GOOD MORNING!

ENTREPRENEURSHIP
TRAINING

LEONIDA U. TAYABAN
Trainer 1
 DEFINITIONS
 Entrepreneurship
The activity of setting up a
business or businesses, taking on
financial risks in the hope of profit.
 Entrepreneur
a person who organizes and
operates a business or businesses,
taking on greater than normal financial
risks in order to do so.

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WHY ENTREPRENEURSHIP?

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WHY ENTREPRENEURSHIP?
 Being your Own Boss
 Self-management is the motivation that
drives many entrepreneurs.
 Financial Success
 Entrepreneurs are wealth creators.
 Job Security
 Over the past ten years, large
companies have eliminated more jobs
than they have created.
 Quality of Life
 Starting a business gives the founder
some choice over when, where, and
how to work.
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Types of Entrepreneurship

 Small Business Entrepreneurship

Small businesses are grocery stores,
hairdressers, consultants, travel agents, internet
commerce storefronts, carpenters, plumbers,
electricians, etc. They are anyone who runs his/her
own business. They hire local employees or family.
Most are barely profitable. Their definition of success is
to feed the family and make a profit, not to take over an
industry or build a million business. As they can’t
provide the scale to attract venture capital, they fund
their businesses via friends/family or small business
loans.
 Scalable Startup Entrepreneurship
These entrepreneurs start a company
knowing from day one that their vision could
change the world. They attract investment
from equally crazy financial investors –
venture capitalists. They hire the best and the
brightest. Their job is to search for a
repeatable and scalable business
model. When they find it, their focus on scale
requires even more venture capital to fuel
rapid expansion.

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Large Company Entrepreneurship

 Large companies have finite life cycles. Most grow

through sustaining innovation, offering new products
that are variants around their core products.
Changes in customer tastes, new technologies,
legislation, new competitors, etc. can create
pressure for more disruptive innovation – requiring
large companies to create entirely new products
sold into new customers in new markets. Existing
companies do this by either acquiring innovative
companies or attempting to build a disruptive
product inside. Ironically, large company size and
culture make disruptive innovation extremely difficult
to execute.

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 Social Entrepreneurship

 Social entrepreneurs are innovators

who focus on creating products and
services that solve social needs and
problems. But unlike scalable
startups their goal is to make the
world a better place, not to take
market share or to create to wealth
for the founders. They may be
nonprofit, for-profit, or hybrid.

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Decide on what to do after
your training.

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THINK ENTREPRENEURIAL!
11
 Three Common Steps to
Entrepreneurship

Do what you know

Look at work you have done for others
in the past and think about how you
could package those skills and offer
them as your own services or products.

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Your work experience, technical
abilities, practical knowledge of
business, hobbies, contacts and family
background can also be important
factors for business success.
Many of the small jobs you do around
your home can be ideas for starting a
business. For example, growing
vegetables, cooking, looking after
children, dancing, fixing watches or
machines, washing clothes, sewing.

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Do What Others Do

 Learn about other businesses

that interest you. Once you have
identified a business you like,
emulate it.

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Solve a Common Problem

 Is there a gap in the market? Is

there a service or product you
would like to bring to market?
(Note: This is the highest-risk of
the three approaches.) If you
choose to do this, make sure
that you become a student and
gain knowledge first before you
spend any money.
Characteristics of
Entrepreneurs

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 Goal-oriented- entrepreneurs focus on developing
their plans and achieving their goals.
 High Energy Level - a willingness to work hard
 Hardworking- entrepreneurs work hard because
they want to excel
 Self-Confidence – belief in yourselves and your
abilities
 Tolerance for Failure - entrepreneurs are not
easily discouraged
 Creativity - entrepreneurs devise innovative ways
to overcome difficult problems and situations
 Tolerance for Ambiguity - entrepreneurs can
normally handle new and uncertain situations
calmly.
 Persistent- entrepreneurs don not easily give-up,
they keep on trying 17
 Flexible- Entrepreneurs must be
flexible in order to adapt to changing
trends, markets, technologies, rules,
and economic environments.

 Responsible-(doing what you are

suppose to do and being held
accountable)

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Actitvity no. 1

 Answer the entrepreneurial test.

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Skills needed by successful
entrepreneurs
 Communication skills (possessing the
ability to read, write and speaking in an
understandable, accurate and
professional manner)
• Human relations skills (the ability to
build and maintain positive
relationships, working well with others)
• Math skills (knowledge of basic
arithmetic and business math skills
such as calculating profit)

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• Problem-solving and Decision-making
skills (the ability to assess situation and
make good decisions )
• Technical skills (knowledge of
computers and how to use them
productively)
• Basic business skills (knowledge and
understanding of the economy and
business functions such as marketing
and management)

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To become an entrepreneur:

Think of a business idea, before you begin

thinking up business ideas, you need to
find out if you have the characteristics
required and the abilities and the
experiences needed to start and run your
own business. You should also find out
which type of business would be most
suitable for you.

You must find out whether you have the

characteristics required to successfully run
your own business. You must find out 22

whether you:
•are committed to start and run your own
business
• are ready to take calculated risks
• willing to pursue an activity even against
obstacles
• can deal with crisis situations
• are ready to take things in your own hands
• can make difficult decisions on your own
• are able to work under pressure
• can quickly adapt to changing needs of your
business
• can separate your family duties and your
business obligations
• enjoy the full support from the family to start
your own business
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Types of Entrepreneurs

 The passionate entrepreneur

This person has had a great idea and this person is ready to
die for it. This person works 24 hours a day and has
company-related dreams, 7 days a week, and this person
usually cannot stop talking about his/her business.
 The specialist
This person is a scholar in their field, which allows them to
have an advantage over their competitors. The problem is
that, usually they will not have all the characteristics of a
successful entrepreneur and they will have to associate with
other people to get ahead. If they are smart and know how to
focus on their own and surround themselves with other
people who can help them with other aspects of the
business, they will do very well.

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Types of Entrepreneurs
 The entrepreneur by chance
This person became an entrepreneur by
chance (ex. a person inherited a business from parents
or relatives)
 The business entrepreneur

They usually have great technical knowledge

and a solid academic background. They know almost
every aspect of a business and know how to surround
themselves with the right people. If they can find a
good idea and have experience, they will be the most
appropriate entrepreneurs for the company to move
forward.

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Types o entrepreneurs
 The entrepreneur out of necessity
They do not want to start a company;
actually they would like to be a happy employee, but
can’t find a job, so they decide to start a business.
Sometimes, this type of entrepreneur can succeed, but
unfortunately many cases of total failure are known.
 The visionary entrepreneur

They have a time machine, which allow them

to travel to the future and anticipate what is to come.
They are creative they are not afraid of risk. Their
greatest strength may also be their greatest weakness:
sometimes, it will be difficult for them to focus on what
they actually have because you might find them
thinking about future projects.
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Types of entrepreneur
 The leading entrepreneur
They are able to convince all of their team in
order for the company to do well and the employees to
perform at their best. It is the image of their company
and their greatest value. Usually they are
entrepreneurs with a great career and who have a
huge charisma.
 The investor

They have loads money, extensive knowledge

in the world of the company, and the experience of
other successful companies previously created by
them.
At times, they will seek to associate with other people they consider
appropriate because they have extensive technical knowledge and if
they have had a good idea, to which they will contribute their capital
and experience in the business world. 27
Types of entrepreneur
 The one who chases opportunities
They cannot stop talking about having 10
extraordinary ideas everyday. They have the enterprise
in their veins, and that leads them to create one
company after another. Watch out! Sometimes having
ten ideas and ten companies might not be a great idea
after all.
 The commercial entrepreneur

They do good in selling and buying. They have

an overwhelming gift for people, they have done well in
their commercial career, and now they have decided to
start their own company.
If they surround themselves with people who can help
them with other aspects of their business, they will
achieve great things. 28
Types of entrepreneur
 The humble entrepreneur
They have a dream: to reach happiness. To do
this, they do not need to earn large amounts of money
or get their company to become a multinational,
but they just want to reach happiness doing what they
love. This is the most common type of entrepreneur
and if they have luck, experience and knowledge, they
will do well.
 The technological entrepreneur

They have technical training, but they have

also been bitten by the entrepreneurial worm. These
types of entrepreneurs are very popular. Ex. Bill Gates

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Types of Entrepreneurs

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Innovative Entrepreneur

 These are the ones who invent the new

ideas, new products, new production
methods or processes, discover potential
markets and reorganize the company’s
structure. These are the industry leaders
and contributes significantly towards the
economic development of the country.The
innovative entrepreneurs have an unusual
foresight to recognize the demand for
goods and services. They are always ready
to take a risk because they enjoy the
excitement of a challenge, and every
challenge has some risk associated with it.31
Imitating Entrepreneurs
 The imitating entrepreneurs are those who
immediately copy the new inventions made by
the innovative entrepreneurs. These do not
make any innovations by themselves; they just
imitate the technology, processes, methods
pioneered by others. These entrepreneurs are
found in the places where there is a lack of
resources or industrial base due to which no
new innovations could be made. Thus, they are
suitable for the underdeveloped regions where
they can imitate the combinations of inventions
already well established in the developed
regions, in order to bring a boom in their
industry.
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 Fabian Entrepreneurs

 These types of entrepreneurs are

skeptical about the changes to be
made in the organization. They do
not initiate any inventions but follow
only after they are satisfied with its
success rate. They wait for some
time before the innovation becomes
well tested by others and do not
result in a huge loss due to its
failure.
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 Drone Entrepreneurs

 These entrepreneurs are reluctant to

change since they are very conservative
and do not want to make any changes in
the organization. They are happy with their
present mode of business and do not want
to change even if they are suffering the
losses.

 Note: This classification is done on the

basis of the willingness of an entrepreneur
to create and accept the innovative ideas.

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 What type of entrepreneur are
you?

Face the truth and make a change if it needs to be

made. Success will be different for each of us, but if
you’re stuck, it could be because you’re not the type of
entrepreneur you should and want to be or you might
not be interested in becoming an entrepreneur.

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 Business Idea
 A business idea is a concept that can be used for
financial gain that is usually centered on a product
or service that can be offered for money. An idea is
the base of the pyramid when it comes to the
business as a whole.

 Find something you love to do and are good at

doing

 Can your idea satisfy a need in the

marketplace?

 Entrepreneurs must be sure that the idea

they choose has interest in the
marketplace

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WHAT IS A BUSINESS IDEA?

 A business idea is a short and

precise description of the basic
operations of an intended
business. A good business
starts with a good business
idea. Before you can start a
good business you need to
have a clear idea of the sort of
business you want to run.

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 A successful business meets the
needs of its customers while making
profit.
Your business idea will tell you:
• What product or service your
business will sell.
• Who your business will sell to.

• How your business is going to sell

its products or services.
• Which need your business will fulfill
for the customers.

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What?

What type of product or service will your

business sell? Your business idea should
be based on products you know about or
services you are good at. They must be
products or services that people are willing
to pay for.
 A product is an object that people pay for. It may
be something you make yourself or it may be
something you buy to re-sell. Tools, baked goods,
clothes and retail goods are products.
 A service is something you do for people which
they pay for, for example, shining shoes, delivering
messages and goods, keeping money safe in a
bank, repairing bicycles, etc. 39
WHO?

 Who will buy your products or service?

Customers are an essential part of every
business. It is important to be clear about
the customers you intend to sell to. Will you
sell to a specific type of customer or to
everyone in an area? There must be
enough people who are able and willing to
pay for your products and services
otherwise the business will not make profit.

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HOW
 How are you going to sell your products or
services? If you plan to open a shop, this is clear,
but a manufacturer or service operator can sell in
many different ways. A manufacturer can, for
example, sell either direct to customers or to
retailers.

WHICH
Which need will your product or service satisfy for
customers? Your business idea should always have
the customer’s needs in mind. It is important to find
out what your future customers want when you work
out your business idea.
THINK OUTSIDE THE BOX

Think imaginatively on new business ideas.

Don’t limit your ideas inside the box.

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 TREE AND BUSINESS

 A tree starts from a small seed.

If you choose a good seed and
a proper place to plant, it can
grow into a healthy tree over
time. In a similar way, a
business starts from a good
business idea and it can grow
into a healthy business.

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TREE AND A BUSINESS

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Activity I. Creating a business
Idea
 Instruction.
Group yourselves into 3
groups. Each member of the
group should think of one good
business idea and draw an object
in the manila paper/bond paper
that represents your business
idea.

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Start your business

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Step 1

 Know your market

( customers and competitors)
Customers
• Those who already buy your
product
• Those who will buy your product
if you have a good marketing
plan
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 Competitors
• Those who sell exactly the same
product or service

• Those who sell similar products

• Those who may want to copy

your product

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Be very clear about your
customers. Who are they? What
do they like?

* The more you know about your

customers, the more successful
your business will be.

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Step 2. Product/s or services

 What does your customers and

competitors needs and wants?
 Why do they need y to buy the
product from you?

It is important to sell what your

customers want.

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Step 3. Place/ Location

 Place means where your

business is going to be located and how
your products will be seen by customers.
• For a manufacturer, place also means the
method of distribution you choose for your
products.
• Ways to distribute products to customers:
• Direct distribution
• Retail distribution
• Wholesale distribution

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Step 4. Promotion

 Promotion means informing and

attracting the customers to buy
your products or services.

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Sales promotion

 Sales promotion is the process

of persuading a potential
customer to buy the product.
Sales promotion is designed to
be used as a short-term tactic to
boost sales – it is rarely suitable
as a method of building long-
term customer loyalty.

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Sales promotion also means

 Everything you do to make

customers buy, or buy more from
your business.
 Attractive displays

 Giving demonstrations

 Giving free samples

or try-outs
 Discounts

 Credit

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Direct marketing

The business of selling

products or services
directly to the public, e.g.,
by mail order or telephone
selling, email, websites,
online adverts, database
marketing, fliers, rather
than through retailers. 57
Advertising

• Giving information to your

customers to make them more
interested in buying your products
or services.
• Ways of advertising
1. Posters
2. Pamphlets
3. Signs
4. Pricelists
5. Business cards

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Public relation

 is the process of generating

positive media coverage for a
company. PR results in
increased good will felt toward a
company from its target
audience of consumers. Using
PR as a tactic to promote
products or services requires
creating a list of media contacts
and pitching them story ideas. 59
Step 5. Pricing
 Setting the price of your product/service in
YOUR chosen market location for your
specific customers
• Pricing is one of the most important
decisions in business.
• In the 4P’s, pricing is one of the factors
that will help you make a sale by
convincing your customer to buy your
product.
• However, sales are not enough. Your price
should also give you enough profit to make
your business run and grow.
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4 ways of establishing prices
of product or service
 Cost-Plus Pricing
Many manufacturers use cost-
plus pricing. The key to being
successful with this method is
making sure that the "plus"
figure not only covers all
overhead but generates the
percentage of profit you require
as well.
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Sample computation

Cost of materials 50.00

+ Cost of labor 30.00
+ Overhead 40.00
= Total cost 120.00
+ Desired profit (20% on sales) 30.00

= Required sale price 150.00

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Demand Price
 Demand pricing is determined by the optimum
combination of volume and profit. Products
usually sold through different sources at
different prices--retailers, discount chains,
wholesalers, or direct mail marketers--are
examples of goods whose price is determined
by demand. A wholesaler might buy greater
quantities than a retailer, which results in
purchasing at a lower unit price. The
wholesaler profits from a greater volume of
sales of a product priced lower than that of the
retailer. The retailer typically pays more per
unit because he or she are unable to purchase,
stock, and sell as great a quantity of product as
a wholesaler does.
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Competitive Pricing

 Competitive pricing is generally

used when there's an
established market price for a
particular product or service. If
all your competitors are
charging Php100 for a
replacement windshield, for
example, that's what you should
charge.
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 To use competitive pricing
effectively, know the prices each
competitor has established. Then
figure out your optimum price and
decide, based on direct comparison,
whether you can defend the prices
you've set. Should you wish to
charge more than your competitors,
be able to make a case for a higher
price, such as providing a superior
customer service or warranty policy.

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Markup Pricing
 Used by manufacturers, wholesalers,
and retailers, a markup is calculated
by adding a set amount to the cost of
a product, which results in the price
charged to the customer. For
example, if the cost of the product is
Php100 and your selling price is
Php140, the markup would be Php
40. To find the percentage of markup
on cost, divide the dollar amount of
markup by the dollar amount of
product cost: 66
Step 6. Record keeping
•Keeping business records will make you
find out if you are making profit or not.
• Without records you will not know if you
have enough cash to continue your
business.
• To keep record means to :
1. Write down how much money your
business receives (Cash In) and pays
(Cash Out).
2. Put receipts and other documents
about money in orderly files (folders
and envelopes)

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Simple record keeping
Bal-
Date Cash In Cash Out ance
1 2a 2b 3a 3b 4
Item Amt Item Amt
Beginning
CASH 15,00
5-Jan Balance 0 15,000
10,00
5-Jan Bought 2nd Hand Oven 0
Bought flour, salt, yeast for
5-Jan bread 750
Bought stationery - pens,
5-Jan notebook 200
Bought cake
5-Jan mix,sugar,butter,choco 705
5-Jan Bought Fuel for 1 Month 1,000
Liquefied Petroleum Gas
(LPG) 600
13,25
Subtotal 5
CASH as of 5- 68
5-Jan Jan 1,745
Step 7. Costing and Profit

 Costs refers to the money your

business spends to make and
sell products or services.
 Costing Is the way or process
of calculating the total costs of
making or selling a product, or
providing a service.

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Importance of costing

 Set your price

 Reduce and control cost
 Make better decisions for the
business
 Plan for the future

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Types of costs
• Direct Cost
These are the costs or expenses that are necessary
and directly related to your products or services.
1. Direct material costs
2. Direct labor costs

These items are consumed every time you produce

a product.
You spend for these only when you produce a product.

It is easy to calculate how much you spend for

these items for each product you produce.

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Types of costs
Indirect costs
 These are all other costs, that are not directly
related to one particular product or service.

 Unlike direct costs, it is difficult to calculate

how much you spend for these costs for each item
you produce.
 Usually, you spend for these even if you do not
produce or sell anything.
 Often called overhead costs
• Rent
• Interest on your loan
• Electricity
• Telephone charges
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Depreciation cost

• If the equipment, tools, furniture, etc. in the

business break down, where do you get the money
to buy a replacement?
• Set aside money for replacement through
“Depreciation”
• Compute the depreciation of all the equipment,
tools, furniture, etc. in your business.

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Estimating Start-up Capital
 Before you can start a business, you will need
money for various payments – this money is called
“start-up” capital. Every business needs start-up
capital because it has to spend some money, for
example, on buying equipment and a place to
operate before any money can come in from the
sale of its products and services.

 Money you need to start your business

• Investments
• Initial working capital

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 Investments

 This may include payment for such items as:

• buildings
• furniture
• Machineries and equipment
• legal fees
• connection charges for electricity
• telephone services
• advertisement
• others

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 Initial working capital
 Initial working capital takes into account the initial
operating expenses, which is the money you have
to pay out during the first few months of operation.
 You must have enough money to cover these
payments until you can pay them from your sales
revenue.
 Initial Working/Operating Capital include:
• Rent of business premises
• Purchase of stocks/raw materials
• Salaries and wages
• Insurance
• Electricity/telephone bills
• Office supplies
• Promotion and advertising
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Sources of initial working
capital
1. your private savings
2. borrowing money from friends or
relatives who want to invest in your
business
3. borrowing from banks or other
financial institutions
4. special loans or grants from the
government, if your business
qualifies for a special loan or grant

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Estimate the Costs, Sales and
Profit from Your Business
 The basic tools for every business in
managing their finances are financial
planning and record-keeping.

 Before you start your business, you can

make business plans which will help you
to:

1. estimate what your costs and sales are

likely to be during your first year in
business
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2. find out if and when you can
expect your business to make
a profit during the first year
3. identify financial problems your
business may have during the
first year and work out what to
do to solve them before they
happen
4. present a clear picture of the
financial workings of your
proposed business to a bank if
you apply for a loan
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Profit

 All businesses need to make profit to

stay in business. Profit is not just the
money you will get into your
business from sales. Your business
costs you money to operate. You
have to spend money to run your
business and this money for the cost
of running your business has to be
subtracted from the sales to work out
how much profit you have made
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Computing for profit
Sales
 Less: Cost of Sales (Direct Material and Direct
 Labor Costs)
________________________
 Gross Profit
 Less: Operating Expenses (Indirect Costs)
_________________________
 Net Profit from Operations (Before Tax)
 Less: Provision for Income Tax
_________________________
 Net Profit

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Stages in the life cycle of an
entrepreneurial firm/ business

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The Business Tree

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Why do business fail
 Most reason have to do with running
out of money because the expenses
are larger than the income. You
avoid failure by making sure the
income is big enough, and expenses
are small enough.
 If you can’t sell enough, your
business will die in the end, because
too little money is flowing in. Your
tree have bad roots!

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Other Reasons Why Business
Fail

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Activity no. 2

 From the business ideas in your

first activity, summarize these
ideas to create a new business
idea. Provide a name for your
business. Prepare a very simple
business plan.

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Thank you.

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