Enterprises

The business of entrepreneur is called an enterprise

Kinds of Enterprises

According to Employment Size

Below are the kinds of enterprises according to employment size

 Small-scale enterprise: It is composed of 10 to 99 workers.

 Medium-scale enterprise: It is composed of 100 to 199 workers.
 Large-scale enterprise: It is composed of 200 or more workers.

According to Asset Size

Below are the kinds of enterprises according to asset size

 Small-scale enterprise: It has assets worth P1.5 million to P15 million

 Medium-scale enterprise: It has assets worth P15 million to P60 million
 Large-scale enterprise: It his assets worth over P60 million

Classifications of Small and Medium-Scale Enterprises

Below are the classifications of small-and medium-scale enterprises.

 Micro business: It is composed of 1-4 employees

 Cottage business: It is composed of 5-9 workers.

The small businesses, usually unregistered, are the backbone of Philippine economy. It is often referred
to as underground economy. Small businesses include individuals who put up temporary stalls selling
different products and offering different services, individuals who sell processed meat and other meat
products; vendors of balut, palamig at different locations; the dance instructors/instructresses; the car
mechanics/vulcanizers; the plumbers; and others.

The estimated output of the underground economy is about 30-50% of the Gross National Product
(GNP) that measures the market value of goods and services produced by Filipino citizens within a given
year.

How Enterprises Contribute to Economic Growth

Since the 1970's, planners of national development have been promoting small-scale and medium-scale
enterprises (SMEs)

Below are the ways in which SMEs help in economic growth

 Provide jobs with relatively low capital

 Disperses industrial activities to rural areas by using raw, indigenous materials like
bamboo,wood, fiber, and seashells
 Controls the inflow of population to urban areas
 Generation of foreign exchange by SMEs' products like handicrafts, garments, leather, and food
items
 Nurturing of entrepreneurial talents and management skills
 Establishment of industrial linkages when SMEs supply large enterprises with services while
large enterprises provide SMEs with financing and technical assistance

Business Opportunities in the Community

Goods and services are made accessible by several entrepreneurial activities. Entrepreneurs think of
setting up businesses even if only small business opportunities exist everywhere. Bakeries, carinderias,
sari-sari stores, and other small businesses exist in every comer of the street. Tricycle and jeepney
operators provide transportation in the neighborhood and elsewhere. Everywhere car washing
businesses and vulcanizing shops thrive. Vans are converted into school services. In every locality, video
shop rentals and internet cafes exist. Computer repairs and services for PCs and laptops may be found
not only in malls and computer shops, but even in the neighborhood. Some enterprising housewives and
women engage in cooking, baking, and catering. Sewing jobs are being undertaken by women of
different ages. Learned men and women offer tutorial jobs. There's an endless list of business
opportunities in the country to help alleviate the people's dwindling income.

Retailing

Retailing refers to any form of direct selling in small quantities, a kind of entrepreneurial activity wherein
a retailer simply purchases finished goods and in turn, sells these goods to customers with a profit.
Stores at the malls, sari-sari stores, groceries, drug stores, shoe stores, hardwares, among others, are
retail outlets.
Types of Selling

Various modes of payment for goods and services have been devised to establish good relations
between customers and entrepreneurs.

Below are the payment schemes used in retail stores

 Cash sale: A customer pays the full amount of the goods and services at the time of sale
 Cash on delivery (COD): This mode of payment is practiced upon delivery of goods in the house
or office of the customer. Usually, orders are placed via the phone
 Credit sale: Customers use credit cards as payment for goods and services. Credit cards are
issued by bank-based credit companies and the cardholder is given a month or more to pay for
the goods and services

Retailing Activities

Specific examples of retailing activities are repacking and consignment

 Repacking: For retail selling, wholesale goods are packed in smaller quantities. Examples of
repacked goods are cooking oil in bottles or in plastic, salt, sugar, and other spices.
 Consignment: A trader leaves his/her goods to another trader for the latter to sell on a
commission basis. Goods such as garments, shoes, bags, and cosmetics are examples of
consigned goods

Activities Related to Retailing

The success of a retail business is determined by the needs of the target market. Below are some
activities that an entrepreneur should undertake before embarking on retailing as an entrepreneurial
activity.

 Identify the goods that a community needs. People buy goods they need
 Goods should be bought on a wholesale basis. These goods are cheaper and can be resold at
reasonable prices for a good profit
 Goods are repacked for retail sale. So that consumers can afford to buy them, goods are
repacked in smaller quantities
 The right prices of goods should be determined. Consumers can afford only fair prices
 The merchandise should be displayed attractively in sales outlets. High sales are generated by
fresh, clean, and attractive goods
 Entrepreneurs should establish awareness of the goods they are selling and their benefits.
 Manufacturing

Manufacturing, one of the most important functions of business, is the processing and/ or assembly of
raw materials by workers using equipment and machinery to produce a product or provide a service. It
involves the maximum and efficient use of resources like raw materials, labor, capital, energy or power,
and machines to make products of the desired quality at the right time at the least cost

Because it provides and generates employment and gives skilled laborers the opportunity to master
their skills and craft and take pride in their work, manufacturing is essential to a country's economy.
Manufacturing makes locally-made products such as appliances, food items, and leather goods and
make these accessible to the average Filipino family. Economic growth is dispersed in the countryside as
raw, indigenous materials found in rural areas are used in manufacturing. Manufacturing provides the
supplies and equipment needed for the smooth and efficient operations of not only local industries, but
international industries as well.
Different Types of Manufacturing

There are two types of manufacturing-the intermittent manufacturing and the continuous
manufacturing

 Intermittent manufacturing: When production is scheduled according to job orders received for
the product, intermittent manufacturing is utilized. Dress shops, tailoring shops, restaurants,
resorts, photography, and others are examples of intermittent manufacturing
 Continuous manufacturing: This is used when there is a regular and continuous demand for a
product and dealers stock on finished goods like food items, appliances, beauty products,
electronic supplies, and others.

Activities Related to Manufacturing

Entrepreneurs should practice creativity to come up with new designs, new products, and alternative
approaches to products and always be ready with wise and practical solutions to problems that would
threaten the survival of his/her business. In manufacturing, a set of outputs are produced after
processing a set of inputs. Included in the inputs are materials, manpower, machinery, methods,
management, and money. Raw materials are converted into finished products through the stages of
operation, assembly, finishing, and inspection.

Operation: This is considered the primary step in a method, process, or procedure where the raw
material is converted into something. For example, this is the stage where a piece of fabric is cut based
on a pattern made and sewn into a dress.

Assembly: This is where parts are to form a finished product. For example, pieces of fabric are sewn
together to form a dress.

Finishing: In this stage, the creativity of manufacturers is put to a test. For example, edges, zippers,
buttonholes, sequins, trimmings, edges, and others are used in finishing a dress or a gown.

Inspection: The finished products quality and quantity are inspected by a quality control supervisor
using his/her senses or by sophisticated measuring tools like tester or gauges.

Keeping an Inventory of Materials

Inventory refers to the keeping of an adequate supply of raw materials, in-process goods, and finished
products to meet targets of production and sales orders. It is the job of the inventory manager to see to
it that there is no overstocking of finished products. The capital of the business should not be focused or
confined alone to stocks because overstocking is costly. On the other hand, production is delayed by too
little or lack of raw materials. This may result to loss of sales or customers.
The inventory manager should see to it when to order stocks, how often stocks are ordered, and how
much of the stocks are ordered.

Kinds of Goods

There are two kinds of goods -the basic and seasonal goods

 Basic Goods: These are goods that are either regularly used in production or sold at a steady
rate at all times. For example, pattern paper, spools of thread, needles, zippers, buttons, and
others are basic goods for a dress shop or a tailoring business. Inventory managers have to know
delivery delay, their reserve stocks of that particular item, and safety stock to be able to
determine how much of basic goods to order at a certain time. The length of time it takes
between sending the order for more stocks and the shipment of that order is referred to as
delivery delay. The estimated number of units expected to be consumed within the period of
delivery delay is referred to as the reserve stock. The extra stock that will fill in for delayed
deliveries or unexpected rise in sales or use is referred to as safety stock The safety stock is
usually half of the reserve stock. The sum of the reserve stock and the safety stock is the re-
order level. Inventory managers place their orders once the stocks reach this re-order level. To
illustrate this, an ice cream store sells half gallons of ice cream. The ice cream store owner sells
about five cans of ice cream a day. Since delivery takes about 7 days or a week, the owner has a
reserve of 35 cans in his/her shelves. The owner experiences delays in delivery so he/she has a
safety of 17 cans in his/her freezer. His/Her reserve stock of 35 cans and safety stock of 17 cans
equal 52 cans. He/She already calls on delivery service for more stocks when his/her stock is
down to 52 cans.
 Seasonal Goods: Since this kind of goods do not move much between seasons, re- ordering of
stocks is not as important and necessary. The entrepreneur should order his/her stocks before
peak season to avoid problems of supplies running out of stock. Examples of seasonal goods are
Christmas decors and cards, candles for November 1, school supplies, and others.

Deciding on the Product to Manufacture

Below are the factors to consider on what product to manufacture

 The product should have a target consumer who has a need for that product, who has long
wanted that product, or who is easily convinced that he/she needs that product.
 There is an abundant and continuous supply of raw materials needed in production.
 The product has a price that is within the reach of the target consumer and is capable of giving
profit for the entrepreneur.
 The product is easily available to the target consumer.
 Basic Concepts of a Service

The 1990's ushered the dawn of service businesses with comfort anul peace of mind as their sales pitch.
Clients of these service businesses are spared of having to do things themselves, to focus on their own
work as they have been relieved of matters of security, maintenance of their surroundings, and other
daily or regular concerns. Among the service businesses are the catering services, security agencies,
school bus services, handyman services, janitorial services, and others.

Activities Related to a Service Business

The nature of the service being offered determines the activities involved in a service business.

Parents are relieved of bringing their children to and from school when they avail of school bus services.
The owners of the school bus services are usually supervised by the Parent-Teacher Associations of
schools so that parents are ensured of the safety of their children aboard the vehicles.

Caterers bring much convenience to hosts/hostesses of parties as they take care of the chairs and
tables, tablecloths, utensils, table decor, including the food, drinks, and the service staff.
Hosts/hostesses will just have to entertain their guests.

Janitorial services are availed of by building administrators. A team of men and women assigned by the
agency contracted for janitorial services maintain the cleanliness of the rooms af a building.

The security of banks, establishments, malls, schools, villages, residences, and others are provided by
security agencies. Strong, alert, and able-bodied guards are assigned to keep the security of the places
mentioned.
Activities Common to Setting Up Service Businesses

 Selection and recruitment of workers/employees with pleasing personalities and who possess
the maturity to deal directly with clients
 Trainings and orientations of workers/employees on how to interact with clients and how to
deliver services efficiently and effectively
 Formulating policies that include behavioral and dress codes among workers/employees
especially when delivering services

How Service Activities Contribute to Successful Businesses

The best and effective way to advertise a service business is by rendering excellent and quality service to
satisfied clients. Though the activities of service providers vary, clients have common expectations like
honesty, loyalty, punctuality, trustworthiness, and efficiency. Once these common expectations of
clients are addressed, then the service business is said to be a success.
 Entrepreneurial Requirements in Running a Business

Identifying Business Opportunities

To be able to identify business opportunities, one's observation, inquisitiveness, and creativity should
work. There is an abundance of business opportunities everywhere. An opportunity may also be the
result of a person's frustration.

Below are the factors to consider in identifying business opportunities

 Client's Needs: An entrepreneur sees a needed and urgent service but cannot put up a service
business because the target consumer may not be able to afford the price. But clients may be
convinced to buy/hire the product and accept the quite high price if the service proves to be of
excellent quality.
 Determine if clients are happy with what they have: Products or services that are innovative,
affordable, and has guaranteed quality will always have a place even if a thousand service
businesses are around. Price becomes a secondary factor as long as the new service or product
is better in quality and service than the existing ones.
 Abundant Raw Materials and Human Resources: Nothing is considered trash. Even scrap
papers, leaf piles, and piles of old newspapers and magazines have their uses. A person may use
his/her creativity to come up with a unique service business to make use of abundant raw
materials and human resources around him/her.
 Latest Trends and Concepts: Sources of brilliant business ideas may be local and international
new concepts, new looks, new crazes, books, magazines, newspapers, library research,
government agencies, friends and relatives here and abroad, and others. Working women are
interested in the latest fashion, housewives search for new cooking trends, husbands are
interested in the latest gadgets and car accessories, the young are interested in the latest
models of cellphones and MP3s, and so on.

The Location of a Service Business

Below are the factors to consider in selecting the location of a service business

 Accessibility/Proximity: Service businesses should be close to sources of raw materials.

accessible to its workers/employees, and be within easy reach of customers or clients.
 Resources: In selecting a suitable location for a service business, consider an adequate space for
smooth operations and storage, abundant supply of running water, and an uninterrupted upply
of electricity.
 Support Services: Service businesses should be close to hospital or medical clinics, fire station,
police station, and other support services
 An Asset to the Community: Service businesses should generate employment and improve
facilities in the community thereby contribute to the development of the community and is an
asset rather than a nuisance (like being a source of noise or pollution).

Recommended Layout of a Business

The movement of workers and their efficiency is increased by a good floor plan or layout.

Manufacturing requirements include an investment in space, tools, equipment, raw materials, and
skilled persons. The requirements of service businesses are investments in space, materials, tools,
equipment, and trained staff.

Staff Requirements

In terms of staff requirements, retailing is the least demanding of the three types of businesses since
retailing is done by just one person. To start operations, a number of workers are needed by the
manufacturing and service businesses.

Time Investment on Business

All forms of businesses are time-consuming. Retailers spend much of their time waiting for customers or
clients to look over their products. A considerable amount of time are spent by manufacturers in
monitoring the production and distribution, checking inventory, recording expenses, and other
operations. Service business providers spend too much time in promoting services to prospective clients.

Personal Satisfaction

When a retailer is able to expand his/her shop or business with his/her earnings, then there is
satisfaction in retailing.
Perhaps the greatest satisfaction in manufacturing is being able to produce an item that is needed,
bought, and satisfies the public.

Satisfaction is achieved by service businesses when the client is satisfied by its service and then
recommends the service business to others.

Basic Managerial Concerns of a Business

 Entrepreneurship is about dreams. Becoming independent, creating and innovating a product or

a service, effective method of manufacture and distribution, or a new form of selling are the
dreams an entrepreneur must have. They must have the passion for these dreams, believe in
them, and make them work. They should discuss these dreams with financiers. Entrepreneurs
must be committed to their dreams.
 Money invested in entrepreneurial activities may be savings or loans, or both. Entrepreneurs
may apply for a bank loan. To secure a bank loan, entrepreneurs must have a proven track
record and the enthusiasm in the business they wish to put up. An assurance is needed by
investors from the entrepreneurs.
 Entrepreneurs must be flexible. They must be ready for the outcomes (positive or negative) of
their dreams.
 Too many excuses become barriers to being a successful entrepreneur. Losing too much, lack of
capital, personal inadequacies, competition, fear of failure, and better alternatives are just
among the excuses that will become barriers to an entrepreneur.
 Entrepreneurs must consider failure as a natural and expected occurrence and a teaching/
learning experience. Failures teach entrepreneurs what he/she should not do, strengthen
his/her resistance to barriers, and develops a strong character. An entrepreneur's secret
weapon is possessing an indomitable spirit.