Entrepreneurship 101: Learn what it takes to become an Entrepreneur

Entrepreneurship 101:Presented by:

JOHN XAVIER S. CHAVEZ

Entrepreneurs Accounting AcademyLearn what it takes to become an EntrepreneurThe Need for Financial LiteracyThe educational system does not prepare students for the real world.The thought of getting good grades to find a good job is an old idea.A new level of sophistication is needed in teaching and advising children.The rules have changed Industrial Age vs. Information Age

2Overcoming ChallengesPeople are becoming obsolete as their grow older. The older you get, the less valuable you become.

The best grades dont count.Shortage of workersBoom and Busts Cycle

Overcoming ChallengesAt what age are you too old?

Examples:Graphic Designeruse by date: 30 yearsGymnastuse by date: 14 yearsLawyeruse by date: 35 yearsModeluse by date: 25 years

The Traditional versus the Ideal Approach in Educating Students about Financial LiteracyTraditional Ideal1. Stay in school and study hard so you can find a good company to work for.1. Study hard so you can find a good company to buy.2. Strive to be good employees.2. Strive to put up your own business and be an employer yourself.3. Write an impressive resume to find a good job.3. Write strong business and financial plans to create jobs.4. The love of money is the root of all evil.4. The lack of money is the root of all evil.5. Money is not taught in schools. Schools focus on scholastic and professional skills, but not on financial skills.5. Money or financial skills is taught in schools.6. The subject of money is forbidden to be discussed over meals.6. Talking about money and business is encouraged in the dinner table.7. I can not afford it way of thinking.7. How can I afford it? way of thinking.8. Ill never be rich attitude. 8. I am rich attitude.9. I am not interested in money or Money doesnt matter.9. Money is power.10. Play it safe, dont take risks.10. Learn to manage risk.

The Traditional versus the Ideal Approach in Educating Students about Financial LiteracyTraditional Ideal11. Job protection/security and job benefits are most important.11. Total financial self-reliance, independence and freedom are most appealing.12. Work for money.12. Let money work for you.

So You Want To Be In Business

What business would I like to do?8 out of 10 SME owners admitted that they dont bother with the financial figures of their business.9 out of 10 start up businesses fail within the year they were set-up.Entrepreneurs roles: money maker admin officer HR manager money finder accountant finance officerBUSINESS = RISKWhat is Entrepreneurship?Process of creating incremental wealthInvolves the following:Initiative taking Organizing and reorganizing of resources to put them to practical accountAcceptance of risk or failure

Risk Taking and the Entrepreneur TypeChance of SuccessExpected Return on InvestmentRisk-Taker20%70%Risk-Averse80%15%Risk-Neutral40%20%Defining an EntrepreneurWebsters someone who runs a business at his or her own financial risk

An entrepreneur is a person who undertakes the creation of an enterprise or business that has the chance of profit (or success).Some qualities of an entrepreneur (WSJ):Clear strategyPartnershipsTechnologyRobust NetworkEthical BehaviorRealistic ViewFlexibilityPassion!Are you an Entrepreneur?Answer each question by checking Yes or No.YesNoI have a strong desire to be independent and be my own boss, not taking orders from others and relying on my own talents. I can move on my own without waiting for someone to push me. Win, lose or draw, I want to be master of my own financial destiny. I want the chance to work at something I enjoy, because of a desire for security in the form of steady income.I have significant specialized business ability based on both my education and my experience. I also love the challenge of pitting my resources and skills against the environment. I am willing to take reasonable risks and handle the pressure that results from a degree of insecurity. Below are some behaviors you need to answer in order to know. Carefully consider whether you possess the behavior or not.Are you an Entrepreneur?Answer each question by checking Yes or No.YesNoI have an ability to conceptualize the whole of a business; not just its individual parts, but how they relate to each other. I am an individual who always comes up with new ideas. I develop an inherent sense of what is "right" for a business and have the courage to pursue it. I believe in giving priority to getting the job done. One or both of my parents were entrepreneurs; calculated risk-taking runs in the family. My life is characterized by a willingness and capacity to persevere. I welcome the responsibility that goes to owning a business.Below are some behaviors you need to answer in order to know. Carefully consider whether you possess the behavior or not.Are you an Entrepreneur?Answer each question by checking Yes or No.YesNoI recognize that much of my success will depend on how well I deal with people.I possess a high level of energy, sustainable over long hours to make the business successful. Below are some behaviors you need to answer in order to know. Carefully consider whether you possess the behavior or not.Now lets count the number of Yes and No answers that you have. That will tell you whether you have what it takes to be an entrepreneur before you take the plunge and quit your jobs.Entrepreneurial SkillsTechnical SkillsWriting SkillsOral CommunicationInterpersonal SkillsOrganizational SkillsNetwork Building SkillsTechnological SkillsBusiness ManagementPlanning SkillsDecision-making SkillsMarketing SkillsFinancial/Accounting SkillsNegotiation Skills Entrepreneurial SkillsPersonal Entrepreneurial SkillsDisciplinedRisk TakerInnovativeChange-orientedPersistentVisionary

Why Self-Employment?An Entrepreneur or Freelancer?An Entrepreneur or Freelancer?The Entrepreneurial MindsetYour business will only achieve its true potential when you begin to "think business."Check Your Ego At The Door This is my business; Ill do whatever I want with it.Create Curiosity The driving force behind business thinking.Move Off The Solution A solution is worthless unless and until it creates something new for the businessGet Evidence Collect soft evidence then turn it into hard evidence that the business can measure.Calculate ImpactYou must never let cash out the door that does not ultimately bring more cash back.Explore the Ripple EffectNever lose sight of the big picture.Slow Down for Yellow Lights Watch out for possible obstacles.Find the Cause Why is this happening? Are these symptoms or causes? Successfully starting a business requires two things: leap of faith and reasoned analysis.What Every Start-up Entrepreneur Must KnowTechnical Aspects of the Business(How the business will work)Financial Management & Record Keeping(How you will keep track of your finances)Legal and Regulatory Requirements of your business(How do you register the business and what laws bind you)Operational Requirements of Running the Business(How to ensure the smooth and efficient workflow) Marketing the Business(How to reach the target market)

Selecting The OpportunityOpportunity CategoriesElements of a Business ModelCustomer SelectionWho is the customer?Is our offering relevant to this customer?Value PropositionWhat are the unique benefits?Differentiation and ControlHow do we protect our cash flow and relationships?Do we have a sustainable competitive advantage?Scope of Product and ActivitiesWhat is the scope of our product activities?What activities do we do and which are outsourced?Organizational DesignWhat is the organizational architecture of the firm?Value Capture for ProfitHow does the firm capture some of the total value for profit?How does the firm protect this profitability?Value for TalentWhy will good people choose to work here?How will we leverage our talent?Doing Business in the PhilippinesWhat Type of Business?Where to Register?How to Register?Single ProprietorshipDTI, BIR, City HallBusiness Requirements and FeesPartnershipCorporationSEC, BIR, City HallSEC, BIR, City HallWhat Type of Business?

Doing Business in the PhilippinesWhere to Register?Doing Business in the PhilippinesWhere to Register?Regardless of whether you are a Sole Proprietorship, Partnership or Corporation, you need to secure a registration with the Bureau of Internal Revenue and the City or Municipal Government for your business permit.Doing Business in the PhilippinesProcedure 1Obtain bank certificate of deposit of the paid-in capitalTime to complete: 1 dayCost to complete: no chargeComment:Fees vary from bank to bank. Some banks in Manila do not charge any fee, some banks charge up to P105 for each certificateDoing Business in the PhilippinesHow to Register?Procedure 2Verify the availability of the company name with the Securities and Exchange Commission (SEC) or DTI.Time to complete:1 dayCost to complete:P40Comment:Corporate name verification can be done on-line. Verification is free and reservation of the name, once approved by the SEC costs P40. How to Register?Doing Business in the PhilippinesOnline registration29Procedure 3Register corporation with the Securities and Exchange CommissionTime to complete:3 daysCost to complete:1/5 of 1% of the authorized capital stock, no less than P1,000Legal Research fee of 1% of filing fee, no less than P10 Bylaws fee, P210Stock and transfer book registration fee, P150 + P7How to Register?Doing Business in the PhilippinesProcedure 3Comment:Required registration documents: corporate name verification sliparticles of incorporation and bylawstreasurer's affidavitstatement of assets and liabilitiesbank certificate of depositauthority to verify bank accounttax account number of incorporatorsregistration data sheet defining personal information regarding directors, officers, stockholders etc, and written undertaking to comply with the reporting requirements of the SEC. How to Register?Doing Business in the PhilippinesProcedure 4Obtain Community Tax Certificate (CTC)Time to complete:1 dayCost to complete: P500 Comment:The CTC of the juridical entity is a prerequisite to obtain the Barangay Clearance. The applicant only needs to supply its name and other personal circumstances in securing the CTC.How to Register?Doing Business in the PhilippinesProcedure 5Apply for a Barangay (district) clearanceTime to complete:2 daysCost to complete:P800How to Register?Doing Business in the PhilippinesComment:No city or municipality may issue any license or permit for any business or activity unless a clearance is first obtained from the barangay where such business or activity is located or conducted. The fee is based on the area (size in sq. meters) of the place of business and the location of the place of business. The fee charged by the barangay depends on the paid-up capital of the corporation and the land area it occupiesP500 minimum plus P300 for the barangay clearance plate.How to Register?Doing Business in the PhilippinesProcedure 6Obtain mayors permit/municipal license to operate at the Licensing Section of the Mayor's Office Time to complete:11 days Cost to complete: The fees vary depending on the local government unit (city/municipality) issuing the mayors permit sanitary permit fee, P9000.2% of capital for license feepermit fee for businesses engaged in retail, P2,000garbage collection fee, P2,500How to Register?Doing Business in the PhilippinesProcedure 6Comment:Required documents: accomplished application for business permits and licenses in duplicate copies with sketch of location of building at the backcertification issued by the corporate secretary to the effect that the company has been duly authorized to engaged in the businessamount of paid-up capitalcertificate of registrationreceipts of payment of due feeslease contractBarangay Clearance/Permitcomprehensive general liability insurance (which is usually based on the area size of the office space), community tax certificate (which is usually based on the paid-up capital). How to Register?Doing Business in the PhilippinesProcedure 7Receive inspection from the Mayor's OfficeTime to complete:5 daysCost to complete:no chargeHow to Register?Doing Business in the PhilippinesProcedure 7Comment:The Mayors Office conducts an inspection to verify that the business will conduct the activity it has stated in the application. There is no need to set an appointment for this inspection and the cost of it is nominal; the inspection generally occurs in the first 5 days after the application for the permit has been submitted.How to Register?Doing Business in the PhilippinesProcedure 8Buy special books of account at bookstoreTime to complete:1 dayCost to complete:P400How to Register?Doing Business in the PhilippinesProcedure 8Comment:Special books of account are required for the purpose of registering with BIR. The books of account are sold at bookstores nationwide. One set of journals consisting of four books, namely, the cash receipts account, disbursements account, ledger and the general journal, may cost about P400.How to Register?Doing Business in the PhilippinesProcedure 9Register with BIRTime to complete: 2 daysCost to complete:Registration fee, P500Certification fee, P15 andDocumentary stamp tax, in loose form to be attached to Form 2303, P15How to Register?Doing Business in the PhilippinesProcedure 9Comment:After the taxpayer obtains the TIN, the company is required to pay the annual registration fee of P500 at any duly accredited bank by using the payment form (BIR Form 0605). In Philippines, there is a community tax, a local tax, VAT, and income tax. When a company registers as a taxpayer, it must indicate in the application for registration the types of taxes it expects to be liable for, including VAT. How to Register?Doing Business in the PhilippinesTaxes For Businesses:Type of TaxWhat It Stands forForm for ReportingRatesIncome TaxTax on taxable net income of the business

Revenue Direct Expenses Operating Expenses = Taxable IncomeBIR Form 1702 for the annual ITR

BIR Form 1702Q for the quarterly reporting which is 60 days after the end of each quarterFor corporations it is 30%;

For individuals it is based on the bracket that has graduated rates from 5% to 32%Doing Business in the PhilippinesType of TaxWhat It Stands forForm for ReportingRatesValue Added TaxThis is the tax on your gross sales when the line of activity that you engage in is liable for VAT

2550 M for the monthly reporting which is due every 20th day of the month following the taxable month

2550 Q for the quarterly reporting which is due every 25th day of the month following the close of the quarter12% on selling priceDoing Business in the PhilippinesTaxes For Businesses:How do you know if you are liable for VAT?You reasonably expect to earn income of no less than P 1,500,000.00;Your line of business does not do services for individuals or corporations who are residing outside of the Philippines;You are not engaged in VAT-exempt services (RR 14-2005; RA 9337)Doing Business in the PhilippinesTaxes For Businesses:Type of TaxWhat It Stands forForm for ReportingRatesExpanded Withholding TaxTax on expenditures subject to withholding taxesBIR Form 1601E due every 10th day of the month following the taxable monthThe rates here will vary depending on the type of transactionDoing Business in the PhilippinesTaxes For Businesses:Type of TaxWhat It Stands forForm for ReportingRatesWithholding Tax on WagesTax on compensation given to employeesBIR Form 1601C due every 10th day of the month following the taxable monthThe rates here will vary depending on the taxable income bracket of the employeeDoing Business in the PhilippinesTaxes For Businesses:Type of TaxWhat It Stands forForm for ReportingRatesFringe Benefits TaxTax on benefits given to employeesBIR Form 1601C due every 10th day of the month following the taxable month32% on Grossed Up Monetary ValueDoing Business in the PhilippinesTaxes For Businesses:Procedure 10Payment of Documentary Stamp Taxes Time to complete:1 dayCost to complete: no chargeHow to Register?Doing Business in the PhilippinesProcedure 10Comment:Section 174 of the National Internal Revenue Code, as amended, requires the payment of documentary stamp taxes on the original issuance of shares of stock at the rate of P2 on each P200 or a fractional part thereof, of the par value of such shares of stock, within 5 days after the close of the month when the registration certificate is issued by the SEC or the shares are issued by the corporation.How to Register?Doing Business in the PhilippinesProcedure 11Obtain the Authority to Print Receipt/Invoices with the Bureau of Internal Revenue (BIR)Time to complete:1 dayCost to complete: included in Procedure 9How to Register?Doing Business in the PhilippinesProcedure 11Comment:The Authority to Print Receipt/Invoices must be secured by the printer before the sales invoices/receipts may be printed. Philippine law does not require a company to have its official invoice forms printed at designated print shops. If a company has secured an Authority to Print Receipts and Invoices, it can ask any authorized printing company to print its official invoice forms. How to Register?Doing Business in the PhilippinesProcedure 12Print receipts and invoices at the print shops accredited by the BIRTime to complete:14 daysCost to complete:P4,000 (between P3,000 & P5,000)Comment:The minimum number to print is 25 booklets.How to Register?Doing Business in the PhilippinesProcedure 13Submit receipts and invoices to the BIR for approval, have receipts/invoices and books of accounts stamped by BIR Time to complete:1 dayCost to complete: no chargeHow to Register?Doing Business in the PhilippinesProcedure 13Comment:In practice, the books of accounts are presented for stamping right after the application is filed. Books can be obtained from BIR. To register books of account and invoices, present the following documents: all the required books of accounts, VAT registration certificate, SEC registration certificate and BIR Form 2303.How to Register?Doing Business in the PhilippinesProcedure 14Register with the Social Security System (SSS)Time to complete:1 weekCost to complete: no chargeHow to Register?Doing Business in the PhilippinesProcedure 14Comment:To enroll for membership with the SSS the documentary requirements are the following: List of Employees, specifying their birth dates, positions, monthly salary and date of employment; and Articles of Incorporation, By-Laws and Certificate of Registration with the Securities & Exchange Commission (SEC) or the Certificate of Registration with the Department of Trade and Industry (DTI). Upon submission of the requisite documents, the employees shall undergo a seminar, which shall be scheduled within one (1) week. At the end of the seminar, the Certificate of Membership shall then be released. It is not mandatory to enroll for housing security with PAG-IBIG Fund although PAG-IBIG Fund members may avail of a housing loan offered by said agency.How to Register?Doing Business in the PhilippinesProcedure 15Register with Philippines Health Insurance Company (PHIC)Time to complete:1 weekCost to complete: no chargeComment:Upon enrollment with the SSS, registration with PHIC may be undertaken. List of Employees shall likewise be submitted to the PHIC.How to Register?Doing Business in the PhilippinesProcedure 16Register with Home Development and Mutual Fund (HDMF a.k.a. PAG-IBIG Fund)Time to complete:1 weekCost to complete: no chargeComment:You will need to submit your SSS registration certificate, Articles of Incorporation and List of Employees.How to Register?Doing Business in the PhilippinesYour Business PlanAddress the Risks Head OnMarket Risk Talk honestly about competition. Recognize that Market Adoption is always a factor.Technology Risk Its OK to sell vaporware and betaware, but dont try to sell to your investors that youre further along than you really are.Financial Risk

Dont be too greedy with your equity and dont run out of cash.Execution Risk Have a back up plan and expect bumps in the road.Management Risk

Talk about your experiences, your successes and your failures. Key Questions What problem do you solve? What is your product? Who is the customer? Who will sell it? How many people will buy it? How much will it cost? How much will you charge? When will you break even?Questions Your B-Plan Should AddressKey Questions:

What problem do you solve?What is your product?Who is your customer?Who will sell it?How many people will buy it?How much will it cost?How much will you charge?When will you break even?Key Product:

Why would anyone buy your product?What will it look like?When will it shipHow different are you from the competition?What is the products name?

Your Business PlanQuestions Your B-Plan Should AddressMarket Research:What do the experts say?What do the numbers say?What do the users say?Whats on the web?What does the media think?Can you predict the future?The Customer:

Do the customers think it is a good idea?Who is the real customer?What are your customers secrets?Should you do focus groups?How much will the customer pay?Your Business PlanQuestions Your B-Plan Should AddressThe Competition:Who is your competition?What are they doing?What is their value proposition?What are their secrets?The Marketing Strategy:What is your strategic objective?What is your marketing objective?How will you sell and support the product?Who will generate demand?Will you need marketing or sales?What is the marketing plan?How do you become front page news?Source: The Silicon Valley Way, by Elton B. Sherwin, Jr.Your Business PlanAccounting For Your Business"No matter how strong or weak your understanding of accounting is, you need to keep very careful, well-organized records."Overdrawing TDO's bank accountTDO Enterprises fabricates the chassis boxes for computers. It always seemed that there wasn't enough money in the bank to pay the bills. A quick look at the aging of accounts receivable revealed that customers paid on average two weeks after the time stated in the terms of sale. Rather than dip into its line of credit again, TDO's solution was to mount an aggressive collection campaign. The company used its accounts receivable system to monitor progress toward getting and keeping customers current. Within the space of two months, TDO's bank account balance had risen to a point where it could pay its bills regularly without having to draw on its credit line. Information Means Profits!!!Accounting For Your BusinessMAG's eroding profit marginsMAG Partners, Ltd. sells grass seed on a wholesale basis. Profits recently turned down for no apparent reason. However, the partners were savvy enough to investigate the sales department's ability to pass on recent price increases to customers. Comparison of the sales prices for MAG's grass seed with what MAG had to pay for it showed a 20 percent decline in gross profit margin (sales - cost of goods sold = gross margin). The solution was to dock sales commissions for the amount under the company's list price. Profits miraculously rebounded.Accounting For Your BusinessInformation Means Profits!!!The business cycle is nothing more than the flow of transactions needed in your business to complete a sale and collect the proceeds. It's important to setting up your accounting system. We want to know what types of transactions are involved and the accounting entries to make along the way.Accounting For Your BusinessAccounting for the Business CycleMost companies business cycles progress something like this: Accounting For Your BusinessPurchase raw materials. Enter goods into raw materials inventory. Begin the manufacturing or assembly process.Enter goods into work in process inventory. Pay suppliers or pay employees (at service companies). Complete the manufacturing or assembly process. Enter goods into finished goods inventory. Sell the inventory. Collect payment for credit sales. Accounting For Your BusinessAccounting For Your BusinessAccounting For Your BusinessAccounting For Your BusinessAccounting For Your BusinessAccounting For Your BusinessFinancial Management

It seeks to plan for the future such that a business entity has a POSITIVE CASH FLOW.KEY OBJECTIVES:Create wealth;Generate cash, and;Provide an adequate return on investment bearing in mind the risks that the business is taking and the resources investedKEY ELEMENTS:Financial PlanningFinancial ControlFinancial Decision - MakingThe Key to Sustaining the BusinessFinancial Planning

NEEDSFUNDINGManagement need to ensure that enough funding is available at the right time to meet the needs of the business. In the short term, funding may be needed to invest in equipment and stocks, pay employees and fund sales made on credit.

In the medium and long term, funding may be required for significant additions to the productive capacity of the business or to make acquisitions.Financial ControlFinancial control is a critically important activity to help the business ensure that the business is meeting its objectives. Financial control addresses questions such as:Are assets being used efficiently?Are the businesses assets secure?Do management act in the best interest of shareholders and in accordance with business rules?Financial Decision - MakingThe key aspects of financial decision-making relate to investment, financing and dividends:

Investments must be financed in some way however there are always financing alternatives that can be considered. For example it is possible to raise finance from selling new shares, borrowing from banks or taking credit from suppliers

A key financing decision is whether profits earned by the business should be retained rather than distributed to shareholders via dividends. If dividends are too high, the business may be starved of funding to reinvest in growing revenues and profits further.How To Master The Financial Side of Your BusinessDo not manage from your bank balance. Manage your cash through the book balance. The reason why you sometimes encounter bank overdrafts is because when you checked your cash balance in the passbook you still had money. So you issued a check. You did not realize that some of the checks you issued before did not yet clear the bank. These checks and the one you issued just now cleared the bank at the same time which is why you have insufficient balance in your bank.Know your cash balance right now How To Master The Financial Side of Your BusinessCash is the most liquid resource in any business. Next to God, cash is King in business.

No Cash = No Business

Know your cash position six months from now. Remember 6 months of cash flow problems can make you bankrupt. By taking control of your cash flow you are making the odds of succeeding in business in your favour. You do what it takes to have that vital information about your business.2. Never run out of cashHow To Master The Financial Side of Your BusinessWhats a financial reporting system anyway? The businesss financial reporting system enables the accounting department capture the transactions all throughout the organization. It consists of the following:The forms used to document the transactionsThe internal control structure within the organizationThe chart of accounts used to give accounting recognition to the transactionsThe books of accounts used to record the transactionsThe design of the management reports given, andThe performance benchmarks of the organization.3. Evaluate your financial reporting systemHow To Master The Financial Side of Your BusinessA budget will help you map out the plan for your businesss future. It will help you decide whether you are still on track or you need to make revisions.

It will also help you compute for your breakeven point. The formula for breakeven point is:

*Contribution Margin per unit = Sales/unit Variable Cost/unit4. Prepare a budgetFIXED COSTSCONTRIBUTION MARGIN*How To Master The Financial Side of Your BusinessAmong the ratios that you need to know about your business are the following:

Current Ratio

This will tell you how many pesos you have for each peso that you owe.5. Know your ratiosCurrent AssetsCurrent LiabilitiesHow To Master The Financial Side of Your Businessb. Quick Acid Test Ratio

This tells you whether even without the inventories you will still have money to pay off your short term debts.5. Know your ratiosCurrent Assets Inventory Current LiabilitiesHow To Master The Financial Side of Your BusinessAccounts Receivables Turnover

This tells you how many times you are able to collect during the year.

Days in Sales Outstanding (DSO)

This tells you how many days the receivables remain uncollected.5. Know your ratiosSalesAccounts Receivable365 daysAccounts Receivable TurnoverHow To Master The Financial Side of Your BusinessInventory Turnover

This tells you how many times you were able to sell during the period.

Days Sales In Inventory (DSI)

This tells you how many days your inventory remains in your warehouse before they are sold.5. Know your ratiosCost of Goods SoldInventory365 daysInventory TurnoverHow To Master The Financial Side of Your BusinessCash Operating Cycle

This tells you how many days you will be able to recover the cash you spent to buy your goods for sale.5. Know your ratiosDSO + DSIHow To Master The Financial Side of Your BusinessAccounts Payable Turnover

This tells you how many times you pay your creditors during the period.

Days in Payables Outstanding (DPO)

This tells you how many days your payables remain unpaid during the year.Cost of Goods SoldAccounts Payable365 daysAccounts Payable Turnover5. Know your ratiosHow To Master The Financial Side of Your Businessj. Cash Conversion Cycle

DSO + DSI DPOThis will tell you how many days you are financing your business to keep it operating or if you are using other peoples money to operate your business then how much is free cash.5. Know your ratiosDSO + DSI - DPO Most business owners have experienced difficult times--periods when your finances were lean or business performance didnt quite meet your expectations. But when a business is teetering on the brink of failure, you have two choices: You can throw in the towel or persevere despite the odds. Take a look at these entrepreneurs who could've given up, but instead chose to look failure in the eyes and fight their way back.

The brink: In 1990, Trump's net worth was estimated at $1.7 billion, but the real estate market suffered a significant decline that year, and many of Trumps investments dropped considerably in value. In his book The Art of the Comeback, Trump says he was $900 million in the red. In March of that year, he announced that he might miss his $43 million principal and interest payment on Trump Castle.The gutsy move that brought him back: Trump leveraged the possibility of bankruptcy as a bargaining tool, which secured a $65 million line of credit, allowing him to survive until the market recovered. Today, Trump reports his net worth as $2.7 billion.Lesson Learned:Bank on Your Negotiating SkillsDonald Trump

The brink: Martha Stewart was convicted and sent to prison in 2004 for lying about the reasons she sold her shares of a biotechnology stock two years earlier. Following the verdict, shares of her companys stock, Martha Stewart Living Omnimedia (MSLO), fell 22 percent, and photos of Stewart in prison attire blanketed the tabloids.The gutsy move that brought her back: As soon as she was released, Stewart dove back into work, launching a new daytime talk show and forming partnerships with such companies as Lowes, Kodak, KB Homes and Sirius satellite radio. MSLO revenues have steadily increased since her release: For Q3 2006, the company reported $61.1 million in revenues, up 48 percent from the same quarter the prior year.Lesson learned: Stay poised and focused through a PR nightmare.Martha Stewart

Harland Colonel SandersThe brink: In 1955, when a newly built interstate highway bypassed Harland Sanders' original Sanders Court and Caf restaurant, the property lost more than half its value, and he had to sell. Despite having a few Kentucky Fried Chicken franchise locations, Sanders was left virtually penniless after paying off his debts.The gutsy move that brought him back: Though Sanders had just celebrated his 65th birthday, he refused to give up on his "original recipe" chicken. He continued working, and by 1960, he had more than 400 franchise units in operation. Four years later, he sold his interest in the company to a group of investors for $2 million, though he remained a company spokesperson until he died in 1980.Lesson Learned: A true entrepreneur never retires.

Lance GokongweiThe brink:In February 1998, Cebu Pacific Flight 387 slammed into a mountainside, killing all 104 people aboard. At the time Gokongwei had been running the fledgling airline for just two years. But in that time he had brought to the company a decidedly un-Asian flavor that had helped make Cebu Pacific the highest-flying domestic carrier. The gutsy move that brought him back: He endeavored to build a firm in which employees had a personal stake. Gokongwei did the textbook things: profit-sharing, Hallowe'en costume contests, team-building workshops. Staff were encouraged to propose ideas to senior management directly.The corporate culture he had built stood him well. Close to half his 450 staff volunteered to be temporarily stationed in southern Cagayan de Oro, where the plane went down, to assist search-and-rescue and comfort victims' families. Several dozen sent Gokongwei personal notes of encouragement and support. During the carrier's two-month suspension, hundreds took unpaid leave.Lesson Learned:"While I deeply regret the loss of lives," says Gokongwei, "some good came from the experience. It strengthened my belief that my job is not just to run a company for myself but for everyone who contributes to it."

"Early on, we organized the structure by hiring professionals. We realized that in terms of marketing, finance, human resources, we did not have the skill. So as early as then, we started delegating. We had a vision, we wanted to be big, we were driven!" Tips from Tony:To survive - and even excel - in difficult times, Tony Tan Caktiong recommends the following: Focus on what you can control - your business, not the environmentFind creative ways to grow your business and to reach your customers Be conservative in your cash managementPrepare for the bad times by making the right decisions during the good timesMake sure that you hire tough employees to help you weather the storm Make it a habit to listen to everyone, including your employees Tony Tan CaktiongWorld Entrepreneur Of the Year, 2004

Thank You!I would be happy to answer your questions...ENTREPRENEURS ACCOUNTING ACADEMY10/F Suite 1006 Rufino Plaza Bldg.,6784 Ayala Ave., Makati City 1223

Telephone #: 339.13.01 | 338.38.57Website: http://www.eaa.edu.phEmail us at: info@eaa.edu.ph

Sheet1CriteriaSole ProprietorshipPartnershipCorporation# of parties1at least 2at least 5advantagesease of formationease of formationlimited liabilitydisadvantagespersonal liabilityliability may extend up to personal assetsdecisions take time

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