MICROFICHE REFERENCE LIBRARY A project of Volunteers in Asia Entrepreneur's Handbook Published by: UP Institute of Small Scale Industries Available from: Swiss Center for Appropriate Technology (SKAT) Varnbuelstrasse 14 CH-9000 St. Gall SWITZERLAND Reproduced by permission. Reproduction of this microfiche document in any form is subject to the same restrictions as those of the original document. - -;‘) .- . f ENTREPRENEUR'S HANDBZIOX TECHNQNET ASIA U,P, INSTITUTE FOR SMA SCALE INDUSTRIES 1981 LL- COPJTEHTS THE PROJECT “TEAM AND CONTRIBUTORS, i FrlREWORD, ii INTRODUCTION, ti I I? III IV V VI VI I VI!1 IX ENTREPRENEURIAL SELF-ASSESSMENT, 7 eng*&tQ 2, Bajaho OPPORTUNITY 1DENTIFICAT:ON AND PROJECT SELECTION, 73 AmulL~O F. Ltao PLANNlNG AND ORGANIZING A BUSINESS, 36 Ignatio u. ALviza MANAGING THE ENTERPRISE, 68 Smenidad F. Lavadolr MARKETING MANAGEMENT, 93 AL-&t R. Abon PRODUCTION AND OPERATIONS MANAGEMENT, 775 Edumdo Q. Cati..eea FINANCIAL MANAGEMENT, 757 G&mix ?. Can&a HOW TO ANALYZE YOUR BUSINF?‘, 206 Tmm 2. Ranuia EXPANDING AND DIVERSIFYING THE ENTERPRISE, 245 .4&xmdti G. de Vzgn and Son&x ?.iong-Aquino APPEND ICES I. ENTREPRENEURIAL SELF-ASSESSMENT SCALE, 26’2 2 FORMAT FOR PROJECT FEASiBILITY STUDY, 270 3 LIST OF FINANCIAL INSTITUTIONS, 275 BIBLIOGK4PHY, 278 -i- THE PROJECT TEAM AND COKTRIBUTORS The ENTREPRENEUR'S tiANVBOOK was prepared and written by the University of the Philippines Institute for Small-Scale Industries (UP ISSI). The UP ISSI project team wa s composed of Seienidad F. Lavador, project director; Alber+o P. Capati, Angelita S. Bajaro and Victor C. Abainza, project assistants; and Myrna R. Co, project editor. Eduardo M. Taylor and Ignacito U. Alvizo served as consultants. Administrative suppo:t was provided by Angelina N. Eduardo and Evangeline H. Punzalan and artwork by Priscila P. de Guzman. A panel of contributors, representing several TECHNONET ASIA Participating Organizations, met on December 8-13, 1980 at the UP ISSI to review the first draft of the manual. They were Sirajuddin Ahmad of the Bangladesh Small and Cottage Industries Corporation (BSCTC): Machdi Ichsani and J.M.P. Ohello of the Departemen Perindustrian CUP), Indonesia; A.M.A. Abeysinghe of the Industrial Development Board (IDE), Sri Lanka; Zahudi bi:, riaji .9bdul 24‘1 i: of the Majlis Amanah Ra'ayat (MARA), Malaysia; and Prani Obhasanond of the Department of Industrial Promotion (QIP), Thailand; Felipe ?apa, a Filipino entrepreneur, Paterno V. Viloi.ia, small enterprise development specialist, Zenaida C. Madroiio, UP ISSI’s management specialist, and Lucita Lazo of the University of the Philippines Department of Psychology sat in as resource persons. Earlier, in July 1979, representatives from these Participat<ng Organizations met at the same venue to formulate the design and determine the methodology and content of the manual. They were Sirajuddin Ahmad of BSCIC, Omar bin Haji Bahrul of MAKA, Vim Roonggrout and Prani Obhasanond of DIP, Hamsah Ynusir and Nadirsjah Ara of DP, A.M.A. Abeysinghe of IDB and senior staff of the UP ISSI. FOREWORD For quite some time, we have been bothered that the entrepreneurship development programs being introduced in developing countries have been mostly patterned sfter models applied in industrialized countries. For sure, we can learn much from the experiences and achievements of the more advanced ecoromie5. Whenever a+licable, they have been referred to and used. But the economic, social and cultural conditions are totally different that make adaptation much more difficult than "inventing" our own models. Hence, we undertook the HANDMAN Project - an Entrepreneur's Handbook and a Trainer's Manual on Entrepreneurship Development. This is followed up by an on-going research project on the "Validation of Selection Schemeland Achievement Motivation Training for Entrepre- neurial Development in Asia". The findings and conclusions of this research would eventually contribute "co a revised version of these publications. These publications are by no means complete. They have been designed so that organizations responsible for entrepreneurship development will be able to supplement the basic material provided with their own in-country "notes'. In some countries, it would be necessary to translate these publications in the local language. We hope we have completed a beginning which would be useful to existing and potential entrepreneurs and to those engaged in training them, In the end, it is the risk-taking entrepreneur who can make things happen in our efforts to industrialize. But with scarce resources, the entrepre- neurial risks must be minimized. We acknowledge with gratitude the generous support provided by the Canadian International Development Agency (CIDA) and the International Development Research Centre (IDRC) of Canada towards the accomplishment of this project. Their contribution would be of immense value to the Third World. LEON V CHICO Executive Director TECHNONET ASIA I rrrnnnl IPT T nu I IY I KUJUL. I 1 UN NC one gets rich working for others. This truism has, of late, been strongly underscored in the current efforts for achieving economic growth, Hence, the developing societies' focus on the stimulation of the enterprising spirit, the attempts at nurturing a unique type of individual whoworksfor no one but himself, that special breed known as the entrepreneur. Drawn from academic sources as well as from experiences and practices of entrepreneurs who have successfully founded their own small enterprises, the materials provided in this handbook are aimed at providing the reader with insights, information and knowledgeability on the theories, general principies and practices required to initiate and operate a small enterprise successfully. The handbook consists of nine chapters encompassing the whole enterprise develop- ment cycle - from the project conceptualization to the growth stage of the firm. Chapter I focuses on the entrepreneurial personality. Since it is an accepted assumption that th,e key to business success is self-knowledge, this initial part deals with the assessment of one's entrepreneurial potentials. Chapter II outlines the approaches available to the entrepreneur to identify business opportunities and screen venture ideas. Having made a decision on what business he would venture into, the entrepreneur must then plan and organize his project with :are and deliberation. How he should plan and make decisions on the varied aspects of the business to 2nsure its successful implementation is discussed in Chapter III. After carefully identifyir,g, planning and organizing the resources of his project, the entrepreneur is ready to actualize his project idea. Chapter IV, therefore, discusses the various management skills required of the entrepreneur. From Chapter V through Chapter VII, the three functional areas of management - marketing, production and finance - are thoroughly covered and expounded on. To ensure that his business is constantly in good health, the entrepreneur must periodically analyze it. Four most commonly used methods of business analysis are presented in Chapter VIII. Because the small entrepreneur is basically a dynamic individual, he is concerned not only with mere survival of his business but also with its growth. Chapter IX thus deals on the matter of expanding and diversifying the small enterprise. In summary, the handbook can serve as a useful and relevant material for both existing and potential entrepreneurs, as well as orovide valuable information to researchers, development workers and policy makers involved in entrepre- neurship promotion. -l- CHAPTER I ENTREPRENEURlAL SELF-ASSESSMENT The hey to br!cce~n6 .&I bU;ILntih LJ knowing onen&(. &$or,e beginning a bwi.wm, Lt in encsem.%l .to ,$ind oti &OL.A~ L,( one indeed, ban .the ho-c&ed entrepreneurial spirit. How much ai .the pmonal chtiactv&tic~ 06 the ~ucc~~b,