MODULE 3

Financing the Venture, Start-up

Operations and Marketing Aspects
Module Overview
The module addresses the various options in venturing into business shying away from
the traditional approach via general trading, production or manufacturing-based business
concerns. It also provides step-by-step process of registering your business and gives the
student the necessary preparations required in starting and operationalizing the business and
also discusses saving options to minimize start-up costs, and deals with the importance of
addressing marketing aspects as premises for entrepreneurial ventures and postulating the
idea of market creation and finding market nitch rather simply matching the market demand,
and aspects on marketing channels, advertising and promotions as vital marketing tool.
Moreover, it discusses at length the concept of franchising and various modalities in
frnachising including some legal aspects of this type of doing business as they relate to
establishing and operating entrepreneurial business concerns.
In this module, we will be learning all about the process of registering your business and
profound understanding of your market. To be specific, you are expected to learn the
following:
1. what are feasible business ideas;
2. what are the ownership options;
3. why some business failss;
4. what are the steps in registering the business;
5. why there is a need to understanding the market; and,
6. analyze the competition in the market.

Module Outcomes
After reading this lesson, you should be able to understand and articulate answers to the
following:
1. discuss the process of starting a business;
2. explain the concept of creating a feasible business idea;
3. discuss why some businesses fail;
4. provide examples of effective team working; and,
5. explain the importance of market analysis.

Lessons in the Module

This module covers the following:
Lesson 1: Starting and Registering your Business
Lesson 2: Market Analysis

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 Lesson 1
Starting and Registering
your Business
Lesson Structure
MODULE NO. AND TITLE:
Module 3 - Financing the Venture, Start-up Operations and Marketing Aspects

LESSON NO. AND TITLE:

Lesson 1 - Starting and Registering your Business

LEARNING OUTCOMES: The students will be able to:

1. identify feasible business ideas;
2. differentiate the various options of business ownership;
3. list down the step-by-step process in registering a business; and,
4. value why there is a need to carefully select a feasible business idea to avoid
business failure.

TIME FRAME: This lesson will cover two (2) weeks.

Greetings everyone! Welcome to Lesson 1 of your Module 3 of the course, OA 111 -
Entrepreneurial Behavior and Competence which will cover two (2) weeks of self-paced
learning module. Have fun!

INTRODUCTION
Having decided to go into self-owned and self-managed business or be an entrepreneur,
the moment in time to really put things together and act as an entrepreneur or like any other
businessman should be an exciting phase. The idea of setting up and commencing the real
efforts at starting up or operationalizing is a career-breaking idea and very challenging.
Gearing up and commences with the crucial decision to be in the business of your own and
the rest could be the beginning of long road to success if the business is properly nurtured and
managed.

ACTIVITY

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 To start, let us have a sharing of ideas and insights on the question-stated below. If you’re
interested in starting a business, you need to make decisions even before you bring your
talent, determination, hard work, and persistence to bear on your project. Here are the basic
questions you’ll need to address. Put your answers here: (Limit your answersof at least 10
to at most 20 words.)

What particular product/service you want to offer to the market?

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Who will buy my product or service?

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Why will they buy it?

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Where will they buy it?

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What do I need to charge to make a healthy profit?

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Am I positioning my product or service correctly? (In other words, if there’s a lot of

competition, look for a specialized market niche.)

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What government regulations will my product/service be subject to?

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ANALYSIS
From the questions above, what exactly is a business idea? Is it feasible?

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Do I want to start a new business, buy an existing one, or buy a franchise?

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ABSTRACTION
Let us start our discussion, please spend enough time undertanding the contents of this
lesson, you can use dictionary or any references you have to aid your learning. I believe in
you! now let’s go down to the details of topic. Here’s a great tip to optimize your learning,
get a highlighter pen to shade important terms and/or phrases, and most importantly take a
good nap for you to be revitalized. Aja!

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STARTING A BUSINESS
Starting a business takes talent, determination, hard work, and persistence. It also
requires a lot of research and planning. Before starting your business, you should appraise
your strengths and weaknesses and assess your personal goals to determine whether business
ownership is for you.

THE BUSINESS IDEA

For some people, coming up with a great business idea is a gratifying adventure. For
most, however, it’s a daunting task. The key to coming up with a business idea is identifying
something that customers want or, perhaps more importantly, filling an unmet need. Your
business will probably survive only if its purpose is to satisfy its customers, the ultimate users
of its goods or services. To come up with an innovative business idea, you need to be
creative. The idea itself can come from various sources. Prior experience accounts for the
bulk of new business idea and also increases your chances of success.

OWNERSHIP OPTIONS
As we’ve already seen, you can become a small business owner in one of three ways by
starting a new business, buying an existing one, or obtaining a franchise. Let’s look more
closely at the advantages and disadvantages of each option.
1. Starting from Scratch
The most common and the riskiest option is starting from scratch. This approach lets you
start with a clean slate and allows you to build the business the way you want. You select the
goods or services that you’re going to offer, secure your location, and hire your employees,
and then it’s up to you to develop your customer base and build your reputation.

2. Buying an Existing Business

If you decide to buy an existing business, some things will be easier. You’ll already have
a proven product, current customers, active suppliers, a known location, and trained
employees. You’ll also find it much easier to predict the business’s future success.
There are, of course, a few bumps in this road to business ownership. First, it’s hard to
determine how much you should pay for a business. You can easily determine how much
things like buildings and equipment are worth, but how much should you pay for the fact that
the business already has steady customers?
In addition, a business, like a used car, might have performance problems that you can’t
detect without a test drive (an option, unfortunately, that you don’t get when you’re buying a
business). Perhaps the current owners have disappointed customers; maybe the location isn’t
as good as it used to be. You might inherit employees that you wouldn’t have hired yourself.
Careful study called due diligence is necessary before going down this road.

3. Getting a Franchise
A franchiser (the company that sells the franchise) grants the franchisee (the buyer) the
right to use a brand name and to sell its goods or services. Franchises market products in a
variety of industries, including food, retail, hotels, travel, real estate, business services,
cleaning services, and even weight-loss centers and wedding services. Essentially, the

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franchisee buys into a ready-to-go business model that has proven successful elsewhere, also
getting other ongoing support from the franchiser, which has a vested interest in her success.
In addition to your initial investment, you’ll have to pay two other fees on a monthly
basis—a royalty fee (typically from 3 to 12 percent of sales) for continued support from the
franchiser and the right to keep using the company’s trade name, plus an advertising fee to
cover your share of national and regional advertising. The cost of obtaining and running a
franchise can be high, and you have to play by the franchiser’s rules, even when you disagree
with them. The franchiser maintains a great deal of control over its franchisees.
For example, if you own a fast-food franchise, the franchise agreement will likely dictate
the food and beverages you can sell; the methods used to store, prepare, and serve the food;
and the prices you’ll charge. In addition, the agreement will dictate what the premises will
look like and how they’ll be maintained. As with any business venture, you need to do your
homework before investing in a franchise.

WHY SOME BUSINESSES FAIL

Businesses fail for any number of reasons, but many experts agree that the vast majority
of failures result from some combination of the following problems:
1. Bad business idea. Like any idea, a business idea can be flawed, either in the
conception or in the execution. If you tried selling snow blowers in Hawaii, you could count
on little competition, but you’d still be doomed to failure.
2. Cash problems. Too many new businesses are underfunded. The owner borrows
enough money to set up the business but doesn’t have enough extra cash to operate during the
start-up phase, when very little money is coming in but a lot is going out.
3. Managerial inexperience or incompetence. Many new business owners have no
experience in running a business; many have limited management skills. Maybe an owner
knows how to make or market a product but doesn’t know how to manage people. Maybe an
owner can’t attract and keep talented employees. Maybe an owner has poor leadership skills
and isn’t willing to plan ahead.
4. Lack of customer focus. A major advantage of a small business is the ability to provide
special attention to customers. But some small businesses fail to seize this advantage. Perhaps
the owner doesn’t anticipate customers’ needs or keep up with changing markets or the
customer-focused practices of competitors.
5. Inability to handle growth. You’d think that a sales increase would be a good thing.
Often it is, of course, but sometimes it can be a major problem. When a company grows, the
owner’s role changes. He or she needs to delegate work to others and build a business
structure that can handle the increase in volume. Some owners don’t make the transition and
find themselves overwhelmed. Things don’t get done, customers become unhappy, and
expansion actually damages the company.

REGISTERING YOUR BUSINESS

Business registration involves enlisting your small enterprise with the proper government
agencies and obtaining the necessary permits to conduct business. The government requires
all enterprises of whatever size, type, and form to secure a permit before it can do business.
An unregistered enterprise is not counted within the economic mainstream. In other words, it
is not legal and therefore is part of the underground economy.

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WHY REGISTER?
At first glance, the mere thought of business registration may mean expense. But if you
are a small entrepreneur who is forward looking, you will see beyond the expense to
appreciate the gains that your business will get for being legal. Registering your enterprise
allows you the exclusive use of your business name, design, and brand name, among others.
In addition, an enterprise that is registered can operate openly without fear of being visited by
‘unwanted’ guests. It is also an investment or a passport to opportunities that will give you
access to the different programs.

WHERE TO GO AND HOW TO GET THERE

Before you can register your small enterprise, it has to be a legitimate business first. This
means, your enterprise should have the necessary permits, licenses, and certificates issued by
the government agencies concerned.
Registering a business is a very simple process. In general, you start by filling out a
registration form and complying with the required documents, filing the accomplished form
with the government agency and attaching the supporting documents, and paying some fees.
After a certain period, you will be issued a certificate of registration, a permit, or a license.
Following are the government agencies that a start-up business needs to register with. Some
of them have already been mentioned earlier in this chapter and are being repeated here for
easy reference.
After making these decisions, you’ll be ready to take the most important step in the entire
process of starting a business: you must describe your future business in the form of a
business plan — a document that identifies the goals of your proposed business and explains
how these goals will be achieved.

MUCH KUDOS TO YOU MY DEAR!

NOW, GIVE YOURSELF TWO BIG THUMBS UP FOR YOUR EFFORT!

APPLICATION
I would like to know how much learnings you gain. Please summarize and put your
answers on the space provided below.
1. Look around and observe, provide at least three (3) businesses in your place
where you think belongs to a certain type of business ownership option. Use the table
below.
BUSINESS OPTIONS EXAMPLES
Starting from Scratch 1.

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 2.

3.
Buying an Existing Business 1.

2.

3.
Getting a Franchise 1.

2.

3.

2. In your personal point of view, among the three business ownership options,
which is best? Cite at least one advantage and disadvantage. (Limit your answersof at
least 25 to at most 50 words.)
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Lesson 2
Market Analysis
Lesson Structure
MODULE NO. AND TITLE:
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 Module 3: Financing the Venture, Start-up Operations and Marketing Aspects

LESSON NO. AND TITLE:

Lesson 2 - Market Analysis

LEARNING OUTCOMES: The students will be able to:

1. understanding target market; and,
2. analyze the competition.

TIME FRAME: This lesson will cover two (2) weeks.

Greetings everyone! Welcome to Lesson 2 of your Module 3 of the course, OA 111 -
Entrepreneurial Behavior and Competence which will cover two (2) weeks of self-paced
learning module. Have fun!

INTRODUCTION
There is one thing that entrepreneurs must enbrace on a lifetime when he or she engages
in the business. This is the concept of matketing analysis. It involves everything the
entrepreneur does to obtain and keep a customer, from conducting market research,
developing customer profile and positioning organizational identify in the market to selecting
marketing strategies to determining location.
Quite often, some newcomers in the field of business brag about their new product or
invention and end up nothing or not going into the business and do it profitably. Most often,
this is typical of an inventor unmindful of the value of marketing aspects in favor of product
development.
For a true and blue blooded entrepreneur, market aspect should be given due importance
if not at all, the most important aspect when one gets into business. For good or bad product
to be relevant to the entrepreneur, the bottom line is that it should make money for him.

ACTIVITY
Activity No. 1 - Instructions:
1. Choose five(5) products in your place. It should be a combination of physical good and
a service industry.
2. Construct a market segment for each of these products/services using the table below.

PRODUCT/SERVICE MAIN TARGET MARKET

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1.

2.

3.

4.

5.

Activity No. 2 - Instruction:

Create a word cloud from the word, MARKET.

Example:

Source: https://connect.ebsco.com/s/article/Poetry-Short-Story-Reference-Center-Lesson-Plan-Word-Clouds?language=en_US
Put your word cloud here. Write it legibly and clear.

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ANALYSIS
From the activity above, how similar/different is your market segmentations between the
five (5) products/services?

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In your own words, define market?

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ABSTRACTION
MARKET ANALYSIS
There are several meanings of the term, “marketing,” that appear in the website
(www.thefreedictionary.com/marketing). Marketing refers to the commercial processes
involved in promoting and selling, and distributing a product or service. It refers to the
commercial functions involved in transferring goods from producer to consumer.
We shall likewise consider the following definitions of the term:
1. a subdivision of a population considered as buyers;
2. the business of buying and selling a specified commodity; and,
3. a geographic region considered as a place for sales.

Related words that were given for the term, “market,” includes the world of commercial
activity where goods and services are bought and sold, and the customers for a particular
product or service.
The four important things in marketing that an entrepreneur must remember are:
- the client, the buyer, the target user, generally called the target market;
- the entrepreneur’s ability as a marketer to understand the target market;
- the entrepreneur’s ability to influence the target market to buy the products or use the
services offered by the business; this will depend on how well he understood he target
market; and,
- the main objective of marketing, which is making the target market buy the
company’s product or service; this will be measured by the revenues that come in the form of
payment from the buyers of the product or users of the service.

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UNDERSTANDING YOUR MARKET
There are five skills you need to acquire that will help you understand the market:
1. how to group (or segment) the market;
2. how to identify which segment to focus on (target); and,
3. how to be more familiar with your target.
It will also help to you to know who else are making similar products or offering similar
services (competition) and how to estimate the size of the target market that will buy your
product or use your service.

SEGMENTING THE MARKET

Market segmentation refers to the process of dividing prospective buyers into groups
that have common needs and will respond similarly to a marketing action. It is a process in
marketing of grouping a market (customers) into smaller subgroups. It is drawn from the
recognition that
A market can be grouped according to these variables: geographic (region of the world or
country, size of country, climate), demographic (population - age, gender, sexual orientation,
income, occupation, education, etc.), psychographic (personality, lifestyle, values, attitudes),
or behavioral (product, benefit sought, rate of usage, brand loyalty, readiness-to-buy stage,
etc.).
It is simple to segment a market. For example, the Market is the whole Philippines or the
Filipinos living within the Philippine archipelago. One can group the Filipinos according to
any or a combination of the demographic variables. The kind of grouping to use will depend
on the nature of product you are going to make and the set up of your business (whether
manufacturing/processing, trading, or service).
One of the more effective ways for identifying the kind of grouping to use in market
segmentation is to go to the places where products similar to what you intend to produce or
service to offer are being sold. You can gain some insights by observing what kind of people
are buying products or using services similar to what you have in mind to sell or offer, and
buying from businesses with the same set-up as yours.

Targeting
After grouping the market into different segments, you must be able to choose which
among the segments or groups to target as your market. To target is to select from among the
big group of possible buyers or users, a specific group or type of buyers to cater to. Normally,
entrepreneurs would want to target all segments of the market – the Philippines or the world.
That is very good and that is encouraged. But the discipline in marketing is to target one
segment at a time. The goal of a business may, however, be to serve all segments if it wants
to.
When you target, you are going to decide which among these groups or segments you
want to serve. In effect, you are narrowing down the market from a very wide universe (all
the Filipinos living in the Philippines) into a specific group or segment.
Targeting will allow you to concentrate on one segment or group at a time. For example,
San Miguel Corporation segmented the market according to “event tables” and focused or
developed a marketing per segment. Marketing in this sense includes the products, the
promotions, the distribution, and the price that applies to each segment. So, the company
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developed specific products per segment. You are also aware that the promotions programs
for each product are different (San Mig Light is promoted to young people who want to stay
out all night but don’t want to get drunk immediately; while Red Horse Beer is for those who
want an instant kick). Each product is also distributed (slightly) differently and priced
differently.

UNDERSTANDING YOUR TARGET

After identifying a specific segment to be your target market, you will need to acquire
skills on how to understand or get to know your target market a little deeper. The usual
practice of some businesses in studying their target market is to use what is popularly called
market research.
Market research is the process of collecting and analyzing information as to how the
goods or services move from the producer to the consumer. Market research is commonly
regarded as an expensive activity especially if it is carried out to draw conclusions and
involve a large number of respondents.
Here is a list of some of the commonly used tools for gathering information and getting
insights about the target market:
1. Surveys
2. Focus group discussions (FGDs)
3. Observing in Context (shadowing, expert walkthroughs, day-in-the-life survey, draw
the experience, fly on the wall)
4. Emphatic tools (mock journey, empathy tools, body storming)
5. Prototyping

When using these tools, be on the lookout for the following:

- Why people do what they do (motivation or intention)
- How they do what they do (process)
- Any behavior that is surprising or beyond the ordinary (e.g., not using a pillow when
sleeping),
- Errors that make sense (e.g., dialing 9 on the house phone)
- Body language (e.g., saying no but nodding)
- Work-around (e.g., using shortcuts)

ANALYZING THE COMPETITION

When trying to understand your target market, do not neglect to look at the other
businesses that are making similar products or offering the same services as yours
(competitors). What is important here is not the competition but your target market in relation
to your competitors. It will help you understand your target market further by looking and
analyzing as to why the target market buys or might buy from the competition – the answer to
these questions can be found in the insights you have already gathered.
Competitor analysis is, first, knowing what your competitor’s marketing is. This
includes: the competitor’s products or services, how much they cost, how they are distributed,
and how they are made known to the target market. The best way to do this is to go out there
and see the competition yourself. Some entrepreneurs even go to the extent of buying the
products or using the services of competitors. In this way, they are able to differentiate the

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product or service and marketing, be ahead of the competition, and ride with the market
trends.
Competitor analysis is, secondly, understanding why the target market is buying or will
buy from the competitor. To achieve this, you can use the tools on how to understand your
market.

Great job! Now, give yourself two big thumbs up for your effort!

APPLICATION
Remarkable! I know you are capable of so much more! Don’t be shy, please share your
brilliant ideas on the things you have learned out from readings. You can use real-life
experiences if want to. Have fun! Put your answers here: (Limit your answers of at least 50
to at most 75 words.)

KNOW THY ENEMY

There are two ways to define competitors. One is by strategic groups—competitors who
use similar marketing strategies, sell simi- lar products or have similar skills. Under this
definition, you might group Toyota and Nissan as competitors within the car industry.
The second, less obvious way to group competitors is by customer— how strongly do
they compete for the same customers’ dollar? Using this method gives you a wider view of
your competitors and the challenges they could pose to your new business.
Suppose you’re considering opening a family entertainment center. If there are no other
family entertainment centers in the area, you might think you have no competitors. Wrong!
Any type of business that competes for cus- tomer’s leisure time and entertainment dollars is
a competitor. That means children’s play centers, amusement parks and arcades are all your
competi- tors. So are businesses that, on the surface, don’t appear similar, like movie theaters,
bookstores and shopping malls. You could even face competition from nonprofit entities, like
public parks, libraries and beaches. In short, any- thing that families might do in their leisure
time is your “competition.”
Don’t limit yourself to the obvious definitions of competition. Start thinking out of the
box and you will be less likely to get sideswiped by an unexpected competitor.

Share your thoughts and learning from the reading entitled “Know Thy Enemy”.
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MODULE ASSESSMENT
INSTRUCTION: Answer the following questions brief and concise. (Limit your
answers of at least 50 to at most 75 words.)

1. Why is there a need to legalize our business?

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2. What do you think is the main reason why sari-sari stores in your place fail?
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3. Why do we need to understand who the target markets are?

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4. Cite at least two (2) advantages and disadvantages of market competition.

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REFERENCES
Green, G. (2015). How to Start and Manage your Own Small Business. New American Library,
Times Mirror, New York, USA
Manila Bulletin, Franchising Business. Manila, October 1994
Naumes, W. (2010). The Entrepreneurial Manager in the Small Business. Addison Wesley

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