REVIEWER IN ENTREPRENEURSHIP

BUSINESS PLAN
- It is a detailed and integrated written document that describes the various activities
involved in opening and operating a new entrepreneurial venture.
- It is a document describing a venture’s opportunity, its product or service, context, strategy,
team, required resources, and potential financial returns.
- It is a formal statement of set of business goals, the reasons they are believed attainable,
and the plan for reaching those goals.
- Guided by three basic questions:
 Where are we now?
 Where do we want to be?
 How do we get there?

WHO SHOULD WRITE THE BUSINESS PLAN?

The business plan should be prepared by the entrepreneur. However, the entrepreneur may
consult many sources.

NATURE AND TYPE OF ENTREPRENEURIAL VENTURE

The business environment is broadly divided into the external or macro environment and the
internal or micro environment.

 External Environment Scanning

It is conducted to determine the availability of raw materials, the sustainability of the
business to the location, the cost involved, the growth of the industry, and the possible
position of the business in the market.

 Internal Environment Scanning

It is conducted to determine the possible target market and the business competency in
taking advantage of available opportunities.
Two Significant Factors that may be considered by the entrepreneur before opening a business
after conducting the environmental scanning:
 The competency of the entrepreneur
 The competency of the business

WHAT BUSINESS TO OPEN?

The Relationship of Entrepreneurial Competency and Business Competency to Opening a
Business:
* Entrepreneurial Competency:
1. Entrepreneurial concepts and principles
2. Entrepreneurial characteristics
3. Entrepreneurial skills

* Business Competency
1. Scanning of the environment
2. Physical environment
3. Societal environment
4. Industry environment
5. Internal environment

The entrepreneur must be able to answer the following questions

1. Do have the entrepreneurial competency to exploit the business opportunity?
2. Have I critically scanned and evaluated the environment to determine the:
a) availability or sufficiency of raw materials
b) sustainability of the project to the location,
c) cost involved
d) growth and barriers in the industry
e) possible position of the business
f) target customers, and,
g) required business competency?

FORMS OF ENTREPRENEURIAL VENTURE

The classification of business venture according to form are as follows:
1. Sole Proprietorship
- It is a business venture owned by one person only.
- Small operating business in Philippine’s is sole proprietorship w/c is highly
encourage among entrepreneurs.
- Its primary advantage is the ease in its formation and management.
- It has limited capital w/c leads to its limited growth in the industry.

The characteristics of Sole Proprietorship are as follows:

a. It is easy to inform and manage.
b. It is simple business operation.
c. It has limited pool of resources.
d. Its growth is limited.
 e. The owner has limited liability.
The creditor may go after the entrepreneur in the event that the
liability or financial obligation of a sole proprietorship is more than the
total resources.

2. Partnership
- It is a business venture that is owned by two or more persons; the owners are
usually called partners.
- In partnership, profit or loss that results from the entrepreneurial operation is
divided among or between partners.
- All partners can contribute to become a common fund of the partnership.
- One can held personal liable for the partnership’s liabilities when the partnership
does not have the ability to settle financial obligations.
- It is easily dissolved compared to the corporation, particularly for the following
reasons:
a. Death of one of the partners
b. Admission of a new partner in an existing partnership
c. Personal insolvency of one of the partners
d. Permanent withdrawal of the investment of a partner

3. Corporation
- It is an entrepreneurial venture formed by at least five but not more than fifteen
persons.
- Large businesses are usually organized as corporations; its management is entrust
to the board of directors by and from the group of stockholders.
- This can be either stock or non-stock, profit or non-profit, and domestic and
foreign.
- Incorporators: persons originally forming the corporation.
 Stock Corporation
- corporation is classified as this when it is authorized to issue
shares of stock to stockholders

 Non-stock Corporation
- it is not authorized to issue shares of stock to the members

 Stockholders or Shareholders
- owners of a stock corporation

 Members
- owners of Non-stock Corporation

 Certificate of Stock
- evidence of ownership of corporation

 Domestic Corporation
- It is organized under the laws of the Philippines
  Foreign Corporation
- It is organized under the laws of the foreign country but has the
authority to operate in the Philippines.

NATURE OF ENTREPRENEURIAL VENTURE

Nature - refers to whether the business is simply selling a product, manufacturing a product, or
rendering a service to customers.

1. Merchandising
- Merchandising Business is engage in buying and selling of products or goods.
- It does not alter the appearance of the product from the seller.
Ex. Grocery stores, Hardware stores, Dry good stores

2. Service
- Service Business provides service to the customers
- Primary sources of income are the different services rendered or provided to the
customers.
- Service entrepreneurial businesses are classified as non-professional service and
professional service.
 Examples of Non-professional Service: laundry shops, car repair shops,
beauty parlors, educational institutions, banking institutions

 Examples of Professional Service: law offices, medical clinics, auditing

and consultancy services.

3. Manufacturing
- Manufacturing Venture is a producer of goods or products.
- engaged in buying raw materials and supplies to be processed into finish products.
- - the salient feature here is the conversion process from the time of raw materials is
purchased up to the time it is sold as finished products.
- 4 M’s in the production operation is applicable to manufacturing ventures.
Ex. Furniture shops, Bakeshops, Rattan factories, Flour producers, Beverage
companies.

4. Agriculture
- Agricultural Entrepreneurial Venture is engage in the production of agricultural
goods and animals.
- may sell raw products or finished goods.
Ex. Mushroom production, Potted ornamental plants, Hog fattening and dispersal,
Poultry products, Fishpond ventures
 5. Hybrid Business
- Hybrid Entrepreneurial Venture possesses the characteristics and nature of
combined types of business entities.
- It inherents in business to produce and sell goods at the same time produce services
to the customers.
Ex. Restaurants & fast-food chains
 Their nature is to process and sell food and at the same time provide
excellent service to the customers.
 They have the attributes of manufacturing business and service entity.

6. Special Corporation
- includes cooperative, joint ventures, and non-profit organizations

WHAT BUSINESS TO OPEN

There are no strict entrepreneurial rules in choosing the type and form of business to open.
Entrepreneur must consider highly the following two important factors: the competency of the
entrepreneur and the competency of the business. Nevertheless, whatever type and nature of
business venture is opened to exploit different business opportunities, innovation or creativity
defines the distinction between an entrepreneur and an ordinary businessperson. An entrepreneur
finds ways to introduce innovation from the production process to the marketing stage, while an
ordinary business person simply imitates business practices and procedures. Innovation can be
introduced from the production phase up to packaging delivery.

PRODUCTION SYSTEM
Three important elements in the production system:
1. the input
2. the transformation or production process
3. The output

INPUT
The input includes the following:
1. Manpower
2. Materials
3. Machine
4. Design
5. Instructions

PRODUCTION PROCESS
It is also referred to as the transformation or conversion process, is the stage of production
where the materials are transformed into the final product with the aid of manpower and machine.

It involves the following activities:

1. Procurement of acquisition of raw materials and manufacturing supplies.
2. Inspection of materials and supplies upon receipt at the receiving section
3. Storage of acquired materials and supplies
 4. Issuance of materials and supplies to the production line
5. Inspection of damage or broken goods and assessment of losses
6. Rework or repair of defective goods to the storeroom

OUTPUT
It represents the final product from the production process distributed from the customers.

THE FOUR M’S IN THE PRODUCTION SYSTEM

Factors involved in the input and production process. The most critical factors in the whole
production system are the inputs and transformation process.

“garbage in, garbage out” or GIGO - when their quality determines the quality of the output.

 Manpower
- It is a human workforce involved in the manufacture of products.
- It is considered as the most critical and important factor of the production.
Criteria that must be highly considered by the entrepreneurs:
1. Educational qualifications and experience required for the job
2. Status of employment, whether permanent or temporary
3. Number of workers required for the job
4. Skills and expertise required for the job
5. Appropriate time the worker needed
6. Conduct of background checking and issuance of requirements
7. Amount of salary or wages and other mandatory benefits
8. Availability of potential workers in the community

 Method (Production Method)

- It refers to process or technique of converting raw materials to finished products.
- Raw materials undergo several stages before it is completed and becomes ready for
delivery to the target customers.
Factors regarding the selection of the method of production:
1. product to produce
2. mode of production
3. manufacturing equipment to use
4. required skills to do work

Product to Produce
Product
- It is the physical output of the whole production process.
- It should be valuable and beneficial to the customers and should satisfy
their basic needs and wants.
  Heterogeneous product
o It has dissimilar characteristics, parts and physical
appearance.
o It can be easily identified from other products.
Ex. makers of furniture, bags, and home decors

 Homogeneous product
o It has a physical appearance, taste, or chemical content
that can hardly be distinguished from that to the
other products.
Ex. makers of soft drinks and medicines

Mode of Production
- refers to how a product will be reproduced

1. Intermittent Production System

- It adopted when the production process is basically short
and machines are frequently changed.
Ex. tailors, goldsmiths, furniture makers, and
manufacturers of farm equipment.

Methods under the Intermittent Production System:

a. Project Method
Product is usually substantial in size and bound
by a specific time to complete it.
Ex. Cargo vessels, jumbo aircraft and buildings

b. Job Ordered Method

The production here is completed by a single
employee or a batch of employees.

c. Batch Method
The production undergoes several stages and the
product is transferred from one worker to another.

Features of the intermittent production system:

1. There is a variety of products to be manufactured.
2. The production flow is not continuous.
3. The production is dependent on the orders of
customers.
4. The volume of production is not material.
5. The machines are for general purposes.
6. The sequence of operations is based on product
designs.
 2. Continuous Production System
- It is adopted when the demand for the product is
considered constant.
- It is not based on the order of customers but for the
stocking of inventories.

Feature of the continuous production system:

1. The production is continuous.
2. The production is not based on the customers’ order
but on the anticipated demand.
3. The production is considered standardized.
4. The products are usually homogeneous.
5. The products are produced in large quantities.

3. Just-in-time Production System

- Goods are produced just in time when the market needs or
demands for them.
- This system is designated to eliminate wastage of resources
and to increase productivity.

 Machine
It refers to the manufacturing equipment used in the production of goods or delivery
services.

Elements in the process of selecting the type of equipment to purchase:

1. Types of products to be produced
2. Production system to be adopted
3. Cost of equipment
4. Capacity of the equipment
5. Availability of spare parts in the local market
6. Efficiency of equipment
7. The skills required in running the equipment

 Materials
- The term material simply refers to the raw materials needed in the production of a
product.
- Materials basically form part of the finished product.
- In case materials are of poor quality, the finished product will be of poor quality as
well.

Important factors in the selection of raw materials:

1. Cost
2. Quality
3. Availability
4. Credibility of suppliers
5. Waste that the raw material may produce