THE ENTREPRENEURIAL MINDSET

INTRODUCTION

Many successful businesses are founded by entrepreneurs who do not have a college degree.

o Apple founder  Steve Jobs o Philippines Airlines and Asia Brewery

o Microsoft founder  Bill Gates owner  Lucio Tan
o Facebook co-founder  Mark o National Bookstore owner  Soccoro
Zuckerberg Ramos
o Uber co-founder  Travis Kalanick o Zest-O Corporation  Alfredo Yao
o Mang Inasal founder  Edgar Sia II

However, we must not lose sight of the fact that other equally successful businesses were founded
by individuals who earned college degrees.

o Jollibee founder  Tony Tan Caktiong

o Lamoiyan Corporation founde  Cecilio Pedro
o ECHOstore co-founder  Pacita Juan

WHAT IS ENTREPRENEUR?
 “entrepreneur” comes from the French word entreprendre, which means “to undertake.”
 It is a reference to individuals who have initiated the establishment of a business enterprise.
 The Theory of Economic Development, Joseph Schumpeter emphasized the role of
entrepreneurs in the process of economic transformation. Through their business ventures,
entrepreneurs introduce to the market, innovation in the form of new products processes, new
markets, and new organizations.

TYPES OF ENTREPRENEURS
 Megaentrepreneurs – According to Schumpeter, these entrepreneurs are individuals who have
generated substantial value and profits from innovation in a very short period. These individuals
are also willing to absorb huge risks using enormous amounts of capital in their business venture.
 Microentrepreneurs – They initiate business enterprise, the ‘value-added’ and profits they make
are limited. Some introduce innovations in the form of changes in their production and
distribution processes, but their contributions are minimal and attract few competitors and
imitators.

Common about mega and micro-entrepreneurs:

- According to Peter Drucker (1985), in his book Innovation and Entrepreneurship, emphasized the
“discipline” in the process of starting and managing a business.
ENTREPRENEURIAL PROCESS
Involves several stages from the awareness of an opportunity to the realization of a business idea.
Steps:
1. Discovery
2. Development of concept
3. Organizing resources
4. Implementation
5. Reaping the returns

 Discovery
 Refers to the recognition of a business idea or the detection of opportunities that could make
money for the entrepreneur.
 Megaentrepreneurs draw their ideas from current inventions and other technological
developments that can bring about huge profits for them.
 Microentrepreneurs typically get their business from limitations of existing products as well as
simple business where markets are easy to enter.
 Development of the Concept
 It gives more details on how the general business idea can be realized.
 It suggests the preparation of a business plan, which must spell out the various activities that must
be done from production to the distribution of the product or service.
 Organizing Resources
 Process of identifying, sourcing, and financing human, nonhuman, and other resources needed for
the conduct of business.
 Implementation
 Process oof carrying out the business plan.
 It covers a number of activities, including the management of human, physical, technological, and
financial resources of business.
 It includes mechanisms for confronting actual and potential rivals as well as for responding to the
various opportunities, challenges, and developments being posed by external environments.
 Reaping the Returns
 Pertains to strategies related to expansion of the business firm.

CHARACTERISTICS OF AN ENTREPRENEUR
Entrepreneurial Traits and Creation of Value-Added

A. Level of Education
 Studies have shown that entrepreneurs need some formal education to be able to seize the
opportunities presented by inventions, innovation, and other technological developments.
 The degree of human resources qualification will depend on the type of business ventures that are
being established by entrepreneurs.

B. Employment Status
 Individuals who become entrepreneurs in developed countries are usually former employees of
companies in the formal sector.
  These entrepreneurs usually get their business ideas and concepts from the operations of
companies they formerly worked on.
C. Entrepreneur’s Wealth
 Megaentrepreneurs source their funds from their own wealth and from their family. Some
generate capital from their business from the wealth they have accumulated from their past
employment.
 They can use some of their assets as collateral in securing credit from banks.

D. Risk Appetite
 Risks are associated with uncertainties in business operation. These uncertainties can threaten the
survival and stability of a business enterprise.
 Megaentrepreneurs = more willing to take risks compared to microentrepreneurs. Their wealth
can provide some security to absorb losses in case the business does not do too well.
 Microentrepreneurs = take risks by default if they want to survive and escape the consequences of
unemployment. Their appetite or risk is not much since they have limited wealth and have
difficulties in getting credit, they have weak defense against the impact of uncertainties.

ENTREPRENEURIAL TRAITS and ENTREPRENEURIAL INTENTIONS

Entrepreneurial Intentions – planned actions formulated in the mind of individuals which are
geared toward the objective of establishing a business venture from potential business opportunities.

INTERNALL FACTORS
Include mainly the qualities of individuals such as demographics, personal traits, psychological
characteristics, individual skills, prior knowledge, and social ties.
 RISKS, COGNITIVE ADAPTABILITY, and ETREPRENEURIAL DECISIONS

RISKS
 can be described as uncertain situations and developments that can increase the probability of loss
or business failure.
 Internal Risk – pertains to dangers coming from the management resources of a business enterprise
that may imperil its operation. For example, liquidity and financial risks, failure to innovate, damage
to reputation, failure to hire best talents.
 External Risk – threats coming from various environments outside the business firm. Examples:
lethargic economy, increased competition, commodity price risks, regulatory risks, business
interruptions, political risk.
Cognitive Adaptability – refers to the ability of individuals to be involved in the process of producing
several ways of decision-making based on the identification and management of changes in their
environment. It requires qualities of flexibility, dynamism, and self-control.

CREATIVE, STRATEGIC, and CRITICAL THINKING

- Creative Thinking
 refers to thought processes that bring discovery of new ideas.
 Creative ideas start from a dream, an insight, or from mere observation.
 The intent of creative thinking is not providing an answer but to ask questions that can lead to
discovery and change.
 Entrepreneurs utilized creative mechanisms to eliminate competition by differentiating their
products and by substantially reducing costs.
- Strategic Thinking
 Involves thought processes that assess current situations that can be useful in the formulation of
plans for the future.
 Porter’s five forces of competition, trend analysis, and scenario building are utilized to provide an
intelligent forecast of future events that can assist the entrepreneur in formulating strategic plans
that cane enhance the growth of an enterprise.
- Critical Thinking
 refers to systematic and rational way of providing an answer to question.

In businesses, critical thinking is useful in explaining how a firm can survive and remain stable.
Business analysis Tools – SWOT (Strength, Weaknesses, Opportunities, Threats)
 THE RISKS, BENEFITS, and REWARDS IN ENTREPRENEURSHIP

THE RISKS IN ENTREPRENEURSHIP

A. Failure
- As an entrepreneur, you gain the most in the success of the enterprise but if it fails, you have the
most to lose in terms of investment and social stature.
- The risk of failure may be minimized as long as you calculate the risks, control them, and plan
accordingly.

B. Long Hours of Hard Work

- There is no instant formula to success.

C. Unwanted Responsibilities
- Financial, Management, Social, and Environmental Responsibilities.

BENEFITS OF ENTREPRENEUSHIP

A. Entrepreneurship Helps the Economy Grow

- The trade between consumers and entrepreneurs involves money in exchange for products or
services.
Example:
Consumer- Computer for Research and Writing
Entrepreneurs - may find an opportunity to produce faster computers with better processors.

 As more products or services are demanded, the more are then supplied, and consequently, the
more money exchanges are done between consumers and entrepreneurs.
 Entrepreneurs are sometimes called the “backbone of the economy.”

B. Entrepreneurship Encourages Technological Growth

 Entrepreneurs are able to find ways to provide consumers with easier, better, faster, safe,
healthier, greener, cheaper. Or smarter products and services,
 Entrepreneurs are able to see thing in different ways, pacing the way to innovation/

Example: modernization of bulky desktop computers.

C. Entrepreneurship Aids in Human Development

 Entrepreneurship aids in human development through employment.
 According to the United Nations Development Program (2015), human development focuses on
the richness of human lives rather than simply the richness of economies. Thus, work is a
fundamental dynamic driver for enhancing human development.
Example: Consider in manufacturing company
 When there is an increase in demand for the product, the entrepreneur needs to hire people as his/her workers.
As more consumers demand the product, the more workers are needed to produce adequate supply.’

D. Entrepreneurship Promotes Inclusive Growth

 Entrepreneurs see opportunities where most see none. Entrepreneurship makes these opportunities
into realties.

Example: When the aetas or indigenous people who live in scattered and isolated mountainous part of
Luzon were displaced from their homes in the town or city. A local organic farmer saw an opportunity to
harness aetas innate knowledge on the spill, crops, and farming and employed them in his organic farm.

 Entrepreneurship capitalized on the aetas’ unique skills and expertise a therefore helped alleviate
the lives of these indigenous people.
 Entrepreneurs are also sometimes called the “engine of the economy” as they provide the drive for
development and growth.

E. Entrepreneurship Begets Entrepreneurship

 Growth begets more growth, means the success of one entrepreneur becomes the success of other
entrepreneurs as well.

Example:

Making Chicharon product.

If the demand for chicken increases, the business that sells products will need to source more pork skin
and fat.

 Value chains may benefit from the other chains.

THE REWARDS IN ENTREPRENEURSHIP

A. Make Money – for financial independence.

B. Be Your Own Boss
C. Gain Self-satisfaction – Self-satisfaction may come through: profits gains, helping employees earn
money, serving a community, or seeing opportunity turn into reality.
 ENTREPRENEURS EMPLOYEES

- Work for the boss

- Are the boss
- Takes on jobs
- Create jobs
- Value wealth over job security
- Value wealth over job security
- Highly dependent on a monthly
- Are not dependent on a monthly
paycheck
paycheck
- Work regular hours
- Are willing to work long hours
- Work to build someone else’s assets
- Build their own assets
Both are - Do not like to take risks
- Have higher tolerance for risk
productive - Pay taxes on total income
- Pay taxes only on net income
members of the - Often resist change
- Adapt quickly to change
society. - Will have to follow strict saving and
- Attain wealth and financial security
investment plan to reach financial
at a young age
security by retirement
- Decide who to hire and who they
- Have little to say over who they
work with
work with and the direction of the
- Make money even when they are
company they work for
asleep
- Make money only when they are
- Have the freedom to control the
working
direction of their company

PARTS OF THE BUSINESS PLAN

- Include the rationale (clear explanation
A. Executive Summary of the business concept: a product or
- This contains a brief description of service that addresses the need of a
each part of the business plan. market), the problems being addressed
- All the parts in the business plan (market analysis, market to serve or a
should be at least one or two gap to fill in), potential benefits for the
paragraphs each. business. Its answers the “What, Why,
- The first paragraph includes your Where, When and How of the idea that
business name, its location, products will be carried out”. States the
or services and purpose of your plan. Mission, Vision, and Objectives of
your business.
B. Introduction
 - Also, include key people who will
handle the business operations. F. Marketing Plan
- A blueprint that outlines a business’
C. Product or Service Description advertising and marketing efforts.
- Describe the name of the product or Describe how you will advertise your
service and its details (properties, product and how you will attract
features, characteristics, possible customers.
sources of raw materials or - It is guided by the P’s of marketing or
ingredients, potential market or the marketing mix: Product, Place,
customers). Price, Promotion, People, Packaging
- It includes the business analysis tool and Positioning.
(SWOT) – Strengths, Weaknesses,
Opportunities and Threats of your G. Production or Operational Plan
products or services. - Lays down the specifics of operating
or running the business. It comprises
D. Industry Analysis Materials, Machines, Men (Women)
- Shows situational presentation, at least and Money.
three to five years current of data,
trends and latest updates of the H. Organizational Plan
industry. - Details the human resource
complement of the business.

I. Financial Plan
- Show the financial or funding
requirement of the business. It also
E. Market Analysis shows the financial projections of the
- Involves search for, and analysis of, business from its startup stage up to
data that can be used to identify, the time it registers positive income.
isolate, describe, and quantify a given
market or group of customers. J. Appendices
- Must answer the questions: What - Intended for miscellaneous items such
makes the market attractive? Who is as photos, contracts, forms,
your target market? How will the certificates, permits and other papers
product reach the customers in the related to the business (you may give
most efficient manner? your Curriculum Vitae).

PERSONAL ENTREPRENEURIAL
COMPETENCIES 1. ACHIEVEMENT CLUSTER

MANAGEMENT SYSTEMS A. Opportunity Seeking

INTERNATIONAL (MSI) grouped PECS - An entrepreneur sees business
into three clusters: opportunities where most see none.
o Achievement Cluster He/she acts on those opportunities
and turn them into realities.
o Planning Cluster - Aside from entrepreneurs’ capacity
o Power Cluster to think critically, they think
 outside the box in tapping sources
for raw materials, financing, and
technical assistance, and among
others.
2. PLANNING CLUSTER
B. Persistence
- “Without persistence, you will not A. Goal Setting
get what you aimed for”.
- An entrepreneur needs to be
- An entrepreneur refuses to give up
SMARTER: Specific, Measurable,
and will try 100 times if needed to
Attainable, Realistic and results-
achieve the goals.
oriented, Time-bound, Ethical and
- For entrepreneurs, failures are
Recorded.
merely speed bumps to the road to
- Entrepreneur “begins with the end
success.
in mind.” He/she first sets the goal
and then plans the steps toward it.
C. Commitment To Work Contract
- An entrepreneur owns full B. Information Seeking
accountability for words and
- An entrepreneur knows that
action. He/she values “palabra de
knowledge or information is
honor” or “word of honor”.
power.
- It starts from his/her own
D. Risk-taking
experience and observation. Then,
- An entrepreneur is comfortable from outside sources such as
with taking moderate and formal (newspaper, radio and TV
calculated risks in order to achieve broadcast, surveys, conferences,
the goal desired. research, books, journals, etc.) and
- Moderate risk taking involves informal (conversations with other
calculating, controlling, and entrepreneurs, inquiries with the
planning. supplier, etc.)
- Entrepreneurs assess the situation
carefully, do research and ask for C. Systematic Planning and Monitoring
advice from knowledgeable
- An entrepreneur believes “failing
people, and plan for contingencies.
to plan is planning to fail”.
- He/she develops a system to
E. Demand For Efficiency and Quality
schedule all the tasks, priority
- An entrepreneur demands listing, implementation program,
efficiency and quality among monitoring and evaluation
workers, products, or services they schemes.
provide and for oneself.
- High efficiency and consistent
3. POWER CLUSTER
quality are very important in
entrepreneur’s success especially
in highly competitive industry. A. Persuasion and Networking
 - An entrepreneur knows he or she
has the power to achieve the goals
planned for the business.
- Building power through others is
through entrepreneur’s network of
personal and business contracts.
- Through networking, the
entrepreneur develops
persuasiveness: able to make
others want to do what he/she
wants them to do.

B. Self-confidence
- An entrepreneur must believe in
oneself, in the products or services
offered.
- Self-awareness is a way to develop
self-confidence. Entrepreneurs take
time to know him/herself
(strengths and weaknesses, and
PECs)