Entrepreneurship and Business Planning Prelim Hand-Outs
(Summary)
Entrepreneurship- is a science and art of converting materials
into highly marketable goods and services that will improve
man’s quality of life.
It is the process of creating or seizing an opportunity, and
pursuing it regardless of the resources controlled. (Harvard
Business School)
Entrepreneur- someone who exercises initiative by organizing
a venture to take benefit of an opportunity and, as the
decision maker decides what, how and how much of a good
or service will be produced. It comes from a French word
“entreprendre” which means “to undertake”.
Perspective of Entrepreneurship
The concept of entrepreneurship was first established in the
1700s, and the meaning has evolved ever since. In the 20 th
century, economist Joseph Schumpeter (1883-1950) focused
on how the entrepreneur’s drive for innovation and
improvement creates upheaval and change. Schumpeter
viewed entrepreneurship as a force of “creative destruction”.
The entrepreneur carries out “creative destruction” or
making a “new combination,” thereby helping render “old
ways” obsolete. The established ways of doing business are
destroyed by the creation of new and better way to do them.
Business expert Peter Drucker (1909-2005) took this idea
further, describing the entrepreneur as someone who
actually searches for change, responds to it and exploits
change as an opportunity.
Four Tenets of Entrepreneurship by Professor Howard H.
Stevenson:
1. Entrepreneurship flourishes in communities where
resources are mobile.
2. Entrepreneurship is greater when successful
members of a community reinvest excess capital in
the projects of other community members.
3. Entrepreneurship flourishes in communities in which
success of other community members is celebrated
rather than derided.
4. Entrepreneurship is greater in communities that see
change as positive rather than negative.
The Evolution of Entrepreneurship using the Lens of
Economic Development Theory
*The theory of Mercantilism*
-was the first major economic theory known in the world. It
drove the economic system during the 16 th to 18th centuries in
the “known” world.
- It was based on the idea that a nation’s wealth will increase
only if the government regulated the entire nation’s
commercial interest. The government according to
mercantilism should take care of all the economic activities.
-Due to its system of “me first” and “no to imports”, it led to a
stagnant global economy.
*Laissez- Faire*
Adam Smith- he introduced the laissez-faire theory and
expounded the need to minimize the role of government
intervention and taxation in the free markets, saying that an
“invisible hand” guides supply and demand.
*Socialism*
Karl Marx- He disagreed with Adam Smith and the laissez-
faire theorists. He interpreted human history as a class
struggle between workers and employers. He declared that
free enterprise(laissez-faire) would lead to increasingly severe
losses and would eventually bring about revolution by the
workers. They call for an economy where the government
owned all the property and distributed everything equally
among all the people through socialism.
Note: Today, experts realize that there is no single theory
that can explain the economic growth.
Joseph Schumpeter- In 1934 an economist that explained
that economic growth is started by people whom he called
“entrepreneurs” who produce goods not only for personal
profit but also for the good of everyone around them. He
called the entrepreneurs the backbone of economy.
- In his classic work, “the theory of economic development”,
he emphasized the role of entrepreneurs in the process of
economic transformation.
Barriers to Entrepreneurship Development
1. Difficulty in finding information on local regulations,
taxation, and environmental laws.
2. Inadequate infrastructure facilities.
3. Lack of support from local and national government
4. Issues of graft and corruption.
5. Resistance to technological advancement
6. Inadequate digital connections and internet
facilities.
Entrepreneurial Challenges in Reshaping Business Strategy
1. Most businesses remain small in scale and are
motivated by necessity.
2. Low start-up capital only PH 10,000 or less with
capital dipping a less than PH1,000
3. There is a lack of entrepreneurial education and
training.
4. There is a lack of support from concerned agencies.
5. There is the lack of access to financing.
Entrepreneur and Entrepreneurial Personality
Entrepreneurs- are high energy creative people, who are self-
confident, have a high level of self-esteem and are futuristic
in their outlook as they seek to incessantly solve problems,
take risk, and learn from failures (theirs and others). They
thrive on change and have a natural predisposition to show
initiative and willingly accept personal responsibility for
projects. They harness all available resources within their
scope in order to achieve success on their own terms. Driven
by a righteous passion, they eventually craft their success in
spite of many preceding disappointments and setbacks.
Ten Personal Entrepreneurial Competencies by McClelland
and McBer:
1. Opportunity Seeking and Initiative
 Does things before asked or force to by events.
 Acts to extend the business into new areas,
products or services.
 Seizes unusual opportunities to start a new
business, obtain financing, equipment, land
work space of assistance.
2. Risk Taking
 Deliberately calculates and evaluates
alternatives.
 Places self in situations involving a challenge or
moderate risk.
3. Demand for Efficiency and Quality
 Find ways to do things better, faster or cheaper
and met or exceeds standards of excellence.
4. Persistence
 Takes action in the face of a significant obstacle.
 Takes repeated actions or switches to an
alternative strategy to meet a challenge or
overcome an obstacle.
5. Commitment to the Work Contract
 Strives to keep customers satisfied and places
long term good will over shorter gain
6. Information Seeking
 Seeks information from clients, suppliers,
employees and competitors
7. Goal Setting
 Articulates clear and specific long range goals
and measurable short term objectives.
8. Systematic Planning and Monitoring
 Plans by breaking tasks down into time-
constrained sub-tasks.
9. Persuasion and Networking
 Uses deliberate strategies to influence or
persuade others.
10. Independence and Self-Confidence
 Seeks autonomy from the rules or control of
others and sticks with own judgment in the face
of opposition.
Characteristics of Entrepreneur and words related to
Entrepreneurship from A-Z by Dr. Neil Planagan and
Professor Peter Baskerville
Ambiguity- refers to as situation in which something can be
understood in more than one way and it is not clear which
meaning is intended. While change is quite stressful for vast
majority of people, entrepreneurs become quite invigorated
by ambiguity and see it as an opportunity.
Beachhead Strategies- are strategies that an entrepreneur
uses to gain market penetration and customer acceptance for
their products. Sam Walton (Wall Mart) used beachhead
strategy of opening in small towns that were not served by
formidable rivals like the retails giants. 1.) Build momentum,
not profit; 2.) Be the topic of conversation 3.) Work with your
champions; 4.) Create memorable experience
Commitment- founding drive of an entrepreneur to see it
through with everything on the line. It is the commitment to
the long-term, the commitment to getting up and starting all
over again. If fate to decrees.
Destiny- driven to take control of the future, craft their
destiny and if need be, make sacrifices in the short term for a
greater long term.
Effectual reasoning- starts with clearly defined goals that
translate into specifically defined objectives that inform
strategies and then determine tactics.
Focus- These successful entrepreneurs are single-minded
with an eye constantly on the prize. They are not easily
distracted, they rarely quit and stay focused on the task at
hand until it is done.
Global- No longer happy to be tagged SME these start-ups
are better tagged Global Opportunity Start-up.
Health- Good health is a remarkable aspect of
entrepreneurial life. Entrepreneurs can’t afford to be sick.
Innovator- An entrepreneur’s core competency is to find new
ways to solve problems and do come up with clever,
workable solutions.
Just- Do It- They immediately look for an alternative even if it
means putting 100% of their own resources behind the
project to make it happen. “Making it happen “ is what an
entrepreneur does.
Keep-it Real- Entrepreneurs are honest and straight forward
in their dealings and expect others to do likewise.
Leadership- Leadership for the entrepreneur is not about
status but function.
Meaning- Entrepreneurs can create the meaning, which will
become the motivation behind their ventures.
Never give-up- Entrepreneurs never quit striving for success.
Opportunity seeker- Entrepreneurs keep their eyes open for
significant changes that may trigger a promotion from option
to opportunity.
People- the most valuable resources in every business
venture.
Quirky- it is a unique behavior and a unique ingredient that
can only be produced by a person with self-esteem and
confident in their offer.
Risk taker- Deliberately calculates the risks and evaluates
alternatives. Entrepreneurs are fearful of a so-called “risk-
free” life that ends in anguished regret of what might have
been, of what could have been, of what should have been.
Subjective advantages- are the advantages the
entrepreneurs achieve because they know how to perfectly
position their offer to fulfill a customer’s emotional needs.
Timing- Entrepreneurs know when to launch the business or
product in the right place at the right time.
Under the radar- Entrepreneurs know to secure their entry
into markets with minimal notice or perceived threats,
ensuring the least negative reaction from competitors,
suppliers, partners or customers.
Value-added- Entrepreneurs makes money by taking a slice
of the added value that they create for their customers via
their innovative products and services.
Work and Play- “to do what you love and to love what you
do”.
X-Factor- special something that entrepreneurs have which
others don’t.
You- Entrepreneurs are people so totally engaged with the
outside that they tend to pay little attention to their one
greatest asset- themselves.
Zest- it is known as the passion or life-blood of the
entrepreneur.
The Philippine MSME
Business Plan
-is a document that describes the various external and
internal elements involved in starting a business or in
expanding an existing venture, amidst a dynamic business
environment. It integrates the different functional plans such
as marketing, manufacturing, finance, and human resource
management, taking into consideration the overall strategy of
a business. It also defines the entrepreneurs vision and serves
the company’s resume .
Three Primary Purpose of Business Plan
1. To serve as an action plan.
This will help an entrepreneur pull apart the pieces of starting
a business and examine each piece by itself. Breaking down
task into smaller one is more viable than tackling a big
challenging task at once.
2. To serve as a road map.
It is an invaluable tool to help the entrepreneur on track of its
goal. It guides the business to achieve what it intends to
pursue.
3. To serve as a tool.
It serves as a tool in attracting investors. A well –written
business plan can convince potential financiers to put money
in the business.

Category Asset Size Number of Value-

employees Added
micro P3 Million and Below 10
below
small P3,000,001 to 10 to 99 32 %
P15 Million
medium P15,000,001 to 100 to 199
P100 Million
large P100,000,001 200 and 68%
and above above

ENTREPRENEURIAL PROCESS
1. Discovery-refers to the recognition of a business idea or
the detection of opportunities that could make money for the
entrepreneur.
2. Development of concept- gives more details on how the
general business ideas can be realized.
3. Organizing resources- the process of identifying, sourcing,
and financing human and non-human and other resources
needed for the conduct of business.
4. Implementation- the process of carrying out the business
plan.
5. Reaping the returns- pertains to strategies related to the
expansion of the business firm.