As an entrepreneur, you can control your internal environment. You can put in place productivity and quality systems, train your employees to be more productive or more quality-oriented, acquire new technology, etc.
On the other hand, your external environment is hard to control. You can only respond or adjust to the changes there.
The external environment is essentially composed of the interaction of political-legal, economic, technological, and intra-industry structures. Thus, the environment is affected by political upheavals, technological advances, domestic and foreign market developments including price fluctuations, inflow and outflow of capital, and so many other things.
Most importantly, you must study the environment of economic and industrial policies, business laws and regulations, and system of business incentives and disincentives.
Incentives to Small Enterprises
Without
entrepreneurs, there can be no production, innovation, and risk taking. That is
very clear. In turn, without production, innovation, and risk taking, a country
does not move forward. That is also very clear. Governments, past and present,
have learned and have made entrepreneurship a priority in the economic program.
The creation
of three million new entrepreneurs tops the 10-point economic agenda announced
by President Gloria Macapagal-Arroyo in her 2004 inaugural address. The agenda
also includes the creation of 6-10 million jobs through more opportunities to
entrepreneurs and a tripling of loan amounts made available to SMEs.
Small
enterprise promotion and development has, in fact, attained the status of a
national movement, participated in by more than 50 government agencies each of
which offers support services to the small businessman. The private sector has
also joined the ”small is beautiful” bandwagon – including industry chambers,
trade associations, schools and universities, civic and non-government
organizations, and church-based groups.
The
Small and Medium Enterprise Development (SMED) Council was created in 1991 to
integrate and synchronize the various efforts. Chaired by the Secretary of the
Department of Trade and Industry (DTI), the Council is composed of:
v
The Director General of the National Economic
and Development Authority (http://www.neda.gov.ph),
v
The Secretary of Agriculture
(http://www.da.gov.ph),
v
The Secretary of Labor and Employment
v
The Secretary of Science and Technology
(http://www.dost.gov.ph)
v The Secretary of Tourism
(http://www.tourism.gov.ph)
v The Chair of the Monetary
Board (http://www.bsp.gov.ph)
v The Chair of the Small
Business Corporation (http://www.sbgfc.org.ph)
v A representative from the
private business sector, and
v A representative from the
private banking sector.
The SMED has an array of programs to assist small
businesses. The areas of assistance cover finance, marketing, training and
human resource development, product development and technology assistance, and
other incentives.
Finance
Government banks like the Development Bank of the
Philippines (DBP), Land Bank of the Philippines (LBP), Small Business
Corporation (SBCorp), Quedan and Rural Credit Corporation, Philippine
Export-Import Bank, and the National Livelihood Support Fund, have agreed in
2003 to simplify and standardize lending procedures, lower interest rates, and
facilitate loan releases to small enterprises under a unified scheme called SULONG.
Even before SULONG synchronized the respective
programs of these banks, lending to small businesses, often with some special
considerations, has been going on for quite a time already. Some, like DBP and
SBCorp, are “wholesale” lenders that use commercial banks, rural banks, thrift
banks and other financial institutions as “retailers” to reach out more readily
to small businesses everywhere in the country.
For micro enterprises, countless micro finance
institutions now proliferating throughout the country are doing a good job of
providing small but quick and no-hassle loans that require no collateral. They
provide an alternative to the so-called “five-six”lenders, who are actually
loan sharks.
Marketing
The DTI, through its various agencies, provide marketing
support to small enterprises by means of:
v exposure in local and
international trade fairs, expositions, trade missions to various
countries-trading partners, and other trade events through the Center for
International Trade Expositions and Missions (CITEM),
v provision of domestic trade
database, including local suppliers courtesy of the Bureau of Domestic Trade
(BDT), and
v provision of export trade
database and consultation services by the Bureau of Export Trade Promotion
(BETP) and the Bureau of International Trade Relations (BITR).
Training and Human Resource Development
The DTI, in cooperation with local government units
and local industry associations, has set up SME Centers nationwide manned by
business counselors who are trained to assist entrepreneurs in their finance,
marketing, technology, and training needs.
In terms of formal training, entrepreneurs may check out the
following services in SME Centers:
v
Skills and other production-related training –
from the Cottage Industry Technology Center (CITC) and the Technical Education
and Skills Development Authority (TESDA).
v
Entrepreneurship, managerial training, including
business improvement – from the UP Institute for Small-Scale Industries (UP
ISSI) and small business extension institutes of other schools and
universities.
v
Export marketing training – from the Philippine
Trade Training Center (PTTC).
Product Development and Technology Assistance
For assistance in product design and development, the agency
to approach is the Product Development and Design Center of the Philippines
(PDDCP). For packaging design, testing and analysis, it is the Packaging
Research and Development Center (PRDC).
On the other hand, the Department of Science and Technology
(DOST) has a number of research and development institutes that undertake R
& D for new products and product innovations. These include: The Industrial
Technology Development Institute (ITDI), the Technology Application and
Promotion Institute (TAPI), the Metals Industry Research and Development Centre
(MIRDC), the Philippine Textile Research Institute (PTRI), and the Forest
Products Research and Development Institute (FPRDI).
Other Incentives
Other
than government support services, there are still other factors that make the
country a viable site for business. According to an annual corporate survey,
these include:
v
labor
availability, quality and reliability,
v
market
potential, size and quality,
v
positive
attitude of Filipino workers,
v
literacy
of workers,
v
low
cost environment, including labor cost, and
v
quality
and quantity of middle management and technical people.
Disincentives
On the
other hand, certain business conditions in the country are seen to be
problematic. The country is facing an oil crisis, an investment crisis. This
oil crisis, though not just affecting the Philippines, is problematic because
it is also affecting the rest of the world.
Industry has responded to it in many ways,
like using alternative fuel and, of course, the inevitable – adjustment in
product pricing.
What may
be more worrisome is the investment crisis. The country’s foreign direct
investment (FDI) rate has declined since 1997 and is among the lowest in Asia.
Nevertheless, new investments help buoy up the economy. Most of these have been
in call centers and business processes (e.g., data encoding, bookkeeping,
inventory), and outsourcing.
A number of manufacturing companies have either
closed down or downsized (staff or operations cut to size), contributing to an
already high unemployment rate. On the other hand, export-oriented industries
and the service sector have remained strong.
Other problem areas that a small enterprise needs to
live with are:
v corruption,
v bureaucratic red tape,
v poor infrastructure,
v peace and order and security
problems,
v political instability, and
v local market size, growth and
access.
Corruption and bureaucratic red tape are said to be
part of our Philippine society and culture. As such, these practices appear in
all aspects of Filipino life, practiced by everyone in high or low status. Poor
infrastructure, peace and order, and political instability are the results of a
government leadership that is hard pressed to set an example of equality and
love for country. When all the social and political problems have been
minimized, only will the economy of the country recover.
SUMMARY
The chapter has given you a definition of a small
business. It presented the strengths and weaknesses of going into business. It
identified what qualities and skills an ideal entrepreneur must possess, and
gave good reasons for the need to study the business environment prior to
putting up a business.
======================================================
The information contained in this article is for general information purposes only. We would like to extend our thanks to DTI and the people behind in realizing this guidebook. There efforts are greatly appreciated. Now we have this information FREE for us to use and eventually be one of the best guide in starting your own small enterprise in the Philippines.
By — Don Quixote