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Entrep Mind Chapter 8

The document provides guidance on starting an enterprise, including developing a business plan and completing legal registration requirements. It outlines the planning stage of identifying opportunities, creating a business plan, and making financial decisions. The starting stage involves registering the business with government agencies and setting up systems. A checklist is provided to guide entrepreneurs through both the planning and starting stages of launching a new business.

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Yeho Shua
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682 views

Entrep Mind Chapter 8

The document provides guidance on starting an enterprise, including developing a business plan and completing legal registration requirements. It outlines the planning stage of identifying opportunities, creating a business plan, and making financial decisions. The starting stage involves registering the business with government agencies and setting up systems. A checklist is provided to guide entrepreneurs through both the planning and starting stages of launching a new business.

Uploaded by

Yeho Shua
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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GE-EM: ENTREPRENEURIAL MIND

CHAPTER 8: Enterprise Start-up


After identifying the business opportunities to exploit, it is now time for the entrepreneur to embark in the
enterprise.
Starting with planning, consisting mostly of preparing the business plan, strategic options may be formulated and
financial decisions made. This continues into the staring stage, involving transactions with government agencies
to register and set up systems to make the business operational.
BASIC GUIDELINES IN BUSINESS START-UP
In preparing for a new business, the entrepreneur is well-advised to do the following:
1. Seek Help. The entrepreneur must obtain much information as he/she can by reading and talking with
people who are knowledgeable about the business he has in mind.

2. Start Small. The entrepreneur grows in knowledge and ability as the business develops and expands.

3. Have adequate cash flow. The entrepreneur should not start the business unless there are sufficient
funds to get through the first 12 to 18 months.

4. Be aggressive in marketing. The entrepreneur must have a proactive approach in marketing products
or services.
BUSINESS START-UP CHECKLIST
There are two (2) major stages the entrepreneur has to go through in starting a business:
1. PLANNING STAGE – refers to the design of strategic options and making key financial decisions.
2. STARTING STAGE – involves the completion of a series of legal requirements, most of which is paper
work.
THE PLANNING STAGE
Planning the enterprise involves several major activities.
1. Research the market – Market research is an organized way of gathering information about the market or
the customers being targeted by the enterprise. It finds out what people want, need or believe in and how they
react to stimulus.
2. Prepare the business plan – A business plan is a written description of a set of business goals, the rationale
for the attainability, and the plan for reaching such goals. It also contains background information on the
entrepreneur or organization proposing the plan.
3. Formulate a strategic business growth plan – The strategic business growth plan is a more pro-active
working document that establishes the basis for growth. It lays down steps to take to generate sales, gross and
net profit in order to achieve the anticipated return on investment and desired payback period. The strategic
business plan should include how the entrepreneur intends to generate sales and get a share of the competitor’s
market.
4. Define the long-term success plan – defining the long-term success plan involves clearly distinguishing
between personal goals and enterprise goals and describing how the two sets of goals support each other. The
process of setting the personal goal serves as a motivation for personal success. The enterprise goals must be
supported by a detailed marketing plan to ensure that the goal is attained.
5. Prepare a risk and failure plan – the risk and failure plan is a “what if” plan in anticipation of probable negative
situations that may occur. Unforeseen occurrences must be identified so that counteraction may be taken
accordingly.
6. Plan for Succession – it should be considered as early as the start of the business to ensure that someone
will be there to continue the business in any eventuality.
THE BUSINESS PLAN

Following is a typical structure of a business plan:


I. Executive Summary h. Utilities Requirement
a. Type of Business i. Plant layout
b. Name and address of the business j. Waste Disposal System
c. Names and addresses of enterprise k. Quality Control System
proponents l. Production Cost
d. Products or service - Total Production per year
e. Objectives - Production cost per unit
f. Background
IV. Organizational Plan
II. Marketing Plan a. Legal form of business
a. Product or Service b. Organizational structure
b. Target market c. Qualifications of Officers
- Area Coverage d. Office Equipment
- Consumer/Customer e. Gantt chart of activities
c. Demand and Supply Analysis - Charting activities against time
- Total Potential Demand f. Administrative expenses
- Present Supplier/Competitor
d. Projected Sales V. Financial Plan
- Per month a. Total project Cost
- In Volume and in Pesos b. Sources of Financing
e. Marketing Program/Strategies c. Projected Financial Statement
- Consider the practices of competitors - Projected Income Statement
- Own marketing program/strategies - Pro forma balance sheet
f. Marketing/Selling Expenses - Cash Flow Projection
d. Profitability Index
III. Production/Operations Plan - Return on Investment
a. Technical Production Description - Break-even Analysis
b. Production/Operations Process - Payback Period
- Step by Step Procedure - Net income: Sales Ratio
- Duration per step per batch e. List of Assumptions Used
- Labor and Machine Requirement per set up
c. Production Schedule VI. Supporting Attachments (annexes)
-Monthly Breakdown a. Market research data
d. Labor Requirement b. Lease contracts
e. Machinery/Equipment Requirement c. Price list from suppliers
f. Materials and Supplies Requirement d. Commitment letters, if any
g. Plant/Factory Location

STARTING THE ENTERPRISE


1. Choose a good business name
2. Apply for a business name
3. Choose the legal form of the business

a. Three (3) legal forms of business:

i. Sole Proprietorship – a business legally owned by one person


ii. Partnership – invested in by two or more persons who contribute money, property, time
and labor or skill to operate a business and divide profits among themselves.
iii. Corporation – is a juridical entity created by or composed of at least five and not more
than 15 natural persons, identified as incorporators, but they may become shareholders
or stockholders by owning at least one share of the capitol stock.

4. Find a business location


5. Register the business
6. Determine capital requirements
7. Identify source of financing
8. Establish relationship with the banker
9. Set up a record-keeping system
10. Understand business tax obligations
a. Value-Added Tax
b. Percentage Tax
c. Excise Tax
d. Income Tax
e. Other Taxes
11. Apply for relevant licenses and permits
12. Create a Website
13. Establish relationship with a business consultant or adviser
A handy checklist developed from many similar lists prescribed by government and financing institutions is given below
to serve as a guide on the steps to take when starting a business.

Start-up Checklist
A. PLANNING STAGE
Activity Status
1. Research the market:
Who are your target customers?
What need is being addressed?
Who are your competitors?
What is the market size?
What are the market trends?

2. Write the business plan:


Executive Summary
Marketing Plan
Production/Operations Plan
Organizational Plan
Financial Plan

B. STARTING STAGE
1. Choose a good business name:
Easy to remember
Easy to pronounce
Unique (Offline and Online)
Relevant to the business

2. Decide on the legal form of the business:


Sole Proprietorship
Partnership
Corporation

3. Look for business location:


Home Office
Commercial Area

4. Register your business:


Local Government
Department of Trade and Industry
Securities and Exchange Commission

5. Set up Relationship with banker:

6. Create Website (if appropriate):


Own
Advertisers to link to
Affiliates to Link to

7. Set up relationship with consultants/advisers, if needed:


8. Hire employees

-End of Chapter 8-

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