Republic of the Philippines

CATANDUANES STATE UNIVERSITY

College of Business and Accountancy
Virac, Catanduanes

GEC E6 – THE ENTREPRENEURIAL MIND DANNAH LYN G. ALCANTARA

TF/5:30-7:00 INSTRUCTOR

Chapter 1
PERSPECTIVE OF ENTREPRENEURSHIP

What is Entrepreneurship?
Entrepreneurship refers to the economic activity of a person who STARTS, MANAGES, and
ASSUMES the risk of business enterprise.

It involves seeking opportunities for market, establishing and operating a business out of the
opportunity, and assessing its risks and rewards through close monitoring of the operations.

Who is an Entrepreneur?
The word entrepreneur has a French origin and was coined from the words entre, which means
“between” and prende, which means “to take”.
An entrepreneur is a unique individual who has the innate ability and an extraordinary dedication
to establish and manage business, and acknowledging all the risks and reaping its rewards.

An entrepreneur identifies an economic need, considers offering economic solution, proceeds

to assemble the resources required, and assumes the risk of either succeeding or falling.

What is Entrepreneurial Mind?

Entrepreneurial mind is about a certain way of thinking-it is about the way in which you
approach challenges and mistakes. It is about an inherent need to improve your skill set and to try and try
again.
But why is this important? The entrepreneurial mind/mindset is what you need to propel yourself
forward.

Positive Characteristics of an Entrepreneur

1. Leadership 3. Hardworking .
2. Optimistic 4. Creative
The entrepreneur – uniquely, optimistic, and committed - works creatively to establish new
resources or endow old ones with a new capacity, all for the purpose of creating wealth.
Core Characteristics of Entrepreneurs
Here are the most important or distinguishing traits or qualities that entrepreneurs should possess.
1. Courage

2. Honesty

3. Integrity

4. Reasonable risk takers

(Entrepreneurs enjoy challenges, but they are careful and calculating.)

5. Hardworking
(Successful people always attribute their success to hardwork.)

6. Creative

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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes

(Entrepreurs are creative, innovative. They do things in new and different ways.)

7. Leadership
(Entrepreneurs are leaders by the very nature of their functions. Here are the essential leadership
qualities: selfless dedication, purpose and vision, courage, conviction, enthusiasm, integrity, tact,
and hardwork.

8. Positive Thinking
(Entrepreneurs are positive thinkers. They think of success and bright sides)

9. Decision maker
(Entrepreneurs make decision. The success of their business depends on their ability to make the
right decisions.)

Decision-making has six distinct phases:

a. Identifying the problem
b. Gathering the data about the problem
c. Analyzing the data
d. Formulating alternative solutions
e. Selecting the best solution; and
f. Implementing the solution/decision

10. Self-confidence
(Entrepreneurs have strong faith in their abilities)

In the attempt to make profits, the entrepreneur performs the following specific function;
 supply the necessary capital;
 the production by buying and combining inputs like materials and labor
 decide on the rate of output in the light of his expectation about demand
 bear the risk inherent to the venture

Innovation may be viewed of an important process consisting of the following:

1. Invention which refers to the discovery or devising of new products and processes.
2. Development which refers to the process by which the ideas and principles generated from the
stage of invention are embodied in concrete products and techniques.
3. Innovation which refers to the actual introduction of new products
or process.

New Ventures and Long Term Enterprise

The transition from a new venture to a successful long-term enterprise consists of four major
stages. They are as follows:

1. Pre-start stage
2. Start-up stage
3. Early growth stage
4. Late growth stage

In the start-up stage, the following activities are undertaken:

*formation of the business
*phase of facilities and equipment
*constructing prototype products
*testing the market
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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes

Examples of Innovation are the following:

*offering business services during Sundays and holidays
*manufacture and sales of new products
*selling on a deferred payment scheme

Role of Entrepreneurship in Socio-Economic Growth of a Country

Entrepreneurs play big role in driving a nation’s economic growth and societal development. They
inspire people to dream big and to push the boundary of advancement. They initiate change in the way we
work and live for the better. And most importantly, they create jobs and fortune for a nation.  They pull
the process of economic development through efficient use of resources, manpower, and finance. Their
role is significant in all types of economies—undeveloped, developing, and developed. 
Let’s take a closer look at how entrepreneurship contributes to a nation’s economic development:

Creation Employment
Entrepreneurs are by nature job creators as opposed to job seekers. When a person becomes an
entrepreneur, there is one less job seeker in the economy. In addition to that, that person provides
employment or multiple other job seekers. The job creation by new and existing businesses is one of the
basic goals of economic development. 

Encourages Better Standard of Living

Entrepreneurship is a key in raising the standard of living. Entrepreneurs not only provide means
for living through employment but they also provide people’s needs and wants. They develop as well as
adopt innovations that lead to improvements in the quality of lives. The boom in the high tech electronics,
personal shopping experiences, luxury cars and other products which have made our life easier are all a
result of this rise in our standard of living, thanks to the innovators and entrepreneurs.

Initiate Chain of Support and Wealth Sharing

While establishing the business entity, entrepreneurs invest their own resources and attract capital
from investors, lenders and the public. This mobilizes public wealth and allows people to profit from the
success of entrepreneurs and growing businesses. This kind of pooled capital results in wealth creation
and distribution.

Enable Balanced Regional Development

Entrepreneur generally looks for places that are cheap to set up business which are usually the
least develop region.  These new businesses and industrial units help in the development of the regions.
This eventually leads to infrastructure improvements including better roads and rail links, airports, stable
electricity and water supply, schools, hospitals, shopping malls and other public and private services that
would not be available otherwise. 
Expanding Exports
As businesses grow, they eventually want to start exporting to expand their businesses to foreign
markets. It is considered an important key factor of economic development since it provides access to
bigger markets which ultimately leads to currency inflows and access to cutting-edge technologies and
processes being used in more developed foreign markets. 
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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes

Entrepreneurs not only invest their own capital but it also attracts capital from the market. They make
productive use of these savings and mobilize them by turning it into a productive resource. The pooled
financial resource or capital is the basis of wealth creation in the economy, thus contributing majorly to
the socio-economic development of a country.
Conclusively, entrepreneurs play a very important role in a nation’s development by starting new
businesses, creating jobs, and contributing to development in various key areas such as Gross Domestic
Product (GDP), exports, standard of living, skills development and community development. 
Advantages and Disadvantages of Entrepreneurship

To everything in life there are advantages and disadvantages; entrepreneurship is no exception.

As a matter of fact, entrepreneurship evolves a lot of risk taking. Yet, it can pay off very well, with
rewards such as profits, the opportunity to be your own boss and make your own decisions.

Advantages

1. Excitement
Due to its high capacity for risk, there is a lot of adventure. It develops excitement in
entrepreneurs. It also develops positive attitude to face challenges.

2. Originality
An innovative entrepreneur tries to bring maximum quality and natural products. Only a creative
entrepreneur can offer a new service or product that no one else has offered before.

3. Independence
Some wish to be their own boss and makes all the important decisions themselves.
Entrepreneurship provides opportunity to think and to act independently.

4. Rational Salary
They are not being paid on what they doing but they earn money for their efforts through profit. If
they work hard earnings will higher.

Disadvantages

1. Meeting Variable Cost

Starting your own business means that you must be willing to give the security of a regular
payment of cash for necessity.

2. Benefits
There is less benefit especially when your business is just starting off.

3. Work Schedule
The work schedule of an entrepreneur is never predictable—an emergency may come up in a
matter of seconds. The day to day activities of an entrepreneur changes from time to time.

4. Administration
All the decisions of the business are made by the entrepreneur, himself. In such a business, there
is a chance for wrong decisions. Such wrong decisions will lead to loss.

5. Incompetent Staff
Most of the time, the entrepreneurs find themselves working with employees, due to shortage of
experienced employees. It brings wastage of raw materials and decrease in productivity.

Categories/Types of Entrepreneurs

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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes

The world of entrepreneurship these days has already evolved, and new terms are coined to suit an
entrepreneurs’ field of expertise. Here as some:

Technopreneur is an entrepreneur who puts technology core of his or her business model.

Social Entrepreneur is one who takes advantage of the country’s social problems and turns them
to profitable institutions with the intention of helping the disadvantaged community rather than making a
profit.

Intrapreneur is an entrepreneur in large company or corporation who is tasked to think, establish,

and run a new big idea. Intrapreneurs are usually the product managers or the business development
managers of a company.

Extrapreneur is an entrepreneur who hops from one company to another to act as the innovation
champion, providing creative and efficient solutions.

Types of Entrepreneurs

1. Based on the type of Business

a. Trading Entrepreneur
*They procure the finished products from the manufacturers and sell these to customers
directly or through a retailer.
*They serve as the middlemen, the wholesalers, dealers, and retailers between the
manufacturers and the customers.
b. Manufacturing Entrepreneur
*They manufacture products.
*They identify the needs of the customers, and, then, explore the resources and technology to
be used to manufacture the products to satisfy the customers’ needs.

c. Agricultural Entrepreneur
*The entrepreneur who undertakes agricultural pursuits are called agricultural entrepreneurs.
*They cover the wide spectrum of agricultural activities like cultivation, marketing of
agricultural produce, irrigation, mechanization, and technology.

2. Based on the use of Technology

a. Technical entrepreneur
*These the entrepreneurs who make use of science and technology in their enterprise.

b. Non-technical Entrepreneur
*They are concerned with the use of alternative and imitative methods of marketing
distribution strategies to make their business survive and thrive in the competitive market.

3. Based on Ownership

a. Sole Proprietorship
*one who as an individual sets up a business enterprise.
*sole owner of the enterprise and bears the entire risks involved in it, gets all the profit—called
unlimited liability.
*Easiest and least expensive to set up

 Advantages
*owner makes all the decisions, hours of business, and whom to hire
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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes

*owner is the boss

*any profits belong to the owner

 Disadvantages
*the owner may lack the ability to buy the right supplies, do accounting, etc.
*if the business loses money, so does the owner
*creditors can claim the personal belongings of the owner

*long hours of work

*if the owner is ill, the business doesn’t open

b. Partnership
*two or more individuals share cost and responsibilities
*terms of partnership is recorded in partnership agreement
*”silent partner” - partner that will front a lot of capital, but don’t participate in business
decisions—receive profits in return

 Advantages
*two or more people share decision-making process
*One person may be better at one task than the other partner
*Sometimes it’s easier to borrow money if two people are involved

 Disadvantages
*share profits
*partners could disagree
*friendship can be lost over time as a result

 Corporation
*business with legal status
*owned by individuals, families or small groups
*ownership often broken into small unit, shares, which are sold through stock exchange
*those who buy – shareholders
*since there are many owners, a board of directors runs the corporation
*shareholders have limited liability, not responsible for debts
*get profits as dividends.

 Cooperatives
*business owned by workers who use it
*run by the board of directors
*each member gets only 1 vote

4. Based on the Size of Enterprise

a. Micro entrepreneur
*one who an investment in plant and machinery of less than
Php 3,000,001 and with less than 10 regular workers.

b. Small-scale
*one who an investment in plant and machinery of less than
Php3,000,001 up to 15,000,000 and with 10 to 99 regular workers.

c. Medium
*one who an investment in plant and machinery of less than
Php 3,000,001 up to 15,000,000 and with 10 to 99 regular workers.

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 Republic of the Philippines
CATANDUANES STATE UNIVERSITY
College of Business and Accountancy
Virac, Catanduanes

d. Large
*one who an investment in plant and machinery above Php 100M.

Distinctions between Entrepreneur and Manager

1. Motive

Entrepreneur Manager
The main motive of an entrepreneur is to start a But, the main motive of a manager is to render the
venture by setting up an enterprise. He services in an enterprise already set up by someone
understands the venture for personal else i.e., the entrepreneur.
gratification.

2. Risk Bearing
Entrepreneur Manager

An entrepreneur being the owner of the A manager as an employee does not bar any risk
enterprise assumes all risks and uncertainty involved in the enterprise
involved in running the enterprise

3. Status

Entrepreneur Manager
An entrepreneur is the owner of the enterprise. A manager is an employee in the enterprise owned
by the entrepreneur.

4. Rewards
Entrepreneur Manager
The reward an entrepreneur gets for bearing Manager gets salary as reward for the services
risks involved in the enterprise is profit which rendered by him in the enterprise. Salary of a
is highly uncertain. manager is certain and fixed.

5. Qualification

Entrepreneur Manager
An entrepreneur needs qualities and A manager needs to possess distinct qualifications in
qualifications like high achievement motive, terms of sound knowledge in management theory
originality in thinking, foresight, risk bearing and practice.
ability, and so on.

6. Innovation
Entrepreneur Manager
An entrepreneur himself thinks of what and On the contrary, what the manager does is simply to
how to produce goods to meet the changing execute the plans prepared by the entrepreneur.
demands of the customers. Hence, he acts as Thus, a manager simply translates the entrepreneur’s
an innovator also called a “change agent”. ideas into practice.

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