SPECIAL TOPICS IN FINANCIAL MANAGEMENT PRELIMS

BECOMING AN ENTREPRENEUR: • National income

FIVE GENERAL STEPS TO BECOME A
SUCCESSFUL ENTREPRENEUR • Dispersal of economic power

1. Ensure Financial Stability • Balance regional development

2. Build a Diverse Skill Set • Economic independence

3. Consume Content Across Multiple Channels • Reducing unrest and social tension amongst youth

4. Identify a Problem to Solve • Improvement in living standards

5. Solve That Problem • Harnessing locally available resources

EIGHT SUCCESSFUL FILIPINO ENTREPRENEURS WHO STARTED SMALL and
entrepreneurship
1. National Bookstore
• Innovations in enterprise
2. Tony Tan Caktiong – Jollibee
3. Edgar Sia – Mang Inasal THREE PHASES IN ENTREPRENEURSHIP DEVELOPMENT:
4. Cresida Tueres – Greenwich Pizza (a) Initial Phase. Creation of awareness about the
5. Milagros, Clanta, Doris Leelin – Goldilocks entrepreneurial opportunities based on survey.
(b) Development Phase. Implementation training programmes to
6. Joe Magsaysay – Potato Corner develop motivation and managerial skill. (c) Support Phase.
7. Asiang Reyes – The Aristocrat Infrastructural support of counselling- assisting to
8.Araceli and Jun Manas – Hen Lin establish a new enterprise and to develop existing units
TOPIC II: ENTREPRENEURSHIP THE FOUR TYPES OF ENTREPRENEURSHIP
ELON MUSK – World’s richest man as of January 2021 1. Small Business Entrepreneurship Small businesses are
Elon Reeve Musk FRS is an entrepreneur and business magnate. grocery stores, hairdressers, consultants, travel agents,
He is the founder, CEO, and Chief Engineer at SpaceX; early internet commerce storefronts, carpenters, plumbers,
stage investor, CEO, and Product Architect of Tesla, Inc.; electricians, etc. They are anyone who runs his/her own
founder of The Boring Company; and co- founder of Neuralink business.
and OpenAI. A centibillionaire and has a net worth of 185.7 2. Scalable Start-up Entrepreneurship These
billion USD (2021) entrepreneurs start a company knowing from day one that
ENTREPRENEUR - A person who perceives a need and then brings their vision could change the world. They attract investment
together manpower, material and capital required to meet from equally crazy financial investors – venture
that need. capitalists. They hire the best and the brightest. Their job
ENTREPRENEURSHIP - The attempt to create value through is to search for a repeatable and scalable business model.
recognition of business opportunity, the management of risk When they find it, their focus on scale requires even more
taking, and through the communicative and management skills venture capital to fuel rapid expansion.
to mobilize human, financial, and material resources
necessary to bring a project to fruition. Entrepreneurship
3. Large Company Entrepreneurship Large companies have
finite life cycles. Most grow through sustaining innovation,
is an attractive career choice. But many decisions have to
offering new products that are variants around their core
be made before launching and managing a new business, no
products.
matter its size.
FUNCTIONS OF ENTREPRENEURSHIP 4. Social Entrepreneurship Social entrepreneurs are
innovators who focus on creating products and services that
(i) Identifying and using the opportunities exist in the
solve social needs and problems. But unlike scalable start-
market;
ups their goal is to make the world a better place, not to
(ii) Converting the ideas into action; take market share or to create to wealth for the founders.
(iii) Undertaking promotional activities to launch an They may be non-profit, for-profit, or hybrid
enterprise; REWARDS OF ENTREPRENEURSHIP
(iv) Striving for excellence in his/her field of work; 1. Profit financial gain proportionate to personal
(v) Bearing the risk and uncertainties involved, and achievement

(vi)Harmonizing 2. Independence power to make own business decisions

CHARACTERISTICS OF ENTREPRENEURSHIP
1. Ability to create enterprise: Entrepreneurship is
primarily an economic activity because it involves creation
and operation of an enterprise. It is basically concerned
with satisfying the needs of customer with the help of
production and distribution of goods and services.
2. Organizing function: An entrepreneur brings together
various factors of production for an economic use.
3. Innovation: Entrepreneurship is an automatic,
spontaneous and creative response to changes in the
environment
4. Risk bearing capacity: Risk is an
inseparable element of entrepreneurship.
5. Managerial and leadership functions: An industrial
entrepreneur must have additional personality traits such as
managerial and leadership skills. Managerial and leadership
qualities predominant orientation in the direction of
productivity, working relation and creative integration
along with desire to make profit.
6. Gap filling: The gap filling between human needs and
the available products and services leads to
entrepreneurship
IMPORTANCE OF ENTREPRENEURSHIP TO ECONOMIC DEVELOPMENT
• Employment generation
3. Freedom escape from an undesirable situation
4. Personal satisfaction enjoyment of a satisfying way
of life
5. Personal Fulfilment contribution to the community
PROFIT (MAKE MONEY)
Entrepreneurship provides financial needs like any other job
or career.
Profit is necessary for a firm’s survival and entrepreneur
expect in return for starting and running a business.
Financial return of a business should compensate its owner
not only for the investment of personal time (in the form
inherent and of salary) but also for personal money invested in the
business (in the form of dividend).
Entrepreneurs are highly motivated by the prospect of
profits.
INDEPENDENCE (BE YOUR OWN BOSS) Freedom to
operate independently.
Entrepreneurs always appreciate the independence inherent
in their chosen careers. They can do things their own way,
reap their own profits and set their own schedules
FREEDOM (ESCAPE A BAD SITUATION)
People sometimes use entrepreneurship as an escape hatch,
to free themselves from an undesirable situation. Other
individuals become entrepreneurs after being laid off by an
employer
PERSONAL FULFILMENT (CONTRIBUTION TO COMMUNITY) Some people
are drawn to entrepreneurship by their desire to do good
SPECIAL TOPICS IN FINANCIAL MANAGEMENT PRELIMS
things, to give some positive contribution to their Florence Nightingale, Susan B. Anthony, and Mahatma Gandhi,
communities as well as the collective efforts of groups like the
INTEGRITY Rochdale Pioneers, the Tolpuddle Martyrs and the National
✓The seeds of corporate misdeeds are formed when Association for the Advancement of Colored People.
individuals compromise their personal integrity, as they do A TYPICAL EXAMPLE OF BLURRING
In these examples, the individual or groups acted as
not do what they believe to be right and proper. ✓The
catalysts challenging the status quo by identifying an
entrepreneurial experience is satisfying, when the
apparently insoluble social problem and tackling it with
entrepreneur understands that the core purpose of the
tenacity and vision. Their outstanding leadership towards a
business is to create value for interested customers.
social end and their ability to see opportunities where
✓Small business owners and managers confront situations others saw only hurdles further single out these charismatic
every day that require them to make ethical decisions figures. (Nicholls, 2005: 2)
FRAMEWORK OF INTEGRITY WHAT IS SOCIAL ENTREPRENEUSHIP?
What is the most difficult ethical issue that have you faces
in your organization? • Social Entrepreneurship create innovative solutions
to immediate social problems and mobilizes the
1. Related to customers and competitors. ideas, capacities, resources and social arrangement
2. The way a company treats its employees, including required for sustainable social transformation.
decision in layoffs, workplace discrimination, and • Combines the passion of a social mission with the
fairness in promotion. discipline and determination of a business venture.
3. Obligations of employees to their employers, focusing • Social entrepreneurship is the use of start-up
on the actions of personnel that may not align with companies and other entrepreneurs to develop, fund
the best interests of their companies. and implement solutions to social, cultural, or
4. Management processes and relationships. environmental issues.
Entrepreneurs must consider the interests of a number of • Social entrepreneurship in modern society offers an
groups when making decisions, such as owners, customers, altruistic form of entrepreneurship that focuses on
employees, the community, and the government the benefits that society may reap
SOCIAL RESPONSIBILITY AND SMALL BUSINESS
An ethical business is one that not only treats • Business entrepreneurs change the face of business
customers and employees honestly but also acts as a good • Social entrepreneurs play the role of change agents
citizen in its community. These obligations are called in the social sector
“SOCIAL RESPONSIBILITIES” • Social entrepreneurs create sustainable solutions
TOPIC III: SOCIAL ENTREPERENEURSHIP that change society for the better
Idealisation – a bad idea with a champion is better than a o “Social entrepreneurs are not content just to
good idea without a champion. give a fish or teach how to fish. They will
not rest until they have revolutionized the
SOCIAL ENTREPRENEURSHIP: SOCIAL ENTREPRENUERS fishing industry.”
• Non- profits Bill Drayton, CEO, chair and
founder of Ashoka Foundation
• Governmental organization Why Social Enterprise?
• For profit businesses • To generate a restricted revenue
BRIEF HISTORY: SOCIAL ENTREPRENEURSHIP
• To use a restricted revenue for advocacy (the forbidden
• In for-profit businesses, profit measured by word)
financial return.
• To use revenue from social enterprise
• In most nonprofits, return is measured by Social
value/Public good and bottom line.
• To create social purpose enterprises
SOCIAL ENTREPRENEUSHIP
• In entrepreneurial nonprofits or social enterprises, A social entrepreneur:
return is measured by both financial return & social
value or public good
• Pursues a mission to create social value.

• The terms social entrepreneur and social

• Applies and adapts business strategies.
entrepreneurship were first used in the literature • Is not limited by current resources.
on social change in the 1960s and 1970s. • Maintains both financial and
• It came into widespread use in the 1980s and 1990s programmatic accountability to constituents
• Promoted by Rosabeth Moss Kanter, Bill Drayton the THREE CLASSIC REQUIREMENTS OF AN ENTREPRENEUR ARE:
founder of • to prioritize the
accumulation of money;
• Ashoka, and others such as Charles Leadbeater.
• Michael Young (1950s to the 1990s) was a leading
• to spot opportunities;
promoter ofsocial enterprise. • to innovate.
• Professor Daniel Bell (1980s) of Harvard desctibed SOCIAL ENTREPRENEUSHIP
as "the world's most successful entrepreneur of Application of entrepreneurial attitudes to social sector:
social enterprises" because of his role in creating • Change is the norm
over 60 new organizations worldwide, including a • Embrace change
series of Schools for Social Entrepreneurs in the UK
• Seek change
• During the 19th and 20th centuries some of the most
successful social entrepreneurs successfully • Client focused
straddled the civic, governmental and business • Shift resources from low to high productivity
worlds, promoting ideas that were taken up by • Calculate risks
mainstream public services in welfare, schools and
healthcare. • Create something new
AND SOCIAL ENTREPRENEURS? • Strive for Transparency
Social entrepreneurship is not a new phenomenon. Whilst ORGANIZATIONAL MODELS
it may represent a newly coined term, it is hardly a novel Leveraged Non-Profit Ventures
concept. • The entrepreneur sets up a non-profit organization
Innovative individuals and enterprising groups have been to drive the adoption of an innovation that
addressing social issues for centuries, as is demonstrated addresses a market or government failure.
by the activities of extraordinary public innovators such as
SPECIAL TOPICS IN FINANCIAL MANAGEMENT PRELIMS
• In doing so, the entrepreneur engages a cross 3. They combine charitable consciousness with business
section of society, including private and public strategy.
organizations, to drive forward the innovation 4. Every problem represents a resource.
through a multiplier effect.
5. Everyone can be a social entrepreneur.
• LEVERAGED NON-PROFIT VENTURES continuously depend on Issues
outside philanthropic funding, but the long-term
sustainability is often enhanced given that the • Fear of loss of control
partners have a vested interest in the continuation • Resources – financial/human
of the venture. • Risk averse culture
Hybrid Non-Profit Ventures
• Conflicting ends
• The entrepreneur sets up a non-profit organization,
but the model includes some degree of cost-recovery • Lack of structure/governance for success
through the sale of goods and services to a cross Organizational Readiness
section of institutions, public and private, as well • Strategy
as to target population groups. • Governance
• Often, the entrepreneur sets up several legal • Human resources
entities to accommodate the earning of an income and
the charitable expenditures in an optimal structure. • Finances

• To be able to sustain the transformation activities • Operations, Products and Services

in full and address the needs of clients, who are • Market perspective
often poor or marginalized in society, the Mapping the Future
entrepreneur must mobilize other sources of funding Ideal Future Vision
from the public and/or philanthropic sectors. Such Formulate dreams that are worth believing in and fighting
funds can be in the form of grants or loans, and for by meeting THREE CHALLENGES:
even quasi-equity Challenge #1. Vision Statement
Social Business Ventures Challenge #2. Mission Statement
• The entrepreneur sets up a for-profit entity or Challenge #3. Core Values
business to provide a social or ecological product Mission
or service. What is your organization’s part in achieving the vision?
• While profits are ideally generated, the main aim is • What do we produce?
not to maximize financial returns for shareholders • Who do we serve?
but to grow the social venture and reach more people • How do we do it?
in need. Values
• Wealth accumulation is not a priority and profits • What do board members & employees stand for and
are reinvested in the enterprise to fund expansion. embrace?
• The entrepreneur of a social business venture seeks • What are the rules?
investors who are interested in combining financial
and social returns on their investments • May include integrity, transparency,
DIFFERENCE BETWEEN SOCIAL AND BUSINESS entrepreneurship, innovation etc.
ENTREPRENEURSHIP Strategic Priority Development Balanced Score Card Format
BUSINESS ENTREPRENEURSHIP Consider organizational success from more than one
perspective, for example: • Internal Business Processes
• Represents the identification, evolution, and
exploitation of opportunities that result in profit. • Client
• May create change in the society, but that is not • Financial
the primary purpose of starting the venture. • Human Resource
• Wealth is same as profit 5 SOCIAL ENTREPRENEURS CHANGING LIVES IN THE PHILIPPINES 1.
SOCIAL ENTREPRENEURSHIP Tony Meloto (Gawad Kalinga and GK Enchanted Farm)
Meloto is the founder of Gawad Kalinga. As a kid, he
• Refers to the identification, evolution, and
lived near the slums and was exposed to Filipinos living in
exploitation of opportunity that result in social
extreme poverty. But it wasn’t until he was on assignment in
value.
Australia that he felt the call to help and give back to the
• May generate profit, but for him/her that is not community. In 1995, he started Gawad Kalinga, a movement
primary reason for starting the venture. that helps build communities. Gawad Kalinga has been
• Wealth also encompasses creation of the social and expanding in leaps and bounds since then, being implemented
environmental capital in over 2,000 communities as well as developing countries
BUSINESS AND SOCIAL ENTREPRENUERS SHARE COMMON TRAITS Indonesia, Cambodia and Papua New Guinea.
GK Enchanted Farm is Gawad Kalinga’s initiative to raise
• Strategic thinkers – like business entrepreneurs,
social entrepreneurs who will truly help local farmers and
social entrepreneurs act upon what other miss
artisans, creating a ripple effect that will showcase
• Mission driven – work hard to generate value Filipino products and hopefully help end poverty.
• Focused – both entrepreneurs are intensely focused
and hard- driving in their pursuit of a social 2. Camille Meloto and Anna Meloto-Wil (Human Nature)
vision Following in their father Tony Meloto’s footsteps,
• Resourceful – they are skilled at mobilizing and sisters Camille and Anna, together with Anna's husband Dylan
motivating resources Wilk, created Human Nature. A beauty and personal care
• Results oriented- driven to produce tangible results brand, Human Nature produces high quality, natural, and
earth-friendly products that help low-income communities,
• Challenges seekers – tackle major issue, providing them with livelihood training, farming, and
opportunities or challenges processing equipment. The brand has won countless
• Perseverance – continue efforts despite obstacles international awards for social entrepreneurship and organic
INCREDIBLE CHARACTERISTICS OF SOCIAL product development.
ENTREPRENEURS
1. They focus on social problems. 3. Krie Lopez (Messy Bessy)
2. They create change. Messy Bessy was established in 2007 as a result of
Krie’s program called HOuSE (Helping Ourselves through
SPECIAL TOPICS IN FINANCIAL MANAGEMENT PRELIMS
Sustainable Enterprises). The brand’s flagship products are  SCOTT HARRISON - Lack of clean and accessible drinking
biodegradable and natural household cleaners made by the at- water is sadly something that millions of people (some
risk youth who Messy Bessy employs estimates put it at more than a billion) worldwide face
every day. After a moment of clarity in Liberia, club
4. Len Cabili (Filip + Inna) promoter Scott Harrison decided to make it his mission
Cabili grew up in Iligan and admired textiles at a young to change that, heading up the non-profit organization
age. In college, she took up clothing technology at the charity: water. Since it began, the charity has
University of the Philippines. A chance trip to General delivered clean drinking water to more than a million
Santos City and Lake Sebu moved the entrepreneur so much people in 17 different countries around the world.
that she established Filip + Inna. Harrison is perhaps one of the most successful social
entrepreneurs of all time, with his organization growing
Today, she works with embroiderers, weavers,appliquers,
more than 100% in the first quarter of 2011, despite a
and beaders from different Filipino tribes: Ga'dang from
major economic crisis that paralyzed many similar
Mountain Province, Tinguian from Abra, Ilongot from Aurora,
ventures. Harrison says he regards charity: water as a
Ifugao from Kalinga, embroiderers from Lumban and Taal,
for-profit startup that has no profits, saying, "We give
Mangyan from Mindoro. In Mindanao, she works with Yakan from
away 100% of our profits. Our shareholders are people in
Basilan, from where her mother hails, Tboli from South
17 countries around the world waiting for a rig to drive
Cotabato, Blaan and Tagakaolo from Sarangani, Tausug from
into a village and provide clean water to a few hundred
Jolo, Sama from Tawi-Tawi, Maranao from Marawi, and Manobo
people living there. We use the word business so much
from Davao.
more than nonprofit, even though that's what we are."
The model seems to be working for him, and Harrison has
5. Bea Misa-Crisostomo (Ritual) quickly created a new model for social entrepreneurs to
Ritual was started by Bea and husband Rob Crisostomo. The emulate
general store stocks bath and beauty products as well as  XAVIER HELGESEN, CHRIS FUCHS, AND JEFF KURTZMAN –Better
cooking ingredients locally sourced from small-scale World Books is an amazing example of a truly successful
farmers. In 2010, the same year it was established, Ritual social entrepreneurship venture. Founded in 2002 by
was recognized by TIME for its products and advocacies. Notre Dame grads Xavier Helgesen, Chris "Kreece" Fuchs,
and Jeff Kurtzman, Better World's mission is to maximize
5 GREATEST SOCIAL ENTREPRENEURS OF ALL TIME the value of every book out there and to help promote
 BILL DRAYTON - Bill Drayton isn't just a great example literacy around the world. The company works by reusing
of a social entrepreneur; he actually helped to define or recycling books through sales on their website and
and promote the term itself. Drayton is the founder and donations to schools, and so far, has used 84 million
current chair of Ashoka: Innovators for the Public, an volumes to raise $12.1 million for literacy funding. The
organization that is dedicated to finding and helping company attributes its success to using a "triple bottom
social entrepreneurs around the world. Drayton spreads line" model, caring not only about profits but also
out his social entrepreneurship expertise in other about the social and environmental impact of everything
organizations as well, working as a chairman at they do
Community Greens, Youth Venture, and Get America
Working! in addition to his duties at Ashoka. As of CHALLENGES FACED BY SOCIAL ENTREPRENEURSHIP
2010, Ashoka Foundation has sponsored 2,145 fellows in • Social entrepreneurs are trying to predict, address,
73 countries, some of which have gone on to develop and creatively respond to future problems.
leading social businesses that have made a huge impact
on communities around the world. • The lack of eager investors leads to the second
 MUHAMMAD YUNUS - Bring up social entrepreneurs and one problem in social entrepreneurship: the pay gap.
of the first names you're likely to encounter is that of • Social entrepreneurs are often unsuccessful is
Muhammad Yunus. Yunus has quite literally written the because they typically offer help to those least able to pay
book on social entrepreneurship, sharing his expertise for it.
in microfinance and social capitalism through a number
of books. Yunus is the founder of the Grameen Bank, an
institution that provides microcredit loans to those in
need to help them develop financial self-sufficiency.
Founded in 1983, the bank has brought in a net income of
more than $10 million, and his work with the
organization landed Yunus a Nobel Prize in 2006
 BLAKE MYCOSKIE - TOMS founder Mycoskie makes this list
because, unlike many of these other ventures, almost
everyone with an awareness of pop culture has heard of
this social brand. Its popularity has spread like
wildfire, which is a good thing both for Mycoskie and
for the people that TOMS aims to help. Mycoskie founded
TOMS in 2006 after a visit to Argentina where he learned
that many children get sick or injured because they do
not have shoes to wear. To combat this, he created TOMS,
a business that donates one pair of shoes to needy
people for every pair that's bought. So far, the company
has donated more than a million pairs of shoes. In 2011,
the company launched another initiative which aims to
give away a pair of glasses or sightsaving surgery for
every pair of sunglasses or glasses sold