Professional Documents
Culture Documents
Just like human beings, business entities go through the stages of development and
growth. Business growth can be achieved through a number of strategies ranging from
clear objectives, following the right strategies by all stakeholders. Entities do operate
in different environments as of today. Environments keep changing due to
competition, technology, increased threats and opportunities. Entrepreneurs have
therefore got to manage and understand the effects of these factors on their business
entities if they are to grow and survive. The highlights to follow in a changing
environment include the following:
A number of growing business entities have diverted from good business practice
especially when the terrain is rough. Entities have gone for unethical practice in order
to survive. This kind of unethical business practices can only last in the short run.
A number of entities start without having a strategic plan. This is not tight because
the entity will not have an objective or goal to achieve. In a changing environment,
prioritization becomes key. Management must have clear priorities yet follow the
strategic plan. At this moment, it is easy for entities to divert their major goals and
strategies to others that were not planned for.
The reality of an uncertain environment is that you cannot use standard management
practices. The uncertainty will overwhelm and undermine them, and the gap between
the results you expected and the ones you actually get will create problems, mostly
because your expectations are too high. The solution is to lower your expectations,
especially about how much progress your team will make and how well things will be
managed. The point is not to throw in the management towel because of the
uncertainty-it is to think realistically so you can manage based on reality, not hope
and desire. If you manage based on hope or desire, you will eventually be forced to
throw in the towel because that method won’t work.
As you lower your expectations, you should also double your focus on making
progress-however, messy and incomplete- a smaller number of key issues. Progress,
not perfection, is the goal, and your focus on progress should not waver even as you
lower your expectations for what that progress will be.
In an uncertain environment, the planning focus needs to shorten up. Every strategic
planning session we do for clients has a mix of long-term, medium-term, and short-
term discussions. In a stable environment, the need for short-term coordination is less
substantial and more time can and should be spent on the question of “where are we
going” long-term.
There can be a tendency for leaders to go into “command” mode when things get
uncertain. That works if the uncertainty is relatively simple and short-term,
impacting tactical actions. In that case, a command from someone who better` sees
the bigger picture can be effective. However, if the volatility is broad, multifaceted, or
sustained, the only way for a team to deal with the complexity is to have robust and
ongoing discussion
Highlight Weaknesses and Blind Spots or black spots that could cause
someone to stumble
Focusing on the weaknesses and areas where the entity has in the past stumbled or
could stumble will enable one to manage the changing environment.
It is important to know what you want to achieve with you business. You should be
able to state your goals precisely in a business plan. The business plan should contain
a contingency in case things do not go as planned,
Business growth challenges become more and more apparent as you bid to build your
business. Achieving consistent, sustainable growth is likely to be a fundaSmental goal
for your business. Expansion can lead to all sorts of exciting opportunities for the
entity and new experiences for employees. But it’s important to be prepared for the
obstacles that might arise on the path to long-term success.
Below, is a list of the top most challenges entrepreneurs will face as their
business grows, alongside advice that will help you successfully manage
these changes.
The challenge
Cash flow problems are the second most common reason why small businesses go
bust, according to researchers. Entrepreneurs have to spend money to make money
during a growth period, but this concept can quickly get out of control and leave you
in a precarious position.
The solution
Manage your cash carefully during these times. Turn to your channels that produce
consistent sales and work to maximize their contributions to your bottom line.
Negotiate favorable payment terms with partners and vendors too.
The challenge:
From history, it is established that entrepreneur’s dread job interview
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most. This is in effect makes them not obtain the employees they would
require. The process can take several days of your time, sifting through
many unqualified candidate to find the diamonds in the rough.
The solution:
Be exclusive. Always try to obtain the best people to do the job for you.
Obtain a professional hiring firm if you can, clearly sate the conditions in
form of salaries, duties, working hours and any other relevant
information to get the best employees.
c] Time management.
The challenge:
The solution:
Make time. Like money, it does not grow on trees, so you have to be smart about how
you are spending it. Create goal list. You should have a list of lifetime goals, broken
down into tie periods. That is, annual, monthly and weekly. Your weekly goals will
then be broken down into specific tasks by day.
Eliminate or delegate any tasks that do not match with your goals. Delegate any tasks
that that do not have to be specifically performed by you. Make the best use of your
time.
There are times when entrepreneurs need to get personally involved in specific
decisions, such as big-picture strategic planning and hiring for key positions. Then
there are times where it is important to delegate and trust that your managers will
make the best decision for their team and the company. Every business owner must
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learn to get a feel for these situations and step in when needed without burdening their
leadership team.
The solution:
Find good employees and good outsourced contract help, for starters. You may have
to pay a little more for it, but the savings in form of time and resulting earnings
potential is great.
The challenge:
Most entrepreneurs are not certain of what to do. They simply go into business
because others have succeeded.
Solution:
Admit you are weak in identifying prosperous niches, and delegate that task to
someone who is strong in this area, specifically someone who has experience in
whatever type of field you are considering entering e.g. Retail ecommerce, service
industry, etc
f] Marketing strategy
The challenge:
A number of entrepreneurs do not know how best to market their products and
services. There are a number of ways and media in which one can advertise one’s
products. These include but not limited to; print, online, mobile advertising, etc.
The solution:
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If the entrepreneur feels that he or she is not good a creating marketing plans and
placing adverts of looking for clientele, it is good practice to outsource ones
marketing strategy to someone who is capable of doing that.
g] Capital
The challenge:
Capital is a big challenge to a number of firms and business enterprise. Many people
have started businesses from their small savings with fear of obtaining capital inform
of loans. Many small business enterprises have failed to pool together so as to enjoy
the benefits of synergy.
The solution:
There are different ways to acquire funding ranging from traditional bank loans to
family and friends to kick start operations. The self-fueled growth model should be
the preferred option as it allows the business to grow slowly but steadily. Additionally
entities can pool resources together so as to have a greater impact in form of capital
and also benefit from synergy.
h] Strapped budget
The challenge:
Many entrepreneurs though they have the necessary available, there is always not
much allocated in the budget for marketing the company or entities to the full
potential that they deserve. Entrepreneurs need to understand that in order for business
to grow, there is need to put enough resources to advertise the business to its full
potential.
The solution:
Every business enterprises in one way or the other struggles with their budgets. The
key issue is to make sure that priorities are set. Prioritize your marketing efforts with
efficiency in mind-spend your money where it works-and reserve the rest for
operating expenses and experimenting with other marketing methods.
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I] Business growth
The challenge:
A number of firms do grow from start until a certain point. However, these firms do
not tend to move from that point. It is at this point that firms take on any further work
within their current structure. This seriously impedes further growth of the firm.
The solution:
Create new processes that focus on task delegation. Many entrepreneurs, used to
wearing all the hats, find themselves in this position once they have achieved a
modicum of success. Because they are doing everything, their growth will come to a
stop once they hit any self-imposing ceiling. The entrepreneur should delegate
tasks to others and take himself out of production end and settle into
management and, finally, pure ownership.
j. Self-doubt.
The challenge:
The solution
Being able to overcome self-doubt is a necessary trait for entrepreneurs. Having good
support system will help: family and friends who know your goals and support your
flight, as well as an advisory board of other entrepreneurs who can objectively speak
out as to the direction of your business. One best way to deal with self-doubt is to
work out you goals and tasks list
3. Business protection
What is business protection and how can it be used to protect a business from the
effects of a key person being diagnosed with a critical illness or dying. The
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Key facts:
Business protection is an insurance contract that protects a business from the
financial effects of key people being diagnosed with a critical illness or dying.
Business protection is available for partnerships, shareholders sole traders and key
employees.
How the arrangement is set up will depend on the type of business and its
particular needs.
Entrepreneurs should employ the following factors among other to protect their
businesses.
i) Protection from factors that facilitate theft-E.g. Shoplifting by staff and
customers, actual taking of cash, etc. Business entities should put measures in
place to guard against such acts. Examples include having strong controls both
physical and procedures in place.
ii) Patents, trademarks, copy rights and trade secrets should be protected through
signing of legal agreements preventing users from copying or making similar
products.
iii) Business entities should consider protection against losses by taking up
insurance so as in case of any eventualities like loss of profits of fires and theft
occurring, the losses can be minimized
iv) Business entities should consider compliance with the rules and regulations
(e.g. licensing, contracts, etc) as non compliance may lead to penalties and in
most case business entities may end up in closure.
4. Reasons for Business Failure
while simultaneously bringing a product or service to market at a price point that meets
consumer demand levels.
What is the major reason that you have started your business? Could none of these
reasons be:
If these are some of the reasons, then you are in the wrong thinking ant you need to
change your thinking.
However, if you started your business for these reasons, you will have a better chance at
entrepreneur success:
You have passion and love for what you will be doing
You are physically fit and possess metal stamina to withstand potential
challenges.
You have drive determination, patience and positive attitude
Failures do not defeat you-i.e. use failure as a learning experience
You thrive on independence
You like-if not love-your fellow man, and show this in your honesty, integrity,
and interactions with other.
b) Poor Management
Another common reason for businesses failure is lack of business acumen on the part of
the management team or business owner. In some instances a business owner is the only
senior-level person within a company, especially when a business is in its first year or
two of operation. While said owner may have the skills necessary to create and sell a
viable product or service, they often lack the attributes of a strong manager and don't
have the time to successfully oversee other employees. Without a dedicated management
team, a business owner has greater potential to mismanage certain aspects of the
business, whether it be finances, hiring, or marketing.
operations running on a day-to-day basis, including funding payroll; paying fixed and
varied overhead expenses, such as rent and utilities; and ensuring that outside vendors are
paid on time. However, owners of failing companies are less in tune with how much
revenue is generated by sales of products or services. This disconnect leads to funding
shortfalls that can quickly put a business out of operation.
d) Location
Location of business is a very critical factor for its success. Whereas good
business location, may enable struggling business to survive and thrive, a bad
location could spell disaster to even best managed enterprise.
e) Lack of Planning
It is critical for all businesses to have a business plan. Some businesses often
overlook the importance of effective business planning prior to opening their doors. A
sound business plan should include, at minimum: a clear description of the business;
current and future employee and management needs; opportunities and threats within
the broader market; capital needs, including projected cash flow and various budgets;
marketing initiatives; and competitor analysis.
Business owners who fail to address the needs of the business through a well-laid-out
plan before operations begin are setting up their companies for serious challenges.
Similarly, a business that does not regularly review an initial business plan—or one
that is not prepared to adapt to changes in the market or industry—meets potentially
insurmountable obstacles throughout the course of its lifetime.
To avoid pitfalls associated with business plans, entrepreneurs should have a solid
understanding of their industry and competition before starting a company. A
company’s specific business model and infrastructure should be established long
before products or services are offered to customers, and potential revenue streams
should be realistically projected well in advance. Creating and maintaining a business
plan are key to running a successful company for the long term.
f] Over expansion
A leading failure of business failure, expansion often happens when business owners
confuse success with how fast they can expand their business. Many businesses often
go bankrupt because of rapid expansion leading to overtrading.
Introduction:
Self employment is a situation in which an individual works for himself or herself
instead of working for an employer that pays a salary or a wage. A self employed
individual earns income through conducting profitable operations form a trade or
business that they operate directly. In Self employment one determines his own work
schedule, provides own tools for work, etc.
If you’re new to the business world, launching your own company can be a daunting
prospect. However, if you have an idea and you’re willing to work hard, you can turn
your dream into a successful venture. To stand out from competitors and help get your
idea off the ground, here are some important factors to consider before starting your
own business.
There are now a vast number of rules and regulations in place, so you need to make
sure you are complying with these upon starting your new business. They are different
laws and regulations that apply which among the many include self employment
taxes, VAT, NSSF contributions, etc.
Most people do not embrace all the paperwork they have to deal with when running
their own business. E.g. keeping receipts, preparing financial statements, tax returns,
etc. If you are not in position to do this, then it is better to hire the services of a
professional accountant.
When you are working for someone you will get a steady paycheque but it will be
fixed irrespective of the profits made. However, in self-employment you can decide
your compensation depending on the revenues generated by the business. It must be
noted that whereas you can decide the compensation yourself, there is a possibility
that you may get nothing if there are zero cash flows.
Adequate funding
This is probably the most important consideration. It’s vital that you have a strong
grasp of your future finances. While the money side of things can seem initially
daunting, try not to be scared. It’s important that you put your full attention into the
financial side; otherwise your business may fall flat from the get-go. You need to have
a thorough understanding of how you are going to fund your business, helping you to
identify whether your business is making a profit. When it comes to funding, there are
various routes that many businesspeople go down, such as obtaining a bank loan to
get them started.
Do what you love to do-Businesses do not just happen. They are made. If you
love what you do, your passion for the business will drive you to be
knowledgeable, creative and persistent.
Most new product or new business ideas are simply spinoffs of old ones. Other
business ideas are simply new ways of marketing the same product.
Do you have a skill other want to hire? If so do not give your expertise away. Start
charging for it.
To locate training opportunities, contact the human resources department and ask to
speak to the person in charge of training programmes.
Be an industry consultant
This is another way to increase your bank account. If you can solve problems such as
answering important business questions e.g. what steps should be taken to increase
market share in a target market or how to manage inventory more efficiently.
When you start a business from scratch you jump through hurdles to find and train
employees, build up a customer base and find suppliers. But when you buy an existing
business much of this infrastructure will already be in place.
Buy a franchise.
If you want to start a business and do not want to develop your own product, or
methods of doing business, franchising could be the ticket to business ownership
In this stage of your feasibility study you need to look objectively at the idea and
determine its profitability. He objective analysis include
Finding out if anyone has tried out your business idea, and if they failed-
why?
Opportunity cost of giving up the current venture in case you are required
to do so
Challenges of not having an assured income coupled ith bills to pay and
other costs
Legal protection of your business and products so that they are not copied
Guidelines for evaluating the right business opportunity may include the following.
You must have complete knowledge of the product or service with which you
are involved
Is the time right to introduce the product or service to the public? Is there need
for this type of item, and what are its potential in relation to its competition
Find out how many buyer have been in the business successfully for a
respectable period of time.
A legitimate business opportunity will even provide you with phone numbers
of other buyers to verify that they are generally satisfied.
What is the company’s profit ratio to sales, to time and service requirements,
etc.
Do you have to work more hours to make the same amount you do now?
Check with current operators to see how they are making out. Are they happy
with their businesses? What problems do they have? If any.
Research company history. Is it new firm with little expertise and experience?
Is it older firm whose regular products have satisfied customers for years?
Is there financial strength and strong credit behind the business opportunity
Evaluate the policies and plans of the company with associations and business
group
Before signing a contract with a seller, the strategies you should use to protect
yourself include the following:
The attorney should be present when you are negotiating with the licensor-seller. He
should be able to explain the implications of each aspects of the contract.
Your accountant should be able evaluate analyze the financial statements of the
licensor-seller in order to assess the financial health of the company.
Contact competitors
This will verify the status of the company in the industry in terms of strength
and weaknesses.
Your accountant or the person auditing the business opportunity can help you
with this.
The parent company does not need to be big in terms of dollars to be credible.
Used common sense and advise from knowledgeable people you trust to
determine whether or not a company seems to be credible.
Are the seller’s claims backed by performance? Do the current operators you
have talked to confirm the profit claims that the company seller makes?
Do they the management strength to be able to train you, and help the company
running for a reasonable period.
Know all the costs and obligations, both your and the sellers.
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The cost you are going to incur and other obligations on an ongoing basis.
Training
Is training at your own expense? How long will the training last?
Will that adverting programme work for you? Check your local market.
Examine the list of equipment, fixtures, inventory, etc. and call a few suppliers
dealing in these items. Compare the prices those suppliers quote you against the
business opportunity price.
The licensor
The history of the parent company needs to be detailed. I should include the
identity and the business experience of any persons associated with the
licensor, whether the company has been involved in any litigation, declared
bankrupt etc.
This should include whether you are getting an exclusive area or territory as a
licensee. Any trademarks, service marks, trade names, log types, commercial
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symbols, patents, copy rights etc. which you are going to able to use as a
licensee need to be identified in here.
If this is a business opportunity that is identified with a given public figure like
a celebrity or a prominent sports personality. It should include what
arrangements have been made with that person. Is that person active in the
business or receiving a royalty out of the proceeds?
Focus on the unique capabilities and the core product. Specialization is the
entrepreneur’s greatest asset.
Knowing who you are and what gets you excited (and bores you to tears) will
help you to reach your goals.
Step 4: Map it
Mapping your capabilities with your target clients’ needs in an excellent way
for you to determine your service strategy. i.e. Go for customers who need
your particular expertise.
Up until now you have been in planning mode, but now it is time to dig in and
put it to work.
This final step is really straightforward. Just do it: Complete the daily actions,
and then do something extra to accelerate your success plan.
The Entrepreneurial Life Cycle repeats itself in businesses of all sizes, from start-ups
in a garage to corporate entrepreneurship activities in global Fortune 500 companies.
It starts with an entrepreneur who perceives an opportunity, creates an organization to
pursue it, assembles the required resources, implements a practical plan, assumes the
risks and the rewards, all in a timely manner for all involved. We present the seven
stages in the Entrepreneurial Life Cycle.
This “gestation” period is quite literally the “pre-start” analysis. It often occurs over a
considerable period of time ranging from one month to ten years. At this stage it is
important to research and understand the dimensions of the opportunity, the concept
itself, and determine how to decide whether it is attractive or unattractive. The
individuals need to look internally and see if they are truly ready for entrepreneurship.
The vast majority of people, including almost all inventors, never move off of this
stage and remain just “considering” entrepreneurship.
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This is a “sanity check,” a go/no-go stage gate for part-time entrepreneurs because
it fleshes out shaky ideas and exposes gaping holes. Venture capitalist Eugene
Kleiner, of Kleiner Perkins Caufield & Byers, says, “Focus is essential; there can be
the possibility of the business branching out later, but the first phase of a company
should be quite narrowly defined.” It is important to include objective, outside
viewpoints because different people can investigate the same opportunity and come to
opposite conclusions.
Profitability and success define the market entry stage. The entrepreneur is committed
with a very simple organization, the resources were correctly allocated according to
the business plan, and the first sales were made. This is what defines success in the
very early stages. If the business model was profitable, reasonable objectives were
met, and the venture is on track for attaining true economic health, then the
entrepreneur can chose between a capital infusion for growth or remaining small with
self-financing (bootstrapping).
because there is not enough room in the market for growth, their production and
management systems are not scalable, or they will not scale because the rate is too
great of a challenge to the management.
Now the venture is a market leader at cruising altitude. The growth becomes a natural
extension of the venture through professional management practices. This
professional management team is implementing the venture’s growth strategy through
global expansion, acquisitions, and mergers as cash is plentiful and inefficiencies are
completely flushed out.
This harvesting stage is focused on capturing the value created in the previous stages
through a business exit. Typical exits are an initial public offering (IPO) or being
acquired by a larger publicly traded corporation. Unfortunately, most of the literature
in entrepreneurship has concentrated on the earlier stages. Little attention has been
given to exits. We know from experience that the opportunity to exit successfully
from a venture is a significant factor in the entrepreneurial life cycle, both for the
entrepreneur and for any investors providing investment capital along the way.
Internal financing:
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If a business needs to generate more finance and cannot raise the same internally, may
seek for external sources of finance. There are basically two types of eternal
financing; Loan capital and share capital.
Loan capital-The most common way is through borrowing. It can be short term,
medium term and long term. Examples of loan capital include bank loans, debentures,
bonds, Leasing, etc.
Share capital-This could come from private investors or venture capital funds.
Venture capitalist are interest in investing in businesses with
Ordinary share-under this arrangement companies raise capital be selling shares in
their business.
Preference shares- Is also a source of finance.
Rights issues- In order to raise funds without diluting control of ownership, a rights
issues offers new shares to existing shareholders.
.
Angel Investor
When pitching an angel investor, all the old rules still apply: be succinct, avoid
jargon, have an exit strategy. But the economic turmoil of the last few years has made
a complicated game even trickier. Here are some tips to win over angel interest: For
early-stage startups, angel investors are a go-to-source of financing. Angel investors
typically invest $10K -$1M and expect a 20- to 25-percent return.
Factoring/invoicing advances
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With factoring and invoicing advances, a service provider will give you money
upfront on invoices that have been billed out. This process is great if you're in a pinch
and need money as soon as possible. However, the fees that factoring services charge
can add up over time. And the process can get a little confusing.
Product pre-sales
Product presales can be an effective method to finance your business, since it doesn't
require you to take out a loan or pay back any debt.
Grants
If your business is involved in science or a research-oriented field, you may be
eligible to receive grants.
debts, and also the severity of losses in the event of default. Before approving a
commercial loan, a bank will look at all of these factors with the primary emphasis
being the cash flow of the borrower.
Credit risk- Refers to the risk that the borrower will default on any type of debt by
failing to make required payments leading to lost principal/interest, disruption of cash
flows and increased collection costs. The loss can arise in a number of ways.
A customer may fail to make a payment due on a mortgage loan, line credit,
etc.
To reduce the lenders credit risk, the lender may perform a credit check on the
prospective borrower, may require the borrower to take appropriate insurance such as
mortgage insurance or seek security guarantees of 3 rd parties
Lenders will always try to mitigate the loss of funds lent out to borrowers by putting
in place mitigation measures such as;
Credit insurance and credit derivatives-lenders and bond holders may hedge
their credit risk by purchasing credit insurance or credit derivatives. These
contracts transfer the risk from the lender to the seller (Insurer) in exchange for
payment.
C) FINANCIAL PLANNING
Financial leverage-The entity should ensure that there is the right mix between
debt and equity.
Plan your cash flows-The financial managers should adequately plan their cash
flows, know when the expenses will be incurred, payment o liabilities, salaries
and investments.
It is a legal requirement for you to keep records of your business transactions for
minimum of atleast seven years as per the income Tax Act of Uganda. The records
you must keep include all documents relating to your income and expenditure.
Keeping good records makes payment of taxes and other business transactions much
easier and helps you to monitor how your business is moving. Ensure that a clear
filing system is set up for ease of reference and retrieval of records. Common
accounting records include; ledgers, Journal, bank statements, contracts and
agreements, receipts, invoices voucher, etc.
Accounting records are important for all type of accounting including financial
accounting, cost accounting as well as for different types of organizations,
corporations, etc.