BUSINESS ENTERPRISE SIMULATION Prof. Juancho M.

Babista

Module 01
STARTUP

Starting a business can be a difficult venture but a rewarding

one. Having a great idea and attempting to bring it to market comes
with a host of challenges, such as attracting capital, employees, market-
ing, legal work, and managing finances. Keep in mind that startups lead
to increased job satisfaction and the possibility of leaving a legacy. Val-
uing a startup can be difficult as startups do not usually have longevity
in which to determine their success. Startups also do not generate profits
or revenue for a few years. But starting small can lead to a big one.
At the end of this module, you are expected to:
1. gain understanding of a startup business;
2. value the importance of strategic planning in starting a busi-
ness; and
3. plan for a business startup.
Startup refers to a business in the first stages of
operations. Startups are founded by one or more en-
trepreneurs who want to develop a product or service
for which they believe there is demand. A business
generally starts with high costs and limited revenue,
which is why an entrepreneur looks for capital from a
variety of sources such as venture capitalists. However,
for those starting a small business, the startup process
can be beneficial.
Many startups turn to others for more funding, including family, friends, and
venture capitalists. Startups can use seed capital to invest in research and to develop
their business plans. Market research helps determine the demand for a product or ser-
vice, while a comprehensive business plan outlines the company's mission statement,
vision, and goals, as well as management and marketing strategies.

Starting a Startup
The first step in starting a startup is having a great idea. Market research is the
next step to determine how feasible the idea is and what the current marketplace looks
like for your idea. Then, creating a business plan that outlines your business structure,
goals, mission, values, and objectives, is the next step. This may seem to be a humong-
ous task for a small business and appears to be fitted for big companies. However, the
aforementioned elements of a strategic plan are also needed in a small enterprise.
One of the most important steps is obtaining funding. This can come from sav-
ings, friends, family, investors, or a loan. For this business enterprise simulation, the
last two sources may not be considered. The next step is to do all the correct legal and
paperwork. This means registering your business and obtaining any required licenses
or permits. This is needed in actual business startup. However, for the purposes of

1
BUSINESS ENTERPRISE SIMULATION Prof. Juancho M. Babista

business enterprise simulation, these legal processes will not be applied. This will be
part of the process but will only include the list of documents that should be secured.
After this, establish a business location. From there, create an advertising plan to attract
customers, establish a customer base, and adapt as your business grows
The benefits of working at a startup include greater opportunities to learn, in-
creased responsibility, flexible work hours, a relaxed work environment, increased em-
ployee interaction, good workplace benefits, and innovation.

Business Enterprise Simulation Models

The current situation of the educational system has limited the students’ expo-
sure in actual business enterprise training. However, in lieu of the on-the-job training
activity, the following are suggested by the Department of Education (DepEd):
1. Model A – Simulation or operation of a micro business enterprise in the Barangay
2. Model B –Taking part in the operation of an existing business for a community with
an industry partnership
3. Model C – Online selling or online business simulation for ABM students especially
when a lockdown is being implemented in the community
4. Model D – Drafting a business proposal employing the different analysis tools like
SWOT and appropriate in the current condition of their locality.

Strategic Planning
A business strategy outlines the plan of
action to achieve the vision and set objectives of
an organization and guides the decision-making
processes to improve the company’s financial
stability in a competing market. It explains how
a business plans to compete in a market and how
it intends to grow at a profit. Businesses world-
wide sell goods and services in competitive mar-
kets that require them to increase the value for
owners and shareholders to secure future exist-
ence. This calls for a plan that helps them guide
their decisions and use resources effectively to
achieve key objectives.
Strategy refers to an organization’s long-
term goals and how it plans to reach them. It shows the path to achieve the defined vi-
sion. Tactic refers to the specific actions taken to reach the set goals in line with the
strategy. For example, a company’s strategy might be to become the cheapest provider in
the smartphone market. A tactic to achieve the strategy is negotiating with suppliers to
reduce the costs of electronic components used in production.
A strategic plan is the grand plan of any organization wherein the overall objec-
tives are set and specific programs are created in support of the objectives. The objec-
tives and programs are in line with the vision and mission. It outlines how a company
will achieve its goals and business objectives. The existence of a strategy is a critical suc-
cess factor for any business. It reflects the strengths and weaknesses of the company and
answers how the company plans to respond to the threats and opportunities in the mar-
ket in which it operates. It takes into account the resources at hand and how to best de-
ploy them to achieve its set objectives.
Strategic Plan Process
A plan always requires a process to follow. Accomplishing such plan is a necessity
to assure a smooth conduct of the business. The following steps may be beneficial in

2
BUSINESS ENTERPRISE SIMULATION Prof. Juancho M. Babista

conducting a strategic plan. The details of each step will be discussed in the succeeding
modules.
1. Define your vision.
2. Have a clear mission.
3. Set the goals and objectives.
4. Analyze the business and the market.
5. Define how to gain competitive advantage.
6. Build a strategy framework.
7. Set strategies for functional areas.
8. Determine the operational plans.
9. Prepare financial forecasts and budgets.
10. Establish measures for success.

Idea Assessment and Business Development Process

An important aspect of successful business development is to follow a process of
how you will assess a business idea or concept or project. This will help you decide
whether to move forward with the project and build a business. The steps below help
outline a simple process you can follow. The steps are not a rigid structure to follow. Ra-
ther, they identify issues you need to address and when to address them.
Take note that if you do not follow a process, you will find yourself going in cir-
cles and revisiting the same issues over and over without making progress. In addition to
wasting time, the frustration may cause you to make poor decisions that can haunt you
later.
Following the steps outlined here does not guarantee business success. However,
it can greatly increase your chances of success.
A. Initial Idea Exploration, Identification and Assessment
The origin of a new business idea can come from a variety of sources. In actu-
al company setting, it may come from the board room of an existing business or a
group of producers sitting around the kitchen table. Even if you are starting a small
business, you may want to use the following approach to formulate the business con-
cept. Anytime during the first and second steps, you may decide that your idea is not
viable, in which case you may want to abandon the idea.
1. Form a group project committee.
For those venturing in businesses, it is wise to create a good project com-
mittee that involves bringing together individuals who have the business devel-
opment skills needed to investigate the idea or concept and carry through with
business formation if the concept is viable. For this business enterprise, you may
gather classmates, friends or relatives to help you out in the idea exploration.
2. Formulate general business idea(s) or concept(s).
Define your business idea or concept and describe why it has merit. Your
idea may involve filling an unmet need in the marketplace with a new product,
providing an existing product in a new form, producing a product better or
cheaper than competitors, or other ways in which value can be add-
ed. Remember, an idea is only viable if people are willing to pay you for what it
provides. For example, a premium product is only viable if someone is willing to
pay more for it.
3. Identify alternative business models or scenarios for the idea(s).
A business model describes how the business will function in producing
the product or service and providing it to the customer. A business scenario is a
logical assemblage of the essential business elements starting with raw materials
procurement and ending with the sale of the final product.

3
BUSINESS ENTERPRISE SIMULATION Prof. Juancho M. Babista

4. Investigate idea or concept and alterna-

tive business scenarios.
Conduct an initial informal in-
vestigation of the validity of idea. Inves-
tigate the scenarios or models. Early in
the process this may be nothing more
than a series of phone calls to knowl-
edgeable individuals. Ask them if your
idea make sense. Identify business sce-
narios or models for further study and
eliminate those that are not viable.
5. Formal investigation.
You may want to conduct a for-
mal assessment such as a pre-feasibility
study or a marketing study of the idea
and various scenarios or models. This
may involve using consultants to investi-
gate various aspects of the project. It
may involve eliminating additional sce-
narios/models or identifying new ones.
6. Refine scenarios.
Select those scenarios that are viable for further study and eliminate the
rest. Going through the first step, you should accomplish two things:
a. Through the process of elimination, you will reduce the number of scenarios
or models under consideration for further study.
b. Refine and flesh-out the remaining scenarios/models.
B. Idea/Concept and Scenario/Model Deliberation and Assessment
1. Further refine the business scenarios/models.
If you have conducted any of the formal assessments described above, you
have information that can be used to further refine your business scenar-
io/models. By now, you should have refined your idea to one or a small number
of specific and detailed business scenario or models that you want to assess.
2. Conduct feasibility study.
A feasibility study will provide a comprehensive and detailed assessment
of the market, operational, technical, managerial and financial aspects of your
business project. These factors will feed into the economic assessment of your
project if it is profitable or not. If you have already conducted a pre-feasibility
study, marketing study or other study; these materials can be used in the feasibil-
ity study. Feasibility studies are usually prepared by consultants, so you will need
to investigate consultants who are familiar with your type of business and experi-
enced in preparing feasibility studies. Since this is a business enterprise simula-
tion, a simple marketing research is needed.
3. Analyze the feasibility study or the marketing research.
When you peruse the outcome of the study, the first step is not to begin
deliberations on whether to proceed with the project. Rather, determine the
completeness and accuracy of the study. Analyze if it addresses the issues that
you want addressed. Find out if there was a thorough scrutiny of the critical is-
sues. Challenge the assumptions and conclusions of the study. Only after you
have accepted the study as being comprehensive can you move to the next step.
4. Further refine the idea and scenario or model.
Before you proceed you may see the need for further study of various as-
pects of the business project. It is not uncommon for the feasibility study or mar-

4
BUSINESS ENTERPRISE SIMULATION Prof. Juancho M. Babista

keting research to uncover new issues that need to be investigated. However,

since this is a simple business enterprise simulation, you can skip this part.
C. Go – Stop Decision
This is the most critical step in the
entire business development process. It is
the point of no return. Once you start down
the path of creating a business, it is difficult
to turn back. If you have unresolved doubts
or reservations about the project, you should
not proceed. That is why it is important to
have an open, honest and thorough discus-
sion when making this decision.
If you are working with a group, you may find that there is division in your
members. Some may want to move forward while others may want to end it. This is
not uncommon. Each needs to take an honest look at the other side’s arguments. If
the issues cannot be resolved, each side needs to go its own way with no bad feelings.
At this point, the remaining members need to determine if they want to proceed with
business creation.
Commitment to the project is another important factor to consider before you
proceed. Most beginners to business development greatly underestimate the time
and effort required to start a business. A financial commitment by project members
at this time, as everyone throws some money in the pot, is an important sign of
commitment to creating the business. If you are working alone, you should be com-
mitted in putting in capital. This step involves making one of the three possible deci-
sions listed below:
1. Decide that the project is viable and move forward with it.
2. Decide to do more study and or analyze additional alternatives.
3. Decide that the project is not viable and abandon it.

D. Business Plan Preparation and Implementation

If you decide to proceed with creating a business, prepare a business plan, an
outline or blueprint of how you will create your business. If you conducted marketing
research, it will provide some information needed for your business plan. Business
planning often involves the use of consultants for major startups. Since you are ven-
turing in a business simulation exercise, there is no need for consultants. However,
your instructor or relatives may have beneficial opinions. At any rate, consultation
may not be important if you have done your study. Remember, it is your business.
Although planning can involve considerable time and effort, it is the easiest
part. Implementing the plan is much more difficult. Many prospective businesses ex-
perience problems or failure due to the improper implementation of their business
plan. This step requires commitment and dedication. Unforeseen problems will
emerge. Your persistence is critical. Implementing your business plan will include,
but is not limited to:
1. Creating a legal structure.
2. Securing market access.
3. Raising equity and securing financing.
4. Hiring management and staff.
5. Constructing facility.
6. Others that you will find necessary.
Since we cannot do this in this current situation, just bear in mind the necessity
of implantation so that you will have a springboard in case you venture into business in
the future.

5
BUSINESS ENTERPRISE SIMULATION Prof. Juancho M. Babista

E. Business Operations
Now that you have successfully start-
ed your value-added business, your work has
just begun. Producer groups often forget that
once the business is created, it takes constant
attention for it to remain healthy and via-
ble. Operating a business is very different
than starting a business. It requires a differ-
ent set of skills. So the people who create the
business may not be the best people to man-
age the business.
These steps will not guarantee success. However, they will increase your odds of
success. Moreover, you will make more efficient use of your time.

Naming Your Startup Business

Finding the right name for your startup can have a significant impact on your
success. The wrong name can do worse than fail to connect with customers. It can also
result in insurmountable business and legal hurdles. In contrast, a clear, powerful name
can be extremely helpful in your marketing and branding efforts. Here are suggestions
on how to come up with a winning name for your business which are adapted from the
book of Richard D. Harroch:
1. Avoid hard-to-spell names.
Do not make potential customers confused about how to find your business,
particularly online. Avoid having to continually correct the misspelled version of your
name. Keep it simple.
2. Do not pick a name that could be limiting as your business grows.
Picking too narrow of a name may cause you problems down the road. Imag-
ine if Jeff Bezos had picked the name OnlineBooks instead of Amazon. Do not limit
your business to a particular product or a specific city.
3. Conduct a thorough Internet search.
Once you have determined a name you like, do a web search on the name.
More often than not, you will find that someone else is already using that business
name. While that won’t be a total showstopper, it should give you pause.
4. Get the .com domain name.
My strong preference is that you secure the “.com” domain name for your
business rather than alternatives such as .net, .org, .biz, or other possible domain ex-
tensions. Customers tend to associate a .com name with a more established business.
Undoubtedly, someone will already own your desired .com name, but many domain
owners are willing to sell their name for the right price.
Think of acquiring the .com name you want as a business investment. Make
sure to grab your desired business name on popular social media sites such as Face-
book, Twitter, and Pinterest.
5. Use a name that conveys some meaning.
Ideally, you want the business name to convey something meaningful and
positive related to your business. Make people instantly get what your business is
about. While meaningless names like Google, Yahoo, or Zappos have some appeal
due to their catchiness, these kinds of names will cost you a lot more to brand. A do-
main name like “OnlineTickets.com” is genius as it conveys the meaning of the busi-
ness and is helpful for search engine optimization purposes.
6. Conduct a trademark search.

6
BUSINESS ENTERPRISE SIMULATION Prof. Juancho M. Babista

Do a search at a government domain to

get an idea as to whether you can get a trade-
mark or service mark for the name. Make sure
your name will not be confusingly similar to a
business name that is already registered. If it is
too similar to an existing name, there may be
issues.
7. Assess if the name if catchy.
Obviously, you do not want a boring
name for your business, but you also do not
want to choose something that is too ‘out there.’ You want the name to be uttered
without hesitation, and you want your name to resonate with your target audience.
8. Get feedback on the name.
Come up with 5 or 10 names and then run them by friends, family members,
and trusted colleagues. Get feedback from your target audience as well. Make sure
that the name does not have any negative connotations, such as when GM named its
new car model the Nova without realizing that the name meant ‘doesn’t go’ in Span-
ish).
9. Make sure the name sounds good when said aloud.
Sometimes names seem fine on paper, but sound awful when said aloud. And
if it is said aloud, make sure people are not confused as to how it is spelled.
10. Use resources available for brainstorming names.
There are a number of sites that can help you brainstorm names, including:
a. Visual Thesaurus. Com that gives a visual around a keyword;
b. Shopify Business Name Generator that generates business name ideas and checks
domain availability simultaneously;
c. NameMesh.com provides a startup company name generator;
d. Naminum.com that allows you to generate names based on a theme; and
e. Eat My Words spearheaded by branding experts such as Alexandra Watkins.
11. Make sure you are personally happy with the name.
You as the business owner will have to live with the name for a long time, so
make sure you are happy with it and believe it will resonate with your customers.
Take the time to get it right from the start.