I. How shall I start?
IDEATION should be the first investment of anybody who seeks to be an entrepreneur. Indeed, it maybe said that business starts and proceeds with the process of ideation, of thinking things through carefully, of asking very fundamental questions and giving the clearest answers to them, of formulating alternative plans, and of organizing ideas so that they can be easily translated into effective action.
II. What business should I be in?
A. Personal Considerations
The fundamental and long lasting basis for going into a business is delight in it. It has to be something you enjoy. It should give you the chance to deal with people you generally like dealing with. It should afford you the chance to do things you have always wanted to do, as well as go to places you like being in. It must challenge your creativity and entrepreneurship ability. Most important, it must lead to self-development, or the development of certain desirable human qualities that are latent within you. Another starting point for business would be the talents that you possess. Is it knowledge in Handicrafts? Public relation?
Selling? Tinkering with machines? Garments or woodworking?
Yet another would be your training or previous working experience. This seems to be easiest route for some people to go into business that will make them compete in one way or another with companies they used to work for. They start with clients, products, or supplies they may “pirate” from their previous job. But these are those who approach the transition more professionally – or as others would bluntly put it, “more ethically” they go into services, or products that complement their previous employment, acting as subcontractors or as suppliers of some of their product components or product lines.
Your choice of business would also depend on a few other essential considerations especially as to what sort of objectives you really have in starting your own business. Is it to learn what you would if you were employed on a full time basis? Is it to supplement your income? Is it to gamble? Is it to employ your relatives? Is it to pursue a hobby? Is it to get very rich? Is it to be of service to your fellowmen? Whatever your objective maybe, you are entitled to them. Be sure, however, that they are realistic and rational objectives. They must serve the social good.III. B. External Considerations
One is: what businesses are being encouraged and supported by the
government? They may be provided some tax breaks, special financing
programs, or marketing support. These business are what the government
considers to be important for our country’s development. They are often
described by all or any of the following objectives” “export-oriented”,
“employment-generating” or labor intensive”, small and medium scale” industries
whose products are meant primarily for markets abroad, but that are also labor-
intensive in technology, are highly favored.
Another factor with worth considering is the rate of growth of various businesses
at various stages of the country’s development. What businesses will be growing
faster than others in the next ten years? In other words, what businesses should
Filipino entrepreneurs organize that would further aid and hasten the country’s
development.
Engineering industries are among those likely to be mentioned ahead of others.
They are involved in the transformation of metal and its by-products into such
items as nuts and bolts, ships, machinery, and even automobiles and aircraft.
And in the light or worsening energy crisis, all sorts of energy development
projects and businesses are likely to be not only rapidly growing, but also highly
supported by the government.
What is the appropriate business scale?
Just how much should be invested in my business?
It is true that whatever amount you have in your hands determines the size of
operation you should put up. It is usually better to ask the question independent
of your financial means. There is, after all, such a thing as the “appropriate size”
of a business.
One stop you can take is to investigate the business you have selected. Look at
the more successful firms in it? Of what particular scale are the more successful
ones? Or does scale really matter in that type of business? Even if the bigger
firms are relatively more successful you may find small firms that are still viable
because they may specialize in certain segments of the markets. Since you are
at it already, make a mental note of the “secrets of success” of particular firms in
that business. You have just started to get acquainted with your future
competitors, too.It is no longer fashionable to immediately think Big. Business failures in the past
have shown investors that having too grandiose a plan in their hands can be
dangerous. Where things can be done on a smaller scale and still yield efficient
and profitable results, more investors are just as attracted as they would be to
promises of bigness. The cry “small is beautiful” has grown so popular that it is
almost part of every investor’s routine now to start thinking small before thinking
big.
In the final analysis, the scale of business that you wish to go into also depends
on your personal expectations. What level of sales do you want to achieve?
part of every investor’s routine now to start thinking small before thinking
big.
In the final analysis, the scale of business that you wish to go into also depends
on your personal expectations. What level of sales do you want to achieve?
What sort of profits do you wish to generate?
IV. How shall I organize business?
1. Choosing the Legal form
There are advantages and disadvantages that go with any legal form of
business, be it a single proprietorship, a partnership or a corporation. These
pros and cons to each business form may fall under any of the following
categories: ease in starting, professionalism in actual operation, decision
making, growth potential, lifespan, distribution of liabilities and legal burdens.
Table 1 below summarizes the major pros and cons that are attached to each
legal form of business. These are not the real determinants of what form the
business should take, however, they just set down certain comparative
characteristics that can help the businessman simplify his selection.
TABLE 1 : ALTERNATIVE FORMS OF BUSINESS
ADVANTAGES DISADVANTAGES
A. Single Proprietorship
(one party)
1. Easy to set up
2. Decision making left
entirely to owner
1. Demanding on owner’s
personal time
2. Growth limited by
owner’s financial means
B. Partnership (at least two parties)
1. Relatively easy to set up
2. Check and balance maintained with two parties around
1. Any personal rifts between partners may dissolve partnership
2. Equal profit sharing despite unequal attention and time given by partners to businessC. Corporation (at least five parties)
1. Maximum flexibility for growth
2. Limited liability of individual shareholders
3. Greater room for professionalism in management.
4. Dissolution least likely.
5. Can involve a wide range of people in business including employees.
6. Reduced tax burden on
owners.
1. Cimplicated setting-up
process
2. Individual stockholders
may have limited
influence on
management
3. Tendency to
institutionalize a
bureaucracy.
2. Finding the Location
Selecting a site is a key decision in starting a business and therefore, adequate
time and effort should be devoted in making a final choice. The numerous
factors you have to consider in choosing a suitable location are: proximity to
target markets; availability and quality of raw materials and supplies; accessibility
to consumers and transportation; consider zoning and local ordinances;
availability of power and fuel sources, finally taxation – municipal taxes and fees
rates.
3. Hiring and training personnel
If your business will be large enough to require outside help, one of your first jobs
will be to hire and train one or more employees. You may start out on a small
scale with only one member of your family. But if the business grows, the time
will come when you must select and train personnel.
4. Raising the needed capital
If you have chosen definitely or tentatively the type of business you want to enter,
you must estimate the capital requirements. You not only need money to start
your business but to carry on the business until it is self supporting. Your
sources of capital will be any or some of these: your personal funds and
property; loans or investments in cash or kind from family members, friends,
partners or stockholders; suppliers and financing from banks and other financial
institutions.5. Registration of New Business
Before the “business of doing business” is tackled the following official steps
have to be taken:
– Registration of Business name with the Department of Trade and Industry
– Application for Mayor’s Permit to operate within the chosen locality and
securing of Municipal License
– Registration with Securities and Exchange Commission (SEC) of Articles of
Incorporation and By-Laws for all corporations and for partnership.
– Registration with the Bureau of Internal Revenue to obtain a Tax Identification
Number (TIN)
– Registration of employees with the Social Security System (SSS) Medicare and so on.