Applied Entrepreneurship Reviewer
Week 1: Entrepreneurial Life and
Starting a Small Business
An entrepreneur is a person who
relentlessly pursues an opportunity.
- They pursue either a new or existing
business.
- They create value in their work while
assuming both risks and rewards.
Why are entrepreneurs important?
➔ They create a new business.
➔ They provide jobs.
➔ They add to the national income.
➔ They create or influence social
change.
➔ They help communities.
You will realize that you are an
entrepreneur when you know to create or
identify an entrepreneurial opportunity.
- This is an economically attractive and
timely opportunity that creates value
for interested buyers or end users.
- It is a product or service that is
attractive or appealing to the
customers that they are willing to pay
their hard-earned money for.
Attitudes and Behaviors of an
Entrepreneur
➔ They plan their day in advance:
- Entrepreneurs are productive, they
don't want to use or waste their time
over unimportant things.
- Planning ahead can give
entrepreneurs a chance to control,
manage and save their time.
➔ They get proper nutrition and
exercise:
- Staying healthy can lead
entrepreneurs to higher levels of
productivity.
➔ Resiliency:
- Entrepreneurs have the capacity to
recover quickly from difficulties.
➔ Focus:
- Entrepreneurs can prioritize their
tasks accordingly.
- Making sure that the less important
take the back seat and the ones that
are critical get full attention.
➔ They are good at selling:
- Entrepreneurs know how to meet the
needs and wants of a customer.
➔ They are able to learn new things:
- Entrepreneurs are always on the
prowl to learn more about what they
do and what the competition is
working on.
➔ They invest for long term
➔ They are good at finding and
managing people.
➔ They do self-reflection
Qualities of an Entrepreneur
➔ Commitment and Determination:
- Entrepreneurs are persistent in
solving problems.
➔ Leadership:
- Entrepreneurs are self-starters, team
builders who focus honestly in their
business relationship.
➔ Opportunity Obsession:
- Entrepreneurs are aware of market
and customer needs.
➔ Tolerance of Risk, Ambiguity, and
Uncertainty:
- Entrepreneurs are like skydivers,
they take crazy risks, they like trying
new things.
➔ Creativity, Self-reliance, and
Adaptability:
- Entrepreneurs are creative,
innovative, and able to adjust to new
conditions to stay in the business and
in order to have an edge over other
competitors.
 ➔ Motivation to Excel:
- Entrepreneurs are goal oriented and
aware of strengths and weaknesses.
Founders vs. Other Entrepreneurs
A founder is an entrepreneur who brings a
new firm into existence.
Franchisees are a category of
entrepreneurs who own a franchise.
- A franchise is an authority that is
given by an organization to someone,
allowing them to sell its goods or
services or to take part in an activity
which the organization controls.
Social entrepreneurs comprises
entrepreneurial activity whose goal is to
find innovative solutions to social needs,
problems and opportunities.
- They are a non-profit organization of
entrepreneurs usually doing
entrepreneurial activity with
embedded social purpose.
Women entrepreneurs comprises a
woman or group of women who initiate,
organize, and run a business enterprise.
- In terms of the Schumpeterian
concept of innovative entrepreneurs,
women who innovate, imitate or
adopt a business activity are called
“women entrepreneurs”.
Starting a Small Business
A small business is owned by one to
several persons.
- It operates a small amount of capital
and serves a limited number of
customers.
- Most small businesses are in the
service industry because it requires
less capital.
- Goods producing businesses need
more capital for their assets.
How to start a small business?
➔ Buy an existing business
➔ Start from scratch:
- The owners have complete freedom
on how they are going to run their
business.
- However, it requires more paperwork
because the business is new.
➔ Franchise:
- A business operating under licenses
issued under a parent company.
Types of Legal Ownership
A sole trader is a legal ownership which
means that the business has one owner
only.
➔ Advantages:
- The sole proprietor has full control of
the business.
- Legal paperwork to set up the
business is simple and low cost.
➔ Disadvantages:
- Unlimited liabilities where the owner
is personally responsible for all the
debts of his business.
A partnership means that the business
has at least two or more owners (partners).
➔ Advantages:
- Easier to get capital since there are
more owners.
- Banks are more willing to lend
money.
- Legal paperwork is simple and low
cost.
➔ Disadvantages:
- Unlimited liabilities where all owners
are personally responsible for
business' debts.
- Arguments may arise if the owners
do not share the same objective.
A corporation, also known as a company,
can have two to infinite owners treated as a
separate legal entity legally recognized as
a person.
➔ Advantages:
- Limited liabilities where an owner is
not personally responsible for the
debts of his company.
 - Continuity where ownership can be
transferred from one person to
another granting corporations an
infinite life.
- Ease of raising funds where to raise
money, owners can sell shares to
new owners.
General Environment:
● Economic Trends
● Sociocultural Trends
● Political/Legal Trends
● Global Trends
● Technological Trends

➔ Disadvantages: Inside-out Analysis considers resources,

- The cost for legal paperwork is capabilities, and competencies that an
higher than sole trader or entrepreneur can bring up to the world of
partnership. business.
- Double taxation where the company's SWOT Analysis:
profit gets taxed at the corporate
level first. Then, when profit is ➔ Factors inside the business:
distributed to the shareholders, it is - Strengths (positive) and weaknesses
taxed again (at the shareholder (negative)
level).
➔ Factors outside the business:
Start-up Ideas - Opportunities (positive) and threats
(negative)
Opportunity Recognition - An
entrepreneur must be able to identify A feasibility analysis is a preliminary
potential of new products or services that assessment of a business idea that gauges
may lead to promising businesses. whether the venture envisioned is likely to
succeed.
Entrepreneurial Alertness - Readiness to
act on existing, but unnoticed business Business Strategies
opportunities.
Broad-based Strategy:
➔ Market Ideas:
- Market Ideas are centered around ➔ Cost-based:
providing customers with a product or - A plan of action that requires the firm
service that does not exist in a to hold down its costs to compete by
particular market but exists charging lower prices and still earn
somewhere else. profit.
➔ New Technology Ideas: ➔ Differentiation-based:
- Involves new ideas, new technology - Designing a product/service with
centered around providing customers unique attributes.
with a new product.
A focus strategy restricts the target
➔ New Benefit Ideas: market to a single subset of customers.
- Centered around providing
customers with an improved product. - It emphasizes a single product or
service.
Business Analyses
Screening New Business Ideas
Outside-in Analysis considers the general
environment before identifying internal Consider the following:
factors.
● Strength of the business idea
- With this analysis, entrepreneurs can ● Targeted market and customers
look for the needs in the marketplace ● Industry and competitive advantage
before determining the use of their ● Capability of founder/s
own capabilities. ● Capital requirement and venture
performance
Week 2: Business Plan
A business plan is a document that
outlines the basic concepts underlying a
business and describes how it can be
achieved.
- It presents a complete and detailed
picture of the new business and the
strategy to launch the business.
- It aims to establish whether or not a
business idea will bring in money that
is greater than what it costs to start
and operate it.
A “game plan” contains the layout of basic
ideas for venture, descriptions of where
you are now, where you want to go and
how you intend to go there.
An opportunity means to assess if a good
idea is also a good investment opportunity.
What is a business plan for?
➔ Used to convince potential investors
about your future business
➔ Showcases the capabilities and
competencies of owners and
managers
➔ Helps guide businesses during the
first few years of the company
Why plan a business?
➔ Reduce, if not remove, the risk of
losing money invested in a poorly
researched or unstudied business
idea.
➔ Avoid costly mistakes.
➔ Anticipate your financial
requirements.
➔ Organize your activities beforehand.
➔ Assess actual performance against
set goals.
➔ Apply for financing from lending
institutions.
Types of a Business Plan
A short plan is an abbreviated business
plan.
- It presents only the most important
issues and projections for the
business.
- Typically in the form of PPT
presentation not more than 15-30
mins.
A comprehensive plan is complete.
- It provides an in-depth analysis of the
critical factors that will determine a
firm's success or failure, along with
the underlying.
Steps in Preparing a Business Plan
1. Study the present situation of the
market - the buyers and sellers.
- You should have some idea of
the products or services similar
to yours that are already
available in the market, who
are making or offering them,
how these other makers or
providers sell their products or
services, how they make their
products or services known to
the buying public, how
go-betweens handle their
products, and how they price
their products or services.
2. Study supply and demand.
- Determine the volume
produced by the different
makers or providers (supply)
against the volume needed by
the buyers (demand).
- If the supply is greater than
the demand, then it might be
better for you to abort the
business idea.
Business Plan Format
The cover page is the first page a banker
or investor sees. It should be structured
neatly and appealing to your intended
audience.
● Company name, address, phone
number, fax number, and website
● Tagline and company logo
● Name of contact person (preferably
the president) with mailing address,
phone number, fax number, and
e-mail address
 ● Date on which the business plan was
prepared
● Confidential and proprietary
statement
● Disclaimer
- statement that denies
something specially
responsibility, it delimits the
scope of rights.
● Number of the copy
- Helps keep track of how many
have been given out.
The table of contents is a sequential
listing of the sections of plan with page
numbers which allows the reader to
spot-read the plan rather than reading it
from front to back.
The executive summary or overview is a
brief explanation of the key points in a
business plan which includes the most
important information from each section of
the plan. Its purpose is to give the reader a
convincing reason to read the full plan and
should be not more than 2 pages.
● Description of proposed business
and business model
- a company's plan for how it will
generate revenues and make a
profit (ex. Avon, a Multi level
marketing that leverage
connections with friends and
family and distribute products
directly)
● Description of the market
opportunity to capture or market
problem the business solves
- a situation in which a company
can meet an unsatisfied
customer’s needs before its
competitors
● Reasons for why this is an attractive
business opportunity
● Key distinctions or differentiators of
the business versus competitors
● Overview of the sales, marketing and
operations strategy and plan
● Description of the execution plan and
timeline
● Overview of projected financials
containing revenues, costs, profits
and assumptions
● Business concept
- Contains the essence of the
enterprise or the idea for a
business (ex. Selling
customized shoes online)
● Product concept
- Contains the essence of the
product or the idea for a
product (ex. Selling customized
shoes)
● Business goals
- The future and long-term
prospects of the enterprise
● Performance Indicators
- a measurable value that
demonstrates how effectively a
company is achieving key
business objectives (Ex. We
will sell 10 pcs of our products
at the end of the week)
The management and organization
contains the following content standards:
● Company Name, logo and address
● Mission
- What your company wants to
do
- Expresses the specific
aspirations of a company, the
major goal for which it will
strive
● Vision
- What your company wants to
become
- Establishes the scope and
purpose of a company and
reflects its values and beliefs
● Key personnel
● Workforce and support personnel
● Organizational chart
 ● Ownership
- Details of a company’s
ownership (Ex. The 4 founders
of company A owns 25% each
of the company)
● Capitalization, Compensation and
Incentives
- Details the source of your
company’s initial funding
● External Management Support
- External companies or
organizations that support the
company’s management
The product/service plan contains the
following content standards:
● Purpose of the product/service
● Product’s unique features
- the distinguishing
characteristics of a product or
service that helps boost its
appeal to potential buyers
● Material requirements and sources
of supply
- Material requirements are
supplies needed to operate the
business while sources of
supply are details of where the
materials will be bought
● Process and equipment that will be
used to manufacture the
product/render the service
- step by step details of how the
product will be made
● Production/service process and
controls
- Step by step details of how the
business will operate and
controlled in times of problems
● Distribution & logistics
- Details of how to get your
products to your customers
● Regulations
- Set of rules that businesses
should abide in their specific
industries
● Compliance Issues
- Perceived regulatory concerns
in relation to the operation of
the business
The marketing plan discusses how a
company makes its customer aware of its
products and services.
● Market analysis which includes
demand and supply vis-à-vis
competitors
- an assessment, which allows
you to determine how suitable
a particular market is for your
industry
● Marketing and sales strategies
● Product/services characteristics
or features
- attributes that can be added to
the product definition to extend
the description of each product
(Examples of Characteristics
are Size, Color, Quality, Shape
or Weight)
● Pricing policy (Strategies)
- The wholesale and retail prices
for its products or services
● Sales projections
- The amount of revenue a
company expects to earn at
some point in the future
The financial plan presents a forecast for
the future of the business. It explains the
assumptions made when forecast figures
were calculated; claims about the product,
sales, marketing strategy, and operational
strategy can create financially successful
business
 ● Start-up cost requirements
- non-recurring costs associated
with setting up a business,
such as accountant's fees,
legal fees, registration charges,
as well as advertising,
promotional activities, and
employee training
● Financial projections
- a forecast of future revenues
and expenses
● Breakeven analysis
- used to determine the number
of units the business needs to
sell in order to avoid losses
● Budget
- an estimate of income and
expenditure for a set period of
time
The appendix of supporting documents
provide various supplementary materials
and attachments to expand the reader’s
understanding of the plan.
● Resume of the key investors and
owners/managers
● Photographs of products, facilities
and buildings
● Professional references
● Marketing research studies
● Pertinent published research
● Signed contract of sale
Week 3: Pricing and Marketing Plan
Price is the charge business set for its
products or services.
- It is the exchange rate you put on all
the tangible and intangible aspects of
the business.
- It is the assessment of the value
customers see in a product/service.
Pricing sends a message about your
product or service, creating a perceived
value.
- If a product/service is set at a
low/median price, it is considered a
value for the masses.
- If the price is set at a high range can
be thought of as a luxury good or of
higher quality.
Primary Considerations in Pricing
If the price is low:
- Businesses tend to recover their
costs slowly, affecting their overall
growth and targets.
- There is a likelihood that businesses
lose the opportunity to earn more.
If the price is high:
- Demand (or appeal) can be
affected if price is high.
- Unless businesses offer an
exclusive product, customers tend
to shift to more affordable
substitutes when prices go high.
Common Pricing Techniques
Cost-based pricing is the most common
method of pricing techniques.
- Derived from how much is the cost in
manufacturing/assembling a product
(plus labor) then adding desired
markup.
➔ 6.50 + 5 + 2 + 1.75 + 3.13 + 6.67 +
14.06 = P39.11 (cost to produce one
product)
➔ P39.11 x desired markup (example,
50%) = P19.56
➔ P39.11 + P19.56 = P58.67 SRP
Competitor-based pricing is used when
business firms have identified competitors
and as such, they do not deviate their
prices from their competitors.
- The common example of this
strategy is the prices of value meals
of known fast food chains. Their
prices are very near (if not exactly
similar) to their competitors.
- The reason behind this strategy is to
minimize the likelihood of switching
to competing firms if the price is
higher than what the competition is
 offering and at the same time,
maximizing potential profit (avoiding
undercharging).
Value-based pricing is used by firms in
setting the price of a product or service
based on the economic value it offers to
the customers.
- Firms are able to capture the
maximum amount a customer is
willing to pay, significantly improving
company profits.
- Products’ prices can be increased
per added value in the product itself.
➔ When buying gadgets and their
peripherals, when a customer
chooses a unit with bigger RAM,
better display resolution, the latest
processor, etc, then this customer
can expect that the price he/she has
to pay will be higher than units with
basic specs.
Marketing Mix
Marketing mix or 7Ps of marketing is the
process of designing and integrating
various elements of marketing in such a
way to ensure the achievement of
enterprise objectives.
- It is the combination of the product,
distribution system, price structure,
and promotional activities.
- It is a set of controllable and
connected variables that a company
gathers to satisfy a customer better
than its competitors.
- According to Philip Kotler,
“Marketing mix is the mixture of
controllable marketing variables that
the firm uses to pursue the sought
level of sales in the target market.”
Marketing mix strategy is choosing and
implementing the best possible course of
action to attain the organization’s long-term
objectives and gain competitive edge.
The Original 4Ps
➔ Product/Service:
- Product refers to any goods or
services that are produced to meet
the consumer’s wants, tastes, and
preferences.
➔ Price:
- Price is the value of money in
exchange for a product or service.
➔ Place:
- Place represents the location where
the buyer and seller exchanges
goods or services.
- It is also called the distribution
channel.
- It can include any physical
store/virtual stores/online shops on
the Internet.
➔ Promotion:
- Promotion refers to the complete set
of activities, which communicate the
product, brand or service to the user.
The Extended Marketing Mix
➔ People:
- People are one of the most important
elements of the marketing mix today.
This is because of the remarkable
rise of the services industry.
➔ Packaging:
- Packaging refers to the outside
appearance of the product and how it
is presented to the customers.
➔ Positioning:
- Positioning refers to a process used
by marketers to create an image in
the minds of a target market.
Two Types of Products
➔ Goods (Tangible):
- Goods are tangible items with
physical attributes that you can
touch, feel, and see— like color, size,
shape, and weight.
 - Individuals can use it whether that’s
single-use, used repeatedly, or even
shared with someone else.
➔ Services (Intangible):
- Services are intangible activities,
amenities, benefits, or assistance
that one person or business performs
or provides to another.
- The receiver of the service usually
pays for the service because the
provider of the service possesses the
skill or the required experience to fill
a need based on customer demand.
Stages of Distribution Channel
Channel 1 contains two stages between
produce and consumer— a wholesaler and
a retailer.
- A wholesaler typically buys and
stores large quantities of several
producers’ goods and then breaks
into bulk deliveries to supply retailers
with smaller quantities.
- For small retailers with limited order
quantities, the use of wholesalers
makes economic sense.
Channel 2 contains one intermediary.
- In consumer markets, this is typically
a retailer which is a company that
buys products from a manufacturer
or wholesaler and sells them to end
users or customers.
Channel 3 is called a “direct-marketing
channel” since it has no intermediary
levels.
- In this case, the manufacturer sells
directly to customers.
Promotion Elements or Tools
Advertising is a popular and powerful tool
of market promotion.
- It is a paid form of non-personal
presentation and promotion of ideas,
goods, and services by an identified
sponsor.
- It is a tool for mass communication.
Personal selling or salesmanship and
management relating to personal selling is
sales force management.
Sales promotion involves offering
short-term incentives to prompt buying and
increase sales.
- It includes temporary efforts to attract
customers and induce them to buy.
Publicity is a non-person stimulation of
demand for the product, service or
business unit by placing commercially
significant news in mass media or getting a
favorable presentation on radio, television
or stage that is not paid by the sponsor.
- It is also a part of public relations.
Process
Process is a series of actions necessary to
provide products or services with the best
service to consumers.
- A process can contain methods or
procedures applied to obtain the
products needed by consumers.
- A service process has to be fast,
easy, and friendly to give more value
to consumers of a product.
Physical Evidence
Physical evidence is a device needed to
support the appearance of a product , thus
directly showing the quality of the products
provided to consumers.
Week 4: 4Ms of Operation/Production
System
The most critical factors in the whole
production system are the inputs and the
transformation process.
- Their quality determines the quality of
the output.​
The factors involved in the input and the
production process are usually referred to
as the four Ms of production - method,
machine, and materials.
Method
Method refers to the process or technique
of converting raw materials to finished
goods.​
- The raw material undergoes several
stages before it is completed and
becomes ready for delivery to the
target consumers.​
- The manager will determine the
most efficient way for each portion
the process to be done to eliminate
damage to the product and to
eliminate areas where time and
manpower are be wasted. ​
- Setting and adhering to the right
operating standards​.
The product is the physical output of the
whole production process.
- It should be valuable and beneficial
to the consumers and should satisfy
their basic needs and wants.
➔ Heterogeneous Product:
- It has dissimilar characteristics,
parts, and physical appearance.
- It can easily be identified from other
products.​
- e.g. furniture, bags, and home
decors
➔ Homogenous Product:
- It has a physical appearance, taste,
or chemical content that can hardly
be distinguished from that of the
other products.​
- e.g. soft drinks and medicines
The mode of production refers to how the
product will be produced.
1. Intermittent production system​
a. project method​
b. job order method​
c. batch method​
2. Continuous production system​
3. 3. Just-in-time production system
Manpower
Manpower simply refers to the human
workforce involved in the manufacture of
products. ​
- It is considered as the most critical
and important factor of production.
- without manpower you are unable to
get your work done. Untrained man
can cause damage to goods.​
- If a man has skills and expertise,
then he can use the other 3Ms
effectively.
- Employer and employee relationship
has to be maintained on mutual
self-respect. Entrepreneurship
requires a well-equipped manpower
that can deliver the goods.
- Building the team.
To get the right people, they must adhere
to the four functional areas of
management:
1. Marketing
● Ordering of supplies
● Sales contract preparation and
business permit renewals
● Keeping and maintenance of
personnel records
● Business communication and
inquiries, etc.
2. Production
● Product manufacture or service
delivery
● Machine operation
● Repair and maintenance
● Quality control
● Raw materials and finished
product inventory, etc.
3. Finance
● Bookkeeping
● Payroll preparation
● Settlement of payables and
collection of receivables
● Petty cash management, etc.
 4. Administration
● Ordering of supplies
● Sales contract preparation and
business permit renewals
● Keeping and maintenance of
personnel records
● Business communication and
inquiries, etc.
Machine
Machine refers to the manufacturing
equipment used in the production of goods
or delivery of services.
Four major types of layout: process,
product, fixed position, and group. Of the
four, the most common are the process
and product layouts​.
➔ By process:
- Also known as layout by function,
this type of layout groups all activities
of the same nature together.
- A good example is a furniture-making
factory where you find cutting,
forming bending, welding/ assembly,
finishing, and packing done in
different sections.​
➔ By product:
- This layout is more for mass
production operations.
- In this type of layout, the different
machines and equipment are
arranged in sequence to process
only one product or a few but very
similar products.
- Examples of these are automobile
assembly, food processing, and
bottling plants​.
➔ By fixed position:
- In this type of layout, the product
does not move around the shop floor.
Instead, all the necessary materials,
equipment and machinery are
brought to it.
- This type of layout is common in the
assembly of bus and jeepney bodies,
and in shipyards.
➔ By group:
- This layout arranges operations in
such a way that a group of people
working together has all the
necessary equipment and tools to
complete the work.
Materials
Materials simply refers to the raw
materials needed in the production of a
product.
- Materials basically form part of the
finished product.​
Raw materials inventory is when a
manufacturer maintains a stock of all the
raw materials to ensure continuous
production of goods.
Finished goods inventory refers to the
supply of goods produced by a
manufacturer, but which remain unsold. ​
Methods of Inventory Valuation
First-in, First-out (FIFO) is an inventory
method of valuation that assumes that the
stock you acquired earliest is sold (or used
up) first.
- Since each sale is made out of the
oldest goods in stock, the ending
inventory therefore consists of the
most recently acquired goods.
Last-in, First-out (LIFO) is an inventory
method of valuation that assumes that the
stock acquired most recently is sold (or
used up) first. ​
Week 6: SWOT Analysis
SWOT stands for Strength, Weaknesses,
Opportunities, and Threats.
➔ Internal factors:
- Strengths (positive) and weaknesses
(negative)
➔ External factors:
- Opportunities (positive) and threats
(negative)
SWOT Analysis is a strategic planning
technique.
- It is a compilation of the company’s
strengths, weaknesses,
opportunities, and threats.
- It helps organizations or a person
develop a full awareness of all the
factors involved in making a business
decision.
- In doing SWOT Analysis, you will be
armed with a solid strategy for
prioritizing the work that you need to
do to grow your business.
base their strategy based on your
weaknesses.
- The weaknesses are areas you can
look to improve on.
Opportunities
Opportunities are situations which the
company can take advantage of.
- You can NOT control these factors.
- Can come in the form of trends,
change in taste, economic factors,
and so on.
Threats
Threats are things that are beyond your
control.
- They prevent you from making most
of your resources; thus, your
marketing strategy will fail due to
such reasons.
- They are situations that you need to
avoid or at least minimize.

For existing businesses, you can assess

their current situation and determine a
strategy to move forward.

For startup businesses, you can help

codify or systematize a strategy so that you
start off on the right foot and know the
direction that you plan on going.

Strengths

Strengths are things which you have full

control over.

- These are the things that the

company does well.
- Resources, skilled labors,
investment, machineries, and so on.

Weaknesses

Weaknesses are things which you have

full control over.

- These things will hinder your

progress and prevent you from
working at optimum level.
- If a competitor knows your
weakness, then they are likely to