent credit. A good idea is not enough; it has to be backed up with a solid business plan. Start-up loans
will also typically require a personal guarantee from the entrepreneurs.

Reference:

[Link] (n.d) Star-up Financing Sources. Retrieve on December 6, 2020 from: [Link]
tools/start-buy-business/start-business/start-up-financing-sources

3. ASSESSMENT –
l Student take Google Forms or Quiz on Canvas

WK. 15 April 25 - 29 MANAGING SMALL BUSINESS RISK

1. OBJECTIVES OF THE LESSON – The student must be able to submit a reaction paper on risk
management approaches used by small firms.

2. LESSON PROPER –

RISK MANAGEMENT

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

A risk can be defined as an event or circumstance that has a negative effect on your business, for
example, the risk of having equipment or money stolen as a result of poor security procedures. Types of risk
vary from business to business. Some risks may be critical to your success; however, exposing your business to
the wrong types of risk may be harmful.

The most common business risk categories are:

² strategic –decisions concerning your business’ objectives

² compliance –the need to comply with laws, regulations, standards and codes of practice
² financial –financial transactions, systems and structure of your business
² operational –your operational and administrative procedures
² environmental –external events that the business has little control over such unfavourable weather or
economic conditions
² reputational –the character or goodwill of the business.
² Others include health and safety, project, equipment, security, technology, stakeholder management and
service delivery.

Preparing a risk management plan

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

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your business.

1. Identify the risk. Undertake a review of your business to identify potential risks. Some useful techniques for
identifying risks are:

ü Evaluate each function in your business and identify anything that could have a negative impact on your
business.
ü Review your records such as safety incidents or complaints to identify previous issues.
ü Consider any external risks that could impact on your business.
ü Brainstorm with your staff.
ü Ask yourself ‘what if’:
n you lost power?
n your premises were damaged or not accessible?
n your suppliers went out of business?
n there was a natural disaster in your area?
n one of your key staff members resigned or was injured at work?
n your computer system was hacked?
n your business documents were destroyed?

2. Assess the risk. You can assess each identified risk by establishing:

l the likelihood (frequency) of it occurring

l the consequence (impact) if it occurred

TIP: The level of risk is calculated using this formula:

Level of risk = likelihood x consequence

To determine the likelihood and consequence of each risk it is useful to identify how each risk is
currently controlled. Controls may include:

l elimination
l substitution
l engineering controls
l administrative controls
l personal protective equipment.

3. Manage the risk

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

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4. Monitor and review

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

Reference:
[Link] (n.d.) Insurance and Risk Management. Retrieved on December 14, 2020 from:
[Link]

3. ASSESSMENT –
l Student take Google Forms or Quiz on Canvas

WK. 16 SOCIAL RESPONSIBILITY

1. OBJECTIVES OF THE LESSON – The student must be able to evaluate the social responsiveness of firms
to stakeholders.

2. LESSON PROPER –
SOCIAL RESPONSIBILITY OF BUSINESS

The term Social Responsibility of Business reflects the impact of a corporation’s activities on society.
This embodies the performance of its economic function and other actions taken to contribute to the quality of
life. These activities may extend beyond meeting the letter of law due to the pressures of competition or the
requirements of contracts.
‘Corporate Social Responsibility of a business is operating in a manner which meets or excels the
ethical, legal, commercial and public expectations that a society has from the business.’
The term corporate social responsibility refers to the concept of business being accountable to how it
manages the impact of its processes on stakeholders on a voluntary basis. Since business have to draw on the
community in which they operate for all resources, they also have obligations to their multiple stakeholders.
Stakeholders are defined as those who get affected by corporate policies and practices. It is acknowledged fact
that business has not just financial accountability but also has the social and environmental responsibility. It is
generally known as the triple bottom-line of good governance.
The licenses to operate in the societies trust that an organization will work in the best interest of the
society. Society itself is increasingly being critical about the operating norms in the industry. Business cannot
be seen as aggravating the problems of the merger, poverty, and depletion of natural resources or inequities.
Entry barriers, adverse judgment from judiciaries or earlier, business was expected to serve the purpose
of its stockholders as a creator of financial wealth. But now business is assigned to fulfill the expectations of
different stakeholders like consumers, employees, shareholders, society, community, environment and
government etc.

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Social Responsibility of Business:
1. Long-Term Interest. It is in the long-term interest of the business to discharge its social obligations by
serving different interest groups such as employees, consumers, government and citizens. . Working for the
society, stakeholders and government helps an organization in establishing a strong public image. On the other
hand, a business organization with vested selfish interests may get ignored by the society.
2. Indebted to Society. A business uses the resources of the society for its functioning. Hence, it becomes
obligatory for it to pay back its dues by serving the society. Businessmen should tend to the needs of the society
and use its resources for community welfare.
3. Social Power. Business persons are endowed with a lot of social power. They have the potential to change
the destiny of the population by collectively deciding for the country on crucial issues such as rate of economic
progress, distribution of income among different income groups etc. Ideally, business persons should take up
social responsibilities in proportion to their social power. If the business enterprise misuses its social powers
for selfish motives, the society can intervene via government controls and other laws.
4. Public Image. A business devoted towards fulfilling its social responsibilities is regarded highly by the
society. Good rapport with employees, suppliers, customers and government helps in building a favourable
public image of the business enterprise. Moreover, a socially responsible organization is considered trustworthy
by the shareholders and investors.
5. Social Awareness. These days, employees and customers are more informed about their rights. While
consumers expect the seller to abide by the fair trade practices, workers want fair wages and other employee
benefits. If the expectations of these interest groups are not met, they may resort to either anti-social activities or
seek help from trade unions and consumer courts. This will lead to industrial turmoil and unrest within the
society which is harmful for proper functioning of the business.
6. To Avoid Government Intervention. If a business organization fails to acknowledge and perform its social
duties, it is bound to lose its freedom and flexibility in the long-run. The Consumer Protection Act and other
legislations passed by the government safeguard the interest of the customers against business persons indulging
in black-marketing, adulteration, hoarding and many other illegal. Social duties should be voluntarily carried
out by all the organizations to avoid such situations.
7. Law and Order. A peaceful society is congenial to the expansion of business. Unable to withstand
exploitation by the business enterprises, the weaker sections can rebel and take the law and order in their hands.
As a result, the survival of the business can be threatened.
8. Moral Justification. A business possesses resources such as finance and talent pool to help bail out troubled
masses out of social issues like poverty, dowry, unemployment and illiteracy by organizing special campaigns
and programs. Additionally, business houses can assist the government in solving many other issues like lack of
foreign exchange etc. Moreover, business organizations increase pollution by releasing untreated sewage into
the environment. Thus, it is a moral obligation of the business to render its services in tackling these issues.
9. Socio-Cultural Norms. Only those business persons who sincerely abide by the canon of business will get
the privilege of being honored by the citizens and the government. Hence, the business should aim to promote
equal opportunity and maintain healthy inter-personal relations with all the stakeholders such as customers,
employees to carve a niche for itself as a honest enterprise.

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10. Trusteeship. The great socio-political leader Mahatma Gandhi propounded the philosophy that owners of
wealth and property should hold and use the wealth for the welfare of the society. Therefore, company owners
should operate the business not only for their own benefit, but also for the prosperity of the society. According
to Keith Davis, since business has the resources to resolve the mounting social problems, it should try and
assume the social responsibilities.
Social Responsibility of Business: Concept:
Every business must conduct its operations so as to produce an overall positive impact on society.
Corporate social responsibility (CSR) requires every business to behave ethically and improve the quality of life
of society. Every business must decide voluntarily to contribute to a better society and a cleaner environment.
CSR is a concept that strikes a happy balance between economic, social, ethical and societal concerns of a
business. It forces every business to conduct the show in the best interests of society.
The essential elements of CSR may be presented thus:
i. CSR is a moral obligation to conduct operations ethically
ii. It strikes a happy balance between economic, ethical and social issues
iii. It demands every business to conduct the show in the best interests of society at large
iv. Businesses must make profits, but that cannot be at the cost of customers.
v. It is a voluntary effort undertaken by every business that goes beyond what has been dictated by law.
vi. It is, in short, a company’s sense of responsibility towards the community and environment in which it
operates. Now-a-days, the term is extended to include philanthropy (love of humanity) and volunteering
(actions undertaken without seeking any gain).

Scope of Corporate Social Responsibility:

Ernst and Ernst have identified six areas in which corporate social responsibility is expected:
(i) Environment:This area involves the environmental aspects of production, covering pollution control in the
conduct of business operations, prevention or repair of damage to the environment resulting from processing of
natural resources and the conservation of natural resources. Corporate social objectives are to found in the
abatement of the negative external social effects of industrial production, and in adopting more efficient
technologies to minimize the use of irreplaceable resources and the reduction of waste.
(ii) Energy: This area covers conservation of energy in the conduct of business operations and increasing the
energy efficiency of the company’s products.
(iii) Fair Business Practices: This area concerns the relationship of the company to special interest groups. In
particular it deals with:
(a) Employment of minorities,
(b) Advancement of minorities,
(c) Employment of women,
(d) Advancement of women,
(e) Employment of other special interest groups,
(f) Support for minority business, and
(g) Socially responsible practices abroad.
(iv) Human Resources. This area concerns the impact of organizational activities on the people who constitute
the human resources of the organization. These activities include:

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 (a) Recruiting practices,
(b) Training programmes,
(c) Experience building-job rotation,
(d) Job enrichment,
(e) Wage and salary levels,
(f) Fringe benefit plans,
(g) Congruence of employee and organizational goals,
(h) Mutual trust and confidence,
(i) Job security, stability of workforce, layoff and recall practices,
(j) Transfer and promotion policies, and
(k) Occupational health.
(v) Community Involvement:
This area involves community activities, health-related activities, education and the arts and other
community activity disclosures.
(vi) Products. This area concerns the qualitative aspects of the products, for example their utility, life-durability,
safety and serviceability, as well as their effect on pollution. Moreover, it includes customer satisfaction,
truthfulness in advertising, completeness and clarity of labeling and packaging. Many of these considerations
are already important from a marketing point of view.
Reasons for the Growing Concern of CSR:
i. Awareness and Education: Education has empowered citizens to seek a better quality of life. They have
started comparing products, prices, quality and almost everything. Erring companies are punished. The adverse
publicity that any profit making business is also another reason why CSR investments from companies have
grown in recent times.
Businesses therefore are made to offer better quality products at affordable prices. Rivals will fill the
gap and eat the market space. So the overall quality of life has improved. We have, therefore, affordable cars,
user-friendly mobiles, less expensive air conditioners etc.
ii. Regulation and Interference: If any business makes money through fraudulent or deceitful ways, the
enlightened public might press the panic button. The angry public may want the government to interfere and
come forward with restrictive regulatory measures. The greedy businessmen, therefore, have no choice but to
fall in line and conduct the show without resorting to dubious means to make extra profits.
iii. Employees and Trade Unions:Profit making companies are forced by employees and trade unions to share
the profits with the community and society at large, apart from sharing the same with employees.
iv. Reputation and Image: Building up a better public image is necessary for every business to survive and
grow. Companies have realized the need to create wealth, taking every stakeholder into confidence. They are
forced to build their public image by committing huge sums of money (Law also requires companies to earmark
5 per cent of profits towards CSR initiatives now), even if it means lesser and lesser profits.
v. Competition and Competition: CSR creates competitive immunity and makes your business more sustainable
in the long run. According to Harvard Business Review “Strategy… is about choosing a unique position – doing
things differently from competitors… These principles apply to a company’s relationship to society as readily
as to its relationship to its customers and rivals”.

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 Furthermore “CSR can be much more than a cost, a constraint, or a charitable deed—it can be a source
of opportunity, innovation, and competitive advantage.” In addition to helping companies differentiate
themselves in an already crowded marketplace, social responsibility also inspires innovation within
corporations thereby developing longer-term immunity and business sustainability.
Social Responsibility of Business: Perspectives:
1. Profit Maximisation:Historically, public viewed business enterprises as institutions which mainly looked after
the interests of their owners. Social responsibility was discharged to the extent of maximising profits within the
legal framework of the country.
2. Trusteeship Management:During later years, the concept of social responsibility widened from mere
satisfaction of owners’ interest to interests of other stakeholders also, like employees, consumers, creditors etc.
Providing good working conditions, goods of the right quality and quantity, timely repayment of loans to
creditors etc., were viewed as essential aspects of social responsibility. Business managers were trustees of
business property, holding it in trust for the welfare of society.
3. Quality of Life Management: A still wider perspective of social responsibility developed in 1960s. It viewed
business enterprises as institutions to remove social ills and uplift the society. Business managers were
supposed to change the quality of society.
Reference:
Sinha S. (n.d.) Social Responsibility of Business: Meaning, Concept, Importance and Barriers Retrieve on
December 13, 2020 from: [Link] [Link]/notes/management-notes/corporate-
social-responsibility/social responsibility -of-business-meaning-concept-importance-and-barriers/18432
3. ASSESSMENT –
l Student take Google Forms or Quiz on Canvas

WK. 17 FRANCHISING

1. OBJECTIVES OF THE LESSON – The student must be able to create a franchising agreement.

2. LESSON PROPER –
FRANCHISING

Franchising is a well-known business strategy. Franchising is a form of contractual agreement in which

a franchisee (a retailer) enters into an agreement with a franchisor (a producer) to sell the goods and services for
a specified fee or commission. The retailer through his outlet distributes the goods or services. It brings
together the title-holder of recognized merchandise with another business. This strategy can be opted by small
businesses by having a brand name of a well-known company associated with it. For small business who cannot
afford for much finance and capital investment for a business startup, franchising will be beneficial. Buying a
franchise can be a shortcut to success

.Franchising can be defined as “a contractual agreement between or license between two parties
(Franchisor & Franchisee) for the purpose of organizing and managing business, where the parties are mutually
benefited”.

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 A franchise is an agreement or license between two parties, which gives a person or group of people (the
franchisee) the rights to market a product or service using the trademark of another business (the franchisor).
Franchise is one form of exclusive retailing. It in fact, is not just a method of retailing. It is a method of
marketing which is lying between entrepreneurship and employment. A franchiser is an independent business
person who abides by the marketing plan of the financier and pays him a fee for the use of his brand and
known-how.

The franchising concept can be understood as license type transactions. The agreement to the franchise
is a standard printed agreement which deals with rights and obligations of the licensor and licensee. The term
‘franchise’ has its origin in the French word ‘affranchir’ which means to ‘to free’. It is the local dealer who acts
as a ‘franchisee’ and operates at a lesser cost by using his local market, knowledge. The franchisee will be able
to do business successfully without risks by utilizing the good-will attached to the brand name of the franchiser.

According to the International Franchise Association (IFA) of America, “A franchising operation is a

contractual relationship between the franchiser and franchisee in which the franchiser offers or is obligated to
maintain a continuing interest in the business of the franchisee in such area as know-how and training; wherein
the franchisee operates under a common trade name, format and procedure owned and controlled by the
franchiser, and in which the franchisee has or will make a substantial capital investment in his business from his
own resources”.

Advantages of buying a franchise

1. Higher success Rate: When entrepreneurs buy a franchise, they buy an established concept that has been
successful. Franchisees stand a much better chance of success than people who start independent businesses.

2. Assistance: When entrepreneurs buy a franchise; they get all the equipment, supplies and instruction or
training needed to start the business.

3. Cost reduction: Franchisor can afford to buy in bulk and pass the savings to franchisees. Inventory and
supplies will cost less than running an independent company. For example, running a courier company on own
could be a difficult task. But by being a franchisee of Overnite Express, the franchisee can save money.

4. Star Power: Many well-known franchises have national brand-name recognition. Buying a franchise can be
like buying a business with built-in customers. For example, buying a franchise of Aptech will help to attract
customers easily.

5. Profits: A franchise business can be immensely profitable. The probability for a small business to succeed is
high as they have the backup and support of well established big business enterprises.

6. Marketing assistance: When a business is associated with a franchisor then the big-business themselves help
in corporate marketing of the goods of the small industry or business they are providing support for.

7. Staff training: The franchisor provides all the necessary training to the franchisee or small business staff and
provides additional resources and decision-making capabilities to a small business.

Disadvantages of buying a franchise

1. Control: Some franchisors exert a great degree of control. No decision can be taken by the franchisees

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without consulting the franchisor.

2. Ongoing Costs: Besides the original franchise fee, royalties, a percentage of franchise’s business revenue,
will have to be paid to the franchisor each month.

3. Lack of Support: All franchisors do not offer the same degree of assistance in starting a business and
operating it successfully. Assistance is provided only at the time of starting the business.

4. Expensive: Buying a well-known franchise is very expensive. Entrepreneurs must have the ability to arrange
the necessary finance.

5. Time consuming: Lot of time is required while selecting a franchise. A complete and thorough research is
required to select the right franchise and to determine whether it would work for the business or not.

6. Misunderstanding: Franchise is a complex procedure and disputes may arise between the franchisee and
franchisor.

Franchising – 7 Salient Features

(i) Two Parties – In a franchise there are at least two sides – the franchiser and the franchisee. There can be
more than one franchisee.

(ii) Written Agreement – There is an agreement in writing between the franchiser and the franchisee.

(iii) Exclusive Right – The franchiser owns a brand or trade mark and allows the franchisee to use it in a
specific area under a license.

(iv) Payment – The franchisee makes an initial payment for the license and becomes a part of the franchiser’s
network. He also pays a regular license fee which may be an agreed percentage of sales or profits.

(v) Support – The franchiser provides assistance to the franchisee in marketing, equipment and systems, staff
training, record keeping. The franchiser initially sets up the business to be run by the franchisee.

(vi) Restrictions – The franchisee is required to operate the business in accordance with the policies and
procedures specified by the franchiser. He gives an undertaking not to carry on any competing business and not
to disclose confidential information regarding the franchise. The franchiser cannot terminate the agreement
before its expiry except for ‘good cause’.

(vii) Specified Period – The agreement is for a specific period e.g., five years. On the expiry of this period, the
agreement may be renewed with the mutual consent of both the parties.

Franchising – 4 Major Types of Franchises (With Examples)

a. Business Format Franchises:

This is the most common type of franchise. Here a company expands by supplying an established
business concept/format, including its brand name, symbol, and/or trademark to independent business owners.

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In this arrangement, the franchisee acquires the right to use or follow a business format and also the best
practices and processes associated with it. The franchiser company generally assists the independent owners
significantly in launching and operating their businesses. In return, the business owners pay fees and royalties to
franchiser. Hence, the franchisee acquires the right to use all the elements of a fully integrated business
operation.

Some of the examples are fast-food restaurants such as McDonald’s, Domino’s Pizza, and KFC. Such
franchisees maintain the design and styling aspects determined by the franchiser in their retail environments,
ranging from the product offered to store design, ambience, atmospherics, and internal infrastructure to service
standards to deliveries.

b. Product Franchises:

In these franchise agreements, the franchisee gets the right to use the brand/trade names, trademark,
and/or products from the franchiser. Through this kind of agreement, manufacturers allow retailers to distribute
their products and use their brand names and trademarks. They also monitor and control on the way retail stores
distribute their products. In return of these rights, store owners pay royalties/fees or buy a minimum quantity of
products. Some of the examples are Tommy Hilfiger, Arrow, Scullers, Cotton King Stores, Reebok stores and
Bata stores who operate under this kind of franchise agreement.

c. Manufacturing Franchises:

In this case, franchiser offers the right to produce and sell goods to a manufacturer under its brand name
and trademark. This type of franchise is generally popular among food and beverage companies.

For example, soft drink bottlers and canners often obtain franchise rights from soft drink companies to
produce, bottle, and distribute soft drinks. The major soft drink companies supply the concentrate to them,
which are further processed, packed, and distributed by the regional manufacturing franchises.

d. Business Opportunity Ventures:

This concept works on the format in which an independent business owner buys and distributes the
products from one company. The company supplies the business owner with clients or accounts, in return of
which the business owner pays the company a pre-decided fee. For example, the business owners may obtain
vending machine routes and distribution rights, through this type of franchise arrangement (e.g., coffee vending
machine).

Retailer brands and companies often look toward franchising as a key operating model for expansion
from scale, geographical coverage, and time perspectives. For example, Gap is looking forward to script a new
story in India as it struggles to maintain customer loyalty in markets across the world. The company was set up
in 1969 by Doris and Donald Fisher and has presence in around in 90 countries through around 3,300 company-
operated stores and 400 franchise stores.

Under the franchise arrangement that the two have drawn up, Arvind has invested in infrastructure and
Gap is providing support in terms of brand name, merchandise, layouts, fixtures, and so on. Arvind sources the
merchandise from Gap’s global sourcing to which they have a direct access. Gap has manufacturing facilities in
and around India, which is another strategic advantage

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References

[Link] (n.d.) Franchising – Meaning | Advantages and Disadvantages. Retrieved on December

14, 2020 from: [Link]
Jashaliya K (n.d.) Franchising. Retrieved on December 14, 2020 from: [Link]
[Link]/management/franchising/franchising/32463

3. ASSESSMENT –
l Student take Google Forms or Quiz on Canvas

END OF MODULE

Evaluation of the Course

1. What lesson or activity did I enjoy most? Why?

2. What is the most important lesson which I can apply in my daily life?

1. What are the new insights/discoveries that I learned?

2. What topic/s do I find least important?

3. What possible topics should have been included?

Prepared by:

MADELINE M. SALVINO, LPT, MBE

Approved by:

KAREEN B. LEON, CPA, CMA, PHD. DBA

Dean, School of Business Administration and Accountancy

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