Chapter 6: Introduction to Business Implementation

Steps in Preparing for Entrepreneurships

1. A Very Clear Purpose
 The entrepreneur must be very clear about the purpose in establishing the enterprise
whether it is for generating profits or feeding the family, making a difference in the industry
or actualizing the self, the purpose must be compelling enough to motivate the
entrepreneur
2. A Very Compelling Vision
 The entrepreneur must establish an enterprise on the basis of a very exciting business
concept leading to a grand vision
3. Not by Any Other Name
 The entrepreneur must choose a very fitting name for the enterprise
 A good name identifies the company very well
4. A Company of Angels
 It is common for entrepreneurs to embark on a business venture as a “lone wolf”, not
needing the capital or expertise of others
 Angel investor
 Provides capital to entrepreneurs knowing that there are risks involved
 They are prepared to support the entrepreneur
 They also exert a lot of effort in choosing the correct partners
 Angel industrial partners
 Are people who can contribute their expertise, experience, technology, contacts and
good character that will enable the enterprise to succeed
5. A Very Good Business Plan
 It is a wise things to do in order to chart the course of the business properly and to focus
the efforts of the entrepreneur
The Purpose of a business plan are:
1. Entice partners, investors and bankers to fund a business venture
2. Communicate what the enterprise is all about
3. Show what financial returns it could muster
Organizing and Structuring the Enterprise
These assets are composed of the following:
1. The current assets which are short lived assets
 They are composed of cash, inventory, accounts receivables and other current assets
2. The long lived or fixed assets
 They are composed of property, plant and equipment
3. The other assets
 They are composed of organizational and pre-operating expenses
 The assets of the enterprise are financed by its liabilities. These liabilities are composed of:
1. Current liabilities
2. Long term debt
3. Owner’s equity
 Capital Structure of the Enterprise
 This is the way the financial packaged is designed
Forms of Business Organizations
Sole Proprietorship
 The simplest and easiest enterprise to organize
 The owner or entrepreneur has sole control over the enterprise
 He or she reaps all the profits and also all the losses
 Requirements before getting a business permit (Mayor’s permit or Municipal license)
1. Barangay clearance
2. Fire Safety clearance
3. Certificate of electrical inspection
4. Certificate of occupancy
5. Department of Trade and Industry (DTI) certificate
6. Lease of contract if space is leased
7. Location clearance
 Additional requirements depending on the type of business
1. Bureau of Internal Revenue (BIR) for taxation purposes
2. Tax Identification Number (TIN) of the entrepreneur serves as the enterprise TIN
Partnership
 Is vested with own legal personality quite distinct and separate from its individual
members
 Can own its own assets and incur its own liabilities
 It can sue and it can get sued
Two types of Partnership based on the liability of the partners:
1. General partnerships
 Composed of partners who are liable individually and collectively to all those who
have claims against them
 Claimants can run after all the personal assets of all the partners
2. Limited partnerships
 Consists of partners who have limited liabilities while others in the partnership
have unlimited liabilities
 A limited partner is not personally liable for all the obligations of the partnership
beyond his or her prorated capital contribution to the partnership
o The partnership should obtain all the required government clearances, permits and
licenses it should get:
1. A bank certificate of deposit on the money contributions of the partners
2. The approval for its partnership name from the Department of Trade and Industry
3. Register with the SSS and BIR
o Securities and Exchange Commission (SEC)
 Having obtained these documents, it should register and file its Articles of Partnership
Corporation
  Has a separate legal personality quite distinct from the investors who contributed money
to the enterprise
 Allows various combinations of funds to be raised from financiers and investors
o Four Types of Corporations
1. Stock Corporation
 Issues capital stocks divided into shares
 Authorized to raise capital that has a corresponding number of shares
2. Non Stock Non Profit Corporation
 Organized to carry out a purpose or purposes other than generating for investors
 All the surpluses generated by the corporation are not distributed to the funders in
the form of dividends
3. Close Corporation
 Limit the ownership of issued stocks to at most 20 persons
 There are strict restrictions on the transfer of stocks
 The stocks cannot be listed in any stock exchange nor can any public offering of
shares be made
4. Corporation Sole
 A special form of corporation allowed by law usually associated with the clergy
 A trusteeship that is set up for the purpose of administering and managing the
affairs, property and temporalities of a church or group of clergy
6. A Merry Band of Men and Women
 After establishing the enterprise, the entrepreneur must meticulously screen and hire men and
women who foster the cause and share the commitment of the enterprise
 If the team is not fully equipped technically and managerially, the small size of the organizations
should allow the people to learn fast:
1. About customers
2. About operations
3. About competition
4. About financing needs
5. About teamwork