Special Topics in

Management
Chapter 9
Small Business
Management and
Entrepreneurship
Lesson 1
 Innovative, creative, and intuitive thinking in business
management helps entrepreneurs come up with great ideas or new
strategies that may lead to the successful achievement of their goals—
service, growth, and profitability. The same entrepreneurial mindset is
valuable in today’s highly competitive and ever-changing business
world. It answers the need for the creation of new products and the
development of new services for society’s benefit. In addition,
entrepreneurship also has socio-economic contributions. It provides
employment, not only to the entrepreneur, but to fellow Filipinos. Thus
helping ease unemployment. Entrepreneurship provides additional
sources of taxes for the government, hence contributing to Philippine
economic progress.
Entrepreneurship – innovative, creative, risk-taking, growth oriented
behavior that brings new opportunities for individuals or organizations to
start new businesses and to produce new products or services that are
beneficial to society

Entrepreneurial ventures – organizations that persistently pursue

opportunities and are characterized by creative, innovative activities that
have service, growth, and profitability as their principal goals

Small business – a business that has fewer than 100 to 500 workers
(depending on the prevailing commercial law in a particular country),
independently owned, operated, and financed; not always entrepreneurial in
orientation and does not dominate its industry; capital is low but capable of
producing goods or rendering services designed to satisfy particular needs of
customers
 The Entrepreneurial Procedure
Business opportunities are waiting for people who have creative
and innovative minds. However, following a systematic process is
crucial in the pursuit of entrepreneurial ventures. This entrepreneurial
procedure involves the following steps:

Formulate the business vision and mission statements. The business

vision of the organization provides a picture of where the
entrepreneurial venture is headed and what the organization can
become in the future. Its mission states the basic purpose and scope of
the organization’s operations.
 Segment of the Market. A business cannot entertain or offer
goods and services to society at the onset in a large scale. It first must
identify a specific segment or group of people it may cater to or what
is called a target market. The basis for segmenting the market to find
the target market may be geographical, demographical,
psychographical, or behavioral.

Geographical. Market segmentation may be used on location (city,

province, region, or country; north, south, east, or west).

Demographical. Demographical bases consider population and can

further be extended to include age, income, education, marital status,
and other related information.
Psychographical. Psychographics looks into people’s interests, values,
attitudes, opinions, and lifestyles.

Behavioral. Segmentation may be based on people’s behavior toward

purchasing or spending, or toward a product or service.

Find the Target Market. After getting enough information about the
overall market, the firm can use statistical tools to analyze this
information and help them decide which part of the whole market they
can serve using their resources in the best possible manner. That part
of the market which the company is willing and capable of servicing is
known as the target market of the business.
Develop the Business Plan. We can define a business plan as the roadmap
which the business must follow utilizing the resources at hand while keeping the
environment in mind. A business plan has the following contents:

Executive Summary – contains the overview of the business and its major plans
Environmental Analysis – includes study of internal and external organizational
surroundings.
Industry Analysis – includes study of trends in the economy, legal requirements,
and possible risks.
Market Analysis – includes analysis of market size, business competitors’
strengths/weaknesses, and short-term sales goals.
Company Description – mentions ownership, mission and vision of the
organization, registration legalities, etc.
Marketing And Sales Activities – strategies for distribution, promotion, and
pricing of products/service.
Understand the Environment. Why should we study the environment? Things
around us are not permanent and everything changes. These changes greatly
impact business. In some situations, businesses control the consequences of
change, however, this is not always the case. When businesses can no longer
control the situation, they are left with no option but to change in consideration of
the environment surrounding them. Environmental factors that affect business
may either be internal or external.

Internal factors are environmental factors within the company and can be
controlled. These include the employees, management, physical facilities, and so
on. On the other hand, external factors have two types: microenvironment and
macroenvironment. Microenvironment includes customers and suppliers,
whereas macroenvironment includes economic, sociocultural, technological, legal,
political, and natural factors, as stated by Kotler (1997).
Components
of a Business
Plan
Products and Services – refers to descriptions of good/services and their
unique features.
Operation – refers to descriptions of manufacturing and service methods,
supplies and suppliers, and control
Processes Management and Ownership – refers to identification of owners
and administrators
Financial Data – includes capital needs, financial projections for one to five
years, available funds, and possible loan services
Time Table – refers to estimated completion dates of ventures

Business planning is important as it helps minimize business risks and

expenses needed for the production of goods and carrying out services. It may
also determine financial requirements and programs of activities in advance.
Implement and Monitor the Business Venture. This step follows after
careful business planning. Choosing the right people to work with and
considering the correct timing for the business implementation are important.
Monitoring the business venture’s progress is also a must to check if its
implementation is proceeding in the right direction or if modifications are
needed along the way.

Maximize the Utilization of Business Resources. Consider the basic ways

of financing business ventures such as debt financing by taking loans from
reputable institutions and equity financing which exchanges ownership shares
in return for an outside investment if additional capital is needed. Human
resources and other material or physical resources must also be fully utilized.
Aside from the procedure mentioned above, business success is also determined by certain
traits that are required of an entrepreneur. Some of these entrepreneurial characteristics are
listed below. Entrepreneurs must be:

Creative and Innovative. Entrepreneurs must have a creative and innovative mindset and
must think out of the box to survive competition and at the same time have competitive
advantage over rival organizations. These are the characteristics that differentiate
entrepreneurs from businessmen.
Good planners. Planning, on the part of the entrepreneur, bridges the gap between where
they are and where they want to go. In other words, it shows the right business direction that
would lead them to success.
Customer-oriented. Entrepreneurs must be customer-oriented to shape their market
offerings and create value in their customers’ minds.
Open-minded. Entrepreneurs must always be open and willing to entertain the suggestions
of team players/employees to encourage the generation of ideas which may be beneficial
when implemented. Learning is a never-ending process and entrepreneurs can also learn by
being receptive to the ideas of people around them.
Flexible. Entrepreneurs must be flexible in order to adapt to changing environmental
conditions. Flexibility comes in relation to changing the strategies, policies, and utilization
of business resources.
Persistent. There is no shortcut to success, and that is why it takes time to attain the
objectives of the company. In the long run, things will not always fall under the control of
the business managers. During times of change and hardship, the entrepreneur must not
give up, especially when things are not favorable for business. Entrepreneurs must be
persistent until their goals are achieved.
Confident. Entrepreneurs must be confident about their own abilities, together with the
abilities of their other team members. They must think positively and believe in their
capabilities and they must not doubt that they can accomplish the most challenging tasks at
hand.
Organized. Entrepreneurs must be well-organized when it comes to all activities of the
business. A well-organized entrepreneur makes sure that their organizational structure
furnishes an environment where individual performance, both present and future,
contributes effectively and efficiently to group endeavors.
Updated/Well-informed. To ensure achievement of entrepreneurial goals,
entrepreneurs must continuously seek important, up-to-date information
regarding their market customers, rivals in business, and suppliers. Expert
opinion must also be sought to be well-informed.
Team players. Entrepreneurs must be able to work well with others. In unity,
there is strength; good coordination with others will ensure business success.
Knowledgeable. Entrepreneurs must have expert knowledge about the product
or service they want to sell, their competitors, and local/regional/ national
markets so that they will have better chances of succeeding.
Risk-takers. Entrepreneurs are not afraid of risks and are ready to meet
business challenges. However, they prefer calculated risks since they are aware
that business undertakings may result in either success or failure, profit or loss