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Assignment 2
Student number: 62099477
Unique number: 739593
I fully agree that various steps should be considered when
establishing a business.
Acquiring assets or in other words your possessions will refer to the first thing needed to
buy, a building or site for the business to be located at. The rest of the assets will be
hired, leased or bought, things like office furniture, computers, desks, chairs, filing
cabinet and a safe. So before establishing a business you should think of all assets that
need to be bought and it does not just stop here. The owner also needs to buy
equipment for the shop itself such as shelves, counters, display cabinets, depending on
the needs. If the business needs a vehicle for delivery there would be a need for a fixed
asset in the form of a vehicle. Subsequently there should be trading stock purchased
which then forms part of the current assets of the business.

Incurring obligations also known as liabilities. Most businesses struggle or are unable to
buy all their assets in cash and therefore they need to make use of credit purchases. So
when buying for instance a delivery vehicle, they can buy this vehicle on credit. This
debt is a liability for the business, while the delivery vehicle is an asset. All trading stock
can also be purchased on credit. The vehicle in this case will act as an liability, while the
stock is an asset.
There are a few factors that hamper the promotion of an entrepreneurial culture in
South Africa according to UNISA, PST311L only study guide:

 Badenhorst (in Schultz 1992: 4) is of the opinion that syllabi are dawn up in such
way that learners are programmed to think like employees and learners are not
encouraged to take any initiative. It seems like all learners must act like
employee robots instead of expressing their own ideas and thoughts.
 The youth is not venturesome and this leads to a lack of entrepreneurs (Rupert
1985: 2). Learners do not get the chance to explore and go out on adventures
and therefore they don’t have the experience to explore with new options.
 For a long time schools have focused on preparing learners for jobs; schools as
well as parents and the community have concentrated on providing paper
qualifications rather than useful skills (Lindhard & Dlamini 1990: 158). Just as
stated there are only focused on paper skills and this can sometimes cover up a
real talent that cannot be put down on paper, after all a job is more about skills
that paper knowledge, most of skills that are learnt will not be useful in the
practical world.
 Badenhorst (in Schultz 1992;4) is of the opinion that syllabi are drawn up in such
way that learners are programmed to think like employees,
Product – The product is very important in a business and to make the business work,
according to me it is one of the most important aspects of a business. The product will
be the combination of utilities which consumers are after and what they want to obtain
and use. The product is offered by the business to the consumer or buyer. When the
business need to choose a product that must think of their consumers and what is
needed, concentrate on the consumer for it will be their product. Also try to make these
products in such way that it is ready to use immediately by the consumer. When the
business is busy looking at products they must choose between a durable and non-
durable product, meaning that a durable product will be able to be used over a long
period of time and a non-durable product will be for a short period of time. Also bear in
mind when making this decision that what can the consumer afford for the durable
product will be more costly. The owner should then go further when making a decision,
he should take into consideration which type of product will it be: Convenience,
selective or speciality. This is very important when planning, because you need to
decide will it be a product they know well (convenience), products that the consumer
wants to compare at several stores for sustainability, quality, price and style or will it be
a product with unique quality that consumer will do an effort to buy the product.

This is important and all of the above mentioned must be taken into consideration within
your destination, poverty and life demands.

Price – The price will refer to the amount that the consumer pays for the product. The
price will be closely linked to the value of the product. Use the consumer obtains in
exchange for the money sacrificed. There should be a few things that should be taken
into consideration when deciding on a price for the product. The business must take into
consideration the price the cost price of the product, meaning the price they get the
product for, they should look at the running costs of the business and take the price into
consideration to cover some of these running costs, the business should also be able to
make a profit to be successful, therefore the price should be a little bit higher than the
cist price, look at the competitors’ prices and see if you can beat the price within a
reasonable amount or maybe set up a deal to get the attention of consumers and lastly
look at the demand of the product, if there is a high demand the price can easily be
lifted. It is very important to decide on a reasonable yet working price that benefit the
consumer and the business for the business needs to be run successfully and there
need to be a generated income.
The place – The place refers to the location of the business which is just as important in
the plan for the business. It is most of the time best to situate your business near
consumers’ reach for people would not like to visit a business far away for something
little or away from all their other shopping so there must be carefully considered where
to situate the business. Then there is a few other things that must be looked at to make
the location work: The parking area should provide enough space and an easy
entrance, reasonable prices, good quality products, helpful service, sufficient security to
protect the business as far possible, it should be clean in and out the shop, enough
space should be provided for consumers to walk between shelves, there should be
good ventilation and lightning in the building so that consumers can be in an open
environment and feel comfortable, provide a variety of products to draw attention, set up
convenient trading hours that suit consumers’ working hours, have regular sales and
offer by hand, use a variety of packaging, make use of your own delivery service or an
reliable delivery service and make use of credit facilities for most consumers will be
buying from you on credit. All of these should be taken into consideration to make the
business plan work.

Promotion. This is important, because it refers to all the techniques used to create a
demand for a new product, or to increase or maintain an established demand for a
known product. The main purpose therefore is to inform, remind or persuade consumers
to purchase the products of the business. The help with the promotion of the business
and to make the business plan work, you can use the following to help you with the

Advertising – An identifiable sponsor pays and then mass communication takes place
on an impersonal level.

Personal sales – This is where sales representatives are very important for they help
with selling your product to consumers using one-on-one communication, convincing
the consumer to buy the product.

Sales promotion – This is an encouragement from the business to the consumer on

short term. This is an encouragement to buy the product using free samples,
competitions, bonus articles and discount coupons.

Publicity – This is an impersonal stimulation to demand for a product by supplying

newsworthy information to the mass media. This way favorable and ‘free’ news is
provided for example sponsorships and news conferences.
I agree with the statement that the chosen form of a business
must suit the particular circumstances, needs and
personality traits of the entrepreneur. I am going to motivate
my answer by looking at the following questions 3.1-3.3.
The following can have a direct influence on the owner’s choice:

 Legislation requirements
 Management participation in the business
 Scale/volume of the product or service provided
 The economic independence of the business
 Liability of the members or shareholders
 The possibilities of obtaining capital
 Possibilities for profit and profit-sharing
 Kind of product or service
 The long term existence of the business

There are a few characteristics of a one-man business:

1. It has no legal entity. The owner and the business can unfortunately not be
2. There will be no continuity. Death will dissolve the business.
3. The transfer of a sole ownership can be accomplished by selling, discontinuing or
transferring to a new business.
4. The owner is unfortunately responsible for all the debts and/or claims of the
business. The personal belongings of the owner can become involved.
5. All profits belong to the owner, this is a very good motivation for managing the
business correctly.
6. Capital comes with personal funds. Sufficient security must be supplied if extra
funds from outside are required.
7. Normally the owner manages his/her one-man business himself/herself and
he/she can therefore easily adapt to changing situations.
8. The legal requirements for establishment are few and simple.
9. Taxation is calculated only on the taxable income of the individual as all the
profits of the business belong to the owner any case.
10. People with the necessary initiatives, abilities, organisations capabilities and
capital usually start their own business. If the business is successful, it can
expand into a large business.
11. This is a popular form of business in the small business sector. There is a close
relationship between the owner and her/his clients.

Some of the most important advantages of a one-man business:

 It is an easy business to establish and does not have too much legal
 All of the profits go to the owner.
 A capable person will quickly gain experience.
 The owner can be innovative and is free to make his/her own decisions speedily
and to carry them out.
 The establishment leads to strong competition which keep prices low and
improves services.
 A sole ownership can easily be adapt to environmental changes.
 There is a close contact between the owner, employees and clients.
Gouws, E. 2003. Economic literacy and Entrepreneurship : Only study guide for PST311.
Pretoria: Universiteit van Suid-Afrika.
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