24

LESSON 1: WHAT IS A SOUND BUSINESS IDEA

A business idea is a concept which can be used for commercial purposes.
It typically centers around a commodity or service that can be sold for money,
according to a unique model. The ability to come up with a business idea can be
transformed into a viable business, where ideas supported by feasibility and a
business plan can then be sold to interested investors, firms, and interested parties
for a lump sum or a management contract, or as agreed. Business ideas are
always available through different sources; however, it is the application applied
on these ideas, and timing makes all the difference in failure or success.
(https://www.definitions.net/definition/business+idea)
An idea is a concept for a product or service that doesn’t exist or is not
currently available in a market niche. It may be a brand-new concept or an
improvement of a current product or service.

In contrast, an opportunity is an idea for a new product or service with a

market that is willing to pay that product or service so that it can form the basis
of a profitable business.

Innovation is a process of making changes to something that adds value to

customers.

Entrepreneurship is a continuous process that needs to be followed by an

entrepreneur to plan and launch the new ventures more efficiently.

An entrepreneur can evaluate the efficiency of an opportunity by

continuously asking certain questions to himself, such as, whether the
opportunity is worth investing in, is it sufficiently attractive, are the proposed
solutions feasible, is there any competitive advantage, what are the risk
associated with it. Above all, an entrepreneur must analyze his personal skills and
hobbies, whether these coincides with the entrepreneurial goals or not.

An opportunity has four essential qualities. These are: attractive, timely.

durable, and anchored on the product or service that creates value for its buyer
and user.
 25

You need to consider your hobbies, consider consumers’ needs and wants,
conduct surveys and questionnaires – test the market, and study demographics
and market research.

THREE WAYS TO IDENTIFY AN OPPORTUNITY

FINDING GAPS IN
OBSERVING SOLVING A
THE MARKET
TRENDS PROBLEM
PLACE

JEAN/ELECTRIC CARS ENERGY PROBLEM ELECTRIC CARS

What is my 5-year or 10-year plan?

Consider adding locations or providing different products/services

 26

Will I go public?

The entrepreneurial process is to be followed, again and again, whenever

any new venture is taken up by an entrepreneur, therefore, it is a never ending
process.
As a future entrepreneur, always remember that a business must be firmly
established on existing business opportunities and that there can be no business
opportunities in the absence of an entrepreneurial idea. Thus, there is a need to
identify the sources of entrepreneurial ideas, some of which are as follows:

1. Changes in the environment

2. Technological discovery and advancement
3. Government’s thrust, programs, and policies
4. People’s interests
5. Past experiences

CHANGES IN THE ENVIRONMENT

The term external environment in this lesson refers to the physical

environment, societal environment, and industry environment where the business
operates.
1. The physical environment includes
a. Climate
b. Natural resources, and
c. Wildlife
2. The societal environment includes the various forces like
a. Economic forces
b. Sociocultural forces
c. Political forces, and
d. Technological environment
3. The industry environment of the business includes
a. Government
b. Competitors
c. Suppliers
d. Customers
e. Creditors and
 27

f. Employees

As an entrepreneur, you must keenly observe and be vigilant to the

reactions of the people to the changes in the external environment. These changes
may or may not have an entrepreneurial implication. You must determine,
therefore, what changes have entrepreneurial indications.

For example, one factor in the physical environment that may dramatically
change is the climate. The temperature is very high during summer but very low
during the rainy season. A person with an entrepreneurial drive can be very
creative and innovative in identifying entrepreneurial opportunities based on the
given environmental change. He/She can open a business venture that responds to
the needs of the people during the summer and the rainy period.

B. TECHNOLOGICAL DISCOVERY AND ADVANCEMENT

Discovery and advancement in the use of technology are other good

sources of entrepreneurial ideas and opportunities. Most people welcome
technological discoveries and advancements but cannot identify or determine
entrepreneurial opportunities stemming from them. On the other hand, a person
 28

with entrepreneurial interest looks at the possibility of business opportunities in

any discovery or advancement in technology.

For example, a person with sufficient knowledge in the repair and

installation of a mechanical engine discovers that the additional engine parts he
installed during the repair have considerably reduced fuel consumption. That
person could simply rest on his laurel for having contributed to fuel conservation.
Nevertheless, if he had any entrepreneurial drive, he would see his discovery as a
business opportunity to manufacture the new engine parts that could reduce fuel
consumption.

C. GOVERNMENT’S THRUST, PROGRAMS, AND POLICIES

The priorities, projects, programs, and policies of the government are also
good sources of entrepreneurial ideas. The term government in this lesson refers
to the local government (municipality, city, or provincial) or the national
government and its branches.

The programs and agenda of the Philippine government intuitively address

the needs of the Filipino people. There are also instances when the national
government responds to the call of international agencies or the world market.
Whenever there are changes in the policies and programs of the government, new
entrepreneurial ideas are likely born.

D. PEOPLE’S INTERESTS

The interests, hobbies, and preferences of people are a rich source of

entrepreneurial ideas. For example, the increasing number of Internet cafes at
present could be attributed to the strong attachment of young people to
computers. The rise of amusement parks, nightspots, and nature farms could be a
response to the need of people for fun and relaxation.

As a future entrepreneur, your business venture should be adaptive to the

interests and hobbies of the people to protect and sustain your business. Keep
evaluating the interests of your target customers.
 29

E. PAST EXPERIENCES

Past experiences and exposures are also a good source of entrepreneurial

ideas. The expertise and skills developed by a person who has worked in a
particular field may lead to the opening of a related business enterprise.

For example, an auditor who has learned the appropriate auditing and
management advisory skills and techniques in a prominent auditing firm can start
his/her entrepreneurial venture by opening his/her own auditing office. In a
similar manner, a good engine mechanic who has worked in a leading car
manufacturer may find it appropriate to open his/her vehicle repair shop. Thus,
his/her relevant job experiences in the past can lead to that entrepreneurial
venture.

LESSON 2: HOW TO PROTECT YOUR BUSINESS IDEA

In recent years, there has been an increase in interest in entrepreneurship.
Consequently, there is much demand for innovative ideas able to create
something of value to society and to generate good financial performance. What
many of these do not know is that when they are faced with a business idea, they
must protect it at all costs. Yet, startups still struggle on securing an idea.

Entrepreneurs should understand the basic principles of Intellectual

property (IP) to protect your ideas from aggressive competition. This is suitable
for all companies, regardless of their size or the sector in which they are
embedded, whether technology is a more traditional industry.

Intellectual property refers to creations of the mind. It can be an

invention (patent / utility model), a design (industrial design), a brand name
(trademark, or a literary and artistic work (copyright).
(https://www.ipophil.gov.ph/what-is-intellectual-property/)

The rights of intellectual property can be about a brand, logo, corporate

identity, products, services, or even processes that differentiate the commercial
offer. These are the most valuable assets that a company can own.
 30

At present, most companies bet and benefit from communication

marketing digital in order to get their products to a huge audience, and at
relatively low cost, which is a more traditional method would be impossible. But
also increases the likelihood of business ideas being stolen by third parties.
That’s why intellectual property protection is essential to the success of business
and entrepreneurs should understand their rights, duties, and securing an idea.

Intellectual property plays an essential role in business success. Especially

in the case of a startup where innovation of the idea and the risk on investment
and success of this are united.

Of the various advantages that this protection features, it highlights the

following:
● Is the exclusive right by preventing third parties to produce, manufacture,
sell or to economically exploit the developed solution, without the
permission of the holder;
● Facilitates business growth as this is protected legally impossible
competition to adopt the ideas;
● It demonstrates the commitment of entrepreneurs for their ideas;
● Values the investment for the development of products or services;
● It allows for differentiation from competitors by offering customers
something new and innovative;
● It generates money by selling or licensing the product or service;
● Transmits security, credibility, and commitment to the customer by the
holder.
 31

Types of Protections for your Business Idea

Here are the types of protection existing and steps securing an idea.

The kind of intellectual property protection an entrepreneur or business can

get depends on the setting in question. Thus, they must decide which of his ideas
fall into which of the options available and that action is taken as soon as possible
to reduce the likelihood of losing protection.
There are four main types of business ideas protection:
1. Patent
2. Trademark
3. Copyright and
4. Trade Secrets

Patents

If the entrepreneur is facing an invention may consider protecting it with a

patent. A patent grants property rights to an invention, new products and
innovative processes. That is, this gives the holder the right to prevent others
from making, using, importing, or selling these without your permission.

There are three main types of patents of which the entrepreneur must
learn about how to protect a business idea in these circumstances:

1. Utility Patents – these patents protect processes, machines, manufactured

items, or composition of matter. Some examples include medicine,
electronics, etc.
2. Design Patents – these patents protect new, original, and ornamental
designs for manufactured items. Examples are the design of athletic shoes
or an automobile body.
3. Plant Patents- these patents cover asexually reproduced and distinct plant
varieties. For example, plant patents cover hybrid tea roses, as well as
Better Boy Tomatoes
 32

The kind of intellectual property protection an entrepreneur or business can

get depends on the setting in question. Thus, they must decide which of his ideas
fall into which of the options available and that action is taken as soon as possible
to reduce the likelihood of losing protection.
There are four main types of business ideas protection:
2. Patent
3. Trademark
4. Copyright and
5. Trade Secrets

Patents

If the entrepreneur is facing an invention may consider protecting it with a

patent. A patent grants property rights to an invention, new products and
innovative processes. That is, this gives the holder the right to prevent others
from making, using, importing, or selling these without your permission.

There are three main types of patents of which the entrepreneur must
learn about how to protect a business idea in these circumstances:

1. Utility Patents – these patents protect processes, machines, manufactured

items, or composition of matter. Some examples include medicine,
electronics, etc.

2. Design Patents – these patents protect new, original, and ornamental

designs for manufactured items. Examples are the design of athletic shoes
or an automobile body.

3. Plant Patents- these patents cover asexually reproduced and distinct plant
varieties. For example, plant patents cover hybrid tea roses, as well as
Better Boy Tomatoes
 33

Trademarks

Trademarks provide us with valuable information. They are source

indicators that allow us as consumers to know what to expect in the quality of a
product or service. They allow us to buy with the assurance that we are getting
products or services that we liked in the past or to avoid those products or
services we did not like. In addition to offering protection to the consumer,
trademarks are often a company’s most valuable assets. They stand as emblems
of a company’s reputation and good will. Often, consumer confidence and trust
built upon brand loyalty encourages product sales.
A trademark includes any word, name, symbol, sound, scent or device or
any combination used, or intended to be used, in commerce to identify and
distinguish the goods of one manufacturer or seller from goods manufactured or
sold by others, and to indicate the source of the goods.

In short, a trademark is a brand name. A service mark is the same as a

trademark except that it identifies and distinguishes the source of a service rather
than a product, such as dry cleaning service or banking services.

As a brand name, most inventions have two names- a brand name and a
generic name. For example, think about coca-cola. You may know it as Coke-
the brand name, but its generic name is soda or pop. It is important for new
inventions to be given both a brand name and a generic name. That way people
identify it generically and associate the brand with quality and desire to purchase.

Developing a brand name isn’t as easy as it sounds. There are guidelines to

consider to make sure your name is fully protected under trademark law. Take a
look at the scale below:

1. Fanciful – new words that had no meaning before their use as a trademark.
Example: Starbucks, Verizon, Cingular, Exxon
2. Arbitrary – common words used so that their original meaning has no
relationship to the goods or services to which they are applied.
 34

Example: the trademark Apple for computer products – an apple

(which is known to be a fruit) has nothing to do with computer
products.
3. Suggestive – these trademarks allude to a quality or characteristic of the
product or service.
Example – the name Jaguar implies speed – a quality that is
desirable in high end cars also named Jaguar.

4. Descriptive – these names describe the service or product such as

Autoway – a store for Autos, or Frosted Flakes to describe Flakes or
Frosted Cereal. Descriptive names may be easier to market but harder to
register. To register a trademark, the company must show that consumers
identify it as a particular brand from a specific name.
5. Generic – a generic term identifies a type of product or service, without
indicating any particular manufacturer or source. For example, cola and
soda are generic terms, PEPSI and COKE are trademarks used to identify
types of cola and soda. Trademarks can lose their ability to identify the
source of specific products when the public begins using them as generic
names of products.

Copyright
Copyright is the legal right granted to a creator of an original work of
authorship to control publication, production, sale, or distribution of it, including
literary, dramatic, musical, artistic, and certain other intellectual works.

Think about the word itself – “copy” with “right”. The owner has the right
to decide how or if the creation is going to be copied.

Copyrights protect original works of authorship. Examples of these are

literary works, music, sound recordings, dramatic works, pantomimes, and
cinematic choreography, sculptural works, pictorial and graphic, architectural
works, software, web content, among many others.
 35

Under the 1976 Copyright Act, notice of copyright consists of three

elements: (1) the symbol “Ⓒ” or the abbreviation “Copr.,” or the word
“Copyright” (2) the date of first publication; and (3) the name of the owner of the
copyright.

To qualify for copyright registration, the work should be represented in a

tangible means of expression, such as a piece of paper. The duration varies
according to the type of work, when, and where it was created. Thus, the
company should seek information on securing an idea.

Trade secrets

A trade secret is information that a company keeps to give them an

advantage over their competitors. Trade secrets can include formulas, patterns,
plans, designs, physical devices, processes, software, and “know-how.”

A formula can be a trade secret. A well-known example of this type of

trade secret is the Coca-Cola formula. This formula gives the Coca-Cola
Company a significant business advantage in the soda market, as there is no other
soda that tastes the same. Other common formulas that are kept as trade secrets
are found in the food, drug, and cosmetics industries, and include formulas for
the seasoning for Jollibee chicken, butter flavoring, special diet rations for dogs,
lipstick, and hair conditioner.

A pattern, plan or design can be a trade secret. For example, courts

have found color TV circuitry, schematics for an analog circuit, molds for the
manufacture of street markers, and a design for a grating all to be trade secrets.

A physical device used in manufacturing can be a trade secret.

Examples of these devices found to be trade secrets include: a device for
manufacturing radio parts, a machine for inking carbon paper and ribbons, and an
adhesive-tape machine.
 36

A process, method or technique used to make the final end product

can be a trade secret. These types of trade secrets include: a process to treat a
metal, a process to manufacture fiberglass and a process for an environmentally
sound method to manufacture coated paper.

“Know-how can be a trade secret. A method or technique might fall into

the “process” category, but many methods and techniques can be better described
as “know-how” this is information and experiential expertise related to using
formulas or processes. Examples include methods to manufacture computers and
know-how to identify malfunction in computer scanning and components.

LESSON 3: HOW TO APPLY FOR REGISTRATION OF A BUSINESS

NAME

What’s in a name? In a business, it means a lot. Your business name is

your company’s branding, so it should catch attention and can be easily recalled.

Aside from spending time coming up with a name for your new business,
you also need to register it with the Department of Trade and Industry (DTI), if
you’re a sole proprietor.

What is a Business Name?

Business Name (BN) shall refer to ANY name that is different from THE
TRUE NAME OF AN INDIVIDUAL WHICH IS USED OR SIGNED in
connection with her/his business on any written or printed receipts, including
receipts for business taxes, duties and fees, and withdrawal or delivery receipts;
any written or printed evidence of any agreement or business transaction; and any
sign or billboard conspicuously exhibited in plain view in or at the place of
her/his business or elsewhere, announcing his /her business.

Why Do You Need to Register Your Business Name with DTI?

Business name registration is required in the Philippines. According to the
Business Name Law (Republic Act 3883), it’s illegal for anyone to use any name
 37

for a business other than the owner’s true name without first registering the
business name with the DTI.

In short, securing your trade name will guarantee you the legal and
exclusive right to use it within its validity period (renewable every five years).
This means no other business can register or use your business name in the
barangay, city or municipality, region, or country, depending on your business
location coverage.

However, note that business name registration with the DTI is only for sole
proprietors and not a license to run a business (You’ll need to secure a business
permit and other related documents for that purpose).

What are the Tips in Choosing Your Business Name?

To make the process a lot faster and easier, follow these guidelines from
the DTI Business Name Registration System when deciding on your proposed
business names: Hence, it is your responsibility to ensure that your proposed
Business Name is:

● not a term or word or group of words that connote activities or norms that
are unlawful, immoral, scandalous or contrary to propriety (e.g. Boobs
Massage & Spa);
● not a name, words, terms or expressions used to designate or distinguish,
or suggestive of quality, of any class of goods, articles, merchandise,
products or services;
● not those that are registered as trade names, trademarks, or business names
by any government agency authorized to register names or trademarks;
● not a name that is inimical to the security of the State;
● not composed purely of generic word or words (e.g. The Drugstore, Health
Care Clinic);
● not a name which by law or regulation is restricted or cannot be
appropriated (e.g. Red Cross, Red Crescent, ISIS);
● not officially used by the government in its non-proprietary functions (e.g.
NBI Private Investigation Services, PNP Security Agency);
 38

● not a name or abbreviation of any nation, inter-governmental or

international organization unless authorized by competent authority of that
nation, inter-government and international organization;
● not ordered or declared by administrative agencies/bodies or regular courts
not to be registered;
● not a name of other persons; and
● not deceptive, misleading or misrepresent the nature of my business.

Who Can Apply for DTI Business Registration?

You may apply for DTI business name registration if you meet these eligibility
criteria:
● At least 18 years old (Foreign nationals aged below 18 must submit proof
that they come from a country where the legal age is lower than 18.)
● Filipino citizen
● Foreign national with a Certificate of Registration of Sole
Proprietorship/Certificate of Authority to Engage in Business in the
Philippines
● Refugee or stateless person

A representative may file your application for DTI business registration by

submitting your authorization letter as a business name applicant, his or her valid
ID, and other required documents.

What are the DTI Business Registration Requirements?

All applicants (except for those filing their application online) must
download, print, and fill out two copies of the Business Name Registration
Form[1] and present any of the following valid IDs:
● Passport
● Driver’s license
● UMID
● PRC ID
● NBI Clearance
● Police Clearance (in ID form)
● Postal ID
 39

● Voter’s ID
● OWWA ID
● Seaman’s Book
● IBP ID
● Senior citizen ID
● PWD ID
● Government office ID
● Validated state college/university ID

Additional documents are required depending on the applicant:

● For foreign nationals: Alien Certificate of Registration and Certificate of
Registration for Sole Proprietorship/Certificate of Authority to Engage in
Business in the Philippines issued by the concerned DTI office
● For refugees/stateless people: Certificate of Recognition issued by the
DOJ-RSPPU or Certificate of Recognition

Foreigners, refugees, and stateless people who apply for DTI business
registration online still need to submit the documents listed above at any DTI
office. There’s also a business name registration fee that varies per business
territorial scope:
● Barangay – PHP 200
● City/Municipality – PHP 500
● Regional – PHP 1,000
● National – PHP 2,000

An additional PHP 30 must be paid for the Documentary Stamp Tax

during your DIT business registration.
 40

How to Register Your Business Name with DTI

A. Online Application for DTI Business Registration

Starting February 2019, all applications for DTI business name registration
should be filed through the Business Name Registration System (BNRS). No
need to visit a DTI office to get a Certificate of Business Name Registration.

Here are the steps to register your business name online through the
BNRS.

1. Check if your prospective business name is available. Go to the Business

Name Search page of the BNRS website and type the keywords of your
preferred trade name.
2. Proceed with your DTI business registration online once you’ve confirmed
that your target business name is still available. Access the New
Registration page of the BNRS site and read the Terms and Condition.
When you’re done, click the I Agree button at the bottom of the page.
3. Fill out the online registration form. Fields marked with a red asterisk must
not be left blank. Your tax identification number (TIN) must also be
provided on the online form.
 41

4. Pay the business name registration fee within five calendar days from the
online application date. You can pay at the DTI office or Negosyo Center
indicated in your Transaction Reference Number (TRN) acknowledgment
form. For convenience, make your online payment immediately during
your DTI business registration via Gcash. If you have a Gcash account,
just enter your mobile number in the Payment Details section.
5. Claim your Certificate of Business Name Registration at the nearest DTI
office or download it for printing.

8. Walk-in / Over-the-Counter Application for DTI Business

Registration
1. Go to any DTI office or Negosyo Center[2].
2. Submit all the DTI business registration requirements. Make sure to have a
list of backups in case your three proposed business names are already
taken.
3. Pay the business name registration fee.
4. Once DTI approves your business name, it will issue a Certificate of
Business Name Registration to you.

Keep your business name document because it’s one of the most important
documents you need to register your business at the municipal office and the
Bureau of Internal Revenue (BIR).

SYNTHESIS
1. As a future entrepreneur, always remember that a business must be firmly
established on existing business opportunities and that there can be no
business opportunities in the absence of an entrepreneurial idea. The ability
to come up with a business idea can be transformed into a viable business,
where ideas supported by feasibility and a business plan can then be sold to
interested investors, firms, and interested parties for a lump sum or a
management contract, or as agreed. Business ideas are always available
through different sources.
 42

2. Nowadays, there is a likelihood for companies’ business ideas being stolen

by other parties. Entrepreneurs should understand the need for intellectual
property protection to ensure their exclusive right by preventing third
parties to produce, manufacture, sell or to economically exploit the
developed solution, without the permission of the holder.

There are four main types of business ideas protection namely,

patent, trademark, copyright and trade secrets among others.

3. When deciding on a proposed business name, it must conform to the

guidelines from the Department of Trade and Industry (DTI) Business
Name Registration System.

Here are the requirements for you to be eligible to apply for DTI
business name registration at least 18 years old (Foreign nationals aged
below 18 must submit proof that they come from a country where the legal
age is lower than 18.)

○ Filipino citizen
○ Foreign national with a Certificate of Registration of Sole
Proprietorship/Certificate of Authority to Engage in Business in the
Philippines
○ Refugee or stateless person

A representative may file your application for DTI business

registration by submitting your authorization letter as a business name
applicant, his or her valid ID, and other required documents.

All applicants (except for those filing their application online) must
download, print, and fill out two copies of the Business Name Registration
Form[1] and present two valid IDs.
43