HomeBusinessInvesting in Zamboanga CityDo you want to go into business?

Do you want to go into business?


WHY GO INTO BUSINESS ?  


Entrepreneurship is a way of life.  Being entrepreneurial means being able to identify, start, and maintain a viable and profitable business, particularly a small enterprise.


People spend  most of their lives working for someone else. Some people eventually rise to positions of wealth and power, while the rest languish in unchallenging and low – paying jobs. On the other hand, there are a select few who strike it out on their own, rather than work for others. They put their own enterprise.


You may ask: “ Why should I risk my resources in an unpredictable business when I could hold a stable job with permanent tenure and an assurance of a regular monthly income, without any risk?” In other words, why be an entrepreneur rather than an employee? 


Having your own business has tremendous rewards, but be sure to weigh prospective returns against potential risks and losses.



Rewards of Going into Business or Entrepreneurship


1. Having unlimited opportunity to make money.


   When you have your own business, you will most certainly have unlimited potential to earn money. How much money you earn depends on the time and effort you put into your enterprise.  Successful entrepreneurs have earned  their wealth and prestige through hard work and by having the right product for the right market at the right time.


2. Being your own boss.


As manager of your business, you make decisions for your enterprise and take full responsibility for these. The quality of these decisions will translate into either gain or loss for your business. Being your own boss means you are in control of your future. You have a better grasp of what you want to be.


3. Tapping your creativity.


A business usually starts out as an idea. You will have the opportunity to harness this creativity and turn your idea into products and processes. 

4.  Overcoming challenges and finding fulfillment.


 Starting a business is by itself an accomplishment. Running a business tests an entrepreneur’s capability in securing and managing resources. How well a business turns out depends on the owner’s ability to face challenges and overcome difficulties.


5.  Helping others.


In the process of running a business, an entrepreneur employs workers and pays them income which improves their lives. An entrepreneur who succeeds and grows also helps suppliers, sub-contractors, dealers and other businesses connected to him succeed and grow too.


6. Building an entrepreneurial legacy.


A business  can be a lasting legacy to the family. It  can ensure employment for some members in the family. It can create  an enterprising culture and can be handed down through the generations. 



 

Risks of Going Into  Business or Entrepreneurship


1.  Possibility of Failure – There is always the possibility of failure – a single wrong business decision can bring a business to bankruptcy.


2.  Unpredictable business conditions – A small firm may not have the financial capability or the organizational capacity to respond adequately to new opportunities and their concomitant problems.


3.  Long hours of work – A prospective entrepreneur must be ready to spend most if not all his waking hours in the business.


4.  Unwanted or unexpected responsibilities -  The entrepreneur may eventually find himself saddled with management responsibilities he did not bargain for.


A.   LOOKING WITHIN ( SELF- ANALYSIS ) 


 A successful entrepreneur possesses personal qualities that help his business grow and thrive. Extensive research  by the Management Systems International reveals ten personal entrepreneurial competencies ( PECs ) that lead to success. These are grouped into what are known as the Achievement Cluster, Planning Cluster  and the Power Cluster.


1. Achievement Cluster


-  Opportunity – seeking
-   Persistence
-   Commitment
-   Risk – taking
-   Concern for quality and efficiency


2. Planning Cluster


-  Goal – Setting
-   Information – seeking
-   Systematic Planning and Monitoring


3. Power Cluster


-  Persuasion and Networking
-  Self- confidence


What else is in you that will orient you to business ?


-    What previous jobs have you held that may help you succeed in business?
-    Do you have a hobby that you can expand into a business ?
-    Have you had technical training on which a business can be based?
-    Are you genuinely interested in getting into a potentially- risky business rather than a stable 8 to 5 job?




B.  LOOKING OUTSIDE
 
>  How adequate is the infrastructure for business in your community, province or city?
>  Is the environment peaceful, safe and orderly?
>  What are the incentives, assistance programs and other support that the national and local governments make available to business?
>  How prepared is the government bureaucracy to serve the needs of the businessmen ?
>  Study national and local market trends, business growth and market.
>  Study imports.
>  Think of other possibilities: subcontracting, public sector purchasing, and franchising.



C. DETERMINING PRODUCT LINE AND BUSINESS TYPE


You can now focus on what specific type of product or service you want to sell. Some of the factors given for consideration will help you come up with great idea for a product.
-     Product industries
-     Service industries
-     Process industries
-     Subcontracting industries






Would you want to run a business of your own, with a partner, or with more people: Weigh the odds :

Forms of Business

Advantages
Disadvantages
Single Proprietorship
> Easy to set up
>  Decision making left entirely to owner
> Demanding on owner’s personal time
> Growth limited by owner’s financial means
Partnership ( At least two parties )
> Relatively easy to set up
>  Check and balance maintained with two owners
>  Partnership may be endangered with conflicts between partners.
> A decision made by one partner is binding on all other partners.
> Generally, liability for debts incurred is unlimited.
Corporation ( at least five parties )
> You share the risks and losses with other partners
>  Maximum flexibility for growth
> Limited liability to individual shareholders
> Greater room for professionalism in management
>  Complicated setting up process.
>  Individual stockholders may have limited influence on management.
> Tendency to institutionalize a bureaucracy
Cooperative ( big number of members )
> Least likely to be dissolved
>  Limited liability
>  More people benefited from the business
> Professional managers may be employed by other members
>  Shared control of the business.
Consensual decision making.
Forms of Business
Advantages
Disadvantages
Single Proprietorship
> Easy to set up
>  Decision making left entirely to owner
> Demanding on owner’s personal time
> Growth limited by owner’s financial means
Partnership ( At least two parties )
> Relatively easy to set up
>  Check and balance maintained with two owners
>  Partnership may be endangered with conflicts between partners.
> A decision made by one partner is binding on all other partners.
> Generally, liability for debts incurred is unlimited.
Corporation ( at least five parties )
> You share the risks and losses with other partners
>  Maximum flexibility for growth
> Limited liability to individual shareholders
> Greater room for professionalism in management
>  Complicated setting up process.
>  Individual stockholders may have limited influence on management.
> Tendency to institutionalize a bureaucracy
Cooperative ( big number of members )
> Least likely to be dissolved
>  Limited liability
>  More people benefited from the business
> Professional managers may be employed by other members
>  Shared control of the business.
Consensual decision making.





C. WRITING A BUSINESS PLAN



 After you have made the preliminary decisions, you can start preparing a business plan. There is no such thing as an all-purpose business plan. You should write your business plan according to the unique factors and conditions of your enterprise.


 The business plan has three main components: the marketing plan, the technical and organizational plan, and the financial plan.

 The following guidelines may help you in writing your business plan :


1. State your objectives - tells your reader who you are, what your business goals are, and what you expect these goals to be accomplished.


2. Describe the business –


 For a new business – explain what the business will be, how the idea for your business was conceived, and how the business is expected to develop.


 For an existing business – provide the following information: business name, date and place of registration, date when the operations began, brief history of the business, names of owners, and partners or major investors.



The Marketing Plan


3. Describe your products or services – a detailed description of your products and services to give the reader a clear idea of what you are selling.  Describe as well as applications or uses of your products that may not be apparent.


4. Identify your potential market – Determine who are present or projected customers and how many.


5. Identify your competitors – Include the following information in your plan :


 Description of competitors
 Size of competitors
 Profitability of competitors
 Operating methods


6. Consider your pricing policy – factors such as cost of production, distribution and acceptance by the market , and  pricing structure of your competitors.


7. Determine your marketing methods – How will you promote or advertise your product? How will you sell your product ? What channels of distribution will you use to reach your customers? What do your customers think of your image as an enterprise ?


 

The Technical ( Production ) and Organizational  Plan


8. Identify your material requirements and sources of supply . – List down what materials you will need and where you will get them.


9. Determine the process and equipment you will use to manufacture your product. – Give a detailed description of the production process.


10. Determine your key personnel. – Identify the key people in your business, including the owner and manager.


11. Identify your work force and support personnel. – List down the skills and positions you need, the number of people for each position, and their corresponding salaries and wages.


The Financial Plan


12. Determine your financial requirements.  – Prepare a forecast that outlines all your capital requirements. There are three: fixed capital, working capital, and pre-operating capital.


13. Prepare a budget. – It should include marketing, production, and general and administrative expenses.




D.  RAISING CAPITAL


Money with which to start and run your new small business can be raised in various ways.

External Sources of Credit

1. Pawnshops
2. Credit Cooperatives
3. Money lenders
4. Lending investors
5. Formal sources of credit

Types of loans

1. Short – term loans
2. Intermediate loans
3. Long – term loans


SME – Friendly banks
-  Some banks are more SME – friendly than others, given the well- known risks and transaction costs which SME lending is associated with.


 -  In its November 2000 issue, Entrepreneur Philippines short- listed five banks as “ best for small businesses.” These are :


 1. Development Bank of the Philippines 
 2. Land Bank of the Philippines
 3. Consumer Savings Bank 
 4. Metrobank 
 5. Planters Development Bank


E.  SEEKING OTHER SOURCES OF CAPITAL

 You might need help in your business plan, especially if you need a loan. You can approach :


 Department of Trade and Industry ( DTI )
 Freelance consultants
 Technical Education Development Authority  ( TESDA )
 Technology and Livelihood Resource Center ( TLRC )
 Department of Science and Technology ( DOST )



F. LOCATING YOUR BUSINESS 


      Finding a site for your business is crucial. In retail business, your sales potential depends mainly on your location. Having in mind the business you have chosen, look at a prospective site taking into account the following:


1. Raw materials – Are sources of raw materials you need for your business accessible to the site?


2. Market – How far are you from your target buyers?


3. Transportation – Consider cost of transporting raw materials and finished goods. Check the availability of public transport for your customers.


4. Labor – Can you employ people living in the vicinity?


5. Utilities – Are light and water available ?


6. Community – How are the community’s rules and regulations in relation to your business?


7. Site – is a suitable lot available ? For how much ?




G. REGISTERING YOUR BUSINESS


       A new mall enterprise has to be registered in various government agencies. The complexity of registration varies according to the legal form of business. A single proprietorship is the easiest to register while a corporation requires more elaborate procedures.


>  Department of Trade and Industry
       -  Administers the registration of business names.

> Securities and Exchange Commission 
       -  Gives the business its legal personality. Only partnerships and corporations

          need to be registered with the SEC.

>  Social Security System

     An employer or any person who uses the services of another person in business, trade or industry or any undertaking must be registered with the SSS. Social, civic, professional , charitable, and other non- profit organizations which hire the services of employees are considered employers.


>  Cooperative Development Authority 
     All cooperatives are required to register with the CDA as per Republic Act 6938 / 6939 .


>  Bureau of Internal Revenue 
        Every business enterprise has to register with the BIR for taxation purposes.


> Department of Labor and Employment
        Monitors the compliance with labor laws.


> Local Government
           All businesses, whatever the legal form, are required to secure a mayor’s permit or municipal license from the municipality  or city where they are located.


 


H. HIRING AND TRAINING PERSONNEL

          If you want to be a good employer, the first step is to know the rights of workers. These are:
1. Equal work opportunities for all.
2. Security of tenure.
3. Work days and hours.
4. Wage  and wage – related benefits
5. Safe working conditions
6. Rest days and holidays
7. Right to self- organization and collective bargaining
8. Workers’ participation and tripartism