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
