NORTHWESTERN UNIVERSITY

Basic Education Department

Junior and Senior High School

ENTREPRENEURSHIP AND ORDINARY SMALL BUSINESS ACTIVITY

At the end of this lesson, the student will be able to:

A. Distinguish between entrepreneurship and ordinary small business activity;

and
B. Determine the importance of knowing the distinction.

Entrepreneurship and Ordinary Small Business Activity

Entrepreneurship is different from the activities of ordinary small businesses.

This does not mean, however, that entrepreneurship does not connote small
businesses. The distinction lies in the descriptive word “ordinary”.

Entrepreneurship and the activities of ordinary small businesses differ in the

following areas:

1. MOTIVE IN OPENING A BUSINESS

An entrepreneur starts a business venture

based on entrepreneurial concepts and
principles and the aspiration to become
successful. He/she is constantly on the
lookout for new and fresh ideas, which can
be found in the business environment. The
business environment is marked by
creativity and innovation. It continuously
changes and evolves. New and fresh ideas
for the entrepreneur lead to business opportunities. Likewise, the entrepreneur
makes use of entrepreneurship as a means to a happy and fruitful life.
Entrepreneurship is perceived as a wealth-creating that will ultimately improve
the life of the entrepreneur.

On the other hand, the owner of an ordinary business opens a business with
the primary goal of making It his/her source of livelihood. The business
becomes a major provider for the family for their financial requirements. The
owner of an ordinary small business operates with a basic motive or earning
profit. However, the level of profitability is sometimes neglected. The
profitability aspect and the level of profitability are two distinct important
issues.

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Module 1 Page 18
 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

Now ask yourself these questions:

1. What small business would you engage in?

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2. Why would you open you own small business?

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3. When your next door neighbor opens a small business and it

attracts good customers, are you also going to open your own small
business? Why do you say so?
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ENTREPRENEURSHIP
Module 1 Page 19
 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

2. PERCEPTION OF RISK IN THE BUSINESS

The entrepreneur takes and faces the business risk squarely. He/she consider it
inherent in the business venture, prepares the business for it and finds ways to
minimize its effects. The owner of an ordinary small business, on the other
hand, believes that the business risk is a deterrent to the operation of the
business and must be avoided.

Usually, the owner is not concerned with coming up with appropriate strategies
to handle it.

Now ask yourself these questions:

1. Would you expect risks in your business? Why?

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2. How would you handle the risks in your business?

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3. Would you have the necessary plan in case business risks arise?
What would it be?

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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

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4. REACTION TO CHANGES IN THE ENVIRONMENT

The environment reacts positively to the changes in the environment. Changes

in the business environment bring new ideas for entrepreneurial opportunities.
The entrepreneur considers changes in the environment a creative mechanism
for development and growth in the entrepreneurial activities. They become a
new source of possible entrepreneurial venture.

Entrepreneurs do not simply wait for the changes to happen in the

entrepreneurial environment. They outline alternative courses in anticipation of
the changes to happen. On the other hand, the owner of an ordinary small
business remains passive and static to to changes in the environment is not a
plus factor to the daily operations but rather a source of negative
consequences.

Now ask yourself the following questions:

1. What possible changes may take place in the environment where

your business operates?
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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

2. Would you consider them favorable or unfavorable to your

business? Why?
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3. What benefits can your business derive from the changes in the
environment?
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4. VIEW ON COMPETITION

For the entrepreneur, the presence of competition is a sign of healthy economic

environment. The environment where the venture operates can be considered
neutral or free-trade because of healthy competition. Competition will
undoubtedly force entrepreneurs to continuously improve their present
products or services. It will be one of the factors that will make them creative in
their endeavor.

The owner of an ordinary small business, however, views competition as an

unhealthy element in the business environment and tries to avoid it. He/She is
very uncomfortable working in a competitive environment and strongly
discourages competition in the business community.

ENTREPRENEURSHIP
Module 1 Page 22
 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

Now ask yourself the following questions:

1. What is your view on competition

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2. Do you consider competition in your community healthy? Why?

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3. How should you treat your competitors?

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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

5. VISION FOR DEVELOPMENT AND GROWTH

The entrepreneur usually outlines the course of his/her entrepreneurial venture

in terms of short-term, medium-term, and long-term plans of action. He/She
makes sure hat the vision and mission of his/her business is clear.

The entrepreneur aligns the daily business activities towards the attainment of
the plans. He/She properly manages the venture in such a way that the
operations will provide development and growth to the venture.

The owner of an ordinary small business, on the other hand, relies upon chance
or luck in maintaining the status quo of his/her business. He/She is not so much
considered about its development and growth as long as he/she is satisfied
with its earnings.

Now ask yourself these questions:

1. Would you have a development plan for your business? Why or

why not?
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2. Would you consider preparing a development plan a useless

endeavor? Why or why not?
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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

3. Would you express your development plan in concrete terms?

Why or why not?
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4. What would be the emphasis of your one-year development plan?
How about your three-or-five year development plan?
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6. HORIZON OF BUSINESS OPERATION

An entrepreneur thinks globally but acts locally. His/her sight is always focused
on the stars above, while his/her feet are firmly anchored on the ground.
He/She is primarily concerned with the major economic events not only in the
local environment but also in the global business market. The entrepreneur has
a strong notion that the business venture will be going out of the local market
and will soon face healthy competition in the international market. The
entrepreneur has both local and global perspectives.

The owner of an ordinary small business, meanwhile, is centered only on the

local environment. He/She does not intend to participate in the global
environment. The concept or view of operating outside the local market is
inconceivable. In other words, expansion has never been an idea worth
entertaining for the owner of an ordinary small business.

ENTREPRENEURSHIP
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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

Now ask yourself these questions:

1. Toward what business horizon would you direct your business?

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2. Why would you choose that business horizon?

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7. SOURCES OF BUSINESS FUNDS

When the entrepreneur finds that the proposed business endeavor is a

wealth-creating venture, he/she explores ways to generate the much-needed
funds from both internal and external resources. He/She strongly believes that
the wealth that the venture may create is more than enough to compensate for
the sourced funds.

On the contrary, the owner of an ordinary small business tends to limit the
funding of his.her business enterprise to personal resources. Loans from
external resources can be a risky undertaking fro him/her. He/she fears that
financial institutions will not be willing to extend financial assistance to the
business. In other words, he/she is already fully convinced that he/she is
pursuing the unprogressive type of business endeavor.

ENTREPRENEURSHIP
Module 1 Page 26
 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

Now ask yourself these questions:

1. What will be the primary source of funds for your business?

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2. Will financial institutions be willing to finance it? Why?

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3. Do you strongly believe that your business venture is worth

funding by the external sources? Why or why not?
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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

4. Would you consider the cost of borrowing before you actually

borrow the funds? Why?
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 NORTHWESTERN UNIVERSITY
Basic Education Department
Junior and Senior High School

Write TRUE if the statement is correct, otherwise write FALSE.

1. An entrepreneur and an owner of an ordinary small business

are totally different from each other.
2. The primary motive of an owner of an ordinary small business
in opening the business is the business opportunity provided by the
environment.
3. An entrepreneur finds alternative ways to avoid business risks.
4. The owner of an ordinary small business considered business
risks inherent in the business venture.
5. Changes in the external environment present business
opportunities on the perception of an entrepreneur.
6. The owner of an ordinary small business anticipates possible
changes in the external environment.
7. Competition increases the creativity and innovative
characteristics of the owner of an ordinary small business.
8. The perspective fro development and growth is usually
manifested in the short and long term plans of entrepreneurs.
9. A person who is an entrepreneur is also a businessperson.
10. In most instances, owners of ordinary small businesses are
hesitant to look for external sources of funds.

LESSON 4: SKILLS AND CORE COMPETENCIES IN ENTREPRENEURSHIP

At the end of this lesson, the students should be able to:

1. Identify the entrepreneurial skills and

2. Discuss the concept of core competencies in the practice of
entrepreneurship
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