COURSE LEARNING MODULE

ENTR 1013 – The Entrepreneurial Mind

AY 2023-2024

Lesson: Gate-1 Preparation

Topic: Money, Model and Mentors

Learning Outcomes: At the end of this module, you are expected to:

1. Understand the importance of Money, Model, and Mentor through the Wealth Conversion Principle.
2. Analyze ways on how to have the right business model in order to maximize revenue while pursuing
cost efficiency.
3. Identify how mentors can give appropriate pieces of advice for the entrepreneurs to avoid mistakes,
accelerate the learning curve or even open windows for opportunities.
4. Create an ecosystem appropriate for a business during the preparation stage.

LEARNING CONTENT

Introduction:

Starting an enterprise entails four ‘gates’ to reach the ‘House of Prosperity’. Each gate has its unique
requirements. Like a race, entering one gate and finishing that stage is not an assurance the next one will
readily be open. It is only when all tasks in the four gates are successfully accomplished that prosperity and
success can be attained.

The first gate in the entrepreneurship journey is the preparation gate. Here, the entrepreneur looks into money,
model (business model) and mentorship. The wealth conversion principle states that wealth is created by
converting money or cash (or its equivalent) into inventories, and back to cash when sold at a profit. If credit
terms have been granted, it should be collected. Having the right business model is indispensable in order to
maximize revenue while pursuing cost efficiency. Mentors can give the appropriate pieces of advice for the
entrepreneurs to avoid mistakes, accelerate the learning curve or even open windows of opportunities. The
entrepreneur also needs ample knowledge /intelligence or IQ, while building an ecosystem appropriate for
his/her business during the preparation stage.

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Lesson Proper:

An entrepreneur must be aware of the important task of doing a feasibility study.

What’s your big idea?

Elements of a good idea.

Money Model Mentors

4 basic questions that is important to investors

1. Who is your target market? – it gives an indicator of how big the markets.
2. What is being offered? – this answer what’s in it for the target market, addressing the pain points of the
consumer. Pain points can be conscious (actual demand) or unconscious (latent demand) that can be
pointed out by the seller.
3. Why is the offer relevant or unique? – this answer why the offer is compelling to the target market.
4. How will this make money for the firm? – this answer how the firm can win in the marketplace and
what’s in it for the investors.

3 Levels of Strategy

Corporate Level: What industry

do we enter / exit and why?
What’s the potential value
capture?

Business Level: What is (or could be) our

competitive advantage?

Functional Level: What is the compelling reason for consumers

and customers to buy our products and/or services and prefer us
over competition?

Strategy can be formulated at three levels, namely, the corporate level, the business level, and the functional
level. At the corporate level, strategy is formulated for your organization as a whole. Corporate strategy deals
with decisions related to various business areas in which the firm operates and competes. At the business unit
level, strategy is formulated to convert the corporate vision into reality. At the functional level, strategy is
formulated to realize the business unit level goals and objectives using the strengths and capabilities of your
organization. There is a clear hierarchy in levels of strategy, with corporate level strategy at the top, business
level strategy being derived from the corporate level, and the functional level strategy being formulated out of
the business level strategy.

1. Corporate Level

Corporate level strategy defines the business areas in which your firm will operate. It deals with aligning the
resource deployments across a diverse set of business areas, related or unrelated. Strategy formulation at
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 this level involves integrating and managing the diverse businesses and realizing synergy at the corporate
level. The top management team is responsible for formulating the corporate strategy. The corporate
strategy reflects the path toward attaining the vision of your organization. For example, your firm may have
four distinct lines of business operations, namely, automobiles, steel, tea, and telecom. The corporate level
strategy will outline whether the organization should compete in or withdraw from each of these lines of
businesses, and in which business unit, investments should be increased, in line with the vision of your
firm.

2. Business Level

Business level strategies are formulated for specific strategic business units and relate to a distinct
product-market area. It involves defining the competitive position of a strategic business unit. The
business level strategy formulation is based upon the generic strategies of overall cost leadership,
differentiation, and focus. For example, your firm may choose overall cost leadership as a strategy to
be pursued in its steel business, differentiation in its tea business, and focus in its automobile business.
The business level strategies are decided upon by the heads of strategic business units and their
teams in light of the specific nature of the industry in which they operate.

3. Functional Level

Functional level strategies relate to the different functional areas which a strategic business unit has,
such as marketing, production and operations, finance, and human resources. These strategies are
formulated by the functional heads along with their teams and are aligned with the business level
strategies. The strategies at the functional level involve setting up short-term functional objectives, the
attainment of which will lead to the realization of the business level strategy.

For example, the marketing strategy for a tea business which is following the differentiation strategy
may translate into launching and selling a wide variety of tea variants through company-owned retail
outlets. This may result in the distribution objective of opening 25 retail outlets in a city; and producing
15 varieties of tea may be the objective for the production department. The realization of the functional
strategies in the form of quantifiable and measurable objectives will result in the achievement of
business level strategies as well.

Understand and be realistic about two things:

a. Value chain cycle
b. Consumer’s path to purchase or the sales cycle

PERSONAL BRANDING

- a term use to describe the image of one’s self in the public’s mind from
previous choices made that will affect the future level of personal
influence, which is part of self-awareness and self-mastery.
- Before investing make sure that your personal branding is credit-
worthy and funding-worthy.

The first step to building your personal brand is knowing yourself and
your personality.

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  Personal branding makes others feel good and feel right working and dealing with the entrepreneur.
Lack of good personal branding will not attract talent and resources so entrepreneurs must therefore
not underestimate its importance, as every act they make is a rehearsal for the future.

RAISIING FUNDS

Cash is the lifeblood of business. If you run out of it and lack access to additional resources, the game is over.

As future entrepreneurs, you'll find that raising funds is a significant part of your efforts and, for better or worse,
a major challenge. Unless you have a clearly defined plan and a path to follow, you’re going to end up wasting
precious time that could have been spent elsewhere. So, understanding the basics of raising capital will be
critical to your success. If you’re clear on what you need to do to get from where you are to where you want to
be, you'll be less likely to derail while you’re in the thick of it.

Raising capital is when an investor or a lender gives a business funds to assist with starting, growing, and
managing day-to-day operations.

Some entrepreneurs consider raising capital to be a burden, but most consider it a necessity. Regardless of
their stance on the matter, raising capital is an essential step for entrepreneurs, founders, business owners, or
anyone looking to start a company.

Basic Ways and Simplest Ways to Raise Capital

1. Savings – discretionary funds from unspent money earned previously by the entrepreneur.
2. Partnership – includes investment from relatives, friends and acquaintances.
3. Loans – money advances, which may be sourced from individual informal channel or financial interme-
diaries like banks.
4. Customer’s Advances – terms of sales advantageous to the seller, such as cash with order (CWO),
asking for down payment (DP), cash on delivery (COD, or collecting franchise fee upfront.

More advanced ways to raised funds

Sources of Funding from Outsiders
1. Angel investor – money invested by an outside individual to a firm.
2. Super angel – big amount of money invested by an outside individual to a firm.

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 3. Venture capital – amount of money invested by outside investors, typically over 10 individuals with none
owning over 10% of investment pool forming themselves as a venture investing company.
4. Private equities – amount of money invested by outside investors, typically over 10 individuals, forming
themselves as a private equity investment company, focusing on firms that already have revenues and
profit.
5. Going public – amount of money invested via initial public offering (IPO) from the stock market.

Note: entrepreneurs must therefore not limit their expansion on internally generated funds, or borrowing money
from bank, or asking partners to put in more money. On a bigger scale, the company may be attractive to
public investors in the stock market.

Question: WHY PARTNERS ARE NEEDED?

Right partners can provide:

 Needed initial funding
 Opening doors to further fund and spread financial risk
 Creating immediate credibility
 Making entrepreneur highly accountable
 Provide mentorship both professional level (operational and strategic) and personal level (personal
growth)

Inventory of benefits of having great partners

1. Provide immediate feedback on strengths weaknesses of plans
2. Help give operational and strategic directions
3. Provide additional funding
4. Spread out financial risk
5. Narrow your knowledge gap
6. Offer immediate credibility to your company
7. Open their network of contacts to you (key suppliers, customers) to lower cost or raise revenues
8. Give an assurance of fairness on dealing with valuation and stock ownership specially after recovering
investment.
9. Mentorship on professional level
10. Mentorship on personal level

Success Story: when Jollibee bought 70% of Mang Inasal in 2010, it took over a functional department of Mang
Inasal every six months starting from the treasury group. In five years’, time, sales of Mang Inasal went up to
2.4 times despite increasing the number of stores by only 30%, creating much productive Mang Inasal in the
process.

Choosing Mentors

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 - A mentor is a trusted and experience adviser who is interested in the success of the mentee.
- He/She does this by investing time to be a sounding board, to listen and understand context, ask ques-
tions, give sound advice, offer alternative opinions, opening windows of opportunities and lessening
risks of the mentee.

Mentoring ensures that knowledge, experience, and hard-won insight transfers from one person to another
through personal interaction over time. While your own great ideas are essential to your new business, with an
experienced mentor at your side, you will have one of the most powerful assets any new businessperson can
ever have: someone invested in you and your success. Here are a few key points on the vital role a good
mentor can play in the success of an emerging entrepreneur, along with advice on choosing mentors wisely.

1. What characteristics does a good mentor possess?

Ideally, a mentor will not so much give advice as coach. An ideal mentor is someone actively
involved in the direction of his or her own successful business. A good mentor should also be
accessible — not all of the time, but he or she should be able to devote enough time to assisting
you in truly broadening and deepening your understanding in ways you could not have done for
yourself.

2. What can a mentor help you accomplish?

Your mentor can help you stay focused on your goals and hold you accountable to your vision
for your company. A good mentor can help a fledgling entrepreneur think through strategies,
crunch numbers, and create a business or marketing plan. His or her guidance can get you
through rough times when your self-confidence may be waning, and show you new perspectives
and pathways to success.

3. How can you find the right mentor?

You should select a mentor carefully. Make sure to understand exactly what you want your
mentor to do. Do you need networking opportunities, introductions to great contacts, or advice
on evaluating markets or developing your product? Different individuals will bring different sets
of skills and varied perspectives to any mentoring experience, so you will need to know what
your “ask” is.

4. Where should you look for mentors?

You can try local business and start-up networking groups as well as the leadership of
community non-profit organizations to find mentors. Offer to work an event promoted by one of
these groups, which can place you in proximity to industry leaders. Find a few people who are
available to have brief meetings with you and see if you click with any of them as mentors.

5. How can you get the most out of a mentoring experience?

Be flexible enough to appreciate the many forms mentoring can take. You might read a book or
watch a video by a well-known and successful entrepreneur, learning from him or her even if
you will never meet.

4 Different Types of Mentors Needed by Entrepreneurs

Types of Mentors Role of Mentor for the entrepreneurs Examples for a Start-Up
Needed Advertising Agency
Operational Guides on matters related to present Client acquisition, presentation,
operations, especially key factors for success execution
that the firm should do exceptionally well
Functional Guides on matters related to support Accounting tax, human
functional areas on which the entrepreneur resource

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 may need some advice
Personal Guides on matters related to personal growth Work-life harmony
Strategic Guides on matters related to the future vision Consulting, service
of the entrepreneur

8 Qualities of a Great Mentor

1. Interested in the success of the mentee.

2. Invest time to listen and understand the different situations of the mentees.
3. Provide advice, both business and personal
4. Help mentees by tapping into the mentor’s network
5. Open doors for opportunities
6. Lessen risk by calling attention to such areas
7. Inspire the mentee
8. Sincerely desire that the entrepreneur succeeds and be even better than them

*** END of LESSON ***

REFERENCES

Textbooks

Go, Josiah and Escareal-Go, Chiqui (2018) Entrepreneurship: Starting an Enterprise. Having an Innovation
Mindset

Online References

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form, in whole or in part, without expressed written permission.