BUSINESS MODELS FOR ENTREPRENEURS

General Learning Objectives

• To be able to know and apply

different business models in starting
a business.
3 What is entrepreneurship?

 Entrepreneurship
 Strategic thinking and risk-taking behavior that results in the
creation of new opportunities for individuals and/or organizations.

 Entrepreneurs
 Risk-taking individuals who take actions to pursue opportunities
and situations others may fail to recognize or may view as
problems or threats.
4 What is entrepreneurship?

 Entrepreneurs are …
 Founders of businesses that become large-scale enterprises.
 People who:
 Buy a local franchise outlet
 Open a small retail shop
 Operate a self-employed service business
 People who introduce a new product or operational change in an
existing organization.
5 Personal traits and characteristics of
entrepreneurs.

Management - Chapter 6
6 What is entrepreneurship?

 Common myths about entrepreneurs:

 Entrepreneurs are born, not made.
 Entrepreneurs are gamblers.
 Money is the key to entrepreneurial success.
 You have to be young to be an entrepreneur.
 You must have a degree in business to be an
entrepreneur.
7 Eight reasons why many small
businesses fail.
8

How does one start a new venture?

 Important issues in new venture creation:

 Does the entrepreneur have good ideas and the courage to give them a
chance?
 Is the entrepreneur prepared to meet and master the test of strategy and
competitive advantage?
 Can the entrepreneur identify a market niche that is being missed by other
established firms?
 Can the entrepreneur identify a new market that has not yet been discovered
by existing firms?
 Can the entrepreneur generate first-mover advantage by exploiting a niche or
entering a market before competitors?
9

How does one start a new venture?

 Questions that keep a new venture focused on its customers …
 Who is your customer?
 How will you reach key customer market segments?
 What determines customer choices to buy or not buy your
product/service?
 Why is your product/service a compelling choice for the customer?
 How will you price your product/service for the customer?
 How much does it cost to make and deliver your product/service?
 How much does it cost to attract a customer?
 How much does it cost to support and retain a customer?
10

How does one start a new venture?

 Life cycle of entrepreneurial firms

 Birth stage
 Breakthrough stage
 Maturity stage
 Each stage poses different managerial challenges and
requires different managerial competencies.
 11
Stages in the life cycle of an entrepreneurial
firm.
 CREATING A NEW BUSINESS

 1. START- UP
 2. FRANCHISING
 3. BUYING AN EXISTING BUSINESS/

BUYOUT
 FRANCHISE

 Franchising is a form of business by which the owner (franchisor) of a

good, service, or a method obtains distribution through affiliated dealers
(franchisees).

 An arrangement under which the franchisor provides a formula for

doing business to the franchisee along with training, advertising, and
other forms of assistance.
FRANCHISE
FRANCHISE
 Best Business Franchise Opportunities in the
Philippines for 2016

 Food Kiosk
 Dim Sums
 Rice toppings
 Full-service restaurants and fast food
 Bars and Cafés
 Hamburgers
 Non-food/service-type franchises
 Spa
 Convenience Stores
 Tutorials/ Homeschooling
 Laundry
17

How does one start a new venture?

 Forms of legal ownership

 Sole proprietorship
 Partnership
 General partnership
 Limited partnership
 Limited liability partnership

 Corporation
18

How does one start a new venture?

 Financing the new venture

 Sources of outside financing
 Debt financing
 Equity financing
 Equity financing alternatives
 Venture capitalists
 Initial public offerings
 Angel investors
19
What resources support entrepreneurship and
business development?
 Promoting entrepreneurship in large enterprises
 Intrapreneurship
 Skunkworks
 Business incubators
 Small Business Development Centers
BUSINESS MODELS
OPPORTUNITY SEEKING,
SCREENING, and SEIZING
OPPORTUNITY SEEKING
 Sources of Opportunities

Macro Environmental Sources of

Opportunities
1. Socio-cultural Environment
2. Political Environment
3. Economic Environment
4. Ecological Environment
5. Technological Environment
THE EXTERNAL ENVIRONMENT
Opportunity Screening
 The Personal Screen
In screening opportunities, the entrepreneur first has to consider his
or her preferences and capabilities by asking three basic questions:
1. Do I have the drive to pursue this business opportunity to the
end?
2. Will I spend all my time, effort, and money to make the
business opportunity work?
3. Will I sacrifice my existing lifestyle, endure emotional
hardship, and forego my usual comforts to succeed in this
business opportunity?
If “YES” is your answer to all of the above, then you can begin
your earnest pursuit of that opportunity.
 Risk-Return Grid for
Screening Opportunities
 The 12 Rs of Opportunity
Screening
1. Relevance to vision, mission, and objectives of the entrepreneur.
The opportunity must be aligned with what you have as your
personal vision, mission, and objectives for the enterprise you want
to set up.
2. Resonance to values. Other than vision, mission, and objectives,
the opportunity must match the values and desired virtues that you
have or wish to impart.
3. Reinforcement of Entrepreneurial Interests. How does the
opportunity resonate with the entrepreneur’s personal interests,
talents, and skills?
4. Revenues. In any entrepreneurial endeavor, it is important to
determine the sales potential of the products or services you want
to offer. Is there a big enough market out there to grab and nurture
for growth?
 The 12 Rs of Opportunity
Screening
5. Responsiveness to customer needs and wants. If the opportunity
that you want to pursue addresses the unfulfilled or underserved
needs and wants of customers, then you have a better chance of
succeeding.
6. Reach. Opportunities that have good chances of expanding through
branches, distributorships, dealerships, or franchise outlets in order
to attain rapid growth are better opportunities.
7. Range. The opportunity can potentially lead to a wide range of
possible product or service offerings, thus, tapping many market
segments of the industry.
8. Revolutionary Impact. If you think that the opportunity will most
likely be the “next big thing” or even a game-changer that will
revolutionize the industry, then there is a big potential for the
chosen opportunity.
 The 12 Rs of Opportunity
Screening
9. Returns. It is a fact that products with low costs of production and
operations but are sold at higher prices will definitely yield the
highest returns on investments. Returns can also be intangible;
meaning, they come in the form of high profile recognition or
image projection.
10. Relative Ease of Implementation. Will the opportunity be
relatively easy to implement for the entrepreneur or will there be a
lot of obstacles and competency gaps to overcome?
11. Resources Required. Opportunities requiring fewer resources
from the entrepreneur may be more favored than those requiring
more resources.
12. Risks. In an entrepreneurial endeavor, there will always be risks.
However, some opportunities carry more risks than others, such as
those with high technological, market, financial, and people risks.
Opportunity Screening Matrix
Opportunity Seizing
 The question for the
entrepreneur in Opportunity
Seizing is…

“Will I be able to manage, to my advantage,

the critical success factors and avoid the
critical failure factors?”
Key Points in Going about the
“Questioning” to Craft a Positioning
Statement
1. What are the main customer segments?
2. What are the different product attributes and
features of each of the competitors?
3. What are the existing marketing practices of the
various competitors?
4. What are the market preferences of consumers
when it comes to the products being offered?
Grids for Competitor Analysis
Analysis of Competitors Products
Options or Directions in Coming up with a
Product/Service Concept
1. The first is to create a concept similar to the winning
products in the marketplace and ride with the obvious
market trends
2. The second is to find a market niche that has not been
filled by the competitors.
3. The third is to conceptualize a product in a positioning
category where the participants are rather weak.
4. The fourth is to conceptualize a product that would change
the way customers think, behave, and buy, thus making
existing products “obsolete” and “old-fashioned.”
Designing, Prototyping, and
Testing the Product

Designing means that the entrepreneur must render the concept

and translate it into its very physical and very real dimensions
(measurement). This entails building a prototype of the product
that will be ready for actual testing by the entrepreneur and
then, later on, subject to testing by potential customers through
focus group discussions (FGD), surveys, product
demonstration sessions, and the like.
Designing, Prototyping, and
Testing the Product

Designing means that the entrepreneur must render

the concept and translate it into its very physical and
very real dimensions (measurement). This entails
building a prototype of the product that will be ready
for actual testing by the entrepreneur and then, later
on, subject to testing by potential customers through
focus group discussions (FGD), surveys, product
demonstration sessions, and the like.
 SUMMARY

 Business starts with an OPPORTUNITY… Seek… SCREEN… and

SEIZE… An Entrepreneur must be adept in changing environment
where opportunity thrives.
 Entrepreneur establishes the positioning of the business in the
marketplace by crafting its main value proposition.
 Entrepreneur should conceptualize and translate the ideas into a
product needed by the market.
 “A BUSINESS PLAN is a requirement for a successful business”.
 WORKSHOP

OUTPUTS

BUSINESS
CONCEPT
SEEKING SCREENING SEIZING
BUSINESS PLAN
- Product
- Target Market
- Finance
- Location
- Elevator Pitch
 WORKSHOP

SEEKING SCREENING SEIZING

SWOT ANALYSIS SELECT BUSINESS

CONCEPT
CONSUMER STUDY

BRAINSTORMING

(MANY) (FEW( BEST

 WORKSHOP

BUSINESS PLAN

A. Product- Define and discuss its features. Why did you choose this
product?

B. Target Market- Describe your market. Identify your specific market

segment: location and profile.

C. Finance- How much will you be needing to support your plan? What
are the sources of your fund requirements? How are you going to pay
your debt?

D. Elevator Pitch- create and present a 2 minute elevator pitch

SEMPER LORENZO!