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ENTREPRENEURSHIP NOTES
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ENTREPRENEURSHIP

Course outline

Topic one;

 Definitions of Entrepreneurship
 Origin of entrepreneurship
 Characteristics of an entrepreneur
 Types of entrepreneurs
 Terms commonly used in Entrepreneurship
 Differences between an entrepreneur and a manager

Topic two: Benefits of Entrepreneurship

(A)Benefits to an Entrepreneur

(B)Benefits to the Community

Topic three:
The Entrepreneurship Process\ Steps taken When Starting a Business

Topic Four:

The Business plan

 Purpose of a Business Plan

 Contents of a Business Plan
 Why Business Plans fail

Topic Five: Entrepreneurship Education and Development

A. Entrepreneurship Education
 Meaning of Entrepreneurship Education
 Importance Of Entrepreneurship Education

B. Entrepreneurship Development
 Meaning of Entrepreneurship development
 Barriers to Entrepreneurship development
 Solutions to barriers
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Topic Six: Women Entrepreneurs

 Problems faced by Women Entrepreneurs
 Measures to promote Women Entrepreneurs
Topic Seven: Entrepreneurship and Economic Growth and Development
 Factors Of Growth
 The Social Costs Of Growth

Topic eight: promotion (Marketing Communication)

Topic Nine

A) Indicators of a viable Business

B) Sources of Business Ideas

C) Resources available for an Entrepreneur

E) Capital for a Business

Topic ten: Leadership in Business

 Leadership styles
 Leadership skills in business environment

Topic eleven: Risks in Business

Delivery Methods

The course will use the following methods

 Straight lectures
 Presentations

Course assessment

Course work/Presentations and tests 40%

Final examination --------------------- 60%

Total------------------------------------- 100%
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References

Drucker,P.F (1985) Innovation & Entrepreneurship, New York; Harper Trade.

Goflon,L.(1997). Business market research.London:Kogan page

Aldrich & Zimmer. (1998). Entrepreneurship. London: Ashgate Publishers.

Hongland,H.and Williamson L (2000).Feasibility studies, Kentucky University

Sexton,D.l. andsmilor,R.w.(2000). Entrepreneur. Chicago: Upsart publishing

Truit,W.(2002). Business Planning: A comprehensive framework and

process.London:Quorum Books.

Wickham, p.(2004). Strategic Entrepreneurship, Essex: Pearson Education.

ENTREPRENEURSHIP
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DEFINITIONS

No universal definition for the term entrepreneurship has emerged. However,

different definitions during the history of entrepreneurship development will help
us to understand the term entrepreneurship.

An entrepreneur is someone who undertakes a venture.

Entrepreneurship is a practice of starting new organizations, particularly new

businesses in response to identified opportunities.

It is the process of creating something new with value by devoting the necessary
time and effort, assuming accompanying financial, psychic, and social risks,
receiving the resulting rewards of monetary and personal satisfaction and
independence.

The definition stresses four basic aspects of being an entrepreneur;

1. Entrepreneurship involves creating something new of value.

That the creation process should have value to both an entrepreneur and public.
(Society and buyers).

2. Entrepreneurship requires devotion of the necessary time and effort.

That as an entrepreneur you must commit or devote the significant amount of

time and effort to create something new and make it operational.

3. The third aspect of the definition of entrepreneurship is assuming the

necessary risks.

These risks take a variety of forms depending on the field effort of the
entrepreneur, but usually centre a round finance, psychic and social areas.

4. The final part of the definition involves the rewards of being an

entrepreneur.

The most important of these rewards is independence, followed by the personal

satisfaction for profit making entrepreneurs, the monitory rewards also comes into
play, for some of these entrepreneurs money becomes the indicator of the degree of
success.
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Entrepreneurship is often a difficult undertaking, as a majority of new businesses

fails due to such thing as poor sales, intense competition, lack of capital or lack of
managerial ability.

Definition of an Entrepreneur

Entrepreneurs are the people who have the ability to spot and evaluate business
opportunities, gather the necessary resources, start a business and take appropriate
actions to ensure its success. He/ She is a person responsible for bringing the
factors of production together.

ORIGIN OF ENTREPRENEURS

There are two theories that explain how entrepreneurs developed often called the
“demand and supply theories’’

Supply theory, entrepreneurs are born, not made .Some people have the
personality traits that make a good entrepreneur.

Several research studies have shown that entrepreneurs are convinced that they can
command their own destinies. The “locus of control” of the entrepreneur lies
within himself .It is this self belief which stimulates the entrepreneurs according to
supply side theorists. John G. Burch, 1986 Business Horizons, gave a list of in-
born traits that make an entrepreneur. These traits include;

 A desire to achieve ; the push to conquer to problems and give birth to a

successful venture
 Hard work; It is often suggested that many entrepreneurs are workaholics.
 Desire to work for themselves; entrepreneurs like to work for themselves
rather than working for an organization or any other individual.

They may work for others to gain the knowledge of a product or a service that they
may want to produce or offer.

 Nurturing quality; willing to take charge of and watch over a venture until it
can stand alone.
 Acceptance of responsibility:
 Reward orientation.
 Optimism
 Orientation to excellence
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 Organization
 Profit orientation

The demand theory

The demand theory holds that entrepreneurs emerge out of the combination of
entrepreneur’s opportunities and people who are well –positional to take
advantage of them. Thus anyone who encounters the right condition might
become an

Entrepreneur, if they find themselves in a position where they find valuable

problems that they alone can solve.

Scholars studying the demand theory try to understand the condition under which
entrepreneurs appear particularly in understanding how differences in entrepreneur
opportunities, and how environmental factors (access to capital, competition etc)
change the rate of entrepreneurship.

THE GENERAL CHARACTERISTICS OF AN ENTREPRENEUR

 An entrepreneur should be innovative .They should always introduce new

changes and ideas and should think positively and quick to get over failure.
 Risk taker. A successful entrepreneur should be in position to bear risk .This
is because any new business are likely to pose a number of risk.
 A successful entrepreneur should be flexible. He should be able to change or
be changed easily according to the changing situations and should possess a
desire for change and constant improvement.
 A successful entrepreneur should be a goal setter. He should be able to set
realistic goals that are achievable in the set or specified period of time.
 Hard work is a quality that should be possessed by a successful
entrepreneur. He should put in all his efforts with commitment to ensure the
success of the business. He should be willing to work for longer hours.
 He should be persistent .A successful entrepreneur should continue to
operate even in times of failure and through a lot of difficulty if he is to be a
successful person in business.
 A successful entrepreneur should have self- confidence in himself and his
business .He should be comfortable with having decisions resting upon him
or her.
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 An entrepreneur should be good at accountability .He should be able to

measure the performance of the business, keep records of possessions and
business transactions.
 A successful entrepreneur should be accommodative. He should give the
customers what they need, and should be caring and welcoming. He should
both listen and communicate well
 A successful entrepreneur should be creative .He should produce or use
original and unusual ideas aiming at disapproving others or out competing
them.
 A successful entrepreneur should be focused. He should always direct his
attention towards fulfilling the set goals of his business.
 A successful entrepreneur should be ambitious. He should have a great
desire to be successful, powerful and wealthy.
 A successful entrepreneur should be information seeking. He should look for
or try to find information concerning all aspects of his business.
 A Successful entrepreneur should be persuasive. He should be in position to
convince people to do something especially when they have the ability to
buy the product but are not yet willing to consume them or when they are
undecided.
TYPES OF ENTREPRENEURS

1. Innovative entrepreneur.

This is a type of entrepreneur who initiates the idea and comes up with the product
or service .These types of entrepreneurs are very rare in developing countries.

Innovative entrepreneurs introduce new goods, inaugurate new methods of

production, discover new markets and reorganize the enterprise. Such
entrepreneurs can work only when a certain level of development is already
achieved and people are looking forward to change and improvement.

2. Imitative entrepreneurs.

These are characterized by readiness to adopt successful innovations by successful

innovating entrepreneurs. They lap up innovations originated by innovative
entrepreneurs. Imitative entrepreneurs don`t innovate to changes themselves, they
only imitate techniques and technology innovated by others.

3. Fabian entrepreneurs.
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These are characterized by great caution and skepticism in experimenting any

change in the enterprise. They imitate only when it becomes perfectly clear that
failure to do so would result into a loss of relative position in the enterprise. They
are shy and lack the will to adopt new methods of production.

4. Drone entrepreneurs.

These are characterized by refusal to adopt opportunities to make changes in

production formulae even at the cost of several reduced returns relative to other
line producers. Such entrepreneurs may even suffer losses but they are not willing
to make changes in their existing methods of production. They struggle to exist and
not to grow. Thus, they normally operate in their traditional way and resist
changes.

DIFFERENCES BETWEEN AN ENTREPRENEUR AND A MANAGER

An entrepreneur is different from a manager of an enterprise. The distinction

between the two is seen from the following basis;

1. A business venture. An entrepreneur owns a business where as a manager

manages the operations of the business.
2. Risk bearing. An entrepreneur bears the risks of the business while a
manager doesn`t bear risks.
3. Continuity. An entrepreneur is concerned with the going concern of the
business. He or She ensures that the business continues operating forever
because it’s a long term investment of an entrepreneur whereas a manager
may not.
4. Innovation. For purposes of meeting the changing tastes and preferences of
customers and consumers, entrepreneurs bring in new ideas in the business,
while a manager may not.
5. Status role. An entrepreneur has a high status compared to the manager.
6. Pre-requisites. An entrepreneur may not require skills to become one but
managers require managerial skills to help him/her perform managerial
functions of planning, organizing, staffing, etc.

FUNCTIONS OF A MANAGER

A Manager carries out a number of activities in an enterprise to ensure that the set
targets are achieved. The following are the functions performed by the managers of
small enterprise;
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1. Planning. This involves the establishment of goals and objectives of a business

and determines the ways in which they will be achieved.

There is always need for planning so as to reduce on the uncertainties of the future.
Therefore planning gives the manager a direction and a course of action which
enables him to allocate a time frame for activities and make maximum utilization
of the available resources.

2. Organizing. This involves the identification of what activities are to be done,

grouping those activities into sections or departments and delegating the activities
to particular individuals to carry them out.

3. Staffing. This involves the process of recruiting, training, developing,

compensating and evaluating employees who actually carry out the identified
needs. It also looks at the welfare of the employees to ensure that they are more
committed to their work. It thus look at aspects like employee motivation with
incentives like housing, medical facilities, etc

4. Coordination. On top of organizing, the manager always has a function of

coordinating different activities within the enterprise to ensure that every activity
gets the necessary support as required in the production process.

5. Leading. This involves guiding the employees about the procedures and work
methods in an enterprise. This could be through open communication so that the
information is passed to the and subordinates and the necessary feedback received
from them.

6. Controlling and monitoring. This deals with monitoring the different business
activities carried out within an enterprise. This could include the transactions that
have been carried out, stock and other properties of the business, etc. This ensures
the smooth running of the business and the achievement of the set goals and
objectives.

7. Motivation. A manager has a responsibility of ensuring that the employees are

comfortable. Motivation is a process of encouraging people to give their best
towards the achievement of the desired targets of the business. This can be done by
paying them well, offering them accommodation, showing concern for their
problems, etc.

8. Budgeting. A budget is a detailed plan that shows the use of financial and other
resources over a given period of time. It represents a plan for the future expressed
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in monetary terms. Managers always prepare budgets so as to control the business

activities.

9. Communication. This involves passing of information from one person to

another. A manager has a function of transmitting information to his or her
suppliers, workers and customers for successful performance. There should always
be open communication with employees and customers which should in turn bring
in feedback which helps a lot on improving the services offered.

10. Evaluation. Managers have a responsibility of making analysis on the general

performance of the business. An evaluation is carried out to measure the success of
the business in a given period of time.

BENEFITS OF ENTREPRENEURSHIP

BENEFITS TO AN ENREPRENEUR

1. Improved standards of living. A Successful business generates a lot of

profits which is a direct income to the entrepreneur. High profits from the
business enable the entrepreneur to meet most of his or her needs and this
improves on his standard of living.
2. Increased income and further investment. The entrepreneur`s income will
increase drastically and part of the profits can be used to make further
Investments.
3. Self –recognition in the community. A successful business and its owners
will highly be respected in the community because of the goods and services
they provide. This actually helps to attract more customers to the business.
4. Permanent address for the entrepreneur and the workers. A successful
business is one that is well established and permanent. Businesses provide a
permanent address for the owners and the employees.
5. Self- reliance and independence. When an entrepreneur carries out a
successful business, he or she gets to do things for him or herself and makes
independent decisions. The entrepreneurs will also be in position to meet
some his or basic needs.
6. Self employment. When one begins a successful business, he or she will
become self employed and as such therefore, will become a boss of him or
herself. This helps reduce on high levels of unemployment in our society
today.
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7. Helpful member in the society. When an entrepreneur operates a successful

business, he will employ a number of people in his business either directly
or indirectly. In this way he achieves self-respect for being helpful to the
community.
8. Development of skills. An entrepreneur on beginning a business gets an
opportunity to invest and develop his skills productively and resourcefully.
This prepares him for bigger business investments in future.
9. Self- confidence. An entrepreneur operating a successful business will easily
develop self confidence since she or he has security of his business.
10.Easy decision making. Decision making which saves delays become easy
since one person is in control and has authority to decide on the present
trends of the business.
11.Easy access to financial resources. A successful entrepreneur can always
use his other business to back him or her up as security in accessing funds.
This opens up one`s chances for further investments.

BENEFITS TO THE COMMUNITY

1. Businesses create employment opportunities in the community in which they

operate.
2. Businesses are sources of government revenue through its taxation policy.
These taxes are used for providing social services to the community.
3. Some businesses “give back” something to the community or society. They
provide donations to societies. Barclays bank for example facilitates areas to
do with education, HIV- AIDS, etc.
4. Some businesses provide different products that are consumed by the
members of the public.
5. Some businesses contribute to the community development programs. For
example supporting sports activities , environmental programs, etc
6. Some businesses help in disposing off wastage products from the
communities in which they operate e.g. some business recycle wastage
products, others use biogas, etc.
7. Businesses act as case study for others to follow. They are taken as role
model which is used in the development of projects.
8. Businesses employ a large number of people which leads to increased
income that result into improved standards of living.
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9. People employed by such businesses are able to acquire skills thus

contributing to the development of a big human capital base.
10.Some businesses create ready market for the products produced by people in
the society.

THE ENTREPRENEURIAL PROCESS / STEPS TAKEN WHEN

STARTING A BUSINESS

Starting a new business enterprise is a very challenging but a rewarding task.

Business needs planning right from the beginning. Entrepreneurs normally take the
following steps when they organizing or preparing to start their business.

1. Spotting/ identifying potential business opportunities. This involves scanning

the surroundings or environment to generate as many business ideas as possible.

2. Selecting business opportunities suitable to your back ground and feasible

in the market areas. From the many business opportunities, the entrepreneur
ranks them in terms of the ability to meet his business needs and then select one.

3. Assessing or carrying out a market survey for the selected business

opportunity. This involves checking whether the entrepreneur’s most preferred
business idea could be developed into a profitable business and whether it have a
competitive advantage over the others. The survey enables the entrepreneur to
determine how to select the customer needs, determine the target market, etc.

4. Preparing a business plan. A business plan is a written summary of the

proposed business venture including its operational and financial details. It helps
the entrepreneur to think through the business before starting it. Through preparing
a business plan an entrepreneur decides on how his business will be organized,
establish how much money will be reacquired to start and operate a business, etc.

5. Mobilizing necessary resources. These include funds, raw materials, etc as

Cleary laid out in the business plan. It may involve applying for the loan, sourcing
raw materials, the reacquired human labor, etc.

6. Selecting a legal form of business. There are several legal forms of business
ownership from which an entrepreneur can choose what suits his business. It
involves the completion of all legal formalities necessary for the selected business.

7. Identifying business location and acquiring land, buildings, equipments,

raw materials, skilled and unskilled manpower. In choosing the business location,
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factors like accessibility to transport and communication services, availability of

raw materials, nearness to the market in case of bulky products have to be
considered.

8. Preparing for and launching the business/ enterprise. While launching, large
quantities of the product should be produced and distributed to potential consumers
and customers.

9. Managing the business operations. This involves the carrying out of all the
management functions such as staffing, coordinating, supervising and monitoring
of the business operations.

THE BUSINESS PLAN

A business plan is a guiding document used in the implementation of the business

idea . It is a document which guides an entrepreneur on what to do, how to do it,
and when to do it. It is a control device against which management can measure its
achievements. It describes all the relevant external and internal elements involved
in starting a new venture such as new regulations, competition, social changes,
changes in consumer needs and technology or internal factors which an
entrepreneur has some control over like manufacturing, marketing and personnel.

Objectives or purpose of business plan

a. The business plan consists of an action plan which acts as a time table in the
implementation of various business activities in a sequenced manner. This helps
the entrepreneur to ensure that different activities are implemented at the right time
and as planned.

b. To clarify the idea. The process involved in creating a business plan means that
the entrepreneur has to ask a number of questions about their ideas . This should
ensure that before starting up, the business idea has to be considered with care.

c. To gain finance. The plan will be used as a means of showing potential

investors or tenders why the business will succeed. Banks insist on a business plan
before any loan or overdraft is granted. Private shareholders might invest because
they believe in the entrepreneur.

d. To monitor progress overtime. The business plan can be used as a working

document for the owner. Regular checks, particularly against the objectives and the
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financial forecasts included in the plan, can act as a useful indicator on how well
the business is doing. This can be the start of an ongoing monitoring process to
help the owner run an efficient organization in future.

e. To show direction. A business needs a plan so that it has direction to follow. The
business needs to know;

12.Where it is going
13.How it is going to get there
14.What resources it will need

Components (Contents) of a business plan

The major components of a business plan include:

1. Introductory page. This is the title or cover page that provides a brief summary
of the business plan`s contents. The introductory page should contain the
following;

 The name and the address of the company

 The name of the entrepreneur(s) and telephone numbers
 A paragraph describing the company and the nature of the business
 The amount of financing needed
 A statement of the confidentiality of the report. This is for security purposes
and is important for the entrepreneur.

The title page sets out the basic concept that the entrepreneur is attempting to
develop. Investors consider it important because they can determine the amount of
investment needed without reading through the entire plan.

2. Executive summary. This is the most concise form of the business plan, covering
all of the key points. It should be about three to four pages in length and should
stimulate the interests of the potential investors. The key points highlighted in the
business plan include; the nature of the venture, financing needed, market
potential, and support as to why it will succeed. As the most important part of your
business plan, this section should be prepared last.

3. Industrial analysis. It is important to put the new venture in the proper context.
In particular, the potential investor while assessing the venture on a number of
criteria needs to do an industry analysis in order to know which industry the
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entrepreneur will be competing in. Discussion of the industry outlook, including

future trends and historical achievements should be included.The entrepreneur
should also provide insight on new product developments in the industry.
Competitive analysis is also an important part of this section whereby each major
competitor should be identified, with appropriate strength and weaknesses
described particularly as to how they might affect the new venture`s potential in
the market. The market should be segmented and the target market for the
entrepreneur identified. Most new ventures are likely to compete effectively in
only one or a few of the market segments. Any forecasts made by the industry or
by the government should be noted. A high growth market may be viewed more
favorable by the potential investor.

3. Description of a business venture. Description of a business venture should be

detailed in this section of the business plan. This will enable the investor to
ascertain the size and the scope of the business. The key elements are the
product(s) or service(s), the location and the size of the business, the personnel and
office equipments that will be needed, the back ground of the entrepreneur(s) and
the history of the venture. Location of the business may be vital to its success,
particularly if the business is retail or involves a service. Thus the emphasis on
location in business plan is a function of the type of business. In assessing the
building or space the business will occupy, the entrepreneur may need to evaluate
such factors as; parking, access from road ways to facility, access to customers,
suppliers, distributors, and town regulations or zoning laws.

4. Production plan. If the new venture is a manufacturing operation, a production

plan is necessary. This plan should describe the complete manufacturing process (it
gives details about how product(s) will be manufactured. If some or all the
manufacturing process is to be subcontracted, the plan should describe the
subcontractor(s), including the location, reasons for selection costs and any
contracts that have been completed. If the manufacturing is to be carried out in the
whole or in the part by the entrepreneur, he or she will need to describe the
physical plant layout, raw materials, and supplier`s names, address and terms,
costs of manufacturing, and any future capital equipment needs. If the venture is
not a manufacturing operation but a retail store or service, this section would be
titled “merchandised plan” and the purchasing of merchandise, inventory control
system, and storage needs should be described.
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5. Marketing plan. The marketing plan describes how the products or services will
be distributed, priced and promoted. Specific forecasts for products or services are
indicated in order to protect profitability of the venture. Potential investors regard
the marketing plan as critical to the success of the new venture. Therefore, the
entrepreneur should make very effort to prepare a comprehensive and detailed plan
as possible so that investors can be clear as to what the goals of the venture are and
what strategies are to be implemented to effectively achieve these goals.

6. Organizational plan. The organizational plan describes the venture`s forms of

ownership i.e. proprietorship, partnership, or corporation. If the venture is a
partnership, the terms of the partnership should be included. If the venture is a
corporation, it is important to detail the shares of stock authorized, share options,
names and addresses of the directors and officers of the corporation. It is also
important to provide an organization chart indicating the line of authority and
responsibilities of the members of the organization. This information provides the
potential investor with a clear understanding of who other members will interact in
performing their management functions.

7. Assessment of risk. Every new venture will be faced with some potential
hazards, given the particular industry and competitive environment. It is important
that the entrepreneurs make an assessment of risks and prepare an effective
strategy to deal with them . Major risks for a new venture could result from
competitor`s reactions, Weaknesses in the marketing, production, or management
team; and the new advances in technology that might render the new product
outdated. Even if these factors present no risks to the new venture, the business
plan should discuss why that is the case. It is also useful for the entrepreneur to
provide the alternative strategies should any of the above risk factors occur . These
contingency plans and strategies illustrate to the potential investor that the
entrepreneur is sensitive to important risks and is prepared should any occur.

8. Financial plan. This is the heart of the business plan. It includes projected profit
and loss account, projected balance sheet for the end of first 6 to 12 months. Also
found in this section should include;

-The total cost of the setting up a business

-Financing and sources of funds

-Profitability of the proposed business

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-Returns on the investment expected

-The break even sales of the business

9. Implementation plan. An implementation plan sets out the logical stages you
will need to go through to turn your business ideas into the reality. It converts your
plans into action.

10. Appendix. The appendix of the business plan generally contains the back
material that is not necessary in the text of the document . Letters from customers,
distributors or subcontractors are examples of information that should be included.
Any document of information i.e. secondary data or primary research data used to
support plan decisions should be included. Leases, contracts or any other types of
agreement that have been initiated may also be included in the appendix. Lastly,
price lists from suppliers and competitors may be included.

Why some business plans fail

A business plan by the entrepreneur fails if it is not prepared properly and does not
analyze or address the issues involved in the new venture. The common failure
factors are;

a) Goals set by the entrepreneur are unreasonable

b) Goals are not measurable
c) The entrepreneur and his team have not made a total commitment to the
business
d) Inexpensive and error methods. i.e. the entrepreneur has no experience in the
planned business
e) The entrepreneur has no sense of potential threats and weaknesses to the
business ( no proper SWOT analysis has been made)
f) No customer need was established for the proposed prouduct or service
g) Poor handling of the financial matters
h) Un reasonable time schedules
i) No proper control for the business plan to ensure effective implementation

ENTREPRENEURSHIP DEVELOPMENT
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Entrepreneurship development is the deliberate end ever in human resource

development which is usually under taken by the state or community with the
major aim of;

i. Developing competence among participants to start, manage and

develop enterprises.
ii. Develop greater understanding of entrepreneurship as a means of
providing and enabling development for entrepreneurs to thrive.

Entrepreneurship development pre-supposes that, although certain characteristics

are in-born, the bulk of entrepreneur characteristics can be developed.

Barriers to entrepreneurship development

Barriers are factors that hinder the development of entrepreneurship. These can
arise at individual level, environmental levels and at firm levels.

Barriers at individual level

Individual weaknesses pose the biggest barrier to entrepreneurship in many

economies. Such barriers are normally ignored as focus is normally on the
environmental factors. This is because there can be a solution to this weaknesses.
These barriers include;

1. Poor entrepreneur skills. Most entrepreneurs and potential entrepreneurs are

short of entrepreneur skills. They are risk averse; lack self confidence, self drive,
creativity, determination, persistence, etc.

2. Lack of business and technical skills. People require business skills in

accounting and management skills to manage their businesses .Some ventures also
require special technical skills to set up, manage and operate.

3 .Low mobility and exposure. This offers the biggest revelation for new
innovations and drive to entrepreneurship. However, many people do not travel a
lot, do not read widely enough and do not explore and investigate. As a result,
highly educated people remain largely narrow minded . This limits the creativeness
and innovativeness of potential and practicing entrepreneurs.
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4. Lack of role models. Uganda is seriously short of role models in the field of
entrepreneurship which limits a number of people who are willing to aspire for a
career in entrepreneurship. Many people have a low opinion of struggling
entrepreneurs while they consider a few successful entrepreneurs to be super lucky
individuals who can only be admired but not emulated.

5. Lack of business ethics. Many ventures have failed or have been compromised
because of unethical behavior such as unpaid loans, unpaid employee, unpaid
suppliers, substandard goods, tax evasion, corruption, smuggling, etc,characterise
many businesses in Uganda. While such tendencies could result in quick profits,
many times these ills come back to haunt the entrepreneur and sometimes ripping
him down completely.

6. Career dependency. Ugandans especially the educated have a long dependency

on their careers to provide for their livelihood. Entrepreneurship has for long been
regarded as the last resort left for uneducated. Although this mind set is changing,
its effects are still a bigger barrier to entrepreneurship in Uganda.

7. Complacency (lack of motivation). Because of lack of role models and limited

exposure, entrepreneurs in Uganda tend to be satisfied by small achievement . The
tendency to celebrate success prematurely limits the growth of the business. The
majority of entrepreneurs are motivated to start a business in order to secure
sufficient income to the family and complacency sets in once this is achieved.

8. Lack of continuity. Very few firms tend to survive the demise of their founders
while others diversify and change very faster before gaining the required
experience. Lack of continuity affects the running of the firm and therefore long
term compositeness of their firm.

Barriers arising from the environment

1. Political stability. This dogged Uganda since independence. This state of affairs
has robbed Uganda of many entrepreneurs. They have lost life, time, saving, and
business assets while some have been closed due to instability.

2. Business administrative procedures. Difficulties in administrative procedures in

establishing a business is complex and burdensome. As a result, businesses are
forced into the informal economy.
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3. Government economic business policy. The formulation and delivery of

business policy in Uganda is still based on the narrow conception of big
businesses. While little or no specific attention is given to the circumstances and
needs of the entrepreneurs.

4. Lack of access to finance. Banking system and practices in Uganda impose

impossible demands for the entrepreneurs. Banks have little incentives to extend
credits and therefore the terms of credit are unreasonable requiring difficult to its
collateral and guarantees to secure loans.

5. Low purchasing power. Low incomes and high levels of unemployment limit the
purchasing power of a relatively small population. This makes it hard for
businesses in general and entrepreneurs in particular to acquire the necessary
economies of scale.

6. Poor infrastructure. Uganda is still plagued by very poor physical and social
infrastructure in terms of roads, electricity, water, schools, hospitals, etc.

7. Economic instability. Due to over reliance on donor assistance and borrowing

the import bills by far outweighs exports over reliance on imports. The Ugandan
economy is easily destabilized by small changes in the international environment.

8. A stigma attached to failure tends to discourage entrepreneurs

9. Lack of willingness to change

Some possible solutions to barriers

1 .Adequate market research, to provide immediate information about the market

2. Lack of enough capital can be solved through credit assistance by setting up

credit societies, reducing interest rates and increasing loan repayment periods. The
introduction of Bonna bagagawale(prosperity for all) scheme by the Ugandan
government which has led to the formation of many SACCOS across the country
is the step in the right direction.

3. Capable local advisers should be trained or made available to handle issues like
project viability.

4. Technical education and support should be provided.

 22

5. Referring to successful role models constantly can solve social stigma.

6. Market contacts and updates should be availed so as to enable the entrepreneurs

to keep in touch with the market and be able to know the needs and the tastes or
any changes that may arise

7. Local companies may be set to research and come up with viable ventures that
entrepreneurs can undertake.

8. The government should ensure that the nation is politically stable to encourage
investment.

9. Improvement of infrastructure should also be given priority to ease the

flexibility of flow of goods and services.

WOMEN ENTREPRENEURS

The traditional perception of women as a helper in the occupation of the husband

and a home maker is gradually vanishing.

Women have started providing themselves in many fields including

entrepreneurship. Quite a large number of women entrepreneurs have set up their
enterprises and are managing them very well.

The realization that women are evaluable human resource has been gaining
ground. Recognition of their services as a necessary sub-system of the centric
social- economic system is gradually becoming part of modern attitudes. Many
factors and developments have influenced women to make up entrepreneurship.

PROBLEMS FACED BY WOMEN ENTREPRENEURS

1. Female entrepreneurs do engage in the operations and management of small

enterprises in various sectors of any economy and this creates a new
dimension in a male-dominated economy However, in their attempt to do
business, they face a number of challenges in all the business under takings.
These challenges include;

Personal problems,

-Lack of family and community support

-Male dominated society

-Lack of education and information

 23

-Economic backwardness

-Low risk bearing capacity

-Family responsibility

Managerial problems

 Lack of knowledge of general management and management experience.

 Lack of skilled labour
 Labour absenteeism and labour turnover
 Lack of clear cut objectives
 Transportation problems as women

Marketing problems

 Lack of knowledge of how to market the products and whom to contact.

 Heavy competition with big enterprises.
 Exploitation by middle men and difficulties in collection of dues.
 Inadequate sales promotion avenues.
 Lack of export marketing support.
MEASURES IN ASSISTING AND PROMOTING WOMEN ENTREPRENEURS

To widen and strengthen the base of women entrepreneurship, the following

remedial measures may prove meaningful;

1. To solve financial problems, the government and financial institutions should

draw and implement special lending policies like removing of collateral, quick
processing of loan and liberal repayment schedule to women entrepreneurs.

Also financial management training programs should be conducted by government

and other organizations.

2. To solve the marketing problems, governments and voluntary organizations

should conduct and elaborate marketing trainings to women entrepreneurs.
Governments should make arrangements to conduct exhibitions and conferences of
women entrepreneurs.

3. Attention of government and voluntary organizations need to be drawn to rectify

social- personal problems. A special program can be conducted against social
emits.
 24

4. Attention of government should be drawn in rectifying the production problems

by giving subsidies of materials supply, assistance for up- gradation of technology,
research and development and giving production trainings to women
entrepreneurs.

ENTREPRENEURSHIP AND ECONOMICS GROWTH AND

DEVELOPMENT

The study of entrepreneurship has relevance today, not only because it helps
entrepreneurs better fulfill their personal needs but because of the economic
contribution of the new ventures.
More than increasing national income by creating new jobs, entrepreneurship, acts
as a positive force in economic growth by serving as a bridge between innovation
and market place.

Economic growth is the process by which a nation`s wealth increases over an

extended period of time. It is a persistent quantitative increase in the value of
goods and services produced in the country in the period of time.

Economic growth is usually distinguished from economic development where by

the latter refers to the process by which real GNP per capita increases
quantitatively and qualitatively over a very long period of time in the country.
Whereas economic growth is measured by increase in GNP, economic
development is measured by the increase in real per capita income or by measuring
the increase in things which improve the quality of life of man e.g. medical care,
housing, food etc

According to the American economist W.W.Rostow, economic growth begins

somewhere between the stage of take-off and the stage of maturity whereas to the
Australian economist Colin Clark, economic growth is between the stage
dominated by primary and the stage dominated by secondary production. The most
striking aspect in such development is generally the enormous decrease in the
proportion of the labor force employed in agriculture.

Factors of growth

Broadly, growth is achieved by; improvement in productive capacity and

technology, checking on population, availability of markets and a favorable
environment for growth.
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The aspects/indicators of growth below are the basis for entrepreneurial

development.
1. Increasing the quality and quantity of natural resources e.g. through exploitation
of land, water resources, forests, etc. Also improvement of quality of existing
resources e.g. through irrigation and use of fertilizers in case of land, improving
methods of fishing, lumbering, mining, etc.
2. Capital accumulation through;
 Public works, forexample people constructing feeder roads
 Increasing savings by individuals, firms and the government
 Accumulation of foreign exchange through increased exports and seeking
for foreign aid.
3.Technical progress which includes inventions and innovations. This increases
productivity of capital and tends to create new products. There is also a need to use
an appropriate technology e.g. to use labor intensive technology in LDCs where
labor is in plenty and cheap
4. Increasing the quality and productivity of labour through:

 Education both formal and informal

 Improvement in health of workers. This increases the supply of labor (time
worked for per period of time) and the ability to work.
 Improving the working condition and employment policies.

5. Encouraging the development of entrepreneurship and to employ expatriates

when there is shortage of entrepreneurs.

6. Specialization which increases the efficiency of factors of production which

results into time saving, acquisition of experience by workers .etc.

7. Checking on population growth through family planning and other population

policies. This leads to persistent growth of GNP per capita.

8. Availability of markets; these include,

a) Domestic markets which depend on income distribution, consumer`s tastes

and preference, transport and storage facilities, etc.
b) Foreign markets which can be improved by economic integration,
negotiating for high prices of exports, etc.

9. A favorable environment for growth which includes;

 26

a) Economic environment e.g. stabilizing prices, tax structure which is

favorable to incentives to work, improving economic institutions etc.
b) Non-economic environment e.g. improvement in political stability,attitude
towards work, and favorable government policy.

The social cost of growth

Much as economic growth is what all nations desire, it attributes to the growth of
undesirable side effect of industrialization such as traffic congestion, increasing
pollution of air and water, the despoiling of the land scape, and a general decline in
man`s ability to enjoy the real amenities of life (leisure is foregone since growth
requires hard work and loss of energy).

Growth may also lead to deterioration of resources e.g. loss of land fertility,
depreciation of capital,etc.

Industrialization leads to development of slums and hence crimes, theft, etc.

PROMOTION OF GOODS AND SERVICES (Marketing Communication)

Promotion is communication with individuals, groups or organizations in order to

facilitate exchanges by informing and persuading an audience to accept the
businesses` products.

The various communication tools used in promotion of goods and services include;

1 .SALES PROMOTION

Sales promotion refers to the various methods or activities adopted by a firm to

increase its sales in order to earn more profits or it is a term used to describe a
category of techniques which are used to encourage customers to make a purchase.
These activities are effectively short term and are used for the following purposes;

-To increase sales.

-To stabilize sales.

-To help with personal selling.

-To respond to the actions of competitions.

-As an effe-ctive alternative to advertising.

-To expand the market share.

 27

-To inform or remind the public of the existing product.

-To reward loyal customers by giving them free gifts or price reductions.

-To locate the product position in the market by targeting a particular market
segment.

Tools of Sales promotion

Among the sales promotion aids often employed by firms are;

1.Free samples

This involves giving and distributing free samples to potential customers so as to

get them interested and consequently buy a product . Producers expect that those
who receive the samples also encourage others to buy the products.

2.Free gifts

This involves giving out free gift to any customer who buys a firm`s products of a
specified value so as to motivate him/her to come back next time. forexample, a
customer may be given 3 packets of omo or soap, free of charge when he/she buys
goods worth shs. 10,000.

3.Price reductions.

This is a deliberate attempt by producers to slightly lower the prices so as to boast

sales. The prices are reduced for a specific period and it is hoped that the old and
new customers will continue to buy even if price reductions are removed.

4. Prize awards. This is where the producer announces a competition through a

mass media e.g. on a radio, television or newspapers offering a number of prizes.
He normally asks a simple question to encourage many to participate. Participants
may be required to enclose cables of manufacturers products and in this way every
participant will have to buy the manufacturer`s product. The producer hopes that
even after the competition, customers will continue buying the products of the
firm.

5. Display. This is creative treatment of merchandise so attractively arrange as to

win the attention and spark the interest of viewers.

6. Public relations. This involves keeping the public informed of new products and
changes of existing products. An organization will often deliberately try to ensure
 28

that the public is kept informed about its trading and other activities. It is done in
order to create, establish and maintain mutual understanding between an
organization and its public.

7.Credit facilities. In order to boost sales, traders/ firms often offer credit facilities
to their trust worthy customers. Thus customers are asked to pay latter at an agreed
date, say after 14 days, 30 days, etc. This method however, requires a lot of paper
work and credit rating of customers.

8.Politeness to customers. This method is most suitable for small businesses that
have no money to spend on advertisement. A small -scale business can still
promote sales by way of greeting, smelling and joking with customers.

9.Self service . This is a system where by customers help themselves with the
goods they want to buy. Super markets mostly adopt it where customers are given
freedom to choose goods they want to buy. This freedom encourages them to come
back and buy more goods.

10.Rebates .

Are promotional pricing tactics, they offer customers partial refund of the money
they spend for specific items they purchase.

11.MPs (push money).These are modest sums of money paid to salesmen as

incentives to encourage greater selling efforts .

12.Branding

A Brand is the name given by a firm to a product or a range of products. It may

also involve giving particular slogans and trademarks to a product to distinguish it
from other similar products or other manufacturers e.g. for toothpaste we have
brands by the names like Colgate, deli dent, ABCdent, etc.

A product may be liked because of its name and this will boast sales.

An organization business can also promote sales through improvement in the

quality of the products in its colour, size, taste, packing, etc.

2.ADVERTISING

Advertising can be defined as a paid for type of marketing communication that is

non-personal, but aimed at a specific target audience through a mass media
channel. Advertising must be a communication directed at a targeted market and
 29

should draw attention to the characteristics of a product, which will appeal to the
buying motives of potential customers.

Advertising Objectives

There are basically two advertising objectives.

1.Promoting goods and services

-To assist with selling

-To increase sales.

-To develop awareness of new products or development of existing products.

-To provide information that may assist will selling decisions.

-To encourage the desire to own a product.

-To generate inquiries.

2.Developing the image of the organization.

-To provide information for a target audience.

-To soften attitudes.

-To assist with public relations activities

-To provide better external environment

-To develop support from a community

Importance of advertising

15.Advertising has a lot of importance to an enterprise. This is explained in the

following points;
16.Advertising increases demand for goods and services leading to mass
production hence increased profits.
17.It creates awareness to the customers of what the business enterprise has for
sale and hence its products become known.
18.Advertising encourages frequent use of the firms goods or services resulting
in increased sales, mass production and hence more profits.
19.In some cases advertising reminds the customers about the firm`s goods and
boasts sales in areas where consumption is low or declining.
 30

20.Through advertising, the business firm can inform its customers the use,
price and special offers of its products. In doing so the business enterprise
gains reputation.
21.Advertising help the business enterprise to keep in touch with its customers.
22.Advertising enables a business to outcompete its rival companies and thus
may gain monopoly status.
23.It helps a business firm to become popular and also to acquire good will.
24.It helps to widen the market of the firms product or goods.

Types of advertising

Advertising is often classified under one of the three headings:

1.Informative advertising

This conveys information and raises consumer`s awareness of the features and
benefits of a product. It is often used in the introductory phase of the product
lifecycle or after modification.

2.Persuasive advertising.

This is concerned with creating the desire for the product and stimulating
purchase . It is used with established and more mature products.

3.Reinforcement advertising

This is concerned with the reminding consumers about the product and it is used to
reinforce the knowledge held by the potential consumers about the benefits to be
gained from the purchase.

Advertising media

This refers to the means through which advertisements are conveyed to the public.
The success of advertisement depends on the message and the media chosen.

Advertisement medium that can be used to convey message to the public. The
common advertising media include among others; newspapers, magazines, radio,
television, billboards, and sign posts.

Choice of media to use

The choice of media requires consideration of the following factors;

 31

1.Cost of medium. A producer must consider the cost in relation to the value of the
product to be advertised . Expensive products can be advertised in expensive media
like television, newspapers, and magazines . Cheaper products and services should
be advertised in cheap media.

2.The coverage. If the advertisement is to be addressed to a wide geographical

area, then a media that can cover such area should be used . In this case, radio,
television, and newspapers are more appropriate . When the advertisement is
intended for individuals in small area, such as a trading centre, then posters and
window display are more effective.

3.The social class.The advertiser should consider the social class to which the
medium appeals. If the advertisement is intended for ordinary people, then
newspapers, radio, and poster are more effective, while if it is for a wealthy class,
television and magazines are appropriate.

4.Speed and urgency. Urgent information on goods and services should be

advertised in media which is fast like radio, television. Others like magazines and
trade fairs take long.

5.The age group . Goods or services which appeal to the youth should be
advertised through magazines, cinema halls, and at times on televisions.
Advertisements for the middle-aged and mature people should be should be
advertised through radio and newspapers.

6.The message to be communicated. If the product or service to be advertised

requires giving detailed information then written forms of communication e.g.
newspapers are likely to become more effective. While if the product or service to
be advertised requires an image, then a dynamic and colorful television advert is
possibly more effective.

Criteria followed when preparing an advertising message

Any advertising you use for your business should be designed primarily to inform
people about your products/services and to persuade them to buy. Hence whatever
the medium you select the following guidelines should be followed when preparing
advertising messages:-

 The heading should emphasize benefits to customers and should easily be

identified e.g. faster and efficient services, cheap sales, quality goods.
 The contents of advertisement should be easy and simple to understand.
 32

 The space provided should be used carefully. One should not fill the whole
space with words or pictures for purposes of clarity.
 An advertising message should appeal to people`s wants and needs.
 You should be honest in your advertisement and therefore able to deliver as
promised.
 One should stress the desirable features of the product or service.
 The advertisement should inform the customers where they can buy the
product or service and also provide other useful information like telephone
contact.

3 .PERSONAL SELLING

Personal selling or direct selling involves interaction between individuals or groups

of individuals. It is where teams of sales force are employed to sell the
product/services to customers. It is normally adopted when launching a new
product on the market. It may involve sending sales men to visit customers in their
homes and offices and discuss with them about the new product sold by them.

The key benefit of personal selling is that it offers the potential customer
individual attention.

As a method of communication, personal selling is useful to firms in the following

ways;

 It introduces a product to appropriate audience

 It develops awareness and interest in the product.
 It explains how the product or service works, and to explain technical
details.
 It helps to obtain orders for the product, and even to deriver it.
 It encourages test marketing.
 It helps gain rapid feedback about and suggestions for ongoing
improvements
 It helps develop good relations with business customers
 It helps have wider market coverage by employing agents in various
geographical areas.

Disadvantages of personal selling are;

 33

-It is costly

-It is labor intensive.

-Some potential customers are not happy about being visited by a sales
representative.

Steps and process of personal selling

The process of personal selling consists of the following steps;

a. Presale preparations. This is the first step and it involves recruiting, training and
motivation of sales person. A good sales person must have knowledge of himself,
business, product and their qualities, target customers and selling techniques.

b. Prospecting. This is the process of locating business customers. It is done

through asking the already existing customers for names and other potential
customers who would want to benefit from the product or services.

c. Pre- approach. This involves doing ‘home work ‘on customers` habits,
preferences, income levels, attitudes and beliefs. The sales force must study and
analyze these aspects because they help in selecting the right sales appeal when
meeting the customers.

d. The approach. This is meeting face to face with the customers. The sales person
introduces himself and the product of the firm in a polite and dignified manner. For
this matter, in order to attract the customers` attention, the agent must be smartly
dressed, greet the customers with a smile, look at the customer squarely in the eye
during interaction and be confident of yourself and time properly when meeting the
customers.

e. Presentation. This is basically opening up sales. Here the agent presents the
product to the customer mentioning and explaining the unique features that may
not be self-evident. He tells the customer the price, terms and conditions of
payment and delivery.

f. Demonstration. To maintain customer`s interest and create desire, the agent

demonstrates how the product works and helps to meet customer`s needs. He
should explain its utility and unique features and qualities. After demonstration the
customer should be given a chance to try, touch, and handle the product to have a
taste of it.
 34

g. Handling objections. During demonstration doubts and questions may be created

in the mind of the customer. The sales person should clear these tactfully without
loosing temper. The best practice is to listen to the customers` complaints and clear
his doubt by giving assurances. The agent should be patient, should the prospective
customer put too many queries and takes time in arriving at any decision. Even
after cleaning all doubts and the customer does not buy, the sales person should let
him go without showing temper.

h. Closing sales. This is regarded as the peak or the climax in the selling process. A
successful close of sales is the main purpose of selling process and the customer
must be inclined to visit the customer again. In closing the sale, the product should
be packed properly and handed over to the customer with speed and accuracy.

r. Post sale follow up. This is the last stage in the process of personal selling. It
refers to the activities undertaken to ensure that the customer is satisfied with the
article / service. This therefore includes such activities as installation of the
product, checking and ensuring its smooth performance, maintenance and offering
after sales services. This helps to encourage repeat sales.

RESOURCES NEEDED FOR AN ENTREPRENEUR

The term resources refer to the endowment that exists in an area or locality. Some
of these resources are helpful in entrepreneurship management and they include;

Human Resources

The term human resources simply refers to managers and employees within a
business,and implies that they are viewed as resources in much the same way as
finance, land, premises and equipment.

Material resources

These are physical resources and may include such things as minerals, buildings,
water, trees, etc.

Information
 35

This is the possession of the requisite knowledge on various aspects of life which
is necessary for development by members of the community. A business / firm
needs information about what resources they are, where they are located and in
what quantities and quality they are available . It also needs to know how the
supply of a particular resource relates to the demand for it.

Financial resources

Financial/ resources is the expression which describes those funds that are used by
a business to acquire the asset which it needs to trade successfully and to settle the
liabilities which accrues during its trading activity.

These funds may consist of investment or share capital put in by the owners or
subscribe by lenders, such as banks or other financial institutions, shareholders,
along with loan capital provided.

Technology

Technology is the application of scientific knowledge in business or industry . It

refers to the machine, equipment and tools that are used to increase the quality and
quantity of goods and services.

BUSINESS OPPORTUNITIES

A business opportunity is a prospect of going into a successful business brought

into by identified gaps in the market or the market`s needs that are not being
satisfied.

Here below is a list of opportunities:

Farming

Carpentry

Stationers

Men`s fashion shop

Timber selling

Charcoal selling
 36

Ladies fashion shop

Children`s cloth shop

Fish processing

Mining

Newspapers

Boat construction

Sports goods store

Furniture store

Baker

Greengrocer

Fishmonger

Butcher

Restaurant

Cafe

Bookseller

Photographer

Hard ware store

Car repairs

Tyre and exhaust centre

Builder

Secretarial bureau

Health centre

School
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INDICATORS OF THE A VIABLE BUSINESS

1. Availability of market. That is to say that people or institutions are willing

and able to buy the products or services.
2. Availability of resources. For a business to be viable the necessary resources
should be available e.g labour,capital, raw materials, technology etc.
3. The returns on investment should be high. This implies that the expected
profits from the business should be accepted by the entrepreneur
depending on the level of investment
4. Availability of required skills i.e skilled manpower should be available and
affordable.
5. Availability of social infrastructure such as schools, roads, hospitals, Banks
power are an indicator for a variable business.
6. Government policy should be favorable to encourage the activities of the
business to man smoothly e.g. taxation.

SOURCES OF BUSINESS IDEAS

Business ideas are the starting point when one is starting a business. The following
are the different sources of business ideas.

1.Through the press like newspapers, magazines, radio, television. This is mainly
because most developments, policies, priorities are communicated and published in
the press.

2.Through having discussions or interviews with successful entrepreneurs to find

out from them on some business issues, seek their views and suggestions and get
their comment on some situations.

3. Technical skills and experience possessed by individuals is an important source

of business ideas. These have the opportunity to think deeply about given
situations including designing better ways of doing things as well as better
products.

4. Business ideas can come out through observation of the developments and
changes taking place in and around the community. One is able to find out the
changes coming up and the needs that are becoming important.
 38

5. Personal contacts with people in the same line of business expose them to
different and viable business opportunities.

6. Business ideas can be got from conducting surveys to find out what is happening
and the latest thinking and preference of customers, entrepreneurs plans,etc

7. Entrepreneurs may go into the market to observe the products that are being
sold, those that are lacking, those that could be improved on, and the gaps that may
be there.

8.Entrepreneurs may also check on the trends of changes taking place e.g. in
production, peoples incomes, who are becoming the major players and what are
becoming the topics or vital issues to be addressed in the community or area, etc

9 .Entrepreneurs can also source business ideas by visiting other companies, trade
shows and organizations to know the desired goods and services that are required.

SOURCES OF CAPITAL OR MONEY FOR A BUSINESS

Money is anything that is generally accepted for the settlements of debts and
obligations. It is a medium of exchange. In Uganda, money is inform of bank notes
and coins that are issued by the bank of Uganda. The following are the sources of
capital (money) for business.

1. Personal savings. One may keep part of his or her income with an aim of
starting a business . People may therefore reduce on their daily expenditures so
as to save. This is mainly applicable to businesses like partnership and sole
proprietorship.
2. Family contribution. Members of the family can contribute the business capital
in terms of money (funds), sponsorship for a course to gain skills, providing
fixed assets like land, building, furniture, machinery or even rendering free
services to the business.
3. Borrowing money (capital) . Business may raise capital through borrowing
from financial institutions such as banks, micro- finance institutions, money
lenders, free and then paid back with an interest depending on the terms agreed
upon during borrowing. However, this source should only be used as the last
resort, since it always attracts interest.
 39

4. Advances from customers. A businessperson can make contracts with major

customers like schools or institutions to supply them with goods. These
customers can pay in advance thus raising capital to operate business.
5. Trade credit. This is where the supplier offers the trader goods on credit and
does not demand cash down payment for them. Payment can be made later after
goods have been sold,etc. . The money received through borrowing must be
used by the business over an agreed period of time

This allows a business to accumulate profits on sales each time a trade credit is
offered there by raising capital to start and run the business independently.

6. Friends. An entrepreneur may have good and rich friends who are willing to
assist in rising capital for their friends to start a business. Normally such friends
always have a thinking that it is better to help a friend start a business rather
than leaving him or her to beg (bother) you all the time .
7. Fundraising/ grants/ donors. Some organizations like Uganda women effort to
save the orphans ( UWESO), The Aids Support Organizations( TASO), etc can
be a source of capital to specific individuals such as the orphans, the infected
and the affected . Such donations received in most cases are source of capital
for many businesses.
8. Selling shares. A share is a unit of capital. An entrepreneur may sell shares to
other people to help him raise large amount of capital for many businesses.
9. Gambling. Some entrepreneurs first risk their money and by chance they get
lots of money from gambling which works as startup capital. This is however
capital and work together. sometimes very risky and in some cases may be
illegal.
10.Merging. This involves both vertical and horizontal merging of companies .
Companies can pool capital and work together.
11.Inheritance. Some entrepreneurs get money and property from people who die .
These could be relatives or very close friends . Such money and property helps
them to start their own business.
12.Sales of personal property. Some individuals sell off their personal property
such as land, vehicles, and other assets so as to raise money to begin businesses.
13.Retained profits. This refers to the money, which is not given to share holders,
but is just re invested in the business. This can be an important source of
capital.
14.Participating in promotions. Different companies carry out promotions to
improve on their sales and sometimes offer cash prices. For example,
 40

companies like coca-cola, New vision, Zain, MTN,organize promotions

source of capital for businesses to some of the lucky winners. where the lucky
winners move away with cash prizes . This has been a

Advantages and disadvantages of the different sources of money in a business

a. Own sources. This includes money such as personal income, savings, etc.

Advantages

1.It allows an entrepreneur to make his or her own decisions, money any planning
and use of time he or she wishes.

2.The entrepreneur bears no direct extra costs e.g. interest charges, negotiations
delays and other inconveniences.

3. The entrepreneur has complete control over the benefits arising from his or her
business operations.

4. The entrepreneur is not subjected to external control over his business.

5. It promotes financial discipline on the part of the entrepreneur since the savings
are hard earned.

Disadvantages

-The entrepreneur may lose his or her personal resources in the event of failure

-Personal sources of funds may be too small to start a viable business.

-The entrepreneur bears all the business risks alone.

b.Gifts and offers from friends. This is some of the major sources of financing
business. These have both advantages and disadvantages.

Advantages

-There is freedom and may not have direct costs .

-They may top up the limited resources of an entrepreneur

Disadvantages
 41

-May have strings attached to them, which may be expensive and

inconveniencing.

-They may not be timely since they come as and when the giver wants.

-They create dependency relationships and unnecessary interference in ones

business.

-They are not reliable . This is because the recipient has no control as to when they
will come. how much will come

-Due to many strings attached to them, it may make them expensive and
inconvenience.

c.Loan. Many businesses cant survive without loans. Loans may be obtained from
family members, friends, well-wisher, financial institutions, etc.

Advantages

-It makes extra resources available to an entrepreneur .

-The external monitoring and added interest in the business operations enforce hard
work and discipline on the part of the borrower

Disadvantages

-The payment obligation may be too tight and cause the borrower to have cash
flow problems.

-The borrower is subjected to external control over his or her business.

-At times the loan funds may not be available at the time when wanted.

-The borrowing entrepreneur may pay interest and other loan charges and fees on
the borrowed funds which increases his or her operating costs.

d.Trade credit/ suppliers credit . As already discussed, businessmen can be

supplied with goods on credit and pay the suppliers later after selling goods.

Advantages

1. It enables a business to obtain the needed business suppliers (raw materials

and services for the production process)
 42

2. There may be no interest charged on the raw materials or goods obtained on

credit hence profits of the business may increase.
3. It reduces the costs of looking and ordering for the products. It reduces the
operation costs for the business e.g. reduces costs of looking for the products
from various suppliers.
4. Reduces the storage costs of the suppliers for the product.
5. Enables the supplier to continue in the production due to the available
demand .
6. May create a good relationship between the business and the supplier
7. Increases the profit level of the supplier since such products are usually
sold at higher prices than those sold for cash.
8. Saves time that would be spent looking for supplies from far away suppliers.

Disadvantages

1. It may be associated with higher cost prices. This is particularly so where the
entrepreneur has no choice of changing to another supplier.
2. May lead to inferior goods and services being supplied since there is no
competition .
3. It leads to inflexibility in planning the sources of supplies.

PROCEDURES FOLLOWED WHEN BORROWING

1. Identifying a business opportunity

2. Carrying out a market survey on the identified business opportunity
3. Developing a business plan for the prospective business and establishing
a total funding required
4. Developing a plan showing how the business will be financed and the
possible sources of funding to close the gap.
5. Identifying and approaching a possible financier.
6. Obtaining the terms and conditions for the loan to be availed from the
preferred financier.
7. Comparing the terms and conditions with those of other financiers in a
similar business or sector.
8. Checking the business plan to establish the implication of the loan to be
acquired (in view of the cost associated with borrowing e.g. interest, loan
fees and charges) to the business.
 43

9. Carrying out discussions with the chosen or preferred financier.

10.Obtaining and using the loan for the intended purposes and according to
the lending terms and conditions agreed upon.

MAJOR TERMS AND CONDITIONS FOR BORROWING

These are mainly guidelines that have to be agreed upon by the lender and the
borrower for accessing, using and repaying a loan. Lending terms and conditions
often cover the following areas.

1. Loan size. This is the amount of loan (money) to be given by the lender
to the borrower. For example a loan of UG shs. 100,000,000.
2. Interest rate. This is the interest that the borrower has to pay to the lender
for taking and using the loan such as borrowing at an interest rate of
14%.
3. Security. Most lending institutions ask the borrower to provide them
with assets or property, which they could sell to recover the loan in
case the borrower fails to repay the loan. These could include buildings,
land, car log book, etc.
4. Loan fees and service charges. This may be required to be paid by the
borrower in addition to interest charges . These may include loan
application fees, loan processing fees, etc.
5. Pectoral bias . These are loans that may be given with a view of
promoting certain sectors, activities and areas of operation . For that
matter there for borrowers who fall into such categories will be given
priority by the lenders.
6. Loan installments. These are the small parts of the loan, which will be
paid at a time either on a weekly, monthly, and half yearly, or annual
basis.

Factors influencing terms and conditions for lending

1. The nature and type of the borrower. For example, is the borrower new or an
old client, his level of credit worthiness, etc all do influence the terms and
conditions on which one can access a loan.
2. The nature and the type of the lender. This takes into consideration the type
of the lender, i.e. is it a formal lending institution, individual lenders, etc.
 44

3. The nature of business. Or project to be funded also influences the lending

terms and conditions. Some projects are long term while others are short or
medium term; some businesses are more risky than others . Such facts there
for have to be considered and greatly influence the lending terms and
conditions .
4. The sources of funds being lent out also greatly influence the lending terms
and conditions . For example money could be from the government like
bonna bagaggawale ( prosperity for all), private institutions, international
agencies, like the International Monetary Fund ( I M F) and the World bank,
etc. Different sources have different policies in relation to their funding
hence influencing the lending terms and conditions.
5. The prevailing government policy that influences the activities of the
borrower greatly influences the lending terms and conditions . For example
government sometimes through the central bank advises the lending
institutions on what interest rate to charge on the borrowers thus indirectly
influencing the rates of interest charged.
6. The level of economic activities in the country also does influence the
lending terms and conditions . For example there could be a period of a
depression where the level of economic activity is low, this will lead to low
rates of interest and” fairer” lending terms. On the other hand, when there
is a boom, interest rates may raise and conditions of lending may become
“harder.”
7. The time period for which the loan or credit is required and when it will be
paid influences the term and conditions of lending . When the credit is
required at a short notice and the terms could be “tougher” than when the
time period when a credit is required is long. It is also obvious that the
longer you use the credit, the higher the rates of interest
8. The amount of loan or credit also influences the lending terms and
conditions . Higher amounts of money call for stricter terms and
conditions for loans while smaller loans may not. At Barclays bank of
Uganda for example, the rate of interest on a Barclays loan reduces as the
loan amount taken increases
9. The number and level of competition from other money lenders influence
the lending terms and conditions .When there are many lenders and the
competition is high, the terms are fairer. On the other hand, when there are
few money lenders, the terms and conditions tend to be a little bit harder.
 45

10. The level of demand. For credit or the estimated number of borrowers
expected, influences the lending terms and conditions . When the number of
borrowers is high, lending terms and conditions tend to be higher than
when the number is small.

SAVINGS

Savings refers to part of a person`s income that is not consumed. It involves

sacrificing current consumption in hope of benefiting from increased future
consumption . It consists of voluntary and involuntary savings.

Importances of savings

1. Savings help to meet the future investment plans. For example savings can be
used to start a business, replace equipments, and also for investment purposes.

2.Savings are used as precaution for the future needs. People save income due to
the desire to provide for unforeseen problems that may arise in the future and
will require them to suddenly spend money . For that matter therefore , both
individuals and business hold some cash on bank accounts in reverse to meet
unexpected needs . Individuals save income to provide for illness, accidents,
unemployment, etc, . At times some business people keep cash in reserve to used
when unfavourable conditions arise or to invest and gain form un expected
deals.

3.Savings are used as a form of collateral security. The saving shows one`s ability
to manage a given loan. People can lend you more money when they look at your
savings. In many micro finance institutions, the amount of loans that a borrower
can access will always depend on the savings on his or her account.

4.The growth in value of savings or level of interest rates. When the rate of interest
rate ( value earned from savings) is high, people will be encouraged to save so as
to earn the high rates of interest are low, it will discourage many people from
saving . Instead of saving, people will spend a lot on consumption and other
investments

5.The level of political stability determines the level of savings in a given

economy. If a country is politically stable, people feel confident and safe to save
their hard earned earnings which results into high levels of savings . On the other
 46

hand, when a country is not politically stable, people lack confidence and are
uncertain about the future, which discourages them from saving.

6.The level of people`s incomes determines the level of savings. Individuals who
earn high incomes always have a chance to save more money than individuals
with low levels of incomes. This is because high income earners are left with a
lot of income after consumption that can be saved. Un like the low income earners
who spend almost their income on consumption . i.e. for basic needs . Low income
earners who earn hand to mouth incomes will always have nothing to save.

7.The stability in the value of money (rate of inflation) determines the level of
savings . Inflation refers to a persistent increase in prices of goods and services . It
results in the loss in value of money . If there are high rates of inflation people are
discouraged from saving for fear of losing value . On the other hand, stability in
value of money ( low rates of inflation ) encourages people to save resulting to
high levels of savings. People will always have confidence that their money will
not lose value.

8.The level of liquidity preference determines the level of savings. Liquidity

preference refers to the desire by people to have their wealth in cash rather than
investing it . Money is desired in cash form to finance investment, carryout
transactions for unforeseen circumstances, etc. The higher the degree of liquidity
preference, the lower the level of savings. On the other hand, the lower the level
or degree of liquidity preference, the high the levels of saving.

9.The marginal propensity to consume determines the levels of savings. Marginal

propensity to consume refers to the proportion of one`s additional income that is
spent on consumption. If the marginal propensity to consume is high, the level of
savings will be low, the level of savings will be high.

10.The marginal propensity to save determines the level of savings. Marginal

propensity to save refers to the proportion of one`s additional income that is
saved . if the marginal propensity to save is high the level of saving will be high
and when the marginal propensity to save is low, the level of saving will be low.

11.The availability of financial institutions and peoples confidence in banks that

facilitates easy saving determines the level of saving. People always tend to save a
lot when there are good financial institutions that would keep their savings safely.
On the other hand, levels of savings are low in cases where there is lack of
organized financial institutions to keep peoples savings.
 47

12.The levels of consumption (people`s consumption habits) determine the level of

savings. Some individuals tend to buy a lot of products that may actually not be
required. They therefore end up spending a lot of money on buying expensive
products thus saving very little. On the other hand, some individuals have good
consumption habits and only spend on what is necessary, they don`t spend
extravagantly and thus save a lot

13.The government policy in regard to income and savings determines the level of
savings. The government through its policies can encourage or discourage savings.
This is to do with taxation of people’s incomes, business activities, savings and the
national social security fund requirements, etc. Such policies will always determine
the levels of saving.

14.The level of speculations determines the level of savings. Businessmen will

always save a lot of money in speculation of benefiting from lucrative abrupt
opportunities that may come up. The higher the level of speculation, the higher the
level of savings. If speculation is low, the rate of savings may be low.

LEADERSHIP IN BUSINESS

Leadership refers to the ability of a person to influence other people to work

towards the achievement of a given set of objectives. This mainly involves
encouraging and guiding of people to follow a course of action aimed at realizing a
given set of actions. Qualities of good leadership include; innovative, self starter,
good decision maker, etc

LEADERSHIP STYLES IN BUSINESS

Leadership style refers to the behaviors that a leader exhibits (shows) as perceived
by the people he is leading in the process of influencing them to achieve certain
objectives. These are discussed below;

The task oriented style of leadership

With this style, there is little consultation. The leader with this kind of style has
less concern for other people`s welfare provided the organization or businesses’
objectives are being realized . The targets are being met by the business, if the
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products are of the quality demanded by the customers and deadlines are
observed.

The people centered style of leadership

This type of leadership involves the participation of people and consultation. It

puts emphasis on the welfare deelopment of employees.

The contingency style

In this kind of style,organizational performance is possible through balancing the

necessity to get work done while maintaining the morale of the people at a
satisfactory level.

Leadership is a function of a leader, the follower and the situations they are faced
with as well as the environment in which they operate. The style is dependent on
how favorable the situation is and the skills of the leader.

Qualities of a good leader

1. Responsibility and readiness to complete work.

2. Enthusiasm and persistence in following up the set goals.
3. Originality (thinking of new ideas) in problem solving.
4. Self confidence and self-esteem.
5. Willingness to accept consequences of his/ her decisions and actions.
6. Readiness to cope with stress.
7. Leading by good example.
8. Flexibility.
9. Dedication.

Leadership skills in business situations

An entrepreneur who is a good leader should always enforce teamwork among his/
her employees. To be able to do this, he or he should posses certain skills, which
will increase his or her competence. The following are examples of such skills.

 Diagnosis skill. This is the ability to assess and understand the situations
being confronted . It involves an analysis of what the situation is now and a
reasonable prediction of how it will be in in the future. The gap that exists
between the two is the problem that the leader should aim at changing.
 49

 Decision making skill. The success of any business depends on the

entrepreneurs ability to make appropriate decisions even if they may appear
unpopular as long as they are made after due consideration of all relevant
factors and their effects.
 Communication. Leaders should have the ability to understand and be
understood by others . They should have a good skill and tact of
communicating both orally and through writing . Leaders should relay
(pass on) information equally to all the employees . For people to be
influenced, they need to understand and accept what is to affect them.
 Conceptual skills. A leader should be in position to know and understand
the missions, goals, objectives and targets of an enterprise. He/ she should
be involved and a hard worker.
 Technical skills. Technical skills include the knowledge and full
understanding of the business`s production processes and systems including
the ability to use machinery and equipment in order to produce results in
line with the objectives of the business . These skills are normally acquired
through education, training, experience and exposure through on the job
work experience. Effective leaders are in most cases more knowledgeable,
skilled and experienced than most of the other employees whom they lead.
 Inter-personal skills. Leaders should be socially magnetic(attractive) in
character . As a result, leaders need the ability to to work with others and
make subordinates work together effectively and harmoniously . A leader
therefore, is expected to have good public relations, respect for
subordinates and clients, respect for procedures etc.
 Adapting skill. A leader should be flexible and sensitive to changes . This
will enable him/her to manage the over-changing customer tastes,
competition, costs and prices, technology as well as the business operating
environment

RISKS ENCOUNTERED WHEN CARRYING OUT A BUSINESS

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Business is all about risk taking. Whenever an entrepreneur enters business, he

should always weigh and assess the kind of risks to be involved in that business. It
is therefore advisable to comprehensively insure business against all the possible
risks. The following are the general risks that may be encountered in any business;

1. Damage or loss of goods in transit. At times, goods are damaged in the

process of transporting, loading, and offloading.
2. Fire out breaks. This can result due to poor workmanship in electrical wiring
or reluctance of leaving candles anywhere which can bring about fire out
breaks.
3. Theft or burglary.
4. Loss of money in transit for example when money is being taken to the
bank.

5. Machinery breakdown and consequence loss. This happens when one does
not service his machinery regularly or when one overloads or over uses the
machines in the production process.

6. Bad debts. This is where the person borrows money from a business but fails
to pay back.

MOTIVATION

The term motivation is derived from the word motive which means a desire or
need that must be satisfied. Motivation represents an unsatisfied need which
creates a state of tension that forces an individual to move directly towards
satisfying this need. Therefore unmotivated people are always under tension until
the need is satisfied.

Motivation is defined as a process of stimulating people to give all the best in order
to achieve organizational goals, therefore, motivation requires;

i. To look at questions like what is the driving force behind people`s goals
and objectives
ii. What are people`s needs and expectations and how do they influence
behavior and performance at work.

The role/ importance of motivating employees in an enterprise

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1. An enterprise that provides motivational incentives like financial and

personal development will always have a good image in the employment
market. This helps in attracting more customers hence more sales.
2. Motivation prevents employees from seeking alternative employment
opportunities elsewhere. If workers are properly motivated, they could have
no reason to move to other enterprises since they could be working
comfortably.
3. Motivation is also very important since it is used as a way of avoiding
strikes by employers. This is especially effective if employees are a bit
discontented with the firm.
4. It is through motivation that makes it easy to achieve the business set targets
such as increased sales, cost control, increased production, etc. If workers
are highly motivated, they could work very hard towards the achievement of
the set goals.
5. Team work that is a very essential aspect in an organization can best be
achieved through motivating members of an enterprise. Teamwork among
employees increases productivity in the long run.
6. If motivation is in terms of money, it helps on improving the employees `
standards of living. This in turn increases their commitment to the
enterprise.
7. Motivation helps in enhancing work to be carried out successfully. This is
because when an individual is motivated, he will put in more effort to work
hence the success completion of the work.
8. Human relations. Effective motivation creates job satisfaction which results
into warm relations between the employer and the employees. This is partly
because, when employees are encouraged to participate in management, as a
way of motivation, it leads to improved management labor relations.
9. Motivation enhances cooperation, loyalty and commitment in an enterprise.
This in turn leads to improved discipline.

Ways of motivating employees in an enterprise

1.Ensuring job security of the employees is one way of motivating the workers.
The employees must be assured of their job security, where by the employer will
not just come and all of a sudden dismiss them at any time he/she feels so without
prior notice.
 52

2.Employees can be motivated by giving them fringe benefits such as pension,

sick pay, sick leave, maternity leave, general welfare, etc,. This could make them
more comfortable which makes them serve the organization better.

3.Timely and adequate remuneration should be paid to workers as a way of

motivating them. When employees get a satisfying and timely payment for a given
amount of work done, they become highly motivated.

4. Promotions of workers objectively without any bias but only on merit are
another way of motivating workers. Employees could work hard in order to gain
promotions which increases the enterprise`s output.

5.Encouraging team work within an enterprise can motivate employees. When

employees work as a team they are greatly motivated which boosts their output.

6. Provision of on job training and sponsoring employees for further studies

motivates them and makes them to work with devotion.

7.Proper management of discipline at the work place motivates the employees.

Every employee could perform better when working in a disciplined environment.

8.Employees could be given special rewards. This should be rewarding for

specific good results on the work well done. This really impresses employees and
motivates them to work harder.

9.Sharing and showing concern for worker`s problems is a way of promoting and
ensuring motivation among the workers.

10.Ensuring open communication in an enterprise is a way of motivating

employees. Every employee should have an opportunity to openly communicate in
an enterprise without any special considerations of a particular group.

11.Practicing transparent management is way of motivating employees. The

administrators need to be honest and faithful to the people they are working with.
They should properly manage the funds of the business.

12.Employees should be given a chance to actively participate in decision making

as a way of motivating them. They could get involved in decision making in order
for them to have a feeling that they are part of the enterprise. This greatly
motivates them.
 53

13.Employers can motivate employees by ensuring that they are having pleasant
working condition/ environment. This enables them to work effectively with a high
level of devotion.

14.Organizing staff parties and giving out gifts at the end of successful periods by
management is another way of motivating employees. It creates a sense of
belonging to such an enterprise.

15..Undertaking performance appraisal can motivate employees in an enterprise.

This motivates employees to do better in his or her present job by giving him in his
or her knowledge of results, recommendation of his merits and opportunity to
discuss with his or her manager.

16.Special monthly recognition. Employees who have performed exceptionally

well should be given special recognition every month so as to encourage them to
always work hard. in many high performing organizations( HPO) today, they
always have( employee of the month) and in this way, they have managed to
motivate such employees to even perform better.

PERFORMANCE APPRAISAL

Performance appraisal is the judgment of employee`s performance in his/her job

based on various considerations other than productivity alone. The following
methods are used in carrying out performance appraisal.

Methods used in carrying out performance appraisal

1.Ranking method. This involves the arranging of employees in order of their

performance. this is usually based on their total ability on their job but sometimes
is according to a few characteristics

2.Grading. This is another method used in carrying out performance appraisal. It

involves categorizing employees in pre-determined grades according to their
performance. This can again be based on quality, quantity, and output.

3.The rating scale method. This is the most common method used in carrying out
performance appraisal. It consists of a list of personal characteristic features
against each of which a scale usually of five points for the manager to mark his
assessment of the employees.
 54

4.The open ended method. This is a comparatively recent innovation introduced

because of the dissatisfaction with the rating scale. it emphasizes the way that the
job is performed and the manager is expected to write a few sentences about
the subordinate and also hints on the employee`s performance.

5. The behavior expectation scale. This is sometimes referred to as behaviorally

anchored rating scale technique (BARS), mainly looks at the behavior of the
employee in the aspects related to his or her job.

Importance of performance appraisal

1. Performance appraisal motivates the employees to do better in their present jobs

since they are in position to get knowledge of results of their performance and
recognition of their merits and opportunity to discuss their work with their
managers.

2. Performance appraisal is needed in an enterprise to ensure that the workers are

efficient and effective. This is because workers will work carefully baring in mind
that there will be an appraisal at the end.

3. There is need for performance appraisal in an enterprise since it helps in

identifying the training needs of the employees. This is because after a
performance appraisal it becomes easy to identify areas of performance where
improvement could occur if appropriate training is given. This helps the enterprise
to clearly plan for its training needs.

4.Performance appraisal in an enterprise helps the managers to decide on

increments of pay to be made to each employee. This is particularly true in
cases where increments on employee`s salaries are made basing on merits. With
performance appraisal, therefore it becomes very easy for the employers to
increase salary without complaints from other members.

5. It becomes very easy to determine the future use of an employee in an enterprise

when performance appraisal is carried out. From the performance of each
employee it is easy to determine who shall remain in his present job, be
transferred, promoted, demoted or be dismissed. The best performers therefore
benefit from the appraisal.

6. Performance appraisal is used to determine whether employees have performed

according to the required or set standards.
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PERSONAL REQUIREMENTS OF THE BUSINESS

There are four personal requirements of a business. These are explained below.

1. Job descriptions. This is a written statement which outlines the duties and
responsibilities involved in performing a particular job. It includes
information on : duties and responsibilities i.e. who does what, when, and
why, the job title, a brief summary of the job duty station, reporting
relationships, working conditions, pay benefits,etc.
2. Job specification. These are detailed statements of physical and mental
activities involved in the job and these could include the relevant social and
physical environmental matters. This specifies the characteristics of the
individual who should occupy the job and they include both the physical
and psychological characteristics e.g. the general health, height, weight,
learning ability, vision, colour,fluency in speaking, qualification and
training, emotional stability, mental steadiness, etc.
3. Job grading. This involves the rating of jobs in order of value. They are
then divided into groups (grades) in order for each to have a basic pay rate or
range. This is followed by the working out of salary grade for each group
basing on broad characteristics of each grade in terms of knowledge and
qualifications, skills etc. here, terms of employment are normally reached
at through collective bargaining.
4. Job performance standards .This mainly looks at what is expected to be
the output for a given job. It involves the evaluation of one`s duties. If one
doesn`t perform as expected then he or she has failed.

Methods of payment of workers

1. Overtime payment. This is paid when someone works over and above his
normal working time. This normally happens when the work is required
urgently and therefore the worker has to be paid an extra amount for the
work done. This rate however varies according to the time or the day on
which the overtime has been done i.e. day or night time or weekend .
2. Piece rate. This is a method of payment where by one is paid for doing a
given piece of work. This is normally applicable to manual work or where
work done is easy to measure and quantify. The rate paid is agreed upon
before the work is done.
 56

3. Time rate is another method of payment of workers. It is a type of payment

arrangement where the payment is made basing on the time one will take
doing the work.
4. Contract based payment. This is the mode of payment where a given person
takes on a piece of work to be done and completed on a given time for an
agreed amount of money. The details of work to be done are specified and
a person who takes on the job does it according to the specifications.
5. Standard pay. This is the method of payment where workers are given a
fixed pay in a given period of time. This may be on month or weekly basis
irrespective of the amount of work done.
6. Bonus payment. These refer to the extra payment (reward) to a worker over
and above his regularly pay, which is normally given to workers who
perform especially so well.
7. Special wage additions. This is the method of payment where special
additions are paid to the employees during abnormal working conditions.
8. Cost of living allowance. This is the method of payment used in mainly
areas that have been affected by an increase in the cost of living. It is
commonly given as in response to arise in general price level to employees
who work in high cost areas.
9. Shift pay. This is a kind of payment for employees who work during unusual
or changing work hours. It is made to compensate them for the
inconvenience and hardship faced. The amount paid varies from industry to
industry.
10.Salary. This is a method of payment that is a fixed periodical payment to a
non-manual employee. It is usually expressed in annual terms, which
implies relative permanent employment relationships. Payment here is made
on monthly basis.
11.Wages. This is another method of payment mainly made to manual workers.
It is usually expressed as a rate per hour.
12.Payment in kind. This is a method of payment where employees are paid in
terms of goods or services instead of money.

ENVIRONMENT AND SOCIAL RESPONSIBILITIES OF A BUSINESS

 57

Environment refers to man`s surrounding and what is found in it. It consists of the
social, economic, and geographic factors together with the natural environment
which includes; land, water, animals,etc.

Environmental standards

The following environmental standards always need to be considered by

entrepreneurs when carrying out business operations. The quality of air, water, soil
and the control of the other aspects that may disrupt the environment as a result of
business operations should strictly be adhered to.

1. Air quality standards.

2. Water quality standards.
3. Soil quality standards.
4. Noise and vibration standards.
5. Standards of environment beauty.
6. Standards of other matters and activities that may affect the environment
e.g. wetlands.
7. Standards for control of noxious (toxic) gases.
8. Building and other structures standards e.g. Not building in wet lands.

Environmental protection bodies such as NEMA, Uganda Wild Life Authority

have the responsibility of ensuring that the above standards are followed.

Responsibilities of a business to society and environment

A Business either directly or indirectly depends on both the society and natural
environment for its survival, growth and sustainability . Therefore, businesses
exercise a lot of responsibility to the society together with the environment.

To the society

1. Business provide market to society`s produce. This is more especially with the
businesses which deal in the produce of the society in which they are located,
they provide market and hence income for the society. This helps to improve on
the society`s standards of living.

2. Business makes contribution to development programs. Businesses make

voluntary contribution towards community development program either in kind
or in cash. These may include areas to do with the women empowerment, road
 58

construction, education, healthy services construction of bridges, environment

protection, etc. In return to this business enjoys good relations with the society,
which becomes their loyal customer that assures them all security in the business.

3. Provision of employment . Business provides employment opportunities to the

members of the society. In which they are located. People are employed on the
different projects that are involved in business e.g. managers, drivers, planners, etc.

4.Provision of social services. Some businesses provide or make it possible for

society to access social services e.g. education, electricity, water, healthy care
services , etc. This is because some businesses are established along with such
social facilities. This helps on improving on the people`s standards of living.

5.Proper disposal of waste products. Some businesses use waste products and
rubbish as their raw materials . The emission of poisonous or obnoxious gases,
loud noise or explosions should be done in a way that do not endanger people`s
health and lives.

6. Payment of taxes. Business pay taxes and in doing this , they make a good
contribution to a society . This is because government uses such revenue to
provide social services to society such as education, security, medicine, etc

7.Preserving the culture and norms of the society. A business should have strict
conditions for the norms and culture of society where it is located. An
entrepreneur should do business in what is acceptable to the culture and
religious beliefs of society . For example he or she should not be selling offending
goods such as pork or beer in Moslem community, selling alcohol drinks near
schools, etc.

To the environment

1.Educating customers on usage and proper disposal of their products helps in

conserving the environment.

2.Businesses have the responsibility of developing new techniques which

demands for less use of the natural resources . This helps in protecting the
environment from a high rate of destruction.

3.Businesses have the responsibility of encouraging re-use and recycling of

products and bi-products . This helps in conserving the environment since
dangerous objects are re-used thus leaving the environment free of their effects.
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4.Businesses have the responsibility of ensuring effective use of materials and to

the extent of possibly creating replacement for example planting trees. This will
help in maintaining natural environment.

5.Businesses have the responsibility of incorporating the principles of

sustainable use and development of natural environment during their process of
production.

6.Businesses have the responsibility of checking harmful effluents and ensuring

proper usage and disposal of the waste products .This greatly protects the
environment from destruction.

Requirements of business that affects the natural environment

The requirements of a business that affect the environment vary depending on the
nature type and size of the business The most common requirement of business
that affects the natural environment and need to be planned for, include the
following;

1. Packaging materials. These range from simple polythene papers, paper bags,
wooden boxes, plastic containers to metal containers. These packaging materials,
negatively affect the natural environment in areas to do with the soil texture,
air,water,drainage system,

2. Agro chemical usage. Agric- businesses usually apply chemical and artificial
fertilizers. These affect human life, they are dissolved by rain and penetrate the
soil to the water table, or the chemicals are carried by erosion to the open water
bodies where people fetch water for home use.

3. Land. This is required for construction of business premises for its operations
and storage of the extracted raw materials . For that matter there for,
manufacturing businesses require large pieces of land and this may lead to clearing
of natural resources like forests and other forms of natural vegetation.

4. Machinery and equipment used in productive operations. Some machinery is

purposely used to destroy the natural physical environment for instance the
graders, machines used in mining and extraction of minerals etc.

5. Energy. The major sources of energy required by business and society in

Uganda include bio gas 96.5%, petroleum 1.5% and hydro-electric 2% . Bio gas
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primarily wood fuel is the main source of energy in Uganda. Its consumption is
expected to remain high because it is the cheapest as compared to the modern
energy. Large institutios such as hotels, schools, hospitals, prisons together with
large factories such as tea factories, tobacco industries, sugar, and fish and brick
industries use mostly biogas. This results in the destruction of the environment.