UNIT 1: DEVELOPING A BUSINESS PLAN

Many of us Filipinos see education as a means of becoming successfully. You often

hear your parents reminding you of being a diligent student in school and working hard so
you can land a reputable position in a company or in the government, as these equate to
“success”. Some even view living abroad as measure of success. Living abroad has been a
traditional notion for all of us. Nowadays, however there are some Filipinos who see another
path to success-entrepreneurship.
How did entrepreneurship become a path to success? There have been many cases in
the Philippines where entrepreneurship has helped transform ordinary Filipinos into
millionaires because of running their own business. Some of the biggest corporations were
initially established as small start up companies. This course is a helpful tool to help you
become financially successful as a manager of your own business.
This course will provide you with the conceptual and practical entrepreneurship
techniques on how to establish your own future business, whether you will sell product, offer
a service, or do both in your town or locality. This course will be divided into two units. Until I
will deal with developing a business plan whereas Unit II will be the application and
implementation of the business plan. The conceptual and theoretical framework of building
a comprehensive business plan will be tackled and prepared in this course because this is
mandatory in setting up a business. The real success of your future business will depend on
your compliance with the set business plan. Therefore, this course also aims to teach you
how to effectively and sustainably run your future business base on the business plan
prepared.
Owning and running a business have its own challenges. You are in charge of all the
operations in your business; therefore, you need to know all of the risks involved, including
the operations, human resources, and problems in the economic market. You need to have a
sound business plan. Most of the failures are caused by the owner’s inability to see the
details of the internal and external affairs of the business. Running a business entails
research, testing, proper execution, and monitoring. This course will give you tools strategies
on how to make your business profitable.
 MODULE 1: Overview of Entrepreneurship
At the end of this module, I can;
1. Discuss the relevance of entrepreneurship in general, including its economic importance.
2. Define who is an entrepreneur
3. Explain the key concepts of common and core competencies in entrepreneurship
4. Delineate clearly between entrepreneurship and employment
5. Explore opportunities for entrepreneurship as a career.
____________________________________________________________________________
Before you prepare a business plan, you need to understand first the macro view of
entrepreneurship. This module will teach you the basics of the entrepreneurship beginning
with role it plays in society and economy. You will also key concepts of common and core
competencies which are required skills to become a successful entrepreneur. You will be able
to understand the pros and cons of being an entrepreneur as compared to being an employee.
A total persona of entrepreneur will be inculcated to you, including the chatecteristics,
behaviour, activities, values, and mindset. Last, you will be exposed to the various exciting
career opportunities in line with being entrepreneur.
What is Entrepreneurship?
Entrepreneurship is a proactive process of developing a business venture to make a profit. It
involves seeking opportunities for a market, establishing and operating a business out of the
opportunity, and assessing its risks and rewards through close monitoring of the operations. With this
definition, being an entrepreneur may seem difficult, but it can be rewarding if the enterprise
flourishes. Creating a sound business plan, along with efficient and effective operation of the business,
will not only benefit the entrepreneur but also the entire society and the economy.
An entrepreneur is successful if the business that he or she envisioned has materialized into a
thriving industry with regular customer and financial gain. He or she either decides to maintain his or
her business or expand. This eventually reflects on the society and the economy as a whole. Here are
the societal and economic benefits of entrepreneurship.
1. Entrepreneurship produces more jobs that equate to an increase in national income. Millions
of unemployed people will have the opportunities to have a decent occupation. Small businesses
produce jobs and wealth.
2. Entrepreneurship amplifies economic activities of different sectors of society. A simple eatery
in a rural area and a coffee shop in an urban area both ignite economic activity regardless of their
business scale.
3. Entrepreneurship introduces new and innovative products and services. New products and
services are always available in the market because of the ingenuity of entrepreneurs to seek
opportunities and improve on them.
 4. Entrepreneurship improves people’s living standards. How can you look good if not
for the services of your nearby salon or barber shop? How can your day be complete without
the food that a nearby eatery cooks? How can you live without the sari-sari store near your
house where you buy your basic needs?
5. Entrepreneurship disperses the economic power and creates equality. It balances the
economy by disturbing national income to more businesses rather than to only few
monopolies.
6. Entrepreneurship controls the local wealth and balances regional development. It
makes sure local resources are used properly and that every area has an appropriate
allocation of resources.
7. Entrepreneurship reduces social conflicts and political unrest. Imagine if there are no
or only few sari-sari or supermarket stores in your area. All of you will then fight for the good
supplies because the store cannot supply all your needs.
8. Entrepreneurship elicits economic independence and capital information. A country
with more entrepreneurs is highly likely to become financially independent and will less likely
need the help of other countries. This also applies to family, barangays, cities.
Entrepreneurship creates wealth instead of barrowing wealth.
Who is an Entrepreneur?
The word “entrepreneur” has a French origin and was coined from the words entre, which
means “between,” and prendre , which means “to take.”
An Entrepreneur is a unique individual who has the innate ability and extraordinary dedication
to establish and manage a business , acknowledging all the risks and reaping its rewards. Like other
vocations, being an entrepreneur is also a calling. It is not a career that one can just jump into when he
or she decides so. It entails a holistic business talent to be considered one , ranging from product and
marketing expertise to operations agility , and to financial proficiency.
An entrepreneur will only expect returns once he or she already added or created value out of
an opportunity. An entrepreneur’s natural talent is being perceptive for opportunities in his or her
surroundings that normal people don’t give importance to or often neglect. He or she sees existing
problems about a certain product or service as prospects rather than threats. Leadership is the core of
every entrepreneur . He or she is always excited about his or her business and bravely takes risks. He or
she innovates, executes his or her big ideas, and rarely procrastinates.
The definition of an entrepreneur only provides you with a general description or shows you
want is expected from an entrepreneur. However, entrepreneurship is composed of varying degrees or
levels of intensity. According to action coach, there are five levels of intrepreneurial development.
1.The self-employed. Self-employed persons are, simply put, not comfortable with routines of a
desk job. They do not want to conform to a fixed working schedule . They want to do things in their
own way and start to feel agitated when controlled by the powers-that-be. While they can be self-
sufficient, their tendency is to become too reliant on themselves , which leads to exhaustion. They will
eventually realize that a successful business should work for them , not the other way around. If they
realize this, they can move on the next level.
 2.The manager. In this level, entrepreneurs feel the need to step up and ask some
help from the people around them. They delegate and hire potential employees to do the
work. However, they may have the tendency to get more people who do not know the exact
needs and requirements of the job, because entrepreneurs think that the battle is in the
scale and not the profitability. As a result, entrepreneurs may get frustrated because the
business does not go as planned, and some potential problems arise from how employees
operate. When they begin to realize this, entrepreneurs will start knowing their employees
better, assessing their strengths and their areas for improvement. They will begin to create
positions that match the requirements of the business and the employees’ expertise.
Entrepreneurs can now move on to the next level.
3. The leader. Entrepreneurs in this level already enjoy seeing their people flourish ,
stepping up and producing great results with minimal supervision. Unlike before where they
are in charge of virtually everything, they can now sleep peacefully at night and have more
freedom and time for themselves. They already recognized key leaders in their organizations.
In effect, these key leaders also enjoy the entrepreneurs’ trust and are satisfied with the
outcome of their careers . Entrepreneurs at this stage now focus on the big picture and
strategic direction of their business rather than in generating sales and operating the
business. At this point, entrepreneurs can now move on to the next level.
4.The investor. Investors look for more opportunities for their business to grow. They
may either purchase one or two business that can potentially add value to the company, or
sell their established business(as a franchise ) to potential entrepreneurs. They will
delegate a suitable manager for such operations and will act as directors. When this
becomes successful, they will now become true entrepreneurs.
5. The true entrepreneur. True entrepreneurs, based on their experience, now aim
for quality and excellence in their work. They have fully learned, and to continue practice, a
four-step process of thinking; starting with idealization, visualization, verbalization, and
materialization, entrepreneurs start to create plans to make the dream a reality.
Verbalization involves sharing their ideas with other people, knowing that their vision is
already occurring. Materialization happens when the vision becomes a reality. In this stage,
true entrepreneurs now have an income that keeps on multiplying even if they do not put
much effort.
The world of entrepreneurship these days has already evolved, and new terms are
coined to suit an entrepreneur’s field or expertise. Here are some of them.
1. A technopreneur is an entrepreneur who puts technology at then core of his or
her business model.
2. A social entrepreneur is one who takes advantage of the country’s social
problems and turn them to profitable institutions with the intention of helping the
disadvantaged community rather than making a profit.
 3. an intrapreneur is an entrepreneur on a large company corporation who is tasked to
think, establish, and run a new big idea or project. Intrapreneurs are usually the product
managers or the business development managers of a company.
4. An extrapreneur is an entrepreneur who hops from one company to another to act
as the innovation champion, providing creative and efficient solutions.
Common and core competencies in Entrepreneurship
Entrepreneurship is a career that requires a plethora of common and core
competencies. Therefore, to be considered a successful entrepreneur, he or she must possess
common entrepreneurial competencies that are needed all throughout the entrepreneurship
career. At the same time, he or she should also possess core competencies that are needed
for business sustainability and management.
Here are the common traits that entrepreneurs should always have.
1.. Entrepreneurs are reactive rather than passive. They address issues, problems,
anProactived challenges before they come rather than when they already happened. They
ensure that proper research is done, the risk factors are assessed, and plans are executed on
a timely and most efficient way.
 2. Agents of changed. Entrepreneurs are innovation champions. They see opportunities
in hopeless and complex situations. They are always enthused to improve and develop new
products and services and introduce them to the market. They don’t settle for mediocrity and
the status qou.
3. Risk takers. Entrepreneurs will not be successful if they do not take risks. By taking
risks, entrepreneurs do not just grab opportunities left and right; they have to take into
consideration and potential various threats they may encounter. Entrepreneurs calculate risks;
if they think that there is a big chance of succeeding, they push through with the venture and
don’t let the opportunity pass.
4. Have a sharp eye for opportunities. Entrepreneurs have a talent for recognizing an
opportunity even by using the macrolevel data only. They know how to assess the net cause
and effect of an opportunity and decide intelligently if a venture should be considered or not.
5. Sociable. Soft skills are one of the most important competencies of entrepreneurs as
these establish the relationship with the most important assets of the company──its people
and its customers. Relationship management is the key for employee and customer retention,
which can be achieved by a sociable entrepreneur.
6. Networkers. A networker knows the key people to connect with. Networking can be
a very intimidating task, for it takes a lot of guts to pull it off. Successful entrepreneurs gain
trust of their valuable network and maintain a long-lasting relationship with them.
 7. Decisive. Entrepreneurs always have a decision about their business. They do not
settle for gray areas or unclear solutions. They do not leave an issue unsolved without a
disposition. They make sure that all aspects of their business have clear objectives and
strategies. Last, they base their decisions on scientific calculations backed up by their
experience and strategies and technical knowledge.
8. Balanced. The minds of entrepreneurs should have a balance between the
analytical and the creative side. Their brains are always playing with “unique ideas” that
no one has ever thought of yet. Entrepreneurs always have “Eureka!” moments and
enjoy them.
9. Innovative. The minds of entrepreneurs are rich with big ideas that can add value
to their existing business or could become a game changer in the industry or business
where they belong. They do not stop improving and thinking of new and worthwhile
ideas for their business.
Here are the core traits entrepreneurs should develop in managing in running the
business
1. Leaders. Successful entrepreneurs always have the heart of the leader. To be
successful leader they must be a source of inspiration of their employees. They must be
very humble, approachable, friendly, and also know how to listen to people’s concerns.
Leaders act on their responsibilities that were given to them. They use their strengths
and limitations to make the best of a situation. They must also be decisive and know how to
own up to their decisions. They know how to unite the team and bring out the best in every
employee.
2. Communicators. Entrepreneurs know how to use all forms of communication to effectively
share ideas and address certain concerns with their costumers or employees. Effective
communication not only provides people with a clear view of what business offers, they
also help prevent mishaps in an organization. Communication channels between
entrepreneurs and their employees or customers should always be open to ensure the
smooth flow of operations in their business.
3. Specialists. Entrepreneurs are expert in their chosen business. They are tactical and are very
keen with details. When asked about the specifics of their products or service, they can
easily answer without heavily relying on their people. They understand the totality and
specificity of their business. As a result, they can easily think of innovating and improving
the product or service offerings because they know their intricacies. They enjoy being in
action instead of being behind the scenes.
4. Problem Solvers. Entrepreneurs possess critical thinking skills and look at problems as
challenges or puzzles that they need to solve. They know how to handle issues in any area
of the business, be it finance, operations, or marketing. They listen to the plight of their
employees on certain problems involving their units, and come up with strategic solutions.
Entrepreneurs are able to solve problems by immersing themselves in day-to-day activities,
knowing what is happening in and out of their business. Entrepreneur should also be aware of
their employees’ personalities; they must know how and when to use them to help solve
problems. Entrepreneurs have faith that every problem has a solution no matter how hard it is.
They must also be courageous and know how to face consequences of their decisions.

Entrepreneurship or Employment?
Entrepreneurship and employment are two different career paths that a person can
choose depending on his/her personal aspirations and work characteristics. It is really up to the
person at the end of the day on what career trail he/she will follow, considering all compelling
career factors that are important to him/her. Table 1.1 shows a comprehensive list of the perks
and the downsides of being an entrepreneur as compared to being employed.
 Important Entrepreneur Employee
career factors
1. Income • Income generated passively even when the entrepreneur is • Income generated actively (i.e., on working hours only); no work= no
resting. pay
• Opportunity income unlimited, depending on the success of • Income usually fixed per month and increases every year depending
the business on the employer and employee’s performance
• Income only earned when the business is successful • Income earned whether the business is successful or unsuccessful

2. Hiring and • Provides job; is the owner of the business and conducts the
Firing, talent selection • Seeks for a job; is the one applying for a job and is interviewed by
Organizationa • Fully responsible for serving customers, making the the company’s hiring officers
l Setup, and business profitable/sustainable, and providing employee • Has the goal of satisfying only the employer or the direct supervisor
Major Key satisfaction • Fully dependent on the employer’s performance; is at risk of losing
Result Areas • Has the power to disengaged nonperforming employees his/her job if the company does not perform well; may find it
applying the due process policy of the disengaging difficult to just leave their below par employer if this only source of
personnel. income
• Can venture into expansion of business such as franchising • Can only work for the current employer exlusively
and buying other similar businesses.
3. Daily Tasks • Performs all necessary variable tasks to establish and • Has routine tasks and works on regular or normal hours
manage a startup business, which usually takes most of the • Follow policies, procedures, and memoranda from the employer
entrepreneur’s time; spend more hours on work than a
regular employee and sometimes gets no sleep
• Prepares policies, procedures, and memoranda for the
business.
4. Leisure • Has a flexible schedule and can take unlimited number of • Has unlimited number of vacation days imposed by the employer
Time and vacation days (applicable only if the business has stabilized
Vacations already)
5. Taxation • Taxed on the net income ; can claim
taxable income deductions for allowable
expenses incurred by the business
6. Comfort level at work • Is comfortable in doing multiple and
challenging task and takes accountability
with the risks and profits of the business;
does not want to be confined in a box;
thinks outside the box or sometimes thinks
there is no box
• Taxed on the gross income ; cannot
use expenses incurred related to
the job such as food and
transportation expenses to claim
for deductions from taxable income
• May be comfortable with routines
and minimal risks; may also be
comfortable in working for the
company itself.
 Careers in entrepreneurship
Entrepreneurship consists of vast career options depending on the passion and field of
interest of the entrepreneur. The saying “When you love what you do, it’s as if you are not working” is
very much applicable to entrepreneurs who considers managing their business as enjoyment rather
than working exhaustively.
Here is a list of the most common small businesses in the Philippines.
1. Sari-sari store. There are approximately more than one million sari-sari stores in the
Philippines. Situated in almost all neighbourhoods , these convenience stores provide affordable basic
retail products to nearby communities. A sari-sari store is one of the easiest businesses to set up due
to the minimal capital required and because it can be managed at home, where the business owner
lives.
2. Rice retailing. Because rice is the staple food of Filipinos and other Asian countries, rice
retailing business is very common in the country. According to the infographic presented by rappler
(2012), Filipinos spend 20% or 20 centavos per every peso for rice. An average Filipino consumed an
average of 92 kilograms (kg) of rice from the 1980s to 1990s, 111 kg from 2008 to 2009, and 119 kg
from 2009 to 2010.
3. Food cart business. This business is also very popular in the Philippines. The number of food
cart businesses is not as big as number of sari-sari stores, but food carts are present in almost every
populous location. They are usually located inside or outside the malls, schools, parks, train stations,
and offices. Popular food items sold in food carts are dumplings (siomai), boiled fertilized duck eggs
and quail eggs deep fried in batter (tokneneng and kwek-kwek), fish balls amd squid balls, burgers,
fried noodles, shawarma, hotdogs, sandwiches, pizza, donuts, and pastries. Popular beverages sold by
food carts are sago’t gulaman (tapioca pearls and jelly), soft drinks, mineral water, milk tea, coconut
juice, and other juices. Food cart businesses are usually usually under franchising arrangements.
 4. Printing business. This business is also lucrative in the Philippines because the
demand is very high. Usually situated near schools and offices, printing businesses cater to
needs of students for their projects and also to offices for their advertising and business
requirements (Flyers, billboards, magazines, newspapers, journals, and calendars). Printing
businesses also cater to the printing demands of occasions such as weddings, anniversaries,
birthdays, funerals, and graduations.
5. Buy and sell business. This business is one of the emerging businesses in the
Philippines, and it is not just done traditionally in brick-and-mortar stores but also over the
Internet. The influx of buy-and-sell web site has changed the behaviour of how Filipinos
exchange goods in the most efficient and practical way. Every one can technically be a seller
even without an actual business.
6. Street food business. Just like the food cart business, this kind of business is
widespread in the Philippines. Street foods businesses are literally located in streets, selling
almost the same food products being sold by the food cart business. Majority of the street
food business owners are selling grilled food items such as barbecue. Some unusually popular
street foods isaw (chicken intestines), Betamax (chicken blood), and adidas (chicken feet). The
famous balut (developing duck embryo) is also sold in the streets. These street food
businesses have been successful and are timeless.
 7. Flea market business or tiangge. In this type of business, entrepreneurs set up a small space
and sell any type of goods in a palengke steup that is normally in an open space. Customers are more
interested to buy from this flea markets because they can bargain for the price. Products being sold
range from clothes, to foods, items, to souvenirs, and to household effects.
8. Online selling business. This business deals with adding the Internet as marketing and
transaction channel for selling. This very similar with the buy-and-sell business, except that the focus is
on selling existing and established products online. The Internet has the revolutionized the way
Filipinos transact business.
9. Cellphone loading business. More than 95% of Filipinos are prepaid mobile phone users,
according to an article published by the Philippine daily inquirer (2012). Moreover, 80% of Filipinos
households have assess to mobile phones. This is the reason why there are so many cellphone loading
stations in the country. Some entrepreneurs link he cellphone loading business to their existing
businesses such as the sari-sari store, food cart, or online business.
10. Laundry and dry cleaning business. This type of business is often located at central business
districts and areas with several condominiums and townhouses. Furthermore these business
establishments also have a significance presents near schools, dormitories, and apartments. One thing
common about the residents of these places is that they do not have enough time to wash and dry
they clothes and just give the job to the laundry and dry cleaning business. The business owner should
follow hygiene requirements before starting this business.
 11. Hair styling and make up business. One of the successful businesses in the
Philippines is the hairstyling business., which includes parlors, and barber shops. Aside from
the core service of giving haircuts, this business also offers auxiliary services such as hair
treatments (perm, straightening, highlighting), massage, and nail styling. Filipinos are generally
conscious about proper grooming and hygiene, so that’s why this business is profitable.
12. Spa, gym, and nail care business. Related to the hair styling and make up business
in the spa, gym, and nail care business. One of the ways Filipinos cope with stress is by going to
a spa. This business offers a range of massage treatments such as facial and body scrubs.
Filipinos now also go the gym because Filipinos are becoming health-conscious. Nail care is
very much enjoyed by Filipino women who avail of manicure, a pedicure, or both. Filipino men
are also focusing on their overall appearance these days.
13. Video and photography business. This business requires talent in capturing precious
moments of celebrators in weddings, birthdays, anniversaries, graduation and other important
events. This business is gaining popularity because of the presence of social media, were
videos and photographs supposed to be shared to other people.
14. Tutorial business. This business caters to students who are not able to catch up with
their lessons, or those who just want to be ahead in class. A tutorial business is composed of
experts in a particular field who transfer their knowledge to another for a fee. In the
Philippines, the tutorial business has become an important aid in reinforcing and enriching the
students’ basic education knowledge.
 15. Baking business. A lot of bakeries are present in almost all neighborhoods in the
Philipinnes because bread is the second staple foods of Filipinos. Pan de sal is the most
common bread being offered by this business.
16. web site development and design/blogging. The popularity of the Internet brought
so many opportunities to Internet-savvy budding entrepreneurs. In this business, the web site
developer conceptualizes and implements a web site for another business whose objective on
to inform, persuade, and remind its customer. Blogging, although initially made as a site to
write your personal thoughts, has a become source of income by online writers, depending on
the writer’s agenda. A blog may become famous or successful if the site has a number of
followers or readers. Some people may earn cash by allowing companies to place ads in their
blogs.
17. Direct selling business. This business is also very common in the Philippines. It is
face-to-face selling of products by sales agent. The products include fashion accessories,
health and wellness items, clothing, food supplements, and homecare items.
18. Car wash and car care business. You often see this business in large cities of the
proliferation of cars. In fact, the demand for car care increases every year.
 19. Bar, cafè, restaurant. The number of foodies (food enthusiasts) has increased
because of the Filipino plate became globalized. Filipino customers’ demand for variety and
quality taste has evolved as well; thus, these businesses are continuously thriving.
20. Water station and LPG (liquified petroleum gas) station. These businesses can
never go wrong as they continuously serve households, supplying them with their purified
water and gas needs. The products that they sell are used for daily consumption, which is why
a lot of these are almost every corner in the Philippines, especially in the urban areas.
No successful business started huge right away. A business starts with an idea. Once the
business is established, the business owner, the entrepreneur, can choose to expand and
explore franchising, intrapreneurship (managing a startup business is an established business),
and acquisition (buying another similar business or a new business). Franchising is a business
arrangement wherin the franchisor, who is the owner of the business, aquires distribution
centers through the franchisees or the affiliated dealers.
 Listed below are Entrepreneur Philippines’ franchise business options in the Philippines,
which a potential entrepreneur can pursue after college or even after finishing K to 12
program.
Franchise or Startup Businesses
. Bakeries, bakeshops, and bread products . Food and snacks carts
. Bars, cafè, and coffee shops . Gas stations / petroleum products
. Beverage and confectionary .General merchandise and retail
. Car care . Health and wellness (salon, massage, spa
and gym)
. Clothing and accessories . Schools
. Covenience stores . Services (personal and business)
. Drug stores and pharmacies . Water stations
. Fast food establishments and retaurants
 Other Additional Business Opportunities
. Dealerships
. Direct selling
. Distributorship

Again , the entrepreneur is limited to the business cited. An entrepreneur can actually
choose any business that may be embraced by the potential target market. Therefore, career
options for entrepreneurs are limitless and boundless. In light of the 2015 ASEAN integration,
which includes the opening of free trade (high-quality products can be exported around the
Southeast Asian region), as an entrepreneur, you should also think of the global scale in
creating your products and providing excellent services to your customers. You should also be
given easier access to financial resources to help your business.
Module 2: Recognizing the Potential Market
At the end of this module, I can:
1. Identify the market problem to be solved or the market to be met.
2. Propose solutions in terms of product and services that will meet the need using techniques on
seeking, screening, and seizing opportunities.
a. Analyse the market need.
b. Determine the possible products or services that will meet the need.
c. Screen the proposed solutions based on viability, profitability, and costumer
requirements.
d. Select the best product or service that will meet the market need.
__________________________________________________________________________
As the saying goes, the most difficult part of every task is where and how you start.. The
same is true with entrepreneurship. You may have all the resources needed to operate a new
venture, but it will never be easy to start one. This module will discuss the proper and efficient ways
of starting a business. You will be introduced to the entreprenuerial process, which starts with
identifying and evaluating the opportunity. The heart of this module is the scanning of the
marketing environment where you can formulate a product or a service solution applying the
techniques of seeking, screening, and seizing opportunities . As a result, you will deal with analyzing
the need of the market, think of the potential set of products or services that will meet the
need, assess the feasibility of the solution, and select the best product or service that will
address the need.
The Entrepreneurial Process
The entrepreneurial process is a step-by-step procedure in establishing any kind of
business that an entrepreneur has to undergo. It is composed of four aspects.
1. Opportunity spotting and assessment . This is the beginning of the process and is
considered the most difficult. Entrepreneurs at this point take note of interesting trends in
their environment. Consumers are reliable sources of opportunity information because
market needs originate from them. Other major sources of opportunity are the glaring
problems in the environment, problems encountered by co-entrepreneurs, new trends,
processes, and developments in the environment. Other minor sources are feedback from
distribution or business partners such as retailers, wholesalers, manufacturers, and
technical people that the entrepreneur is working with. The entrepreneur’s toughest job is
to carefully assess the opportunity through estimation of opportunity length, capitalization
required, threats, profitability, and calculation of real and perceived value. Entrepreneurs
should also assess if the opportunity is aligned with their personal goals and attributes.
Last, entrepreneurs should already think in advance how they will position the product
Or service in the market and showcase its unique selling proposition. This module will focus mainly
on opportunity spotting and assessment, which represent the entrepreneur’s stimulus in starting a
new venture.
2.Developing a business plan. Entrepreneurs should formulate a business plan when they
have already spotted and assessed the opportunities for a market. A business plan is a
comprehensive paper that details the marketing, operational, human resource, financial, strategic
direction, and tactics of the business. The business plan will be the core guide and direction of the
entrepreneur in calculating the resources needed, assessing how to obtain these resources
efficiently, and running the business sustainably.
3. Determining the capital needed. A big idea can never be translated into reality if the
entrepreneur’s resources are limited. Therefore, it is mandatory in the entrepreneurial process to
calculate the resources needed to establish the business and compare this against the
entrepreneur’s current resources. Caution must be applied in computing the complete set of
resources needed and include only those items that are considered as the real needs in venture
creation. Allowance must be considered as well because there will be times that resources will be
inadequate or unsuitable.
4. Running the business. This is the part where the entrepreneur should use the resources
allocated for the new venture. The business plan prepared in step 2 should already have been
implemented. All aspects of the business plan should be critically observed from operations,
marketing and sales, human resources, finance, and strategy implementation. The
entrepreneur should have a control and monitoring system to serve as a check and balance
of the formulated plans.
Table 2.1 summarizes the components and steps in the entrepreneurial
process(hisrich,2010)
Table 2.1. Components and steps in the entrepreneurial process
Opportunity Spotting and Developing a business plan Determining the capital Running the business
Assessment needed
• Evaluate the identified • Come up with a business • Calculate the intrinsic • Practice leadership as a
opportunity description and analysis and extrinsic capital way of life
needed
• Conceptualize and • Perform industry analysis • Calculate the existing • Recognized critical
measure the opportunity capital success factors

• Identify the perceived • Come up with the • Calculate the difference • Identify existing and
value of the opportunity marketing plan between the needed foreseeable problems
to the company and the capital and existing and issues
costumers capital. Choose the most
cost-efficient suppliers
or service providers
• Do cost-benefit • Prepare the operations plan including the • Develop contact • Employ risk-
analysis of the organizational plan and relationship mitigating controls
opportunity with suppliers and and monitoring
including risk service provides system
analysis
• Match the • Come up with the financial plan • Devise an
opportunity with expansion/sustaina
the entrepreneur’s bility strategy
skills and
objectives
• Scan the strengths • Identify strategies and tactics
and weaknesses of
competitors

• Perform monitoring and control

 Scanning the Marketing Environment
Scanning the marketing environment is the starting point of any new venture that
involves understanding and knowing the intricacies of the macroenvironment,
microenvironment, and internal environment. With this process of scanning the general
environment, an entrepreneur can recognize various opportunities and at the same time
understand thoroughly the arena where the future business will operate. The process of
seeking, screening, and seizing is adapted to create the most suited product or service for
an opportunity. The general rule is to find the opportunity first before coming up with a
new product or service, not the other way around. This is one of the mistakes that budding
entrepreneurs commit in starting a new venture
Seeking, Screening, and Seizing
The 3S opportunity spotting and assessment is the framework that most of the
promising entrepreneurs use to finally come up with the ultimate product or service suited
for a specific opportunity. An opportunity is an entrepreneur’s business idea that can
potentially become a commercial product or service in the future. The entrepreneur serves
as the catalyst of creating a value for the costumers through the new or innovated product
or service. As a reward, the entrepreneur earns profits when the costumers are satisfied
and delighted
S1: Seeking the Opportunity
Opportunity seeking is the first step and is the most difficult process of all due to the number
of options that the entrepreneur will have to choose from. It involves the development of
new ideas from various sources as follows:
1. Macroenvironmental Sources
a. STEEPLED. This is a mnemonic for sociocultural, technological, economic,
environmental, political, legal, ethical, and demographic factors. This represents the general
environment where the entrepreneur can identify business opportunities from and where
the future business is about to operate. Any external factor or a combination of external
factors from these eight environmental forces can have a direct effect in opportunity
generation and business sustainability. These will be discussed further later sections.
b. Industry. This is the source of current trend on what is happening in the industry
where the future business will belong to. For example, the entrepreneur should be fully
acclimated on what is happening with the rice industry if he/she wants to establish a rice
retailing business.
c. New Discovery or Knowledge. This are new trends that can be the core business
model of new venture. For example, the influx of model applications necessitates businesses
to have this platform as one of their transaction channels.
d. Futuristic opportunities. These are projected new opportunities that can
possibly affect to the new business while it running. For example, Sari sari
stores in the future will be able to incorporate financial transactions such as
accepting bills payment and process remittance.
2. Micromarket
a. Consumer preferences, interests, and perception. These are the current
needs and wants of potential costumer that should be discover right
away by budding intrepreneur. This way, he/she will be able to take a
chance of the opportunity. A need is recognized when a costumer
believes that there is a difference between his/her current situation
versus his/her desired condition. A want, on the other hand, is
recognized when a costumer believes that there is a specific product or
service that can perfectly suit the need.
b. Competitors. Recognizing and understanding potential competitors will
aid the entrepreneur to develop a product or service that is unique and
will surely stand out from the competition. The 4Ps of marketing
(product,place,price and promotion) will be competitively position if the
entrepreneur is familiar with his or her competitors.
• B. Competitors. Recognizing and understanding potential competitors will
aid the entrepreneur to develop a product or service that is unique and will
surely stand out from the competition. The 4Ps of marketing
(product,place,price and promotion) will be competitively position if the
entrepreneur is familiar with his or her competitors.

• c. Unexpected opportunities from customers. Oftentimes, the most brilliant

ventures comes from the most unexpected opportunities. It may happen in
unlikely situation, unlikely places, and unlikely with people. Existing
problems and bottlenecks often give rise to an unexpected opportunity.
What entrepreneur usually do is be on of the situation and change the
market’s perception of a product or service or build a new market. In the
Philippines, there are a number of budding social entrepreneurs who
turned unnoticed products into superstar products that carry also the value
of social responsibility.
 d. Talent, hobbies, skills, and expertise. Business opportunities do not just come from
outside forces, but also from within the entrepreneur. The entrepreneur’s talents, hobbies,
skills, and expertise can be a source of business opportunity. For example, if the entrepreneur
is an artist, why not sell his or her paintings? If he or she is a musician, why not put up a bar
and perform there? If he or she is an expert in home design, why not make it a business?
e. Irritants in the marketplace such as deterrents, problems, complains, and delays.
Generally, entrepreneurs see opportunities in situations where there is recurring problems or
sometimes when there is no more hope in solving the problem. When customers are already
sick and tired of the same old issue or problem, that is when the opportunistic entrepreneur
should come in and make a difference.
f. Location. Often, entrepreneurs just have to look at their ecosystem and they will be
able to spot a business opportunity right away. For example, if the entrepreneur’s location has
many schools, than a restaurant, an eatery, or probably a computer shop might be a good
business to establish. If the entrepreneurs. If the entrepreneurs is in an island with awesome
beachfront, why not put up a hotel?
Methods of Generating Ideas
Recognizing and understanding a vast sources of opportunities is one difficult activity to
do. Also, the methods of generating ideas may be overwhelming to undergo through. Either
one or a combination of the methods given can be employed by the entrepreneur by
generating new ideas.
1. Focused group discussion (FGD). In this method, a moderator handles a very open,
free-flowing, and in-depth discussion with a group of people who can provide insightful ideas
about a new product or service that will fill a market need.
2. Brainstorming. Similar to an FGD, brainstorming is an activity that allows the
participants to share creative ideas using the following rules: (a) no destructive criticism or
judgement is allowed, (b) wilder ideas are accepted, (c) more ideas are preferred, and (d)
improvement of others’ ideas is allowed. In short, brainstorming is a fun discussion with lenient
rules.
3. Brainwriting or internet brainstorming. This is exactly the same as brainstorming,
except that the channel used is not face-to-face, but in writing or online. The results of
brainwriting or internet brainstorming usually take longer, as the answers depend on the
availability of the participants in answering the questionnaires online.
4. Problem Inventory Analysis. This method is similar to he FGD except that the
participants are already given an inventory of product or service problems. The participants
will just identify from the list given the compelling problem (s) of a potential product or service
instead of generating the ideas from them.
Macroenvironmental Sources: Example of Findings
STEEPLED Analysis
The result of the STEEPLED scan will aid the entrepreneur in deciding what product or
service to set up and whether this new venture will succeed or not. The focus of this scan is
only on the microenvironment. Again, not all factors can have an effect on the new venture.
The important thing is for the entrepreneur to fully scan these factors so he/she can decide if
there is compelling business opportunity or an impending threat.
1. socio-cultural factors. These factors represent a general view of a locality’s
traditions, customs, beliefs, norms, and perceptions. These factors affect how a person of the
locality behaves and reacts to marketing and selling activities.
The entrepreneur should take note of the following sociocultural factors:
• Health consciousness
• Educational level
• Attitudes toward imported goods and services
• Attitudes toward the person’s lifestyle
• Attitudes toward product quality and costumer service
• Attitudes toward saving and investing
• Emphasis on safety
• Buying habits
• Religion and beliefs
2. Technological factors. These are composed of innovations of an existing technology
or an invention of a new one mostly on applied science and engineering research areas.
Entrepreneurs should always up-to-date with the technological changes, as these are
catalysts in improving a product or service or replacing them entirely. The entrepreneur
should take note of the following technological factors:
• Basic infrastructure level
• Rate of technological change
• Spending on research and development
• Technology incentives
• Legislation regarding technology
• Communication infrastructure
• Access to newest technology
• Internet infrastructure and penetration
3. Economic factors. These factors play a vital role in the scanning of marketing environment because
economic factors directly affect any business venture. These factors include income, expenses, and resources that
cost of doing business and generating income.
The entrepreneur should take note of the following economic factors:
• Fiscal polices
• Price fluctuations
• Stock market trends
• Growth rates
• Inflation rates
• Interest rates
• Exchange rates
• Unemployment trends
• Labor costs
• Stages of business cycle
• Trade flows and patterns
• Level of customers’ disposable income
• Monetary polices
 4. Environmental or ecological factors. These factors should be given much importance
in conducting a business especially when the world has already suffered severely from human-
induced calamities. The scan of these factors will help the entrepreneur determine if the
business he or she is entering into will comply with the environmental standards or will just be
a hazard to people, animals, and nature. Moreover, the entrepreneur will know if the business
venture will be suited with the weather conditions in his/her locality.
The entrepreneur should take note of the following environmental factors:
• Weather
• Climate change
• Laws regulating environment pollution
• Air and water pollution
• Recycling
• Waste management
• Attitudes toward “green” or ecological products
• Endangered species
• Attitudes toward and support for renewable energy
 5.Political factors. These factors are mostly induced by government policies and
administrations, which can have a strong effect in the entrepreneur’s business.
The entrepreneur should take note of the following political factors and examples:
• Government stability and likely changes
• Bureaucracy
• Corruption level
• Tax policy (rates and incentive)
• Freedom of press
• Rule of law
• Government effectiveness
• Political rights
6. Legal factors. Related with political factors, legal factors are government laws and
regulations that can restrict or allow business activities.
The entrepreneur should take note of the following legal factors and examples:
• Anti-trust law
• Discrimination law
• Copyright, patents/ intellectual property rights
• Consumer protection
• Employment law
• Health and safety law
• Data protection law
7.Ethical factors. These are the factors that will serve as an entrepreneur’s guide on
how to be ethical in running the business.
The entrepreneur should take note of the following ethical factors:
• Ethical advertising and sales practices
• Accepted accounting, management, and marketing standards
• Attitudes toward counterfeiting and breaking patents
• Attitudes toward development and well-being of employees
 8. Demographic Factors. These are the characteristics of the people in the target
market.
The entrepreneur should take note of the following demographic factors:
• Population growth rate
• Age distribution and life expectancy rates
• Gender distribution
• Social distribution
• Family size and structure
• Minorities

S2- Screening the Opportunity

By now you ready feel overwhelmed with how vast S1 (opportunity seeking) is, but
you don’t have to worry that much. This concept has been inculcated to you to see the
universe of opportunities an entrepreneur can derive from the macroenvironmental and
microenvironmental sources. The key here is in the effective choosing or careful diligence.
Entrepreneurs should start with the big picture. This is the best way in ensuring that the
entrepreneur has scanned the best potential business to venture into. Once the compelling
opportunities are identified, S2 will be next crucial step.
Opportunity screening is the process of cautiously selecting the best opportunity. The
selection will depend on the entrepreneur’s internal intent, i.e., the main objective that the
business will accomplish in the entrepreneur’s life, and the external intent, which will address
the compelling needs of the target market. The entrepreneur should apply due diligence and
independent judgement in selecting the opportunities that have a potential and eliminate
those that are not within the scope of the entrepreneur’s risk appetite. Risk appetite refers to
the entrepreneur’s tolerance of business risks.
Time must be considered by the entrepreneur in screening the opportunities at hand,
as it is considered one of the most critical resources of an entrepreneur. Time should only be
devoted to worthwhile opportunities. Therefore, entrepreneurs must always be sharp-eyed
for real opportunities. They must be able to intelligently say no to low-compelling
opportunities and proceed with sensible ones. The crafting of a business plan starts only
when entrepreneurs already said no to many opportunities and said yes to one forceful
opportunity, to which they will devote their time and resources.
Detailed here are the important elements that are always present in a compelling
opportunity. The entrepreneur should say no to an opportunity if it does not contain any of
these business opportunity elements:
1. Has superior value to customers
2. Solves a compelling problem, issue, a need, or a want
3. Is a potential cash cow
4. Matches with the entrepreneur’s skills, resources, and risk appetite
The Opportunity Attractiveness Test
The Opportunity Attractiveness Test (OAT) (Youngleson, 2009) aims to assist
entrepreneurs in ensuring that the opportunity that they will venture into is an attractive and
feasible prospect. This is not the “be all” in the road to entrepreneurial success but a
framework to measure how compelling an opportunity is. This test is designed to detail each
entrepreneurial aspect into small chunks to come up with a sound entrepreneurial decision.
The entrepreneur must answer this test realistically avoid overestimation or underestimation.
All the risks must be accounted and assessed first.
These can come from different aspects of the business such as operations, market,
economy, and finance. These risks must be estimated and measured to determine the impact
to the potential business.
 The answers in this test will be the guiding principles of the entrepreneur in writing the
business plan. The components of the OAT will be used to channel the entrepreneur’s direction in
data gathering. It is vital that this test must be carefully reviewed over and over again before finally
going to the last step of seizing the opportunity. At the of this test, the entrepreneur should be able
to at least decipher the relative attractiveness of the business opportunity. Ultimately, the decision
lies in the risk appetite of the entrepreneur.
Because each venture is unique, some components of this test might not be applicable to all
businesses. It is the job of the entrepreneur to discern which among these components can put an
equitable weight to components that are relevant to the potential venture. The entrepreneur can also
customize this test to better suit the screening requirements of new venture. In summary, with the
four business opportunity elements and this OAT, the entrepreneur can’t go wrong in his or her new
venture. The key is effective diligence.
1. The “concept” and the “strategy”. The entrepreneur should think of the business’
existence. He or she can do this through crafting a brief vision statement. A vision statement is simply
defined as what the business should do in the future. The entrepreneur should also devise a value
creation proposition, i.e., the value that the product or service will offer to the target customers or
the satisfaction of the needs or wants of the target customers. The proposition should be compelling
enough to influence the behaviour of the target customers. Influencing the behaviour means enticing
the target customers to pay an above average or a premium price on the product or service. The
entrepreneur should also understand the importance of the timing of the business. He or she should
ask: is it really necessary to establish the business now? Last, the entrepreneur needs to devise a
differentiator or a positioning strategy──what difference will the new business inculcate to the target
customers as compared with the rest? Is this compelling enough to influence the behaviour of
potential customers?
 2. Opportunity metrics. These are considered as the opportunity’s critical success
factors. The factors will approximately determine the attractiveness of the new venture
depending on the total scores that it will generate and the risk appetite of the entrepreneur.
Table 2.2a-g consists of the basic metrics necessary in starting up the business. The answers,
however, require extensive research, so the entrepreneur must be careful in answering this
metrics table. Moreover, the entrepreneur can extend scoring system depending on the
complexity of the industry and the venture itself. In this example, the entrepreneur can put 5
as the highest score and 1 as the lowest score. Again, the weight of each factor should be
determined by the entrepreneur.
Table 2.2a Opportunity metrics for market potential
Industry or market Highest potential Lowest potential Attractiveness score
potential Description

1. Market need • Easily identifiable market • Unclear market

• Potential recurring • Revenue just one time or
revenue from the market seasonal
• Market-driven • Market unstable
a. customers accessible Already stuck with competitors
b. Payback time Within one year or less Three years or more
c. Value to Significant Insignificant
costumers
d. Product • Durable or long shelf-life • Perishable
• New or innovative • “me too”
• Value of money • Unreasonably priced
e. Service Highly demanded seasonal
2.Market structure Emerging Declining or stagnant
3. Market size • Established and clear • Unknown; undetermined
• Big enough for the entrepreneur • small
4. Growth rate Faster and acceptable growth rate Slow and unacceptable growth rate
5. Market capacity Fully capacitated Under capacitated
6. Market share • Easter and faster market penetration • Difficult and slow market penetration
• High potential in maximization of • Low potential in maximization or
market share percentage (e.g., 20% or market share percentage (e.g., 5% or
more) less)
7. Cost leadership Cost efficient Too costly
Total (weight):
Table 2.2b. Opportunity metrics for financial feasibility
Financial feasibility Highest potential description Lowest potential description Attractiveness score

1.Net income Robust Fragile; inconsistent

2.Return on investment High and faster returns Low returns(e.g., 20% or less
(e.g.,20%or more in 1 year) in 5 years)
3.Capitalization Reasonable capitalization Unreasonable capitalization
required required

4.Internal rate of return(IRR)- High and consistent IRR (e.g., Low and consistent IRR (e.g.,
annual return that makes the 20% or more) 20% or less)
initial investment turn into
future cash flows
5.Free cash flow-represents Highly positive(e.g., 30% of • Low or not enough to
the liquidity of a business gross sales/revenue or more) cover capital expenditures
after allocation of capital • Low in liquidity
expenditures
A. Sales growth high low
B. Asset Low High
intensity(assets/sales)
 C. Working capital Low High
D. Research and Low High
development and other
capital expenditures
E. Gross income High(e.g., 30% or more) Low(e.g., 30% or less)

6. Capital recovery period Fast(e.g., 2 years or less) Too slow(e.g., 5 years)

Total (weight):

Table 2.2c opportunity metrics for exit strategies or harvest option

Exit strategy or harvest Highest potential description Lowest potential description Attractiveness
options score
1. Value added potential High strategic value Low strategic value
2. Exit strategies Many envisioned option, e.g., Limited or no exit strategies
merger, acquisition, or strategic
alliance
3. Capital valuation • Reasonable capital valuation • Unfavorable capital
• Realizable capital valuation
• Credit crisis

Total (weight):
Table 2.2d Opportunity metrics for competitive advantage
Competitive advantage
1. Fixed and variable costs
2. Control over prices,
distribution and costs
3. Barriers to entry
a. Legal and proprietary
protection
b. Response and lead time
c. Networks
Total (weight):
Highest potential description No potential description Attrativeness score
Cost-efficient Costly
Strong weak
Difficult to entry No barrier (s) at all or easy to
enter
Exclusivity Non or unsecured
Competition is not yet • Tough competition
aggressive • Unable to a gain
competitive advantage
Accessible and close Limited access and requires
relationship intensive relationship
building
Table 2.2e Opportunity metrics for management team
Management team Highest potential description lowest potential description Attractiveness score

1. Entrepreneurial lineup Fully dedicated, driven, and Undecided and just testing
united the waters

2. Industry and technical Highly skilled and Quick background and

experience experienced in the industry experience in the industry
chosen chosen

3. Integrity and concern to Highly degree of integrity and Questionable and unsure
the new venture concern

4. Intellectual honesty Willing to understand what Unwilling to understand what

they don’t know they don’t know

Total (weight):
Table 2.2f Opportunity metrics for strategic differentiation
Strategic differentiation Highest potential description
1. Degree of fit High
2. Entrepreneurial description Excellent and innovative
entrepreneurial team
3. Service management Excellent customer intimacy
4. Timing Perfect timing- strengths and
opportunities conspiring
5. Fatal flaw Almost none or almost risks-free
6. Technology “I first”
7. Flexibility Adaptability to changes
8. Opportunity orientation Opportunity is treated as
continuum
9. Pricing Price leadership
10. Place of distribution Accessible in many tradition and
alternative channels
11. Margin for mistakes and Forgiving and believes in second
errors chances
Total (weight):
Lowest potential description Attractiveness score
low
Mediocre and less-skilled
entrepreneurial team
mediocre and unimportant
customer servicing
Bad timing- weaknesses and
threats all over the place
Few to many
“me too”
Traditional and slow
Opportunity is treated as vacuum
Lower than competitors
Inaccessible or limited channels
available to the customers
Unforgiving and stiff
Table 2.2g Opportunity metrics for assessment of personal resources
Assessment of personal Highest potential description Lowest potential description Attractiveness score
resources

1. Personal goals and fit Has clear objectives and matches Goals unclear and disconnected
with the entrepreneur’s capacity to entrepreneur’s capacity and
and resources resources

2. Success and failure Propensity to succeed high Propensity to fail high

3. Opportunity costs Willing to sacrifice first for a Contented with status quo
better opportunity

4. Desirability Matches with the lifestyle and Ultimate desire is only big
preference of the entrepreneur returns

5. Risk appetite Calculated risks Undefined and unknown risks

6. Stress management Can live comfortably with stress Inability to manage stress

Total (weight):
Total attractiveness score
at the end of this test, the entrepreneur should first compute for the total scores per
factor. Then, a corresponding weight or percentage should be given as to the importance of
the factor to the venture’s overall standing. This weight must be multiplied to the total score
accumulated per test. The entrepreneur should also establish at tiered scale of description on
the total attractiveness score.
sample tiered scale:
4.00-5.00 – very attractive
3.00-3.99 – attractive
2.00-2.99 – tolerable but must take caution and due diligence of the risk
1.00-1.99 – not attractive or too risky.
S3-Seizing the opportunity
Opportunity seizing is the last step in opportunity spotting and assessment. This is the “pushing
through” with the chosen opportunity. Entrepreneurs should make the best out of this opportunity,
they should exert effort and full dedication for the success of the new venture. The entrepreneur’s
idea can be any type of innovations listed here.
Innovation is the process of positively improving an existing product of service. It is a key driver
for economic growth. Innovation is inevitable as the world constantly changes. Therefore, products and
services must also adapt to these changes. There are three types of innovations according to the
degree of distinctiveness.
1. Breakthrough innovation. These innovations, which may also include inventions, occur infrequently
as these establish the platform on which future innovations in an area are developed.
Breakthrough innovations must be protected by a patent, a trade secret, or a copyright. Examples
of breakthrough innovations include the internet, the computer, or the airplane.
2. Technological innovation. These innovations occur more frequently than breakthrough innovations.
These innovations are technological advancements of an existing product or service. These
innovations need to be protected, too. In relation to the examples given, technological innovations
include the wireless fidelity or Wi-Fi, the laptop, and the jet airplane.
3. Ordinary innovation. These innovations occur ordinarily as the name implies. They are commonly
originating from market analysis and technology pull instead of a technology push.
This means that the market has a strong influence in the implementation of an innovation.
Relating again to the given examples, examples of ordinary innovations are unlimited internet
plans of telecommunications companies, a wireless mouse, and an airbus for economical
Entrepreneurs often encounter a problem in defining a “new” product or service, or
identifying its components or features. Examples of these include drastically improving the
packaging and not the product itself, adding one extra step in the service delivery process, or
simply augmenting a product or service. The “newness” is also independent on the eyes of the
market and the company. The entrepreneur must then establish that the new product or
service offered will provide true value to the customers and influence their behaviour. Further,
the new product or service should increase the profitability potential of the enterprise.
Product or service planning and development process
In the seeking process, one opportunity stood out from a number of sources. This
opportunity was tested according to its attractiveness and feasibility in the screening process.
The last process, hold the seizing process, involve refining and developing this opportunity. The
refining process is called product or service planning and development process. It has five key
stages
1.Idea stage. In this stage, the entrepreneur determines what are the feasible products and/or
services that will perfectly suit the opportunity. Usually , a market evaluation is conducted by
the entrepreneur to assess whether the new product or service ideas will be accepted by the
market using values and benefits to consumers as metrics. On the other hand, the value of the
new products and/or services should also be assessed if these will benefit the entrepreneur.
Product and services that are unappealing to the market should be eliminated should be
eliminated at this stage.
2. Concept stage. Once the acceptable product or service has already been identified, it will go
through the concept stage. In the concept, the developed idea undergo a costumer
acceptance test. This test includes getting the initial reactions of the primary target market
and the distribution channel. Conversational interviews are conducted to understand
costumer preference on physical characteristics and attributes of a product or the physical
evidence and characteristics of a service. Both favorable and unfavorable results will be used
to devise and acceptable product or service. These will also be used to compare the new idea
with the competition with regard to superiority or inferiority. Once all of the necessary pieces
of information are gathered, the entrepreneur can already proceed with the next stage.
3.Product development stage. In this stage, the entrepreneur leverages on the information
generated from prospective costumers via the concept stage. Actual reactions from
prospective costumers are determined. The entrepreneur will conduct a costumer panel
where the actual product samples or actual service samples will be given or rendered to panel
of potential costumers. The participants’ task is to critique the actual product or service and
record the good qualities and inferiors attributes. They are also given sample of competitors’
product of services for comparative purposes. Consumer preference will largely be based on
methods such as multiple brand comparisons, risk analysis, level of repeat purchases, or
intensity of preference analysis (Hisrich, 2010)
4. Test marketing stage. This stage validates the work done from the first three stages to
measure success in the commercialization of the product or service. Actual sales results will
be the foundation of the consumers’ acceptance level and will be the basis in
commercializing the product or service.
Module 3. The Marketing Plan
At the end of this module, I can:
1. Describe the unique selling proposition and value proposition that differentiates one’s
product/service from existing products/services.
2. Determine who the costumers are I terms of the following:
a. Target Market
b. Customers requirements
c. Market Size
3. Validate customer-related concerns through the following:
a. interview c. observation
b. focus group discussion d. survey
4. Describe the marketing mix (7Ps) in relation to the business opportunity and vice versa:
a. product e. people
 b. place f. packaging
c. price g. process
d. promotion
5. Develop a brand name.
_____________________________________________________________________________
After the comprehensive processes of seeking, screening, and seizing the opportunity,
it is now time for the entrepreneur to focus on the chosen business and dig deep.
Entrepreneurs must write a business plan. A business plan is a comprehensive paper that
details the situation analysis, objectives , strategies and tactics, and how to monitor and
control the enterprise. This module will familiarize you on how to prepare a strategic marketing
plan as a first component of the business plan. Some entrepreneurs fail to give importance to
the voice of a business venture-the market. If ignored or given small attention, this becomes a
major source of the entrepreneur’s failure.
This module will also let you understand and identify what makes a product or service
stand out fro the competitors through defining the unique selling proposition and value
proposition of the product or service. You will understand the behavior, attitude, and
psychology of the entrepreneur’s customers through various ways of customer validation. You
will understand in detail and apply the 7Ps of marketing mix in instigating awareness and
driving sales of the business venture. Last, you will understand the fundamentals in brand
management and how branding gives a specific business an overall appeal and credibility.
Value proposition and Unique selling proposition
Before focusing on the topics of value proposition and unique selling proposition, you
must first know the marketing process. In a nutshell, marketing is all about knowing the
customers. Therefore, the marketing process starts with identifying the customers’ needs
where you are tasked to create a meaningful value proposition. Next, you study what the
customers want or desire for you to build a unique selling proposition. From there, it is
imperative to identify the most strategic market or group to tap.
A value proposition (VP) simply states why customer should buy a certain product or
service. Customers are very specific when it comes to their needs and their desired benefits,
so the value proposition should cater to those particular needs. Thus, the value proposition is
the major diver in customer per chase or service availment. The stratup entrepreneur will
surely have a hard time thinking of a value proposition for his or her business. The
entrepreneur should bear in mind that a value proposition has to be direct in addressing the
problems of the customer, should have quantifiable benefits, and should differentiate itself
from the competitors.
The following are some tips for the entrepreneur on how to create an effective value
proposition to the target customers:
1. Prepare a situation analysis that details the problem (s) of the customers.
2. Make your value proposition straight to the point, simple, and specific; in short, there
should be know complications. Your value proposition has to target your major objective.
3. Highlight the value of your product or service so that customers will easily get what
benefits you can provide.
4. Adapt to the language of your market. Ensure that your target market understands clearly
what you are trying to say and avoid putting unnecessary in explicable places.
5. Add credibility-enhancing elements such as actual testimonials from customers, partners,
and other stakeholders, putting specific assurance elements and social acceptability metrics
from in social media and press materials. Several quality management certification, such as
the ISO seal, add more credibility to the product or service that you are trying to sell.
6. Differentiate your value proposition with your competitors. Examples of value proposition
differentiators are the originality of the product or service, its functionalities, or if the
product or service can be tailor-fitted to the customer’s preference, among others.
To illustrate, here is a sample potential value proposition from the most common small
businesses in the Philippines.
Aling Tere’s sari-sari Store
Situation analysis:
Prior the establishment of a sari-sari store, aling tere notices that there is a
convenience store in her vicinity, where many call center agents, nurses, and construction
workers buy food, beverages, and other products during odd hours (from 10 pm to 6 am). She
discovers that the customers either ride a tricycle or a jeepney just to reach the convenience
store. There are two sari-sari stores nearby, but they close at 9 pm. Aling tere believes this an
opportunity for a sari-sari store business with a twist. Aling tere realizes she needs to address
the needs the needs of the customers to differentiate her business from the competition. She
decides to establish a 24/7 sari-sari store. As an initial investment, aling tere hires three
employees who will help her run the sari-sari store in three shifts. During their break, aling
tere mans the sari-sari store herself. She designs her sari-sari store like a semi convenience
store, where customer can freely go and choose the product they want. It is also air-
conditioned. For security purposes, she also installs a CCTV camera. He task now is to craft a
worthwhile value proposition for the potential customers.
 Proposed value proposition: “Tindahang maasahan, bukas kahit anong oras!”
Why should be this considered an effective value proposition? It is specific and straight
to the point. It describes what the business is by referring to tindahan──a Filipino term for a
basic retail store. It highlights the value to the customers that they can buy their basic
necessities from this value proposition because the phrase “bukas kahit anong oras” signifies a
guarantee that customers will be served anytime of the day. And last, aling tere’s store is the
only sari-sari store that is open 24/7, which makes her store different from competitors.
On the other hand, a unique selling proposition (USP) refers to how you will sellthe
product or service to your customers. It addresses the customers’ wants and desires. After you
create your value proposition, you have to figure out to how to advertise or promote certain
unique features of the product or service that you’re trying to sell. You can do this in the form
of product or service characteristics, promotion strategies and tactics, distribution centers and
supply chains, pricing, physical attributes or physical evidence, human resources or human
capital, and market positioning strategies. The ability to crafts an effective USP is gauge on how
well an entrepreneur knows his or her product or service.
The following are some tips for the entrepreneur on how to create an effective unique selling
proposition to the target customers:
1. Identify and rank the uniqueness of the product or service attribute. This is the most
difficult part because you only need to choose on or two at the most. That attribute will be
your key to success, as this will compel customers to purchase from you and not from your
competitors. The unique selling proposition, while it presents the best features of your product
or service, should also avoid competition. Put your self in the customers’ shoes and ask
yourself, “why should I choose you over the others? Or, “why should I deal you at all?”
identifying the unique selling point is a tough job and requires marketing research. The best
way to identify it is to identify the marketing mix (7Ps) and distinguish which among those
displays the product’s unique features. The 7ps will be discussed later in this module.
2. Be very specific. Out details that emphasize the differentiators against the
competitors. This differentiators should be very compelling and should make the customers
think that they are really getting more value from you than the others. By being a specific,
make sure that the USP does not rely on heavy, extravagant promotion. The customers do not
want to feel that they are being fooled.
3. KISS (keep it short and simple). One challenge that marketers always face is that the
customers’ attentions pan is limited and very easy to switch. Therefore, think of a very catchy
unique selling proposition in the simplest and shortest way possible. You can compare it with a
headline of a newspaper or a website. That’s the first item that the customer will see.
 To illustrate, use the sample from the previous discussion to build a potential unique
selling proposition for aling tere’s sari-sari store.
The first step is the identification an ranking of the uniqueness of the product or
service attribute using the 7ps of marketing. Make sure that there peace at through
explanation and analysis about the ranking.
7ps Product or Place Price Promotion People Packaging process
service
USP Retail Near a call Competitive Signage Three shifts Semi- The only sari-
description products center, a of Aling tere’s convenience sari store that
public assistants(6 store operates
hospital, and AM-2PM, 24hours,
a 2PM-10PM, 7days a week.
construction 10PM-6AM)
site
Unique? No No No No Yes Yes Yes
USP s 3 2 1
 The process was ranked first as the most unique because aling tere wants to solve a
compelling problem of the customers, i.e., the availability of a retail store near there where
place odd hours. This was based on her marketing research about her environment. Packaging
convenience store and a sari-sari store. People ranked because it is the sari-sari store that has
three persons to work in shifts. It is common that the owner or an assistant attends to the
store with a determine schedule, and not the entire day.
Proposed unique selling proposition: “tindahang maasahan, bukas kahit anong oras!”
You will notice that proposed value proposition and unique selling proposition are the
same. Why? Because the most compelling differentiating factor is positioning, the value
proposition is also the perfect unique selling proposition, considering all the factors numerated
were all met (defined unique attribute, specific and short/simple). It is catchy, too. However,
this may not be the best unique selling proposition for aling tere. The entrepreneur,s creativity
and inventiveness will always come into play.
Both the value proposition and unique selling proposition should be clearly
communicated to the target customers in the catchiest way possible. Common communication
channels include signage. Web sites, social media, print ads, television and radio commercials,
and mobile advertisements.
Know your costumers
After the general scan and research performed during the course of the preparation
for the value proposition and the unique selling proposition, it is now time to dig deep and
understand the target customers through marketing research. Marketing research is a
comprehensive process of understanding the customers’ intricacies and the industry they
revolve in. Marketing research is one of the most critical tasks of an entrepreneur. Therefore,
no budding entrepreneur should establish a business without undergoing the marketing
research process or else the business will surely fail. The result of marketing research is the
entrepreneur’s major investment in a business, as it will lead him/her to most effective
strategies to employ. Marketing research aims to scrutinize the target market, their specific
requirements, and the market size where the business operates.
Market Size
Market size is simply the size the arena where the entrepreneur’s business will play. It
is the approximation of the number of buyers and sellers in a particular market. The
entrepreneur is required to determine the market size first to gauge the vastness or tininess
of the market where he/she intends to join. The only way to do this is to conduct a strategic
marketing research from reliable sources using dependable methods.
The first step is to estimate the potential market-the approximate number of
customers that will buy the product or avail the service. Usually, this is what you call the