Assignment for Entrepreneurship and Small Business

Name: Hiwot Endalew

Id: mgt 10/01H-54
Center: A.A

Part i . choose the best answer

1. b 6.
2. e 7
3. e 8
4. d 9
5. 10

ii. Essay type questions

1. Briefly explain the component/elements of a business plan

1) Executive Summary
This is the outline of your business plan. Its objective is to sum up the focus point of your plan
and tempt readers to go through the remaining plan.
So what goes into an executive summary
 Business name, place and contact details.
 List of product you wish to sell and customer pain you plan to resolve proposition
 The target market you want to cater
2) Company summary
You don’t need a company description for plans for internal use. Outsiders are interested to know
everything about your company that help them understand your business.
An impressive company summary must give readers essential details such as:
  Products it plans to sell to specific market
 The benefit it offers
 Factors that make it better than its competitors
3) Product or services
This section must include detailed description of products or services you plan to sell. This part of
business plan is more important to external readers than to internal users. Always specify product
or service offerings in terms of customer needs that these fulfill. Sa you write the existing needs
that your products solve, you can identify new customers and needs that your business can fulfill.
4) Market Analysis
This is an understanding of potential customers that you need at first place. Your very business idea
must originate from potential customer need. You identify a customer pain and think of product
that could solve that pain.
Here’s a what you must include under the market analysis section of your business plan:
 Industry Overview
 Target Market
 Competition Analysis
 Forecasting
5) Business strategy and implementation
This is what comes under the business strategy and implementation section pf business plan:
 Marketing strategy: this basically specifies the tactics you plan to adopt to create
awareness of your business idea.
 Sales strategy: this needs to be written separately from marketing. This is because
sales and marketing are separate from each other. Your marketing effort to help
increase your idea awareness and visibility. Whereas, sales convert the potential leads
to customers.

6) Management Overview
The following things under the management summary section:
 Organization Structure
 Management background
 Personnel cost projections

7) Financial Summary
As a startup, you need to plan for cash flow. How much do you need to meet your working
capital requirements?
Profitable and cash flows are separate from each other. That being said, you need to consider
items in your financial statements that impact your cash balance.
Items that increase cash balance
 Cash sales
 Decreases in current assets
 Sales of long term assets
 Outstanding creditors

Items that decreases cash balance

  Credit sales
 Increase in current assets
 Purchase of long term asset
 Outstanding debtors

Needless to say, cash flows are prepared from your income statement and balance sheet.

2. Generate a feasible business idea and prepared a business plan.

3. List and explain the types of diversification strategies

Diversification is investing in products or business that are different from the product you sell or
the business you own. Diversification strategies exploit opportunities outside business’s market
industry.
o Synergetic Diversification: is a growth strategy that involves seeking products that are
technologically compatible with one’s existing product or business.
o Horizontal Diversification: it is a growth strategy in which a business owner seeks product
that are salable to his or her present customers but technologically unrelated to those
products.
o Conglomerate Diversification: is a growth strategy in which business owner looks to
acquire products or businesses that are totally unrelated to its existing business both in
terms of technology or markets.
4. Why Mergers
i. Buying firm’s view point
ii. Selling firm’s view point

Merge is an external growth strategy. A merge means a combination of two or more firms in to one. It
may occur in two ways:

(a) Takeover or acquisition of one company by another and

(b) Creation of new company by complete consolidation of two or more units

The former is called absorption whereas the letter is known as amalgamation.

5. What is the important of micro and small enterprises for the economic development of
country?
Micro and small business enterprise is a specific form of small enterprise. The purpose is to understand
the contribution made by small business as part of our total economic system. Small firms operate in all
industries, but they differ greatly in their nature and importance from industry. I thinking about their
economic contribution, therefore, we first need to identify the eight major industries ( as classified by
U.S department of commerce ) and note the types of small firms that function in these industries. These
eight major industries are as follows:

 Wholesale trade
 Construction
 retail trade
 services
 finance, insurance and real Estate
 Mining
 Transportation and public utilities
 Manufacturing

6. Briefly explain regarding the major competencies required for successful entrepreneurs.

There are three major competencies for successful entrepreneurship these may be defined as
 A body of knowledge
 A set of skills
 A cluster of traits
A. Knowledge: a set or body of information stored, which may be recalled at an appropriate time.
knowledge in the context of business may be manifested by information on or familiarities with
aspect such as customers, the market, competitors, technical matters and source of assistance.
Knowledge of business, however, is not enough for success in setting up and operating a
business.
B. Skill: is defined as the ability to apply knowledge and can be acquire or developed through
practice. In the context of business, it is possible to distinguish between skill of a technical and
managerial nature.
C. Traits : defined as the aggregate of peculiars qualities or characteristics which constitutes
personal individuality.
A successful entrepreneur
Take initiative
Is persistent
Is concerned for high quality
Is oriented to efficiency
Take calculated risks
Is persuasive