Chapter 5

Entrepreneurship
and New Venture
Management
Annalene G. de Guzman
Mikaela Josiah A. Sara
 The Business Plan :
Creating and Starting The Venture
Planning as Part of The Business Operation

• Planning is a process than

never ends for a business.

• As the venture grow up to

mature business, planning will
continue

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• A document that summarizes the business strategy
and structure
• a written document prepared by the entrepreneur that
describes all the relevant internal and external elements
and strategies for starting a new venture.
• It is a integration of functional plans such as marketing,
finance, manufacturing, sales and human resources

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Writing a Business Plan

It should answer three questions:

1. What are the entrepreneur’s goals and

objectives?
2. What strategies will the entrepreneur use to
obtain these goals and objectives?
3. How will the entrepreneur implement these
strategies?
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The business plan is valuable to the entrepreneur, potential
investors, or even new personnel, who are trying to
familiarize themselves with the venture, it goals, and
objectives.
• It helps determine the viability of the venture in a designated
market
• It provides guidance to the entrepreneur in organizing his or her
planning activities
• It serves as an important tool in helping to obtain financing.

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 Elements of a Business Plan

• Sales Forecast – one of the most

important elements in the business
plan

• Financial Planning - the financial

plan is made up of a cash budget,
an income statement, balance
sheets, and a breakeven chart.

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STRUCTURE OF ENTREPRENEURIAL
ORGANIZATIONS
• Entrepreneurs must make the right decisions when they start
• Should they buy existing business or build from the ground

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 STARTING NEW BUSINESS
• individual’s commitment to becoming a business owner
• choosing the goods or services to be offered
• understand the true nature of the enterprise in which they are engaged

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 Buying an Existing Business
• an existing business has already proved its ability to draw
customers at a profit
• It has also established working relationships with lenders,
suppliers, and the community
• track record of an existing business gives potential buyers a
much clearer picture
Raymond Albert Kroc (October 5, 1902 – January 14, 1984)
was an American businessman. He purchased the fast
food company McDonald's in 1961 and served as its CEO from 1967 to
1973. Kroc is credited with the global expansion of McDonald's, turning it
into the most successful fast food corporation in the world. Due to the
company's growth under Kroc, he has also been referred to as the founder
of the McDonald's Corporation.

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Buying an Existing Business
Howard D. Schultz is an American
businessman and author. He served
as the chairman and chief executive
officer (CEO) of the Starbucks Coffee
Company from 1986 to 2000, and
then again from 2008 to 2017. Under
Schultz, the company established a
large network of stores which has
influenced coffee culture in Seattle,
the U.S., and internationally.
Following large-scale distribution
deals Starbucks became the largest
coffee-house chain in the world.
Our Heritage
Our story begins in 1971 along the cobblestone streets of
Seattle’s historic Pike Place Market. It was here where Starbucks
opened its first store, offering fresh-roasted coffee beans, tea
and spices from around the world for our customers to take
home. Our name was inspired by the classic tale, “Moby-Dick,”
evoking the seafaring tradition of the early coffee traders.
Ten years later, a young New Yorker named Howard Schultz
would walk through these doors and become captivated with
Starbucks coffee from his first sip. After joining the company in
1982, a different cobblestone road would lead him to another
discovery. It was on a trip to Milan in 1983 that Howard first
experienced Italy’s coffeehouses, and he returned to Seattle
inspired to bring the warmth and artistry of its coffee culture to
Starbucks. By 1987, we swapped our brown aprons for green
ones and embarked on our next chapter as a coffeehouse.
 Starting from Scratch
• planting an idea, nurturing it, and making it grow into a strong
and sturdy business

• a new business does not suffer the ill effects of a prior

owner’s errors

• the start-up owner is also free to choose lenders, equipment,

inventories, locations, suppliers, and workers, unbound by a
predecessor’s commitments and policies

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Starting from Scratch
To find openings, entrepreneurs must study markets and
answer the following questions:

(1) Who are my customers?

(2) Where are they?
(3) At what price will they buy my product?
(4) In what quantities will they buy?
(5) Who are my competitors?
(6) How will my product differ from those of my competitors?

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Starting from Scratch
• the best way to gain knowledge about a market is to work in
it before going into business in it

• a quick scan of the local Yellow Pages or an Internet search

will reveal many potential competitors

• studying magazines, books, and websites aimed specifically at

small businesses or hiring professionals to survey the market
for you.

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 Financing the New Business
• Personal Resources

John Mackey Fred Smith Rebecca Boenigk

$10,000 loan from his father $4M inheritance from his father Personal savings and loans from
several family members

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Strategic Alliances
Spun.com is the Web's first cash-free
exchange of digital entertainment products
(CDs, DVDs and video games). Founded in
1998 by brothers Andrew and Steven
Grundy, Spun was built on their vision to
create an online music exchange.

• Provider of a digital products exchange

platform. The company offers an online
platform that enables users to exchange
video games, music CDs and DVDs.

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Lenders
• Banks and private investors usually want to see formal
business plans, detailed outline of proposed businesses
and markets, owners’ backgrounds, and other sources of
funding
• Government loans have strict eligibility guidelines

Ventures Capital Companies

• groups of small investors seeking to make profits on companies
with rapid growth potential
• may also demand a representative on the board of directors
• managers may even need approval from the venture capital
company before making major decisions
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Ventures Capital Companies

Future Now Ventures

Kickstart Ventures Future Now Ventures (“FNV”) is a specialised investment

Globe Telecom (Ayala Corp) firm focussing on fast growth companies developing
cloud, mobile and enterprise technological services.
Kickstart Ventures is arguably one of the Their background, experience and networks lead them
earliest VC firms backed by one of the biggest into nearly all corners of the technology and industry
and oldest companies in the country. landscape.
Founded in 2012 as an offshoot of the Ayala-
owned Globe Telecom, Kickstart Ventures is a
corporate VC firm whose main objective is to
bet on “visionary founders in the early- to
growth-stages of company formation and
expansion.”
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Small-business Investment Companies
• small-business investment companies (SBICs) seek
profits by investing in companies with potential for
rapid growth
• Created by the Small Business Investment Act of 1958
• Apple Computer, Intel and FedEx

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Sources of Management Advice
• To survive and grow small businesses also need advice regarding management. This
advice is usually available from four sources: advisory boards, management
consultants, the SBA, and networking
Advisory Boards
All companies can benefit from the problem-solving abilities of advisory boards

Management Consultants
Opinions vary widely about the value of management consultants—experts who charge
fees to help managers solve problems

The Small Business Administration

• more than financing role, SBA’s role in helping small-business owners improve their
management skills
• SBA programs are designed to show them how to spend it wisely
• offers small businesses four major management-counseling programs at virtually no
cost
Networking
• small-business owners are discovering the value of networking—meeting regularly with one
another to discuss common problems and opportunities and, perhaps most important, to pool
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FRANCHISING
Franchising agreements
A contract between an entrepreneur (the franchisee) and a parent company (the
franchiser);
the entrepreneur pays the parent company for the use of its
trademarks, products, formulas, and business plans
Advantage:
franchisers benefit from the ability to grow rapidly by using the investment money provided by franchisees
Disadvantage:
• start-up cost
• Extremely profitable or hard-to-get franchises are much more expensive
• Franchisees may also have continued obligations to contribute percentages of sales to the parent
corporation
• Buying a franchise also entails less tangible costs
• franchise agreements are difficult to terminate
• they do not guarantee success
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THE PERFORMANCE OF ENTREPRENEURIAL
ORGANIZATIONS
Trends in Small Business Start Ups
1. Emergence of E-commerce
• rapid emergence of electronic commerce
• Internet has provided fundamentally new ways of doing business

2. Crossovers from Big Business

• started by people who have opted to leave big corporations and put their experience and know-how
to work for themselves
3. Opportunities for Minorities and Women
• minorities and women are starting more small businesses
4. Better Survival Rates
• more people are encouraged to test their skills as entrepreneurs because the failure rate among small
businesses has been declining in recent years

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 REASONS FOR FAILURE
• managerial incompetence or inexperience
• neglect can also contribute to failure
• weak control systems can lead to serious problems
• insufficient capital can contribute to new business failure

REASONS FOR SUCCESS

• combination of hard work, drive, and dedication
• careful analysis of market conditions can help new business
owners assess the probable reception of their products in the
marketplace
• managerial competence also contributes to success
• luck also plays a role in the success of some firms
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 Thank you

Annalene de Guzman

21-58564

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