Special Topics in

Management
 Topic Outline:

• Small Business and Entrepreneurship

• Family Business Enterprise

• Starting a Business: Legal Forms and

Requirements
 Small Business Management and Entrepreneurship

Small Business- A small business is a privately owned

and operated business. A small business typically has a
small number of employees.
Entrepreneurship – the process of starting and
operating your own business.
Entrepreneur – the people who create, launch, organize
and manage a new business and take the risk of
business ownership
 What are the risks?
Business failure
Financial loss
Loss of employment
Loss of time

33% of all new businesses fail within 2 years. 50% fail within
4 years.

Advantages of Entrepreneurship

Personal freedom and satisfaction

Increased self-esteem and income
Important Personal Characteristics of Successful Entrepreneurs

They’re goal-oriented
Entrepreneurs are all about setting goals and putting their all into achieving
them; they’re determined to make their business succeed and will remove
any encumbrances that may stand in their way. They also tend to be strategic
in their game plans and always have a clear idea in mind of exactly what they
want to achieve and how they plan to achieve it.
They’re committed to their business
Entrepreneurs are not easily defeated; they view failure as an opportunity
for future success, and if they don’t succeed the first time, they’ll stay
committed to their business and will continue to try and try again until it does
succeed. A true entrepreneur doesn’t take ‘no’ for an answer.
They’re hands-on
Entrepreneurs are inherently proactive and know that if something really needs to
get done, they should do it themselves. They’re ‘doers’, not thinkers,and tend to
have very exacting standards. They view their business as an extension of
themselves and like to be integral in its day-to-day operations— even when they
don’t have to be
They thrive on uncertainty
Not only do they thrive on it—they also remain calm throughout it.
Sometimes things go wrong in business, but when you’re at the helm of a
company and making all the decisions, it’s essential to keep your cool in any
given situation. True entrepreneurs know this and secretly flourish and grow
in the wake of any challenges.
They continuously look for opportunities to improve
Entrepreneurs realize that every event or situation is a business opportunity,
and they’re constantly generating new and innovative ideas. They have the
ability to look at everything around them and focus it toward their goals in
an effort to improve their business.
They’re risk taker
A true entrepreneur doesn’t ask questions about whether or not they’ll
succeed—they truly believe they will. They exude this confidence in all
aspects of life, and as a bi-product, they’re never afraid to take risks due to
their unbinding faith that ultimately they will triumph.
They’re willing to listen and learn
The most important part of learning is listening—and a good entrepreneur will
do this in abundance.
They have great people skills
Entrepreneurs have strong communication skills, and it’s this strength that
enables them to effectively sell their product or service to clients and
customers. They’re also natural leaders with the ability to motivate, inspire
and influence those around them.
They’re inherently creative
This is one trait that, due to their very nature, entrepreneurial business
people have by the bucket load. They’re able to not only come up with
ingenious ideas, but also turn those ideas into profits.
They’re passionate and always full of positivity
Passion is perhaps the most important trait of the successful entrepreneur.
They genuinely love their job and are willing to put in those extra hours to
make their business grow; they get a genuine sense of pleasure from their
work that goes way beyond just cash.
 Entrepreneurship Vs.
Small Business

Many people use the terms “entrepreneur” and “small business owner”
synonymously. While they may have much in common, there are significant
differences between the entrepreneurial venture and the small business.
Entrepreneurial ventures differ from small businesses in these ways:
1. Amount of wealth creation – rather than simply generating an income
stream that replaces traditional employment, a successful
entrepreneurial venture creates substantial wealth.
2. Speed of wealth creation – while a successful small business can
generate several million pesos of profit over a lifetime, entrepreneurial
wealth creation often is rapid.
3. Risk – the risk of an entrepreneurial venture must be high, otherwise,
with the incentive of sure profits many entrepreneurs would be pursuing
the idea and the opportunity no longer would exist.
4. Innovation – entrepreneurship often involves substantial innovation
beyond what a small business might exhibit. This innovation gives the
venture the competitive advantage that results in wealth creation. The
innovation may be in the product or service itself, or in the business
processes used to deliver it
 Advantages and
Disadvantages of Small
Business
 Advantages: Disadvantages:

• Can be managed and controlled • May have limited access to

by the owner. sources of finance.

• Often able to adapt quickly to • Owner has to carry a large

meet changing customer needs. burden of responsibility if unable
to afford to
• Offer personal service to employ specialist managers.
customers.

• May not be diversified. Greater

• Find it easier to know each worker; risks of negative impact of external
many staff prefers to work for change.
smaller more “human” businesses.

• If family-owned, the original

• If family-owned the business owner may restrict innovation,
culture is often informal. family
Employee’s wellmotivated and rivalries, and keeping control may
family members perform multiple take priority over business
roles. expansion.
Types of Entrepreneur
According to the type of business:
 Types of Entrepreneur According to the type of
business:

Business entrepreneurs: who start business units after

developing ideas for new products/services.
Trading entrepreneurs: who undertake buying & selling of goods,
but not engage in manufacturing.
Corporate entrepreneurs: who establish and manage corporate
form of organization which has separate legal existence.
Agricultural entrepreneurs: who undertake activities like raising
and marketing of crops, fertilizers and other allied activities.
Reasons to Become an Entrepreneur:
1. Creativity: Using your creativity and energy to achieve something that
inspires you can be very rewarding. Starting, running and growing a business
can provide a high level of satisfaction.
2. Independence: The freedom that comes with operating a business can lure
many people. You don't need to convince your boss - you are the boss. You
make the products you believe in and you can offer the services your clients
want.
3. Solutions: You have a solution to a common problem or a big problem?
Whether the solution relates to the environment, communications, food or
services, wanting to see your solution used by all can be a driving factor to
becoming an entrepreneur.
4. Time: Entrepreneurs ultimately decide on their shifts and their pay checks.
Usually, the more hours you invest in your business, the more money you will
make. As an entrepreneur, you get to choose how you want to balance work
and personal time.
5. Money: Many businesses make enough profit to pay modest salaries, pay
bills and even grow. On the other hand, some start-ups turn into multimillion
peso enterprises. The possibilities are endles
Family Business
Enterprise
Family Business Enterprise
• Family business is a corporation that is entirely owned and
managed by members of a single family.
• Family firm is a corporation that is entirely owned by
members of single family. It is also known as company owned,
controlled and operated by members of one or several
families.
Family business is one in which one or more members of one
or more families have ownership, interest and significant
commitment towards business.
Characteristics of Family Business:

• Succession is one important decision which determines future effectiveness

in terms of company operation.
• Family business comprises of family members in business operations
ensuring effective utilization of in house talent in family.
• Single minded dedication of family members ensures survival of family
business through toughest times.
• Family business may be comprised of one or more than one family in
business operations.
• Family members who are not contributing or not involved in business are
part of business.
• Family business values are reflection of values possessed and followed by
family members.
• Members of family have legal control over business.
Types of Family
Business
 Types of family Business
• Family owned business : is a profit organization were number of voting
shares, but not necessarily majority of shares are owned by members of
single extended family but significantly influenced by other members of
family.
• Family owned and managed business : is a profit organization were
number of voting shares, but not necessarily majority of shares are owned by
members of single extended family but significantly influenced by other
members of family. In this business has active participation by one family
member in the top management of company so that one or more family
members have ultimate management control.
• Family owned and led company : is a profit organization were number of
voting shares, but not necessarily majority of shares are owned by members
of single extended family but significantly influenced by other members of
family. In this business has active participation by one family member in the
top management of company so that one or more family members have
ultimate management control. But in this method one member has major
influence on business activities who in charge of regulating activities of
business and members of family business.
Starting a Business:
Legal Forms and
Requirements
Business Operation:
Activities involved in the day to day functions of the business conducted
for the purpose of generating profits

Business Plan:
Document that describes a business along with it’s objectives, strategies, the
market in which it operates and the businesses’ financial forecasts.
A business plan is a blue print of step by step process that would be followed to
convert business idea into successful business venture.
Business Plan Purposes:
• Plans for future
• Allocate resources
• Identify and prepare for problems and opportunities
• Useful for start up businesses applying for finance or growth
• Improves entrepreneur’s understanding of business and the market
Audience
• Banks, Financial lenders.
• Venture Capitalists: people who invest for a share of the business.
• Business Angels: people who invest in start up businesses which are
high risk, high growth market.
• Providers of grants
• Potential purchaser of the business
 Idea generation:
is the first step in the business planning process. This step
differentiates entrepreneur from usual business. An entrepreneur
may come up with new business idea or may bring in value addition to
existing product in the market. Sources of new idea for entrepreneurs
are:
Consumers/ customers
Existing companies
Research and development
Employees
Dealers, retailers.
 Environmental scanning
once the entrepreneur is through the idea generation stage, next entrepreneur is required to
conduct environmental scanning which includes analyzing external and internal environment that
affects business idea.

1. External environment comprises of :

Socio cultural appraisal : it gives brief overview about the culture and
tradition existing in society. It is comprised of values and beliefs of people
which determines the acceptance of product by customer in the market.
Technological appraisal : it assess various technological options available
to convert an idea to product. It also provides an brief overview about
technological updates.
Economic appraisal : it assess the status of the society in terms of economic
development, per capita income, national income, consumption pattern in
the business.
Demographic appraisal : it assess the population pattern of given
geographic area. Which includes sex, age profile, distribution etc
 Economic appraisal : it assess the status of the society in terms of economic
development, per capita income, national income, consumption pattern in the
business.
Demographic appraisal : it assess the population pattern of given geographic
area. Which includes sex, age profile, distribution etc.
Government appraisal : it assess the various legislation, policies, incentives
formulated for particular industry. Flexibility of these rues determine ease for
entrepreneur in terms of opening venture in particular area.
2. Internal environment :

Raw material: it refers to in terms of availability of raw material required

for the process of production. If the material availability is at distance place
and is very expensive then entrepreneur should give second thought to the
same.
Production/ operation: it assesses the availability of various machineries,
equipment's, tools, and techniques that would be required for production.
Finance: it studies total requirement of finance in terms of start up
expenses, fixed expenses, running expenses etc.
Market: refers to study on potential customer and target customers in
market.
Human resource: refers to demand and supply of required human
resource in market and estimation of expenses to be incurred on human
resource.
 Feasibility analysis:
refers to conducting detailed analysis in relation to every aspect relevant to
business and determining credibility of business.

Market analysis: is conducted to estimate the demand and market share for
proposed product and service in future. Demand and market analysis is
based on factors like consumption pattern, availability of substitute goods
and services etc.
Technical and operational analysis: is to assess operational ability of
proposed business enterprise. Technical or operational analysis collects data
on following parameters :
1. Material availability
2. Material requirement planning
3. Plant location
4. Plant capacity
5. Machinery and equipmen
 Marketing plan: lays down the strategies of marketing which can lead to
success of business plan. Strategies are in terms of marketing mix which
includes (product, price, place, promotion) which determines the potential
demand of customers for product in the market.
Production plan / operational plan: production plan is drafted for
manufacturing sector where as operation plan is designed for business into
service sector. It comprises of strategies on parameters such as location
layout, cost, availability of material, human resource etc.
Organizational plan: defines type of ownership pattern in company, sole
trading concern, family business, private or public limited company etc.
Financial plan: financial plan indicates the requirement of proposed
business enterprise. Which includes fund flow, cash flow statement,
breakeven point, projected ratio, projected balance sheet.
 Project report preparation
project report is a written document that describes step by
step strategies involved in starting and running business

Evaluation, control and review:

as company operates in dynamic environment company has to
monitor and review strategies and policies to stay in line with
competition existing in market.
List of Business Permits
and Licenses in the
Philippines
People do business to make a living, serve their community, and
pursue their dreams. It is good to hear a person who’s taking risk to
start his or her business, whether small, medium or big. However, the
process of starting and registering a business can be one of the most
crucial stages of doing business. Getting the right permits and licenses
should be done before running a business, otherwise, you may end up
operating a business without a license, which can be punishable under
certain business laws. That is why if you are an aspiring business
personor entrepreneur, and if you want to conform with the
government’s rules on establishing and legalizing a business, you have
to be aware of the following list of business permits and licenses in the
Philippines.
Basic permits:
The following are some example of business permits and licenses that are
generally required to all business industries.

1. Barangay Clearance
2. DTI Business Name (BN) Registration Certificate
3. SEC Certificate of Registration
4. Mayor’s Business Permit.
5. BIR Certificate of Registration
.
Special permits
The following are the special or secondary permits that are usually
required for business establishments with special operation or industry.

1. Bangko Sentral ng Pilipinas (BSP)

2. Bureau of Food and Drugs (BFAD)
3. Bureau of Animal Industry (BAI)
3. Bureau of Fisheries and Aquatic Resources (BFAR)
5. Bureau of Plant Industry (BPI)
 There are maybe other business permits that are
required for certain types of
businesses aside from what we have listed and
mentioned above. Legalizing
your business doesn’t only extend to registering it
and securing a license or
permit. A legalized and compliant business is one
that consistently
complies with the government’s laws and regulations
from registration, to operation, and until cessation