Module 3B: Starting a Business kn the Philippines Flashcards
Business idea generation
Creativity
Innovation
Invention
ability to develop something original, particularly an idea or a representation of an idea.
Creativity
adds value to an existing product or service
Innovation
truly novel product, service, or process that, though based on ideas and products that have come before
Invention
The creative process: The 5 stages of creativity
[PIIEE]
Preparation
Incubation
Insight
Evaluation
Elaboration
involves investigating a chosen field of interest, opening your mind, and becoming immersed in materials, mindset, and meaning
Preparation
refers to giving yourself, and your subconscious mind in particular, time to incorporate what you learned and practiced in the preparation stage
Incubation
a.k.a. “illumination,” a term for the “aha!” moment
Insight
when the solution to a creative problem suddenly becomes readily accessible to your conscious mind
Insight
the purposeful examination of ideas
Evaluation
the actual production release of a “minimum viable product”. It functions well enough that you can begin to market it while still elaborating on it in an iterative development process.
Elaboration
- a feeling of dissatisfaction among customers
- persistent or recurring problem that frequently inconveniences or annoys customers
pain points
response to both changes within markets and changes from outside markets
Key point about innovation
Seven sources for innovative opportunities
[TIPI DCN]
1. The unexpected
2. Incongruities
3. Process need
4. Industry and market structure
5. Demographics
6. Changes in perception, mood, and meaning
7. New knowledge
Internally focused sources for innovative opportunities
[TIPI]
1. The unexpected
2. Incongruities
3. (Innovation based on) Process need
4. Industry and Market Structures
Externally focused sources for innovative opportunities
[DCN]
5. Demographics
6. Changes in Perception, Mood and Meaning
7. New knowledge - both scientific and non-scientific
Types of innovation
- Incremental innovation
- Pioneering innovation
- Disruptive innovation
- Social innovation
Type of innovation that modifies an existing product or service
Incremental Innovation
Type of innovation that is based on new technology. Advancements in the related field that leads to the development of a new product
Pioneering innovation
Type of innovation that makes a product more affordable or accessible
Disruptive innovation
Type of innovation that address social and environmental challenges
Social innovation
Developing an Invention
[ESCCD]
1. Educate yourself
2. Stay organized
3. Conduct Market
4. Research
5. Conduct Patent
6. Research
7. Develop a Prototype
Source of the Known
Education / Research
Experience / skill
Family (business/tradition)
Source of the Unknown
Information from friends
Brainstorming
Tips/information from various sources
→ creates significant value for customers and offers significant profit potential to the entrepreneur
→ it can also be said that there exists an entrepreneurial opportunity when a gap exists between supply (amount and characteristics of the product produced) and demand (consumers’ desire for the product).
Entrepreneurial Opportunities
Identify the problem → Test hypothesis → Evaluate opportunity (Competency, Competition, Sustainability, Profitability, and Financing)
Shaping opportunities
→ focus on what creates that value
→ defining and refining the problem that needs to be solved for customers and users.
→you need to be sure that the problem exists and be able to describe it in some detail before you even begin to invest heavily in building your solution
Shaping opportunities
Evaluate Opportunity
[CCSPF]
Competencies
Competition
Sustainability
Profitability
Financing
Evaluate opportunities
* Do I have substantial knowledge and skills?
* Do I know someone who has advanced knowledge and skill who I can trust to be a partner or employee?
* Do I have connections inside the industry who can help me?
Competency
Evaluate Opportunity
* How many competitors are there in the area? in the industry?
* What are their strengths and weaknesses?
* How are you going to be different?
.Competition
How to do a competitor check
- Mystery Shopping
- Buy their product/service
- Interviewing competitor’s customers
- Competitor’s website/social media
- Testimonials
Evaluate Opportunity
* Threat of new entrants
* Threat of substitute/s
* Bargaining power of supplier
* Short lived trend/fad
Sustainability
Evaluate opportunity
* Net income
* net profit margin
* break-even point
* payback period
* return of investment
Profitability
Evaluate Opportunity
* Compute for capital requirement
* check if this can be funded by your savings
Financing
4 legal forms of ownership
sole proprietorship
partnership
corporation
cooperative
Types of partnership
General partnership
Limited partnership
A business co-owned by 2 or more general partners
simplest form
made up of general partners
most common type of partnerships
have unlimited liability
General partnerships
a person who has full or shared responsibility for running the business
General partners
a business co-owned by at least one general partner and one limited partner
Limited partnerships
In partnerships, they have unlimited liability
general partners
In partnerships, they have limited liability (only able for the amount they invested in busines)
-they do not operate on business, they provide capital
limited partners
Special elements of a corporation
stock
stockholder
dividend
board of directors
closed (private) corporations
open (public) corporations
- shares of ownerships of corporations
stocks
2 types of stocks
common stock
preferred stock
stock with voting privilege
common stock
stock without voting rights; dividend paid first
preferred stock
a person who owns a share of a corporations stock
stockholder
a corporation whose stock is bought and sold on exchanges and can be purchased by any individual
open (public) stock
corporation with a single stockholder, who must be a natural person, trust, or an estate
provided in Title XIII (Special Corporations) of Republic Act No. 11232, also known as the “Revised Corporation Code”
One person corporation
a portion of the corporation’s profit (earnings) that is distributed to stockholders
dividend
a corporation whose stock is owned by relatively few people and is not sold publicly
closed corporation
governing body of the corporation
elected by the stockholders and appoint corporate officers
board of directors
autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of risks and benefits of the undertaking in accordance with the universally accepted cooperative principles.
cooperatives
