Republic of the Philippines 1.

Provision of employment to people;

ROMBLON STATE UNIVERSITY 2. Profits;
Romblon Campus 3. Service to the community;
School of Arts, Sciences and Technology 4. Personal satisfaction;
5. Means to earn a living;
6. Achievement of power; and
FIN 1: BUSINESS FINANCE 7. Protection of one’s self and family
TOPIC 2: Organizing a Business
Entrepreneurship

Why Persons Engage in Business - Entrepreneurship is the ability and readiness to develop,
Entrepreneurship organize and run a business enterprise, along with any of its
Business Prospecting uncertainties in order to make a profit. The most prominent
The Search for Business Opportunity example of entrepreneurship is the starting of new
Business Promotion businesses.
Discovery
Determination of Feasibility - In economics, entrepreneurship connected with land, labour,
Assembling the Needed Resources natural resources and capital can generate a profit. The
The Promoter entrepreneurial vision is defined by discovery and risk-
Liability of Promoters taking and is an indispensable part of a nation’s capacity to
succeed in an ever-changing and more competitive global
The first stage in the life cycle of a business is organization. marketplace.
Much of what will happen to the firm in the later stages depends on
the first few steps in the organization process. Because of the
magnitude of the capital required in establishing a corporation, the Joseph Alois Schumpeter is regarded as the father of
activities undertaken in the organization stage are more entrepreneurship. He introduced the concept of entrepreneurship.
sophisticated and may take a year or several years before actual Meaning of Entrepreneur
operations begin. This does not mean, however, that small business
businesses do not deserve careful thought and analysis before they - The entrepreneur is defined as someone who has the ability
start operating. and desire to establish, administer and succeed in a startup
venture along with risk entitled to it, to make profits. The
Most Common Reasons for Business Failures best example of entrepreneurship is the starting of a new
business venture. The entrepreneurs are often known as a
1. Bad or improper management practices, including poor cost source of new ideas or innovators, and bring new ideas in
controls and poor hiring practices; the market by replacing old with a new invention.
2. Poorly focused and executed marketing or inadequate - It can be classified into small or home business to
marketing; multinational companies. In economics, the profits that an
3. Poor location; entrepreneur makes is with a combination of land, natural
4. Failure to invest in new products and efficient technology; resources, labour and capital.
5. Lack of adequate financing; - In a nutshell, anyone who has the will and determination to
start a new company and deals with all the risks that go with
it can become an Entrepreneur.

Why Persons Engage in Business

 be the launching of a new product that is new to the market
What are the 4 Types of Entrepreneurship? or a process that does the same thing but in a more efficient
It is classified into the following types: and economical way.
 Visionary and Leadership quality- To be successful, the
Small Business Entrepreneurship- These businesses are a entrepreneur should have a clear vision of his new venture.
hairdresser, grocery store, travel agent, consultant, carpenter, However, to turn the idea into reality, a lot of resources and
plumber, electrician, etc. These people run or own their own employees are required. Here, leadership quality is
business and hire family members or local employee. For them, the paramount because leaders impart and guide their
profit would be able to feed their family and not making 100 million employees towards the right path of success.
business or taking over an industry. They fund their business by  Open-Minded- In a business, every circumstance can be an
taking small business loans or loans from friends and family. opportunity and used for the benefit of a company. For
example, Paytm recognised the gravity of demonetization
Scalable Startup Entrepreneurship- This start-up entrepreneur and acknowledged the need for online transactions would be
starts a business knowing that their vision can change the world. more, so it utilised the situation and expanded massively
They attract investors who think and encourage people who think during this time.
out of the box. The research focuses on a scalable business and  Flexible- An entrepreneur should be flexible and open to
experimental models, so, they hire the best and the brightest change according to the situation. To be on the top, a
employees. They require more venture capital to fuel and back businessperson should be equipped to embrace change in a
their project or business. product and service, as and when needed.
 Know your Product-A company owner should know the
Large Company Entrepreneurship- These huge companies have product offerings and also be aware of the latest trend in the
defined life-cycle. Most of these companies grow and sustain by market. It is essential to know if the available product or
offering new and innovative products that revolve around their service meets the demands of the current market, or
main products. The change in technology, customer preferences, whether it is time to tweak it a little. Being able to be
new competition, etc., build pressure for large companies to create accountable and then alter as needed is a vital part of
an innovative product and sell it to the new set of customers in the entrepreneurship.
new market. To cope with the rapid technological changes, the
existing organisations either buy innovation enterprises or attempt Importance of Entrepreneurship:
to construct the product internally.  Creation of Employment- Entrepreneurship generates
employment. It provides an entry-level job, required for
Social Entrepreneurship- This type of entrepreneurship focuses gaining experience and training for unskilled workers.
on producing product and services that resolve social needs and  Innovation- It is the hub of innovation that provides new
problems. Their only motto and goal is to work for society and not product ventures, market, technology and quality of goods,
make any profits. etc., and increase the standard of living of people.
 Impact on Society and Community Development- A
Characteristics of Entrepreneurship: society becomes greater if the employment base is large
Not all entrepreneurs are successful; there are definite and diversified. It brings about changes in society and
characteristics that make entrepreneurship successful. A few of promotes facilities like higher expenditure on education,
them are mentioned below: better sanitation, fewer slums, a higher level of
 Ability to take a risk- Starting any new venture involves a homeownership. Therefore, entrepreneurship assists the
considerable amount of failure risk. Therefore, an organisation towards a more stable and high quality of
entrepreneur needs to be courageous and able to evaluate community life.
and take risks, which is an essential part of being an  Increase Standard of Living- Entrepreneurship helps to
entrepreneur. improve the standard of living of a person by increasing the
 Innovation- It should be highly innovative to generate new income. The standard of living means, increase in the
ideas, start a company and earn profits out of it. Change can
 consumption of various goods and services by a household - Discovering the idea for a new business;
for a particular period. - Determining the feasibility of the idea; and
 Supports research and development- New products and - Assembling the needed resources to start a business.
services need to be researched and tested before launching
in the market. Therefore, an entrepreneur also dispenses Discovery
finance for research and development with research
institutions and universities. This promotes research, - The identification of an idea for a new business in the
general construction, and development in the economy. first step in business promotion.
- The business promoter may also be induced to certain
Businessman and Entrepreneur product ideas because of the availability of materials.
It is a common assumption that businessman and Determination of Feasibility
entrepreneur are the same, but both words refer to a different Aspects in Determining of Feasibility
individual possessing a distinct approach to business. to put is in - Management study includes proponents, personnel, and
other words, a businessman follows a set path engraved by some organization;
other person with an unoriginal idea, whereas an entrepreneur - Marketing study;
thinks and believes in making his own path with new ideas. - Production facilities and the product;
In the future, an entrepreneur can become a businessman. - Taxation and legal aspects;
However, between businessman and entrepreneur, there is a thin - Financing aspects;
line difference businessman is a market player, whereas, the - Profitability; and
entrepreneur is a market leader. In the below article, we will help - Social desirability
you understand the differences between businessman and
entrepreneur. Management Study

2 Options to Engage in Business - It is in this particular portion of feasibility study where

the following aspects are determined;
- To supply the capital of a firm; - The appropriate form of organization;
- To create a business that he will operate - The internal structure of the organization;
- The owners; and
Entrepreneur’s Function - The staffing pattern of the organization

- To supply the capital firm; Assembling the Needed Resources

- To organize production by buying and combining inputs;
- To decide on the rate of output in the light of his - Initial capital required;
expectations about demand; and - The essential properties;
- To bear the risk involved in these activities - Processes; and
- Personnel
Business Prospecting
Promoter
- First, he/she should carefully scan the environment for
other possible openings; - the person responsible for the formation of a company.
- Second, he/she should prepare a list of alternative
business opportunities; and The Promoter is motivated by any or a combination of the
- He/she should make his choice from the list. following:

Business Promotion - The promoter’s fee;

3 Steps involved in Business Promotion - Share of stock or bond in the new business project;
 - A management position in the new business project;
- A new customer for his products or services; and
- The desire to contribute to the economic growth of the
local community

Classification of Promoters

Professional promoters – they are those whose main

occupation in business promotion;
Side-line promoters – they are the persons who perform
promotion activities occasionally.

Banking promoters – they are banking institutions which provide

business promotion services to their clients.

Financial promoters – they insist of investment houses engaged

in a promotion of certain business ventures through the sale of
securities.

Subdivision promoters – they are those engaged in development

of new subdivisions.

Liability of Promoters

- The promoter undertakes to pursue his job with capacity

of a temporary trustee.
- He cannot legally bind the firm into contracts and deeds
unless approved by the owners or the board of directors.

Prepared by:

Jones Dick R. Marceño

Lecturer 1