Republic of the Philippines
JAMIATU MUSLIM MINDANAO
Darussalam Matampay, Marawi City
Subject: ENTREPRENEURSHIP
Time/Day: 7:30-8:30 am/STTH
Reference: De Guzman, Angeles A. (2018). “Entrepreneurship”. LORIMAR Printing, Inc.
UNIT I: INTRODUCTION TO ENTREPRENEURSHIP
Entrepreneurial activities today have become
very important and are keys to economic development.
Growth, industrial development, including employment
generation, depends upon entrepreneurial behavior of a
country.
Entrepreneurs are the reason for a large quantity
of highly developed industries which result to greater
employment opportunities for unemployed youth,
increase in per capita income higher standard of living
and increased individual saving, revenue to the
government in the form of income tax, value added tax,
export duties, import duties, and balanced regional
development.
Relevance of Entrepreneurship to an Organization
1. Development of managerial capabilities
An entrepreneur studies a problem, identifies its
alternatives, compares the alternatives in terms of cost a
benefit implications, and finally chooses the best
alternatives.
2. Creation of organizations
Entrepreneurship results in the creation of
organizations when entrepreneurs assemble and
coordinate physical, human, and financial resources and
direct them towards achievement of objectives through
managerial skills.
3. Improving standard of living
Entrepreneurship helps in making a wide variety of
goods and services available to the society which results
into higher standard of living for the people.
4. Means of economic development
Entrepreneurship involves creation and use of
innovative ideas, maximization of output from given
resources, and development of managerial skills which
are essentials to the economic development of a country.
Concept of Entrepreneurship
Entrepreneur derived from the French verb
enterprendre, which means “to undertake”. It refers to
those who “undertake” the risk of new enterprises. An
enterprise is created by an entrepreneur and the process
of its creation is called entrepreneurship.
Entrepreneurship is a process of actions of an
entrepreneur who is always in search of something new
to exploit new ideas into gainful opportunities by
accepting the risk and uncertainty of the enterprise.
Entrepreneurs are innovators, willing to take risks and
generate new ideas to create unique and potentially
profitable solutions to modern-day problems.
Intrapreneurship is when entrepreneurship
describes activities within a firm or large organization
which may include corporate venturing.
Entrepreneurial activities can be;
 Incremental innovations are a number of small
changes that transform process flows.
 Disruptive innovations are entirely new approaches.
Factors Affecting Entrepreneurship
1. Personality Factors
a. Initiative – does things before being asked.
b. Proactive – identifies and utilizes opportunities.
c. Perseverance – works against all odds to
overcome obstacles and is never complacent with
success.
d. Problem-solver – develops and maintains
relationship with customers and financers;
conceives new ideas and introduces innovative
solutions.
e. Persuasion – convinces customers and financers
to patronize his business.
f. Self-confidence – makes decisions and sticks to
his decisions.
 g. Self-critical – learns from his mistakes and from
experiences of others.
h. Planner – collects information, prepares a plan,
and monitors performance.
i. Risk-taker – is willing to take calculated risks.
2. Environmental Factors
a. Political climate
b. Legal system
c. Economic and social conditions
d. Market situations
Core Competencies in Entrepreneurship
1. Economic and dynamic activity. Entrepreneurship is
an economic activity because it involves the creation
and operation of an enterprise with a view to
creating value or wealth by ensuring optimum
utilization of scarce resources. This value creation
activity is performed continuously in the midst of
uncertain business environment.
2. Innovation. Entrepreneurship involves a continuous
search for new ideas. It compels an individual to
continuously evaluate the existing odes of business
operations so that more efficient and effective
systems can be evolved and adopted.
3. Profit potential. Profit potential is the level of return
or compensation to the entrepreneur for taking on
the risk of developing an idea into an actual business
venture.
4. Risk bearing. The essence of entrepreneurship is the
willingness to assume risk arising from the creation
and implementation of new ideas. New ideas are
always tentative and their results may not be
instantaneous and positive.
Functions of an Entrepreneur
1. Innovation. This involves doing new things or doing
existing things differently.
2. Assumption of Risk. This willingness to take risks
allows an entrepreneur to take initiatives in doing
new things and marching ahead in his/her efforts.
3. Research. An entrepreneur finalizes an idea only after
considering a variety of options, analyzing their
strength and weaknesses by applying analytical
techniques, testing their applicability, supplementing
them with empirical findings, and then choosing the
best alternatives.
4. Development of Management Skills. The work of an
entrepreneur involves the use of managerial skills
which he/she develops while planning, organizing,
staffing, directing, controlling and coordinating the
activities of business.
5. Overcoming Resistance to Change. An entrepreneur
paves the way for the acceptance of his/her ideas by
others.
6. Catalyst of Economic Development. An entrepreneur
plays an important role in accelerating the pace of
economic development of a country by discovering
new uses of available resources and maximizing their
utilization.
Types of Entrepreneurs
1. Innovative Entrepreneurs. These entrepreneurs have
the ability to think newer, better and more
economical ideas of business organization and
management. They are the business leaders and
contributors to the economic development of a
country.
2. Imitating Entrepreneurs. These entrepreneurs are
people who follow the path shown by innovative
entrepreneurs. They imitate innovative
entrepreneurs because the environment in which
they operate is such that it does not permit them to
have creative and innovative ideas on their own.
3. Fabian Entrepreneurs. These types of entrepreneurs
are skeptical about the changes to be made in the
organization. They do not initiate any inventions but
follow only after they are satisfied with its success
rate. They wait for some time before the innovation
becomes well tested by others and do not result in a
huge loss due to its failure.
4. Drone Entrepreneurs. These entrepreneurs are those
individuals who are satisfied with the existing mode
and speed of business activity and show no
inclination in gaining market leadership.
5. Social Entrepreneurs. These entrepreneurs drive
social innovation and transformation in various fields
including education, health, human rights, worker’s
rights, environment and enterprise development.
Career Opportunities for Entrepreneurship Graduates
1. Mid-level Management. At big companies, the C-
level folks develop ideas, the ground force does the
 work, and mid-level management converts the idea
into execution.
2. Business Consultant. Businesses today need
consultants who can go to a client site, identify
problems and fix them.
3. Sales. Entrepreneurship graduates can work in sales
or run the department of any businesses. It
represents a company, manage accounts, and follow
up on leads.
4. Research and Development. A good qualification to
work in R&D is a training and education on
understanding of business concepts, procedures, and
practices and entrepreneurship.
5. Not-for-Profit Fundraiser. Being able to raise funds
requires understanding the importance of business
and networking relationships.
6. Teacher. Those with entrepreneurship degree are
qualified to teach the core subjects in Senior High
School and teach students the entrepreneurial skills.
They can also teach the benefits of math to business,
history to innovation, and literature to persuasive
advertising.
7. Recruiter. College graduates who had courses that
cover operations management, leadership and a
variety of others, and those with entrepreneurship
degree, most likely have a keen sense of what type of
person is needed to fill us a position.
8. Business Reporter. Entrepreneurship graduates can
write articles, or pick up a quick class to learn how to
write article. They can take a prime position to take
the lead in covering a local business beat.
Some Myths about Entrepreneurship
1. Entrepreneurs, like leaders, are born, not made.
2. Entrepreneurs are academic and social misfits.
3. To be an Entrepreneur, one needs money only.
4. To be an entrepreneur, a great idea is the only
ingredient.
5. One wants to be an entrepreneur as having no boss is
great fun.
UNIT II: DEVELOPING A BUSINESS PLAN
Lesson 1: Preparing a Business Plan
Definition of a Business Plan
A business plan is a “formal statement of a set of
business goals, the reasons why they are believed
attainable, and the plan for reaching hose goals. It may
also contain background information about the
organization or team attempting to reach those goals”.
Focus of Business Plan
Externally focused plans target goals that are
important to external stakeholders, particularly financial
stakeholders. They typically have detailed information
about the organization or team attempting to reach the
goals.
Internally focused business plans target, an
intermediate goals required to reach the external goals.
They may cover the development of a new product, a
new service, a new IT system, a restructuring of finance,
or the refurbishing of a factory.
Categories of a Business Plan
1. Business Plan for Profit – typically focuses on
financial goals.
2. Marketing Plan – targets changes in perception and
branding as its primary goals.
3. Project Plan – describes the goals of a particular
project.
4. Business Plan for Non-Profit and Government
Agency – tends to focus on service goals.
5. Operational Plans – describes the goals of an internal
organization, working group or department.
Contents of Business Plan
A business plan has the following parts:
1. Executive Summary
It guides proponents or investors on the overall
feasibility of the proposed project at a glance. It
summarizes the major highlights and findings of each
major aspect of the study. The conclusion of the study is
its focal point.
2. Project Background and History
It narrates the project conceptualization, and derails
the events that led to the study. It also presents the
project proponents, the proposed name of the project
the type of business proposal/project, and the project
location.
3. Management and Personnel Feasibility
It pinpoints the project’s general to specific market
feasibility topics. It presents the market and an analysis of
past, present and future demand and supply for the
situations for the particular product(s). If the conditions
presented are feasible, then a look at the marketing
practices of your competitors will be studied. It presents
a summary of sales projections of the project study’s
entire duration and, the project’s marketing system and
forms design.
4. Production Feasibility
This refers to the manufacturing aspects of the
product. It includes the details of what the product is and
how they will be produced/raised using proposed
location production size (capacity) and lay-out. It also
looks into the machineries and equipment, raw materials
and manpower requirements, as well as the detailed civil
engineering and lay outing of the project, as applicable. It
also presents the project utilities, wastes and waste
management methods, and the production system’s
documentation and forms.
5. Financial Feasibility
It enables the entrepreneur to know how much
capitalization will be needed to finance the project and
who will be the project’s financiers. It determines the
most adaptable financing scheme in terms of the
financiers’ terms and conditions of repayment.
It identifies the financial soundness of the business
plan with presentation of some assumptions to the
financial projections as well as the projected financial
statements and financial analysis including financial
ratios, break even points, sensitivity analysis, project rate
of return, and payback period to prove the financial
feasibility of the project.
6. Socio Economic Feasibility
This is viewing the project’s feasibility only from the
point of view or from the standpoint of the project’s
proponents/investors. This part presents the project’s
feasibility as to how it will be beneficial to other people
and entities.
7. Project Implementation and Timetable
These include the details of all activities to be
considered during the project’s pre-investment and pre-
operating phase and also the timetable of each of these
activities. Sometimes, this is included in the Management
and Personnel Feasibility to distinguish pre-operating
from normal operating activities.
Although there is no fixed way of writing a business
plan, the introduction provides a positive overview of the
entire study. It includes the mission statement which
answers the following questions;
 Who is the customer?
 What do they need?
 What’s in it for the customer?
 How does the company satisfy its stakeholders?
A description of the product or service must be stated
in the introduction as well as the market, the company,
anticipated sales and profits summarized from the
income statement, and required financing.
Feasibility Study
The preparation of a Business Plan complements
the feasibility study. The feasibility study is a major
information source in making a critical decision whether
to go or not to go into the business.
The advantages of writing down the results of the
feasibility study are as follows:
 The findings can be set out in clear and logical way, so
that potential lenders can understand the business
and its likely risks/advantages. The document helps
the entrepreneur to clarify and focus his/her ideas.
 It is a reference material that can be used to plan
long term development of the business.
 The plan can be regularly consulted and updated as a
guide to the business development.
 Mistakes can be made on paper rather than in the
operation of the business.
 When the plan shows that a successful business is
possible, it makes the entrepreneur feel more
confident to succeed.
 It helps the entrepreneur to decide on how much
money is needed and if properly prepared, it gives
the loan agency confidence that their money will be
repaid.
Most lenders have little understanding of the
business and the entrepreneur should therefore write
the business plan in a simple way, avoiding jargon
and technical language as much as possible. If lenders
can understand what is involved in the business, most
likely they will approve the loan.
It is important to include as much detail as
possible and if necessary do thorough research first.
It is also important to look outwards from the
business to judge what competitors will do and how
the business will develop to become sustainable.
 As a requirement, a detailed business plan is b. A business plan is prepared after a decision to
prepared before its implementation. proceed. (go/no go)
1. Conducting a Feasibility Study c. A feasibility study provides an investigate
An idea for a business is not a sufficient reason to function.
begin production straight away, without having thought d. A business plan provides a planning function.
clearly about the different aspects involved in actually
running the business. Too often, people invest money in a
business only to find out later that there is insufficient
Feasibility Plan Business Plan
demand for the product or that it is not the type that 1. Prepared after
1. is conducted
customers want to buy. To reduce this risk of failure and before a a decision to
losing money, potential producers should go through the decision to PLAN proceed.
proceed. 2. Provides a
different aspects of running their business in discussion
2. provides an planning
with friends and advisers before they commit funds or try function
investigative
to obtain a loan. This process is known as doing a function.
feasibility study and when the results are written down,
the document is known as a business plan.
Here is a Feasibility Study Checklist. It consists of Lesson 2: Market Analysis
questions to be answered in order to determine the To start a business, the first thing to do is to find
feasibility of a business plan. out what is the demand for the product by conducting a
Conducting a feasibility study need not be difficult or short market survey.
expensive, but the most important aspects should all be It is better to do market survey (if necessary with
taken into account to ensure that potential problems are assistance from partners or advisers) because they will
addressed. These are summarized in the Feasibility Study then properly understand their customers’ needs and
Checklist given below. how their business should operate. If an idea is found to
be feasible, this knowledge will in turn give the
Questions that can be answered by feasibility study are confidence to go ahead when problems are encountered,
addressed: knowing that their product is in demand.
 Is there a demand for the product? It is important to think in advance about the type
 Who else is producing similar products? of information that is needed and to ask people the same
 What is needed to make the product? questions each time, so that their answers can be
 What is the cost of producing a product? compared and summarized. This should be a short
 What is the likely profit? exercise to keep the costs low and in-depth market
research is not necessary for most products. A convenient
Each of these aspects should be looked at seriously. way of doing this is to prepare simple questionnaires
When all the information have been gathered and which can be used by entrepreneurs to remind
analyzed, it is time to make a decision on whether the themselves of which questions to ask.
proposed investment in the business is worthwhile or
whether the producer’s money could be better spent Sources of New Product/Service
doing something else. The same considerations should be 1. Consumer
taken into account when an existing entrepreneur wishes Monitor potential ideas and needs from
to diversify production or make a new product. customers and formally arrange for consumers to
express their opinions.
2. Comparison between a Feasibility Study and a 2. Existing Products and Services
Business Plan Analysis of products and services uncovers ways
a. A feasibility study is conducted before a decision to improve offerings that may result in a new product
to proceed. (go/no go) or service.
3. Distribution Channels
Chanel members can help suggest and market
new products.
4. Government (Patent Office)
Files of the Patent Office can suggest new
product possibilities. New product ideas can come in
response to government regulations.
5. Research and Development
Conduct research on your market and your customer
needs. This results to the development and identification
of new and improved product and services.
Methods of Generating New Products/Services
1. Focus Group
A moderator leads a group of 8 to 14 participants
through an open, in-depth discussion in a directive or
nondirective manner. This is an excellent method for
generating and screening ideas and concepts. It
allows people to be stimulated to greater creativity.
2. Brainstorming
Good ideas emerge when the brainstorming
effort focuses on a specific product or market
area.
Rules of brainstorming:
a. No criticism of ideas or suggestions. Every idea
even the wildest, non-feasible idea is accepted.
b. Freewheeling discussion is encouraged.
c. Quantity of ideas is desired.
d. Combinations and improvements of ideas are
encouraged.
3. Problem Inventory Analysis
Consumers are provided with a list of problems
and are asked to identify products that have those
problems. Results must be carefully evaluated as they
may not actually reflect a new business opportunity.
Generating New Product/Services for Conventional or
Innovative Businesses
Conventional ideas can be taken from tried and
tested business, models like opening up a snack bar in
competition with almost 100 others in a particular city.
For the innovative businesses, however, a product can be
introduced that is not yet known to the market. Needless
to say, it is where experimentation and boldness in
business come in.
1. Conventional business scenario
Below are ways to start conventional business.
a. Start a business that you are familiar with.
b. Start a business due to the needs of existing
business contacts.
c. Gain business inspiration from your hobby or
interest.
d. Gain inspiration from an imported item.
e. Explore the possibility of import business.
2. Innovative business scenario
Here are some ways to introduce an innovative
business.
a. Gain inspiration from the needs and wants of
customers.
b. Gain an inspiration from the problems and issues
that bothered you and your peers.
c. Study the usual or existing solutions and venture
in the alternative solution.
d. List down existing products and find out their
other uses aside from what was stated.
Survey of Market Size and Value
A different set of questions is needed when
assessing the size of the market for a particular type of
product and the value of the market (the amount of
money spent on that product each month or year).
At the same time it is possible to gather
information about the types of people who buy a
particular food and where they buy it.
The information gathered from potential
consumers can be analyzed by the entrepreneur to get a
good idea of the quality characteristics of the product
that consumers prefer, the total demand for the product
and the total value of the market.
This involves making a number of assumptions
and it is important to consider the following:
1. Are the people interviewed really representative
of all potential consumers?
2. Was the number of people interviewed enough?
3. Were people giving accurate information?
Market Share and Competition
Market surveys and the calculation of market size
and value are important to find out whether the demand
for a product really exists.
It is therefore important from the outset, to
estimate the proportion of the total market that a new
business could reasonably expect to have. This is referred
as the market share.
It is often difficult to estimate a realistic market
share. The figure depends on a large number of variables.
In many cases, new entrepreneurs over-estimate
the share that they could expect, with the result that
production operates at only small proportion of the
planned capacity.
These figures should not be assumed to
represent the scale of production that could be expected.
Even if no one else is currently making a product locally, it
is likely that once a new business starts production and is
seen by others to be successful; they too will start up in
competition.
Competitors
Competitors are very important to the success or
failure of a new business. The entrepreneur should
recognize that there are different types of competitors.
 General competitors
 Type competitors
 Brand competitors
They also compete with the profit margin and level of
service that they offer to retailers and with special offers
or incentives to customers.
New entrepreneurs must therefore assess each of
these factors using a Strengths, Weakness, Opportunities,
and Threats (SWOT) analysis.
Lesson 3: Marketing Strategies
A start up or a company’s strategy combines all of
its marketing goals into one comprehensive plan. A good
marketing should be drawn from market research and
focus on the product mix in order to achieve maximum
profit and sustain the business. The marketing strategy is
the foundation of a marketing plan.
The following questions will help in formulating the
marketing strategies;
1. Who is producing similar products?
2. Where are the competitors located?
3. What is the quality and price of their products?
4. What can I do to make a new product that is
better than those of the competitors?
5. Why would customers and consumers want to
change to a new product?
6. What offers or incentives do competitors give to
retailers?
7. What are competitors likely do if a new product is
introduced?
After developing a marketing strategy, there is a
“Seven P Formula” that can be used to continually
evaluate and re-evaluate the business activities. These
seven are: product, price, promotion, place, packaging,
positioning and people. As products, markets, customers
and needs change rapidly, it is a must to continually
revisit these seven Ps to ensure the business track and
achieve the maximum results possible in today’s
marketplace.
The 7 Ps in Business Opportunity
1. Product
To begin with, develop the habit of looking at the
product as an outside marketing consultant brought in to
help the company decide whether or not it’s in the right
business at this time. Ask critical questions such as, “Is
the current product or service, or mix of products and
services, appropriate and suitable for the market and for
the customers of today?”
a. Whenever there is difficulty selling as much of the
products or services as planned, there is a need to
develop the habit of assessing the business honestly
and asking, “Are these the right products or services
for the customers today?”
b. Compared to the competitors, is the product or
service superior in some significant ways to anything
else available? If so, what is it? If not, could it be
developed to an area of superiority? Should this
product or service be offered at all in the current
marketplace?
2. Price
The second P in the formula is price. Develop the
habit of continually examining and re-examining the
prices of the products and services to sell for making sure
they’re still appropriate to the realities of the current
market. Sometimes there is a need to lower the prices. At
other times, it may be appropriate to raise the prices.
Many companies have found that the profitability of
certain products or services doesn’t justify the amount of
effort and resources that go into producing them. By
raising their prices, they may lose a percentage of the
customers, but the remaining percentage generates a
profit on every sale. Could this be appropriate?
Sometimes there is a need to change the terms and
conditions of sale. Sometimes, by spreading the price
over a series of months or years, it can sell far more than
today, and the interest one can charge will more than
make up for the delay in cash receipts. Sometimes
products and services can be combined together with
special offers and special promotions. Sometimes it can
include free additional items that cost very little to
produce but make the prices appear far more attractive
to customers.
In business, an experience of resistance or frustration
in any part of the sales or marketing plan, gives the
entrepreneur an opening to revisit the area. Be open to
the possibility that the current pricing structure is not
ideal for the current market. Be open to the need to
revise the prices, if necessary, to remain competitive, to
survive and thrive in a fast-changing marketplace.
3. Promotion
The third habit in marketing and sales is to think in
terms of promotion all the time. Promotion includes all
the ways to tell customers about the products or services
and how to market and to sell.
Small changes in the way the product is promoted
and sold will lead to dramatic changes in the results. Even
small changes in the advertising can lead immediately to
higher sales. Experienced copywriters can often increase
the response rate from advertising by 500 percent by
simply changing the headline on an advertisement.
Large and small companies in every industry
continually experiment different ways of advertising,
promoting, and selling the products and services. Here is
the rule: Whatever method of marketing and sales is
being used today will, sooner or later, stop working.
Sometimes it will stop working for known reasons, and
sometimes it will be for unknown reasons. In either case,
the methods of marketing and sales will eventually stop
working, and will necessitate developing new sales,
marketing and advertising approaches, offerings, and
strategies.
4. Place
The fourth P in the marketing mix is the place where
the product or service is actually sold; develop the habit
of reviewing and reflecting upon the exact location where
the customer meets the salesperson. Sometimes a
change in place can lead to a rapid increase in sales.
Sell the product in many different places. Some
companies use direct selling, sending salespeople out to
personally meet and talk with the prospect. Some sell
through catalogs or mail order. Some sell at trade shows
or in retail establishments. Some sell in joint ventures
with other similar products or services. Some companies
use manufacturers’ representatives or distributors. Many
companies use a combination of one or more of these
methods.
In each case, the entrepreneur must make the right
choice about the very best location or place for the
customer to receive essential buying information on the
product or service needed to make a buying decision. In
what way will it be changed? Where else could the
products or services be offered?
5. Packaging
The fifth element in the marketing mix is the
packaging. Develop the habit of standing back and
looking at every visual element in the packaging of the
products or service through the eyes of a critical
prospect. Remember, customers form the first
impression within the first 30 seconds of seeing the
product or some elements of the company. Small
improvements in the packaging or external appearance of
the product or service can often lead to completely
different reactions from the customers.
With regard to the packaging of a company, a
product or service, think in terms of everything that the
customers sees from the first moment of contact with the
company all the way through the purchasing process.
Packaging refers to the way the product or service
appears from the outside. Packaging also refers to the
people and how it is dressed and groomed. It refers to
the offices, the waiting rooms, the brochures, the
correspondence and every single visual element of the
company. Everything counts. Everything helps or hurts.
Everything affects the customer’s confidence.
When IBM started under the guidance of Thomas J.
Watson, Sr., it was early concluded that fully 99 percent
of the visual contact a customer would have with this
company, at least initially, would be represented by IBM
salespeople. Because IBM was selling relatively
sophisticated high-tech equipment, Watson knew
customers would have to have a high level of confidence
in the credibility of the salesperson. It, therefore,
instituted a dress and grooming code that became an
inflexible set of rules and regulations within IBM.
As a result, every salesperson was required to look
like a professional in every respect. Every element of
their clothing-including dark suits, dark ties, white shirts,
conservative hairstyles, shined shoes, clean fingernails-
and every other feature gave off the message of
professionalism and competence. One of the highest
compliments a person could receive was, “You look like
someone from IBM”.
6. Positioning
The next P is positioning. Positioning develops the
habit of thinking continually about how the products are
positioned in the hearts and minds of your customers.
How do customers think and talk about the products
even if it is not present? How do customers think and talk
about the company? What positioning does it have in the
market, in terms of the specific words people use when it
is described and offered to others?
In the famous book by Al Reis and Jack Trout,
Positioning, the authors pointed out that how the
products are seen and thought about by the customers is
the critical determinant of the success in a competitive
marketplace. Attribution theory says that most customers
think of the products in terms of a single attribute, either
positive or negative. Sometimes it’s “service”. Sometimes
it’s “excellence”. Sometimes it’s “quality engineering”, as
with Mercedes Benz. Sometimes it’s “the ultimate driving
machine”, as with BMW. In every case, how deeply
entrenched that attribute is in the minds of the
customers and prospective customers determines how
readily they’ll buy the product or service and how much
they’ll pay.
7. People
The final P of the marketing mix is people. Develop
the habit of thinking in terms of the people inside and
outside of the business who are responsible for every
element of the sales marketing strategies, and activities.
It’s amazing hard to think every element of the
marketing strategy and the marketing mix, and then pay
little attention to the fact that ever single decision and
policy has to be carried out by a specific person, in a
specific way. The ability to select, recruit, hire and retain
the proper people, with the skills and abilities to do the
needed job to have done, is more important than
everything else put together.
In his best-selling book, Good to Great, Jim Collins
discovered the most important factor applied by the best
companies was that they first of all “got the right people
on the bus and the wrong people off the bus”. Once
these companies had hired the right people, the second
step was to “get the right people in the right seats on the
bus”.
To be successful in business, you must develop the
habit of thinking in terms of exactly who is going to carry
out each task and responsibility. In many cases, it’s not
possible to move forward until you can attract and put
the right person into the right position. Many of the best
business plans ever developed sit on shelves today
because the [people who created them] could not find
the key people who could execute those plans.
Developing a Brand Name
For a new business, creating and effectively
marketing a new brand name is one of the most
challenging aspects of starting a business.
For a new business, creating and effectively
marketing a new brand name is one of the most
challenging aspects of getting out of the proverbial
starting blocks.
Choose the wrong name and customers have no
idea what your business stands for or what it does.
Choose the right name and customers
immediately identify with your value proposition. It’s an
important step, so let’s review some of the basics.
The Significance of Brand Name
Brand name will always be incredibly important
even if progressive business experts claim that the
significance of brand names is fading. As an
entrepreneur, therefore it is important that you spend a
considerable amount of time and effort developing your
brand name.
How to Develop a Brand
If you are ready to brand your business, you need
to have a clear understanding of what developing a brand
actually involves before you really get started. You brand-
development process should always follow these major
steps:
1. Decide what is going to be brand.
Is it branding product, a service, a company, or an
individual?
2. Do the research.
First, find out everything there is to know about the
market. Then find out everything there is to know about
the product or service.
3. Position the product or service.
Find and win a place for the offering in the
marketplace and in consumers’ minds by providing
unique solutions to problems or needs that aren’t already
being addressed by competing products.
4. Write the brand definition.
The brand definition describes what is to be offered,
why it is offered, how the offering is different and better,
what unique benefits the customers can count on, and
what promise or set of promises will make all who work
with and buy from the business.
5. Develop the name, logo, and tagline.
The name is the key that unlocks the brand image in
the customer’s mind. The logo is the brand mark or
symbol that serves as the face of the brand. The tagline is
the memorable phrase that provides consumers with a
quick indication of the product, brand, and market
position.
6. Launch the brand.
The brand goes public when the name, logo, and
slogan is unveiled, and when it begins to tell the market
the story of how the brand reflects what it stands for.
7. Manage, leverage, and protect the brand
This is the “care and feeding” phase of the branding
process; it’s the step that leads to a strong, healthy,
resilient brand. Just like good parenting, good branding
management can be summed up in a single word –
consistency.
8. Realign the brand to keep it current.
Occasionally, it can (and should) change how the
brand is presented. From time to time, there is a need to
update the presentation (the face of the brand) to keep it
relevant to the market in which it lives.
Lesson 4: The 4Ms of Operations
If Sales is the engine that powers Auto Salvage
yards then Production is the drive train that gets us
where we are going. Production is both reactive and
proactive almost simultaneously. It reacts to what is sold
today and must meet the expectations set by the sales
team. It must also anticipate what most likely will be
needed in the near future. The key for production is to
have procedures and processes that can accomplish both.
Once the procedures are set up to maximize efficiency, it
is time to train the production staff on their individual
responsibilities centered on the 4 Ms of Production.
Production Driven by Sales
The buyer buys vehicles based on statistics of
what has been sold and what has been searched. By the
same token, production managers should decide how
many and what parts to take off a vehicle based on
statistics of what has been sold and searched for on the
vehicle. Why put labor into part that make up less than
20% of sales? Why spend pesos chasing nickels? With
today’s inventory management system, the production
managers have an unprecedented amount of information
at their fingertips and they need to learn how to use it.
4 Ms of Production
1. Use the Inventory Management System to establish
what is needed and at what inventory stock levels
impacts the first M-Method. Based on what is known,
the manager can determine the volume of cars that
need to be processed and who will be responsible for
each step of the process. The manager will determine
the most efficient way for each part of the process to
be done to eliminate damage to the product and to
eliminate areas where time and manpower are
wasted. Controlling waste is the key to efficient and
profitable production.
2. The second M is Manpower. When examining the
Methods which are now in place, what is the ideal
number of people it will take to perform these
methods and what positions should they be in? How
will the personnel be trained and measured for
performance? What is the “cycle time” of each part
of the Method?
3. Machine is the third M in the sequence. When
examining the facilities, vehicles and tools, is
everything needed in place to ensure the safety of
the employees while examining the efficiency and
productivity of the department? Do all employees
have access to the same tools and equipment, if
needed? Do the tools enable them to perform tasks
independently? Are they trained on how to maintain
the machinery and tools?
4. Material is the last portion of the Ms of Production.
Are the materials needed is in place to perform all
parts of production and are they conveniently located
to minimize waste>
Measuring Production
Once the new processes are formalized and
employees are trained on how to perform, you can begin
to measure for expected performance and begin
enforcing minimums. Do get also production standards
and implementation procedures. Once these standards
are known the manager is responsible in figuring out how
to motivate (by means of money/ recognition) and train
the employees to reach these new standards.
Production or Technical Feasibility
Once an entrepreneur has found information
about potential consumers, their requirements and the
likely share of the market that could be obtained for a
new product, it is then necessary to assess whether
production at this scale is technically feasible.
The series of questions below is helpful in
deciding the technical requirements of the business:
1. Are enough raw materials of the correct quality
available when needed for year-round production?
2. Is the cost of the raw materials satisfactory?
3. Are the correct size and type of equipment available
for the expected production level and is it at a
reasonable cost?
4. Can it be made by the local workshops? Are
maintenance and repair costs affordable?
5. Are sufficient information and expertise available to
ensure that the food is consistently made at the
required quality?
6. Are suitable packaging materials available and
affordable?
7. Are distribution procedures to retailers or other
sellers established?
8. Is a suitable building available? What modifications
are needed?
9. Are services (fuel, water, electricity, etc.) available
and affordable?
10. Are trained workers available and are their salaries
affordable?
Contents of Production or Technical Feasibility
1. Production Planning
This plan should indicate how the different stages
in a process are linked together. It should identify any
‘bottlenecks’ in the process, the equipment that is
required for each stage and where quality assurance
procedures should be used.
The data that has been found from market
surveys is added to the process chart to indicate the scale
of production that is required.
A chart is prepared and used for planning a
number of different aspects of the production process.
2. Raw Materials and Ingredients
There are two stages involved in planning the
amounts of materials that are needed to produce the
required weight of product. It is necessary to calculate
the amount of each ingredient that will be needed to
formulate a batch of product. Further, it is necessary to
calculate the amount of losses that can be expected
during preparation.
3. Equipment Required
The decisions on equipment requirements are
influenced by the:
a. The cost and availability of machinery;
b. The availability of people who are skilled in
maintenance and repair;
c. The availability and cost of spare parts and the
possibilities of local equipment fabrication.
4. Packaging
Selection of packaging materials frequently
causes the largest problems for small producers and is
often the main cause of delay in getting a business
established.
Considerations include the following:
a. The technical requirements of the product for the
protection against light, crushing, air, moisture,
etc.
b. The promotional and marketing requirements;
and
c. The relative cost and availability of different
types if packaging. Professional advice should be
sought from packaging specialists or agents of
packaging manufacturers.
5. Staffing Levels
Decisions on the number and types of workers
that are required to operate the proposed business are
taken in conjunction with decisions on equipment
procurement.
It is possible to break down the production into
different stages and then decide the number of people
that will be needed for each stage of the process.
It is important also to include functions such as
store management, quality assurance and bookkeeping
when planning employment levels.
Developing a Business Model
Most technical entrepreneurs focus hard on
building an innovative product, but forget that an elegant
solution doesn’t automatically translate into a successful
business. Businesses require an equally elegant business
model, with the right price, messaging and delivery
channel to the right target customers to keep the dream
alive and growing.
Defining the right business model requires the
same diligence as designing the right product, but the
approach and skills required are different. That’s why
investors acknowledge that two are often better than
one – with one focusing on the technical solution, and
other focusing on defining and building the business
model. These two jobs must be done in parallel.
In the investment community, this work is called
proving the business model. It starts with validating a
business opportunity (a large customer segment willing
to pay money to solve a real problem), in much the same
way as your proof of concept or prototype validates your
technical solution. Here are seven steps recommended
for establishing the right business model.
7 Steps Recommended in Establishing the Right Business
Model
1. Size the value of the solution in the target segment.
Customers often complain that existing approaches
are not intuitive or integrated, but old solutions may be
familiar and locked in. estimate your costs, including a 50
percent gross margin, as a lower bound on a price.
Products too expensive for the market won’t succeed and
prices too low will leave an exposure. Match with
competitors prices and market demographics.
2. Confirm that the product or service solves the
problem.
Once the prototype or alpha version is available,
expose it to real customers to see and feel the same
excitement and delight. Look for feedback on how to
make it a better fit. If it doesn’t relieve the pain, or
doesn’t work, no business model will be saved.
3. Test the channel and support strategy.
Now is the time to pitch the entire business model to
a group of customers or a specially selected focus group.
This is not just a product pitch, but must include all
elements of your pricing, marketing, distribution and
maintenance. Here again is a chance to make pivots for
almost no cost.
4. Talk to industry experts and investors.
A small advisory board of outsiders with experience
in the domain can give the unbiased needed feedback, as
well as connections for setting up distribution and sales
channels. It's also valuable to talk to potential investors
for their views and possible sources of capital, even if it is
for a bootstrapping effort.
5. Plan and execute a pilot or local rollout.
 Good traction on a limited rollout is great validation
of a business model. It allows to test costs, quality and
pricing in a few stores or a single city, with minimum
jeopardy and maximum speed for recovery and
corrections. Save your viral campaign and major
inventory buildup for later.
6. Focus on collecting customer references.
Give extra attention to those first few customers, and
ask for publishable testimonials and word-of-mouth
support in return. If there will be no support, even with
the personal efforts, take it as a red flag that the business
will probably not scale at the rate you projected.
7. Target national trade shows and industry
association groups.
There is a need for positive visibility, credibility and
feedback from these organizations as a final validation of
the business model, as well as the product model, in the
context of major competitors. This may also be a great
source for leads as a key part of that final roll-out and
scale-up effort.
The business model can be a better sustainable
competitive advantage than the product features, or it
can be the biggest risk exposure. Too many of the
business plans are heavy on competitive product
features, but light on business model details and
innovations.
Forecasting the Revenues of the Business and the Costs
to be Incurred
Having completed the study of technical
feasibility, the entrepreneur should then have sufficient
information to determine the costs that are likely to be
involved in production. Additionally, the market survey
will have supplied information about the sale price that
could be achieved for the new product. The entrepreneur
is therefore in a position to calculate the expected
income and expenditure and the gross profit that can be
achieved.
savings (known as the owner’s equity) will be sufficient to
start the business without a loan.
The requirement for working capital also continues as
the business develops and a ‘Cashflow’ should be
prepared. Requirements for working capital will differ
among types of business. This is because of the seasonal
nature of the raw materials needed and other
ingredients.
2. Operating Costs
There are two types of operating (or production)
costs. Those expenses that have to be paid even if no
production takes place are called fixed costs and those
that depend on the amount of food that is produced are
the variable costs.
3. Income and Profit
From the market survey, the estimated market size
and share enables you to calculate the expected sales.
The gross profit (or gross loss) is the difference between
the expected income and the total operating costs over
the first year, including any loan repayments.
Income is therefore calculated as follows:
Income = Selling price per unit x number of units sold
Financial Planning
If the gross profit indicates that the proposed
business is likely to be successful, it is then necessary to
repeat the calculation of monthly gross profit for one
year to five years.
This will then show whether there is sufficient
cash available to operate the business without the need
for further loans. This is known as a cashflow forecast.

1. Start Up Costs
The start-up capital is the amount of money that is
needed to buy the facilities and equipment, to register
and license the business and get the necessary
certificates.
Working capital includes the costs of raw materials,
packaging, staff training, product promotion etc. that
have to be made before the business begins to generate
income from sales of the product.
The start-up capital and initial working capital are
calculated to determine whether the entrepreneur’s