MODULE 20

SPECIAL TOPIC IN
MANAGEMENT: FAMILY
BUSINESS ENTERPRISE

REPORTER:
MA. ALTHEA KAYE MATAGCOS
SMALL BUSINESS vMANAGEMENT AND
ENTREPRENEURSHIP

E ntrepenuer is a person who establishes a business by

identifying a need or opportunity to exploit, and takes
on the responsibility and financial risk for owning and
operating a business.

An entrepreneur can be described in

terms of what he or she is capable of doing
and the characteristics that he or she must
have. Wishing to be an entrepreneur one
needs to know the distinguishing features that
set entrepreneurs apart from other working
individuals.

THE PERSONAL FEATURES OF AN ENTREPENEUR ARE

DESCRIBED AS FOLLOWS IN THE NEXT SLIDE.
IDENTIFIES BUSINESS
v OPPORTUNITIES

F irst of all, an entrepreneur is someone who identifies business

opportunities in the environment where he or she lives.

 To identify – one must have an open mind about

opportunities that make money.
 One must continuously search for ideas on what
people want.
 If so, one decides if the individual will either create
or buy the product to sell it.
 As a entrepreneur, one needs to meet new people to
identify business opportunities.
 Enjoys interacting with people.
 Does not hesitate to approach a wide array of
people.
 The business is about filling the gap of people’s
needs.
MAKES PLANS vAND DECISIONS

A fter selecting a business opportunity, an entrepreneur makes plans and

decisions to organize resources to set up one’s own business. Here are
the other tips.
 One must perform managerial functions of
PLANNING, ORGANIZING, COORDINATING,
STAFFING, MOTIVATING, and CONTROLLING
one’s own business enterprise.
 One must know how to arrange activities related to
recruiting staff, purchasing raw materials, setting up
work spaces for the administration office and the
production plant, linking up with financial sources,
and complying with business regulations.
 One must prepare an action plan which specifies,
among other aspects, the quality features of one’s
own product or service to entice customers.
INVEST TIME, EFFORT,
v AND MONEY

A n entrepreneur is a very busy person.

 One must know how to invest time, effort, and money to
manage the business.
 One can make vital decisions about various aspects of one’s
business enterprise.
 Decision-making is a regular function for the entrepreneur.
 One knows the weight of the pro’s and con’s of the things
and chooses the best alternative course of action.
 One must know how to manage time.
 Knows how to stick to plans and budgets, all while keeping
an open mind to adapt to new situations.
 Prepared for the contingencies and search for new
opportunities.
 Must know how to coordinate the proper use of human,
physical, and financial resources of the enterprise
 TAKES CALCULATED
v RISKS

A n entrepreneur takes calculated risks, which may

pertain to financial and operational risks of
business.
 An entrepreneur must know that he or she is not in
full control over the behavior of other people or
other institutions of the business.

 One must be willing to bear the risks and

uncertainties of the business.

 One must assume the possible risks of the

business.

 One is able to take calculated risks, can muster

courage, self-confidence, and prudence in their
work.
INTRODUCES INNOVATION
v AND CHANGE

A
n entrepreneur strives to succeed b being innovative, creative, and
open to change.
 One must learn to view things from new angles and
perspectives.
 Able to try out new approaches for implementing usual
tasks and activities.
 Will look for new resources to create better products and
services.
 Builds relationships and alliances with new business
partners.
 Networks with associations and organizations to
leverage various kinds of support to his or her business.
 On difficult times, one can still continue to preserve the
positiveness.
 Can still remain resilient and adapts to change.
 Inspires and motivates its own staff to embrace new
things.
EARNS PROFITS ANDv DEVELOPS SOCIETY

A s fruits of labor and personal commitment, an

entrepreneur earns profits from the business that he
or she has set up.
 Though an entrepreneur is profit-oriented, one must also
be inspired in doing good for other people.
 One must aim in creating products or services that
protect and improve the well-being of the customer and
the environment.

BY BEING SUCCESSFUL IN ONE’S OWN ECONOMIC VENTURE, HE OR

SHE STILL CONTRIBUTES TO THE DEVELOPMENT OF THE SOCIETY.
 STARTING UP YOUR
v
BUSINESS

I f one wants to start their own business enterprise, then the next presented slides
shows a diagram of the steps to start a business.

IDENTIFY AND SELECT A PREPARE PRE-FEASIBILITY PREPARE A BUSINESS PLAN

BUSINESS OPPORTUNITY STUDIES

REGISTER YOUR BUSINESS DETERMINE LEGAL STRUCTURE FOR FINANCE YOUR BUSINESS
YOUR BUSINESS

EACH OF THESE STEPS WILL BE EXPLAINED DEEPLY IN THE NEXT SLIDES

IDENTIFY AND SELECT A vBUSINESS OPPROTUNITY

T he first step is to identify potential business opportunities in a

systematic way.
 It is through DATA collection and FIELD observatons.
There are many opportunities in the world of business. One must
maintain an open mind to look for them. An entrepreneur can sense a
business opportunity faster than other people. Time should be an ally
and to get ahead of others by spotting a potential business is a better
way of doing so.

 From there, one can select a project idea that is base on one’s
RESOURCES, SKILLS, PERSONAL PREFERENCE,
EXPERIENCE, PERSONAL VALUES, and FAMILY SUPPORT.
PREPARE A BUSINESS
v PLAN

A Business plan – is a document that contains the

GOALS, PLANS, STRATEGIES, and RESOURCES of a
business.
A
FEASIBILITY STUDY – is a study evaluation of
the proposed project in terms of its overall
economic sense.
 THE BUSINESS PLAN STARTS;
 An initial idea  It covers four aspects namely;
 Evolves into a business concept proposal 1. MARKETING
 Finally into a detailed analysis of the 2. TECHNICAL
different factors in the business to make it 3. PRODUCTION
succeed. 4. ORGANIZATIONAL
 FOR A START-UP BUSINESS;
 Prepare a good business plan that consists
the pre-feasibility studies, called a
FEASIBILTY PLAN or a START-UP PLAN.
MARKETING
v ASPECT
T hese involve market research to determine a gap in
market demand for the product or service,
determination of whether the gap is sizable enough
to make a project feasible, and analysis of
competitors, market shares, sales volumes, and
selling prices
 They identify the sources of sales revenue for
the business. They specify the appropriate
marketing mix and marketing strategies.

TECHNICAL OR T hese involve analysis on how to make the product or

service, the sources and costs for materials, quality
features, and operating processes with costs.
PRODUCTION
v

ASPECTS
 They specify the planned production capacity,
the production process, and the required
technology, equipment, and machinery.
 Ensures quality management.
 Present variables of this aspect now includes
ECOLOGICAL IMPACTS.
FINANCIAL
v ASPECT
T hese involve analysis of whether the project will be
financially viable by determining the sales revenues,
the costs and expenses in producing the product or
service, the means of financing, and analysis of
profitability of the venture.

 In addition to the income statement, they contain

the projected cash flows and the balance sheets

ORGANIZATIONAL
v T hese identify the legal form of the business.
 They contain the organizational structure and

ASPECTS
personnel requirements for the business.
 They specify the roles and responsibilities of
mangers and staff.
 They also identify the locations of the business
office, the manufacturing or production plant,
and sales outlets.
 FINCANCE YOUR
v
BUSINESS

O ne can finance their small business using several and combined sources; one’s money
for example; along with one’s family, friends, and relatives; borrowing from a bank;
getting investors such as venture capitalists.

IT IS IMPROTANT TO PREPARE A S-W-O-T

(STRENGTHS, WEAKNESSES, THREATS, and
OPPORTUNITIES)
analysis of these alternative sources of funds for your
business
Register your Business

After deciding on the type of legal form for

your business, you have to register it with the
appropriate agency

DTI
BIR
Forms of Businessv and How to Register

Legal Form of Business How and Where to Register

 Apply for a business name and registered at the DTI. Applicant must be at
least 18 years old
 Apply for TIN at the BIR
 Get a barangay clearance as requirement for mayor’s permit
Single Proprietorship  Get a mayor’s permit or license for your business
 (SSS) number for your business and for yourself as an employee or a self
employed individual. If you have workers who earn at least an income of
P4 000, they should also be registered with SSS. These may pertain to the
low-skilled workers such as utility staff, messengers, or domestic helpers.
Legal Form of Business How and Where to Register

 Register with (SEC), at least two members are required in a partnership

 Submit other documents same as in a sole proprietorship
Partnership  Get a mayor’s permit

 Certificate from SEC, 5 to 15 members

 Registration data sheet\
 Bank certificate of deposit for your paid up capital
 Articles of incorporation
 Undertaking to change name
 A treasures affidavit
Corporation  Your corporate by laws
 Endorsement/clearances from other government agencies
 Proof of remittance by foreign corporate subscribers and for a
corporation with foreign equity
 Application form F-100, for corporations with more than 40% foreign
equity
 SSS
Legal Form of Business How and Where to Register

 If you employ at least 5 workers, register your business with (DOLE)

 Secure SSS number for your business and for yourself as an employee or
a self –employed individual. Workers that earn at least an income of 4000
should also be registered with SSS
Corporation
 Register your business with Page-IBIG Fund (Home Development Mutual
Fund), naming yourself and your workers as members of the fund
 Register your business with PhilHealth. Your workers should also be
members of PhilHealth

 Apply at the SEC

 Submit documents same as in partnership
Limited Liability  Get a mayor’s permit

 Register at the Cooperative Development Authority (CDA)

Cooperative  Get a mayor’s permit
Importance of Family Business
Enterprise

For an entrepreneur, profit alone is not the main motivation

and reward for success. An Entrepreneur finds fulfillment in
contributing to the development of the community where
he/she lives. Through his/her business enterprise, he/she able
to generate employment for other people. Can contribute to
economic growth for the country as well. As such, ,an
entrepreneur accepts social responsibility to society.
G rowth of a Family Enterprise
1. A family member sets up a small business
A small family business enterprise, usually starts from a modest
shop within the residence or backyard of the family member with
entrepreneurial spirit. Over the years, his/her resourcefulness,
determination, patience, self confidence, paid off. He/she continues to
develop customer relationship and earn higher profits. He/she expand
her production and scope of marketing activities. If he/she decided to
get married, his/her spouse joins in managing their own family
business. As a couple, they share authority and decision making in
running the family business. This setup is called the First-generation
family businesss. The owner who set up and built the family enterprise
have full management control over the family business
2. Children of the owners of the family enterprise join the
family
business
As children of the owners of the family enterprise grow and
mature into adults, they participate in the business. More member
involved in the family business, the business continue to expand. The
owner may give their children some authority and decision making
during the initial years. They usually also hire managers who are non-
family members. Gradually, the children of the owners more adept in
learning the intricacies of the business. At this point, the owner give
managerial positions to their children. Authority and decision making
in the family business are now gradually shared among the first-
generation and second generation family members. This setup, the
first and second generation family members shared management
3. Children of the owners of the family enterprise assume
control over the family business

First generation owners of the family business eventually grow

old. Their children who finished academic degrees use their own skill to
run the business. Due to old age, the owner of the family business
decide to relinquish to their children the full management of the family
enterprise. This setup called the Second Generation Family Business.
Children of the owner have full management control over the family
enterprise.
4. Second Generation Family Members Continue
to Build the Family Enterprise

The second-generation owners of the family

business become mature and start their own families,
they encourage their children to participate
In the management of the family business
5. Third Generation Family Members
assume control of the family business

When the second generation owners of the

family business become old themselves, they
pass on to their children the management of the
family business. This setup is called the Third
Generation Family Business
Family Business is a unique organizations because they
serve as family units and at the same time business units.
Family must maintain Family Harmony in dealing
everyday challenges of business operation. Conflict in
management may occur because of different in
personalities and educational background. As will as
conflict in decision making as family members share
authority and control over a certain aspect in the
business.
 But in the end, family business succeed as they learn to
adapt change , develop effective management systems, and
continue embrace family values and maintain harmonious
relationshis.
 Conflict in management may occur because
of different in personalities and educational
background. As will as conflict in decision making
as family members share authority and control
over a certain aspect in the business. It is evident
that a family business face many challenges for its
growth and survival
Small Business Enterprise Help Developed the
Philippine Economy

Micro, small, and medium enterprises are the backbone

of the Philippine economy as they comprise the majority of
economic establishment in the country.
 Based on 2014 statistics released by DTI, close to
947 000 establishments exist in the Philippines . 90% of it
are micro enterprises, % are macro enterprises and less
that 1 % are medium enterprise. DTI figures state that
micro, small, and medium enterprises in the Philippines
comprise 99.6 % of all existing establishments.
Philippines’ Magna Carta for Micro, Small, and
Medium Enterprises

1. Micro Enterprises- these are not more than

P3 000 000 in value of total assets
2. Small Enterprises- these are from P3 000
001 to P15 000 000 in value of total assets
3. Medium Enterprises- these are from P15
000 001 to P100 000 000 in value of total
assets
E x a m p l e s o f S m a l lv F a m i l y E n t e r p r i s e s

Wholesale
Retail Outlets
Small Restaurants
Internet Shops
Dry Clean Services
Automotive Repair Shops
Agricultural Production Enterprises (poultry raising, hog
raising, vegetable production
Enactment of Specific Philippines Laws

1. Magna Carta for Micro and

Medium Enterprises ( RA No.
6977)

Mandates the coordination among

different government agencies, in
providing support to all small and
medium enterprises (SMEs), which
include, among others, DTI , DA and
DOST.
2. Go Negosyo Act (RA No. 10644)

Aims to established within every

city and municipality and facility to
advise entrepreneurs on their business.
It provides a one –stop-shop for
individuals who want to know more
about registering their business and
the various business opportunities that
they can tap
3. Barangay Micro Business Enterprise (BMBE) (RA
No. 9178)

Provide additional support to micro enterprises or

those not more than P3 Million in total value . Upon
registration with the local government unit, micro
enterprises are entitled to tax exemptions, access to
credit, technology transfer, exemption from coverage of
the Minimum Wage Law, and other government
incentives.