ENTREPRENUERSHIP DEVELOPMENT

WORKBOOK FOR LEARNERS

1
MODULE ONE
1.0 Concept of Entrepreneurship
Session Duration : 60 minutes

Introduction
Since long, entrepreneurship has been recognized as an essential ingredient of
economic development. The manner in which it has been exploited in the western
societies has varied from time-to-time to suit the changing ethos of socio-
economic reality. From early centuries (16th to 19th) the definition of
entrepreneurship has changed from time-to-time. In France, the term entrepreneur
was used in the early days for army leaders. Later, architects and builders of
roads and bridges were called entrepreneurs. In the 19th it was applied to
businessmen/tradesmen who bought and sold goods at a profit. |It was in the 20th
century that an entrepreneur was identified as the person who identifies an
opportunity, takes a risk, consolidates resources and sets up an enterprise.

This session will explain the attitudes required and the functions carried out in
relation to entrepreneurial activities.

Session Objectives
• At the end of the session, trainees will be able to define the terms
entrepreneurship, intrapreneurship and entrepreneur

Learning Outcomes
On completion of this session, you should be able to:
Define the terms entrepreneurship, intrapreneurship and entrepreneur
Distinguish between entrepreneurship and entrepreneur?

Learners Activities / Environment

Ensure that the learning activities include explanations of entrepreneurship,

intrapreneurship and entrepreneur

Activity
What do you understand by the term entrepreneurship,
intrapreneurship and entrepreneur?

2
Reading Material
Entrepreneurship can be described as a creative and innovative response to the
environment. Such responses can take place in any field – business, industry, agriculture,
education, and the like. Doing new things or doing things that are already being done in
new ways is, therefore, a simple definition of entrepreneurship. Or you may emphasize
that for our understanding, a person involved in a business activity where the person sells
a product/service and makes profit is an entrepreneur. This may include manufacturing,
trading, or service oriented business (i.e. laundry, restaurant, petrol pump, etc.).
Whatever may be the activity, entrepreneurship has two distinct aspects – one is the
entrepreneur herself and the other is the enterprise.

ENTREPRENEUR + ENTERPRISE = ENTREPRENEURSHIP

Entrepreneurs by and large have been found to be people with a high drive and higher
activity level, constantly struggling to achieve something which they could call as their
own accomplishment. They like to be different from others and strive to accomplish
goals which are not otherwise very easy to achieve. At the same time, they do not strive
to achieve something which is practically impossible. Constantly goaded by their goals,
they work very hard. It has been found that some of the highly motivated entrepreneurs
have developed awareness of their own strengths and weaknesses and also about the
resources and constraints in the environment while striving to reach their goals. This
concept is gender free.

Entrepreneurship Concept
What is Entrepreneurship

Entrepreneurship is one of the four mainstream economic factors: land, labor, capital, and
entrepreneurship. The word itself, derived from 17th-century French entreprendre - refers to
individuals who were “undertakers”, meaning those who “undertook” the risk of new enterprise

Entrepreneurship is the dynamic process of creating incremental wealth. This wealth created
by individuals who assume the major risks in terms of equity, time, and/or career commitment
of providing value for some product or service. The product / service may or may not be new
or unique but value must be infused by the entrepreneur by securing and allocating the
necessary skills and resources. The process as involving all the functions, activities, and
actions associated with the perceiving of opportunities and the creation of organizations to
pursue them

Who is an Entrepreneur

A business founder

Someone who has turned a normal community activity into a business. Anyone who creates
and introduces value to customers through a product or service and expect to get a financial
reward. The entrepreneur is the individual (or team) that identifies the opportunity, gathers the
necessary resources, creates and is ultimately responsible for the performance of the
organization
3
Entrepreneurial Businesses

The two most important categories of businesses to consider when discussing

entrepreneurship are small businesses and micro enterprises. Though these two categories
do not capture all entrepreneurial enterprises, they comprise the lion's share of businesses
that fit within the definition discussed above.

Entrepreneurship and Innovation

Creative as a prerequisite to innovation

Creativity - is “the ability to bring something new into existence. Emphasis is on the “ability”,
not the “activity”, of bringing something new into existence.

Innovation - is the process of doing something new.

Innovation, - transformation of creative ideas into useful applications, but creativity is a
prerequisite to innovation.

The Creative Process

Five stages:

Idea Germination

Preparation

Incubation

Illumination

Verification

Innovation and Entrepreneurship

The difference between invention and innovation is:

Invention - is the creation of new products, processes, and technologies not previously
known to exist.

Innovation - is the transformation of creative ideas into useful applications by combining
resources in new or unusual ways to provide value to society for or improved products,
technology, or services.

Elements in the Innovation Process

Analytical Planning - to identify: product design, market strategy, financial need

Organizing Resources - to obtain: materials, technology, human resources, capital

Implementation - to accomplish: organization, product design, manufacturing,
services

Commercial Application - to provide: value to customers, reward of employees,
revenues for investors, satisfaction for founders

4
The Entrepreneurial Process

Creating Creating
An entrepreneurship an
Entrepreneur enterprise

Different Stages of Enterprise Building

Realisation of when an entrepreneur scans the

Opportunity environment and selects the product

Consolidation of an entrepreneur consolidates resources,

Services (finance, land, buildings etc)

Implementation and resources are put together and entrepreneur

Creation of venture starts an enterprise

Reference materials
1. Women Entrepreneurship Development Manual (ICECD) 1993
2. Change and Entrepreneurship, Jenks L. H, Harvard Univ. Press 1949

5
2.0 Types of Entrepreneurs

Introduction
There are many types and forms of entrepreneurs. Some operate as a family (mum and
dad), others as individuals – sole trader. There are women entrepreneurs etc. This session
will expose you to the various types and forms of entrepreneurs with a view to widen up
the mind set of the trainees

Entrepreneurship Attributes:
The entrepreneurship attributes being addressed include the need to be open-minded,
creative and ability to identify business opportunities, risk taking

Session Learning Objectives

At the end of the session, you should be able to describe the various types of
entrepreneurs

Learners Outcome
At the end of the session, you should be able to identify and describe various types of
entrepreneurs

Activity
In your groups, identify the various types of entrepreneurs in
your community. The answers from this exercise should
be along he lines of those indicated on TR 2.2

Reading MaterialsTR 2.1

Who is an Entrepreneur

A business founder

Someone who has turned a normal community activity into business

Anyone who creates and introduces value to customers through a product or
service and expect to get a financial reward

The entrepreneur is the individual (or team) that identifies the opportunity,
gathers the necessary resources, creates and is ultimately responsible for the
performance of the organization.

TR 2.2

Types of entrepreneurs
o Sole traders
o Inventors
o Innovators
o Agents of change
o Curious

6
=

Entrepreneurial Traits Assessed in a Behaviour Test

1. The need to achieve: This is evident in an individual’s desire to achieve some standard
to excellence and success in performance
2. Risk taking: They have an inclination to take calculated, moderate and, intelligent risks.
They tent to avoid both excessively high as well as low risks
3. Positive self-control: This includes self confidence as well as self-efficacy and, a
positive image of ones’ abilities and achievements
4. Initiative and independence: Such people not only show initiative but also exhibit a
great deal of independence in their day to day behaviour
5. Problem solving: They have the tendency to approach problems with a view to solve
them
6. Hopeful about the future: Even in a situation where there is a lot of disappointment and
frustration, they don’t lose hope
7. In constant search: Always scanning the environment for opportunities
8. Time conscious: They set goals for themselves and try to accomplish them within the set
time framework

Reference materials
2. Women Entrepreneurship Development Manual (ICECD) 1993
2. Change and Entrepreneurship, Jenks L. H, Harvard Univ. Press 1949

3.0 Forms of Business

Session Duration : 60 Minutes

Introduction
A business organisation in contrast to a public service organisation or a charity, exist to
provide goods and services at a profit. Making a profit may not necessarily be the sole
aim of the business, but it is certainly what distinguishes it from a non-business
organisation. The business organisation we are concerned with here range from one-man
business to a large public company thousands of staff in a variety of locations.

The session will therefore, identify and explain the various forms of business and relate
to the legal requirement of their formation

Learning Objectives
At the end of the session, you will be able to:
identify and understand the various from of business
describe the from of business and,
relate the legal requirement of each from of business

Learning Outcomes
Various forms of business identified and described
Legal requirement relating to each from of business identified and discussed

7
Activity
Questions for Discussion

1. What is the significance of limited liability to

a.) shareholder? b.) creditors? c.) banker?

2. For what overall purpose are companies obliged to make public their
constitution and activities?

3. What is the principle distinction between a private limited company and

public limited company?

5. Why do some people prefer to establish a registered cooperative rather say

a private limited company?

Reading Materials
Forms of Business

There are basically four forms of business

The sole trader
The partnership
Limited company
Cooperatives

1. The sole trader

This is the simplest from of business. This means going it alone with one-person
business. The owner of the business takes all the profits but suffers all its losses
and has all the problems and worries to himself

The legal requirements for setting up such business are minimum. All profits
made by sole trade are subjected to income tax rather than corporate tax levied on
company profits

The main advantages of operating as a sole trader are

The formalities for starting up are minimum
Complete autonomy to run the business as the individual wishes
The profits of the business belong to the trader
No public disclosure of accounts

Disadvantages
The sole trade is entirely responsible for the debts of the business
The individual as a manager has to be responsible for all aspects of the
business (marketing, sales, product development finance etc)
8
2. Partnership
A partnership exists when at least two, and usually not more than twenty, persons
agree to carry out a business together. Such an agreement can specify the rights
and obligations of each partner. As with sole trader, the members of the
partnership are owners of the property and liable for its contracts. Therefore, they
are responsible for meeting their debts to third parties

Advantages of Partnership
Few formalities required for starting up
Sharing of partner’s knowledge and skills
Sharing of management of business
No obligation to publish accounts
Sharing of profits or losses

Disadvantages
Each partner is liable for the debts of the partnership
Risks that the partners may not be able to work together at a personal level
The death or bankruptcy of one of the partners will automatically dissolve
the partnership, unless otherwise provided for in the partnership agreement

3. Limited companies
A limited company can be formed by two or more people who become its
shareholder. When a limited company is formed it is said to be ‘incorporated’ i.e.
endowed with separated body, or persons. The corporation so formed is treated,
according to law, as a separate entity, independent of its members. Limited
companies fall into categories – Public limited companies (plc) and Private
limited companies. A public limited company must make its shares available to
the public for purchase and the company name must end with words, Public
limited company. A private limited company on the hand is not compelled to of
float is share to the public

In registering a limited company, the following are the legal requirements:

1. The company’s name
2. The location of the registered office
3. The objectives/purposes of the company
4. A statement that the liability of members is limited
5. The amount of share capital

Advantage of a limited company

• In the event of failure of business, shareholders are protected against the
loss of more than the nominal value of their shares
• The separate legal person of the company exist independently of the
members
• Shares (in plc) are readily transferable

9
 Disadvantages
• Precisely because liabilities are limited, it may be difficulty for a small
company to borrow as extensively as desired since banks may be unable to
recover their funds if business fails
• There are considerable legal procedures to be followed when setting up a
company
4. Cooperatives
Small groups of people who wish to set up a business along explicitly democratic
lines and with the benefits of a limited liability can chose to establish a
cooperative. Usually promotion of cooperative has been encouraged by the
government. Some of the rules governing cooperatives are
• Each member must have equal control on the ‘one person one vote’
principle
• Members must benefit primarily from their participation in the
business
• Interest on the loan or share capital has to be limited
Advantages
Provides an opportunity for pooling of capital
Encourages active collaboration between all section of the workforce
Provide limited liability (if registered)
Provides rewards on an equitable basis
Disadvantages
There is less likelihood of a level of profitability and growth that could be
achieved by a limited company
Relationships can deteriorate
Decision making process can be lengthy

Legal Requirements

Sole Trader
The legal requirements for setting up such business are minimum.
All profits made by sole trade are subjected to income

Partnership
Few formalities required for starting up
No obligation to publish accounts
Sharing of profits or losses

Limited company
In registering a limited company, the following are the legal requirements:
The company’s name
The location of the registered office
The objectives/purposes of the company
A statement that the liability of members is limited
The amount of share capital
Reference Materials
Management Theory and Practice by G. A Cole (
Business Law - Sixth Edition by Keenan and Riches (2002)
10
4.0 DIFFERENCE BETWEEN AN EMPLOYEE AND
ENTREPRENEUR
Session Duration 60 minutes

Introduction
Being entrepreneurial does not only mean having a business. Entrepreneurial attributes
could still be found even in an employee.

Learning Objectives
At the end of the session, trainees will be able to explain the differences between an
employee and an entrepreneur

Activity

In you groups, tackle question in TR 4.1 (the difference between and employee
and an entrepreneur) Answers from the activity should be along the lines given in
HO 4.1 and HO 4.2
TR 4.1

Questions for Discussion

1. Identify and discuss the difference between and employee

and an entrepreneur
2. Identify and discuss “Advantages and disadvantages of being
an entrepreneur
3. Identify and discuss “Advantages and disadvantages of being
an employee”.

Reading Materials
HO4.1

Difference between an Employee and Self-employment

A woman running a small business establishment by working on one or two machines

and looking after her business all alone is said to be self-employed. When a woman
starts a small business venture and employs a few people to keep it running, but manages
the show herself, she is an entrepreneur.

Thus, we can say that all entrepreneurs are self-employed but all self-employed are not
entrepreneurs. The entrepreneur is one who initiates and established an economic
activity or enterprise. (This could be a self-employment unit or an enterprise with other)

11
HO 4.2

Different Kinds of Employment

There are several ways in which people can be employed

Wage employment: This means working for weekly or monthly payment called wage or
salary. The work is done in a shop, factory, office or other places of business. An
important thing to remember about wage employment is that it is usually obtained in
competition with other people who want the same job

Sheltered employment: Though not that common in Zambia, in this kind of employment
people also get a wage or salary, but their work is done in a special condition where they
do not have to compete with others who want a job. An example of sheltered employment
is the special workshop which are sometimes established for persons with disabilities

Cooperatives: Sometimes workers join together to share the running of a business.

Instead of paying wages, each worker gets a share of the profits. These are common in
agriculture industry

Self-employment: This is a situation where an individual establishes their own business

and pay themselves out of the profits

Reference Materials
1. Small Business Management II, Unit 8, “ Open Learning Programme for
Entrepreneurs”, EDI, FNST
2. Handbook of New Entrepreneurs. P. C Jain, Oxford University. Press, 1998

12
5.0 Self-
Self-employment
Duration 45 Minutes
Introduction
Most countries in Africa, Zambia included face a serious shortage of employment.
There are not nearly enough jobs for everyone. Most of the young people with
good qualifications have great difficulties to find employment. The difficulties are
usually greater in rural area where there is far much less development

What can be done to improve the situation? Certainly, the answer does not lie in
the government or indeed anybody else creating jobs for the many unemployed.
The answers are in individuals creating business for themselves and earn a living
out of it
Entrepreneurship Attributes: The attributes being addressed in this session include the
need to be creative, innovative, independent, risk taker
Learning Objectives
At the end of the session, you should be able to
Identify self-employment as a viable career option
Explain the benefits of being self-employed
Explain the challenges of being self-employed
Learning Outcomes
Self-employment defined
Benefits of self-employment as an alternative appreciated
Challenges of self-employed explained and appreciated
Activity

Tackle exercise “Self Assessment Instrument”, HO 5.1 individually.

Do not spent so much time thinking through the questions

Reading Materials

HO 5.1
Self-employed

Self-employed are those workers who earn a living by running their own business.
Examples include plumbers, gardeners and freelance photographers etc. Many people
start their business adventure dreaming of riches and freedom. And while both are
certainly possible, the first thing to understand is that there are trade offs in being self
employed. Difficulty bosses, annoying co-workers, peculiar policies, demand upon your
time and limits on how much money you can make are traded for independence,
creativity, opportunities, and power. But by the same token, you also swap a regular pay-
cheque and benefits for no paycheque and no benefits. A life of security, comfort, and
regularity is traded for one of uncertainty

13
There are definitely pros and cons to be self-employed. These include:
1. Control. Even if you like your boss and your job, possibilities remain that you can
be laid off any time; the company can go bankrupt. But if you are self-employed,
you are in control of you work and career
2. Money. Many people chose to be self-employed because they think they are more
money worth than they are making on a job or they want to provide a better life
for their families. There is a limit to what amount of money one can make when
employed. There are far fewer limits when you are an entrepreneur
3. Creativity and independence. Self employment provides for great creativity and
independence. Running your own business may require you to be marketing
wizard, salesman, bookkeeper, secretary and manager all rolled into one
4. Freedom. Working at your own business gives you the flexibility to decide when
and where you will work. You decide your hours and place of business

But there are downsides to being self-employed

1. Uncertainty. The life of an entrepreneur is not necessary an easy one. It is fun. It
is challenging, exciting, spontaneous. The hardest part of being in business for
your self is that there is no steady source of income; paycheque does not come
every 30 days
2. Risk. Not all entrepreneur ventures are successful. The willingness to take a
smart, calculated risk is the hallmark of smart entrepreneurs
3. Lack of structure. Many people like the structure for working for someone’s.
They know what is expected of them and what they need to accomplish each day.
This is not true when you work for yourself. The work is very unpredictable

There is need to consider both risks and rewards of entrepreneurship before deciding to
jump in. It is easy to become infatuated with the idea of owning a business. But if one
was to do it right, and be successful, then there is need to take emotions out of the
equation. One has to begin thinking like a businessman, consider risks, and make
informed, intelligent, calculated decisions

HO 5.2
Self-
Self-assessment Instrument
Assessing Yourself
1. Are you a self-starter?
a) Yes, I like to do things on my own
b) If someone helps me get started, I will definitely follow through.
c) Most of the time, I would rather follow than lead.
2. How do you fee about taking risks?
a) I really like the feeling of being a bit on the edge.
b) Calculated risks are acceptable at times.
c) I like the tried and true.
3. Are you a leader?
a) I usually get people to go along when I initiate something.
b) I can give the orders if I have to.
c) I let someone else get things moving, and then I take part if I feel
like it.

14
4. Do you like to assume responsibility?
a) Yes, I enjoy taking charge of things and seeing them through.
b) I will take over if I have to, but would rather let someone else be
responsible.
c) There’s always some eager beaver around wanting to show how
smart he is. I say let him.
5. How organized are you?
a) I like to have a plan before I start.
b) Being well organized isn’t my strongest suit, but I can do it when
necessary.
c) I just like to take things as they come.
6. How hard are you willing to work?
a) I can stay motivated as long as necessary.
b) I will work hard for a while, but when I’ve had enough, that’s it.
c) I think many other things are more important than work.
7. Are you decisive?
a) I can make up my mind in a hurry if I have to.
b) If I have to make up my mind quickly, I do, but I don’t like it.
c) I don’t like to be the one to decide things.
8. Can you live with uncertainty?
a) Yes.
b) I can if I have to, but I don’t like it.
c) No. I like knowing what to expect.
9. Can you stick with it?
a) If I make up my mind to do something, I don’t let anything get in
the way.
b) Usually.
c) If things don’t go right, I may just quit.
10. How good is your health?
a) I never run down!
b) I have enough energy for most of the things I want to do.
c) I run out of energy sooner than most of my friends.
11. Are you competitive?
a) You bet.
b) When I need to be, I can be
c) Not really, my nature is more laid-back.
12. Do you have a lot of willpower and self-discipline?
a) Yes.
b) I am disciplined when I need to be
c) Not really.
13. Do you plan ahead?
a) In my book, failure to plan is planning to fail.
b) Planning is important, but so is spontaneity.
c) I take one day at a time and let life take me where it will.
14. Are you creative?
a) Yes I am. I am always thinking up new ideas.
b) I have an occasional brainstorm.
c) No, not really.
15
 15. Can you live without structure?
a) Yes
b) Actually, the idea of living without a regular job or pay check
makes me nervous.
c) No, I like routine and structure in my life.

If you answered “a” on more than half of the questions, you have the personality
needed to run your own business. If most of your answers were “b” you’re likely
to encounter more trouble than you may want.

If you have several “c” answers, then you are not quite ready to start your own
business. But that does not mean that you can’t get ready. While certain aspects
of entrepreneurship are innate (the willingness to take a risk, for example), many
are learned (such as knowing how to conduct market research). If the results of
this quiz tell you to slow down, that is good. You can always take business
classes, read more books, or listen to business tapes in order to learn more.
Another option would be to get a partner who has the skills you lack. There are
many ways to start you own business, and if you are not ready now, it does not
mean you will never be ready.
Reference Material

1. Small Business Management II, (EDI- India) 1999

2. Fredrick Harbison, Education, Manpower & Economics (New York, McGraw-Hill)

6.0 Historical Background to the Zambian Economy

Session Duration : 60 Minutes

Introduction
The wealth of Zambia is based largely on mining in the rich copper belt,
and downturns in copper prices have severely damaged economic
consequences. Some processing and manufacturing has been started
since independence, and during the 1970s attempts were made to
diversify to agriculture and to make the country self-sufficient in food.
In the early 1990s the estimated annual national budget showed about
$665 million in revenue and $767 million in expenditure.
Session Objective
At the end of the session, trainees will be able to:
Appreciate the historical background to the Zambian economy and its
impact on the entrepreneurship growth
Will be able to explain the various social-political trends in Zambia
and how these relate to entrepreneurship growth in the country

16
Session Outcome

Session delivery
1. Distribute HO 6.1 and discuss the Historical background to the Zambia
Economy
2. Distribute HO 6.2 and discuss the “Social Political Trend in Zambia”
3. Give a summary of the session

Tips
Please acquaint yourself with the five year national development plans

Historical background to the Zambia Economy

• Zambianisation: A strategy adopted by the government soon after independence

in 1964
• Objective of this strategy was to empower Zambian by offering them senior
positions that were held by the European colonial masters
• Nationalisation: This was a state programme that saw the take over of key
companies by the government
• Import Substitution Industrialisation Strategy: A deliberate policy to start
manufacturing locally goods that were being imported into the country.
Examples; Livingstone Motor Assembly, Rover Zambia in Ndola
• Mono-culture Economy: Zambia is highly dependant on only one economic
resource, copper. This is at the expense of other sectors like agriculture,
manufacturing, tourism. This state of affairs did not promote the growth of other
sectors nor later on encourage entrepreneurial activities
• Urbanisation: Zambia is one of the most urbanised countries in Sub-Sahara
Africa. About 60% of the Zambian population live in urban areas particularly
along the line of rail.
• One Party State: A political situation in which there is only one political party in
the country. This was a situation in Zambia from 1973 to 1991, United National
Independence Part was the only party in the country
• Multi partism: A political situation where there are more than one party in the
country. This was the case from 1964 to 1973 and 1991 to date

• Population growth rate: The average population growth rate for Zambia has been
3.6%. This is considered to be too high for a country like Zambia

17
HO6.2
Social-political Trends

1960’s The first ten years of independence was marked by an outpouring optimism
There were hug investments in infrastructure and human resource
Huge sums of money were put into ministries, schools, hospitals, factories and
roads. At this time, most of the economic activities were still concentrated in a
few white settlers

New measures were put in place to create jobs and self employment particularly
for the indigenous Zambians. For example, the cooperative movement,
establishment of at least a factory in major districts (Kapiri Glass, Kawambwa
Tea and Kafue Nitrogen Chemicals etc)

1970’s The country started experiencing economic slowdown, global market price for
copper started becoming weaker. Prices of imports were getting higher and higher
thus making operations of most the enterprises in the country difficult as these
were highly dependant on foreign inputs

Financial support from overseas was nowhere near enough to resolve the rapidly
growing balance of payment position

1980’s The country adopted the IMF supported economic reforms programme. However,
these reforms put the country into even more stress. The strength of the local
currency weakened significantly, inflation sky-rocketed, generally making the
development of enterprises in the country unattainable
Due to the lopsided development between the rural and urban areas, the county
started experiencing huge drift of rural dwellers into towns particularly along the
line of rail. This trend had social consequences like high crime rates in urban
areas. Not every one was able to be absorbed into formal employment. Social
amenities were not enough to go round

1990 The era saw the end of the one-party-system and the reintroduction of the multi-
partism. This was followed by almost full liberalisation of the economy. These
changes were accompanied by the change of government as well.

2000 The country started experiencing positive growth. The mining sector which was at
the verge of collapse has picked up with the introduction of new ones. The era
was also marked with elections and the new government that was formed pledged
to stump out corruption.

The country is still certainly facing a number of challenges like HIV/AIDS which
has taken a toll on the productive sector of the society. Employment levels are
still low and poverty levels are high

18
Manufacturing
In the early 1990s manufacturing employed less than one-sixth of the labour force, but
accounted for more than one-third of the gross domestic product (GDP). Principal
activities were the smelting and refining of copper and other metals, vehicle assembly,
petroleum refining, food processing, and the production of fertilizers, explosives, and
textiles.

Foreign Trade
Imports—such as machinery and transport equipment, mineral fuels and lubricants,
chemicals, food, and basic manufactured goods constitute the biggest chunk of total
imports. Exports—chiefly copper, cobalt, and zinc. Principal partners for exports are
Japan, France, Thailand, India, Belgium and Luxembourg (which constitute a single
trading entity), and Saudi Arabia; principal partners for imports are members of the
South African Customs Union (Botswana, Lesotho, Swaziland, and South Africa),
Great Britain, Germany, and the United States.
Transportation and Communications
Zambia has about 2164 km (about 1345 miles) of railroads. A railroad from Zimbabwe
runs through Livingstone, Lusaka, and Ndola, connecting with the DRC system, and
then to Benguela on the Atlantic coast of Angola. The Tanzania-Zambia Railroad
(Tazara) connects Lusaka with the port of Dar es Salaam in Tanzania. About 13,500 km
(about 8400 miles) of all-weather roads connect the main towns of Zambia. Lusaka is
served by an international airport

Reference Materials
1. Zambia National Development Plans I, II, III, IV
2. Informal Sector Business Activities in Lusaka Urban Districts, Tolosi S &
Nawiko M 1997
3. Emergence, Growth and Characteristics of the Informal Sector in Zambia,
1991

19
7.1 Natural Resources as They Relate to
Entrepreneurship

Session Duration 60 Minutes

Introduction
Every location in this country is endowed with national resources. However, only a few
are able to harness these resources for their livelihood. This session aims at exciting the
trainees to be critical to the resources around them.

Entrepreneurial Attributes: Resourcefulness, creative, innovativeness,

Learning Objectives
At the end of the session, you will be able to
• List the various resources found in Zambia
• Identify the potential usage of these resources for entrepreneurial growth

Activities
1. In your groups read, discuss, and answer questions on TRI 7.1
“Identification of Resources and their usefulness to entrepreneurial
activities”

TR7.1

Individual Exercise: Resource Identification

1. Identify a business that you would like to venture into

2. What are the resources required for the business you have identified?
3. What is the importance of each resources identified?

Reading Materials

Land and Resources

Most of Zambia is high plateau with a flat or gently undulating terrain. Elevations
average between about 1100 and 1400 m (about 3500 and 4500 ft). Mountains in the
northeast reach 2164 m (7100 ft). Major rivers are the Zambezi in the west and south
and its tributaries, the Kafue in the west and the Luangwa in the east; and the Luapula
and Chambeshi, in the north. Lake Bangweulu, in the north, is surrounded by a vast
swampy region. Lake Kariba is a large reservoir formed by Kariba Dam on the
Zambezi River.

20
Climate
Although lying within the Tropic Zone, much of Zambia enjoys a pleasant subtropical
climate because of the high altitude. The average temperature in Lusaka during July,
the coldest month of the year, is 16° C (61° F); the hottest month, January, has an
average temperature of 21° C (70° F). Annual rainfall ranges from 750 mm (30 in) in
the south to 1300 mm (51 in) in the north. Nearly all of the rain falls between
November and April. This type of climate is conducive for tropical fruits cultivation,
cotton, maize, sorghum and cassava.
Natural Resources
Most of the country has savannah-type vegetation—grasslands interspersed with trees.
Teak forests are in the southwest. Animals include elephants, lions, rhinoceroses, and
several varieties of antelope. Of overwhelming importance are the rich mineral veins of
the country’s copper belt. The belt extends down into Zambia from southern DRC and
contains major deposits of copper, cobalt, and other minerals.
Zambia also has substantial hydroelectric potential. The Kariba Dam on the Zambezi
River is the country’s main power source.. Other stations are on the Lunsemfwa and
Mulungushi rivers serve Kabwe. Installations have also been built on the Kafue River.
In the early 1990s the total installed electricity-generating capacity was about 2.8
million kilowatts.
Labour
In the early 1990s about 2.8 million Zambians were part of the labour force.
Agriculture
More than two-thirds of Zambia’s working population is engaged in agriculture, largely
subsistence farming. Principal crops in the early 1990s (with annual output in metric
tons) included corn, the staple food, 464,000; sugarcane, 1.2 million; and cassava,
270,000. Sunflower seeds, peanuts, sweet potatoes, and tobacco are also grown. Beef
and dairy cattle are raised for domestic use.
Mining
The copper mines of Zambia are among the richest in the world. Although world
copper prices collapsed in 1975, damaging the Zambian economy, in the early 1990s
the country still received 93 percent of its export earnings from copper. Other minerals
extracted were zinc, cobalt, and lead. A diamond field was discovered in 1992.
Tip
: In the discussion emphasise on the importance of human resources and finance as some
of the critical resources for any enterprise

21
 8.0 Informal Sector Growth

Introduction

The first appearance of this term, “informal Sector” in official documents was in a report
of ILO’s mission to Kenya in 1972. One of the mission’s main findings was that in
developing countries like Kenya (Zambia inclusive), the main employment problem was
not unemployment, but the existence of large numbers of “working poor” many of them
working so hard in the production of goods and services, but whose activities were not
recognised, recorded, protected or regulated by the government. This phenomenon was
recorded as the informal sector.

Learning Objectives
At the end of the session, you will be able to:
• Explain the term, informal sector
• Identify factors encouraging the development of informal sector
• Understand the role the informal sector play in Zambia

Session Outcome
• Informal sector explained
• Factors encouraging informal sector growth identified
• Informal sector in Zambia discussed

Activities

In your small groups, identify and discuss factors encouraging

informal sector growth in Zambia

Reference Material
The Informal Sector

What are informal sector: These are very small units producing and distributing
goods and services and, largely of independent and self employed. They operate
on very little capital or none at all and utilise very low technology and skills. They
operate on very low levels of productivity, and which generally provide very low
and irregular income and, highly unstable employment for those employed by
such enterprises.

They are informal because for most part they are not registered with the
government. They are mostly not recognised and supported by government. They
are, most of the time compelled by circumstance to operate outside the framework
of the laws. They tend to have very little or no access to organised markets and to
credit systems
22
 The importance of the informal sector in Zambia can not be over emphasised. The
sector employs between 40% to 60 percent of the urban labour force

In Zambia, the informal sector can be traced from colonial days of mining. In
Lusaka for instance, the urban district informal sector business activities started in
1930. During this time, informal sector developed because of the need to provide
certain goods and services to European settlers and African settlers. Products such
as firewood, charcoal, reed-baskets could not be provided in modern markets

Factors encouraging the Informal Sector

Mostly it is due to the inability by other sectors of the economy – agriculture or
other rural activities on the other hand, and modern industry and services on the
other – to provide adequate incomes or employment opportunities to a rapidly
growing labour force. The steady stream of migration from the rural areas urban
areas coupled with increasing population growth meant that urban modern
activities have been able to absorb more of the burgeoning urban labour force.

Those excluded from the employment in the modern sector constitute a large
labour surplus. Since the people concern can not afford to be employed for any
length period of time, they have to create for themselves activities which can
provide them with income

Other recent developments like the 1980s recession, the IMF/ World Bank
adjustment programmes have further resulted in the growth of the informal sector.
The restructuring of the civil service and the closing of most parastatal
organisations saw a huge number of people without employment. These ended up
informal sort of business activities which the majority fall in the informal sector

Ease entry is often said to be the main feature of the informal sector in contrast to
the formal sector where entry barriers are higher

Examples of Informal Sector in Zambia

The following are the examples of the informal sector in Zambia
Brick making
Door, window frame and burglar bar manufacturing
Soap manufacturing
Tailoring
Food processing
Construction of private homes
Stone crushing and selling
Street vending
Shoe repairs
Motor vehicle repairs
Welding
Hair dressing

23
Reference:
1. How to Motivate Entrepreneurship in Zambia, Nanjappa K. L Min. of
Commerce
2. Small Enterprise Development Programme, Lusaka 1993
3. The Dilemma of the Informal Sector (ILO) 1991
4. Informal Sector Business Activities in Lusaka Urban District, Tolosi S &
Nawiko M 1997
5. Emergence, Growth and Characteristics of the Informal Sector in Zambia,
1991

24
 9.0 The Role of Enterprises in Economic Growth

Session Rationale
The role of small sector has been recognised as the most powerful and vibrant
sector of the Zambian economy. It has the potential to provide more employment
per unit of investment and therefore, the government attaches great importance to
the development of the small and the ancillary sector. The ancillary units provide
the support services required to the growth of medium and large scale sector in
the country. The small sector has shot into prominence over the years through its
multifaceted contribution

Session Objectives
At the end of the session, trainees will be able to:
• Define the terms, micro, small medium and large enterprises
• Define the terms economic growth and development
• Explain the role of enterprise in the Zambian economy

Session Outcomes
• Informal sector explained
• Factors encouraging growth of informal sector identified
• Informal sector in Zambia discussed

Activities

In your groups, discuss the role of enterprises in the Zambian

Economy

25
Reference Material

HO 9.1

The role of Enterprise in the Zambian Economy

In Zambia, there is a challenge before the class of entrepreneurs to accelerate the

tempo of industrial activities in such centre in which the traditional capital has
remained shy to enter, and where without foreign collaboration and technical know-
how imported from foreign lands. The Zambian industry has not ventured to progress.
This is a highly unsatisfactory state of affairs and it calls for Zambian entrepreneurs
accepting the challenge to take calculated risk and adventures in moving bravely into
such sophisticated centres without in any way relying on foreign collaborations.

Imbalances

The second vital challenge for the entrepreneurs is the dangerous imbalances in the
regional economy. By and large, Zambian Industries are concentrated only at Kabwe,
urban district, Kafue Township, Livingstone district, Lusaka urban district, and
Copperbelt province of Ndola Rural district, exception of Ndola Rural District.
Nearly 60% of total population of the country are living in rural areas, and yet there
are fewer industries to support them. People on the Copperbelt and Lusaka areas for
instance, are earning five times more than their relatives. Thus it may be seen that
vast areas of the country are starving of industries and the benefits of industrial
economy. Thus entrepreneurship Zambia shall be identified with the inclination of
new entrepreneurs to penetrate all the rural parts of Zambia, so that within a very
short time the regional imbalances are corrected all over the country through the
efforts of entrepreneurs.

As already pointed out entrepreneurship involves risk and adventure through

calculated and the resurgent youth of the country are most suitable. In fact the
creation of Small Industry Development Organisation (SIDO) then was done with a
view to take the responsibility of ways and means to create such an atmosphere where
the entrepreneurs would find the appropriate assistance for the fulfilment of their
image. In the context of the traditionally shy investment capital in Zambia, not only a
positive entrepreneurship has to be developed but also the capital to sustain the
adventure of entrepreneurship. The time has come to identify entrepreneurship as
separate from industrial opportunism, and the measures mentioned above are directed
towards such identification.

Reference:
1. How to Motivate Entrepreneurship in Zambia, Nanjappa K. L Min. of Commerce
2. Small Enterprise Development Programme, Lusaka 1993
3. The Dilemma of the Informal Sector (ILO) 1991

26
10 Policy Instruments Supporting Enterprise
Development
Session Objectives
At the end of the session, you will be able to:
• Outline policy instruments supporting enterprise development
• Relate policy instruments to enterprise development

Learning activities
Ensure that the learning activities include the following
• An outline of the policy instruments supporting the development of enterprise in
Zambia
• Relation of policy instruments to enterprise development

Activity

1. Outline the Government of Zambia policy on enterprise development

2. Discuss how these policies could lead to the promotion of enterprise development
in the country. Suggestion, if any additional policy guideline that should be
included

Reading Materials
Small Enterprise
Enterprise Development Act 1996

As the means towards the Government of Zambia’s support of small scale enterprise, the
Small Enterprise Development Act was enacted in 1996
This act led to the creation of the Small Enterprise Development Board
The function of this Board included:
• To promote and facilitate the development of micro and small enterprise
• To create a conducive environment for attaining of the purpose

Specifically that Board was to:

• Formulate, coordinate and implement policies and programmes to promote the
development of micro and small enterprises
• Monitor the efficiency and performance of micro and small enterprises having
regard for the purpose for which they are established
• Establish a data base for facilities and sources of finance, technology, raw
materials, machinery, equipment and supplies
• Provide marketing support services to the micro and small enterprises
• Register, collect, research and disseminate information relating to micro and small
enterprises
• Monitor and coordinate activities and programmes of promotional agencies
engaged in micro and small scale enterprise development

27
 • Assist in the development and upgrading of appropriate technologies for micro
and small enterprises
• Initiate and develop industrial estates and common facilities for use by micro and
small enterprises
• Establish training and processing centres to provide machinery and equipment
• Develop the Zambian entrepreneurship
• Arrange for independent training, management and consultancy services for micro
and small enterprises
• Provide the financial services
• Make recommendations to the Ministry on any legislative reforms which may be
required for the development of the micro and small enterprises

Reference Material
1. Small Enterprise Development Act No. 26 of 1996
2. Technical Education, Vocational and Entrepreneurship Training Policy (GRZ)
1996

28
 11.Statutory Obligation Relating to Enterprise
Development

Session Objective
At the end of the session, trainees should be able to:
• Apply statutory obligations to enterprise development

Leaning Activities
Ensure that the learning activities include the following
Application of statutory obligation to enterprise development. This should include
• PAYE
o NAPSA
o Labour laws
o Licensing and permits

Activity
1. What are the enterprise’s obligations as regard Pay-as you earn (PAYE)
and National Pensions and Savings Authority (NAPSA)
2. What are the labour laws related to an enterprise and, how are these being
applied in an enterprise?
3. What are the licenses and permit requirements in operating a particular
enterprise?

29
12 Support Systems
Session Objectives
At the end of the session, trainees will be able to
• Identify support services to enterprise development
• Discuss the role of support systems to enterprise development in Zambia
Session Outcome
• Support systems to enterprise development identified
• Support systems to enterprise development discussed
•
Reading Materials
Materials
Financial Services and Incentives
The government of Zambia through the Small Enterprise Development Board, does,
in order to facilitate the development of enterprise, provide the following financial
services and incentives:
• Identifies entrepreneurs, and projects which require financial assistance
• Provides information on the sources of finance
• Assists enterprises with the preparation of business plans, project proposals
and other loan application documents
• Monitor, establish and design standards for loan administration, effective use
of loan funds and repayment mechanism by enterprise so as to curb misuse of
financial resources
o venture capital
Exemptions
An enterprise registered under the Small Enterprise Development Act is entitled
to the following incentives
• Exemption from paying of tax on income for
• The first three years of operation for an enterprise operating in an urban
area
• The first five years of operation for an enterprise in rural area
• Operating of a manufacturing enterprise for the first five years without
manufacturing licence
• Exemption from payment of licensing fees
• Exemption from payment of rents on factory premises for the first five
years
• Trade licensing act shall does not apply to such enterprise

Activity
Discuss how the financial services and incentives provided by the government
could promote the development of enterprises in Zambia

Reference Material
1. Small Enterprise Development Act No. 26 of 1996

30
 MODULE TITLE:
MODULE 02 DEVELOPING ENTREPRENEURIAL COMPETENCES

TABLE OF CONTENTS
1. MODULE INTRODUCTION ............................................................................... 32
2.1: DEVELOPING SELF MOTIVATION ................................................................. 33
2.1.2 DISCOVERING YOURSELF ............................................................................. 38
2.1.3 POSITIVE THINKING .................................................................................... 41
2.1.4 IMAGINATION, INNOVATION, CREATIVITY OF AN ENTREPRENEUR . 45
2.1.5 GOAL SETTING ................................................................................................. 48
2.2 DEVELOPING BUSINESS OPPORTUNITIES ................................................... 50
2.2.1 BUSINESS IDEAS .............................................................................................. 51
2.2.2 ENVIRONMENTAL SCANNING...................................................................... 56
2.2.3 FEASIBILITY STUDY ....................................................................................... 65
2.2.4 BUSINESS OPPORTUNITIES ........................................................................... 68
2.2.5 RISK TAKING .................................................................................................... 73
2.3 MOBILISING RESOURCES FOR AN ENTERPRISE ....................................... 76
2.3.1 RESOURCES MOBILISATION ......................................................................... 77
2.4 NETWORKING FOR AN ENTERPRISE DEVELOPMENT............................. 80
2.4.1 ENTERPRISE NETWORKING .......................................................................... 81
2.5 EFFECTIVE BUSINESS COMMUNICATION IN AN ENTERPRISE............. 85
2.5.1 COMMUNICATION IN AN ENTERPRISE....................................................... 86
2.5.2 PLANNING FOR EFFECTIVE BUSINESS COMMUNICATION IN AN
ENTERPRISE............................................................................................................... 90
2.5.3 APPLICATION OF INFORMATION AND COMMUNICATION
TECHNOLOGY (ICT) IN AN ENTERPRISE ............................................................. 96

31
 1. MODULE O2 INTRODUCTION

MODULE AIM

The aim of the module is to build entrepreneurial competences, attitudinal change that
will lead to self motivation and generation of business ideas.

LEARNING OBJECTIVES

At the end of the module, Trainees will be able to:

1. Demonstrate self motivation;
2. Develop business ideas,
3. Identify and select business opportunities;
4. Mobilize resources,
5. Network for enterprise development;
6. Implement business decisions,
7. Communicate in various business situations;

32
 2.1: DEVELOPING SELF MOTIVATION

This unit will cover the following sessions:

 Entrepreneurial Traits and characteristics:
 Discovering Yourself;
 Positive thinking;
 Imagination, Innovation and Creativity of an Entrepreneur;
 Goal setting

33
 2.1.1 ENTREPRENEURIAL TRAITS AND CHARACTERISTICS

Introduction

The reasoning behind this session on entrepreneurial traits is that it enables your learners
to explain what drives the individuals that have succeeded in enterprise development. It
also enables the learners assess their ability to venture into the entrepreneurial career. In
the end, it will isolate their personality strengths and weaknesses to start an enterprise.
The session affords them an opportunity to identify weak points that they can do
something about.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Describe entrepreneurial traits and characteristics;

2. List the entrepreneurial traits and characteristics;
3. Explain the relationship between entrepreneurial traits and characteristics and the
success of the enterprise;

Unit Sessions

The session will cover the following topics:

i. What are entrepreneurial traits and characteristics?

ii. List of entrepreneurial traits and characteristics;
iii. The relationship between entrepreneurial traits and characteristics and the success
of the enterprise;
What are entrepreneurial Traits?

In the first module you were introduced to the meaning of an entrepreneur. You must
understand that there are many meanings of the term entrepreneur. In all explanations you
will come across or create yourself, you may notice that there are four parts to the
meaning namely, person or persons and their personality, persistent pursuing of an
opportunity, the establishment of business or organisation and the achieving of benefit
and growth. Traits are a mixture of an individual set of qualities, including behaviour,
nature, needs, drive and main beliefs. These traits you are born with and others you get
them through informal and formal training.

The traits are influenced by:

 Characteristics they are born with;

 Culture of the community (society);
 Family, work and;
 Education;
 Political and policy environment
These sources of influences by encourage or discourage the growth of entrepreneurship.
34
The Entrepreneurial Traits and Characteristics List

Entrepreneurs are successful for a number of reasons. In this session we shall discuss the
entrepreneurial traits and characteristics. You may ask what are traits and characteristics.
These traits have been observed through observation and studies among successful
business persons in a number of countries. Let us look at some of the traits and
characteristics. Do you have the following traits?
i. You set clear goals – Your road to success must begin with asking yourself
where you are going. The existence of a clear and specific purpose, aim or goal is
the starting point for your road to achievement.
ii. You are committed - You have belief in what you are capable of achieving; you
are committed to your team and the people you work with in the business.
iii. You act on opportunities – identify and act on new or unusual business
opportunities by looking for resources to create something valuable.
iv. You have initiative – you are self-reliant, and have willingness to initiate action
without needing or taking direction from others and have ability to solve
problems.
v. You are persistent – you do not tire to hunt for success despite difficulties on the
road to success. If one door closes on you another is identified and opened.
vi. You have strong passion - a driving passion to carry out your idea, be it in the
from of a new technology, a different approach, a more thorough application of
known technologies or a combination of all three.
vii. You have strong self-confidence. You are willing to be lonely and make tough
decisions and believing you are right despite the majority thinking you are wrong.
viii. You are disciplined – you have self control to plan and carry out the plan. You
know where you are going and how you will get there because you have refined
your goal into action and you have put in measures to check progress.
ix. You are a moderate risk taker - You are not a gambler who throws around
money without having control over the results of your action. Many people think
entrepreneurs are generally thought of as tremendous risk takers. You as an
entrepreneur are advised to focus on reducing risk deliberately by planning and
managing the business well.
x. You are knowledgeable about business - You look for information within the
business or its surroundings to help you achieve your purpose or avoid problems

The list of these traits is not exhausted. You may think of other characteristics or
remember certain behaviour among the business persons you have come across.
Success in Business and Entrepreneurial Traits
Like many nice things in life, owning and managing a business successfully is tough.
Business is not for the weak in body and mind. In business there are many dangers. You
many lose your effort, time and money you have put in the business. Or the business
many be a problem to other people who are not in any way connected to it.
The entrepreneur to successful own a business goes through the following activities:
 Identifies and develops a business opportunity ( to be discussed in the next sessions);
 Develops a business strategy (way of doing business);
 Mobilise resources to start the business;
 Start the business;
 Expand the business;
35
There are many opportunities out there unless one has a trait of identifying and
developing them, they remain unexploited. To develop a business strategy requires
developing a clear goal, information, passion and commitment. There are enough
negative influences from your friends, family and community to discourage you put the
idea on hold and seek the easy way out and seek employment.

For business activities to start you need resources but resources are few and those who
have resources are not easy to help. This is one of the strongest tests to starting a
business. I am sure you have met many people say that they are unable to go into
business because of lack of resources. You need to rely on some of the traits above,
namely, seeking information on resource providers, persistent in asking for support even
when you have been turned down several times and showing confidence in what you
plan to do to win over others.

A new business has as many needs for care as a newly born baby. In a new business
almost everything is new, the owners, customers, employees and suppliers are new. In
addition the business belongings are new. In this new environment mistakes are bound to
be made. The entrepreneur needs to have the character to be focussed and apply some of
his/her traits such as being disciplined to handle temptations, having the goal in mind
despite current difficulties, having personal initiative to solve problems. Some of the
problems experienced by start up are as follows:
 Lack of experience;
 Low capital, poor cost control;
 Poor location;
 Too much stock;
 Excessive buying of fixed assets;
 Poor customer care;
 Poor planning;
 Poor execution of plans;
 Negative attitudes to work among employees

A business that is expanding will need new management to take care of increased
responsibilities. If the entrepreneur was owner-manager it is time to take initiative and
take the opportunity of employing experienced and skilled human resource in the
business.

Summary

In this session, we described traits of an entrepreneur. We looked at the behaviour of a

person that influences entrepreneurial activities. Ten entrepreneurial traits have been
listed and explained. Lastly the entrepreneurial traits have been linked to the success of a
business through the main activities of an entrepreneur starting from opportunity
identification to expanding the business. Each of the entrepreneur traits, goal setting,
commitment, opportunity seeking, personal initiative, persistent, passion, self discipline
and information seeking can be applied at each stage of the entrepreneurial stage.

36
Exercise

Answer the following questions:

1. Name one successful entrepreneur you know very well. Discuss the
entrepreneurial traits that have been observed displayed by the entrepreneur you
have mentioned.
2. Explain how training can help develop entrepreneurial traits?

Reference Materials

1. Matthew Sartwell, Napoleon Hill’s Keys to Success; Piatkus, London, 1995

2. Thomas W. Zimmerer and Norman M. Scarborough, Essentials of
Entrepreneurship, Pearson International,

37
2.1.2 DISCOVERING YOURSELF

Introduction

It is important for the learners to discover their personality in order to see whether
entrepreneurship is for them. The personality may assist learners chose a business that
will be enjoyable rather than a punishment. What they enjoy doing has a relationship with
type of personality they have.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Describe personal attributes and talents;

2. Identify personal attributes and talents;
3. Relate talents and attributes to entrepreneurial success.

Sessions
This unit will cover the following session
i. Describe personal attributes and talents;
ii. Identify personal attributes and talents;
iii. Relate talents and attributes to entrepreneurial success.

What Are Personal Attributes and Talents?

You have personal attributes and talents that can make you succeed in business. Personal
attributes and talents are the right skills and abilities for the job. A successful career in
business is an outlet for your personality, interests, skills and values. So what are your
personality, interests, skills and values? The sum total of these qualities is called your
personality.

Understanding your personality can tell you such things as how much encouragement you
need from other people to do anything. Or are you a person who is relaxed working on
your own? Are you an organised person or otherwise. Do you approach everything
caution or you one who goes through with anything without concern?

It is important for you to discover your personality in order to see whether

entrepreneurship is for you. Please you must realise though that your personality may
assist you chose a business that will be enjoyable rather than a punishment. What you
enjoy doing has a relationship with type of personality you have.

Identifying Personal Attributes and Talents

It is useful to identify your personal attributes so that you will be able to decide on what
type of business is suitable to you. These attributes will also be useful in identifying
business opportunities, establishing the business, managing the business and initiating its
growth.
38
Ask yourself the following questions:
 Do you like to work with machines and tools?
 Do you like to observe, learn, examine, analyze, and solve problems?
 Do you like to use you imagination or creativity to solve problems?
 Do you like to work with people; to inform, enlighten, help, train, develop or cure
them;
 Do you like to work with people; to influence, persuade, lead, or manage for
organizational goals or economic gain?
 Do you like to work with data?
 Do you have functional skills? (Skills not necessarily associated with a specific job
and are used to accomplish general tasks or functions of a job e.g. problem solving);
 Do you have content skills called work-content skills, specific and specialized to one
job, such as preparing a financial statement, or fixing a car?
 Do have adaptive skills cover ability to learn quickly, teamwork, being self
motivated, self-awareness, empathy, persistence, optimism, and social deftness;

Applying talents and attributes to entrepreneurial success

There are a number of skills you'll need to succeed as an entrepreneur. You should not
worry if do not possess them all. As an entrepreneur you can always employ people with
those skills to add to your abilities.

Below are skills you may need now or later to help you in business:

Interpersonal Skills
As an entrepreneur you should have good people skills. You ability to freely mix with
many people is a valuable asset that is worthy more than the money you may have in a
bank. When people like you its is very likely they will like your business too.

Networking Skills
Networking can be a useful business approach to establish build partnerships and
discover new business contacts. A successful entrepreneur is a net worker. You must be
visible and easy to remember in gatherings.

Leadership Skills
Leadership is the ability to influence. Once you are an entrepreneur it means you have
taken up a leadership role. You may be owner-manager – worker (OMW), the skills of
leadership is very important.

Management Skills
Management skills mean planning, organising, leading and controlling activities that
cover operation, employees, customer, suppliers, and government agencies.

Employee Relation Skills

Employees are the most important resource your business has. It is essential that you
manage this resource very carefully. It is a resource that can come in today and walk out
tomorrow. A good relationship with Human resource will make your life much easier
39
Team Building Skills
You must build a team of essential professionals who you share the same vision. You do
possess all the needed skills and experience assembling a team of employees, partners,
accountants, your lawyers, and bakers will take your business to a higher level.

Marketing and Sales Skills

Marketing and selling skills are essential to bringing in revenue. Unless the customer is
aware of and interested in what you are selling they will never buy. If marketing and
selling are difficult employ a sales person.

Financial Management skills

Understanding cash flow will save you business going under faster than you can register
it. The danger areas are poor working capital; cash withdraws by the owner, credit
mismanagement, and misunderstanding of cash surplus and profit.

Time Management Skills

Time cannot be stored for future use. It cannot be bought from a shop. It is not elastic.
You can only use or misuse time available. Time is one of the resources whose value is
underestimated until it is too late. There a number of ways that will increase the wastage
of time namely: meetings, poor planning, repeated interruptions, failure to list priorities,
failure to delegate, being disorganised, indiscipline and failure to say” no”.

Do not worry if you not have these skills. Many people even those who have been
running business for many years do not have all these skills. As an entrepreneur,
however, you must learn some of these skills to help you run the business effectively.

Summary

In this unit we discussed that a successful career in business is an outlet for your
personality, interests, skills and values. We emphasise that it is valuable to recognize
your personal attributes so that you will be able to decide on what type of business is
suitable you. In addition an entrepreneur can employ people with those skills to add to
one’s abilities. There are interpersonal, marketing, management skills, technical and
communication skills you need now or later to help you in business

Exercise

Answer the following questions:

1. Explain the purpose of identifying your personal attributes and talents;

2. List the personal talents and skills you possess?

Reference Materials
1. Beardwell Ian, Human Resources Management, Prentice Hall Essex, 1994;
2. Mathew Sartwell, Napoleon Hill’s Keys to Success; Piatkus, London, 1995

40
 POSITIVE THINKING

Introduction
What one thinks about somehow transform itself into the physical reality. If one expects
to fail, you will fail and if you expect to win you will win. If an individual has a positive
thoughts and attitude towards success in business the mind sets you up in a position to
succeed.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Describe positive thinking;
2. Explain the thinking process;
3. Apply the process of positive thinking to entrepreneurial success.

Session

This session will cover the following topics:

i. Description of positive thinking;
ii. The thinking process;
iii. Application of the process of positive thinking to entrepreneurial success.

Description of positive thinking

If you expect to win you will win and conversely if you expect to lose you will lose. It is
a matter of your attitude. What is an attitude? It is a mental make-up, usual frame of
mind. Attitudes are part of the abilities. The ability to interact socially requires certain
attitudes. All of our feelings, beliefs and knowledge are based on our internal thoughts,
both conscious and subconscious. You are in control, whether you know it or not. We can
be positive or negative, enthusiastic or dull, active or passive.

The Thinking Process

The mind has tremendous power that can be used to make your life better. Your mind can
be conditioned to think positively to bring desirable changes to your life. You as a human
being is created with enough resources to be successful in the field of your choice.
The mind is the mental power that enables you and me to:
 Think;
 Make choices,
 Experience emotions
The mind is the seat of intelligence and memory. The mind is divided into two parts of
activities known as:
 Conscious Mind;
 Subconscious Mind
The conscious mind enables you to:
 Use numbers in calculations;
 Words in speech;
 Controls muscular movements;
 Make decisions
41
The subconscious mind on the other hand enables:
 Management of internal organs workings such heartbeat, breathing, digestion and
blood circulation (touch the wrist – do feel the blood circulation);
 Imagination (close your eyes and imagine you own the biggest bank in Zambia);
 Reactions to emotional stimulation (do you remember the last time you laughed);
 Automatic reproduction of activities learnt over time (are able to write he word
Entrepreneur without looking at spelling in this manual?

How Does the Mind Work?

Transforming Thoughts into Reality

The mind can change thoughts into reality. You remember that one of the functions of the
conscious mind is to enable you make decisions and the main function of the
subconscious mind is to automatically reproduce any action repeated over time. The
decision making and reproduction of repeated action combined transform thought into
reality. If you think that you will fail you will indeed fail but if you think that you will
succeed you will.

The Mind Does not Make Judgments

The subconscious mind works only after you have given it instructions through your
decisions and thinking. Before the subconscious mind turns thoughts into reality it first
has to receive instructions from your thinking. However, it does not judge your thoughts
to be bad or good. It is neutral. If you were worried about something so much have you
noticed that that which you were worried about does really happen. So, instead of you
spending time worrying use it to create solutions.

The Mind sees No Difference between Real and Unreal

The subconscious mind does not tell the difference between reality and imagination. You
must have observed that some people are frightened of the lion whether they see it right
there or they are told of the story.

The Mind Understands only Positive Instructions

The mind only recognizes positive language. When a positive message in thoughts is sent
to the subconscious mind it is carried out as it is. However, when a negative instructions
of thoughts is sent to the mind it changes it into a positive message. If you say, “I want to
be a business person”, the mind will carry out even when you do not have money. It will
show you how to source for funds. How does the mind change the negative message to a
positive one? A negative message like, “I don’t want to be a loafer” will be turned into, “I
want to be a loafer”. The removed word is “Don’t”.

The Mind needs to know that your Goal is Possible

You must convince your subconscious mind that your goal is achievable. If you have
convinced and committed to the goal, your mind will know that it is possible and will
guide your actions, behaviour and decisions towards your goal.

The Mind Will Attract Everything to Meet Your Goals

42
The mind will gather everything to fulfill your goal whether constructive or destructive.
Once you are focused on your goal your mind will attract to you every resource you need
to meet your goal. If you want to win you will - you will think consistently on how you
will achieve the goal, you believe you will achieve, and you expect to win. For the
reasons above you will collect information needed and attract people who can help
achieve your goals. However if you expect to lose you will attract all factors that will
ensure that you fail.

The Mind will answer All Your Questions

The mind has the ability of answer all questions you may ask. If you ask a negative
questions the answer will be negative, if your question is positive the answer will be
positive.

Entrepreneurial Success and Process of Positive Thinking

As an entrepreneur you must think positively and positive thinking is communicable.

People you will meet and those near you pick your mental moods and are affected
accordingly. On your mind play around with thoughts of happiness, good health and
success, and you will cause people to like you and want to help you, because they enjoy
the positive vibrations that your positive mind send out.

To harvest good results from positive thinking yield, you should do some inner work in
the mind. Developing a positive attitude toward life will result in a successful outcome of
whatever you do in business. Positive attitude will also make you take any necessary
actions to ensure your entrepreneurial success.

If you want to reap from positive thinking it is not enough to sparingly say few positive
words and spent much of your time crowding your mind with negative thoughts. To
successful apply positive thinking; your entrepreneurial goal has to be your main mental
attitude.

In entrepreneurship, there are benefits and their challenges too. As a person intending to
start your own business you have a choice to flood you mind with positive or negative
thoughts. However, if you really want to succeed in business few word of advice are
handy:

 Cover you inner dialogue with thought and feelings of happiness, strength and
success
 Avoid negative thoughts of losses in business and swap them with constructive
happy thoughts.
In discussions with employees, suppliers, customers and advisors use words that
suggest scenes of strength, happiness and success in their minds.
Visualise with concentration and belief the pleasant outcome of your plan or action
before you prepare or start;
 Disasters in the world were there and will always be there. If you have no power to
do anything constructive do not kill yourself with worries;
Show confidence and self belief in your in your dealings with other people
Engage in physical exercise it helps in developing a positive attitude.
43
.

Summary

We discussed that all of our feelings, beliefs and knowledge are based on our internal
thoughts, both conscious and subconscious. The mind can be conditioned to think
positively to bring desirable changes to life. The mind is the seat of intelligence and
memory. The mind is divided into two parts of activities known as Conscious Mind and
Subconscious Mind. Positive attitude can make one take any necessary actions to ensure
entrepreneurial success.

Exercise

Answer the following questions:

1. What is the positive thinking?

2. What are the differences between the conscious and subconscious mind?
3. How can positive thinking help you create a successful enterprise?

Reference Materials:
1. Hill Napoleon; “Positive Action Plan – How to Make Every Day a Success”,
Piatkus, London, 1996;
2. Mathew Sartwell, Napoleon Hill’s Keys to Success; Piatkus, London, 1995;

44
2.1.4 IMAGINATION, INNOVATION, CREATIVITY OF AN ENTREPRENEUR

Introduction

Entrepreneurs apply imagination, creativity and innovation to develop new ideas that are
applied to create solutions to problems and opportunities to improve the quality of life.
New needs will emerge and it will require the exploitation of the entrepreneur to create
new solutions.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Describe the concepts of imagination, innovation and creativity;

2. Apply the concepts of imagination, innovation and creativity to entrepreneurship

Topics

This session will cover the following topics

i. Describe the concepts of imagination, innovation and creativity;
ii. Apply the concepts of imagination, innovation and creativity to entrepreneurship

Description of Imagination, Innovation and Creativity;

Imagination

Entrepreneurs use their imagination to create a picture of a successful business delivering

useful products and services to customers at a profit. The term imagination comes from
the Latin verb imaginari meaning "to picture oneself." Imagination is a mental creation
in the mind of ideas and pictures of things that are not real or not heard, seen, smelt or
touched.

As an entrepreneur you can apply imagination to:

• Generate business ideas;
• Solve business problems;
• Create new ways of doing things

Creativity is the ability of coming up with new ideas and ways of solving problems and
exploiting opportunities. You and I can be creative. All of us have brains. It is the brain
that is the centre of creative power. The brain has two sides, the left and the right sides.
The left side of the brain has a job of processing information in a step by step fashion.
The right side of the brain processes information intuitively all at once relying more on
images. As an entrepreneur you can use the left side to select one business idea and use
the right to generate as many ideas as possible.

45
To be creative you need to utilise more of your right side of the brain. You can be
creative by:
• Always asking if there is a better way;
• Challenging custom, routine, and tradition,
• Being thoughtful;
• Thinking a lot to generate a lot of ideas knowing one of them will work;
• Seeing an issue from a different viewpoint;
• Seeing mistakes as lay by to success;
• Realising that there may be more than one answer to a problem,
• Seeing problems as a source of new ideas;
• Connecting unrelated ideas to a problem to generate innovative solutions;
• Looking at issues from a broad view

You can use your creative power to create a new market and a new customer.

Innovation
Innovation is defining term for entrepreneurs. Innovation can be found in business,
political, social, and technological sectors. Taking up ideas, developing new solutions to
solve people’s problems is innovation. Innovations can be found in the technical and
socio-economic field. The creations of insurance, banking, hire purchase, micro finance,
trade unions are socio-economic innovation while the cell phone, email, and internet are
technical innovations.

As an entrepreneur you can bring innovation in the following areas:

• New products;
• New ways of making a product;
• New ways of packaging a product or service;
• New ways of marketing the product;
• New ways of selling the product;
• New ways of pricing the product;
• New ways of storing a product;
• New ways of caring for customers.

However, for an innovation to be successful it must be linked to the customer needs. No

matter how nice the innovation is, if it does not meet the customer’s needs then freeze it.

Peter F. Drucker a well known expert on Management has suggested a five stage
approach to purposeful systematic innovation as follows:
• Start by analysing opportunities within the enterprise, industry and the external
environment, Innovate for now
• Look at the financial implications but also get a feedback from suppliers and
customers,
• Be simple and focussed;
• Start small;
• Be dominant in a particular field and take leadership.

46
Imagination is the power of the mind to create unreal images and ideas that can be a basis
of creation. Everything as somebody said is created twice; in the mind and in the hands.
Creativity is the ability to generate a number of ideas. Innovation is the process of
creating value for customers by coming up with better products and services

Summary

In this session we defined imagination as a mental creation in the mind of ideas and
pictures of things that are not real or not heard, seen, smelt or touched; creativity as the
ability of coming up with new ideas and ways of solving problems and exploiting
opportunities and taking up ideas, developing new solutions to solve people’s problems is
innovation. We examined the how the three abilities can be applied to entrepreneurial
success.

Exercise

Answer the following questions:

1. What are the differences among imagination, creativity and innovation?

2. What can discourage one’s creative power?
3. How can one improve creativity?

Reference Materials

1. Burn Paul, Entrepreneurship and Small Business Mathew, Palgrave Macmillan,

New York, 2001;
2. Thomas W. Zimmerer and Norman M. Scarborough, Essentials of
Entrepreneurship, and Small Business Management, Pearson International New
Jearsey, 2005.

47
2.1.5 GOAL SETTING

Introduction

Successful entrepreneurs need to think in a long term way. Life is a long term journey.
Entrepreneurs need to know where they are and where they are going. Entrepreneurs
need to have a destination to aim for, start small, achieve a little at a time and build on the
achievement. Entrepreneurs should reflect on the achievement and challenges over the
period.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Define goals;
2. Explain the importance of goal setting;
3. Develop entrepreneurial goals;

Topics
This session will cover the following topics
i. Definition of goals;
ii. The importance of goal setting;
iii. Develop entrepreneurial goals

Definition of Goals

A goal is an aim of what you want to achieve in life over a period of time. Unless you
know where you are going anything you do is a waste. Setting goals and targets allows
you to choose where you want to go in life. If you know what you want to achieve then
you will be able to focus on that goal. Setting your goals will enable you gather
information and resources to help you achieve it.

When you set goals it enables you to:

• Be aware of what you want to achieve;
• Add to what you already have;
• Improve performance and increase results in whatever you may be doing
• Influence others to achieve;
• Create a sense of pride and satisfaction for yourself;
• Build confidence in yourself
• Think positively;
• Be imaginative, creative and innovative, .

How do set Goals?

To set goals you must decide what you want to be and have in you life time. You may set
goals in the following areas

• Career – Do you want to be an entrepreneur in specific sector?

48
 • Family – what type of family would you want?
• Financial Status – how much financial resources would you need?
• Social status – What type of social relations do you want?
• Physical status – what physical state of your body do you need?
• Spiritual - what spiritual needs to be satisfied?

How to Start to Achieve Your Lifetime Goals

Once your goals are set. You must break them into specific, measurable, achievable,
realistic and time bound stages called objectives. The objectives can further be broken
into activities over a period of time and using known resources (skills, information and
time. Goals, objectives, and activities are positive statements that must be written.

Summary

A goal is an aim of what you want to achieve in life over a period of time. We looked at
advantages of goal setting. We looked at what goals can be set. We also outlined the
steps to achieving the goals.

Exercise

Answer the following questions:

1. What are the differences between a goal, objective, and activity?

2. How can goal setting facilitate your success in business?

Reference Materials

1. Hill Napoleon; “Positive Action Plan – How to Make Every Day a Success”,
Piatkus, London, 1996;
2. Mathew Sartwell, Napoleon Hill’s Keys to Success; Piatkus, London, 1995;

49
 2.2 DEVELOPING BUSINESS OPPORTUNITIES

This unit will cover the following sessions:

 Business ideas;
 Environmental Scanning;
 Feasibility study;
 Business opportunities;
 Risk Taking.

50
2.2.1 BUSINESS IDEAS
Introduction

Business ideas are the seed of the enterprise development. An entrepreneur’s initial task
is to scan the environment and create new business ideas. It is from the created ideas that
bring about opportunity identification.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Describe business ideas;

2. Explain the process of generating business ideas;
3. Outline the techniques or business idea generation;
4. Generate a business idea.

Topics

This session will cover the following topics

i. Description of business ideas;
ii. The process of generating business ideas;
iii. The techniques for business idea generation;
iv. Business idea generation

Description of Business Ideas

If you want to start a business you need a business idea. A business idea is a new,
creative approach to specifically address a perceived need, want, problem or challenge of
customers through a profit generation activity. It is a result of your specific thought or
concept that arises in your mind. Business ideas come from various sources. The
commonest source is the need of the members of the community that is not yet satisfied.
Your business idea in any of the three types of business namely: retail, manufacturing
and services.

Sometimes the list of types of business covers farming and mining. Selling goods to other
people is retail business. Making some things to sell to your customers is manufacturing.
When you sell your time, skills and knowledge, then you are in the service business.
Growing crops and keeping livestock for sale is a farming business. Digging, collecting
and processing minerals is mining. There are also businesses that require harvesting
natural resources in water and on land such as fish, timber and non timber forest
products.

51
The Process of Generating Business Ideas

The process of generating ideas involves two steps namely: scanning the surrounding
(environment) and idea generation. Scanning the environment assist you to see what is
going on, changing and the needs of people. By having a keen interest in what is going on
you will be able to see the needs of people emerging.

Scanning the environment involves collecting information from various sources. These
sources are:

No. Category of Information Sources

Sources
1. Personal and Informal Family members, Friends, Employees, Customers,
Sales Persons,
2. Personal and Formal Bankers, Investment Centre, Consultants,
Researchers, Councils, Business Associations,
Business Registration Office, Commercial
Exhibitions, Industry and Trade Contacts
3. Written Magazines, Newspapers, Newsletters, Books,
Catalogues, Journals, Bill Boards, Posters
4. Oral Trade Shows, Seminars, Suppliers/Agents,
Professional Organizations

The Techniques for Business Idea Generation

There a number of ways you can generate ideas. There a number of methods you can use
to generate business ideas.

No. Technique Explanation

1. Draw on Your Skills Covert your skills into a business
2. Make Use of Your You have been able to do something for a long time.
Experience Can you advise others in the same field at a fee?
3. Use You Hobby Do you like music? Set up a music store.
4. Improve services Offer a better service of the current services you pay
for
5. Improve a product Improve its appearance, function, colour, packaging
and so on
6. Modify an existing Make it look luxurious, make it simpler, or make it
product into a new one smaller, change the shape.
7. Travel Come back with something you saw or used not
available in you area
8. Listen to complaints Create a solution to a complaint
9. Research Find out special needs of certain groups of customers
10. Reproduce the idea Apply a successful idea to new settings
11. Create new value for a Use taxi vehicle for advertising
product
12. Somebody’s waste is Turn waste into something useful for someone.
another person’s Treasure
52
 13. Brainstorm Generate as many ideas as possible without checking
the usefulness one may turn out to be a gold mine
14. Commercialize research Turn research ideas from research institutions into
recommendations and business
inventions
15. Combine uses into one Create a pen with functions of a musical instrument
product
16. Visualization Create a picture of a business in your mind
17. Adding or Subtracting Add or subtract a few features to the product or service
to make it suitable in terms of use or price. Selling
cooking oil from a pump
18. Time framing Offer the same service in a short time
19. Technology application Technological developments these days are so fast and
abundant that one can come up with so many ideas of
unique applications
20. Creation of opposites If a product is small make it big, if it is long make it
short, if it is slow make it fast, if it is for very one
make it for one person, if it is tall make it short n
advice versa.

The list of methods of generating ideas does not end there. You will be able to come up
with other methods where you listen, see, touch and smell. The list will be determined by
how much you use your imagination.

Generation of Business Ideas

Once you start thinking you will generate hundreds of ideas. The tradition of keeping all
the ideas in your head is not useful. Buy a note book. Write all the ideas that come into
you mind in the notebook. At this stage, do not worry about how good or silly the idea is:
you will be surprised how good the idea was in later days or years.

Before you go to the marketplace, research institution or business associations to look for
business ideas, start with yourself. You should look at your strengths and weaknesses
which will show the areas suitable for business ideas, the size and type of the business.

Every person has strong points and weak ones. You should build on your strengths and
work on your weaknesses. The business idea you choose will be influenced by your
strengths, weakness, likes and dislikes. Selecting a business idea is not a matter of
wishful thinking or simple fantasising. It will be helpful to you if you select a business
idea in the area you are familiar with and have knowledge and skills that will either find
immediate application or balance the skills of the others in the business. A look at the
environment will also suggest to you whether the business idea is good or not.

Make very day an exciting creative day. You may be lying on bed, washing, in class,
working, at a social gathering, or travelling, or any other activity you may be doing. Let
your mind zero in on the business possibilities your senses bring in all the information.
Write down quickly as the business idea come to you mind. Within a few hours or days
you should produce an encouraging list of business ideas.
53
Selecting the Business Ideas

It is promising that you have a list of the business ideas. Where do you go from there?
Having prepared a reasonable list of ideas you must examine each business idea so that
you end up with a short list of business ideas with the highest chance of success. You can
use the scoring suggested below.

Simple Scoring Method for Business Ideas.

Score: Yes = 1 and No = 0; Allocate scores to each question. If the answers to all the
questions is YES the total score is 12 and 0 if all your answers were No. You may select a
business idea if it scores above 5 and review it or reject it if it scores below 5.

Business Idea Assessment From

Name of the Business Idea:
No. Focus Question Yes No Score
1. Personal The business suits your personal
characteristics characteristics?

2. Knowledge and You have knowledge and skills that

skills will help you run this type of
business?
3. Experience You have experience that will help
you to run this business?

4. Business You know about the products and

Knowledge services in this business?
5. Business Support You know where to get advice and
information about this business
6. Customers You are knowledgeable of the
potential customers for this
particular business?
7. Competition This will be the only business of
this kind in your area?
8. Profitability You have reasons why you think
this business will be profitable?
9. Human Resources, You know the type of equipment,
Premises, materials premises or qualified
Equipment and staff required for this business?
Materials
10. Finances You are sure you will be able to get
the finances to provide what is
needed in the business?
11. resources You know where will you get the
resources to start this type of
business
12. Business Growth You know this business has
potential for growth?
54
TOTAL SCORE

After the business ideas identification, listing and assessment you are now ready to go
further to develop this business idea into business opportunities through spending time
assessing, researching, developing and planning.

Summary

We defined a business idea as new, creative approach to specifically address a perceived

need, want, problem or challenge of customers through a profit generation activity. We
outlined the process of generating ideas that it involves two steps namely: scanning the
surrounding (environment) and idea generation. We described scanning that it involves
collecting information from various sources environment. Twenty techniques or methods
one can use to generate business ideas were outlined. The Business Idea Assessment
From was introduced as a screening mechanism to select ideas.

Exercise

Answer the following questions:

1. What is a business idea?

2. What is environmental scanning?
3. Outline three methods for generating business ideas?
4. Describe how you can select a business idea from long list of other ideas?

Reference Materials

1. Burn Paul, Entrepreneurship and Small Business Mathew, Palgrave Macmillan,

New York, 2001;
2. Entrepreneurship Development Institute, International Training Programme for
the New Enterprise Creation - Reading Materials Module – 6, 7, 8 and 9 India,
Oct. 01 – Nov. 09, 2001
3. Thomas W. Zimmerer and Norman M. Scarborough, Essentials of
Entrepreneurship, and Small Business Management, Pearson International New
Jearsey, 2005,
4. Birley Sue and Muzyka Daniel, Mastering Enterprise, Pearson Professional,
London, 1997

55
2.2.2 ENVIRONMENTAL SCANNING

Introduction

All businesses operate in an environment. There are people, natural resources and
organisations in the environment. Understanding the environment will reduce the
uncertainties and provides evidence for opportunities.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Describe the concept of environmental scanning;

2. Discuss the importance environmental scanning;
3. Explain the techniques of environmental scanning
4. Outline the process of environmental scanning;
5. Carry out an environmental scan

Topics

This session will cover the following topics

i. Description of environmental scanning;
ii. The importance environmental scanning;
iii. Techniques of environmental scanning
iv. Process of environmental scanning;
v. Carrying out an environmental scan

Description of Environmental Scanning

Now that you have identified one business idea you want to develop you must understand
that your business will operate in an environment. The business you want to start will
operate in a complex environment of business, economic, technological, social and
political influences. The other term for the environment is surroundings. Scanning is
checking or examining. Understanding the surroundings will reduce the uncertainties.

56
External Influences of the Environment

Government
Industry
Customers

Labour
market

Your
Suppliers business

Technology
Competitors

National Creditors
Private
individuals Bodies

The Importance of Environmental Scanning;

Environmental scanning is important for these reasons:

 Spot important economic, social, cultural, environmental, health, technological, and

political trends, situations, and events in the country and outside that may have an
effect on your business
 Identify the potential opportunities and threats for the business arising from these
trends, situations, and events
 Achieve an accurate understanding of your business’s strengths and weaknesses
 Present a support for study of future opportunities

Techniques of Environmental Scanning

There are a number of techniques you can use to carry out an environmental assessment.
This module will cover the following techniques:
 BPEST Analysis;
 Porters Five Force Model;
 SWOT analysis;
 Value Chain Analysis

BPEST Analysis

BPEST analysis is concerned with the environmental influences on a business.

The acronym stands for the Business Political, Economic, Social and Technological
issues that could affect the strategic development of a business.

57
Identifying BPEST influences is a useful way of summarizing the external environment
in which a training institution operates. However, it must be followed up by consideration
of how a business should respond to these influences.

The table below lists some possible factors that could indicate important environmental
influences for a business under the PEST headings:

BPEST

Business Political / Legal Economic Social Technological

Sate of industry - Environmental - Economic - Income - Government
known or regulation and growth distribution spending on
projected protection (overall; by (change in research
industry distribution of
sector) disposable
income;
Market: current - Taxation - Monetary - Demographics - Government
and projected (corporate; policy (age structure of and industry
demand, consumer) (interest rates) the population; focus on
Buyer behaviour, gender; family technological
size and effort
composition;
changing nature
of occupations)
Competition: - International - Government - Labour / social - New
Market share; trade regulation spending mobility discoveries and
New comers, (overall level; development
New products specific
spending
priorities)
Suppliers: - Consumer - Policy - Lifestyle - Speed of
Reliability; protection towards changes (e.g. technology
Alternatives unemployment Home working, transfer
(minimum single
wage, households)
unemployment
benefits,
grants)
Ban Fund - Employment law - Taxation - Attitudes to - Rates of
Donor Funds (impact on work and leisure technological
consumer obsolescence
disposable
income,
incentives to
invest in
capital
equipment,
58
 corporation
tax rates)

Business - Government - Exchange - Education - Energy use and

Associations organisation / rates (effects costs
attitude on demand by
overseas
customers;
effect on cost
of imported
components)
- Competition - Inflation - Fashions and - Changes in
regulation (effect on fads material
costs and sciences
selling prices)
- Stage of the - Health & - Impact of
business cycle welfare changes in
(effect on Information
short-term technology
business
performance)
- Economic - Living
"mood" - conditions
consumer (housing,
confidence amenities,
pollution)

59
Porters Five Force Model

Michael Porter's famous Five Forces of Competitive Position model provides a simple
perspective for assessing and analysing the competitive strength and position of a
corporation or business organization

Five competitive forces influence the level of competition in an industry which finally
will have a say on the level of profit in a particular industry.

The competitive forces are:

 The threat of new entrants to the industry;
 The threat of substitute products or services;
 The bargaining power of customers;
 The bargaining power of suppliers
 The rivalry of current competitors

The threat of new entrants to the industry – a new entrant into an industry will bring
extra capacity and more competition

The threat of substitute products or services – a substitute product or service produced

by another industry satisfying the same needs of the customers;

The bargaining power of customers - customers want better products at lower prices.
Meeting this want may result in the lowering of profitability;

The bargain power of suppliers – suppliers can apply force to obtain higher prices for
their products and services.

The rivalry of current competitors – the higher the rivalry the likely possibility of
lowering prices and high investment in marketing to beat competition which may results
in low profitability
Porter Five Forces of Competition Diagram

New Market
Entrants
- The threat

Suppliers – Industry Customers –

bargaining power Competitors bargaining power
of suppliers Rivalry of customers

Substitute Products
– the60treat of
substitute products
SWOT analysis

Strengths/weaknesses of the organisation are related to the opportunities and threats of

the environmental helps to identify how the current resources and capacity of the
Organisation manage the situation in the environment.

SWOT Analysis is a common strategic planning tool developed to compare internal

strengths and weakness with the external opportunities and Threats.

S- Strengths, W - Weaknesses, O - Opportunities, T- Threats

Sample SWOT analysis

STRENGTHS WEAKNESSES
o Good traditions and image  Insufficient financial resources
o Effective decision making  Lack of management systems and
o Strong leadership policies
o Committed and caring staff  Unclear communications and linkages
o Qualified and experienced staff  Too reliant on donor funding
o Office equipment is available  Lack own premises
o Availability of transport  Lack of finances
 Uncommitted staff

OPPORTUNITIES THREATS

 Cause related organisations are trendy • Increasing competition for resources

 Ageing population will increase clients with similar organisations
and • Government trend toward privatisation
 More opportunities for collaboration in of public services
 Current era of partnership networks • law suits in courts

Simple rules for successful SWOT analysis.

 Be realistic about the strengths and weaknesses of your business when conducting
SWOT analysis.
 SWOT analysis should differentiate between where your business is today, and
where it could be in the future.
 SWOT should always be specific.
 Avoid vague areas.
 Always apply SWOT in relation to your competition i.e. better than or worse than
your competition.
 Keep your SWOT short and simple.
 Avoid complications and too much analysis
 SWOT is subjective.

61
Value Chain Analysis

Value Chain Analysis is tool for working out how you can create the greatest possible
value for your customers, as well as your best route to profit maximization.

In business, customers pay you to take raw inputs, and to “add value” to them by turning
them into something of worth to other people. In manufacturing, where the manufacturer
adds value by taking raw material of little use to the customer (house wife/husband) for
example, maize and turning it into something that customers are prepared to pay money,
for example mealie meal. This idea is also important in service industries such as
training, where people use inputs of time, knowledge, equipment and systems to create
services of real value to the person being served - the customer in this case the learner.

The Value Chain Analysis helps you identify the ways in which you create value for your
customers, and then helps you think through how you can maximize this value: whether
through nice products or useful services.

Michael Porter suggested that the activities of a business could be grouped under two
headings:

(1) Primary Activities - those that are directly concerned with creating and delivering a
product (e.g. component assembly); and

(2) Support Activities, which whilst they are not directly involved in production, may
increase effectiveness or efficiency (e.g. human resource management). It is rare for a
business to undertake all primary and support activities.

Value Chain Analysis is one way of identifying which activities are best undertaken by a
business and which are best provided by others ("out sourced").

Linking Value Chain Analysis to Competitive Advantage

What activities a business undertakes is directly linked to achieving competitive

advantage. For example, a business which wishes to outperform its competitors through
differentiating itself through higher quality will have to perform its value chain activities
better than the opposition. By contrast, a strategy based on seeking cost leadership will
require a reduction in the costs associated with the value chain activities, or a reduction in
the total amount of resources used.

Primary Activities are as follows:

 Inbound logistics - - All activities dealing with receiving and storing externally
obtained materials
 Operations - The manufacture of products and services - the way in which
resource inputs (e.g. materials) are converted to outputs (e.g. products)
 Outbound logistics - All activities connected to getting finished goods and
services to buyers

62
  Marketing and sales - activities involved with informing buyers and consumers
about products and services (benefits, use, price etc.)
 Service - All activities related to maintaining product performance after the
product has been sold

Support Activities are as follows:

 Procurement -This covers how resources are acquired for a business (e.g.
sourcing and negotiating with materials suppliers)
 Human Resource Management - activities concerned with recruiting,
developing, motivating and rewarding the workforce of a business
 Technology Development - activities concerned with managing information
processing and the development and protection of "knowledge" in a business
 Infrastructure - Concerned with a wide range of support systems and functions
such as finance, planning, quality control and general senior management

Steps in Value Chain Analysis

Value chain analysis can be broken down into a three orderly steps:
(1) Break down a market/organisation into its key activities under each of the major
headings (primary or secondary;
(2) Examine the potential for adding value via cost advantage or differentiation, or
identify current activities where a business appears to be at a competitive disadvantage;
(3) Develop strategies built around focusing on activities where competitive advantage
can be sustained

Process of Environmental Scanning;

Steps to conducting the environmental scanning:

 Clearly state the purpose of collecting information
 Decide on how the information will be collected desk or field study or both;
 Identify who is responsible for the process.
 Decide who will collect information;
 Identify the sources of information;
 Identify methods of collecting information;
 Assemble existing information on issues and needs;
 Reflect on the strengths and limitations of that information including;
 Select data gathering techniques to fill in information or audience gaps, detect
emerging issues, and verify existing information
 Collect scanning information from other organizations.
 Assemble the information;
 Analyse and translate the information into actionable

Carrying Out an Environmental Scan

Carrying out the environmental assessment will assist you identify a number of issues in
the natural environment, the business scene, target market and competition, human
resources, legal frame work, technologies and social issues.

63
Summary

We discussed that businesses operate in a complex environment of business, economic,

technological, social and political influences. We indicated that environmental scanning
can assist in spotting important economic, social, cultural, environmental, health,
technological, and political trends, situations, and events in the country and outside that
may have an effect on your business; identify the potential opportunities and threats for
the business arising from these trends, situations, and events; achieve an accurate
understanding of business’s strengths and weaknesses; and present a support for study of
future opportunities. Lastly we described environmental scanning techniques namely:
BPEST Analysis; Porters Five Force Model; SWOT analysis; and Value Chain Analysis

Exercise

Answer the following questions:

1. Mention five influences in the environment that may affect business operations;
2. Describe the environmental scanning techniques namely: BPEST Analysis;
Porters Five Force Model; SWOT analysis; and Value Chain Analysis

Reference Materials:

1. Mathew Sartwell, Napoleon Hill’s Keys to Success; Piatkus, London, 1995

2. Thomas W. Zimmerer and Norman M. Scarborough, Essentials of
Entrepreneurship, Pearson International

64
2.2.3 FEASIBILITY STUDY

Introduction

Feasibility study is the assessment of the market, technical, and financial situation of the
proposed business to ascertain its viability and practicability. The tendency of sensing a
business opportunity and immediately pour resources into it to start an enterprise without
thorough investigation results in disastrous results and great waste.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Describe feasibility study;

2. Outline the process of feasibility study;
3. Carry out a feasibility study.

Topics
This session will cover the following topics
i. Description of feasibility study;
ii. The process of feasibility study;
iii. Conducting a feasibility study.

Description of Feasibility Study

Feasibility study is an examination to see whether your business idea is viable or

practical. The feasibility study aims at answering your question of “should I continue
with the proposed business idea?” All the feasibility activities are aimed at answering this
question. The feasibility study outlines and analyzes several alternatives or methods of
achieving business success.

A feasible business is one where the business will generate adequate cash-flow and
profits, withstand the risks it will encounter, remain viable in the long-term and meet
your entrepreneurial goals. The business idea can be a new start-up business, the
purchase of an existing business, an expansion of current business operations, or a new
enterprise for an existing business. You conduct the feasibility study before preparing the
business plan. Once you have carried out a feasibility study then you can proceed to write
a business plan.

Conducting a Feasibility Study

You have in your hands a business idea that you like. Casual observations, discussing
with other people indicate that it is a good business idea. You have good reviews further
by reading more about it but can it work?

65
Investment Assessment Techniques

Payment Period
The number of years required to recover the original cash outlay invested in a business
project. If a business generates constant annual cash inflows, the payback period can be
computed dividing cash outlay by the annual cash inflow.

Payback period = Cash investment/annual cash inflow

A business project requires an investment of K 50, 000, 000. and generates an annual
cash inflow of K 12, 500, 000. The payback period is as follows:

Payback period = 50,000, 000/12, 500, 000 = 4 years.

Net Present Value

The method is a process of calculating the present value of cash inflows and outflows of
an investment proposal using the cost of capital as the suitable discounting rate and
finding the net present value by subtracting the present value of cash outflow from the
present value of cash inflows.

A business project costs initially K 25, 000, 000 and generates year end cash inflows of 9,
000, 000; 7, 000, 000; 6, 000, 000 and 5, 000, 000 from one year to five years. The
required rate of return is 10%.

Net Present Value

Year Cash Inflow Discounting Factor Present Value of Cash
(ZK) at 10 % Inflow(ZK)
1 9,000,000 .909 818
2 8,000,000 .826 661
3 7,000,000 .751 526
4 6,000,000 .683 410
5 5,000,000 .620 310
Total Present Value Cash Inflow 27, 250, 000
Less Investment (Initial Capital Expenditure) 25, 000, 000
Net Present Value

Internal Rate of Return

IRR is the rate which equates the present value of cash inflows with the present value of
cash outflows of an investment. It is the rate at which the NPV is zero.

Example
A project costs K 16,200,000 and is expected to generate cash of K 8000000; K 7000000;
and K 6000000 over a three year period. What is the IRR?

66
Cash Inflows Present Value at 20% Discount Rate
Year Cash Inflows Discount factor at 20% Present value
1 8,000,000 .833 6,664,000
2 7,000,000 .694 4,858,000
3 6,000,000 .579 3,474,000
Total Discounted cash inflows 14,996,000
Less cash outlay 16,200,000
NPV (- ) 1,204,000
Note this is a higher rate, we try at a lower rate.

Cash Inflows Present Values at 18%, 16%, and 14% Discount Rate
Year Cash Discount Present DF PV DF@14% PV
Inflows Factor Value @
(18%) 16%
1 8,000,000 .847 6,776,000 .862 6896000 .877 7,016,000
2 7,000,000 .718 5,026,000 .718 5201000 .769 5,383,000
3 6,000,000 .609 3,654,000 .609 3846000 .675 4,050,000
Total PV 15,456,000 15,943,00 16,449,000
Less cash outflow 16,200,000 16,200,000 16,200,000
NPV -744,000 -257,000 +249,000
The rate we are looking for lies between 14% and 16%.

So lets us try to calculate the Present value at15%

Year Cash Inflow Discount Factor @ 15% Present Value

1 8000000 .870 6960000
2 7000000 .756 5292000
3 6000000 .658 3948000
Total Discounted cash inflows 16,200,000
Less cash outlay 16,200,000
NPV 0

Acceptance Rules
No. Method
1 Payback Period
2 Net Present Value
3 Internal Rate of Return
Acceptance Rule
Accept business project if the payback period is shorter
than one set up by management
Accept a business project if the present value of cash
inflows over a number of year is positive
Accept business project if the internal rate of return is
higher than or equal to the cost of capital

Summary

Feasibility study is an examination to see whether your business idea is viable or

practical. A feasible business is one where the business will generate adequate cash-flow
and profits, withstand the risks it will encounter, remain viable in the long-term and meet

67
your entrepreneurial goals. A feasibility study looks at market, technical, financial and
managerial feasibility. A number of assessment tools are used.

Exercise

Answer the following questions:

1. Describe feasibility study?

2. Mention one that is useful to assess market, technical, financial and managerial
feasibility?
3. Describe the financial feasibility study methods

Reference Materials

1. Burn Paul, Entrepreneurship and Small Business Mathew, Palgrave Macmillan,

New York, 2001;
2. Cole G A, Strategic Management, Letts Educational, London, 1997

2.2.4 BUSINESS OPPORTUNITIES

Introduction

An opportunity is a foundation for establishing of a business for an entrepreneur. A

business opportunity personifies the entrepreneur and motivates the mobilization of
resources to start an enterprise.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Define the term business opportunity;

2. Identify sources of business opportunity;
3. Develop business opportunities selection criteria;
4. Select business opportunities;
5. Relate the business opportunities to entrepreneurial activities;
6. Differentiate between a business idea and business opportunity.

Topics

This session will cover the following topics:

i. Defining Business Opportunity;

ii. Sources Of Business Opportunity;
iii. Business Opportunities Selection Criteria;
iv. Selection Of Business Opportunities;
v. Relating The Business Opportunities To Entrepreneurial Activities;
vi. Business Idea and Business Opportunity.

68
Defining Business Opportunity;

A business opportunity is an attractive business idea which an entrepreneur has selected

to invest his/her resources to create value on the basis of assumptions of favourable
market need and profit.

Sources of Business Opportunity;

You need to be focused and quite serious in you effort of identifying business
opportunities. Business opportunities can be sourced from:

 The Environment – the natural resource base of an area;

 Population - occupational pattern, socio economic background;
 Current business Situation- trading and business activities in the area and the
trends for new demands of goods and services;
 Target market – expectations of the target group in terms of their skills,
knowledge, and financial resources;
 Resources - industries based on minerals, agriculture, marine and other natural
resources

Business Opportunities Selection Criteria;

An entrepreneur’s first task after assessing himself/herself is to identify and select an
attractive business opportunity. An acceptable business opportunity is a combination of:
 Confirmed need in the community;
 Capability of an entrepreneur;
 Availability of resources to develop the business opportunity.

The Existence of Needs in the Community

A good idea is a good seed for a business opportunity. Growing the idea into a business
opportunity requires confirming that what ever is proposed for production must have a
market need. If the need is already confirmed for you then it cuts down on your costs. If
not, you are required to carry out an environmental scan.

Entrepreneur’s Capability

You as an entrepreneur have certain level of knowledge, skills, values, experience and
assorted traits. It is obvious certain business opportunities will suit your personality
others will not. It is obvious that you need to match given business opportunities with
your personality profile.

Availability of Resources

To develop a business idea into a business opportunity you will need resources. The
resources needed may be special skills, technology, raw materials, infrastructure and
finance.

69
 Selection of Business Opportunities
You can apply the results of the scanning and feasibility to identify to select the business
that is presents the most attractive option.

Focus Method Application Expected Results

Scanning BPEST Identification of external issues
Business, political,
that may affect the business economic and
operations technological trends are
good
Porters Five Force Isolate competitive forces that Competitive strength
Model influence the level of and position of a
competition in an industry business in the market
is favourable

SWOT Identify how the current Business capacity is

resources and capacity of the high
business can manage the
situation in the environment
Value Chain Assesses how you can create the Developed strategies
greatest possible value for your focusing on activities
customers, as well as your best where competitive
route to profit maximization advantage can be
sustained.

Feasibility Payment Period Calculating the number of years Selection of a project

Study required to recover the original based on the number of
cash outlay invested in a years required to
business project recover the original
cash outlay invested in
a business project
being lower that the set
period
Net Present Value Finding the net present value by Net present value of the
subtracting the present value of results of subtracting
cash outflow from the present the present value of
value of cash inflows. cash outflow from the
present value of cash
inflows.
Internal Rate of Finding the rate which equates Rate which equates the
Return the present value of cash inflows present value of cash
with the present value of cash inflows with the
outflows of an investment. present value of cash
outflows of an
investment.

70
Decision Making

This is the most critical step in the entire business development process. In a sense it is
the point of no return. Once you start to establish a business, it is difficult to turn back
otherwise you waste resources. If you have doubts or fears about the business, you should
not go ahead. Be open, honest and discuss this matter before you make the decision.

Commitment to the business idea is another important reason to look at before you
continue. Avoid underestimating the time and effort you need to start a business. A
financial commitment by you at this time and others is an important sign of dedication to
establishing the business.

This step involves making one of the three possible decisions listed below:
 Decide that the business opportunity is viable and move forward with it.
 Do more study and or examine additional options.
 Decide that the business is not viable and abandon it.

The Business Opportunities and Entrepreneurial Activities

To be an entrepreneur one must have the passion to own a business; self motivated
person prepared to face risks. The reason for entrepreneurship is the ability to identify,
pursue and exploit the value from a business opportunity. You cannot call yourself an
entrepreneur until you identify and track at least one business opportunity.

Business opportunities may be there but not every one will follow up on them. You heard
people say I had the same idea when they see a business they were thinking of starting
has commenced operation under the ownership of a stranger. If a business opportunity is
complex leave it, you will be lost in the arrangements of so many parts that have to work
together smoothly.

Business Idea and Business Opportunity

A business idea is a seed for a business opportunity. Before business opportunities are
developed one should identify business ideas. Business ideas are new, creative
approaches to specifically address perceived needs, wants, problems or challenges of
customers through profit generation activities while opportunities are business projects
which an entrepreneur has selected to invest his/her resources to create value on the basis
of assumptions of favorable market need and profit. The selection of business ideas
involves only one step scoring method. The selection of business opportunities involves
the assessment of business ideas and undertaking feasibility study

SUMMARY

In this session we described business opportunity as an attractive business idea which an

entrepreneur has selected to invest his/her resources to create value on the basis of
assumptions of favorable market need and profit. It was argued in this session that an
acceptable business opportunity is combinations of confirmed need in the community;
capability of an entrepreneur; and availability of resources to develop the business
71
opportunity. We discussed the application of feasibility study as a basis of selection of a
business opportunity. We claimed that entrepreneurship is the ability to identify, pursue
and exploit the value from a business opportunity. Lastly we differentiated a business
opportunity from a business idea.

EXERCISE

Answer the following questions:

1. Describe a business opportunity.;

2. What can make a business opportunity acceptable?
3. Explain the process of selecting business opportunities?

Reference Materials:
1. Burn Paul, Entrepreneurship and Small Business Mathew, Palgrave Macmillan,
New York, 2001;
2. Entrepreneurship Development Institute, International Training Programme for
the New Enterprise Creation - Reading Materials Module – 6, 7, 8 and 9 India,
Oct. 01 – Nov. 09, 2001
3. Thomas W. Zimmerer and Norman M. Scarborough, Essentials of
Entrepreneurship, and Small Business Management, Pearson International New
Jearsey, 2005.

72
2.2.5 RISK TAKING

Introduction

All the businesses are exposed to different degrees of risk. Risk exists as a result of
businesses living in an uncertain and ever changing environment. It is sensible to study so
that one comes up with measures to reduce it. Owning a business without understanding
eth risks the business faces will be playing a dangerous game of gambling.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Define the term risk;

2. Describe risk taking and risk avoidance;
3. Explain the types of risks taken by entrepreneurs;
4. Relate risk taking to entrepreneurship;

Topics

This session will cover the following topics

i. Define the term risk;

ii. Describe risk taking and risk avoidance;
iii. Explain the types of risks taken by entrepreneurs;
iv. Relate risk taking to entrepreneurship

Define the Term Risk

All the business you have seen and those you will see in future are all exposed to
different degrees of risk. Risk exists as a result of you the entrepreneur failing to forecast
with certainty of future events. Risk is a danger or threats to your business. Risk also
offers you an opportunity to make a profit. Businesses usually look risk as the potential of
loss or failure. This is too narrow; risk could also represent the opportunity to take
profits.

Risk Taking and Risk Avoidance

Entrepreneurship demands that part of your culture is risk taking. You the entrepreneur
have potential and a trait to take risks. You have experienced risk taking in social
relations and career. The experience will help you judge the chances, risk what is
necessary and avoid risks which have little likely incentive.

Risk avoidance is the situations where individuals, are especially those that have never
gone into business, are afraid of going into business. You hear them say, “Business is not
for me”. Such individuals prefer to look for jobs. You may have observed that some
73
individuals have skills that can assist them start a business that may even pay them more
than any job but they are afraid of failure. In some of our communities, people ridicule
individuals that have failed in business. Fear of failure and loss creates risk avoidance.
One way of removing this fear is training, counselling and learning by observation from
those in business.
The possibility of failure cannot be avoided. Failure is the first lesson to success. Your
business will grow; your problems and opportunities will multiply. So, you should not be
afraid to make decisions that may result in failure but you can learn from you failure.
Adopting a safe and failure proof life is not profitable. To live a life of a king you will
work under the pressures and conditions of risk-taking.

Types of Risks Taken By Entrepreneurs

There are types of risks especially experienced by new entrepreneurs. These are:

Environmental risk- fire, riots, weather, thefts, sudden government policy change;

Entrepreneur’s Risk – how committed are you to own a business. Many budding
entrepreneurs backslide to job seeking. Lack of experience in business is another cause of
failure.

Business Management Risks - poor management of finance, poor marketing skills, poor
planning skills, incorrect pricing are high risks areas for businesses especially small and
medium sized businesses;

Market Risks – the emergence of competitors in the industry, inflationary pressures,

exchange rate instability, low demand for locally produced goods, and poor distribution
systems are risks areas an entrepreneur should manage.

Operational risks - staff turn over, sudden change in technology, materials supply
disruptions are some of the risks in the operational arena.

Financial Risks- loss of cash, loss of a financial investment, high taxes and high interest
rates are some of the risks in this area.

Risk Taking To Entrepreneurship

The awareness that you can make a profit by taking a risk is one of the motivating
factors. You place your money in a business, use the money to assess the market, buy at a
low price inputs to produce and sell in an activity awarded by the earning of a profit. To
manage risk you must be aware of past events in the field, have the passion to live in the
present and you take the necessary risks to harvest success in the future.

Risk taking is not the same as gambling. There is a big difference between gambling and
risk taking. When one is taking risk it does not mean that one must be unthinking. There
are millions of people unhappy with there current situation. They look out for huge
rewards with the barest minimum of investment. They have very little confidence in the
74
possibility of success. The success or failure in such efforts is placed on lucky. An
entrepreneur is different from a gambler in that an entrepreneur puts an effort and other
resources having assessed the high possibility of success. The risk taking ability and
characteristics of entrepreneurs are linked by the ability of the entrepreneur to understand
their business; self-confidence; information seeking; goal setting and determination to
achieve.

Summary

We discussed that risk exists as a result of you the entrepreneur failing to forecast with
certainty of future events. Risk was described as either a danger or threats to your
business or an opportunity to make a profit. Risk taking was explained as the ability to
judge the chances, risk what is necessary and avoid risks which have little likely
incentive. Risk avoidance was described as adopting a safe and failure proof life though
not profitable. Various types of risks especially experienced by new entrepreneurs were
listed. The awareness that you can make a profit by taking a risk is one that is describing
entrepreneurship.

Exercise

Answer the following questions:

1. What is risk and risk taking?

2. Why do individual avoid taking risks in business?
3. “Risk taking is gambling”. Do you agree? Explain your answer.

Reference Materials:
1. Institute of Chartered Accounts, Risk Management for SMEs – www.icaew.co.uk

75
2.3 MOBILISING RESOURCES FOR AN ENTERPRISE

This unit will cover the following sessions:

 Identification of types of Resources;
 Resource Mobilisation.

76
2.3.1 RESOURCE MOBILIZATION

Introduction

Resources are inputs that go into an enterprise to ensure that activities are carried in
marketing, production, and management. Without resources nothing will be produced or
sold. Traditionally everyone in need of resources to go into business looked to the banks
for assistance. Now, there are numerous sources of inputs which one with talent can
exploit. Ask yourself, how do individuals organizing social function parties and events
are able to mobilize resources. Are there lessons we can learn from social function
organizers?

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Define the concept of resources;

2. Explain the importance of resources in an enterprise;
3. Discuss the role of resource mobilization in an enterprise;
4. Outline the various resource providers;
5. Discuss methods for resource mobilization;
6. Mobilize resources for enterprise development

Topics

This session will cover the following topics

i. Define the concept of resources;
ii. Explain the importance of resources in an enterprise;
iii. Discuss the role of resource mobilization in an enterprise;
iv. Outline the various resource providers;
v. Discuss methods for resource mobilization;
vi. Mobilize resources for enterprise development

Definition of Resources

To start business operations you will need resources. Resources might be financial or non
financial. Resources are inputs that are needed in the business to carry out the business
operations. You the entrepreneur are the most important resource in the business. There
are other resources needed namely human resources to carry out work, business
guidelines to assist in a consistent and quality provision of information, facilities such as
machines to make work easier, materials to turn into products or services and funds to
buy resources from outside the business.

77
Qualities you need Mobilize Resources for an Enterprise

You must estimate how much resources you need to start and run the business. How
much resources you will need will depend on the size of the business and the number of
owners who can contribute capital. Money is usually the resource mentioned by most
starting up entrepreneurs. However, the amount of funds can be reduced if entrepreneurs
ask for resources instead of hard cash. Borrow resources you need but you need certain
talents such as:

1. Passion – you must have a strong passion for the business opportunity
2. Curiosity - ask many questions on who can help and the contact persons for
resources
3. Optimism – if you are turned down by one person or one organisation do not give
up. You will need to improve your proposing skills;
4. Prudence – you must be careful with money and have control on costs and the
value of the business.
5. Competitive – resources are limited and as an entrepreneur you must beat
competition
6. Risk taking – to mobilise resources you should not fear taking calculated risks.
7. High energy levels – Take good care of you health and eat sensibly because you
will definitely be stressed at more than one occasion.
8. Flexibility – you should take advantage of the changing resource environment;
9. Be Confident – you must be confident you will achieve resource mobilisation
goal;
10. Be Persistent - never give up in asking for resources until you receive;
11. Be economical - use all available resources on priority areas in the business;
12. Self Belief - firmly believe that success and failure lies within your personal
control and influence

Sources of Financial and Non Financial Resources

Most of us when looking for resources for a business, what comes to mind first are the
banks. Banks give loans. Can you afford interest and loan repayments?

Here are other sources:

1. Buy second hand from auctions or advertisements;
2. Hold a “Career Change Party”. It is party where you ask friends and relatives to
make pledges to your career change from unemployed or employed to self
employed;
3. Send a business proposal to Micro Credit Organizations;
4. Ask relatives and friends to lend or give you all or part of the resources you need;
5. Buy items you need on credit;
6. Approach an insurance company to invest in your business;
7. Ask equipment suppliers to offer equipment on hire purchase;
8. Sell personal belongings;
9. Let customers buy in advance;
10. Approach one of the government agencies to provide you with support

78
Mobilising Resources for Enterprise Development

To mobilize resources you must be well organized. The following steps can help you
mobilise resources:
1. Prepare a business plan;
2. List all the type and amount of resources you need to develop your business;
3. Examine funding prospects including yourself, informal and formal sources;
4. Prepare a fundraising strategy (objectives and approaches);
5. Prepare an action plan;
6. Put plan into action
7. Monitor the progress of fundraising activities;
8. Evaluate the results of the resource mobilization;
9. Review the plan;
10. Repeat the process

Summary

We explained that resources are inputs that are needed in the business to carry out the
business operations. It was explained that how much resources the business need s will
depend on the size of the business and the number of owners who can contribute capital.
To mobilize resources certain talents are needed. Sources of inputs for the business are
outlined. The steps to mobilizing resources were outlined.

Exercise

Answer the following questions

1. Is “information” a resource? Explain your answer.

2. What is the resource that is always available to an entrepreneur?
3. List organisations that can provide you with financial support in Zambia?
4. Who can offer you non financial support?

Reference Materials

1. SAIF, Resource Mobilization and Fundraising Development, Sandon

79
2.4 NETWORKING FOR AN ENTERPRISE DEVELOPMENT

This unit will cover the following sessions:

 Importance of networking in enterprise development:
 Types of networks in enterprise development.;

80
2.4.1 ENTERPRISE NETWORKING

Introduction

Networks are groups of individuals and organizations sharing resources. Networking is a

skill to seek and provide resources to a grouping with similar goals. Networks support an
enterprise in various areas as such market information, production techniques and
management tips.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Define the terms networks and networking;

2. State the importance of networks and networking in enterprise development;
3. Illustrate the role of networks and networking in a business environment;
4. Identify the various types of networks essential for enterprise development;
5. Explain the principles of networking;
6. Establish networks.

Topics

This session will cover the following topics

i. Define the terms of networks and networking;

ii. State the importance of networks and networking in enterprise development;
iii. Illustrate the role of networks and networking in a business environment;
iv. Identify the various types of networks essential for enterprise development;
v. Explain the principles of networking;
vi. Establish networks

Define networks and networking

Networking is when a group of entrepreneurs come together to provide to each

support for the sake of their business. A network is group of entrepreneurs sharing
information and supporting each to develop their businesses. If you spend a bit of
time checking in your community you may find a network relevant for your needs.

Networking is a must have skill for most business people, but especially for
entrepreneurs. It is very profitable to establish contacts with individuals whose help
you will need in future. Simply networking is meeting people who can be of help to
you and you being a help to them.

Every individual can be associated with any of these networking types:

1. The loner – likes to work alone;
2. Socialiser – tries to make friends with every one. The contacts established are
done randomly;
81
 3. User – regular collector of business cards. This network quickly forgets the
face behind the business cards. This type focuses on his/her own agenda. The
need for gathering information is not important.
4. Builder – Very generous individuals. The Builder is well organised net
worker, good listener and learner. This type is collector of information that
others can benefit from.

What is the importance of networks and networking in enterprise development?

Networks are important for the following reasons:

• It helps you market yourself and your business at the least cost;
• Every person you meet has other people who also know others who can assist
you?
• A link to a network is connection to a resource base at a low cost;
• Creates good will and trust in the business circles;
• It provides you with potential opportunities

The role of networks and networking in a business environment

The role of networking in networks is mainly business development. Business

networking serves many purposes:
• sales promotion,
• general marketing,
• recruiting,
• knowledge exchange, and
• business development

Types of networks essential for enterprise development

Principles of networking

To successfully network you must apply the following norms:

• Giving and receiving – as much as you want to receive you must also be ready
to give;
• Contributing and accept support – you expected to contribute support to others
as well as being ready to accept support;
• Offering and requesting – you will be offering on regular information and you
should also request for information;
• Promoting other needs and yours – you may have received information that
some one in the network needs some support and it is your responsibility to
inform others of that need. You must, when needs arise; mention the needs to
members of the network.
• Trust and persistence – in a network you must develop trust because mistrust
can create conflict.

82
 Establish networks
To establish a network start with people you know already. The starting point is to
develop network map. The first thing you need to do is to write a list of people you know
what they do and where. Write down useful details of people you will meet on a daily
basis.

Network Map

Market
Contacts
Public Sector
Contacts Finance
Contacts

You
Human
Public Sector Resources
Contacts Contacts
Social
Contacts
Technology
Contacts

Steps to establishing a network

1. Start with your family and friends;

2. Attend social gatherings;
3. To be prepared to communicate quick,, brief and focused information about you;
4. Get to know yourself well;
5. Prepare informative business cards;
6. Carry with you business cards to all gatherings, meetings and travels,
7. Present your skills not your job;
8. Develop a tracking systems of contacts;
9. Create relationships with the business cards;
10. Listen more and talk less;
11. Develop and use your ability to ask questions;
12. Conduct follow up actions decisively, timely and consistently;
13. Do not make empty promises;
14. Look for unique opportunities;
15. Establish long term business contacts and referrals;
16. Develop a data bank;
17. Conduct follow ups on contacts;
18. Ask for who, places, how to do it, steps, recommendations, connections, contacts
and timings,
19. Socialise at gatherings and be visible,
20. Listen, learn, persist, and maintain contact

83
Here are the Dos of Net Working

• Be patient – nobody grew into an adult in a day;

• Focus on you goal – unless you aware of you destination networking will a
uncomfortable affair;
• Be sensitive to cultural differences – preconceptions of people will make you
unwanted element in the network;
• Follow on given leads;
• Contact people even when you do not need their help;
• Aim for quality in the network relationships;
• Be selective on what you can do;
• Let your style fit your networking.

Summary

Networking is when a group of entrepreneurs come together to provide to each support

for the sake of their business. A network is group of entrepreneurs sharing information
and supporting each other to develop their businesses. Networks are important for
linkages to sources of support and business. There are steps of establishing net works
among them are: attend social gatherings, communicate, create relationships, look for
unique opportunities and conduct follow up actions. These are principles one need to
follow in a network.

Exercise

Answer the following questions:

1. What are networks and networking?

2. What is the importance of networks?
3. What type of networks can one find in the community?
4. Mention to two networks you know and what is their purpose?

Reference Materials:
1. Mathew Sartwell, Napoleon Hill’s Keys to Success; Piatkus, London, 1995
2. Starkey Paul, Networking for Development, IFRTD, New Premiur House,
London, 1997;
3. Warner Jon, Networking, Management Pocketbooks, Hants, 2000.

84
2.5 EFFECTIVE BUSINESS COMMUNICATION IN AN ENTERPRISE

This unit will cover the following sessions:

 Importance of communication in an enterprise;
 Types of communications,
 Barriers to communication;
 Planning for effective communication;
 Application of information and communication technology (ICT) in an enterprise.

85
2.5.1 COMMUNICATION IN AN ENTERPRISE

Introduction

Every human being communicates every day. Communication in business is not the same
as ordinary communication. If you communicate effectively you may save or earn
money. The prospect of losing money through poor communication is very high. There
are now various methods for communication which a business can use. The coming of
email and internet has made the world one big village. You can now communicate with
people thousands of kilometres away and get a feedback in a matter of minutes at a cost
less than a bottle of a soft drink.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Define the term of communication;

2. Explain the communication process;
3. Explain the importance of communication in an enterprise;
4. Relate the importance of communication in an enterprise
5. Explain the types of communication in an enterprise;
6. Discuss the barriers to communication;
7. Illustrate ways to address the barriers to communication;

Topics

This session will cover the following topics

i. Definition of communication;
ii. The communication process;
iii. The importance of communication in an enterprise;
iv. Relate the importance of communication in an enterprise
v. The types of communication in an enterprise;
vi. The barriers to communication;
vii. Strategies to address the barriers to communication

Definition of Communication
Communication involves giving, receiving information, ideas, through written word,
or visual means from a sender to a receiver for particular purpose. You are
communicating every day by talking, gesturing, writing, and symbols. In business
communication is conducted internally and externally through various methods to
achieve set goals.

86
 Communication Model

Noise

Message Message
Medium
Sender Receiver

Feedback Feed back

Noise

The method used is usually determined by: cost, confidentiality, security, influence,
urgency, distance, time, resources, written record, Receiver of message.

Methods of Communication
Type of Communication From Method
1. Internal Oral Telephone
2. Intercom
3. Meeting
4. Presentation
5. Face to Face
6. Messages
7. Telephone
8. Written Report
9. Graphs
10. Email
11. Fax
12. Notice
13. Form/Questionnaire
14. Minutes
15. Newsletter
16. Memo
17. SMS

Methods of Communication
No. External Oral Method of Communication
1. Meeting
2. Conference/seminar
3. Conversation
4. Telephone
5. Presentation
6. Written Leaflets
7. Letter
8. Invitation
9. Forms/Questionnaire
10. Press Release
11. Customer magazine
87
 12. Advertisement
13. Notice
14. Graph/chart
15. Report
16. Email
17. Fax
18. Letter

The Barriers to Communication

Miscommunication is a common problem in personal or business lives. It has been a

source of conflicts and waste. In miscommunication the sender means one thing the
receiver of the message understands something else. Communication may break down for
various reasons;
• Body Language – the body gestures may send a wrong signal to the receiver of
the message.
• Language – the words being used may have different meanings;
• Listening – The receiver may not be attentively be listening;
• Prejudgment – this is a case of hearing what is on our mind already;
• Relationships – the state of the relationship between the sender and the receiver
will have an influence on the effectiveness of the communication;
• Emotional Stress- communication will be ineffective if the person involved in
sending the message or receiving it will be afraid, angry, and crying.

Barriers to communication can occur if the recipient has failed to convey the meaning or /
and the importance of the message.

• Sender breakdown – too much information is being sent, so the recipient misses
key points. Also, language can be difficult to understand, as it can be too
complex.
• Method breakdown – when information is very detailed or complicated, then
written instructions are better than messages which can be misinterpreted.
• Recipient breakdown – the recipient deliberately makes a choice to misinterpret
the message because of their attitude to either the sender to the message at hand.

Other problems with communication could be:

• Long chain of command.

• Language - complex, and hard to understand.
• Vague purpose – not detailed enough, more explanation required
• Inappropriate medium (method used, e.g. written, electronically etc).
• Red tape – message gets passed on to many different people before finally
reaching the recipient making the process too long and the message changing.
Also, actions can be delayed as a result of a late arrival of the message.
• Status of two parties – can be intimidated by the other person’s status because of
their gender, age etc.
• Location – distance of recipient or where message has to reach.

88
 • Distraction – Communication channels breaking up.

Strategies to minimize Barriers to Communication

For communication to be effective apply the following guidelines:

i. Read – expand your language by reading;

ii. Listen attentively – before you speak listen;
iii. Think and plan – before you speak or write plan your
communication very carefully;
iv. Use appropriate language – use simple and clear language;
v. Be open minded – do not make judgement before you hear the
message;
vi. Select the right media – select the right method you will use to
communicate;
vii. Time you communication – select the right time to communicate;
viii. Use suitable language – use the right words to send the right
meaning;
ix. Get feedback – find out the message reached and it was
understood;
x. Maintain standards – aim for quality language and presentation.

Summary

Communication involves giving, receiving information, ideas, through written word, or

visual means from a sender to a receiver for particular purpose. There are a number of
communication methods. The method used is usually determined by: cost,
confidentiality, security, influence, urgency, distance, time, resources, written record,
Receiver of message. Miscommunication is a common problem in personal or business
life. It has been a source of conflicts and waste. There are number of strategies one can
apply to minimize communication break down?

Exercise

1. What is communication?
2. Want is the importance of communication in an enterprise?
3. What are the barriers communications? Give examples.
4. Suggest three strategies that can reduce barriers to communication.

Reference Materials

1. Griffin W. Ricky, Fundamentals of Management, Houghton, New York, 2000;

2. Taylor Shirley, Communication for Business, Pearson, Essex, 1999,
4. Mathew Sartwell, Napoleon Hill’s Keys to Success; Piatkus, London, 1995
5. Starkey Paul, Networking for Development, IFRTD, New Premiur House,
London, 1997;

89
2.5.2 PLANNING FOR EFFECTIVE BUSINESS COMMUNICATION IN AN
ENTERPRISE

Introduction

Finding out how to communicate important messages to key stakeholders of a business in

the most effective way possible is not an easy task. It requires planning. The Plan will
show you where you have come from, where you are and where you are going with your
communication. In this case, the likelihood of success is high.

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Explain planning for effective communication;

2. Plan for effective communication;

Topics
This session will cover the following topics
i. Explain planning for effective communication;
ii. Plan for effective communication

Communication Plan
Communication planning is figuring out how to communicate important messages to key
stakeholders of a business in the most effective way possible. Communication planning,
while often overlooked, is an important business function that can become urgent.

Communication plans may be internal or external in focus.

For example:
 Internal: rolling out a new benefit program to the employees of the business
 External: letting the shareholders know about a new stock offering; letting customers
know about a new product offering

Elements of business communication planning include:

 Communication Vision
 Philosophy
 Communication and Information Goals
 Content and Meaning of all Business Messages
 Credibility
 Message
 Channel
 Audience
 Timing
 Effectiveness

90
Why Develop A Communications Plan?

1. Most small businesses have limited resources — both time and money. A strategic
Communications plan will help your business focus those resources on the most
important tasks and set priorities. Without a plan, businesses run the risk of reacting to
external events in a knee-jerk manner, wasting valuable communication opportunities
and getting pulled “off-mission” in the process.

2. A good plan imposes discipline and clear thinking that will help you clarify your
objectives and target audiences, sharpen your message and help you better understand the
environment in which you will be delivering that message.

3. Communications planning will help your business put together all of its
communications work on a particular issue, including not only media activities, but
government relations, networking, investment promotions, and communications with
suppliers.

4. A good plan will help ensure that everyone in your business is on the same page when
they communicate with the rest of the world.

5. A communications plan will help you develop better media plans, too. A well-
developed media plan is important because the media is the primary education force in
our society; they set the public policy agenda and frame public perception on many
issues.

OVERVIEW OF COMMUNICATIONS PLAN

A typical plan outline will look this:

1. Situation Analysis: Organizational Background
2. Situation Analysis: External or Public Environment
3. Campaign/Organizational Goal and Key Objectives
4. Communication Objectives
5. Target Audiences
6. Key Messages
7. Strategies
8. Tactics
9. Timing
10. Timelines
11. Spokespeople

Situation Analysis: External or Public Environment

It is important to be aware of the external threats and opportunities to your

organization, to those who may be opposed to your messages, and to have a good
sense of the communications environment in which you will be delivering your
message.

91
You may consider these questions:
1. What will the current local/national perception of your business,?
2. Will you widely be seen as small business?
3. Will you be seen as credible?
4. How do you want to be positioned?
5. How exposed will your business be?
6. How will your business be positioned within the media to date?
7. Have any special studies or surveys been carried out affecting your area?
8. Who are your supporters?
9. Who will publicly support your business role in the community?
10. Do you have competitors?
11. What are the competitors’ messages?
12. What effect will these messages have on your business?
13. What are the competitor’s strengths and weaknesses?

Communications Objectives
Objectives are concrete, measurable and specific.\
Consider these questions:
1. What are you aiming to achieve by communicating?
2. What do you want your target audience to do, exactly? What is your “call to
action”?
 Do you want your audience to buy your goods?
 Do you want them to change a personal behaviour?
 How will you measure success? What will your benchmarks be?
 Do you want to provide your audience with new information?
 What do you want them to do with this information?

TARGET AUDIENCE
1. Who do you ultimately want to influence?
2. How can you reach your target audiences?
3. List them in order of priority to reaching your goal or key objectives.
4. Who do you want to support your business?
5. What is the message you want communicated?

KEY MESSAGES
There are many ways of communicating about you business. It is important to know
which words will ring with your audiences; which words or ideas the public will
embrace. Some research, such as informal focus group testing or direct mail
questionnaires may be required to fully understand your audiences’ motivations.

The results of testing may be unexpected — even counter-intuitive.

Message testing is an important step to ensuring you develop a successful
communications campaign.

Communication Strategies
Consider the following questions when developing your strategies:
 Is your strategy proactive or reactive?
 Low profile or high profile?
92
 Local community or nation-wide?
 What are the major communications opportunities?
 What are the major communications challenges?
 What communications strengths will be available in your organization?
 What networks will your business have?
 Does your approach need paid advertising through print or electronic media
(assuming you have the resources to do so!)?
 Who are your competitors?
 What do you anticipate competitors key messages will be in response to your
release?
 How will you respond?
 What are the potential weak points in your argument or story?
 How creative can you be?
 Does your strategy permit the development of a specific Media Strategy?
 Which kind of media coverage will result in the greatest impact on customers and
suppliers?
 Should your story be delivered in a media briefing with specific reporters invited?
 Can your story be made visual? Are there ways in which your story could be staged,
presented and/or supported by visual materials?
 When should your release be timed? How does it fit with other current events?
 What are current editorial priorities?

TACTICS
There are literally dozens of methods to reach an audience. In selecting and prioritising
your tactics, consider these questions:
 How big is your budget?
 What personnel resources are available to you?
 How do you plan to deliver your key message(s) to your target audiences;

Now, Use The Plan!

Don’t shelve your work and return to fighting fires. Use it! Refer back to your
communications work plan on a regular basis. Build an evaluation process into the
project timeline. The greatest benefit in having built your Strategic Communications
Plan, other than the fact that you were able to pull off a fantastic campaign, is that the
next time you decide to mount a communications campaign, a large chunk of the work
will already be done. And, if you track your successes, challenges and failures, then
you’ll be able to adapt subsequent campaigns to accommodate what you learned the first
time around.

TIMING
Timing refers to the natural links onto which you can hook your communications. For
example, if the government will be making budget decisions that will impact your
business area, be prepared to respond. Be proactive and contact media and assistants to
the Minister before the decision and announcements are made. Does your business issue
have natural links to stories around specific holidays? Plan out your activities well in
advance of the holiday you are hooking your campaign on.

93
SPOKESPEOPLE
Determine who within your business will project the most credible voice to your key
audiences. You may want to train one person to address the government and editorial
boards and another to share your message with customer. If you are dealing with
a variety of issues, you may also want more than one spokesperson.

94
Summary

Communication planning is figuring out how to communicate important messages to key

stakeholders of a business in the most effective way possible. Without a plan, businesses
run the risk of reacting to external events in a knee-jerk manner. A typical plan outline
will look like this: Situation Analysis: Organizational Background; Situation Analysis:
External or Public Environment; Campaign/Organizational Goal and Key Objectives;
Communication Objectives; Target Audiences; Key Messages; Strategies; Tactics;
Timelines and Spokespeople

Exercise

Answer the following questions:

1. What is a communication plan?

2. What is the importance of a communication plan for an enterprise?
3. What the major components of a communication plan?

Reference Materials

Don Hofstrand & Mary Holz-Clause, Co-Directors, Ag Marketing Resource Center, Iowa
State University, Nigel Atkins’, A Guide for Communications , Planning , 1997

95
2.5.3 APPLICATION OF INFORMATION AND COMMUNICATION
TECHNOLOGY (ICT) IN AN ENTERPRISE

Introduction

This is the era of ICT. In business, the introduction of ICT offers an opportunity to reduce
costs and communicate effectively. ICT enhances information management and
communication thereby simplifying decision making

Unit Learning Objectives

On completion of this session, the trainee will be able to:

1. Explain ICT in an enterprise;

2. Describe the importance of ICT in an enterprise;
3. Apply ICT in an enterprise.

This session will cover the following topics

i. What is ICT?
ii. The importance of ICT in an enterprise;
iii. Application of ICT in an enterprise

You have come across the word ICT in various situations, at school, college, hospital,
vehicles, machines and telephones. ICT stands for Information Communications
Technology. You may also come up with your own definition after reading this unit. ICT
is a rapidly changing field. We can only understand it by looking back at what has
happened so far.

Uses of ICT

ICT uses digital technology to help you and me, businesses, civil organisations,
government, and communities to have products that will store, retrieve, manipulate or
receive information electronically in a digital form; the examples of the products are
personal computers, digital television, email, robots and cell phones. ICT is also
concerned with the way these different uses can work with each other.

Categories of ICT

ICT is normally grouped into:

 Traditional computer-based technologies (things one can do on a personal

computer or using computers at home or at work);
 Digital communication technologies (which allow people and organisations to
communicate and share information digitally)

96
Traditional Computer Based Technologies

Information applications include:

1. Standard Office Applications

 Word processing E.g. Microsoft Word: Write letters, reports etc
 Spreadsheets E.g. Microsoft Excel; Analyse financial information;
calculations; create forecasting models etc
 Database software E.g. Oracle, Microsoft SQL Server, Access;
Managing data in many forms, from basic lists (e.g. customer contacts
through to complex material (e.g. catalogue)
 Presentation software E.g. Microsoft PowerPoint; make presentations,
either directly using a computer screen or data projector. Publish in digital
format via email or over the Internet
 Desktop publishing E.g. Quark Express, Microsoft Publisher; produce
newsletters, magazines and other complex documents.
 Graphics software E.g. Adobe Photoshop and Illustrator; Macromedia
 Freehand and Fireworks; create and edit images such as logos, drawings or
pictures for use in DTP, web sites or other publications

2. Specialist Applications - Examples (there are many!)

 Accounting package E.g. Sage, Oracle; manage an organisation's
accounts including revenues/sales, purchases, bank accounts etc. A wide
range of systems is available ranging from basic packages suitable for
small businesses through to sophisticated ones aimed at multinational
companies.
 Computer Aided Design Computer Aided Design (CAD) is the use of
computers to assist the design process. Specialised CAD programs exist
for many types of design: architectural, engineering, electronics, roadways
 Customer Relations Management (CRM) Software that allows
businesses to better understand their customers by collecting and
analysing data on them such as their product preferences, buying habits
etc. Often linked to software applications that run call centres and loyalty
cards for example.

Communication applications include:

The C part of ICT refers to the communication of data by electronic means, usually over
some distance. This is often achieved via networks of sending and receiving equipment,
wires and satellite links. The technologies involved in communication tend to be
complex. However, there are aspects of digital communications that you need to be aware
of. These relate primarily to the types of network and the ways of connecting to the
Internet.

Internal networks
These are normally called local area network (LAN). The LAN involves linking a
number of hardware items (input and output devices plus computer processing) together
within an office or building. The aim of a LAN is to be able to share hardware facilities
97
such as printers or scanners, software applications and data. This can cut down on costs
of hardware purchases and printing materials in the business. This type of network is
valuable in a business office where there is need to have access to common data or
programmes by all working in the office.

External networks
Often you need to communicate with someone outside your internal network; in this case
you will need to be part of a Wide Area Network (WAN). The Internet is the ultimate
WAN - it is a vast network of networks.

E-Commerce
E- Commerce is electronic commerce. This is business taking place over the electronic
network. It covers buying and selling using communication technology. It uses the email
and internet to conduct business.

Internet
The internet is a global (world wide) network of high powered computers connected by
cables, telephone lines, microwave dishes, satellites and other digital equipment to store,
retrieve, manipulate or receive various types of information electronically in a digital
form.

Email
It is a communication method of sending and receiving messages using computers on the
network. A computer, network connection and email address are necessary to use it.

E commerce eliminates the barrier of time and distance in buying and selling. You can
shop from your office. You do not need to travel to the shop. The shop comes to you
through the computer. You can also sell your goods to the whole world through the
computer.

Uses of the Internet in Business

You can use the internet to:

 Advertise your goods and services;
 Facilitate communication or provide information about your business and its
services;
 Sell good and services;

The commonest businesses on the e-commerce are:

 Retailing – selling goods and services directly to a consumer;

 Services – Airlines, banks and insurance companies are selling their services on the
internet;
 Supply chain – providing services to develop products through the stages of
production from raw materials to final products or services

98
Summary

ICT stands for Information Communications Technology. ICT uses digital technology to
help you and me, businesses, civil organisations, government, and communities to have
products that will store, retrieve, manipulate or receive information electronically in a
digital form; the examples of the products are personal computers, digital television,
email, robots and cell phones. Now ICT is now changing the way businesses are run. E-
commerce is the new addition to ICT. E- Commerce is buying and selling using
communication technology.

Activity

1. What is ICT?
2. What are the uses of ICT?
3. Suggest what can be sold using communication technology?

Reference Materials

1. Kubre Milan, Management Consulting, ILO, Geneva, 1996;

2. Mdaan Anil, Illustrated World of Internet and E- Commerce, Dreamland, New
Delhi, 2001;
3. Maude J. Timothy, the Internet Investors, CIB, Kent, 1999

99
 REFERENCES

1. Armstrong Peter, Critique of Entrepreneurship – People and Policies, Palgrave

Macmillan, New York, 2005;
2. Birley Sue and Muzyka Daniel, Mastering Enterprise, Pearson Professional,
London, 1997;
3. Calvin Robert J. , Entrepreneurial Management, McGraw-Hill, New York, 2002;
4. Kelly Kevin, New Rules for the New Economy, Fourth Estate, London, 1998;
5. Livesay Harold C. Entrepreneurship and the Growth of Firms, Edward Elgar,
Aldershot, UK, 1995;
Perry Martin, Small Firms

100
MODULE THREE

3.1 Duties and Responsibility of Management

Introduction
In order to run a successful, growing enterprise, an entrepreneur needs to possess
not only entrepreneurial attributes but managerial skills as well

Learning Objectives: At the end of the session, you will be able to

• State the duties and functions of management
• Relate the functions of a manager to entrepreneurship

Learning outcomes
• Duties and functions of management explained
• Functions of management related to entrepreneurship

Reading Materials

What is Management?
• Getting things done through the efforts of others
• Making things happen and produce results
• The art of achieving the objectives of a business / organization in the most efficient
way

Functions of Management

As a process management can be described in terms of several major functions often

performed simultaneously or as part of continuum

The Functions are:

• Planning
• Organizing
• Staffing
• Directing
• Controlling

101
1. Planning
• The determination of course of action in order to achieve desired result
• It is the process of anticipating the future and discovering alternatives course of
action
– a process by which specific objectives are established and details ways of
achieving them are established

• Planning is a sub function of forecasting

– What is to be done
– How
– When
– Where and,
– Who will do it
– It involves selection of objectives, strategies, policies, programmes and
procedures

2. Organizing
• Organization
– a group of people working together to achieve a common goal
• Organizing
– division of work, allocation of duties, authority and responsibility
– it includes span of control, numbers of levels of management and delegation
– it is bringing together human, financial, material resources, plant and
machinery to objective

3. Staffing
• manning and keeping manned the position provided in the org. structure
• a process in which managers select, train, promote and retain and retire
subordinates

4. Directing
• Guiding and leading subordinates
• A process by which actual performance of the subordinates is guided towards
common goal
• Inculcating in subordinates a keen appreciation of the org. orientates them
continuously, clarifying their assignments etc
• Directing involves
– delegating
– motivating
– communication
– Coordinating

102
5. Control
• Continually monitoring of activities
• its about measuring and correcting activities
• Types of Control
– production and operation control
– inventory control
– quality control
– financial control

The Individual Aspects of Control

• establishing reporting systems
• developing performance standards
• measuring performance standards
• taking corrective action
• rewarding

Responsibilities of a Manager
• Responsibility to the Department
– Knowledge of managerial techniques
– good leadership qualities
– economy in operations
– planning & coordination of work
– establishment of targets and standards
– proper care and use of equipment, materials etc
– knowledge of department, interpretation of laws rules, regulations and policies

Responsibilities to the Employee

• indoctrination of new employee
• knowledge of HR
• adequate instruction in performance of assignments
• accurate, definite and reasonable assignments
• recognition, respect and praise when due
• fair evaluation of performance
• good working conditions

103
•Authority of Managers
• Authority - emphasized power over a situation or an individual
– the right to command and power to make oneself obeyed
• Two Types of Authority
– statutory authority - belongs to the position
– personal authority - as a result of intelligence, knowledge, moral qualities and
the gift to command people
• to be effective both types of authority should be available

Activity
Why do mangers fail?

Possible answers to why managers fail

• Lack of managerial skills knowledge and attitudes
• promoting levels of incompetence
• lack of authority
• lack of leadership drive
• poor relationship with the boss
• lack of commitment
• membership in trade union
• fear of victimization
• organization climate
• Is my relationship with senior management satisfactory?
• Am I doing too much routine or administrative clerical work?
• Have I have enough time to think?
• Do any of my staff need further training?

Activity

Are there differences between a manager and entrepreneur?

If so, state these differences

Reference Material
1. Busines Environment P. Diwan, Excel 1996
2. A Manual of Business Opportunity Identification, J.B Patel 1995
104
3.2 Leadership

Introduction
Leadership is the ability to inspire others to seek defined goals and objectives
enthusiastically. It is the human factor which binds a group together and motivates it
towards goals. It is the quality of behaviour in individuals by which others are drawn
to accept their guidance – the more reason it is so crucial in entrepreneurship.

Session Objective
At the end of the session, you will be able to
• Define the term leadership
• Identify types of leadership
• Demonstrate good leadership qualities

Session Outcome
• Leadership defined
• Types of leadership identified
• Trainees demonstrating good leadership qualities

Activities

Activity

In small groups:
3 Identify leaders you consider to have good qualities in your community.
4 Against each leader identified, list down traits and characteristics of them

105
Reading Material

L E A D E R S H I P

Definition
Leadership is the ability to inspire others to seek defined goals and objectives
enthusiastically. It is the human factor which binds a group together and motivates it
towards goals. It is the quality of behaviour in individuals by which others are drawn
to accept their guidance.

A leader is one who exercises influence over others. He or she is a person with the
ability to influence the behaviour of others in a given situation.

Leadership and Management

Managers by definition are expected to lead by virtue of the positions they hold in the
organisation. Thus term ‘manager’ and ‘leader’ are sometimes used synonymously.
Organisations depend to a larger extent on the leadership qualities provided by
managers: They are expected to motivate or inspire people to put in their best. In
addition it involves getting people committed to the organisation’s mission and vision.

Functions of Leaders in Organisations

• Crafting path for the organisation; giving direction to the organisation
• Communicating information and giving advice
• Monitoring performance and giving feedback
• Establishing basic values for the organisation
• Clarifying and solving problems
• Administering rewards and sanctions
• Making decisions
• Representing the group to others

Thus there is an overlap between management and leadership.

Qualities of Good Leaders

• Commitment:
Commitment self dedication to a cause, enthusiasm, determination and serving as
role model
• Courage:
Courage ability to withstand difficult and dangerous situations
• Foresight:
Foresight ability to ‘see’ things before they happen
• Human Relations:
Relations empathy; putting oneself in position of the other.
• Credibility:
Credibility having a good track record
• Integrity:
Integrity having good moral standing
• Intelligence:
Intelligence ability to think quickly and correctly; reasoning power
• Decisiveness:
Decisiveness ability to stand by his or her decision
• Emotional stability:
stability able to control one’s temper
• Visionary:
Visionary ability to create picture of what the organisation should be in future
• Self-
Self-confidence:
confidence being sure of what one is doing
• Capacity to admit error
• Honesty:
Honesty being trustworthy

106
Sources of Power for Leaders
Power is the ability of an individual to control or influence others. A person has power
over you only if he or she controls something you value.

Coercive Power
This is power dependent on fear.. One reacts to this power out of fear of the negative
results that might occur if one failed to comply. It rests on the application or threat of
application of physical sanctions such as infliction of pain; generation of frustration
through restriction of movement etc. For example a person goes into the bank, holds a
gun to the teller’s head and asks for money; the teller will comply out of fear of losing
what he or she values most - life.

In the organisational context, one has coercive power over the other if they can dismiss,
suspend or demote someone assuming that the other person values their job.

Reward Power
This is the opposite of coercive power. People comply with the wishes or directives of
another because it produces positive benefits. The reward can be anything that one
values - money, promotion, favourable appraisal etc.

Legitimate Power
In the organisation this power is derived from one’s structural position. This is the
power one has as a result of his or her position in the formal organisational hierarchy.
It embraces acceptance by members of the organisation of the authority of a position.

Expert Power
This is the influence wielded as a result of expertise, special skill or knowledge.
Physicians, lawyer, engineers etc have expert power. So we follow their advice.

Referent Power
This is power exercised as a result of one wanting to identify with a person who they
consider to have desirable or unique personal traits. If I admire and identify with you,
you can exercise power over me because I want to please and be like you. It develops
out of admiration of another and a desire to be like that person because of the unique
characteristics they possess, e.g. oratory etc. It is much like charisma. If you admire
someone to a point of modelling your behaviour after them, then they possess referent
power over you. Referent power explains why celebrities are paid millions to endorse
products in commercials.

When you possess something that others require, that you alone control, you make
them dependent on you and gain power over them. If something is plentiful, possession
of it will not increase your power.

107
Leadership Styles

There are basically three types of leadership styles reflected by way of making decisions.

1. Autocratic Style: Leader-

Leader-centred

The leader or manager makes decisions and imposes them on subordinates. All the
power is centralised in one person who enjoys issuing order and directives. There is
very little teamwork and association with subordinates. This is the militaristic type of
leadership.

Here people simply do what they are told to do. Consequently there is no room for
subordinates to use their creativity. People will be working in fear and in the process
may be making a lot of mistakes. This style of leadership is appropriate in emergency
and crisis situations.

2. Democratic Style: Team-

Team-Centred

Here decision making is shared between the leader and the subordinates, but the leader
has the final say.
The leader uses subordinates ideas and opinions constructively. Criticism and praise
are given objectively. Whenever the leader is forced to make a decision without
consulting subordinates, he or she explains to the group later. Because decision making
is shared, it is ‘owned’ by all. In addition, because of the participatory nature of the
democratic style, there is a feeling of belongingness.

3. Laissez-
Laissez-faire: Individual-
Individual-centred

This is a ‘free for all’ style of leadership. The leader allows group members to do as they
please. Decisions are made by whoever is willing in the group. The leader only
provides information, but does not take responsibility.

Reference Material
1. Busines Environment P. Diwan, Excel 1996
2. A Manual of Business Opportunity Identification, J.B Patel 1995

108
3.3 Team Building

Session rationale
The importance of team work in any undertaking is well understood and yet how
effectively this collection of individual’s work, how it feels about its
accomplishments and about itself is often left largely to chance

Learning objectives
At the need of the session, you will be able to:
• Define a team
• Outline the process of team building
• Relate team building to entrepreneurial process

Learning outcome
• The term team defined
• Team building process outlined
• Team building related to entrepreneurial process

Activities

Individual Exercise

1. What is the difference between ‘a team’ and ‘a group of colleagues’ in the

some organization?

2. Identify three so-called teams in your school and say whether they fit your
definition of teams

3. Would you consider people in a church to be a team? Give an explanation

for your answer

4. What does being in a team mean to you?

109
TR3.1
Team Work
What is a Team?
• A collection of individuals who have come together for a specific common
purpose. Their continued effort are supposed to produce a given product/service
• A Team is a group of people who feel energized by
1. ability to work together
2. fully committed to high level of output
3. care about how each member feels during work process

The Difference between a Team and a Group

• Membership
The members of a team are identified as such
• Goals
The team knows what its objectives and goals are in terms of work it has to do,
and in terms of the sort of team it wants to be
• Interdependence
Individuals alone would not be able to achieve the goals
• Collaboration
Members continuously help and support one another
• Identification
Team members think in terms of ‘we’…instead of ‘I’

Teams as Synergy Concept

• Synergy is the force that makes the whole greater than the sum of its individual
parts
• Through effective team work, a group can generate solutions to problems that are
far superior to those that are developed individually by its members

Characteristics of a winning Team

• Strong commitment to the achievement of organization goals
• Open and frank communication
• Actively listen to each other
• a climate of trust and understanding is developed
• All members of the team participate in problem solving and decision making
process
• Members have gate keeping skills to ensure involvement of the whole team
• Team members confront each other’s assumption in ways that do not close further
discussion
• they are wary of reaching agreements prematurely
• conflict is regarded as healthy and a necessary part of the problem solving process
• conflicts resolved through negotiation and collaboration
• A cohesive bond exists between individuals team members and as a team as a
whole

110
Stages of Team Development

Forming Stage

• In the early stages, the team leaders and members need to get used to each other,
exploring their strengths and weakness
• Common failing - the desire to make an immediate impact, by imposing their
authority inappropriately

What the team leader should do

• get to know the balance of skills in the team
• examine the team’s objectives and targets
• work to establish trust and openness within the group

Storming

Temperamental and attitudinal differences begin to appear - at times translated into open
conflicts.

Team leader should

• encourage people to open, but not confrontational about their differences
• help them see differences positively
• ensure high level of discussion and debate around contentious issues

Norming Stage

Team members begin to work out ways of working effectively together

The role of team leader is to:

• help the team develop ground rules about team behavior
• instigate regular progress review
• consolidate his / her own relationships with the groups in terms of accessibility,
support, decision making process etc

Performing Stage

High levels of performance are achieved

What should be done

• provide the support the team needs
• maintain open communication, joint problem solving
• manage the boundaries between the team and the rest of the organization

Reference Material
1. Small Business Management – II, “The Open Learning Programme in
Entrepreneurship” EDI

111
3.4 Marketing Concepts

Introduction
Marketing – is the performance by an enterprise of all the activities required in order to
create, promote, and distribute products in accordance with the present or potential
customers’ demand and the firm’s ability to produce.

Learning Objectives
At the end of the session, you will be able to:
• Explain the term marketing
• Explain the five marketing concepts
• Discuss the importance of marketing to an enterprise

Learning outcome
• The term marketing explained
• The five marketing concept explained
• The importance of marketing to an enterprise explained

Reference Material
Marketing Management, Phillip Kotler, Prentice Hall India, 1997

112
Reading Materials
TR
Five Marketing Concepts

Product Concept
▲ Consumers will favour those products that have the most quality, performance of innovative features
▲ Managers in these organizations focus their energy on making superior products and improve them
over time
– they are caught up in a love affair with their products and fail to appreciate the market

The Production Concept

▲ Consumers will favour those products that are widely available and low in cost.
– concentration is on achieving high production efficiency and wide distribution coverage
▲ Assumption: Consumers are primarily interested in product availability and low price

The Selling Concept

▲ the consumers, if left alone, will ordinarily not buy enough of the organization's products
– the way forward- aggressive selling and promotion effort
▲ Assumption: The company has available a battery of effective selling and promotional tools to stimulate
buying

Marketing Concept
▲ The key to achieving the org. goals consist in determining the needs and wants of
target markets and delivering the desired satisfaction more effectively and efficiently
than competitors

The Societal Marketing

▲ Organisation’s task is to determine the needs, wants, and interest of target markets and to deliver the
desired satisfaction more effectively and efficiently than competitors in a way that preserves the
consumer’s and the society’s well-being

MARKETING CONCEPTS

Marketing – is the performance by an enterprise of all the activities required in order to

create, promote, and distribute products in accordance with the present or potential
customers’ demand and the firm’s ability to produce.

This definition is dealt under the following headings:

- Marketing activities
- Principles of marketing management
- Marketing techniques
- Marketing strategy
- Creating a market
113
Marketing activities

• Market Research – activities concerned with obtaining marketing information. It

is necessary to find out the facts about the market so that decisions can be based
on factual information and not on guesswork.

• Product Planning – activities concerned with developing a product so that it

satisfies the customer and enables the enterprise to use its productive capacity
fully.

• Pricing – activities concerned with determining the price of the product on the
basis of costs as well as market factors such as distribution channels used,
discount structure applicable, level of prices of competitors products, ability or
willingness of customers to pay, and so on.

• Advertising – activities concerned with making the product known to the

customers and creating demand for it. Advertising brings the customer to the
product.

• Sales Promotion – activities covering all aids to sales other than advertising.
Sales promotion stimulates demand and increases sales. Usually sales promotion
moves the product towards the customer.

• Distribution – activities concerned with distributing the product from the

manufacturer to the customer, making the product available and easy to buy.

The activities outlined above are carried out when planning and preparing a market
programme.

Principles of marketing management

• Active attitude – company must have an active attitude towards the market. It
cannot expect customers to buy a product simply because it is produced.
Management must actively study the market, persuade customers, promote the
produce and organize distribution.

• Importance – second principles is that the management of an enterprise must

recognize that marketing should be given at least as much importance as other
basic managerial functions such as administration, production and finance.

• Integrated – the third principle is that the marketing function must be

“integrated”. This means that the various marketing considerations (such as
customer preference, competition, distribution etc) must be taken into account in
the decision of all the managers not only those directly concerned with sales.

114
 • Marketing Techniques – the management is required to control the application of
a range of skills and techniques in marketing generally derived from practical
industrial experience and from modern social services such as economics,
statistics and applied psychology.

• Marketing skills and techniques can be divided into four broad groups, first of
these comprises techniques related to obtaining marketing information through
market research and consumer surveys. The second group of skills and
techniques comprise those developed to influence the customer and stimulate
demand for the product – viz advertising and sales promotion. The third group of
skills comprise what are known as analytical techniques for the purpose of
analyzing market data and costs.

Marketing Strategy

• Marketing Strategy – is the art of selecting the appropriate market

techniques.

• Choice of techniques depend on:

1. type of product
2. size of the firm
3. market
4. resources of the firm

Creating a market – the activities involved in marketing, the rules of management

which should be applied, and the marketing techniques used to carry out these
activities.

We have also seen how the appropriate marketing techniques must be selected to
develop a particular marketing strategy.

The proper and active use of marketing techniques provides the possibility of
creating a market, for example:

1. A market can be created by increasing the present volume of sales

2. Creating a market can mean waking up a sleeping market

3. Creating a market can involve creating a demand that did not exist at all.

The process of creating a market may be carried by a new firm or an existing one based
on a new product (at least new in a particular market) or an established one. Just as
launching a new product is creating a market so expanding the sales of an existing
company with an established product is creating a market.

115
3.5 Marketing Plan for an Enterprise

Introduction
A marketing plan is a central instrument for directing and controlling marketing
effort in an enterprise. Enterprises that want to improve their marketing
effectiveness and efficiency must learn how to create and implement sound
marketing plans. Therefore, this session will seek to address how an effective plan
can be developed

Learning objectives
At the end of the session, you will be able to:

• Outline the process of marketing plan

• Apply a marketing plan to an entrepreneurial process

Activities

Design a marketing plan for your project. The plan should contain the
following:

• An Analysing Market Opportunities

• Selecting target markets:

• Marketing strategies:

• Marketing programmes

• Organising, implementing, and controlling mechanisms:

The Marketing Plan Process

Analysing Market Opportunities: The first task to develop a marketing plan is to

identify and analyse the long term market opportunities. In order to do so there is
need to operate a reliable marketing information system. Market research is an
indispensable marketing tool in this regard.

Researching and selecting target markets: The second stage is to research and
select target markets. There is need to know how to measure and forecast the
attractiveness of any given market. This requires estimating the market’s overall
size, growth, profitability and risks

116
Designing the marketing strategies: The third stage is the adoption of
appropriate marketing strategies. These include product positioning and
differentiating. For example, an enterprise could decide to offer high quality, high
price for a particular market target

Planning marketing programmes: Marketing strategies should be transformed

into marketing programmes. This is accomplished by making basic decisions on
marketing expenditure, marketing mix (price, place, product, promotion) and
market allocation

Organising, implementing, and controlling the market effort: The final stage in
the marketing process is the organising market resources and implementing and
controlling the market plan. An entrepreneur must build a marketing organisation
or effort that is capable of implementing the marketing plan. In small enterprises,
one person can carry out all the marketing tasks. This might not be the case with
large enterprises were a team of marketers could be required

Content of a marketing
marketing plan
1. Executive summary: present a brief overview of the proposed plan
2. Current marketing situations: presents relevant background data on the
market, products, competition etc
3. Opportunity & issues analysis: identifies opportunities/threats, weakness,
strengths, and issues facing the product
4. Objectives: defines the goals the plan wants to reach
5. Marketing strategies: present broad marketing approaches to be used
6. Action programmes: Answers; what will be done, by whom, when and
where
7. Project profit and loss statement: farceuses the expected financial
outcomes
8. Controls: indicates how the plan will be monitored

Reference Material
Marketing Management, Phillip Kotler, Prentice Hall India, 1997

117
 3.6 Buying

Introduction
The aim of marketing is to meet and satisfy target customers needs and wants. But
“knowing customers” is never simple. Customers may state their needs and wants
but act otherwise. They may not be in touch with their deeper motivations. They
may respond to influences that change their mind at the last minute. Entrepreneurs
must study their target customers, wants perceptions, preferences and, shopping
and buying behaviour. Such studies will provide clues for designing new
products, product features, prices and the like

Session Objectives
On completion of the session, you will be able to:
• Define the term buying
• Outline the buying problem
• Discuss factors influencing the buying process

Session Outcome
• The term buying defined
• The buying process outlined
• Factors influential to the buying process discussed

Activities

1. How is buying a value adding activity? Elaborate

2. Who are the main characters in the buying decision process?
3. Elaborate on each of the five stages of the buying process

118
Reading Materials

Model of Buying Behaviour

Marketing Stimuli Other Stimuli

Product Economic
Price Technological
Promotion Political
place social

Buyer’s characteristics Buyer’s decision

process
Cultural Problem recognition
Social Information search
Personal Evaluation decision
Psychological Post-purchase
behaviour

Buyer’s Decision
Product choice
Brand choice
Dealer choice
Purchase timing
Purchase amount

Detail Model of Factors Influencing Behaviour

Cultural Social Personal Psychological

Cultural ReferenceAge & life Motivation

groups cycle stage
Perception
Subculture Family Occupation Buyer
Learning
Social Class Roles & Economic
Statuses circumstance Beliefs &
attitude
Personality

119
Buying Role
For many products it is easy to identify a buyer. Men usually choose their shaving
equipment, and women chose their dishes. Other products involve a decision-
making unit consisting of more than one person. For instance, in buying a car, a
son might suggest a new car. A family might suggest a car to buy, a husband
might decide on a make. The wife might have different thoughts on the type of the
car

Thus, we can distinguish five roles people can play in a buying decision
1. Initiator: A person who first suggests the idea of buying a particular
product
2. Influencer: A person whose view or advice influences the decision
3. Decider: A person who decides on any component of a buying decision;
whether to buy, what to buy, how to and when
4. Buyer: the person who makes the actual purchase
5. User: The person who consumes or uses the product

Five Stage Model of the Buying Process

Need Information Evaluation Purchase Post purchase

recognition search alternatives decision behaviour

Reference Material
Marketing Management, Phillip Kotler, Prentice Hall India, 1997

120
 3.7 PRICING
Introduction
For any entrepreneur to have a return on his or her business, they have to make a
profit. One of the factors in the profit equation is the price. Therefore, right
pricing is a prerequisite to a success of any enterprise
Session Objective
At the end of the session, you will be able to:
• Define pricing and price
• Explain the importance of pricing in an enterprise
• Set price for a given product/service
Session outcome
• The terms price and pricing defined
• The importance of pricing in an enterprise explained

Reading
Reading Materials

Pricing
Business make a profit by selling goods and services at a price that is higher than their
costs. Profit is a result of the interaction between cost, volume and price. For instance, ,
the volume of good sold affects the cost per unit. If the volume increases, the fixed
overheads are spread over more units and so, the cost be unit decreases. Cost is also
influenced by price. Pricing are very important because they have a major effect on the
volume sold and as the consequence on profit generated

One of the major considerations of a pricing decision is the effect a change in price will
have on volume sold. If price is reduced, by how much will demand increase? If price is
increased will a large or small decrease in demand occur? A complete answer to these
questions, if such an answer does indeed exist, will involve a number of different factors
in the total marketing mix, but the basic microeconomic analysis of demand is the
fundamental starting point. There are two extremes of the price/demand trade-off
represented graphically bellow:

Price

0
Demand

Pricing Strategies Based on Costs

121
1 Total cost Pricing
There are many different pricing strategies. Cost is one of the many methods and
is certainly not universally used as a key method for pricing

Cost – plus pricing involves adding a mark-up to the total cost of the product in
order to arrive at the selling price. Unfortunately, because of fixed cost, the full
cost of a product will be a function of the number of units produced, which in turn
will be a function of the number of units sold. Yet sales quantity will be a
function of the price charged for the product and so the argument is circular

2. Marginal Cost- Plus Pricing

To an accountant marginal cost is the same as variable cost. Some of the reasons
for using it in preference to total cost are as follows:
• It is just as accurate as total cost-plus pricing. A large mark-up percentage
is added because both fixed costs and profit must be covered, but the
uncertainty over the fixed cost per unit remains in both pricing methods
• Knowledge of marginal cost allows the possibility of pricing below total
cost when times are bad, in order to fill capacity
• It can be used very successfully to price specific contracts because it can
be used to recognise relevant costs and opportunity costs are as well as
sunk costs.
• It also recognises the existence of scarce or limited resources, the use of
which by competing products and services need to be reflected in selling
prices if profit is to be maximised.

Reference
1. Fundamental of Financial Management, J. H Horn, PHI, 1996
2. Management Accounting, CIMA, Cashmore C. & I Balachandra, 2001

122
 3.8 : Market Research

Introduction
The ability to scan the environment for business opportunities, ability to analyse the
markets and offer a desirable package to the customer is very crucial to the success of any
enterprise and, this can be achieved through a market research
Session Objectives

At the end of the session, you will be able to

• Define market research
• Outline the process of market research
• Conduct a market research

Session Outcome
• Market research defined
• Market research process outlined
• Trainers able to conduct a research

Reading Material

Market Research
Marketing Research: Many management decisions are made under the conditions of
uncertainty and risk, but the use of marketing research is one of the few highly developed
areas where management research is scientific and qualitative. This is so because markets
are dynamic and competitive. Success often depend on control over markets

Important decisions have to be taken frequently, and in order to make decisions with
confidence, managers of enterprises need relevant and comprehensive information. It is
the task of marketing research to provide this information
Marketing research can be defined as, ‘the objective gathering, recording and analysis of
all facts about a problem relating to the transfer and sale of goods/services from
producers to consumers / users’.
Market Research: is a concentration of one part of marketing research. It concentrates on
quantifying information about potential sales. It is a study of markets. This may be
carried out by the enterprise’s own staff or by an outside firm or specialists to find out the
possibility of creating or expanding a market for a particular product/service
Main Areas of Study
• what is the potential market
• what are the customers’ needs and wants
• what is the enterprise's expected share of the market
• what is the probable volume of future shares
• what is the geographical distribution of the market
• will consumers accept the product / service
• what features of the product do they want
• what is the appropriate packaging
• why do customers buy the product
123
Product / Service Planning
When planning for the new product or service, the market research will assist in:
• providing data on whether the product is likely to sell and the most desirable
features
• carrying out an internal assessment as to the enterprise's capacity and capabilities
i.e. technical and marketing skills required
• considering the need for product improvement or development
• considering the king of packaging

Steps in Market Research

1. Problem Identification and definition
2. Research Design: Establish the type and amount of information, Decide on
type of data (primary or secondary), Determine data collection methods,
sample size and techniques
3. Data Collection
4. Data Analysis
5. Report Writing

Activity

1. What is market research?

2. What steps does an enterprise need to follow to understand its market,

make better decisions and increase its profits?
3. What are the differences between market research and marketing
research?

Activity

1. Define the term, research

2. Name two main sources of data?

3. What are the main stages of research process?

Reference Material
Marketing Management, Phillip Kotler, Prentice Hall India, 1997

124
3.9 Costing

Introduction
Determining what it costs you to produce a commodity is important because it
acts as a basis upon which entrepreneurial decisions could be made, for instance
fixing of price, what wages and salaries to give, what profits to make etc.

Learning Objectives

By the end of this module, you should be able to:

1. describe the concepts of cost and costing

2. place costs and costing into their correct classes
3. apply to your business the various methods of costing a product
4. fix the price of a product using the principles of costing

Learning outcomes
• The term cost defined
• Importance of costing explained
• Cost for given product calculated

Methodology: Lectures and Discussions

Activities

Reading Materials

Costing

Introduction
Costing: Determining what it costs you to produce a commodity is important because
you want to fix the price at which you sell that commodity. It also helps you in deciding:
• how much of the commodity you should produce.
• what aspects of cost you should control in order to reduce costs and increase the
profits, and
• by how much you can change the price, costs and the amount you can produce if
you are to get the profit you want.
There are a number of methods that you can use to decide the cost of a commodity. We
discuss three of these methods in this module. These are:
• absorption costing
• standard costing
• marginal costing

Under marginal costing, we discuss the idea of breaking-even. This idea helps you in
making important production and pricing decisions, and give value of the stock (goods)
in the organisation.
125
Cost Accounting is how you break into parts what you spend on the business. You
separate costs for each product or service which your business supplies to the customers.

Management Accounting is a term that we use to describe the reports that we prepare for
management from time to time. We base these reports on cost accounting.

Costing is the classification, recording and appropriate allocation of expenditure for the
determination of the costs of products or services.

Why do we do costing?

We do costing because we want to:

• Provide information which we can use to make good decisions
• Have basic information which we can use to do pricing, budgeting and tendering.
• Monitor and control expenditure in the organisation.
• Give value of the stock (goods) in the organisation.

Activity

Group Exercise 1

1. What is costing?
2. What is a cost?
3. Your business has bought a number of things to use. List the cost of all these
and add them together. How much money does our business have?
4. Now that you know what your business has, what are you going to do to make
it grow?
5. Do these figures you have, show that your business has problems? If they do
what are you going to do about it?

Activity

Individual Exercise 2

1. Using your business as an example, list all the costs that you make per month. Use the
heading given above.
2. What are your highest costs?
3. What are your lowest costs?
4. How much money do you get per month after selling your products?
5. Subtract the total cost of expenses from the total amount that you make from your
business.
6. Are you making a profit?
7. Which costs can you control easily?
8. Which costs can you not control? Why?

126
Parts of a cost
Costs of a product have four main parts. These parts are:
• Direct material costs
• Direct labour costs
• Direct expenses
• Overheads
We are now going to discuss each in some detail.

Direct material costs

Direct material costs are associated with those materials which we use to produce a
product. For example, in making bread, we use grain flour, milk, sugar, yeast and oil
as raw materials. The costs of these materials are our direct material costs.

Direct labour costs

Direct labour cost is what we spend directly on the workers who produce the product.
In case of bread, direct labour costs include the wages paid to the bakers making the
bread and all the support staff directly involved in the baking.

Direct expenses
Direct expenses are directly associated with the product but we do not classify them
under direct materials or direct labour. Examples are the electricity and the water that
we use in making bread.

Overheads
Costs that we cannot trace directly to the product come under another group called
overheads. These costs include rent, administrative expenses, and maintaining the
service departments. Maintaining the service departments covers seeing that the
boiler is working, there is enough security and the buildings and machines are kept in
working order.

Prime costs
This is the total of direct labour, direct materials and direct expenses. They are the
most important costs [prime] in an organisation. In the short run, production can only
continue if the organisation can meet these basic costs.

Factory overheads
These are the overhead expenses that come about as a result of the work that goes on
in the factory. We get these costs for the benefit of the factory alone. In the case of a
bakery, this relates to the salary of the supervisor, depreciation and maintenance of
the bakery building and its security.

127
The total of prime costs and factory overheads come under production costs. The
production cost is the total cost of producing the commodity in the factory. For
producing bread, this is all the cost that we get for producing the bread and leave it on
the bakery floor.

Selling and distribution overheads

The cost that we get in the process of taking the product to the customer comes under
selling and distribution overheads. It includes the salaries of the sales personnel, cost
of maintaining selling and distribution vehicles, advertising, among other things.

Administrative overheads
Every organisation spends money so that it can run efficiently. The cost of carrying
out the running or administration of an organisation comes under administrative
overheads. Administrative overheads include the cost of running the chief executive
office and the salaries of the support departments such as accounts, personnel and
security.

If the product sells at such a price that all these costs can be covered, we can then
deduct the total cost of the goods sold from the sales. The difference that we get is
the net profit.

Below is how to calculate the net profit.

• Director Labour + Direct Materials + Direct Expenses = Prime Cost

• Prime Costs + Factory Overheads = Production Cost
• Production costs + selling & Distribution Overheads + Administrative
Overheads = Cost of Sales
o Selling Price – Cost of Sales = Net Profit

Activity
1. List the various classes of costs
2. How can the knowledge of a product cost benefit the entrepreneur?
3. In your planned business what are your:
• Primary costs:
• Overheads?
• Selling and distribution overheads?

Reference
3. Fundamental of Financial Management, J. H Horn, PHI, 1996
4. Management Accounting, CIMA, Cashmore C. & I Balachandra, 2001

128
3.10 Culture, Values and Business Ethics

Introduction
The session will help the trainees decide on the values and culture of their enterprises at
the same time, recognising that there are business ethics to be followed. It covers the
approach that one should adopt to establish the value system of your business unit.

Session Objectives:
At the end of the session, you will be able to: -
• Define the terms cultural, values and business ethics
• Explain the influence of cultural values and ethics on an enterprise
• Discuss the role of cross cutting issues in business

Reading Material
Culture

What is organisation’s culture?

The importance of organisation culture:
An organisation’s culture will influence its strategy, its way of doing business and the
way it responds to change. A key factor in determining how effective an organisation is
will be the appropriateness of its culture for its stakeholders, and particularly its
customers. A strong culture will be beneficial if it focuses on these elements and
highlight the need to change proactively

The main effects and characterises of a strong culture is as follows;

• It will strengthen behavioural regularities and norms amongst its members of the
organisation
• It will minimise some of the perceptual differences among people within the
organisation
• It will reflect the philosophy and values of the organisation’s founder or dominant
group
Some aspects of culture will be visible while many others will be invisible and more
significant

Ethics
The term ethics refers to the code of behaviour considered correct by a particular group,
profession or individuals. Managers usually face a lot of situations that require ethical
judgements and, the question of what criteria these judgement will be based on is one that
requires attention, particularly so that there are no universally agreed code of behaviour.
However, these could be some of the considerations:
• Decisions should be evaluated according to their practical consequences in
bringing about the greatest good for the greatest number of people
• People have basic rights, such as the freedom of speech and the right to a fair trial
• Decision makers should be guided by the principle of fairness and equity, as well
as impartiality
129
What are Basic Values

Values can be termed as good or bad. They are either helpful for your long term business
growth or they can be the cause of your downfall. Therefore, when answering the above
queries you should not try to find out or guess the right answer but should be honest and
write what you feel you would do in the circumstances described. It will help you to
examine your present value system in a beneficiary manner.

You may ask whether you should have values on important areas of business behaviour
and whether you should publicise them among your people. The answer to both these
questions is, yes, you must. Let us examine the reasons for it.

The first advantages of the values that you have in conducting the business, is that they
help you to delegate. For instance, the marketing manager in the first example who was
sure about the values of the company decided against taking the order of substandard
goods even at a profit. Had he not been clear about the company’s value system, he
would have waited till he got your decision on the matter.

The second advantage of the value system is that you operate among like-minded people.
Let us suppose your value system regarding employees considers them as valuable
resource rather than a disposable commodity that can be easily purchased from the
market. In such a case, when you recruit a personnel manager, you would look out for a
person who shares your ideas about human resources. Similarly, if your value system
does not permit you to sell low quality goods, your production personnel would be
conscious about quality all the time. The marketing people will be equally confident
about the products. The customer too would have favourable perception of your goods

An Illustration

Suppose that you have deputed your marketing manager to a foreign country for scouting
business for your firm. He contacts a customer who wants to place an order with your
firm, provided you supply him sub-standard goods at low prices. The sub-standard goods
are likely to harm the health of the population in that country even though the value of
order and the profit margin offered may be high.

What is your marketing manager likely to do? He could do two things: ask you for
guidance in the matter or may straight away tell the party that it will not be possible to
accept an order for sub-standard goods even if the volume of sales is high and the profit
margin is good. Your marketing manager may also emphasise that to your firm the
health and welfare of people is of prime concern and therefore it would not even dream of
doing anything that could affect the health of people anywhere in the world.

When he asks for your guidance in the matter, it means that your firm does not have clear
idea of the values that it cherishes. If he rejects the offer for an order without talking to
you first, that would mean that not only does your company have a clear idea of the
values, but that you have taken care to convey these values to all the persons in the
company.

130
Thus, basic values of a company are like lighthouses on sea shores. These lighthouses
with their powerful revolving search lights help ships to sea and find their way towards
the shore even in darkness. Similarly, values give direction to a company’s personnel
and help them to take decisions that maintain and increase the company’s reputation in
the marketplace.

Values touch every aspect of business

Though we have given an example of marketing decisions based on values, you must
remember that values of a company encourage all vital aspects of a company’s functions.
For instance, let us talk about relations with people within the company. Some
companies treat people as disposable assets who can be hired and fired at will. Other
companies look at people as valuable resource, a storehouse of ideas and generators of
innovations and treat them accordingly. Similarly, a company could have a set of values
when dealing with the government, with competitors, with customers, with non-
government organizations, etc.

Activity
Self Assessment Instrument
The following multiple choice questionnaire will help you to discover your own set of
values.
Consider the following situation:-
1. A senior and loyal employee of your company who is also an expert in his
field suddenly approaches you with a letter of resignation.
How would you handle the incident?
a) Find out where he wants to join.
b) Increase his pay and ask him to continue
c) Scold him and tear off the resignation letter
d) Any other approach
What does your response indicate about your value systems for employees?
2. An export consignment has been found to be defective by your foreign
customer.
How would you react?
a) Make effort to see that the customer accepts the goods even at a discount.
b) Contact the customer, apologise for the inconvenience and assure him that
a replacement will be sent immediately.
c) Take legal action to force the customer to accept goods.
d) Any other approach.
What does your response tell you about you value systems for customer?
3. A competitor is in trouble. You have heard that the wants to dispose off
his unit.
How would you go about this matter?
a) Send feelers for a buyout.
b) Spread word in the market about imminent closure of the unit
c) Keep quiet till someone acquires the unit.
d) Any other approach

131
 4. The party which markets your products is showing signs of slowdown; he is not
marketing your products as vigorously as they had done earlier.
What would you do?
a) Blame him for slow movement of your goods.
b) Meet him to find out what his problems are.
c) Begin to identify an alternative party for marketing your products.
d) Any other approach.

What does your response tell you about your value system for dealers and distributors?

Activity II
In small groups define the terms
 Culture;
 values and;
 ethics

Activity III

Think of some examples of variation in national cultures and ethics that might
cause particular problems to entrepreneurs

References

1. Encarta 98 Encyclopaedia, Microsoft, 1998

2. Organisational Management, Ritson N & Marsden A, CIMA, 200

132
3.11 Strategic Planning Process
Introduction
Today’s business environment puts pressure on entrepreneurs to complete urgent
tasks, meet day-to-day objectives, and overcome short-term problems. This is
operational or short-term planning – and it often tends to take precedence over
long term planning – which is what strategic planning is all about

Learning Objectives
At the end of the session, you will be able to
• Defining strategic planning
• Outline steps in strategic planning
• Carry out a strategic plan

Learning Outcome
• Strategic planning defined
• Steps in strategic planning outlined
• Importance of strategic planning in an enterprise discussed

1. Divide the trainees into small groups to discuss the role of strategic planning in
entrepreneurial growth

133
Reading Material

Strategic Planning Process

Vision

Mission Statement

External Internal environment

Environment environment
Analysis Analysis

Goal Formulation

Strategy formulation

Programme / Action
Formulation

Implementation

Feedback

The Importance of Strategic Planning

Strategy concerns itself with what is ahead, looking at where the organization is going,
and how to get there. Even if the organization already knows which products or service is
taking to which market, there is still need for a strategy to make it happen

Having a strategy enables an organization to ensure that day-today decisions fit in with
long-term interest of an organization. Without a strategy, decisions made could have a
negative impact on future results. A strategy also encourages everyone to work together
to achieve common aims. Most organizations have strategic plans at highest levels but
some do not communicate it all the way down. A strategy is important whether you serve

134
external customers (those outside your organization) or internal customers (those in
departments or sections within the organization)

An effective strategy should consist of the following: -

• Must be consistent with the organization’s skills and capabilities
• Must exploit external trends and influences
• Must be flexible enough to respond to rapid changes in the environment
• Must incorporate carefully developed objectives
• Must be based on carefully evaluated policies and plans

THE PROCESS

1. Stakeholder Analysis
Identify Stakeholder
• Stakeholder interests /expectations, of
• Stakeholder major resources
• Stakeholder sanction power
• Stakeholder linkages with, and dependencies on, other entities

2. Problem Agenda
The problem agenda is a list of problem themes that provides focus for
investigation into the external and internal environments of an organisation.

i) What problems has the organisation inherited from the past that
has a huge impact on its performance?
ii) What important questions or issues lie ahead for the organisation?
iii) If you were clairvoyant, what would you like to know about the
future of organisation?
iv) What things make you uncertain about the future of the
organisation?
v) If you were given the opportunity, what changes would you make
to the organisation?

3. Internal Analysis

i) Analyse organisation structure in term of

• Conduciveness to achieving the mission, and objectives of the
organisation
• Departmentalization
• Number of levels of International Aids Alliance and how tall the
structure is.
• Centralization/Decentralization
• Staffing levels of jobs
135
 ii) Analyse the culture of the organisation e.g. management style, work ethic,
internal practices/politics etc
iii) Analyse the organization’s Resources
• Human – Numbers, qualifications, personnel/HR management systems
• Financial – sources, reliability, accounting/financial planning systems
• Material – vehicles, classrooms, equipment etc, and their distribution
and management
iv) Analyze management systems, marketing, capacity management,
transport, management, strategic planning etc.

4. External Analysis
i) Keeping your problem agenda in mind, identify important
political/legal, economic, social-cultural,
technological/infrastructure and environmental factors and trends
that impact on organisation’s performance. Expressing these as
variables wherever possible, e.g. ‘falling disposable incomes’ or
‘rising inflation’. Identify trends and possible future outcomes.
See attached extra information sheet.
ii) Separate these factors, after processing them, into
• Opportunities – those that the organisation can capitalise on to
enhance performance, and
• Threats – those that hamper the organisation’s performance or
growth
iii) Identify 10 critical success factors’ (Generic characteristics of an
organisation that can succeed in an environment with the threats
and opportunities identified above), e.g. lean, flat organisation
structure

5. Strategic Options Generation

These are actions that would
• Eliminate or reduce internal weaknesses
• Use strengths to limit external threats
• Use strengths to take advantage of external opportunities
• Create critical success factors

Activity
1. In your groups, explain the importance of strategic planning in an
enterprise?
2. What are the major steps in the strategic planning process?
3. What is the difference between a vision and a mission statement?
3. What is the importance of defining the mission statement in the strategic
plan process?

Reference Material
1. Marketing Management, Phillip Kotler, Prentice Hall India, 1997
2. Organisational Management, Ratson N & Marsden A, CIMA, 2001

136
3.12 Use of Business Records

Introduction
Records from a crucial aspect of any enterprise which should kept and used as and when
require

Session Objective
At the end of the session, you will be able to:
• Define business records
• List business records
• Prepare business records for a given organisation
• Keep records

Session outcome
• Business records defined
• Business records listed
• Business records for a given organisation prepared

Reading Material

Record Management
Records – defined as written down statements of facts, events
Importance of Records
• For future reference and use
• Provide necessary input for decision making
• An up-to-date record stores in a manner or from that provide speed
retrieval thereby promoting some levels of efficiency in an enterprise
Registry is the nerve-centre of any business
It is responsible for classification, indexing, filling and supply of all records
In small organisations, the owner takes full responsibility of the registry

Some of the business records include the following:

• Personal confidential files – usually kept by personnel department
• Marketing files – pertaining to all marketing activities of the enterprise
• Sales files
• Financial files
• Purchasing files
• Stores files
• Operation files

Importance of classification of records

• It eradicates the mis-filling of documents
• It reduces the chances for loss of documents
• Quick retrieval of records

137
Record Identification
Records that are brought under one subject can be identified by:-
• The use of reference numbers indexing system
• NB. Whatever the system being used, it should be simple and easy to use

Indexing / Referencing
This can be done by arranging records or files:-
• By alphabet
• By grade, post or rank
• By departments
• By numerical sequence with cross reference where necessary

Active / Inactive Records Management

The management of these two types of records depend on:
How frequently these records are called for and as such, they have to be kept where they
can be easily reached

Activity 1

1. What is the importance of record classification in an organisation?

2. What is the use of indexing in record keeping?
3. Explain the how the following records are managed
a) Activity records
b) Inactive records

Activity 2

You are in charge of a newly created company known as Chimutengo Carpentry.

Chimutengo Carpentry is into manufacturing of schools desks and chairs which it
supplies to the Ministry of Education. Identify the various business records
required for the enterprise. Explain the usefulness for each record identified to the
enterprise

Reference

1. Records Management, ZAMIM

138
3.13 Importance of Stock Control
Introduction
It is always important ensure that an enterprise has the right stocks at the right time all the
time to meet demand as it rises and at the same time, maintaining a balance in terms of
costs of keeping such stock

Session Objective
At the end of the session, trainees will be able to
• Define stock control
• Explain the importance of stock control in an enterprise
• Explain the relationship between buying and stock control
• Manage stock in an enterprise

Session outcome
• The term stock control defined
• The importance of stock control in an enterprise explained
• Relationship between buying and stock control explained
• Trainees able to manage stock

Reading Materials
Stock Control

Meaning
Stock control is the means by which materials of correct quantities and quality are made
available as and when required with due regard to economy in storage ordering costs and
working capital

This is generally done through the process of determining in advance – Requirement of

materials taking into account existing stock, delivery time and consumption so that the
amount of stock on hand at any time will be sufficient to meet operational requirements
and in accordance with stock control policy

Stock control is influenced by:-

1. Operational requirement or needs of an enterprise
2. Delivery lead time: The time it takes to place an order until materials are received
3. Availability of capital
4. Cost of storage and ordering

Objective of inventory control

1. The major objective can be summarised into three main questions:
2. What to order? This is the assessment of the range of items to be held in stock
individually and collectively
3. When to order? This is governed by lead time between placing and order and
receiving it

139
 4. How much to order? This is a system of determining the order quantities each
time an order is paced. This requires a balancing act between ordering cost and
stockholding costs
Managing Stock in an Enterprise
Stock taking and Stock checking
This is the process of verifying the quantity balances of the items held in stock. This is
done by accounting, weighing and measuring all items in stock and recording the results

Reasons for stock taking

• To verify the values in the stock record
• To reveal the possibility of fraud or loss
• To reveal any weakness in the system for custody and control of stock
• To determine the efficiency stock keeping method
• To verify the accuracy of stock records
• To facilitate preparation of the final accounts

Types of stock taking

• Periodical stock taking
• Continuous stock taking
Rules for Stock Taking
• Appoint one person to control the whole process
• While stock taking is in progress do not have the store house open to business
• Have stock-taking sheets under the control of the controller of operations
• Damaged, deteriorated or used items should be recorded separately
• Items should be recorded in terms of normal unit of issues
• The method of pricing should be shown on the stock taking sheet
• Goods still under inspection should be recorded separately
• Arrangements must be made to include in the total list of stock all items
belonging to the business which are not in the premises

Activity 1
Q. Your friend has set up a business to manufacture wooden chairs and beds
recently. He has been asked by the bank to manage or reduce the levels of
inventory in his business. He has come to seek your advice about the ways and
means to achieve this. Describe how you will help him!

Activity 2
In small group, identify and discuss factors that influence stock control
in an enterprise.

Reference

1. Stores Records, National Grains Management Course ISTT, SADC

140
3.14 The Role of Finance in an Enterprise

Introduction
In many small enterprises, financial management takes a low priority and
financial planning and monitoring systems are often inadequate. But enterprises
operate in a changing and competitive world. If these enterprises were to survive
in the continuous changing environment, entrepreneurs need to develop necessary
understanding and confidence to make full use of financial information

Session Objective
At the end of the session, you will be able to
• Define the term finance
• Discuss the role of finance in an enterprise;
• Discuss the importance of good financial management

Session outcome
• The term finance defined
• The role of finance in an enterprise discussed
• The importance of good financial management discussed

Reading material
FINANCIAL MANAGEMENT

What is Financial Management?

Finance is part of management as a whole. Financial management involves:

planning, organising, financing, controlling and reporting on organisation’s
resources to achieve set goals. Financial management is the lifeblood of an
enterprise.

When lifeblood has the correct mix of nutrients it nourishes and sustains the
various parts of the body providing energy to achieve its mission. In the same
way, sound financial management enriches the operation of an enterprise and
helps run efficiently and effectively

Financial management is about good use of resources available to an enterprise.

In practice it involves managing risks, both internal and external, in an organised
and considered way by establishing systems and procedures to bring about
financial control

141
Why is financial management important for an enterprise?
• It assists in efficient management of resources such as cash, equipment, human
resources and time
• It contributes to efficient allocation of resources
• It enhances accountability and transparency of enterprises’ affairs
• It guides entrepreneurs (managers) to achieve objectives

Some key concepts

1. Financial control: At the heart of financial management is the concept of
financial control. This is defined as “a state of affairs which ensures that finances
of an enterprise are being properly handled”.
To achieve this, policies and procedure have to be introduced. Without proper
financial control an enterprise is at risk of
• Loss through theft, fraud or incompetence
• Deviation from objectives
• Waste of resources
• Under-utilisation of resources
2. Accounting Records: Every organisation must keep accurate records of all
financial transactions that take place so that, as a minimum, it can show how
funds have been used. Accounting records can also provide valuable information
about how the organisation is being managed
3. Financial Planning: The budget forms the basis for an organisations’ financial
plan – a summary of all expected income and expenditure for a stated purpose and
time frame
4. Financial Monitoring: Provided the organisation has set a budget and has kept
and reconciled its accounting records in a clear and timely manner, it is then a
simple matter to produce financial reports which allows the manager to assess the
progress of the organisation
5. Internal Controls: Controls, checks and balances – collectively refer to internal
controls are put in place to safeguard the organisations’ assets. The purpose is to
deter opportunistic theft or fraud, and to deter errors and omissions in the
accounting records, to aid accuracy

Activity

In small groups;
1. Discuss the importance of good financial management to a
business.
2. Discuss the financial management process

Reference:
1. Contemporary Financial Management, Moyer R.C, Krettowe W.J
1996
2. Financial Accounting, Basley, Nikoli & Gowe

142
3.15 Sources of Finance
Introduction
The life line for any enterprise is finance. There are various types and sources of finance.
Traditionally, enterprises have been able to source their finances from banks. But other
sources such as individual savings, borrowing from relatives have played a crucial role in
the financing of enterprises

Session Objective
At the end of the session, you will be able to:
• State the source of finance
• Explain the conditions for accessing formal sources of finance

Session Outcome
• Sources of funds stated
• Condition for accessing formal finances explained

Activity

Field Visit: In small groups carry out a field visit to the local financial institutions of
your choice with a view to identify and obtain information on the conditionality of
obtaining finances from them. This should be half a day’s event.

Reading Material

Financial Needs for an Enterprise

1. Start – up capital. These are funds required to start up a business
2. Capital for expansion. This is required particularly for the purpose of
acquiring fixed assets such as buildings, machinery, equipment and
land
3. Working Capital. This is for purchase of raw materials, financing of
credit sales, paying wages and meeting unexpected emergencies.
Working capital may include cash in hand or at the bank
Traditional Sources of Finance
4. Personal savings. Most of the time this is not adequate
5. Loans from friends and relatives. This ranks second in importance as a
source of finance. Usually no interest is paid on these finances
6. Organised capital markets such as discount houses, leasing companies,
saving institutions such as insurance companies and commercial banks
7. Trade credits. These are usually offered by the suppliers of inventory
which in the case of small enterprises manufacturing units means raw
materials. Trade credit is a form of working capital and is short term in
nature
8. Unorganised capital. These are money lenders, sometimes referred to as
local capitalists (Kaloba)
9. Retained earnings. If the business is doing fine, part of the finance
generated by the business can be ploughed back
143
 Conditions for accessing formal finances

Arising from the field work, these are some of the conditions for obtaining
formal finances from institutions such as banks. Trainees should have
identified
1. Need for collateral and securities
2. Prohibitive interest rates
3. Stringent pay back periods
4. Stringent process with a lot of decimations
5. At times loans can only be given to a group as opposed to
an individual

Reference
1. Informal Sector Business Activities in Lusaka Urban District, Tolosi M.S &
Nawiko M, 1997
2. Financial Assistance to Small Scale Industries, Kani F 1985

144
3.16 Financial Statements
Introduction
Any business has important financial concerns and its success or failure depend on large
part on its financial decisions. Every key decision made by a firms’ manager has
important financial implications. Entrepreneurs’ daily face questions like:
• Will a particular investment be successful?
• Where will the funds come from to finance the investment
• How much inventory should be held
• Does the enterprise have enough cash or access to cash?

In order to answer these questions, an entrepreneur will require certain information and
this information can be obtained from the financial statements

Learning objectives:
At the end of the session, you will be able to
• Define the term financial statement
• List the various financial statements in an enterprise
• Explain the importance of financial statements
• Interpret financial statements

Learning Outcome:
• The term, ‘financial statement “ defined
• Various financial statements listed
• Importance of financial statements explained
• Various financial statements interpreted

Reading Material

Financial Statements

In business language, the accounts imply a set of reports or financial statements which
show the financial standing of an enterprise. Specifically, there are three major reports:
• income and expenditure account (or profit and loss account)
• balance sheet
• cash flow statement

1. Income and Expenditure Account

It is produced from either the trail balance or on receipts and payment accounts. It
records as a summary
• All categories of income and expenditure which belong to that year;
• All income not yet received but belong to that financial year
• All payments not yet paid but belong to that financial year

145
2. The balance Sheet
This is the listing of all the assets and liabilities on one particular date and
provides a “snap shot” of the financial position or net worth of an enterprise. It is
prepared on the fundamental relationship in accounting, that is, every addition to
an organisation’s asset is financed by either outside parties or by the owners

Component of the Balance Sheet: The balance sheet has two parts. One part
records all balances on assets account, the other record all the balances on
liabilities accounts plus the income and expenditure account balance

3. The Cash Flow Statement

The Cash Flow Statement explains where the funds came from and how they were
applied during the reporting period. This report is of much greater relevance to a
profit motivated enterprise where cash flows and investments are crucial to the
enterprise’s performance and survival

Accuracy of Financial Statements

The financial statements of a company are examined by various parties, including

shareholders, bondholders, banks, government agencies, employees, suppliers,
and financial analysts. These parties are concerned that the statements present a
fair and accurate picture of a company’s financial position (i.e. assets, liabilities,
earnings and cash flows). Most companies hire external independent auditors to
attest that the financial statements reflect the financial position of the company

Activity

1. What is the use of the following financial statements in an enterprise?

• Income and expenditure account
• The balance sheet
• Cash flow

2. What are the elements of a balance sheet?

Reference:
1. Contemporary Financial Management, Moyer R.C, Krettowe W.J 1996
2. Financial Accounting, Basley, Nikoli & Gowe

146
 17.0 Selling

Introduction
The ability to use personal communication skills within an enterprise to
persuade someone to act by buying something and, the ability to
communicate something of value to someone is a key to succeed in
business

Session Objectives
At the end of the session, the trainees will be able to:
• Define the term, sales
• Prepare a sales plan
• Sell good and services

Reading Materials

Selling:
Personal communication of information to persuade a prospective customer to
buy something. It involves a person helping another person achieve something of
value through the exchange process. It is about communication between buyer
and seller

To Buy or Not to Buy

Sales persons should consider the flowing questions before developing
a sales presentation

• What type of product is desired?

• What type of buying situation is it?
• How will the product be used?
• Who is involved in the buying decision?
• What practical factor will influence the buying decision?
• What are the buyer’s important buying needs

The Role of the Sales Force in the Enterprise Promotional Efforts

A major marketing issue for an enterprise is to determine the sales force’s
role. Enterprises use salespeople in many ways. However, there are four basic
questions used as a guide in defining the roles of the sales force:
1. How much selling effort is needed to gain and hold a customer?
2. Is the sales force the best marketing tool, compared to advertising and
other sales promotion?
3. What type of sales activities – for example, technical assistance, frequent
or infrequent sales calls – will be necessary?
4. Can the enterprise gain strength relative to its competition with its sales
force?

147
 10 Steps in the Sales Process

Prospecting

Pre-approach

Approach

Presentation

Trail close

Determine objectives

Meet objectives

Trail close

Close

Follow-up

Activity
Design a sales plan for your enterprise

Reference:
1. Business Environment, Diwan P, Excel 1997
2. Marketing Management, Kotler P. 1991

148
 3.17 Budgeting

Introduction
In every business there is need for planning of the various activities, processes
and procedures. One such tool that is used for planning purposes is a budget

Session Objective
At the end of the session, you will be able to:
• Define budgeting
• Explain the importance of budgeting
• List the various types of budgets
• Outline steps in preparing a budget
• Prepare a budget

Reading Materials

What is a Budget?
A budget is a plan, usually for one year, which shows how an organisation intends to
acquire and use resources to achieve a set of objectives. It is describes an amount of
money that an organisation plans to raise and spend for a set purpose over a given period
of time

Functions of a budget
• Financial planning - it is a financial planning tool which quantifies the activities
of an enterprise in a given period
• Financial statement – to demonstrate an enterprise’s viability and credibility for a
given period of time
• Fund-raising aid – provides important information for grant application
• Financial control – sets limit of authority in committing the enterprise’ resources
• Financial monitoring – it allows comparison of actual income and expenditures

Benefits of Budgeting
• Planning
• Enhance managerial perspective – i.e. increases awareness of the environment in
which the enterprise operate in
• Advance warning of problems
• Coordination of activities
• Performance evaluation
• Promote ownership and motivation

Types of budget
1. Income and expenditure budget
2. Capital budget
3. Cash flow budget

149
 The budget Cycle
• Preparation: This involves giving thought to the targets and associated
resourcing requirements for the next year
• Collation: This ensures that activities of the budget are consistent with the
enterprise’s needs
• Authorisation: this involves actual allocation of resources to each item of
the budget
• Implementation

Individual Exercise
1. What are the benefits to be gained from budgeting?
2. How does the budgetary process assist in communication?
3. Describe the major steps in the budget process?
4. What is the principle budget factor?

Reference
1. Management Accounting – Decision Making, CIMA, Cashmore & Balachandra
I,2001

150
3.18 HUMAN RESOURCES IN AN ENTERPRISE
Introduction
Any enterprise, big or small needs to have clear objective both in the long term or
short term. All activities in an enterprise are then expected to be organised in such
a manner as to achieve the set objectives. Functions, duties and responsibilities
that are relevant for the objectives must be specified. The functions of staff
management – which the human resources management, has the overall objective
of ensuring that the enterprise attains its objectives by properly utilising its human
resources
Objectives
At the end of the session, you will be able to
• Define the term, human resources
• Explain human resources practice in an enterprise

Reading Materials
Human Resources Management

What is Human Resources Management (HRM)? There are many different versions of
the meaning of HRM, but taken together, a picture of the main characteristics of this
approach to employment management emerges. The summary is as follows:
• It is a top management driven and management-orientation activity
• It can take either a ‘hard’ from or a ‘soft’ form. The hard form is the one where
employees are considered just as another resource like capital or land while the
soft form regard employee as the most crucial resource in the business
• It is performance oriented, emphasising the need for ever high levels of
achievement to meet new challenges
The list above is best regarded as a prescription of how people management should be
conducted

The Human Resource Plan: This is a strategy for acquisition, utilisation improvements
and retention of an enterprise’ human resources. The plan is based on the following
questions:
• What has to be done to attain the objectives of the business?
• Who is responsible for the various stages of the plan?
• When will the stages have to be completed?
• How will they be accomplished?
The determinants and contents of human resources plan:
• Organisational growth rate
• Technological and productivity changes
• Skills requirements
• Training requirements
• Recruitment
• Development, promotion and succession planning
• Natural wastage
• Strategic objectives of the enterprise
151
 Summary
What is Human Resources Management (HRM)?
• It is a top management driven and management-orientation activity
• It can take either a ‘hard’ form or a ‘soft’ form. The hard form is the one where employees are
considered just as another resource like capital or land while the soft form regard employee as the
most crucial resource in the business
• It is a performance oriented, emphasising the need for ever high levels of achievement to meet
new challenges

Functions of Human Resources Management

A) Planning manpower requirements. I.e. anticipate vacancies, recruit

B) Organising the manpower resources. I.e. determine the organisation’s structure and manpower
needs to effectively meet the enterprise’s requirements
C) Staffing: To ensure that new recruits are provided with appropriate training and information to
enable them perform their duties effectively. Also concerned with promotions and transfers
D) Motivating: to set Kwacha values on job positions that are fair and equitable when compared
with other positions
E) Provide facilities for employee’s enjoyment, provided the need exchange of information
throughout the enterprise
F) Develop effective work regulations and harmonious working relationships
G) Develop effective performance evaluation systems

Activity

What are employee’s expectations from an enterprise?

HO18.4

Possible answers of the question

• Employees want to be treated courteously
• To be welcomed to their new jobs
• Simple and intelligent instructions
• Recognition of their importance
• Realistic recognition of a job well-done
• Prefer working for an organisation where confidence prevails in the ability and fairness of top
management

Reference:
o Organisational Management, Ritson I & Marsden A, CIMA, 2001
o Small Business Management – II, Open Learning Programme in
Entrepreneurship, EDI, FNSt
o Managing Staff, ISTT, SADC, GRZ

152
 3.19 Invention and Technical Innovations
3.19

Introduction
Competition is both a necessary and sufficient conditions for achieving
competitiveness. The creation of competitive condition will create both the
pressure and the incentives to make enterprises competitive. And one way in
which this could be achieved is by being steps ahead in product / process
innovation and inventions

Session Objectives
• On completion of the session, you will be able to:
• Define invention and technical innovation
• Explain the importance of invention and technical innovation to national
development
• Outline the patent process
• Discuss the barriers to commercialisation of inventions and technological
innovations
Tips
Make sure you are familiar with the patent process in Zambia

Reading Materials
HO 19.1
Technical Innovations / Invention

• Innovation: the introduction of process or product that is new to a particular

situation, regardless of whether it has been used before elsewhere
• All modifications or adaptations of a process or products that are new to the
economy – however minor they may be
• Innovation could be said to be coming up with new ideas upon which inventions
could be done

Innovation activities include:

• Search activities to determine the range of available process and product variants
and selection for the range
• Minor or major adaptation of production techniques and products
• Development of techniques and products
The Process of Innovation
• Possible basic scientific discovery
• Applied research
• Experimental development
• Initial commercial application
• Improvements

However, this is not a linear progression. The starting point could be anywhere

153
Problems of Innovation in Developing Countries
• There is a tendency to focus on market forces alone as a basis for innovation
activity
• Planning horizons for individual enterprise is shorter, thereby not allowing for
more time for innovation activities
• Too much emphasis on minor product change at the expense of fundamental
technological innovations

Innovation Specialisation and Initial Endowments

• Development of skills required for innovation usually require formal education
and training
• Accumulated experience or learning by-doing is by far the most effective way

Invention
Invention- creation of new devices, objects, ideas, or procedures useful in
accomplishing human objectives. The process of invention is invariably
preceded by one or more discoveries that help the inventor solve the problem at
hand. A discovery may be accidental, such as the discovery of X rays by
Wilhelm Conrad Roentgen while he was experimenting with cathode rays, or
induced, such as the invention of the lightning rod by Benjamin Franklin after
he proved that lightning is an electrical phenomenon.
In common usage the term invention is applied only to the production of new
materials or operable devices, and the term inventor is applied to a person who
has produced a new device or material. Less frequently, the term invention is
applied to a new procedure; thus a person may be said to have invented a new
game or a new system of accounting. Under strict definition, however, anything
produced by humans that are new and unique is an invention; this definition was
recognized by Johann Sebastian Bach, who gave the title Inventions to a series
of his short keyboard compositions.
In most countries, certain classes of inventions are legally recognized, and their
use is temporarily restricted to the control of the inventor. In the United States
and indeed Zambia, any new and useful art, machine, manufacture, or material,
or any new and useful improvement of these, may be protected by patent;
written material, music, paintings, sculpture, and photographs may be protected
by copyright. The protection afforded by this legal recognition is limited; in
many cases, if a person alters an invention and thereby improves or changes it,
that person may be eligible for a new patent or copyright. Patent and copyright
laws do not provide coverage for all inventions. Many processes and ideas
lacking clear-cut characteristics, such as psychological concepts useful in
advertising, cannot be legally protected.

Early Inventions
The earliest artefacts show evidence of human inventiveness. The names of the
great archaeological ages—the Stone Age, the Bronze Age, and the Iron Age—
154
 are derived from the inventive use of stone and metal implements (see
Archaeology). Early stone implements were crude, but the purposes they
served—protection and food gathering—were instrumental in humans' growing
domination of the earth. Many of the most significant inventions and inventive
developments occurred before the period covered by written history. These
include the invention of crude tools, the development of speech, the cultivation
of plants and domestication of animals, the development of building techniques,
the ability to produce and control fire, the ability to make pottery, the
development of simple political systems, and the invention of the wheel.
The period of recorded history began with the invention of writing, and writing
as a means of mass communication became important with the invention of
movable type in the 15th century. Invention proceeded steadily throughout the
period of written history, but since the advent of printed books, people all over
the world have been able to obtain records of the discoveries of the past for use
as a basis for further discoveries and inventions.

Activity
Barriers to Commercialisation of inventions / innovations
Identify and discuss commercial barriers to invention / innovations in
Zambia?

Reference:
Encarta 98 Encyclopaedia , Microsoft 1998

155
 3. 20 Technology in an Enterprise
Introduction
Technology has become an increasingly important dimension of economic
growth. The extremely rapid development in this are in the last few decades is
unprecedented in their speed in and impact on production structures of an
enterprise with consequent effect on economic growth and income distribution

Technology in the development of small sector industry has become an issue. A

significant connection exist between scale of industry and technology

Session Objective
At the end of the session, you will be able to:
• Define technology
• Identify sources of technology
• Select suitable technology for an enterprise
• Relate technology to an enterprise

Reading Material
Criteria for Selecting Appropriate Technology
• The appropriateness of a technology should be considered in relation to goals of
the enterprise, the products, process, cultures and environment. The questions to
be asked are:
• Does the technology support the goals of the enterprise?
• Are the products / services to be produced affordable by and useful and
acceptable to intended users?
• Does production process make economic use of the inputs?
• Are the products, the processes and related arrangements compatible with the
local environment and culture?

Activity
1. What is appropriate technology?
2. What is indigenous technology?
3. What are the sources of technology for your business?
4. Explain the importance of technology to an enterprise

Reference:
Reference

1. Appropriate Technology, Bardwell,

2. Productions and Operational Management, Everett A, PHI, 1997
3. The Distorted Growth of Import Substitution Industrialisation, The Zambian
Case, Seidman A. 1997
4. Encarta 98 Encyclopaedia, Microsoft 1998

156
3.21 Gender in an Enterprise
Introduction
In realizing the glaring gender imbalances that exist between women and men,
Gender has become a cross-cutting issue attracting a lot of attention from various
sectors of the society. Governments all over the world have passed legislation that
promote equality and protect women’s rights. Therefore, an appreciation of this
cross-cutting is crucial to the promotion and success of entrepreneurship in the
country

Session Objective
At the end of the session, you will be able to:
• Define the term, gender
• Integrate gender in the operation of an enterprise

Reference Material
GENDER IS

• Social Relationship between Men and women

• These relationship are Socially Constructed and Institutionalised
• Roles have been Shaped Historically and are due to
- Ideological
- Economical
- Religious
- Cultural Factors

• Gender is thus not Biological difference

• Gender is a Social concept
• Gender is different from sex – Biologic Concept
• Gender is not a static concept
• Gender can thus evolve and change according to
- Time
- Situation/Circumstance
- Culture
GENDER ROLES
Gender roles
Gender roles are learned behaviours in a given society/community or other social group that
condition which activities, tasks and responsibilities are perceived as male or female.
Gender roles vary considerably across settings and also change over time. The following factors
can shape and change gender roles:
• Age
• Class
• Race
• Ethnicity
• Religion and other ideologies
• Geographical environment
• Economic environment
• Political environment

157
Types of gender roles
Concept of gender roles developed by Caroline Moser
• Gender planning recognises women triple role: women reproductive, productive, and
community managing activities,
• Men primarily undertake productive and community politics activities

Reproductive Role
• These activities are usually unpaid
• They are excluded from national employment and income statistics
• They are viewed as activities with non-measurable economic value
• Refers to child-bearing
• Activities carried out in caring for the household members

Productive Role
• Work undertaken to produce goods and services for marketing
• Includes processing of primary products
• Can be performed at workplace and at home
• They can be formally or informally organized

Community managing role

• Activities undertaken at the community level
• This role is often an extension of their reproductive role
• It is done to ensure the provision and maintenance function of scare consumption
resources e.g. water, fuel, wood
• This is voluntary unpaid work, undertaken in ‘free’ time
• Primarily performed by women

Community politics role

• Activities performed at community level, e.g. organizing formal meeting/informal
gathering etc.
• Usually paid work, either directly or indirectly
• Benefit in terms of power, position and knowledge
• Undertaken mostly by men

Who does what?

• Preparation of separate profiles if significant differences exist – can be between men and
women, between women belonging to different class and caste groups etc.
• Gender patterns of labour vary according to sectors, age and hierarchy
• Age differences affect status of men and women in society
• Existing hierarchical differences between men and women at the workplace result in
unequal working conditions.

158
Activity

Time Tasks done women Tasks done by men

5:00
6:00
7:00
8:00
9:00
10:00
11:00
12:00

HOW TO INTEGRATE GENDER IN OPERATIONS OF ENTERPRISES

THIS CAN BE DONE BY GIVING ANSWERS TO THE FOLLOWING QUESTIONS:

• DOES THE ENTERPRISE CHALLENGE THE EXISTING DIVISION OF LABOUR, TASKS,
RESPONSIBILITIES AND OPPORTUNITIES?
• WHERE DOES THE OPPORTUNITY FOR CHANGE OR ENTRY POINT EXIST AND HOW
BEST CAN THEY BE USED?
• WHAT SPECIFIC WAYS CAN BE PROPOSED FOR ENCOURAGING AND ENABLING
WOMEN TO PARTICIPATE DESPITE THEIR TRADITIONALLY MORE DOMESTIC
LOCATION AND SUBORDINATE POSITION?
• WHAT IS THE LONG TERM IMPACT IN TERMS OF WOMEN’S INCREASED ABILITY TO
TAKE CHARGE OF THEIR OWN LIVES AND TO TAKE COLLECTIVE ACTION TO
SOLVE PROBLEMS?

Reference

1. Gender /Population Issues in Project Design and Management (Paper

Presentation), N. Nyangu 1997
Gender Issues in Project Design (Paper Presentation) Kamb

159
MODULE 04 ESTABLISHING AN ENTERPRISE
CONTENTS
INTRODUCTION……………………………………………………………………..1
UNIT 1. THE BUSINESS PLAN…………………………………………………….. 2
Unit 1.1 Importance of A Business Plan……………………………………………... 3
What Is A Business Plan? ............................................................................... 4
Unit 1.2 Contents of A Business Plan………………………………………………... 4
Outline of A Business Plan…………………………………………………. 8
Unit 1.3 Factors to Consider In Preparing A Business Plan………………………… 8
Steps Involved In Writing A Business Plan………………………………… 8
Unit 1.4 Preparing A Business Plan…………………………………………………..10
(i) The Business Idea/Concept………………………………………………..10
(ii) Business Goals……………………………………………………………12
(iii) Description of the Industry……………………………………………..13
(iv) Description of Business Venture……………………………………….. 16
(v) Marketing Strategy/Plan…………………………………………………. 19
(vi) Sales Forecast………………………………………………………….... 21
(vii) Production Strategy/Plan……………………………………………….. 24
(viii) Management/Corporation Structure…………………………………... 28
(ix) Risk Assessment………………………………………………………… 34
(x) Implementation/Action Plan…………………………………………….. 35
(xi) Financial Statements……………………………………………………. 36
(xii) Financial Forecasts/Projections………………………………………... 36
(xiii) Financing Requirements……………………………………………….. 47
(xiv) References……………………………………………………………… 48
(xv) Appendices……………………………………………………………… 48
Unit 1.5 Presenting A Business Plan……………………………………………….... 49
(i) Areas Of Focus When Presenting A Business Plan………………………. 50
(ii) Key Qualities Being Looked For By Stakeholders/Audience…………… 50
(iii) Skills Necessary for a Successful Presentation………………………... 50
UNIT 2 FORMALISING AN ENTERPRISE………………………………………. 52
Unit 2.1 Business Documentation…………………………………………………... 52
Importance of Business Registration……………………………………… 52
Types Of Business Registration……………………………………………. 53
Other Statutory Registrations……………………………………………… 55
Unit 2.2 Physical Set-Up of an Enterprise………………………………………… 56
Factors to Consider………………………………………………………. 56
Location and Buildings…………………………………………………... 57
Furniture………………………………………………………………….. 57
Positioning Of Machinery and Equipment……………………………… 57
Essential Facilities……………………………………………………….. 57
Accessibility……………………………………………………………... 58
Unit 2.3 Production/Service Process……………………………………………… 60
Description and Importance…………………………………………….. 60
Steps Involved In Setting Up A Production/Service Process……………. 61
Factors Essential for Success of A Production/Service Process……….. 61
Other Issues Concerning Production/Service Process…………………… 61
160
REFERENCES…………………………………………………………………… 64
The training materials are meant to be used by those undergoing technical/vocational
training, as well as those in the micro/small enterprise sector. The training materials are
applicable to start-up and incubation phase business.

Module 138 – 04 – A deals with the subject “Establishing an Enterprise” and is presented
in two units:-

Unit 1: Business Plan

Unit 2: Formalizing an Enterprise

This Workbook is meant to assist the trainee to acquire skill to prepare a business plan
and to formalize an enterprise. To be able to use this Workbook effectively, you need
prior knowledge of:

 Identification of business opportunities and generation of business ideas.

 Forms of business and types of enterprise.
 Formulating marketing plans.
 Costing and pricing.
 Financial statements and budgeting.
 Formulating strategic plans.

In this module you will learn, not how to do the above but how to draw the information
together to make a business plan. It is therefore essential that you have gone through the
preceding three modules or other similar training.

Various instructional devices are used in this Workbook:

• Definitions and Explanations – read and understand. Do not proceed beyond any
word or phrase whose meaning you do not know or are not sure of.
• Examples – follow them well and relate to your own situation.
• Stories - about other businesses. Think about how you would respond, or what it
would mean for your business, in similar situation.
• Exercises and Assignments– there are group and individual exercises. For the
latter you will be required to write in the Business Plan Worksheets in Annexure 1
of this Workbook.
• References – throughout the workbook these will point you to the preceding
modules where you can find detailed information.

Once you have made the decision to start a business, you may actualize this decision in
two steps:
i. You write down your Business Plan; and
ii. You formalize your business by having it registered and by setting it up in a
designated area.

161
UNIT 1. THE BUSINESS PLAN

Introduction

This unit deals with the first stage in the process of establishing an enterprise- writing the
business plan. Two stories of enterprise are used as running examples to illustrate the
procedures. The trainee is required to collect and record information for his/her own
business plan in the Business Plan Worksheets. The examples are ultimately developed
into two model business plans as the final illustration to the trainee. The trainee is
required to write his/her business plan and make a presentation.

Learning Objectives

By the end of this Unit the trainee should be able to:

1. Prepare a business plan.
2. Present a business plan to stakeholders.

Learning Outcomes

On completion of this Unit the trainee will be able to:

1. Describe a business plan
2. Explain the importance of a business plan in an enterprise.
3. Outline the contents of a business plan.
4. Explain the contents of a business plan
5. Identify factors to be considered when preparing a business plan.
6. Explain the factors involved in making a business plan.
7. Prepare a business plan
8. Define the terms “presentation” and “presentation skills”.
9. Explain the importance of presenting a business plan to stakeholders.
10. Present a business plan.

Unit 1.1 Importance of a Business Plan

What is a Business Plan?

A Business Plan can be described as a document in which you present your business idea,
goals and objectives, and how you are going to achieve them.
There are many reasons why you need a business plan, the following being the most
notable:-

 For Management of the Business – writing the business plan enables you to
refine your business idea and to think through the challenges you are likely to
encounter before you have to deal with them. The goals and objectives you set in
your business plan provide a means for measuring your performance. The
business plan is a valuable tool for communicating the goals and objectives of the
business to employees.

162
  For obtaining financial support – the business plan is a key document when you
are seeking loan finance from banks, or equity finance from investors or partners.
 For securing business contracts – a well written business plan does inspire
confidence in those you seek supply contracts or tenders from, as well as those
you wish to procure goods and services from.
 A communication tool to professional service providers – such as lawyers and
business consultants.

Exercise 1

(a) In your own words, give a brief description of a business plan.

(b) Besides those outlined above, think of any other useful purpose(s) a business
plan can serve.

Unit 1.2 Contents Of A Business Plan

There is no standard layout or format for a business plan. You are free to tailor your
business plan to your specific needs and taste. However, you do need to adhere to logic in
the arrangement of the elements of the plan.

Similarly, the length of your business plan may range from a few pages, if you intend it
for internal use only, to over thirty pages if it is intended to secure financial support. In
general, ten (10) pages to twenty-five (25) pages are considered sufficient for most
purposes.

Following below is an outline showing the contents of a business plan. It represents the
longer, comprehensive version of a business plan, one which would result in a document
of twenty (20) pages or more. If you wish to prepare a shorter document, you will need to
reduce detail by grouping sub-headings and some headings under existing titles or new
ones altogether.
163
Numbering of the elements of the document is essential for clarity and for cross-
referencing. You may come across documents in which the Executive Summary is
numbered as the first element. In our illustrations, we will adopt the formal approach
where the Executive Summary is not numbered, but numbering starts with the first
element in the main body of the document.

Outline of a Business Plan

EXECUTIVE SUMMARY

This is a very important part of your business plan since it is the first part people are
going to read. If you do not write it well and interestingly enough the reader may form a
low opinion of your business plan – and choose not to read the main document.

Note that although it is the first part of your business plan, you prepare the Executive
Summary only after you have completed all the sections of the main body.

A good Executive Summary is short (no more than 2 pages in length), brings out all the
important aspects of your business plan, and holds the attention of the reader. The
following will normally sufficiently cover the content of your business plan in the
Executive Summary:

 Business Description
 Ownership and Management
 Key Initiatives and Objectives
 Market Opportunities
 Competitive Advantages
 Marketing Strategy
 Summary of Financial Projections

1.0 BUSINESS OVERVIEW

This section introduces the reader to your business. You present your business idea,
history of the business (if any), your vision and mission, business objectives, ownership,
location and facilities. Thus:

1.1 Business History

1.2 Vision and Mission Statement
1.3 Objectives
1.4 Ownership
1.5 Location and Facilities

2.0 PRODUCTS

Here, you tell the reader about the products (goods and/or services) you will be selling.

164
 • Describe your products and their key features: why will customers buy your
products and not your competitors’? What makes your products unique in the
market place? How will they differ from those of your competitors?
• Describe your production process and comparative advantages you may be
having.
• Mention any improvements you plan to make to the existing products, and any
new products you plan to introduce.
Thus:
2.1 Products And Key Features
2.2 Production Process
2.3 Comparative Advantages in Production
2.4 Future Products

3.0 INDUSTRY OVERVIEW

In this section, you describe the industry in which your business will operate. This will
assist your reader to understand your business plan. Conversely, it also demonstrates to
the reader that you understand your industry and hence inspire their confidence in your
business plan.
Discuss the overall size of the industry, the key product and market segments, customer
behaviour ( buying criteria and processes), types of business in the industry, trends in the
industry and its general outlook. Thus:

3.1 Market Research

3.2 Size Of The Industry
3.3 Key Product Segments
3.4 Key Market Segments
3.5 Purchase Process And Buying Criteria
3.6 Description Of Industry Participants
3.7 Key Industry Trends
3.8 Industry Outlook

4.0 MARKETING STRATEGY

In this section, you now show the reader how your business will fit into the industry you
have described above. You achieve this by describing your marketing strategy, that is,
what your target markets will be; who your competitors will be; your competitive
position; and how you will approach the pricing, promotion and distribution of your
products. Thus:

4.1 Target Markets

4.2 Key Competitors
4.3 Competitive Position
4.4 Pricing Strategy
4.5 Promotion Strategy
4.6 Distribution Strategy

165
5.0 MANAGEMENT AND STAFFING

This is a very important section of your business plan. Ultimately the success or failure of
your business is determined by the quality of personnel. You will therefore tell the reader
about your management team and staff and their relevant expertise and experience. Thus:

5.1 Organizational Structure

5.2 Management Team
5.3 Staffing
5.4 Labour Market Issues

6.0 REGULATORY ISSUES

All businesses are subject to regulation of one kind or other. Depending on the nature of
industry and type of business, the regulatory issues you have to take account of may be
few or many.

• Do your products need to be protected by copyrights, patents or trademarks? Have

you ensured that by selling your products you are not breaking copyright, patent
and trademark laws?
• Besides trading licenses, do you require any other? Do you need a permit from a
specific Government Ministry or Institution? Does the Revenue Authority require
you to meet certain conditions before you commence operations?
• Are there any other regulations specific to your products?

Thus:
6.1 Intellectual Property Protection
6.2 Regulatory Issues

7.0 RISKS

It is good to show the reader that you have thought of things that could go wrong in your
business and that you have you have put in place protective measures.

In this section, you identify the risks faced by your business and how you would
minimize their negative impacts. Thus:

7.1 Market Risks

7.2 Other Risks

8.0 IMPLEMENTATION PLAN

Your business plan includes various things that will need to be done. In this section you
summarize these activities, state who is going to do them and when. Thus:

8.1 Activities and Dates

166
9.0 FINANCIAL PLAN

This section considered by many to be the most important as it shows your financing
needs as well as the profit potential of your business. A good financial plan gives
confidence to the reader that you have a good understanding of your business.
The financial plan basically comprises projections or forecasts of four financial
statements. You will need to discuss each of the projected statements, focusing on
anticipated trends. You will also include notes (assumptions) to the financial projections
which, for purposes of clarity, may be presented as an appendix. Thus:
9.1 Projected Annual Profit And Loss Statements - Three (3) Years.
9.2 Projected Monthly Cash Flow Statements - One (1) Year.
9.3 Projected Annual Cash Flow Statements - Three (3) Years.
9.4 Projected Annual Balance Sheets - Three (3) Years.

ASSUMPTIONS (MAY BE PRESENTED AS AN APPENDIX)

Note 1: Revenue Assumptions

Note 2: Sales Revenue Collection Assumptions
Note 3: Costs of Sales Assumptions
Note 4: Sales and Marketing Assumptions
Note 5: Property and Utilities Assumptions
Note 6: Operations Assumptions
Note 7: Banking and Other Assumptions
Note 8: Salaries, Wages and Other Assumptions
Note 9: Other Sources of Funding
Note 10: Other Uses of Funding

This would mark the end of your business plan.

167
 Exercise 2

Assume that you wish to write a business plan only for your own use within the
business. You have therefore opted to use the shorter format of the business plan.
Your task is to critically consider the comprehensive business plan outline shown
above and to compress it to fit one element per lime given below.

Unit. 1.3. Factors to Consider In Preparing A Business Plan

Having known the contents and format of a business plan, you now will be introduced to
the actual process of writing a business plan.

It is very helpful to break the writing process into two phases:-

Phase 1:
Collect the required data and information and record it in worksheets. Ensure that all
necessary information under each business plan element is captured in the worksheets
before you proceed to writing the actual plan. At this stage you may use bullet points to
capture the information. Note that the ordering of elements differs from that in the final
documents. The reason will become apparent later.

Phase 2:
Compile the information from the worksheets into the business plan as per given format.

The whole process is as follows:

Steps Involved In Writing a Business Plan

1. Have at hand the Business Plan Worksheets and the following documents:
• Your strategic environmental analysis report.
• Your market research/survey report.
• Your research and development report (if any)
• Your business idea/concept.

168
2. Formulate your business goals.
3. Prepare a description of your industry.
4. Prepare a description of your business venture.
5. Prepare your marketing strategy/plan.
7. Prepare your production strategy/plan (for manufacturing or service).
8. Prepare your management/corporate structure.
9. Prepare your risk assessment.
10. Prepare your action plan.
11. Prepare your financial statements (if it is an on-going business).
12. Prepare your financial forecasts
13. Prepare your financing and capitalization requirements.
14. Prepare your references.
15. Prepare your appendices.
________________________________________________________________________

This point marks the end of phase 1. You are free to go back and add information to the
worksheets until you are confident that you have sufficient information. Then you
proceed to phase 2.
____________________________________________________________________________________________________________

16. Write the main body of the business plan, as per format given above, using
information from the business plan worksheets:
• Bearing in mind your target audience.
• 25 pages inclusive of appendices is sufficient length for most purposes.
• Decide on font and size of letters.
• Clear and simple business language.
• Try and give it a story-like character.
• Let someone read through and offer comment. Feel free to revise several times if
necessary until you are satisfied with it.

17. Write the Executive Summary.

18. Prepare the “confidentiality clause” and the “recognition of risks” (if desired).
19. Prepare the table of contents (especially if the business plan will be given to
external users).
20. Prepare the cover sheet.
21. Finally, arrange the pages in the following order and bind in an attractive manner:
• Cover sheet
• Table of contents
• Executive summary
• Confidentially clause and recognition of risk (if desired)
• Main body
• Appendices

169
Unit 1.4. Preparing a Business Plan

You are now going to be guided through the entire process of preparing your business
plan. Examples will be drawn - sometimes simultaneously, other times alternately - from
two imaginary start-up businesses whose stories start as follows:

(i) Peter Moonga has a Crafts Certificate in Auto-body Repair obtained from
Livingstone Institute of Business and Engineering Studies (LIBES). John
Mweemba has a Crafts Certificate in Auto Mechanics from Choma Trades
Training Institute (CTTI or Mawaggali). The two met three years ago when
they were both employed as fresh graduates by a successful auto repair
company in Lusaka. Peter and John have now agreed to come together and
establish a business in the auto industry.

(ii) Mr. Rotson Bombwe was Shop Manager in a parastatal chain store until it
went into voluntary liquidation in the early 1990s. He has since then been into
farm production at a family holding west of Lusaka. Mrs. Amelia Ngosa
Bombwe, his spouse, has just been retrenched by a private manufacturing firm
where she had worked in the accounts section for over 20 years, rising to the
position of Assistant Accountant. She is awaiting her substantial redundancy
package. After much thought and discussion, the couple has agreed to invest
in a household goods retail shop.

Ultimately, the above two examples are developed into Model Business Plan presented
as Annexure.

You the trainee must decide on a business idea which you will develop in a series of
assignments into a business plan. Your idea need not to be the real thing. It just has to be
realistic enough to give you meaningful guidance. You will be recording your
information in the Business Plan Worksheets. You are free at any point to go back and
revise or change your business idea or concept.

Let us now start working on the process of preparing information necessary for writing a
business plan. We will proceed worksheet by worksheet as listed in the steps above.

(i) The Business Idea/Concept

In this worksheet you identify the business by name as well as by activity, stating the
core business and any other activities. You also state the customers’ needs which are
going to be satisfied by your products.

Observe how Peter and John, after much thought Reference: Details of how
and discussion, write down information in the to develop business ideas are
Worksheet. found in Module 138-02-A
Unit A 2.2

170
 (i) Business Idea/Concept

Business Name:

P J Utility Motors

What the Business will be doing:

Rehabilitating Vanettes and light trucks for sale to owners of

small businesses and to local farmers.

Customers’ needs to be satisfied:

Business owners in town need means of transport which they have

control over, for movement of supplies and products as well as
other transport purposes.

Local farmers in rural areas too need means of transport under their
control, for movement of inputs and produce, and also to provide
transport services to their communities to and from urban centres.

Both types of customers need models that are readily serviceable.

For Mr. and Mrs. Bombwe the completed worksheet looks like this:

(i) Business Idea/Concept

Business Name:

ROTAM Shoppers’ Delight

What the Business will be doing:

Retail sale of household goods

Customers’ Needs To Be Satisfied:

High quality, trendy products

171
 Develop your own business concept. You may need to refer to
Module 138-02-A Unit A 2.2 or other similar training materials.
After you have carefully thought out your business name, the
activities you will be carrying on, and your customers’ needs, turn to
the worksheet provided at the back if this workbook and fill in the
information.

(ii) Business Goals

In this worksheet you write down the vision, mission and key objectives of the business.
Collectively, these statements define the destination of your business. You establish your
business goals by carrying out a strategic analysis.

Reference: More about the Strategic Planning Process in Module 138-03-A Unit A 3.8

Peter and John, after working on their strategic plan, wrote down the following
information in the worksheet.

(ii) Business Goals (P J Utility Motors)

Vision
To become leading firm in motor vehicle rehabilitation in Zambia.
Mission
To provide high quality, reliable rehabilitated utility vehicles to urban
business and rural farming communities in Zambia.
Values
• Honesty in dealing with customers and other stakeholders.
• Carrying on business in an environmentally responsible manner.
• Development of communities.
Objectives
• Have the business registered by 31st December, 2006.
• Raise total capital of K84.2 million by 31st January, 2007.
• Commence production by 28th February, 2007

172
The Bombwes filled in their business goals as follows;

(ii) Business Goals (ROTAM Shoppers’ Delight)

Vision
To be the number one choice for middle and upper class households in Zambia.
Mission
To provide our customers with popular original brands of household goods at
affordable prices.
Values
• Honesty and fairness in dealing with customers.
Objectives

• Register business by 30th November, 2006

• Finish preparation of premises by 31st January, 2007
• Commence trading by 31st March, 2007

Business Plan Worksheet

Think about your own business concept. In similar manner to the

examples given above, write down your business goals in the
business plan worksheet.

(iii) Description of the Industry

In this section, you discuss the industry in which your business is. Sources of information
include chambers of commerce, business associations and national development plans
and other government economic reports. Presently in Zambia, there are no independent
consultancy firms providing such information on commercial basis. However, you must
collect as much information as you can about the industry in which you will operate.

Peter and John wrote down the information in their workbook.

173
(iii) Description of the industry (P J Utility Motors)

Market Research

No formal market research into the automotive industry has been carried out.

Informal enquiries were carried out at the Road Traffic Commission Offices in
Choma and in Lusaka. Local individuals who supply used motor vehicle from
South Africa and oversees were also interviewed.

Some business owners and farmers were also asked for their opinions on
rehabilitated motor vehicles.

Size of the Industry

Estimated at no less than 50,000 units per year. This figure covers all manner of
Motor vehicles.

Key Product Segments

Two broad categories: the brand new and the second hand. Across these the
following segments can be identified:

• Industrial vehicles – graders, dump trucks, haulage trucks.

• Light commercial vehicles – light trucks, Vanettes.
• Family utility vehicles – Vanettes and station wagons.
• Executive vehicles – cars and station wagons.
• Luxury vehicles – mainly cars, such brands as Mercedes Benz, Volvo, Lexus

Key Market Segments

Users of motor vehicles in Zambia may be segmented as follows:

• Heavy industry
• Light industry and commerce
• Farm sector and small business sector
• Institutional (Government, NGOs, Business Executives)
• Family.

Purchase Process and Buying Criteria

Industrial, institutional and formal business consumers have procurement
procedures to ensure the “best buy” for the purpose. A minimum of three
quotations are considered by a procurement committee and the best offer is
selected and the order is made. The whole process, from decision to buy to the
actual buying, can take several weeks.

174
 Farmers, small businesses and families have a less formal buying process but it
is no less thought out. Reliability and extended use are key considerations.
Much time is invested in considering the available options.

Luxury buyers pay particular attention to outward appearance and the

convenience features of a particular model. Here too, the buying process is
lengthy.

Description of Industry Participants

Presently, there is no motor vehicle manufacturing or assembly going on in

Zambia. Motor vehicles on the market are from three sources:

• Registered commercial dealers such as Star Motors Zambia Limited, Southern

Cross Motors Limited, Honda Zambia Limited and Toyota Zambia Limited.
Some of these deal in used vehicles as well.
• Numerous individual informal sector dealers who normally deal in used cars
from South Africa and Japan and target mainly the small business, farmer and
family sector.
• Motor vehicle repair firms do sometimes rehabilitate and sell vehicles as
incidental business.

Key Industry Trends

Since privatization of the economy 19 years ago, and the subsequent growth in
the informal sector and decline in the formal sector, there has been a steady
increase in the consumption of used motor vehicles. The primary consideration
is affordability by the general cash – starved small businesses.

Industry Outlook

With the continued strengthening of the private sector in general and the small
business sub-sector in particular, annual purchases of used motor vehicles are
expected to continue rising over the next several years.

In s similar manner, Mr. and Mrs. Bombwe analysed their industry and note down key
information in the business plan worksheet.

175
 Exercise 3

Assume you are in Mr. and Mrs. Bombwe’s position. Think about the industry in
which their business will operate. Describe the industry, recording this
information on a separate sheet of paper.

Share your description with the rest of the class.

Business Plan Worksheet

Think about your business concept and identify the industry in which
it fits. Fill in the ‘industry’ section of the business plan worksheets.

(iv) Description of Business Venture

Under this section, you record information on the specifics or particulars of your
products(s) or service(s). If you feel there is need to show images of the product, this is
the stage at which you prepare the photographs or drawings. You discuss the
characteristics and quality of your product.

You also identify and discuss your target markets, the competitive advantage of your
business concept, location and size of your business premises, the staff and equipment
required.

You may also discuss the history of the business in terms of the guiding principles and
development work done.

For Peter and John, the business plan worksheet is filled in as follows:

176
(iv) Description of Business Venture (P J Utility Motors}

Products

Rehabilitated vanettes (half ton to two ton capacity) and light trucks (two
ton to five ton capacity) finished to high standards of mechanical
condition and outward appearance.

In order of preference, the brands: Toyota, Datsun/Nissan. Other brands

will only be done on order. There will be the by-product of scrap metal.

Product Protection

There are no product rights to be protected. Neither are there rights that
will be infringed by this business.

Target Markets

Owners of existing and new small businesses in the urban centres of

Southern Province; small and medium indigenous farmers throughout
Southern Province; urban middle class families.

These groups are showing increasing awareness of the need for own utility
transport. Within the range of half ton to five ton capacity rehabilitated
vehicles, these groups would consider as a bargain prices ranging from
K10 million to K30 million.

These groups’ need is for reliable, affordable utility transport with a

serviceable lifespan of at least 5 years, all without the anxieties associated
with imported motor vehicles.

Competitive Advantage

The key competitors are the businesses specializing in used car imports, as
well as the individual informal sector dealers.

Our products will appeal to that niche which appreciates the fair-priced but
well finished rehabilitated utility vehicles which also carry a guarantee and
After-sales maintenance service. Risk is also reduced by virtue of dealing
with a traceable local supplier.

Estimated market share is one percent, or 500 vehicles, per year across the
entire country. For Southern Province in particular where the business will
initially be launched a market share of 50 motor vehicles per year is
anticipated.

177
 Location and Size of Premises
The business will operate from rented premises in the light industrial area
of Choma Town in Southern Province. This is well located in the centre of
the Province.
The premises have a total area of 1,500m2 out of which 500m2 is built up
and comprises a motor vehicle service bay and other utility structures.
Staff and Equipment Needed
The two partners, Peter and John, will work full-time in the business
and will constitute the key technical personnel.
They will be assisted by two full-time Technical Assistants and one full
time Book Keeper/Cashier.
Security services will be hired. So too will accounting and legal services.
Equipment will include the following:
• Heavy duty hydraulic jacks
• Heavy lifting tackle
• Full auto body repair kit
• Full auto electrician’s kit
• Full auto mechanic’s kit
• Assorted hand tools and power equipment
Business History
This is a start-up enterprise but the partners have worked together for
three years under one employer and have developed mutual respect,
understanding and share the values of honesty and fair play in the
conduct of business, as well as the virtue of aiding the less privileged
in society.

Once again, the business venture of Mr. and Mrs. Bombwe would similarly be addressed
as above and the information written down in their business plan worksheet.

Exercise 4

On a separate sheet of paper, write down the information that would make up
the business venture worksheet for Mr. and Mrs. Bombwe’s business concept.

When you are done, share your results with the rest of the class

Business Plan Worksheet

Describe your business venture, filing in the appropriate worksheet at the

back of this workbook.

178
(v) Marketing Strategy/Plan

This is where you show how you are going to achieve your sales. Peter and John
complete their worksheet in the following manner:

(v) Marketing Strategy/Plan (PJ Utility Motors)

Sales Strategy

The two partners will share the responsibility of selling.

Monthly sales targets: Year 1 – 2 vehicles

Year 2 – 3 vehicles
Year 3 – 4 vehicles

To be targeted are the urban small business owners, urban middleclass

families, and indigenous rural farmers.
Product promotion will include advertisements in the press and on Sky Radio;
posters with pictures in urban areas; flyers given out at rural transport stations.
Distribution
Direct selling will be employed. The finished vehicles will be displayed at the
Workshop premises for viewing. They will be collected by the buyers, or will
be delivered to them upon their own request. In the longer term, sales agency
arrangements will be considered, especially for areas outside the Province.
Pricing
Each unit rehabilitated will be individually costed and a mark-up, added,
bearing in mind the price range acceptable to the customers.
Guarantees
A six month guarantee will be given against mechanical and/or systems failures
not attributable to users’ carelessness. Concessionary after-sales service rates will
be offered to customers, despite that maintenance will not be normal business.
Tracking Methods
Enquiries, whether by physical visit, by phone or by mail, will be recorded
together with how the enquirer got to know about our products. The information
will be analyzed periodically to elicit patterns and indications for future product
promotion.

Let us now see how Mr. and Mrs. Bombwe devised their marketing strategy.

179
 (v) Marketing Strategy/Plan ( ROTAM Shoppers Delight)

Sales Strategy
Experienced till operators will be employed.
State-of-the-art tills will be used, including electronic funds transfer machines.
Shelf arrangement and relative positioning of the various goods categories
will be designed to achieve maximum exposure to and convenience for the
customers.

Monthly sales targets:

• Alcoholic/other beverages K20 million
• Foodstuffs K50 million
• General groceries K50 million
• Kitchenware K50 million
• Electrical/electronic appliances K60 million
• DIY Hardware K 5 million
• Other household stuff K10 million

Target customers will be the middle to upper-class of Lusaka City.

Business promotion will take the form of advertisements on national and
Private radio, the press and popular publications such as the Lowdown.
Distribution
For the period of this business plan, there will only be this one retail outlet. In
the longer term, other outlets will be considered in and outside Lusaka.
Pricing
Cost plus a percentage mark-up, ultimately fairly priced to give value-for-
money to the customer.
Guarantees
For electrical/electronic equipment, only those brands with warranties from
the manufacturers will be stocked, so that such warranties may be available to
customers. For other goods, a case by case money-back policy will be pursued.
Tracking Methods
Periodically a brief questionnaire will be given randomly to customers at the
till. This will seek to establish whether the customer is a first time customer, an
irregular customer, or a regular customer, and ask for suggestions on how the
service may be improved.

Business Plan Worksheet

Consider your own marketing strategy. You may refer to Module

138-03-A Unit A 3.2. Fill in the business plan worksheet at the
back of this workbook.

180
(vi) Sales Forecast

Up to this point, you already have an idea of the sales levels you wish to achieve, as set
out in your marketing strategy above. What you now need to do is formulate realistic
assumptions for sales quantities and values:
- For the first twelve months of the first year.
- Annual figures for years 1 to 3.

These sales forecasts are the starting point for your profit and loss as well as cash flow
forecasts.

(vi) Sales Forecast (P J Utility Motors)

Assumptions

1. Production: Year 1 – 2 Vehicles per month

Year 2 – 3 Vehicles per month
Year 3 – 4 Vehicles per month

2. Product Mix: Yea 1 Vanettes only

Year 2 – 02 Nos. Vanettes
01 Nos. Light truck
Year 3 – 03 Nos. Vanette
01 Nos. Light truck

3. Scrap Metal: Year 1 – 1000kg per month

Year 2 – 2000kg per month
Year 3 – 3000kg per month

4. Sales Prices: Vanette - K15 million each

Light truck - K25 million
Scrap Metal - K100 per kilo

Monthly Sales forecast for Year 1

Values in K’million

Month 1 2 3 4 5 6
Vehicles 30.0 30.0 30.0 30.0 30.0 30.0
Scrap Metal 0.1 0.1 0.1 0.1 0.1 0.1
TOTAL 30.1 30.1 30.1 30.1 30.1 30.1

181
 7 8 9 10 11 12 TOTAL
30.0 30.0 30.0 30.0 30.0 30.0 360.0
0.1 0.1 0.1 0.1 0.1 0.1 1.2
30.1 30.1 30.1 30.1 30.1 30.1 361.2

Annual sales forecast

Year 1 2 3 TOTAL
Vehicles 360.0 660.0 840.0 1,860.0
Scrap Metal 1.2 2.4 3.6 7.2
TOTAL 361.2 662.4 843.6 1,867.2

Mrs. Bombwe and her husband similarly work out their sales forecasts. They assume an
average sales price for each unit in each category of merchandise.

Sales Forecast (ROTAM Shoppers’ Delight)

Assumptions

Product Group Quantity per Month Average Unit Price

(units) (K)
Alcoholic/ Other beverages 500 40,000
Foodstuffs 5,000 10,000
General groceries 3,000 16,667
Kitchenware 700 71,429
Electrical/Electronic 120 500,000
appliances 500 10,000
DIY Hardware 1,000 10,000
Other household stuff

Sales will increase 10 percent annually

Monthly Sales Forecast for Year 1

Values in K’million
Month 1 2 3 4 5 6
Alcoholic/other beverages 20.0 20.0 20.0 20.0 20.0 20.0
Foodstuffs 50.0 50.0 50.0 50.0 50.0 50.0
General groceries 50.0 50.0 50.0 50.0 50.0 50.0
Kitchenware 50.0 50.0 50.0 50.0 50.0 50.0
Electrical/Electronic appliances 60.0 60.0 60.0 60.0 60.0 60.0
182
 DIY Hardware 5.0 5.0 5.0 5.0 5.0 5.0
Other Household stuff 10.0 10.0 10.0 10.0 10.0 10.0
Total 245.0 245.0 245.0 245.0 245.0 245.0

Month 7 8 9 10 11 12 Total
Alcoholic/other 20.0 20.0 20.0 20.0 20.0 20.0 240.0
beverages
Foodstuffs 50.0 50.0 50.0 50.0 50.0 50.0 600.0
General groceries 50.0 50.0 50.0 50.0 50.0 50.0 600.0
Kitchenware 50.0 50.0 50.0 50.0 50.0 50.0 600.0
Electrical/Electronic 60.0 60.0 60.0 60.0 60.0 60.0 720.0
appliances
DIY Hardware 5.0 5.0 5.0 5.0 5.0 5.0 60.0
Other Household stuff 10.0 10.0 10.0 10.0 10.0 10.0 120.0
Total 245.0 245.0 245.0 245.0 245.0 245.0 2,940.0

Annual Sales Forecast

Values in K’million
Year 1 2 3 Total
Alcoholic/other beverages 240.0 264.0 288.0 792.0
Foodstuffs 600.0 660.0 720.0 1,980.0
General groceries 600.0 660.0 720.0 1,980.0
Kitchenware 600.0 660.0 720.0 1,980.0
Electrical/Electronic appliances 720.0 792.0 864.0 2,376.0
DIY Hardware 60.0 66.0 72.0 198.0
Other Household stuff 120.0 132.0 144.0 396.6
Total 2,940.0 3,234.0 3,528.0 9,702.0

Business Plan Work Sheets

Turn to the Business Plan Worksheets at the back of this workbook and write down
your sales forecast, starting with your assumptions. Bear in mind that your
forecasts can only be as good as your assumptions. Be as realistic as you can.

(vii) Production Strategy /Plan

Having set your sales targets, you may now turn your attention to the question of how
you are going to produce or acquire those goods. You must now formulate your
production strategy plan.

183
Observe how Peter and John put together their production

(vii) Production Strategy /Plan (PJ Utility Motors)

Production Process
Old and accident wrecked vanettes and light trucks will be completely dismantled, all
parts thoroughly checked for mechanical soundness, unsound parts will be scrapped and
replaced with brand new or very good used ones, and the vehicle re-assembled and spray
painted.

Physical Plant Requirements.

A large utility structure with provision for working space, storage space and a display
area is needed.
Premises for rent have been identified, 1,500 m² in extent with 500m² of building
structure comprising a motor vehicle service bay, a large room for storage of equipment
and salvaged spare parts, and a smaller room to be used as office space. There is
sufficient extra space to provide for display area and a transit dump for the scrapped
vehicle parts.

Machinery and Equipment

• Heavy duty hydraulic jack
• Block and Tackle
• Air compressors
• Work benches with vices
• Assorted power tools
• Spray painting kit
• Auto body repair kit
• Auto mechanics repair kit
• Auto electrics kit
• Assorted hand tools.

Raw Materials
• Used vehicles in various conditions will be bought from auctioneers, and
from institutions, including GRZ, by tender. Acquisitions from
individuals will be avoided, as a matter policy, to minimize risk.
• Accident damaged vehicles will be bought from insurance companies.
Beyond- repair vehicles will be bought for salvaging spare parts.
• Brand new spare parts will be bought directly from supplier in South
Africa.
• Auto body paints will also be bought directly from South Africa

Stocking Requirements
A stock of brand new as well as second hand spare parts will be maintained. A stock
record will be put in place.

184
 Suppliers
Key raw materials will be acquired from GRZ, NGOs and insurance companies. Others
will be bought from South Africa. No discounts are expected.

Staff Required
• Two full-time Technical Assistants
• One full-time Book Keeper/ Cashier
• Security will be hired.

Capital Estimate
Start – up Requirements:
Business Registration K 150,000
Licences and Permits K 50,000
Machinery and Equipment K22,000,000
Utility Vehicle (used) K15,000,000
Initial vehicles stock (04) K20,000,000
Initial stock of spares K 2,500,000
Other stock K 1,500,000
Electricity (3 months) K 1,200,000
Water (3 months) K 600,000
Rentals (6months) K 6,000,000
Preparation of premises K 1,500,000
Security fees (3 months) K 900,000
Salaries (3months) K12,000.000
Business promotion K 800,000
Total K 84,200,000

Mr. and Mrs. Bombwe on the other hand will not engage in production. They will simply
be retailing already manufactured goods. They fill in their worksheet as follows.

(vii) Production Strategy /Plan (ROTAM Shoppers’ Delight)

Production Process
No production involved

Physical Plant Requirements

A structure of at least 1,000m² with a high roof, power ventilation, secure doors and
reliable utilities supply is needed.
Machinery and Equipment
• 1 Ton utility panel Vanette
• Electronic cash registers with funds transfer facility
• Trolleys and baskets
• Movable shelving
• Cold room
• Display chest and upright fridges
• Electronic balances
185
Raw Materials
None as there will not be any production.

Stocking Requirements
The policy will be never to run out of any of the items on sale.

Foodstuffs are expected to be fast selling and to turn over two to three times a month.
Slower selling items will be stocked to last a month. New orders will be made one week
and a half before stocks run out.

Suppliers
There are many local manufacturers of foodstuffs, and these will be preferred so long as
they meet our quality standards. Discounts will be negotiated.

Other merchandise will be sourced mainly from abroad. Quality brands will be stocked
which come with warranties/guarantees.

Staff Required
• Five (5) sales staff (Till Operators)
• Five Shelf/sanitary attendants
• One (1) Accounts Assistant
• Security and other services will be hired.
Capital Estimate
Start-up requirements:

Business Registration K 2,000,000

Licences and Permits K 250,000
Utility Vehicle (used) K30,000,000
Stocks K115,000,000
Rentals (3 months) K 6,000,000
Preparation of Premises K 3,000,000
Security Fees (3 months) K 9,000,000
Salaries (3 months) K 45,000,000
Cold room Installation K 15,000,000
Refrigerators K 25,000,000
Electricity (3 months) K 1,500,000
Water (3 months) K 1,500,000
Cash Registers K 15,000,000
Trolleys and Baskets K 5.000,000
Shelving K 5,000,000
Electronic Balances K10,000,000
Business Promotion K 7,000,000
Packaging/Other K 4,750,000
Total K300, 000,000

186
Business Plan Worksheet
Turn to the Business Plan Worksheet and write your Production Strategy/Plan.
Remember that this should be based on the sales targets that you have set.

(vii) Management/Corporate Structure

Here, you address the legal form of the business; who the owners are; their stakes in the
business; and their terms of association. You also give the management structure; the key
qualifications of the managers; and the professionals or consultants on call. An
organisational chart is very useful in showing reporting relations, and if it is rather large
you may do well to put it in appendices.

Peter and John have decided to settle for an ordinary partnership, as it is then much easier
to get the business started. Here is their business structure.

(viii) Management/Concept Structure (P J Utility Motors)

Legal Form

Partnership, registered under the business name “P J Utility Motors.”

Share Distribution

Peter Moonga 50%

John Mweemba 50%
TOTAL 100%

Contracts

1. The partners will be guided by a comprehensive partnership agreement.

2. Full-time employees will be engaged on contract.

Management

The two partners will, on top of providing the main technical input, also
discharge the management functions as follows:

Peter Moonga Finance and Administration

John Mweemba Production and Sales/Marketing

The responsibility of “Managing Partners” will alternate annually.

Peter Moonga has a Craft Certificate qualification in Auto Body

Repair obtained from Livingstone Institute of Business and
Engineering Studies (LIBES), which training had a strong
187
 Entrepreneurship component. He has had 3 years experience in auto
Body repair work with a leading auto repair firm in Lusaka.

John Mweemba has a Craft Certificate qualification in Auto

Mechanics obtained from Choma Trades Training Institute (Mawaggali).
He too underwent entrepreneurship training and has had 3 years experience in
auto mechanics/electrical repair work with the same firm mentioned above.
C Vs of the two are appended.
Contract Professionals/Consultants
None will be required. No areas of deficiency are anticipated.

Organization Chart

Managing
Partner

Partner
Book Keeper
Cashier

Technical Technical
Assistant Assistant

188
The Bombwes have opted for the corporate form of business, given the expected level of
investment. Their business structure is as follows:

(viii) Management/Corporate Structure (ROTAM Shoppers Delight)

Legal Form
Limited Company under the name “ROTAM Shoppers’ Delight Limited”
Share Distribution

Director No. of Shares Values of Shares Percent share

K holding

Rotson Bombwe 150,000.00 150,000000.00 50

Amelia Ngosa
Bombwe 150,000.00 150,000,000.00 50

TOTAL 300,000.00 300,000,000.00 100

Contracts
1. The Directors will be guided by the Articles of Association.
2. All full-time employees will be engaged on contract
Management
The two Directors will discharge the management function. The position of
Managing Director will alternate on three year basis, starting with Mr.
Robson Bombwe; Mrs. Amelia Ngosa Bombwe will take charge of the day
running of the business.
Mr. Robson Bombwe holds a higher Diploma in Business Management with
over 10 years experience in managing a large retail outlet.
Mrs. Amelia Ngosa Bombwe holds a Certificate in Accounting and Business
Studies and has over 20 years experience in handling business records and
Accounts
. She will initially be in charge of all operations.
C Vs of the Directors are appended.
Contracts Professional/Consultants
Professional marketers will be hired to formulate the initial marketing and
sales program.

189
 Organization Chart

Managing Director

Director of
Operations

Accounts
Assistant

Sales
Attendants

Shelf/Sanitary
Attendants

Business Plan Worksheet

Think about your business and write down the most suitable
Management structure for it.

(xi) Risk Assessment

What things could go wrong in the course of your business operations? What are the
measures you will put in place to minimize, or avoid altogether, the negative impacts of
such factors? These are the questions you answer in this section.

Peter and John wrote down their risk assessment in the business plan worksheets as
follows:

(ix) Risk Assessment (P J Utility Motors)

Competitors’ Reaction
190
Competitors, especially the individual informal dealers in imported used
vehicles, are most likely to reduce their prices and also to insinuate
inferiority of a rehabilitated vehicle to an imported second hand one.

On the first point, we do not think our competitors can match and sustain
our price levels for long. As a counter-measure we would be willing to
reduce our sales prices by 10 to 15 percent and still remain afloat.

On the second count, our offer of 6 months guarantee is sufficient to give

confidence to our customers. We will ensure supreme workmanship such
that none of our products fails the guarantee test.

External Factors

1. The Landlord may terminate the Lease Agreement for the business
premises at any time. We will seek to develop our own property in the
shortest possible time.
2. New direct competition is inevitable from the numerous auto mechanics
who will attempt to replicate our business concept. We will maintain our
lead by sticking to technical excellence and aggressive product
promotion.
3. A favourable change in policy regarding duty on imported second hand
vehicles could occur. We are confident even then to maintain our
competitive advantage in terms of price and reliability.
4. Handling a stolen vehicle would have dire consequences for the business.
We will avoid this by dealing only with institutional sources and also by
ensuring that we pay for only those vehicles with prior clearance from the
Road Traffic Commission and Interpol.

Internal Factors

1. Sales reductions of up to 50 percent are possible over certain periods,

notably from December to April. The business would be able to
survive with some measure of profit.
2. Demand increases of up to 100 percent may be possible in the period
July to October. We would meet it by securing bank overdraft
facilities and by engaging temporal Technical Assistants.
3. Government could at some point increase the national minimum
wage for workers. Given our relatively high budgeted wages, we
would not expect a drastic change in the wage bill.
4. If any of the Technical Assistants were to decide to leave us, there
would be some slackening in the production process. However, there
are many experienced –though not formally trained – mechanics
available for employment.

191
 Exercise 5

Assume you are in the position of Mr. and Mrs. Bombwe. On a separate sheet of
paper, write down a risk assessment for their business.

Business Plan Worksheets

Think about your business. Prepare a risk assessment in the Worksheets provided.

(x) Implementation/Action Plan

This section presents a summary of the key things to be done in order to achieve the first
year’s objectives, when they must be done and who will be responsible.

For Peter and John, the implementation plan is as follows.

(x) Implementation Plan (PJ Utility Motors)

Activity By When By Whom

Register Business Name 31/12/2006 P. Moonga
Prepare Partnership Agreement 10/01/2007 P. Moonga and J. Mweemba
Sign Partnership Agreement 11/01/2007 P. Moonga and J. Mweemba
Open Business Bank Account 20/01/2007 P. Moonga
Mobilise K30million Start-Up Capital 31/01/2007 P. Moonga and J. Mweemba
Order Initial Stocks 10/02/2007 J. Mweemba
Prepare Premises 25/02/2007 J. Mweemba
Recruit Staff 25/02/2007 P. Moonga and J. Mweemba
Start Operations 28/02/2007 P. Moonga and J. Mweemba
Finish First Two Vanettes 20/03/2007 P. Moonga and J. Mweemba

For Mr. and Mrs. Bombwe’s business, the implementation plan looks like this.

192
 (x) Implementation Plan (ROTAM Shoppers’ Delight)

Activity By When By Whom

Prepare Memorandum & Articles of Association 20/11/2006 Lawyers
Register Business 30/11/2006 Lawyers
Open Business Bank Account 10/12/2006 A.N. Bombwe
Mobilise K300million Start-Up Capital 31/12/2006 R. Bombwe & A.N. Bombwe
Work on Premises 31/01/2007 R. Bombwe
Recruit Staff 31/01/2007 R. Bombwe & A.N. Bombwe
Order Stocks 15/02/2007 R. Bombwe
Launch the Business 31/03/2007 Advertising Consultants
Review Performance 10/05/2007 R. Bombwe & A.N. Bombwe

Business Plan Worksheet

Write down the implementation plan for your business in the Worksheet provided.

(xi) Financial Statements

These give an indication of the past performance of a business, normally for at least the
last three years. In this case neither business has a history to report.

(xii) Financial Forecasts/Projections

To be able to turn your plan into monetary figures you need to come up with a set of
assumptions as to what conditions are expected to prevail within the business in the
future. These assumptions must be founded on the realities obtaining within the business
as well as the environment within which the business will operate. With poor unrealistic
assumptions even the most beautiful looking financial projections are useless, and
misleading to the user.

Let us look at how Peter and John make their financial forecasts.

193
(xii) Financial Forecasts/Projections (PJ Utility Motors)

Assumptions
(i) Revenue/Income
Will only come from sales of rehabilitated motor vehicles, the scrap metal generated, and
the after- sales repair and maintenance service to be offered only to the customers. Thus
the monthly revenues are assumed as follows:

Monthly Revenue (K’million)

Product/Year 1 2 3
Motor Vehicles 30.0 55.0 70.0
Repair/ Maintenance Service 0.5 1.0 1.5
Scrap Metal 0.1 0.2 0.3

(ii) Sales Revenue Collection

All sales will be made, and revenue collected, within the month of production.

(iii) Cost of Sales

Monthly Cost (K’million)
Product/ Year 1 2 3
Motor Vehicles 10.0 20.0 25.0
Repair/ Maintenance Service 0.0 0.2 0.5
Scrap Metal 0.0 0.0 0.0

End- of- year stock values of K2m, K3m, and K4m for respective successive years are
anticipated.

(iv) Sales and Marketing

Monthly cost: Year 1 K 400,000
Year 2 K 800,000
Year 3 K1,000,000
(v) Property and Utilities
Depreciation
• Buildings: None to be rented.
• Motor Vehicle, Machinery, Equipment: 10% pa i.e. K3,700,000
Maintenance
• Buildings: None. Borne by landlord
• Motor Vehicles, Machinery, Equipment: 5% pa. i.e. K1,850,000
Utilities
• Electricity: K 400,000
• Water: K 200,000
• Telephone: K 100,000
• E-mail : K 50, 000

(vi) Operations
• Rent K1,000,000 pm 3 months in advance
194
 • Fuel & oils : K 600,000 pm
• Stationery/Postage : K 50, 000 pm

(vii) Banking and Other

• Monthly bank charges K100,000
• No loan facilities will be taken in the period of projection
• Insurance of Motor vehicle: 7.5% pa

(viii) Salaries/ wages and other

• Salaries/ wages: 02 Partners K3,000,000 pm
02 Assistants K 500, 000 pm
01 Book Keeper K 500,000 pm
• Salaries /wages will be increased by 25 percent annually
• Other services will be hired:
Security K500,000
Legal K500,000 per quarter
Accounting K500,000 per quarter
• Hired services will also increase by 25 percent annually.
• Taxes/ statutory Payments
 being a partnership, individual partners will pay personal tax on their
share of profit, at 35 percent
 Pension Fund contributions: K 250,000
 Workers Compensation Fund: K150,000

(ix) Other Sources of Funding

All start-up capital will be financed equally by the two partners from their savings.

(x) Other Uses of Funding

Annual cash surpluses will go towards expanding business in subsequent years, as well
as to build up capital reserves.

PROJECTED PROFIT AND LOSS STATEMENT (K'M)

Year to 28 February 2008 2009 2010

Total Sales 367.20 674.40 861.60
Cost of Sales 122.50 242.40 306.00
Gross Profit 244.70 432.00 555.60

Fixed Costs

195
Salaries/wages 48.00 60.00 72.00
Rent 12.00 12.00 12.00
Electricity 4.80 4.80 4.80
Water 2.40 2.40 2.40
Telephone/Email 1.80 1.80 1.80
Stationery and Postage 0.60 0.60 0.60
Security Service 6.00 7.50 9.00
Legal Services 2.00 2.50 3.00
Accounting Services 2.00 2.50 3.00
Sales and Marketing 5.20 9.60 12.00
Insurance 1.10 1.10 1.10
Fuel and Oil 7.20 7.20 7.20
Repair/Maintenance 3.40 1.80 1.80
Depreciation 3.70 3.70 3.70
Bank charges 0.10 0.10 0.10
Statutory payments 4.80 6.00 7.20
Total Fixed Cost 105.10 123.60 141.70
Net Profit before Tax 139.60 308.40 413.90
Tax @ 35% 48.86 107.94 144.87
Net Profit 90.74 200.46 269.04
Drawings 0.00 0.00 0.00
Profit Retained 90.74 200.46 269.04
Cumulative Profit 90.74 291.20 560.24

196
 PROJECTED MONTHLY CASH FLOW (K'M)

Month: Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Total
Receipts (Inflow)
Sales 30.60 30.60 30.60 30.60 30.60 30.60 30.60 30.60 30.60 30.60 30.60 30.60 367.20
Capital 47.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 47.00
Loans, Overdrafts Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 77.60 30.60 30.60 30.60 30.60 30.60 30.60 30.60 30.60 30.60 30.60 30.60 414.20
Payments (Outflow)
Raw Materials 22.50 0.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 122.50
Salaries/Wages 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 48.00
Rent 3.00 0.00 0.00 3.00 0.00 0.00 3.00 0.00 0.00 3.00 0.00 0.00 12.00
Security Services 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 6.00
Legal Services 0.00 0.00 0.00 0.50 0.00 0.00 0.50 0.00 0.00 0.50 0.00 0.00 1.50
Accounting Service 0.00 0.00 0.00 0.50 0.00 0.00 0.50 0.00 0.00 0.50 0.00 0.00 1.50
Electricity 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 4.80
Water 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 2.40
Telephone/E-mail 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 1.20
Sales and Marketing 0.80 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 5.20
Insurance 1.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.10
Fuel and Oil 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 7.20
Stationery/Postage 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.60
Repair/Maintenance 1.65 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 3.30
Capital Purchases 37.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 37.00
Loans/OD Repayment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Bank charges 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 1.20
Statutory Payments 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 4.80
Tax 0.00 0.00 12.20 0.00 0.00 12.20 0.00 0.00 12.20 0.00 0.00 12.30 48.90
Licences/Permits 0.25 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.25
Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Drawings 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 72.65 6.90 29.10 20.90 16.90 29.10 20.90 16.90 29.10 20.90 16.90 29.20 309.45
Cash Surplus 4.95 23.70 1.50 9.70 13.70 1.50 9.70 13.70 1.50 9.70 13.70 1.40 104.75
Opening Balance 0.00 4.95 28.65 30.15 39.85 53.55 55.05 64.75 78.45 79.95 89.65 103.35 104.75
Closing Balance 4.95 28.65 30.15 39.85 53.55 55.05 64.75 78.45 79.95 89.65 103.35 104.75 209.50

197
 PROJECTED ANNUAL CASH FLOW STATEMENTS (K'M)

Year to 28 February 2008 2009 2010

Receipt (Inflow)
Sales 367.20 674.40 861.60
Capital Introduced 84.20 0.00 0.00
Loans, Overdrafts, Other 0.00 0.00 0.00
Total 451.40 674.40 861.60
Payments (Outflow)
Stocks 122.50 242.40 306.00
Salaries/Wages 48.00 60.00 72.00
Rent 12.00 12.00 12.00
Security Services 6.00 7.50 9.00
Legal Services 1.50 2.50 3.00
Accounting Services 1.50 2.50 3.00
Electricity 4.80 4.80 4.80
Water 2.40 2.40 2.40
Telephone/E-mail 1.20 1.20 1.20
sales and Marketing 5.20 9.60 12.00
Insurance 1.10 1.10 1.10
fuel and Oil 7.20 7.20 7.20
Stationery and Postage 0.60 0.60 0.60
Repair and Maintenance 3.30 1.80 1.80
Capital Purchases 37.00 0.00 0.00
Loans/OD Repayment 0.00 0.00 0.00
Bank charges 1.20 1.50 1.80
Statutory Payments 4.80 6.00 7.20
Tax 48.86 107.94 144.87
Licences/Permits 0.20 0.10 0.10
Other 0.00 0.00 0.00
Dividends 0.00 0.00 0.00
Total 309.36 471.14 590.07
Cash Surplus 142.04 203.26 271.54
Opening Balance 0.00 142.04 345.30
Closing Balance 142.04 345.30 616.84

Projected Annual Balance Sheet (K'M)

Year to 28 February 2008 2009 2010

Fixed Assets
Buildings 0.00 0.00 0.00
Plant and Equipment 19.80 17.60 15.40
Vehicles 13.50 12.00 10.50
Total Fixed Assets 33.30 29.60 25.90
Current Assets
Stocks 2.00 3.00 4.00
Debtors 0.00 0.00 0.00
Total Current Assets 2.00 3.00 4.00
Current Liabilities
Bank OD 0.00 0.00 0.00
Creditors 0.00 0.00 0.00

198
Total Current Liabilities 0.00 0.00 0.00
Net Current Assets 139.64 342.80 614.54
Long Term Liabilities
Capital 84.20 84.20 84.20
Retained Earnings 90.74 291.20 560.24
Total Liabilities 174.94 375.40 644.44

Mr. and Mrs. Bombwe's financial forecasts are worked out as follows:

(xii) Financial Forecasts/Projections ( ROTAM Shopper's Delight )

Assumptions

1. Revenue/Income

Monthly Revenue/Income (K’million)

Product Group/ Year 1 2 3

Alcoholic/other beverages 20.00 22.00 24.00
Foodstuffs 50.00 55.00 60.00
General groceries 50.00 55.00 60.00
Kitchenware 50.00 55.00 60.00
Electrical/Electronic appliances 60.00 66.00 72.00
DIY Hardware 5.00 5.50 6.00
Other Household stuff 10.00 11.00 12.00
Total 245.00 269.50 294.00

Monthly income will increase by 10% in years 2 and 3. Year end stock will be 10% of monthly
sales

2. Sales Income Collection

The shop will operate on "cash and carry" basis. No credit will be given to
customers.

3. Cost Of Sales

Monthly Cost (K' Million)

Product Group/Year 1 2 3
Alcoholic/other beverages 10.00 11.00 12.00
Foodstuffs 25.00 27.00 30.00
General groceries 25.00 27.00 30.00
Kitchenware 20.00 22.00 24.00
Electrical/Electronic appliances 30.00 33.00 36.00
DIY Hardware 2.00 2.20 2.40
Other Household stuff 3.00 3.30 3.60
Total 115.00 125.50 138.00

Monthly cost of sales will increase by 10% per annum. There will be one month’s trade credit on
25% of stock.

199
4. Sales and Marketing
Monthly cost: Year 1 - K1, 000,000 from month two (2)
Year 2 - K1, 500,000
Year 3 - K2, 000,000

5. Property and Utilities

Depreciation
o Buildings: None. To be rented.
o Motor vehicles, machinery, equipment: 15% (K15, 750,000.00) per annum.

Maintenance
o Building: None, borne by landlord
o Motor vehicles, machinery, equipment: 10% (K10, 500,000.00) per annum.

Utilities
o Electricity: K500, 000 per month
o Water: K500,000 per month
o Telephone: K300,000 per month
o E-mail: K200,000 per month

6. Operations
o Rentals: K2, 000.000 per month; 3 months in advance, will increase by 50% annually.
o Stationery/postage: K100,000 per month
o Fuel and oils: K1,500.000 per month

7. Banking and Others

o Monthly bank charges: K500,000 per month
o No loan/overdraft facilities are envisaged
o Insurance: Motor vehicle - 7.5%; Equipment- 2%; stock - 2% of monthly value.
8. Salaries/wages and others
o Salaries/wages: 02 Directors - K10, 000,000
05 Sales staff - K 2,500,000
05 Sanitary staff - K 1,500,000
01 Accounts Assistant - K 1,000,000
Total per month K15, 000,000
Note: Salaries will increase by 25% annually

o Hired services: Security - K3,000,000 per month

Legal - K1, 000,000per quarter
Accounting - K2, 000,000 per quarter
Note: Hired services will also increase by 25% annually.

o Taxes/statutory payments: Corporation tax @ 45%

Pension fund contribution: K1, 000,000 per month.
Workers compensation fund contributions: K500, 000
per month
Licences and permits: K250, 000 per annum

9. Other sources of funding

None. All start up capital will be financed by equity.

10. Other uses of funding

Annual cash surpluses will go towards reserves for future expansion of the business.

200
Projected Profit and Loss Statement (K' Million)

Year to 31 March 2008 2009 2010

Total sales 2,940.00 3,234.00 3,528.00
Cost sales 1,380.00 1,518.00 1,656.00
Gross Profit 1,560.00 1,716.00 1,872.00
Fixed Costs
Salaries/wages 180.00 184.50 189.00
Rent 24.00 36.00 48.00
Electricity 6.00 6.00 6.00
Water 6.00 6.00 6.00
Telephone/E-mail 2.40 2.40 2.40
Stationery and Postage 1.20 1.20 1.20
Security services 36.00 45.00 54.00
Legal service 4.00 5.00 6.00
Accounting services 8.00 10.00 12.00
Sales and Marketing 18.00 18.00 24.00
Insurance 6.00 6.00 6.00
Fuel and oil 18.00 18.00 18.00
Repair/maintenance 13.50 10.50 10.50
Depreciation 15.80 15.80 15.80
Bank charges 6.00 6.00 6.00
Statutory payments 18.30 22.80 27.30
Total fixed cost 363.20 393.20 432.20
Net profit before tax 1,196.80 1,322.80 1,439.80
Tax @ 45% 538.56 595.26 647.91
Net profit 658.24 727.50 791.90
Cumulative Profit 658.24 1,385.74 2,177.64

201
 Projected Monthly Cash Flow (K' Million)
Month Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Total
Receipts (Inflow)
Sales 245.00 245.00 245.00 245.00 245.00 245.00 245.00 245.00 245.00 245.00 245.00 245.00 2,940.00
Capital Introduced 300.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 300.00
Loans, OD, Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 545.00 245.00 245.00 245.00 245.00 245.00 245.00 245.00 245.00 245.00 245.00 245.00 3,240.00
Stocks 115.00 115.00 115.00 115.00 115.00 115.00 115.00 115.00 115.00 115.00 115.00 115.00 1,380.00
Salaries/wages 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 180.00
Rent 6.00 0.00 0.00 6.00 0.00 0.00 6.00 0.00 0.00 6.00 0.00 0.00 24.00
Security services 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 36.00
Legal services 0.00 0.00 0.00 1.00 0.00 0.00 1.00 0.00 0.00 1.00 0.00 0.00 3.00
Accounting services 0.00 0.00 0.00 2.00 0.00 0.00 2.00 0.00 0.00 2.00 0.00 0.00 6.00
Electricity 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 6.00
Water 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 6.00
Telephone/E-mail 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 2.40
Sales and marketing 7.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 18.00
Insurance 6.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6.00
Fuel and oil 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 18.00
Stationery/postage 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 1.20
Repair/maintenance 3.00 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 2.50 13.50
Capital purchase 105.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 105.00
Loans/OD payment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Bank charges 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 6.00
Statutory payments 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 18.00
Tax 0.00 0.00 134.90 0.00 0.00 134.90 0.00 0.00 134.90 0.00 0.00 134.90 539.60
Licences/permits 2.30 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.30
Other 4.70 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4.70
Dividends 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 271.80 139.60 274.50 148.60 139.60 274.50 148.60 139.60 274.50 148.60 139.60 276.20 2,375.70
Cash surplus 273.20 105.40 -29.50 96.40 105.40 -29.50 96.40 105.40 -29.50 96.40 105.40 -31.20 864.30
Opening balance 0 273.20 378.60 349.10 445.50 550.90 521.40 617.80 723.20 693.70 790.10 895.50 864.30
Closing balance 273.20 378.60 349.10 445.50 550.90 521.40 617.80 723.20 693.70 790.10 895.50 864.30 1,728.60

202
Projected Annual Cash Flow Statement (K' Million)
Year to 31 March 2008 2009 2010
Receipts (Inflow)
Sales 2,940.00 3,234.00 3,528.00
Capital introduced 300.00 0.00 0.00
Loans, Overdrafts, Others 0.00 0.00 0.00
Total 3,240.00 3,234.00 3,528.00
Payments (Outflow)
Stocks 1,380.00 1,518.00 1,656.00
Salaries/wages 180.00 225.00 270.00
Rent 24.00 36.00 48.00
Security services 36.00 45.00 54.00
Legal services 4.00 5.00 6.00
Accounting services 8.00 10.00 12.00
Electricity 6.00 6.00 6.00
Water 6.00 6.00 6.00
Telephone/E-mail 3.60 3.60 3.60
Sales and Marketing 18.00 18.00 18.00
Insurance 6.00 6.00 6.00
Fuel and oil 18.00 18.00 18.00
Stationery and postage 1.20 1.20 1.20
Repair and maintenance 13.50 10.50 10.50
Capital purchases 105.00 0.00 0.00
Loans/OD repayment 0.00 0.00 0.00
Bank charges 6.00 6.00 6.00
Statutory payments 18.30 22.80 27.30
Tax 538.60 595.30 647.90
Licences/permits 2.30 0.30 0.30
Other 4.70 0.00 0.00
Dividends 0.00 0.00 0.00
Total 2,379.20 2,532.70 2,796.80
Cash surplus 860.80 701.30 731.20
Opening balance 0.00 860.80 1,562.10
Closing balance 860.80 1,562.10 2,293.30

Projected Annual Balance Sheets (K' Million)

Year to 31 March 2008 2009 2010
Fixed Assets
Buildings 0.00 0.00 0.00
Plant and equipment 63.70 52.40 41.10
Vehicles 25.50 21.00 16.50
Total fixed assets 89.20 73.40 57.60
Current Assets
Stock 24.50 27.00 29.40
Debtors 0.00 0.00 0.00
Total current assets 24.50 27.00 29.40
Current Liabilities
Bank OD 0.00 0.00 0.00
Creditors 28.80 31.60 34.50
Total current liabilities 28.80 31.60 34.50
Net current assets 873.30 1,616.90 2,425.10
Long Term Liabilities
Capital 300.00 300.00 300.00
Retained earnings 658.20 1,385.70 2,177.60
Total liabilities 987.00 1,717.30 2,512.10

203
As you many observe, this section has so much information in terms of assumptions and figures
that you may have some trouble getting your message through to the reader. Remember that
this section is considered by many to be very important. It does help to attach this information
as appendices and only summarise it in the narrative of the main text.

Business Plan Work Sheets

Prepare your financial forecasts and write them down in the business plan Worksheet
provided. As you work through the figures, you may find it necessary to revisit your
assumptions. Feel free to do so - it is part of the process of refining your business plan.

(xiii) Financing Requirements

In this section, you write down the total funds required by the business, as well as the
breakdown according to where these funds will come from. This is especially important if
you propose to borrow some of the funds.
In the cases of PJ Utility Motors and ROTAM Shoppers’ Delight Limited, both
businesses will be financed with own (equity) funds. The Worksheet for ROTAM
Shoppers’ Delight Limited would look something like this;

(xiii) Financing Requirements (ROTAM Shoppers’ Delight Limited)

Total funds required: K300,000,000.00
Means of financing:
Equity K300,000,000.00
Bank Loans Nil
Government Loans Nil
Micro Finance Loans Nil
Family Loans Nil
Government Grants Nil
Other Grants Nil

Business Plan Work Sheet

Write down your proposed financing plan in the business plan

Worksheets provided.

(xiv) References

These are an important attachment when the business plan is meant for external
circulation. They are names and addresses of institutions and/or professional individuals
with whom your business has transacted and who thereby are in a position to vouch for it.
If the business is just beginning, the partners or directors may draw upon their personal
references.

Mr. and Mrs. Bombwe wrote out the references Worksheet as follows:

204
 (xiv) References

Present Bankers: None. Proposed - Standard Chartered Bank (z) Ltd

Present Financing Institution: None
Lawyers: None. Proposed – Mutende Chambers
Accountants: None. Proposed – Moores Rowland
Auditors: None. Proposed – MTN Associates
Others: None

(xv) APPENDICES
These contain supporting information and data. They are a device for de-congesting the
business plan.
Peter and John have agreed that initially they will use their business plan internally only.
They therefore decide that they do not require a lengthy document with appendices.
Mr. and Mrs. Bombwe, on the other hand realize that they will need the business plan to
facilitate negotiations for trade credit with suppliers. They therefore decide to prepare an
elaborated document with the following list of appendices to be included.

(v) Appendices (ROTAM Shoppers’ Delight Limited)

(i) References
(ii) Detailed assumptions and financial/forecasts
(iii) CVs of Directors

Business Plan Work Sheet

Assume your business plan will be made available to outsiders.

Prepare your list of appendices in the Worksheet provided.

Read through your business plan work sheets once more and make any additions and
changes that you feel are necessary. You may then proceed to write your business plan in
the format suggested on page _____ and following steps 17 to 22 outlined on page ____.

Sample business plans for P J Utility Motors and ROTAM Shoppers’ Delight Limited are
available at the back of this workbook. Read them and use them as guides only. Do not be
afraid to let your personal style of writing come through.

205
Unit 1.5 Presenting a Business Plan

Your business plan may be for purposes of securing a loan from a bank or micro
financing institution, or from convincing partners to be part of the business. Whatever the
case may be, it is usual for such stakeholders to request you to present your proposal in
person to them. They want you to speak to them about your business plan, despite that
they will already have read it.
When stakeholders request a presentation from you, it is generally a sign that you wrote a
good business plan. Why then do these people want to listen to you in person? There are
two main reasons,
1. To seek clarification and elaboration on some aspects of the business plan.
2. To know the person behind the plan, as this is what ultimately determines its
success or failure. This is perhaps the main reason why you are asked to present
your plan.
As you speak, the audience will be hopping to make a good judgment that you possess
the qualities necessary to make the business plan actually work. You must therefore know
what these qualities are, and then manage the entire presentation process in such a way
that you give a maximum demonstration of these desirable qualities.

But, first and foremost you must know what you are going to present.

1.5.1 Areas of Focus When Presenting a Business Plan

Be sure that you thoroughly know and understand all aspects of your business plan and
then prepare notes specifically for the presentation focusing on the following areas.
1. A very brief background.
2. Statement of the business concept that is, the products, the customers, the
customers’ needs which will be satisfied, and how the product will be made
available to the customers.
3. Discussion of the market and your competitive advantage. This is a key area;
ensure you give it sufficient emphasis.
4. Discussion of the competencies of the managers and key staff. This is another key
area which you must give sufficient stress.
5. Discussion of the financial forecasts. Do not forget to make a statement on the
underlying assumptions.
6. Discussion of some of the weak areas of your business plan and how they will be
addressed. Demonstrate that these weaknesses are not beyond correction.
7. Conclusion, summing up the overall benefits of the business proposition to the
various stakeholders.

(ii) The Key Qualities Being Looked For By Stakeholders/Audience

The following are the personal qualities you must demonstrate and project to your
audience as you present your Business Plan.

Motivation
Your desire to make a success of your business must show.

206
Enthusiasm
You must portray genuine interest in the plan you are presenting.

Integrity
As you speak, the audience must get the impression that you re trustworthy and subscribe
to a code of good conduct in business.

Managerial Ability
You must portray to the audience that you have the ability to direct both material and
human resources to the ultimate success of the Business Plan.

(iii) Skills Necessary for a Successful Presentation

To be able to get desired impressions and information to the audience, you need to
develop ad refine the following.

Poise
The way you carry yourself has a lasting impression upon the audience. Show that you
are calm and in control. This is quite different from giving off airs of arrogance.

Voice Control
Speak strongly without being overly loud. Develop a good voice modulation and
intonation without which you are certain to be boring.

Address the audience

Do not talk to the board, the flip chart, or the notes in your hand.
Always keep the audience interested in what you are saying. Maintain frequent eye
contact with each and every one of them. If the audience comprises only a few people,
try and turn the presentation into a discussion.

Manage your time well

Keep the presentation short. A duration of 20 minutes is good enough. It is difficult to
hold the interest of the audience beyond 30 minutes. Avoid being asked to wind up.

Manage the feedback well

You will be required to answer questions and make clarifications. Respond with
thoughtfulness and honestly. If you do not know or are not sure of a particular point, say
so and pledge to supply the answer in a few days.
Graciously acknowledge any valid criticism.
Note down any comments, suggestions and criticisms which require to be acted upon and
be sure to do so in due time.

207
Assignment

Read your Business Plan so that you are thoroughly familiar with each and every one of
its aspects.

Prepare the notes for a 10- minute presentation which you will be required to make to
either a panel of 5 people, or to your full class.

208
UNIT 2. FORMALISING AN ENTERPRISE

Introduction

The second stage of establishing an enterprise – formalizing an enterprise – is dealt with

in this unit. As in unit 1 the two stories of enterprise are used to instruct and illustrate.
The process of enterprise formalization has three steps: documentation, physical set-up,
and production/service process set-up. The trainee is required to do these procedures for
his/her enterprise.

Learning Objectives

By the end of this Unit the trainee should be able to:

1. Prepare documents for formalizing an enterprise.
2. Describe the physical set-up of an enterprise.
3. Describe the production/service process of an enterprise.

Learning Outcomes

On completion of this Unit the trainee will be able to:

1. Explain the documents required for formalizing his/her business.
2. Prepare all documents and papers for formalizing his/her enterprise.
3. Describe the physical set-up of his/her enterprise.
4. Set-up the production/service process for his/her enterprise.

2.1. Business Documentation

Importance of Business Registration

To formalize an enterprise is to have it registered with the relevant government
institutions. Its existence becomes officially recognized. While it is not
illegal in Zambia to conduct business without
Reference
being formally registered, any enterprise with
some degree of ambition soon realizes that Details of the legal forms
Government institutions, NGO’s, donor agencies of business are found in
and even some private businesses, do not do Module138-01-A
business with unregistered enterprises. Unit 1.1.3

Exercise 6

Think about your Business Plan. Imagine you were conducting business
without being registered. What kinds of business deals do you think you
would miss out on? List down as many as you can think of.

209
Types of Business Registration
To register an enterprise you fill in a form (or set of forms), submit them to the relevant
Registrar with a fee, and upon approval receive your Certificate of Registration or of
Incorporation.

The following summarizes the Business Documentation for the four most popular legal
forms of business in Zambia.

Legal From of Responsible Forms to be Certificate Issued

Business completed
Sole Proprietor Registrar, Patents Business Name Certificate of
And Companies Form II: Statement Registration
Registration Office of Particulars to be
(PACRO) Lusaka given in case of a
Firm
Partnership Registrar PACRO Business Name Certificate of
Form II: Statement Registration
of Particulars to be
given in case of a
Firm
Limited Liability Registrar PACRO Companies Form 2: Certificate of
Company Application for Registration
Incorporation as a
private company
limited by shares
Cooperative Registrar of Certificate of
Cooperatives , Registration
Ministry of
Agriculture and
Cooperatives

Before the Patents and Companies Registration Office can process your application, you
are required to submit preferred business names for “Search” to ensure that the name you
propose in not being used by another business or that it will not cause undue confusion
with an already existing name. For the Sole Proprietor/ Partnership the preferred names
are written on Form II itself. For the Limited Liability Company, a written application
has to be made.

In the case of ROTAM Shoppers’ Delight Limited, Mr. and Mrs. Bombwe made their
application as shown below, giving three names at once to save time.

210
Example

Amelia N. Bombwe (MD)

P.O Box
LUSAKA

1st November 2006

The Registrar of Companies

LUSAKA

Dear Sir/ Madam

RE: APPLICATION FOR SEARCH OF BUSINESS NAME

We intend registering a Limited Liability Company and do hereby apply for search of the
following business names in order of preference.

1. ROTAM Shoppers’ Delight Limited

2. Luombe Cash and Carry Limited
3. Kimasala Cash and Carry Limited

Yours faithfully,

AMELIA N. BOMBWE

Application forms for the registration of business names and incorporation of companies
are presently only available at the PACRO. Application forms for registering a
Cooperative may be accessed from the District Agriculture Coordinating Offices
throughout Zambia.

211
Following below are reproductions of the Business Registration forms

Exercise 7

1. Assume your business is to be registered either as a sole Proprietorship or a

Partnership. Accordingly, complete the Business Name from II given in
Annex 2.
2. Assume your business is to be registered as a limited liability Company.
Write an application for search of your business name and then complete
the company’s form 2 given in Annex 2.

Besides the foregoing primary business registration, there are other Statutory
Registrations that are essential to making your business fully eligible to operate, and still
other non-Statutory Registrations, which serve to improve the firm’s ability to do
business.

Other Statutory Registrations

1. Zambia Revenue Authority (ZRA) – registration for business taxes, employees

PAY AS YOU EARN, and Value Added Tax. Some manufactured products,
such as alcoholic beverages, require special arrangements regarding Excise Duty
prior to commencement of production.

2. Local Authorities (District/ City Councils) – Acting on behalf of Central

Government these handle the issuing of Trade and Manufacturing Licences for
most products. Licensing for most products. Licensing for manufacture of and
trading in certain products such as alcoholic beverages and pharmaceuticals is
handled by special Boards.

3. National Pension Scheme Authority (NAPSA) – Registration of employees

with the National Pension Scheme. Failure to do so on the part of the business as
employer can lead to financially crippling, if not fatal consequences for the
enterprise , and/ or criminal charges against the business owners.

4. Workers Compensation Fund Control Board - Registration of employees with

the fund for compensation for disability or death while on duty. This protects the

212
 employer from civil claims arising from death or disability of an employee on
duty.
5. Environmental Council of Zambia (ECZ) – All production / manufacturing
enterprise is required to have prior clearance from the ECZ as a way to regulate
the impact of industry on the environment. The ECZ has legal mandate to shut
down any business which fails to comply with its requirements.
6. PACRO- Registration of any patents and copy rights
Non –Statutory Registrations
These impose no legal obligation on the business but rather confer economic and
other advantages upon it.
1. Zambia Development Agency – ZDA – Registration with this institution
renders a firm exempt from various taxes and licenses and also facilitates
easier access to certain services.
2. Chambers of Commerce/ Business Associations
- For micro and small enterprises, the District Business Associations (DBAs)
under the umbrella body Zambia Chamber of Small and Medium Business
Association (ZSCSMBA) offer an opportunity to be connected to a country
wide information network.

Assignment

Think about your planned products and operational process.

1. List down the statutory registrations you will be obliged to have, noting
down all the licenses to be obtained.
2. List down the non-statutory registrations you would wish to have.

2.2. Physical Set –Up of an Enterprise

Factors to Consider
How you set up the actual business premises is broadly determined by three factors:
(i) Existing regulations within the industry;
(ii) The nature of the enterprise; and
(iii) The technical capacity and business culture /style of you the owner(s).
The last factor in the one over which you have the most control. It is advisable to seek
expert assistance if your personal knowledge is insufficient, especially in the case of
manufacturing-type enterprises.

The first two factors normally impose restrictions which you must observe.

Ultimately, the set-up of the business premises must serve the best interest of the business
while observing the regulatory requirements. Therefore, to be able to plan well for the
set-up of the business premises you must have thorough knowledge of the production
process as well as the safety standards applicable.

213
Location and Buildings
Choose a site in an area designated by Local Authority. A factory may not be set up in a
trading area.

The location must have some strategic advantage.

The building must be suited to the use and also have sufficient capacity for the envisaged
scale of operation.

You need to refer to the Factories Act and the Food and Drugs Act for the minimum
standards set by law for certain buildings.

Furniture
This refers to tables, chairs, desks, cabinets, shop counters and shelving, and other similar
items.

Select furniture to suit to suit the purpose, and also to be sufficient for both staff and
customers.

Positioning of Machinery and Equipment

Especially in processing / manufacturing situations, machinery and equipment must be so
positioned within the building as to achieve optimum productivity – high efficiency of
staff with minimum risk posed to their persons.

In a retail outlet, the safety and convenience of the customer must be a prime
consideration. Processing plants must be tested and commissioned before
commencement of operations.

Essential Facilities
These include the following:
(i) Potable water
(ii) Electricity. Most factory /workshop facilities need 3 phase supply.
(iii) Telephone land lines
(iv) Toilet facilities for men and women.
(v) Change rooms at factory / workshop premises.
(vi) Basic fire lighting equipment and First Aid Kits.

Accessibility
This is essential for all types of enterprise. Select a site that is accessible throughout the
year.

When all of the above are in place, you are ready to start your business operations.

Taking the example of PJ Utility Motors, the physical set-up of the business would be as
follows.

214
Example

Physical Set-up of P J Utility Motors

Location and Building
Plot No. 9999 on Singani Road in Choma. The area is designated for industrial use.
• Total area of premises: 1,500m²
• Main shed: 400m2 broken down into :
- 250m² middle space with pit; to serve as motor vehicle assembly/service bay.
- On either side a 75m² secure room; one to serve as a store for parts and
equipment, the other as an office.
• A separate structure: 80m² comprising toilets and a change room.
• A separate structure: 20m² to be put to miscellaneous use.
• To be constructed: 4m x2.5m sun-shaded stand to serve as show space.
Furniture
2 Nos. steel work benches
2 Nos. steel filing cabinets
3 Nos. desks
3 Nos. chairs
Machinery and Equipment
All equipment to be used is portable and does not require installation.
• Block and tackle
• Motor vehicle service kits (tool boxes)
• Assorted power and hand tools.
Essential Facilities
• Toilets and change room are available.
• There is 3-phase electricity supply by ZESCO, and water supply by Southern
Water and Sewerage Company Limited.
• There is no land line telephone service to the premises; will use GSM phone
services which are readily available.
• Will install fire extinguishers, sand buckets and fire blankets as prescribed by
the Fire Safety Regulations; will also install Fire Aid Boxes.
Accessibility
The premises are on Singani Road, which is tarred and provides access all year round.

Exercise 8

Write down the physical set up requirements for ROTAM Shopper’s Delight
Limited.

215
 Assignment

Write down the physical set-up for your business.

2.3 Production/Service Process

Description and Importance

After the place of business has been fully prepared - in the case of manufacturing and
service enterprise - there is yet another step before the goods or services become a reality.
You must now define your production or service process – that sequence of activities
which will transform your raw materials or inputs into the desired goods or services.
Identification and establishment of a production/service process broadly serve the
following purposes:
1. To assure optimum transformation of raw materials into desired products.
2. To minimize the time taken to complete the production process.
3. To assure consistency in the quality of the product.
To be able to serve these purposes the production/service process needs to be
documented so that it may provide a constant reference for all involved. You must put it
on paper.

Exercise 8

1. In your own words, write down what a production/service process

is and explain its importance.
2. Consider the micro enterprise sector in your local economy. List at
least five (5) enterprise types which would require a
production/service process to be set up.

Steps Involved in Setting up a Production/Service Process

There are basically three steps involved.

Step 1. Know and Understand the Production/Service Process

If you do not already possess thorough knowledge of the technical and procedural aspects
of your business, you need to take steps to acquire them. As a small business owner you
are unlikely to have sufficient resources to employ a professionally qualified manager.

Step 2. Break the Process Down Into Definite Logical Steps

The best is to present these steps in numbered sequence in a flow chart.

Step 3. For Each Step, Specify the Requirements and/or Expectations

Write down the materials required for the job, the specific activity or operation involved
the expected standard of finish, duration, and safety precautions to be taken.

216
Factors to Consider in Setting up a Production/Service Process

1. Statutory Requirements
There are a number of laws which regulate the conduct of processing/manufacturing
enterprise in Zambia, notably;
(i) The Factories Act which primarily seeks to ensure the safety and
health of workers in processing/manufacturing facilities.
(ii) The Food and Drugs Act which regulates the food processing industry
to protect the public from hazards related to poorly processed foods.
(iii) The Environmental Protection and Pollution Control Act which seeks
to minimize the impact of effluents and emissions from processing
plants on the environment.

You need to be familiar with the requirements of these and any other relevant legislation
and work them into the overall design of your production/service process.

2. Safety Features
In order to protect employees from injury, and machinery/equipment from damage, the
production/service.

Factors Essential for Success of a Production/Service Process

1. Skilled Staff
All production/service process depends primarily on skilled staff to succeed. From the
process you have established, you can prepare job descriptions and subsequently the
skills required for the various staff. You must decide on the minimum acceptable skills
level.

Assessment of the job applicants should include practical tests. The ideal candidate
should also possess writing and reading skills.

2. Working Procedures
Based on the production/service process, you must formulate and document a code of
working procedures to guide employees on daily basis. This is fundamental to product
standardization and quality assurance.

3. Setting Goals
You need to set production goals or targets in order to get the most out of your
production/service process. These must be SMART.

4. Interpersonal and Organizing Skills

This refers to one’s ability to positively interact with staff as individuals and also as a
group, for purposes of achieving production targets. As owner of a small business, you
need to cultivate these skills in yourself in order to get the most out of your employees.

217
Other Issues Concerning Production/Service Process

1. Managing the Process Time

In order to avoid time over runs, you need to ensure that all machinery and equipment are
always in good working condition. You also need to effectively supervise the workers.

2. Monitoring the Business

Seeing that the various stages in the production/service process flow chart are attained in
due time provides, in part, an effective means for monitoring the performance of the
business.

Let us see how Peter and John documented the production process for P J Utility Motors.

Example

Production/Service Process P J Utility Motors

Flow Chart

Disassemble Clean the parts Inspect and Repair the

Motor Vehicle for inspection select sound motor body
parts

Re-assemble the Test drive and Spray paint and

motor vehicle fine tune finish

Details
Step 1.
o Raw material of used/wrecked vehicles.
o Complete systematic dismantling down to chassis, including engine.
o Output individual motor vehicle parts need for cleaning.
o Maximum time allowed; 1 working day.

Step 2.
o Clean each and every part and record.
o Output; cleaned motor vehicle parts ready for inspection.
o Maximum time allowed; 2 working days.

Step 3.
o Inspect each and every part for faults or wear.
o Select the sound parts and record.
o Set aside the unsound parts for scrapping.
o Output; clean, sound parts ready for use.
o Maximum time allowed; 2 working days.

218
Step 4.
o Do any panel beating necessary.
o Replace any body parts that will not rehabilitate well.
o Output; auto body ready for spray painting.
o Maximum time allowed; 2 working days.

Step 5.
o Build up the vehicle from the chassis.
o Parts from other vehicles of same model will be used to cover up. Brand new parts will
be used where no good enough used ones are not available.
o Output; a whole re-assembled motor vehicle ready for test driving.
o Maximum time allowed; 2 working days.

Step 6.
o Test drive under various conditions and at different speeds for a minimum of 30km.
o Final engine tune up.
o Output; motor vehicle ready for spray painting and finishing.
o Maximum time allowed; 1 working day.

Step 7.
o Spray paint.
o Other finishing touches.
o Output; rehabilitated motor vehicles ready for sale.
o Maximum time allowed; 3 working days.

Total Process Time Per Vehicle: 13 working days.

219
What do you think of the production process for P J Utility Motors? Could they have
provided more details? Are there any important aspects that have been left out? If you
were in their place, would you have done things differently?

Assignment

Write down the production/service process for your enterprise. Do not forget to
incorporate safety features and quality control measures.

REFERENCES
1. Factories Act.
2. Food and Poison Control Act.
3. Environmental Protection and Pollution Control Act.
4. National Pension Scheme Authority Employer’s Guide.
5. Brochure: Facts about Worker’s Compensation Fund Control Board.
 TABLE OF CONTENTS

MODULE 5: SUSTAINING AN ENTERPRISE

1. AIM
The aim of this module is to impart skills that will enable the trainees to sustain the
enterprise and manage its growth.

2. LEARNING OBJECTIVES
At the end of the module, trainees will be able to:-
• Identify the different tools that can be used to appraise an Enterprise
• Explain the concept of total quality management and its impact on productivity.
• Outline indicators for business growth

3. Further reading and References

The contents of this Workbook are not exhaustive. It is recommended that trainees read
widely on the topic of Sustaining an Enterprise, beyond the contents of Workbook.
i) Text books include:-
Burns, Paul (2001). Entrepreneurship and Small Business. Palgrave Macmillan. New
York.
Thompson, Arthur; Strickland A. j.; Gamble, John (2005). Crafting and Executing
Strategy, Concepts & Cases Chapter 3. 14th Edition. McGraw-Hill Companies, Inc.: New
York
ii) Web sites:
Entrepreneur magazine: (US): www.entrepreneurmag.com
Small Business Services: www.businessadviceonline.gov.uk
Barclays Bank: www.smallbusiness.barclays.co.uk

How to use this Workbook

__________________________________________
It is recommended that you start by thoroughly reading the theory in every section of the
workbook. Then you can go over each section slowly concentrating on key issues as you
learnt them in class.
This Workbook together with other suggested reading given to you by the Trainer will
help you master entrepreneurship concepts and competencies as they relate to Sustaining
an Enterprise.

When you feel comfortable with the concepts in each section, you can then try out your
understanding and your skills in the trainee assessment section by answering the
questions and doing the exercises listed there.

221
1. Trainee Assessment Section
Part 1: Questions
This section will help you test how well you have understood the concepts that underpin
the process of sustaining an enterprise. You should answer all the questions. Suggested
Answers have been given to help you evaluate your answers.
Part IIa: Exercises
This part of the self assessment section helps you to apply the knowledge and skills you
have acquired during training and to relate them to relief situations.
Part IIb: Internet exercises
This part of the self assessment section helps you to familiarise yourself with how to use
the internet and the World Wide Web to look for information relevant to business
operations.

2. Suggested Answers to questions

These are answers to the theoretical questions in part 1 of the self assessment section.
The suggested answers are meant to guide trainees on how to tackle questions related to
the theory that underpins the topics.

Introduction to the contents of the Module

________________________________________________
Once an enterprise has been established and is running there is now need to work towards
sustaining its operations at a profitable level and also work towards growing the business
to a higher level.
In order to sustain an enterprise, there is need first to assess its current position and its
future prospects. Based on such an assessment, steps can then be taken to implement
actions that will direct the enterprise towards growth.
In this unit we discuss three areas which can be used as tools for sustaining the operations
of an enterprise. These are:-
• Appraising the enterprise
• Productivity and management
• Managing survival and growth
This workbook will enable trainees to test their entrepreneurship skills as they relate to
the process of sustaining an enterprise. In each sub unit, the practical exercises and
questions aimed at helping trainees reinforce learning through practical application of
concepts.

222
Unit 5.1: Appraising an Enterprise – Learning Outcomes
Appraising an enterprise involves doing what some entrepreneurship experts refer
to as “enterprise audit”. This is an examination of the enterprise and its environment
to determine its status.

1. Learning objectives
By the end of this session, trainees will be able to:-
• Use basic tools for the assessing performance of an enterprise.
• Identify the different stages in the life of an enterprise
• Describe the process of Total Quality Management in an Enterprise

2. Learning outcomes
• Ability to use basic tools for the assessing performance of an enterprise.
• The different stages in the life of an enterprise correctly identified
• The Total Quality Management process in an Enterprise correctly described
• Total Quality Management and productivity correctly related
• Strategies for managing change correctly identified and described

Unit 5.1.1: Enterprise performance

In very simple terms, appraising an enterprise takes the form of doing a very detailed
assessment of the operations of an enterprise. In order to survive and continue to grow,
the management of an enterprise must ensure that the enterprise has a favourable position
in relation to the industry in which it operates. The industry position of an enterprise can
be determined using some basic performance indicators which include:-
i) Market performance
The performance of an enterprise depends first and foremost on its ability to secure a
sufficiently large customer base to enable it produce at a profitable level.
One of the ways of determining how well an enterprise is performing is therefore to
assess its position in the market in relation to its competitors. This can be done by
assessing what percentage of the market share the enterprise holds. The Boston Matrix is
one way an enterprise can use to assess its market position.
The diagram below summaries the different positions that enterprises can hold on the
market in relation to their market performance.

223
Market Share
10x 1.x .1x
M 20% STAR PROBLEM CHILD
A Attractive market Attractive Market
R High market share Low Market share
K High growth rate High growth rate
E 15% (market Leaders/Challengers) (starters, average performers)
T

G
R 10%
O CASH COW DOG
W
T
H Attractive market Unattractive market
5% Large Market share Low market share
R Low growth rate Low/no Market growth
A (Market leaders with stability) (Poorly performing with no growth
T potential)

E 1%

224
ii) Financial performance
Financial assessments are the most common ways of determining the performance of an
enterprise. Different method can be used in this regard. This unit we will discuss just
two basic ones, namely:
Gross Profit margin: This is used to assess profitably by assessing how much profit an
enterprise has made in relation to the sales.
Gross Profit margin = Gross profit x 100 =x%
Sales
Acid Test ratio (Quick Ratio): this is ratio measures the actual liquidity of an enterprise.
It is expressed as a factor. It is suggested that the ideal acid test ratio must be 1:1,
meaning that the amount of money expected in the short term is able to pay off
outstanding short term debts.
Acid Test ratio = Current assets – stocks
Current liabilities
TRAINEE SELF ASSESSMENT SECTION
Part I: Questions

Questions
1. Why is it important to assess the performance of an Enterprise?
2. Name at a least three basic performance indicators for an enterprise?

Part II: Practical Exercises

1. Exercise on Customer satisfaction

In groups of two’s, conduct a customer satisfaction audit of a small enterprise of your choice
by interviewing at least five customers using the Customer satisfaction audit from below.
Customer satisfaction audit
Score
# Element YES NO

1. There is a proper process of determining customer wants/needs

2. Workers/Owners listens carefully to customer needs
3. Customer concerns and Complaints are attended to and rectified
4. Customers are considered important and are treated with respect
5. The quality of the products/services is very good
6. Owner/workers are courteous to customers
7. When customers lose interest in Company’s product, company follows
up to find out the reason why.
Total Score

‘Yes’ answers less than half for all five customers = Company customer satisfaction is low and needs
improvement A total score of less that

2. Exercise using Boston’s portfolio market assessment matrix

i) Study the operation of a small business of your choice and conduct a analysis of its market
position in relation to its market share and market growth potential.
ii) Illustrate your answer using the Boston portfolio matrix.
226
4. Exercise Financial Assessment

i) Investigate an enterprise of your choice and determine its financial

performance by calculating the gross profit margin and the acid test ratio.
ii) Comparing your findings with the general performance of the industry in
which the enterprise operates.

Note: You need to look for information from Organisations such as ZACCI or Zambia
Manufacturers Associations to find out what the industry average figures are.

227
Suggested Answers to Questions in Part I
________________________________________________

Answer to Question 1
It is important to assess the performance of an enterprise in order to establish how well
placed the enterprise is to conduct profitable business operation and to establish how well
positioned it is to compete with is rivals in the same industry.

Answer to Question 2
The three basic business performance indicators are:-
i) The Boston Matrix used to measure market performance
ii) Gross profit margin used to measure how much profit an enterprise makes in relation
to its sales.
iii) The acid test ratio used to measure the liquidity of an enterprise.

228
Unit 5.1.2: Life Cycle of an Enterprise
An enterprise, like a human being or a product, has a life cycle. A human being is born
and then goes through various growth stages such as childhood, teenage hood,
adolescence, and adulthood. A product is introduced on the market, and then it goes
through the growth stage, then the maturity stage and finally the decline stage where it
eventually phases out. In the same way, an enterprise goes through a life cycle, which
involves the following stages:
• Ideas generation: this is when the business idea is conceived and subjected to an
environmental scan, market research, feasibility study and finally the preparation of
the Business Plan
• Business launch: this is the commissioning of the enterprise to commence operations
• Business growth and expansion: this reflects the growth of the enterprise through
increased sales volume, increased number of employees, expansion in terms of capital
investments and increase in profitability levels
• Business maturity: this is where business operations appear to have gotten to the
highest capacity levels and begin to stagnate meaning that no further growth is
recorded
• Business decline: at this stage, the business begins to show a downward trend in terms
of sales and operational capacity
• Phase out or re-launch: with a continued downward trend, the business may eventually
phase out. Where the entrepreneur has fresh ideas a re-launch may occur, meaning
the business may take a different form or nature.

Some tips on enterprise performance

At every stage of an enterprise’s life cycle, there is need for systematic, efficient and
effective planning and execution in order to lengthen the life span of that enterprise. Just
like a vehicle’s life span can be lengthened through appropriate repairs, maintenance
services and use of appropriate and recommended spares, an enterprise’s life span can be
lengthened through the use of appropriate and recommended entrepreneurial and business
management skills.
An enterprise’s life cycle is in the hands of the entrepreneur who owns it. The
entrepreneur is like a driver who must steer the vehicle in the right direction. It is up to
each entrepreneur to utilise the best entrepreneurial skills and competencies based on a
sound understanding of the following key business stakeholders:
• God (the creator and giver of all knowledge, skills and wisdom)
• The Customer (the king and queen of any business)
• The employees (the people with whom the entrepreneur runs the enterprise
• The Suppliers (the people who make it possible for an entrepreneur to produce)
• The Competitors (the people from whom an entrepreneur may borrow various
entrepreneurial ideas and help him measure his performance)
• The Government (the people who facilitate and create an enabling environment for
enterprises to flourish)
• The Owner and family (the people on whom the survival of the enterprise largely
depends)

229
TRAINEE’S SELF ASSESSMENT SECTION
Part I: Questions

Questions
i) Outline the different stages that an enterprise under goes throughout its existence.

Part II: Practical exercise

1. Exercise of Enterprise Life cycle

i) Study and analyse the operations of your selected enterprise.
ii) Discuss your finding in your group and determine the stage at which the enterprise is
in its existence.
iii) Prepare a short report explaining your findings. The report should highlight the
key factors that put the enterprise at identified stage and submit it for marking.
iv) Present a summary of your report in a class plenary session.

230
Suggested answers to Questions in Part I
Answer to Question 1
An enterprise is like a human being in that it goes through different stages of growth
through out its existence.
These stages can be broadly outlined as follows;-
i) The ideas generation stage, which is the conception stage of the enterprise.
ii) The Business Launch stage, which is when the business is commissioned to start
operations.
iii) The Business growth and expansion stage which is the expansion of business
operations through increased sales, capital investment or profit levels.
iv) Business maturity stage which the period where enterprise operations have reached
the highest capacity levels and are showing no further growth.
v) Business decline stage, this is a time when enterprise operation begin to show a
downward trend
vi) Phase out or re-launch stage, this is when the business operations are either phased out
because of a continued down ward trend or when a re-launch of an enterprise is
initiated because the enterprise is taking a different turn.

231
UNIT 5.2: PRODUCTIVITY AND MANAGEMENT
Production is the creation of goods and services through transformation of inputs into
outputs. For these goods and services to be efficiently produced, there is need for a
process of managing the way the inputs are converted from input into out puts so that the
proper quality is produced without any unnecessary wastage.
Two key subjects are central to the process of creation of goods and services, namely,
quality and productivity. In the next two sub-units we will discuss these two topics in
more details.

1. Learning objectives
After going through this section of the workbook and topic and attending related class
sessions in productivity and management, participants will be able to:-
• Define total quality management (TQM)
• Explain the nature of change
• Employ strategies for managing change

2. Learning outcomes
• Total quality management (TQM) correctly defined
• The nature of change correctly explained
• Strategies for managing change properly applied

Unit 5.2.1: Total Quality Management (TQM)

Total Quality Management (TQM) is defined as a way of thinking and working that is
concerned with meeting the needs and expectations of customers. TQM tries to move the
focus of quality away from being just an Operation’s Department activity into a major
concern for the entire organization.
In short through TQM, issues of quality become the responsibility of all employees in all
the departments of an enterprise.
The process of Total Quality Management is best achieved through the following key
concepts:
Continuous improvement: TQM requires a never-ending process of continuous
improvements that embraces people, suppliers, materials, equipment, and procedures. In
TQM, the end objective is perfection.
Employee empowerment: the concept of TQM believes in the involvement of the
workforce in every step of the production process. It also believes in continuous
employee training and development.
Benchmarking: TQM believes in benchmarking, which is an approach where an
enterprise compares its operations with those of other enterprises preferably the best
enterprise available
Just in time concept: TQM believes in systems that are designed to produce or deliver
just and when the products and services are needed.

232
COSTS ASSOCIATED WITH QUALITY
The cost of quality is the price you pay for doing things wrong the first time around. This
means all costs attributable to producing a product that is not 100% perfect. At least four
major categories of costs associated with quality can be identified; namely,

i) Prevention costs
These are costs associated with activities involved in reducing the potential of producing
defective products. They include the cost of training workers to improve capabilities and
the cost of managing quality improvement programmes. A skill upgrading course for
workers to enhance their ability to make products that comply with set standards is an
example.

ii) Appraisal cost

These are all costs related to monitoring and evaluation of production processes to ensure
that the production system is operating within set standards and include the cost of testing
and payment of inspectors. Appraisal costs also include the cost of independent
verification to get certification from National Standards Bureaus.

iii) Internal failure

These are costs that result from actual production of defective products. Internal failure
costs can include the cost of scrap resulting from defective pieces and the actual cost of
rework and cost of down time when the next operation cannot take place because the
inputs are defective.

Example
When producing protective overalls, if the sleeves have been cut too short, then that
material becomes scrap as it cannot be used on the same overalls and production of
overalls has to be halted become there is no sleeve inputs.

iv) External costs

These are costs relating to delivering poor quality to the customer. External costs are the
most expensive costs to a company. They include cost of redoing the job, e.g. reinstalling
a kitchen unit because the first job was wrongly done, scrap and overtime; the cost of
transporting goods that have been recalled.

What is productivity?
Productivity is defined using a ratio as output over input. This means that productivity is
measured by what comes out (output) as a result of what goes in (input).
Productivity = Output/Input
The higher the output given at constant input, the higher the productivity.
For instance, if two (2) days of work produces five (5) bags of maize and another two (2)
days of work produces seven (7) bags of maize under similar circumstances, then, the two
days that produces seven bags of maize is more productive.

233
Factors that affect productivity
The methods used: the more efficient the method is, the more productive the result is
bound to be
Capital: the more available and efficient use of capital, the more productive the result is
bound to be
Technology in use: the more updated and appropriate the technology in use is, the more
productive the result is bound to be
Human resources in use: the more skilled, experienced and knowledgeable the human
resources are, the more productive the result is bound to be
How to improve productivity
Productivity in an enterprise may be improved by taking the following actions:-

Develop productivity measures for all operations and all departments

• Develop methods for achieving productivity improvements such as getting ideas from
workers, studying how other enterprises have improved productivity and re-
examining the way work is done
• Establish reasonable goals for improvement
• Ensure that there is a culture of teamwork
• Measure improvements and publicize them
• Offer incentives and rewards for productive work

Link between TQM and Productivity

By using TQM techniques such as statistical process control, Pareto charts, and fish-bone
diagrams, a company can locate waste, identify its cause, and eliminate it and facilitate
production of a quality service or product.

Total Quality Management therefore makes an enterprise more efficient and productive
because productivity is the ratio of output over input. The link between TQM and
productivity is very tight because a good TQM system leads to higher level of
productivity in an enterprise.

234
TRAINEE’S SELF ASSESSMENT SECTION
Part I: Questions

Question 1
1. What do you understand by Total Quality Management?
2. How can you achieve total quality Management in an enterprise?

INTERNET EXERCISE

Quality resource guide

http://deming.eng.clemeson.edu

Access the above website and prepare a short report on your findings.

235
Suggested Answers to Questions in Part I
Answer to Question 1

Total Quality Management (TQM) is a way of thinking and working that is concerned
with meeting the needs and expectations of customers. TQM puts the focus of quality on
everyone in the organisation hierarchy and not just on the production Department. With
TQM, issues of quality are the responsibility of all employees in all the departments of an
enterprise.

Answer to Question 2

You can achieve Total Quality Management in an enterprise by implementing the

following activities:-
i) Continuous improvement: a continuous process of improvements that embraces
people, suppliers, materials, equipment, and procedures.

ii) Employee empowerment: Involving the whole workforce in every step of the
production process and organising continuous employee training and development.

iii) Benchmarking: comparing the enterprise quality performance with other enterprises
which are considered to be the best in the industry.

iv) Just in time concept: introducing a system that is designed to produce and deliver
just and when the products and services are needed.

236
UNIT 5.3: MANAGING SURVIVAL AND GROWTH
The enterprise operates in dynamic environment of constant change and its continued
existence depends on how well it can adjust to this changing environment. The change
that occur in the environment can be social, where people’s habits and life styles change,
environmental where seasons and climatic conditions can change or organisational where
various factors can cause the structure of the organisation to change.
Collectively these changes will impact on the performance and existence of an enterprise.
This subunit deals with two issues that relate to the survival of an enterprise, namely;
i) Managing change: the nature of change and the strategies that can be used to manage
change.
ii) Strategies for growth: the indicators of business growth and the strategies that
can be used to achieve enterprise growth

1. Learning objectives
On completion of this unit, the trainees will be able to:-
• Outline indicators of business growth
• Identify appropriate strategies for enterprise growth
• Explain the nature of change
• Employ strategies for managing change

2. Learning Outcomes
• Indicators of business growth correctly outlined
• Strategies for enterprise growth correctly identified
• The nature of change correctly described
• Strategies for managing change correctly applied

237
Unit 5.3.1: Managing change
What is change?
Change can be defined as an alteration or difference in the way things are done as a result
of some developments.
Every enterprise no matter the size operates in an ever changing business environment.
Different factors in the business environment can cause change in an enterprise. Such
factors include:-
• Changing customer tastes
• Changing workers demands regarding work patterns
• Changing skill requirements
• Changing technology
• Changing levels of competition
• Changing government regulations on commerce and trade
As a result of this constantly changing environment, an entrepreneur must ensure that the
enterprise has the flexibility to adapt to such changes. This means that the entrepreneur
must keep his eyes and ears open to be able to identify and understand the changes that
are taking place and how they relate to his enterprise’s operations.
Change if left unmanaged can cause the down fall of an organisation. The success of an
enterprise depends in part on the entrepreneur’s ability to manage change.
What is change management?
In very simple terms, managing change refers to an enterprise’s ability to respond
favourably and appropriately to new problems, challenges and difficulties it encounters in
the course of transacting business operations.
The process of change management
The process of change can be analysed and explained in terms of the dynamics at work
between the three major elements of the change process. These three elements are:-
• The present state of the enterprise
As was discussed earlier on under “appraising an enterprise”, a SWOT analysis maybe
used to measure essential aspects of the enterprise such as its substructures and systems,
its culture and climate, its leadership and management and its performance and
profitability in order to gauge the enterprise’s all round effectiveness and efficiency.
• The desired future state of the enterprise
Again as was examined earlier on, the “Strategic Planning Process”, is one of the most
common approaches to achieving the desired future state of the enterprise. This entails
change management.
• Change through (planned) interventions
Sometimes change occurs through some interventions in the course of running an
enterprise. Some of these changes can be planned whilst others may not necessarily
occur due to planning. For instance, the abrupt resignation or even death of an employee
may result in certain interventions, which can bring about changes.

238
Strategies for Managing Change
• Defining the vision as a reference point for the change sought
• Sensitising enterprise members about the eminent change
• Catalysing to fight resistance, overcome inertia, create support and re-affirm the
validity of the proposed changes
• Steering in order to focus on the system that will guide the process of change and
keep it on track
• Delivering to effect the vision and actual transition from the current situation to the
planned state
• Obtaining participation and active involvement of all enterprise members as an
essential element to the success of the change process
• Handling the emotional dimensions which come in form of typical reactions to
change
• Handling power issues because change frequently upsets the balance of power within
an enterprise
• Training and coaching in order to introduce new ways of thinking and behaving as a
result of change
• Communicating actively and effectively as an essential component to successful
change

239
TRAINEE’S SELF ASSESSMENT SECTION
Part I: Questions

Question 1

1.1 Name four factors than can cause change to occur in an enterprise.

1.2 Explain three strategies that can be used to manage change in an

enterprise.

Part II: Practical Exercises

1. Internet exercise

1.1 Conduct a web search on the subject of managing change in a small

enterprise
1.2 Prepare a report on your findings

1.3 Present findings in a class session.

240
Suggested Answers to Questions in Part I
Answer to Question 1
Different factors in the business environment can cause change in an enterprise which
can affect the enterprise positively or negatively. Some of these factors include:-
• Changing customer tastes
• Changing technology
• Changing levels of competition
• Changing government regulations on commerce and trade
•
Answer to Question 2
In order for an enterprise ensure that change does not cause negative effects, there is need
to manage the change. Change can be managed using different strategies such as:-
• Defining the vision of the enterprise so that it can be used as a reference point during
the process of change.
• Identifying a change agent to act as catalyst who can help overcome resistance and
inertia.
• Communicating actively and effectively about what coming change is to all
employees in the enterprise

241
Unit 5.3.2: Strategies for Enterprise Growth
1. From Enterprise establishment to survival
At the time of establishment and some time thereafter, an enterprise is preoccupied with
finding customers, delivering products/services. The organisational structure of the
business is simple and planning is usually minimal. At this stage, the entrepreneur who is
usually the owner manager is actively involved in every aspect of the business.
At this stage, the business aims to establish sufficient customer base and a reputable
product/service portfolio to ensure viable business operations. Control of revenues and
expenses is critical at this stage in order to maintain a positive cash flow. This is the
make or break stage of the business.
However, once the enterprise has established itself with sufficient customer base and has
employed people in critical areas such as marketing, accounting and technical
operations, then the enterprise is set to embark on a growth path should the entrepreneur
so desire.
2. Enterprise growth

For an enterprise to embark on a growth path, the entrepreneur must first clarify the long
term vision of the enterprise and be able to mobilise necessary resources. The Enterprise
requires a clear strategy of how the vision will be achieved. At this stage, what is critical
to the success of the enterprise is:-
a) The owner’s goals for the business
b) The owner/manager’s strategic planning, and execution abilities
c) The operating systems that are in place
i) Indicators of Business growth
Growth in an enterprise can come in many forms and there are many indicators of
enterprise growth. They include sales levels, capital levels, and enterprise profitability.
• Sales volume as an indicator of enterprise growth
A growing customer base that results in increased sales volume can be a very good
indicator of the performance of an enterprise. Generally, consistent growth in sales
volume is an indication that the business is growing.
• Profitability as an indicator of business growth
An enterprise can compare its profits over a period of time to determine if the
enterprise is growing, stagnant or declining. Decline in profits can be an indication
that the business is not growing.
• Capital levels
The amount of capital available to an enterprise will determine to certain extent the
level of operation that an enterprise can undertake. Therefore, if the capital level in a
business in growing, it could be an indication that the business in growing, hence the
need for increased capital injection.

242
Strategies for enterprise growth

There are many growth strategies that an entrepreneur can embark on in order to grow the
business. It is up to the owner/manager of the business to assess the business
circumstances and decide on which growth path best suits the enterprise at a particular
point in time. Below are some of the strategies that an enterprise can use to grow:-
• Growth through subcontracting
A growth strategy through subcontracting entails giving out extra business to
outsiders when an enterprise’s capacities can not accommodate it. For instance, a
carpenter is requested to supply one thousand (1,000) desks and his capacity can only
supply five hundred (500) desks; such a carpenter can subcontract another carpenter
to produce the extra 500 desks.

• Growth through mergers and acquisitions

A merger means two different enterprises, A and B coming together to form
enterprise C. While an acquisition is where a Company A, acquires company B and
maintains the name Company A and meanwhile Company B ceases to exist forthwith.
The objective in both cases is to increase operating capacity, efficiency, and
enterprise competitiveness.
• Growth Strategies through Joint ventures
Sometimes growth may be achieved through a Joint Venture strategy, where
Company A and Company B go into a joint venture arrangement where Company C
is created but both Companies A and B continue existing in their own right.
For any strategy to be successful there must be a fit between the objectives of an
enterprise and the opportunity in the business environment. Strategies for growth should
therefore be crafted based on the growth areas identified as critical to the success of the
enterprise.

243
TRAINEE’S SELF ASSESSMENT SECTION

Part 1: Questions

Question 1

1.1 What issues are critical to the success of the organisation as the enterprise
prepares to move from survival stage towards growth?

1.2 Name at least two indicators of enterprise growth and explain how they can
be used to determine enterprise growth.

Part II : Practical Exercise

1. Internet Exercise

Go to www.google.Com (Zambia), and do a search on mergers and

acquisition in Zambia.

Identify the Organisations that deal with the process of mergers and
acquisitions.

244
Suggested Answers to Questions in Part I
Answer to Question 1
As an enterprise embarks on a growth path, it is important that the entrepreneur first
clarifies the long term vision of the enterprise. The entrepreneur must also prepare to
mobilise the resources necessary to finance the planned growth. At this stage, the
Enterprise requires a clear strategy of how the vision will be achieved. The issues that
are most critical to the success of the enterprise at this stage are:-
a) The owner’s goals for the business
b) The owner/manager’s strategic planning, and execution abilities
c) The operating systems that are in place
Answer to Question 2
Growth for an enterprise can come in many forms and there are different indicators for
enterprise growth, two of which are outlined below
a) Sales volume
Sales volumes are very good indicates of the performance of an enterprise. A growing
customer base that results in increased sales volume is an indication that the business is
growing.
b) Size of Capital employed
The amount of capital employed in an enterprise will determine to a certain extent the
size of operation to be undertaken. When the capital level in a business goes up, it could
be an indication that the business in growing, hence the need for increased capital
injection.

CONCLUSION

This workbook has been developed to help trainees apply and practice the
entrepreneurship knowledge and skills they acquired in class in relation to the process of
sustaining an enterprise. The practical exercises and questions each sub unit, have been
developed in such a way that they reinforce learning through practical application of
concepts.
Knowledge in the three main topics which have been discussed in this Module, namely;
Appraising the enterprise, Productivity and Management, and Managing survival and
growth are essential to sustaining the operations of an Enterprise.
The main concepts brought out in this module are that:-
For an enterprise to operate sustainability there is need for the owner to perform regular
appraisals in the areas of market and financial performance and for the entrepreneur to
be fully aware of what stage of the enterprise cycle the business is in.
That productivity and quality management play a very vital role in the performance and
ultimate success of an Enterprise.
That the business environment is dynamic and that success is dependent on how well the
enterprise owner manage change
a) That if the entrepreneur does not take deliberate steps to foster business growth,
the enterprise will not be sustained.
An entrepreneur who wishes to succeed in business therefore needs to learn these lessons
well and be able to effectively apply them in a business set up.

245
TABLE OF CONTENT
MODULE TITLE 248
MODULE AIM 248
1. MEANING OF ENTREPRENEURSHIP, INTRAPRENEURSHIP AND ENTREPRENEUR 249
2. ROLE OF ENTREPRENEURSHIP IN NATIONAL DEVELOPMENT 250
3. TYPES OF ENTREPRENEURS 251
4. FORMS OF BUSINESSES 252
5. TYPE OF BUSINESSES 253
6. EMPLOYEE OR AN ENTREPRENEUR 254
7. SELF EMPLOYMENT 255
8. HISTORIC BACKGROUND TO THE ZAMBIAN ECONOMY 256
9. NATURAL RESOURCES IN ZAMBIA 257
10. INFORMAL SECTOR 258
11. ROLE OF ENTERPRISES IN ECONOMIC GROWTH 259
12. POLICY INSTRUMENTS THAT AFFECT ENTERPRISE DEVELOPMENT 260
13. STATUTORY OBLIGATIONS AND ENTERPRISE MANAGEMENT 261
14. SUPPORT INSTITUTIONS 262
15. SELF ASSESSMENT OF ENTREPRENEURIAL TRAITS AND CHARACTERISTICS; 264
16. ENTREPRENEURIAL GOAL 265
17. PROCESS OF ENVIRONMENTAL SCANNING 269
18. FEASIBILITY STUDY 270
19. MEASURES TO MANAGE RISKS 275
20. ENTERPRISE RESOURCES MOBILISATION 276
21. ENTERPRISE NETWORK 277
22. COMMUNICATION PLAN 278
23. APPLICATION OF INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) IN AN
ENTERPRISE 279
24. BUSINESS MANAGEMENT FUNCTION 281
25. LEADERSHIP 282
26. TEAM BUILDING 283
27. MARKETING PLAN 284
28. BUYING 285
29. SALES PLAN 286
30. MARKET RESEARCH 287
31. COSTING AND PRICING 288
32. FINANCE MANAGEMENT 289
33. SOURCES OF FINANCE 290

246
34. FINANCIAL STATEMENTS 291
35. BUDGETING 292
36. BUSINESS RECORDS 293
37. HUMAN RESOURCES IN AN ENTERPRISE 294
38. STRATEGIC PLANNING PROCESS 295
39. PROTECTING INVENTIONS AND TECHNICAL INNOVATIONS 296
40. BUSINESS ETHICS AND VALUES 297
41. BUSINESS PLAN PREPARATIONS 298
42. BUSINESS DOCUMENTATIONS 301
43. PHYSICAL SET UP OF THE ENTERPRISE 302
44. PRODUCTION PROCESS 303
45. ENTERPRISE PERFORMANCE 304

247
MODULE 06
MODULE TITLE:

INTEGRATED PROJECT – ENTREPRENEURSHIP

MODULE AIM

The aim of the module is to apply entrepreneurial competences, establish an enterprise

and develop enterprise growth strategies.
.

LEARNING OBJECTIVES

MODULE I: INTRODUCTION TO ENTREPRENEURSHIP

248
1. MEANING OF ENTREPRENEURSHIP, INTRAPRENEURSHIP AND
ENTREPRENEUR

Explain the meaning of Entrepreneurship, Intrapreneurship and Entrepreneur;

Entrepreneurship

It is a way of life and process of creating new value through a new business in an
environment of risk to earn a profit and growth through mobilizing resources to
exploit opportunities.

Explain entrepreneurship from the point of:

 Starting your own business

 Inventing something new
 A spirit of creative thinking and innovation that embraces an entire
organization

Intrapreneurship

Intrapreneurship is the organizational culture of a business that allows employees to

be creative and innovative in solving problem and exploiting opportunities within the
limits of the available resources.
Suggest way that can create an atmosphere of entrepreneurship in your business.

Entrepreneur

An Entrepreneur is a person who creates new value through a new business in an

environment of risk to earn a profit and growth through mobilizing resources to
exploit opportunities.

Give an example from the community you live.

249
 2. ROLE OF ENTREPRENEURSHIP IN NATIONAL DEVELOPMENT

 Outline the role of entrepreneurship in national development;

Entrepreneurship is one of the most critical ingredients necessary to secure economic

prosperity for Zambia. Zambia’s poverty levels at more than 60% are rendering most
Zambians without access to social services and minimum income for livelihoods.
You have an opportunity to enter the career of entrepreneurship, what is the importance
of entrepreneurship to Zambia:

Explain in terms of the following:

 Variety of goods and services,

 Improved Income,
 Job opportunities.
 Expanding tax base
 Rural urban migration

250
 3. TYPES OF ENTREPRENEURS

There are different types of entrepreneurs. The list given is indicative. You may come up
with another list.

No. Type Description Distinguishing Your preference

Feature
Student entrepreneurs
Community entrepreneurs
High-growth entrepreneurs
Hobby entrepreneurs
Lifestyle entrepreneurs
Social entrepreneurs
Women entrepreneurs

Select your preferred type of entrepreneur.

251
 4. FORMS OF BUSINESSES

 Outline the forms of businesses;

There are the five main forms of business. It may sole proprietorship, partnership, limited
company, cooperative, public limited company

 Describe the type of the business form.

 Explain the advantages and disadvantages in terms of:
o Liability;
o Tax;
o Management of the business;
o Business Entity

 Select one business form.

Business Form
No. Type Advantages Disadvantages Selection
1. sole proprietorship
2. partnership
3. limited company
4. cooperative
5. public limited
company

 Select one type of business and give reasons for your choice.

252
 5. TYPE OF BUSINESSES

There are various types of business. The type of business is influenced by the sector it
belongs to and the operations it is involved in.

 Steps
o Identify the type of business;
o Describe the form of operations they are involved in;
o Give an example of their products or service;
o Select the type of business you prefer and give reasons for your choice.

Business Type

No. Type Operations Product/service Selection

253
 6. EMPLOYEE OR AN ENTREPRENEUR

 Discuss the merits and demerits of being an employee or an entrepreneur;

Steps
 Explain who are employees and entrepreneurs;
 List their merits and demerits of each career;

No. Focus Employee Entrepreneur

In what position can Merit Demerit Merit Demerit
you
1. Create own destiny
Position:
2. Make a Difference in life
Position:
3. Earn High Income
Position:
4. Have Fun
Position:
5. Risk Loss
Position:
6. Long Hours
Position:
7. Hard Work
Position:
8. Responsibility of
Decision making
Position:
9. Require high level of
Discipline
Position:
10. Have security of career
Position:
Total
Career selected in the space of position indicate merit for the career and a demerit for the
other.

254
 7. SELF EMPLOYMENT

There is encouragement from the government for people to become self-employed. Self
employment is attractive with the high levels of unemployment in this country. There
exist disadvantages. The critical decisions to make are what you are going to do in view
of the advantages and disadvantages.

 Steps
o List the benefits of self employment;
o List the challenges;
o Explain how you will deal with the challenges

No. Factor Benefits Challenges Strategies to Deal with

Challenges
Ownership
Independence
Risk
Income
Age
Gender
Security

255
 8. HISTORIC BACKGROUND TO THE ZAMBIAN ECONOMY

 Discuss the historical background to the Zambian economy and its impact on the
entrepreneurial growth;

Zambia got its own independence from the UK in 1964. It experimented with two
decades of one party rule. The multiparty democracy was reintroduced 1991. In the last
four to five years, there has been growth in the mining, manufacturing, tourism and
construction sectors. Zambia’s economic performance has improved and the economy is
enjoying modest growth of around 5% per annum. Zambia has received extensive debt
relief under the Multilateral Debt Relief Initiative (MDRI). The external debt burden has
been reduced from around $7.1 billion to $0.5 billion.

Zambia is ranked 165 on the United Nations human development index (2004). Over
two-thirds of the population in Zambia live on less than $1 a day that is around 7.5
million people. Child mortality rates are high, maternal mortality has increased and
deaths from AIDS and child hunger are rising. However, overall poverty levels have
improved in recent years. The poverty rate has fallen from 73% in 1998 to 68% in 2004.
Net enrolment rates for primary education are improving, school literacy is rising,
immunisation coverage is increasing and child death rates are falling (DFID).

 Steps to this section:

o Discuss the historical background:

o Identify the political and economic trends;
o Identify opportunities and challenges for entrepreneurship

256
 9. NATURAL RESOURCES IN ZAMBIA

Zambia is endowed with a good stock of natural resources. The commonest natural
resources are: people, copper, cobalt, zinc, lead, coal, emeralds, gold, silver, uranium,
hydropower, water bodies, forestry resources and animals and cultural resources. The
exploitation of these natural resources is low.

Steps identify the natural resources;

Assign potential uses of the natural resources in an enterprise;

Zambia Natural Resources Potential

Natural Resource Potential Use

257
 10. INFORMAL SECTOR

 Identify the factors influencing the growth of the informal sector in Zambia.

The informal sector is an arena of income generation activities for both the unemployed
and employed, found in rural and urban areas, producing and selling products and
services to limited markets in commercially and at authorized places. The earnings vary
from product to product. It is a relief sector for individuals who either want to supplement
their income or those unemployed youth and adults in all parts of the country. Informal
sector operators use unregistered income activities, use adapted technology, unregulated
and highly competitive.

Complete the table below:

No. Focal Area Characteristics Growth of Informal

Sector Factors
Type of Business Structure
Location
No. of Employees
Quality of Goods
Skills

258
11. ROLE OF ENTERPRISES IN ECONOMIC GROWTH

Identify the role of enterprises in the growth of the economy;

Zambia’s gross domestic product by sector is agriculture (22%), industry (29%), and
services (49%). The gross domestic product growth is 5%.

Zambia has micro; small, medium and large enterprises in various sectors of
agriculture, construction, manufacturing, mining, trading, service delivery. There are
local and foreign owned enterprises.

Zambia’s agricultural products are: corn, sorghum, rice, peanuts, sunflower seed,
vegetables, flowers, tobacco, cotton, sugarcane, cassava (tapioca), coffee; cattle,
goats, pigs, poultry, milk, eggs, and hide. The industry is represented by copper
mining and processing, construction, foodstuffs, beverages, chemicals, textiles,
fertilizer, horticulture.

Complete the table below:

Role of Enterprise in an Economy

No. Growth Factor Contribution

259
 12. POLICY INSTRUMENTS THAT AFFECT ENTERPRISE DEVELOPMENT

 Outline Zambia’s legislation supporting enterprise development;

There are various policy instruments that have a positive or negative effect on
enterprise development in Zambia. These policies are housed in various Ministries
and public agencies. The policies have various roles.

 Steps

o Identify the enterprise areas that can be affected by the policies:

o Identify the policy that regulates the enterprise area;
o Mention the Government agency responsible for that policy.

Policy Instruments and Enterprise Development

No. Public Agency Policy Enterprise Effect on
Instrument areas Enterprise
Development
1. Entrepreneur
2. Business
Opportunity
3. Marketing
4. Operations
5. Employees
6. Finance
7. Customers
8. Competition
9. Mergers
10. Ethics

260
 13. STATUTORY OBLIGATIONS AND ENTERPRISE MANAGEMENT

 Outline statutory instruments relating to enterprise management;

Enterprises operating in Zambia are regulated through statutory obligations. There are
various types of taxes to be paid. There are a host of licenses to be applied for and other
fees to be paid.

 Steps
o Identify the statutory obligations;
o State the enterprise obligation;
o Identify the impact on enterprise growth;

Statutory Obligations and Enterprise Management

Statutory Obligations Enterprise Obligation Impact on Enterprise

Growth

261
 14. SUPPORT INSTITUTIONS

 Identify support organizations for enterprise development

There are public, private and civil societies supporting enterprise development. The
supporting institutions have different roles they play. There are multifunctional
organizations and there are single functions ones. The organizations offer human
resources development, training, counselling, marketing support, financial support and
networking support

 Steps
o Identify support organizations;
o Describe the role they play in enterprise development;

No. Area Supporting Services

Organisations
1. Entrepreneurship Development
2. Marketing
3. Training
4. Technical support
5. Financial Credit
6. Information
7. Infrastructure

262
Module II: ENTREPRENEURIAL COMPETENCES AND ATTITUDE
GUIDELINES

263
 15. SELF ASSESSMENT OF ENTREPRENEURIAL TRAITS AND
CHARACTERISTICS;

 Assess entrepreneurial traits and characteristics;

Please complete the questionnaire to assess your traits and characteristics?

No Yes
1. You set clear goals to know where you are going
2. You are committed to your team and the people you work with in
the business
3. You identify and act on new or unusual business opportunities by
looking for resources to create something valuable.
4. You are self-reliant, and have willingness to initiate action without
needing or taking direction from others and have ability to solve
problems.

5. You do not tire to hunt for success despite difficulties on the road to
success
6. You have passion to carry out your idea, be it in the form of a new
technology, a different approach, a more thorough application of
known technologies or a combination of all three.

7. You are willing to be lonely and make tough decisions and

believing you are right despite the majority thinking you are wrong.

8. You know where you are going and how you will get there because
you have refined your goal into action and you have put in
measures to check progress
9. You are not a gambler who throws around money without having
control over the results of your action
10. You look for information within the business or its surroundings to
help you achieve your purpose or avoid problems

Total
Percentage

264
 16. ENTREPRENEURIAL GOAL

 Develop an entrepreneurial goal;

Entrepreneurs need to have a destination to aim for, start small, achieve a little at a time
and build on the achievement. Entrepreneurs should reflect on the achievement and
challenges over the period.

Element Why Indicator

What do you want to achieve
How would you want to achieve your goal
What would you do to achieve your goal
Who will assist you to achieve your goal
When will you achieve the goal

1. Generate a business idea;

The process of generating ideas involves two steps namely: scanning the surrounding
(environment) and idea generation. Scanning the environment assist you to see what is
going on, changing and the needs of people. By having a keen interest in what is going on
you will be able to see the needs of people emerging.

Scanning the environment involves collecting information from various sources. These
sources are:

No. Category of Information Sources

Sources
5. Personal and Informal Family member, Friends, Employees, Customers,
Sales Persons,
6. Personal and Formal Bankers, Investment Centre, Consultants,
Researchers, Councils, Business Associations,
Business Registration Office, Commercial
Exhibitions, Industry and Trade Contacts
7. Written Magazines, Newspapers, Newsletters, Books,
Catalogues, Journals, Bill Boards, Posters
8. Oral Trade Shows, Seminars, Suppliers/Agents,
Professional Organisations

The Techniques for Business Idea Generation

There a number of ways you can generate ideas. There a number of methods you can use
to generate business ideas.

265
No. Technique
21. Draw on Your Skills
22. Make Use of Your
Experience
23. Use Your Hobby
24. Improve services
25. Improve a product
26. Modify an existing
product into a new one
27. Travel
28. Listen to complaints
29. Research
30. Reproduce the idea
31. Create new value for a
product
32. Somebody’s waste is
another person’s Treasure
33. Brainstorm
34. Commercialise research
recommendations and
inventions
35. Combine uses into one
product
36. Visualisation
37.
Adding or Subtracting
38. Time framing
39. Technology application
40. Creation of opposites
The list of methods of generating ideas does not end there. You will be able to come up
with other methods are you listen, see, touch and smell. The list will be determined by
how much you use your imagination.
Explanation
Covert your skills into a business
You have been able to do something for a long time.
Can you advise others in the same field at a fee?
Do you like music? Set up a music store.
Offer a better service of the current services you pay
for
Improve its appearance, function, colour, packaging
and so on
Make it look luxurious, make it simpler, or make it
smaller, change the shape.
Come back with something you saw or used not
available in you area
Create a solution to a complaint
Find out special needs of certain groups of customers
Apply a successful idea to new settings
Use taxi vehicle for advertising
Turn waste into something useful for someone.
Generate as many ideas as possible without checking
the usefulness one may turn out to be a gold mine
Turn research ideas from research institutions into
business
Create a pen with functions of a musical instrument
Create a picture of a business in your mind
Add or subtract a few features to the product or service
to make it suitable in terms of use or price. Selling
cooking oil from a pump
Offer the same service in a short time
Technological developments these days are so fast and
abundant that one can come up with so many ideas of
unique applications
If a product is small make it big, if it is long make it
short, if it is slow make it fast, if it is for every one
make it for one person, if it is tall make it short and
advice versa.
266
Generation of Business Ideas

Once you start thinking you will be generate hundreds of ideas. The tradition of keeping
all the ideas in your head is not useful. Buy a note book. Write all the ideas that come
into your mind in the notebook. At this stage, do not worry about how good or silly the
idea is: you will be surprised how good the idea was in later days or years.

Selecting the Business Ideas

It is promising that you have a list of the business ideas. Where do you go from there?
Having prepared a reasonable list of ideas you must examine each business idea so that
you end up with a short list of business ideas with the highest chance of success. You can
use the scoring suggested below.

Simple Scoring Method for Business Ideas.

Score: Yes = 1 and No = 0; Allocate scores to each question. If the answers to all the
questions is YES the total score is 12 and 0 if all your answers were No. You may select a
business idea if it scores above 5 and review it or reject it if it scores below 5.

Business Idea Assessment Form

Name of the Business Idea:
No. Focus Question Yes No Score
13. Personal The business suits your personal
characteristics characteristics?

14. Knowledge and You have knowledge and skills that

skills will help you run this type of
business?

15. Experience You have experience that will help

you to run this business?

16. Business You know about the products and

Knowledge services in this business?

17. Business Support You know where to get advice and

information about this business

18. Customers You are knowledgeable of the

potential customers for this
particular business?

19. Competition This will be the only business of

this kind in your area?

267
 20. Profitability You have reasons why you think
this business will be profitable?

21. Human Resources, You know the type of equipment,

Premises, materials premises or qualified
Equipment and staff required for this business?
Materials
22. Finances You are sure you will be able to get
the finances to provide what is
needed in the business?

23. Resources You know where will you get the

resources to start this type of
business

24. Business Growth You know this business has

potential for growth?

TOTAL SCORE
\

After the business ideas identification, listing and assessment you are now ready to go
further to develop this business idea into business opportunities through spending time
assessing, researching, developing and planning.

268
 17. PROCESS OF ENVIRONMENTAL SCANNING

 Conduct an environment assessment;

Steps to conducting the environmental scanning:

 Clearly state the purpose of collecting information

 Decide on how the information will be collected , desk or field study or both;
 Identify who is responsible for the process.
 Decide who will collect information;
 Identify the sources of information;
 Identify methods of collecting information;
 Assemble existing information on issues and needs;
 Reflect on the strengths and limitations of that information including;
 Select data gathering techniques to fill in information or audience gaps, detect
emerging issues, and verify existing information
 Collect scanning information from other organizations.
 Assemble the information;
 Analyse and translate the information into actionable

Carrying Out an Environmental Scan

Carrying out the environmental assessment will assist you identify a number of issues in
the natural environment, the business scene, target market and competition, human
resources, legal frame work, technologies and social issues.

269
 18. FEASIBILITY STUDY

Conduct a feasibility Study;

Description of Feasibility Study

Feasibility study is an examination to see whether your business idea is viable or
practical. The feasibility study aims at answering your question of “should I continue
with the proposed business idea?” All the feasibility activities are aimed at answering this
question. The feasibility study outlines and analyzes several alternatives or methods of
achieving business success.

A feasible business is one where the business will generate adequate cash-flow and
profits, withstand the risks it will encounter, remain viable in the long-term and meet
your entrepreneurial goals. The business idea can be a new start-up business, the
purchase of an existing business, an expansion of current business operations, or a new
enterprise for an existing business. You conduct the feasibility study before preparing the
business plan. Once you have carried out a feasibility study then you can proceed to write
a business plan.

Conducting a Feasibility Study

You have in your hands a business idea that you like. Casual observations, discussing
with other people indicate that it is a good business idea. You discover that you have
good business idea further by reading more about it but can it work?

Market Assessment

Find out the following:

 What is the total size of your market?

 What percent share of the market will you have?
 Current demand in target market.
 Trends in target market—growth trends, trends in consumer preferences, and trends
in product development.
 Growth potential and opportunity for a business of your size.
 What barriers to entry do you face in entering this market with your new company?
Some typical barriers are:
o High capital costs
o High production costs
o High marketing costs
o Consumer acceptance and brand recognition
o Training and skills
o Unique technology and patents
o Unions
o Transport costs

 How will you overcome the barriers?

270
 How could the following affect your company?
o Change in technology
o Change in government regulations
o Change in the economy
o Change in your industry
Product
 What are the most important features? What is special about it?
 What are the benefits? That is, what will the product do for the customer?

Customers
 Who are your targeted customers, their characteristics, and their geographic
locations, otherwise known as their demographics?
o Age
o Gender
o Location
o Income level
o Social class and occupation
o Education
o Other (specific to your industry)
 For business customers, the demographic factors might be:
Industry (or portion of an industry)
o Location
o Size of firm
o Quality, technology, and price preferences
o Other (specific to your industry)
Competition

 What products and companies will compete with you?

 Will they compete with you across the board, or just for certain products, certain
customers, or in certain locations?
 Will you have important indirect competitors?
 How will your products or services compare with the competition?

Production Assessment

 How and where are your products or services produced?

 What are the methods of:
o Production techniques and costs
o Quality control
o Customer service
o Inventory control
o Product development

271
Location Assessment
 What qualities do you need in a location?
 Is the location you need available?
 What are the physical requirements:
 Is the amount of space needed available?
 Is the type of building you need available at a reasonable cots?
 Is power and other utilities like water available?

Legal Environment Assessment

 Are you able to meet the conditions for the following:
o Licensing
o Permits
o Health, workplace, or environmental regulations
o Special regulations covering your industry or profession
o Zoning or building code requirements
o Insurance coverage
o Trademarks, copyrights, or patents (pending, existing, or purchased)

Human Resource Assessment

 Will you be able to engage the number of employees needed?
 Are the skilled staff and professionals you need available?
 Do you know where and how will you find the right employees?
 Will you be able to meet the pay structure?
 Have you developed a human resource development plan?
 Do you have schedules and written procedures prepared?
 Have you drafted job descriptions for employees?

Suppliers Assessment
 Have you identified key suppliers?

Credit Policies Assessment

 Do you plan to sell on credit?
 What terms will you offer your customers; that is, how much credit and when is
payment due?
 Will you offer prompt payment discounts?

Management and Organization Assessment

 Who will manage the business on a day-to-day basis?
 What experience does that person bring to the business?
 What special or distinctive competencies do the individuals need to have?
 Is there a plan for continuation of the business if this person is lost or incapacitated?
 If you’ll have more than 10 employees, have you created an organizational chart
showing the management hierarchy and who is responsible for key functions.

272
Professional and Advisory Support Assessment
 Do you intend to have the following in the enterprise?
o Board of directors
o Management advisory board
o Attorney
o Accountant
o Insurance agent
o Banker
o Consultant or consultants
o Mentors and key advisors

Investment Assessment Techniques

Payment Period
The number of years required to recover the original cash outlay invested in a business
project. If a business generates constant annual cash inflows, the payback period can be
computed dividing cash outlay by the annual cash inflow.

Payback period = Cash investment/annual cash inflow

A business project requires an investment of K 50, 000, 000 and generates an annual cash
inflow of K 12, 500, 000. The payback period is as follows:
Payback period = 50,000, 000/12, 500, 000 = 4 years.

Net Present Value

Calculate the present value of cash inflows and outflows of your investment proposal
using the cost of capital as the suitable discounting rate and finding the net present value
by subtracting the present value of cash outflow from the present value of cash inflows.

Internal Rate of Return

IRR is the rate which equates the present value of cash inflows with the present value of
cash outflows of an investment. Calculate the rate at which the NPV is zero.

Select a business opportunity;

Sources of Business Opportunity;

You need to be focused and quite serious in you effort of identifying business
opportunities. Business opportunities can be sourced from:
 The Environment – the natural resource base of an area;
 Population - occupational pattern, socio economic background;
 Current business Situation- trading and business activities in the area and the
trends for new demands of goods and services;
 Target market – expectations of the target group in terms of their skills,
knowledge, and financial resources;
 Resources - industries based on minerals, agriculture, marine and other natural
resources

273
Business Opportunities Selection Criteria;
An entrepreneur’s first task after assessing himself/herself is to identify and select an
attractive business opportunity. An acceptable business opportunity is a combination of:
 Confirmed need in the community;
 Capability of an entrepreneur;
 Availability of resources to develop the business opportunity.

Selection of Business Opportunities

You can apply the results of the scanning and feasibility to identify and select the
business that is presents the most attractive option.

Focus Method Application Expected Results

Scanning BPEST Identify external issues that may
affect the business operations
Porters Five Force Isolate competitive forces that
Model influence the level of competition in
an industry
SWOT Identify how the current resources and
capacity of the business can manage
the situation in the environment
Value Chain Assess how you can create the
greatest possible value for your
customers, as well as your best route
to profit maximization
Feasibility Payment Period Calculate the number of years
Study required to recover the original cash
outlay invested in a business project
Net Present Value Find the net present value by
subtracting the present value of cash
outflow from the present value of cash
inflows.
Internal Rate of Find the rate which equates the
Return present value of cash inflows with the
present value of cash outflows of an
investment.

Decision Making

This step involves making one of the three possible decisions listed below:
 Decide that the business opportunity is viable and move forward with it.
 Do more study and or examine additional options.
 Decide that the business is not viable and abandon it.

274
 19. MEASURES TO MANAGE RISKS

Propose measures to manage risks

Identify risks
Risk management allows you to examine your business plan and identify the risks of not
achieving your business' objectives.

A risk management process involves:

o methodically identifying the risks surrounding your business activities
o assessing the likelihood of an event occurring
o understanding how to respond to these events
o putting in place systems to deal with the consequences
o monitoring the effectiveness of your risk management approaches and controls

There are four ways of dealing with, or managing, each risk that you have identified. You
can:
o Accept it – Observe it
o Transfer it – You can insure
o Reduce it – put in internal measures
o Eliminate it – Introduce new technology, ways of doing it.

Apply these strategies to risks you can identify under marketing, management,
operational and financial risks.

275
 20. ENTERPRISE RESOURCES MOBILISATION

Mobilise enterprise resources;

Resources are inputs that go into an enterprise to ensure that activities are carried in
marketing, production, and management. Without resources nothing will be produced or
sold.

To mobilize resources you must be well organized. The following steps can help you
mobilise resources:

11. Prepare a business plan;

12. List all the type and amount of resources you need to develop your business;
13. Examine funding prospects including yourself, informal and formal sources;
14. Prepare a fundraising strategy (objectives and approaches);
15. Prepare an action plan;
16. Put plan into action
17. Monitor the progress of fundraising activities;
18. Evaluate the results of the resource mobilization;
19. Review the plan;
20. Repeat the process

276
 21. ENTERPRISE NETWORK

Networks are groups of individuals and organizations sharing resources. Networking is a

skill to seek and provide resources to a grouping with similar goals
Develop an enterprise network;

Steps to establishing a network

21. Start with your family and friends;

22. Attend social gatherings;
23. To be prepared to communicate quick, brief and focused information about you;
24. Get to know yourself well;
25. Prepare informative business cards;
26. Carry with you business cards to all gatherings, meetings and travels,
27. Present your skills not your job;
28. Develop a tracking systems of contacts;
29. Create relationships with the business cards;
30. Listen more and talk less;
31. Develop and use your ability to ask questions;
32. Conduct follow up actions decisively, timely and consistently;
33. Do not make empty promises;
34. Look for unique opportunities;
35. Establish long term business contacts and referrals;
36. Develop a data bank;
37. Conduct follow ups of contacts;
38. Ask for who, places, how to do it, steps, recommendations, connections, contacts
and timings,
39. Socialise at gatherings and be visible,
40. Listen, learn, persist, and maintain contact

277
 22. COMMUNICATION PLAN

Finding out how to communicate important messages to key stakeholders of a business in

the most effective way possible is not an easy task. It requires planning. Plan will show
where you have come from, where you are and where you are going with your
communication.

Prepare communication strategies.

A typical communication plan outline will look like this:

1. Situation Analysis: Organizational Background

2. Situation Analysis: External or Public Environment
3. Campaign/Organizational Goal and Key Objectives
4. Communication Objectives
5. Target Audiences
6. Key Messages
7. Strategies
8. Tactics
9. Timing
10. Timelines
11. Spokespeople

Prepare your enterprise communication plan.

278
 23. APPLICATION OF INFORMATION AND COMMUNICATION
TECHNOLOGY (ICT) IN AN ENTERPRISE

You have come across the word ICT in various situations, at school, college, hospital,
vehicles, machines and telephones. ICT stands for Information and Communications
Technology.

Select the ICT application for you enterprise. Give reason for your selections.

3. Standard Office Applications

 Word processing
 Spreadsheets
 Database software
 Presentation software
 Desktop publishing
 Graphics software
 Email
 Internet

4. Specialist Applications - Examples (there are many!)

 Accounting package
 Computer Aided Design
 Customer Relations Management (CRM)

5. E- Commerce

279
Module III: DEVELOP ENTERPRISE MANAGEMENT;

280
 24. BUSINESS MANAGEMENT FUNCTION

 Develop a business management function check list;

Management is the process that includes strategic and business planning, setting goals
and objectives, managing resources, deploying the human and financial assets needed to
achieve objectives, and measuring results. Management also covers recording and storing
facts and information for later use or for others within the organization. Management
functions are not limited to managers and supervisors. Every member of the business has
some management and reporting functions as part of their job

Apply this Management Function Check List

1. Planning - Have you decided what you want to achieve in the future
(today, next week, next month, next year, next five years, etc.) and to
generate plans for action?
2. Organizing -To what extent are you making optimum use of the resources
required to enable plans to be put into action successfully.
3. Leading/Motivating - how are you going to use skills in these key areas to
get others to play an effective part in achieving plans?
4. Controlling – how will you check the progress against plans which may
need to be modified upon feedback?

281
 25. LEADERSHIP

Leadership is the ability of an individual or groups of individuals to influence, motivate,

and enable employees to contribute toward the effectiveness and success of the business.

Propose application of leadership principles;

Propose ways in which you can:

 Assess your strengths and weakness;
 Communicate regularly, openly and receptively;
 Show people that you trust, respect and care about them;
 Express genuine interest in others;
 Look at things from the point of view of the other person,;
 Listen intently with a an interested look;
 Create a self motivated, cooperative teams with shared vision;
 Make others feel important;
 Recognize, praise, and (non financially) reward those you work with;
 Admit mistakes, and think before you criticize;
 Set clear goals;
 Do not lose your focus by being distracted;
 Crowd your mind with good thoughts;
 Learn not to worry;
 Be enthusiastic;
 Practice with energy and real desire to be a good leader.

282
 26. TEAM BUILDING

Team building is a planned effort to improve communications and working relationships

by way of any planned and managed change involving a group of people with shared
goals and principles. Team building is essential as a part of a strategy of management for
business development.

 Develop team building strategies;

Complete the table

Stage Name Characteristics Entrepreneurial
strategy
I Forming
II Storming
III Norming
IV Performing

283
 27. MARKETING PLAN

 Assemble a marketing plan;

A Marketing Plan is a written document that outlines the actions necessary to achieve a
specified marketing objective, purpose and goal. It can be developed for a product or
service. It can be prepared for a year or for five years. A marketing plan may be a
component of your business plan.

You may use this guide to develop a marketing plan:

Assess the Market Situation

 Type of Industry;
 Target market;
 Customer Profile;
 Level and type of competition;
 Type of competitors;
 Market Trends;

Marketing Strategies

 Marketing Goal;
 Marketing Purpose;
 Marketing Objectives;
o Product (Characteristics and benefits);
o Place (Distribution and places);
o Promotion (Advertising, Selling, Sales promotion and publicity);
o Price (Level, flexibility, discounts)

284
 28. BUYING

 Outline the buying process;

Buying is procurement. It is the acquisition of goods or services at the best possible price,
in the right quantity and quality, at the right time, in the right place for the direct benefit
or use of the business.

Procurement or buying usually consists of seven steps:

 Information Gathering: search for suppliers who can satisfy the requirements.
 Supplier Contact: Identity of one or more suitable suppliers have been identified,
 Background Review: consulted references for product/service quality.
 Negotiation: Undertaken negotiations on price, availability, quantity deliveries,
guaranties and return of damages.
 Fulfilment: Ensure that supplier preparation, shipment, delivery, installation, testing,
training and payment are completed according to agreement.
 Service support – evaluate the performance of the goods or services and ensure that
service support is provided;
 Renewal: After the experience would you like to continue with the same supplier or
change.

285
 29. SALES PLAN

 Prepare a sales plan;

A sales plan is a tactical plan for achieving marketing objectives. It is a step-by-step

process that will show how you will acquire new customers; and how you will increase
business from existing customer base. The key feature of sales plans is its use of unit
projections and sales values. Sales plans are about targets and numbers.

Steps
 Segment your target market;
 Find out what is happening in your industry;
 Develop sales strategies
o What are you going to sell?
o How much do you want to sell?
o How are you going to interest the customers?
o Who and how many people will be selling?
o How are you going to improve their sales skills?
o When you are you going to sell?
 Measure the performance of your sales effort;
 Suggest areas of improvement

286
 30. MARKET RESEARCH

 Conduct a market research;

Market research is finding out the customer needs. Many businesses and individuals
starting enterprises assume that they know how their customers look at their products and
services. Many times their ideas about what the customer wants are simply guess work.
In a market research there are many questions asking about the customers’
characteristics, product specifications, other suppliers, communication, pricing,
distribution, and other marketing issues.

Conduct a simple market research by following these steps:

 Define the market problem
 Analyse the market situation
 Collect data that is specific to the problem through reading documents and going to
the field to ask individuals and organizations familiar with the target market
 Analyse and interpreting the data to get the meaning of the target market
 Propose solutions to the market problem;
 Design a marketing plan

287
 31. COSTING AND PRICING

 Cost and price a product or service;

Costing will provide information to make decisions, assist pricing, budgeting, tendering,
monitor expenditure and give value to stock,

 Steps

o Identify the four main parts of costs – direct material, direct labour, direct
expenses and overheads;
o Add all costs that go into a product that go into making a product;
o Add a predetermined percentage as profit to the cost
o Compare your prices with other products in the market
o Make adjustments;
o Settle on the price.

288
 32. FINANCE MANAGEMENT

 Outline the roles of financial management;

Financial management is a managerial responsibility and activities concerned with

planning, organizing and controlling an enterprise’s financial resources.

Roles of Financial management

 Raising funds;
 Using funds properly;

Outline how you will:

 Raise funds;
 Utilise funds properly.

289
 33. SOURCES OF FINANCE

 State source of finance for your enterprise;

To start business operations you will need financial resources. Financial resources may
be needed to procure machinery, equipment, materials and pay workers. There are formal
and informal sources of finance.

Source of Finance
Formal Source of Finance
No. Source Amount of Funds Conditions

Non Formal Source of Finance

No. Source Amount of Funds Conditions

290
 34. FINANCIAL STATEMENTS

 Interpret financial statements;

The journal and general ledger are the main company’s financial records. These
constitute the central “books” of your system, and every transaction flows through the
general ledger. These records remain as a permanent track of the history of all financial
transactions since day one of the life of your company. The information from the records
is the basis for financial statements.

The Statements are:

 Balance Sheet – communicates information about the assets, liabilities and owners
equity at a particular date;
 Profit and Loss Statements – presents the summary of revenue, expenses and net
income of the firm over a period of time;
 Cash Statements – outlines the cash inflows, cash outflows and net cash balances
over a period of time

Steps to Interpreting Financial Statements

 Prepare the projected financial statements, namely, Balance sheet, Income Statement
and Cash Flow Statement;
 Interpret the financial statements using the ratios below:

Liquidity Ratios:
Current Ratio= current assets/current liabilities;
Quick ratio= current assets-Inventory/current liabilities;

Leverage ratio:
Debt –equity ratio= long term debt/equity

Activity Ratio:
Inventory Turn Over = cost of goods sold/average inventory;
Inventory turn over= sales/inventory;

Debtors Turnover and Collection period

Debtors Turnover= credit sales/average debtors;
Average collection period = Days in a Year/Debtors Turn over;
= Debtors x Days in a Year/Sales

Total Assets Turn Over

Total assets Turnover= sales/total sales

Profitability ratio
Gross Profit margin = sales- cost of goods sold/sales;
=Gross profit/ sales
Net profit margin = net profit after taxes/sales

291
 35. BUDGETING

It is a managerial process of developing a plan expressed in financial terms for the

enterprises operations and resources over a period of time. It is prepared for the purpose
of expressing expectations, communication, coordination and control of financial
resources.

Budgets you should prepare are:

 Operating Budgets – planning of activities of the enterprises among them are

production, sales and purchases;
 Capital Budgets – planning to acquire such things like buildings, machinery and
vehicles;

Other budgets you must prepare are:

 Sales Budget;
 Cash Budget;
 Recruitment, Deployment and Training Budget

292
 36. BUSINESS RECORDS

Prepare business records

Records are important in a running of a business. In future you may need to make a
decision on the direction of business or the use of resources. If there no records you
decision will be an exercise of guess work or intuition.

There are sections of the business that need records

 Financial Records - the cash book, the sales ledger, the purchase ledger and the
wages book;
 Marketing – customer records, sales force;
 Production – machinery and equipment register, list of employees and inventory;
 Management and administration –staff, building, support organisations, and licences
and certificates.

Prepare the main records listed above and assign some people to manage the records.

STOCK CONTROL

 Develop stock control measures;

Stocks are the products of an enterprise produced for sale and the components that make
up the products to be used later in production.

To make stocks properly you should answer the following questions:

 How much should we order?

 When should we order it?

Steps

o Determine ordering costs (costs of acquiring the said materials

including storing;
o Carrying costs – costs incurred for holding a given level of
stocks;;
o Calculate the economic order quantity – order size at which costs
of ordering and holding stock are at the minimum;

293
 37. HUMAN RESOURCES IN AN ENTERPRISE

Human resources are the individuals employed in an enterprise that deal with the hiring,
firing, training and other personnel issues.

Steps to meeting human resources of the enterprise;

 Set an organizational structure of the enterprise;

 Link the human resources needs to the business strategies of the enterprises;
 Assess the human resource needs of the enterprise;
 Develop a human resource plan;
o Recruit and select employees;
o Training and development the employees;
o Establish condition so f service;
o Develop work environment relationships;
o Develop employee records and administration;

294
 38. STRATEGIC PLANNING PROCESS

Develop a strategic plan;

A strategic planning process implies a business having a clearer idea of what it is, what it
does, and what challenges it faces, and its response to its environment.

Steps
 Develop a vision, mission and values;
 Assess the external and internal environment;
 Develop strategic goals and objectives;
 Prepare an operational plan;
 Formulate performance assessment measures;
 Prepare an operational budget.

TECHNOLOGY IN AN ENTERPRISE

The narrow definition of technology is a piece of equipment and the technique for
performing a particular production, marketing or managerial activity.

Select suitable technology for an enterprise;

No. Technology Costs Efficiency Size Durability After Training

Type Sales
Service
1. A
2. B
3. C
4. D

Grading: 1 (Lowest); 5 (Highest)

295
 39. PROTECTING INVENTIONS AND TECHNICAL INNOVATIONS

Identify ways of protecting your ideas;

Get Assistance of a Lawyer

It’s best if your lawyer is familiar with each category of intellectual property, so he or she
can help you select the appropriate type.

Trade secrets are perhaps the most straight forward: they cover information used in the
trade that provide a commercial advantage and are not known to the general public. They
include things like a manufacturing process, the formula for making a product or
compound or a business’ customer lists.

Copyrights protect the tangible expression of ideas. Common uses include protecting the
contents of books, movie plots, paintings and sound recordings. Copyright protection
starts when the creator puts pen to paper and creates a tangible expression of the idea.
This basic protection may be registered by filing an application for copyright registration,
which requires a simple form, a modest fee, and a copy of the work you want to protect.

Trademarks protect the product identifiers — the names, logos and general visual
attributes that distinguish a business from its competitors. The primary purpose of trade
marking is to prevent consumer confusion over the origin of the products

Patents are by far the most technically demanding branch of intellectual property. In
basic terms, a patent is given to an inventor of some novel machine, process, or product
that has utility to the public. In exchange for disclosing this new invention to the public,
the government gives back to the inventor an exclusionary right (the patent) to prevent
anyone else from making, using or selling the invented device or process

296
 40. BUSINESS ETHICS AND VALUES

Identify the way in which your business can be affected positively or negatively by
cultural values and ethics;

 Steps
o List cultural values and social factors (e.g. family, Gender, HIV/AIDS);
o List business ethics ( Corruption, Nepotism, Racism and Tribalism);
o Outline the positive effects on the enterprise;
o State possible negative influences on the operations of the business;

 Identify ways in which you can mainstream gender in your enterprise;

 Develop measures to prevent and manage HIV/AIDS in the enterprise.

297
 41. BUSINESS PLAN PREPARATIONS

 Prepare and present a business plan;

A business plan is a planning document that summarizes the activities of a business for a
given period of time. The plan communicates the business elements to lenders and others,
provides the basis for managing the business, and provides a yardstick by which progress
may be measured and changes evaluated.

 Developing the Business Plan

o Get organised and the energy to write the business plan;

o Start with some of the easy steps first.
o Describe your business and your product or services.
o Explain the market you are targeting, the industry, customers and
competitors.
o Make a first draft first without concern for perfection;
o Keep in mind your intended audience and why you are writing the plan.
o Disclose the risks and uncertainties in your business, ;
o Show that the loan will be repaid if you intent to get a loan;
o Evaluate the strengths and weaknesses of each competing firm;
o Look for opportunities in the marketplace.
o Create a strategy for your business;
o Outline how you will execute the strategy;
o Link your products and services, your marketing and your operations to
your strategy;
o Find a particular market niche to focus on and a unique strategy?
o Avoid overestimating sales projections and underestimating costs.

A business plan can be seen as a collection of sub-plans including a marketing plan,

financial plan, production plan, and human resource plan. The business plan has many
formats. There is however a format that is common:

FORMAT – Business plan

 Executive summary
o Explains the basic business model
o Gives rationale for the strategy
 Background
o Gives short history of company (unless it is a new company)
o provides background details such as:
 age of company
 number of employees
 annual sales figures
 location of facilities
 form of ownership including

298
 o background of key personnel including
 owners
 senior managers
 Marketing
o the macro-environment
o the competitive environment
o the industry
o the customers priorities
o product strategy
o pricing strategy
o promotion strategy
o distribution strategy

 Production and manufacturing

o describe all processes
o production facility requirements - size, layout, capacity, location
o inventory requirements - raw materials inventory, finished goods
inventory, warehouse space requirements
o equipment requirements
o supply chain requirements
o fixed cost allocation
 Finance
o source of funds
o expected return
o break even analysis
o monthly pro-forma cash flow statement
o existing loans and liabilities

 Human resources
o assign responsibilities
o training required
o skills required
o union issues
o compensation
o skills availability
o new hiring

 Attachments
o Brochures and advertising materials
o Industry studies
o Maps and photos of location
o Magazine or other articles
o Detailed lists of equipment owned or to be purchased
o Copies of leases and contracts
o Letters of support from future customers

299
 Presenting the Plan;
 Will involve:
o Prepare well;
o Make eye contact with audience;
o Give a smile;
o Avoid distracting movements;
o Pause to catch a breath;
o Use a wide range of voice tones;
o Speak clearly;
o Answer questions briefly, honestly and accurately;
o After the presentation, review your performance.

300
 42. BUSINESS DOCUMENTATIONS

Prepare enterprise documents;

There are regulations the enterprise will need to abide by. Legal requirements vary from
one type business to another. The responsible Government Ministries and associations
can provide you with details.

The commonest documents you need to obtain will deal with issues of:
o Registration;
o Inspections;
o Tax,
o Pension funds;
o Workman’s compensation;
o Trading

301
 43. PHYSICAL SET UP OF THE ENTERPRISE

 Set up the business office;

Setting up your office takes a lot of thought. Take the time to plan the whole set up.
Do you need to rent office space or can you start your business from home? The area in
which you set up depends on the type of business you have.

o Where will you operate from, home, rented place or owned place?
o What are the cost and interruptions implications
o Make a list of the essential equipment needed to run your business;
o Keep the features of the equipment to a minimum.
o Will you lease or buy furniture;
o Are there certain regulations for the physical setup?

302
 44. PRODUCTION PROCESS

 Outline the production process;

A well organised production process saves time and costs. You must ensure that products
are designed for marketing and production in a concurrent process to reduce costs and
time to market.

 Production process

o Select the right flow of work and layout (fixed position, in-line or
functional arrangements);
o Keep raw materials, work-in-progress and finished products as inventory
to the minimum but safe levels;
o Reduce materials handling costs;
o Reduce materials waste;
o Relate production planning to sales forecasting to avoid bottleneck;
o Set and improve performance standards;
o Prepare maintenance and repair schedule;
o Identify potentials areas to save energy;
o Reduce adverse conditions of temperature, dust and radiation exposure to
avoid occupational dangers;

303
 45. ENTERPRISE PERFORMANCE

State the key indicators

Enterprise performance control is the process whereby a business ensures that it is

pursuing strategies and actions which will enable it to achieve its goals. The measurement
and evaluation of performance are central to control and require asking four basic
questions:

o What has happened?

o Why has it happened?
o Is it going to continue?
o What are we going to do about it?

 Manufacturing and Production Indicators

Ability to produce against the marketing plan

 Indicators concerned with controlling production quality

o measurement of scrap
o "most likely reasons" for product failures
o actual failure rates against target failure rates
o complaints received against the quality assurance testing programme
o annualised failures as a % of sales value
o failures as a % of units shipped

 Indicators concerned with the purchasing department's external relationships with

its suppliers
o inventory levels and timing of deliveries
o stock turnover ratio
o suppliers delivery performance
o analysis of stock-outs
o parts delivery service record
o % of total requests supplied in time
o % supplied with faults
o Indicators of sales delivery and service
o shipments vs. first request date
o average no. of days shipments late
o response time between enquiry and first visit

304
 Sales and Marketing
o measurements based on "staying close to the customer"
o customer satisfaction analysis
o price of products comparisons
o check on unsuccessful visit reports
o monitoring repeated lost sales by individual salesmen
o sales per 100 customers
o analysis of sales by product line
o backlog of orders analysis
o share of the market against competitors
o share of new projects in the industry
o time to turn round repairs
o delays in delivering to customers (customer goodwill)

 Human Resources
o skilled vs. non skilled
o management numbers vs. operations staff
o labour / outside contractor analysis
o workload activity analysis
o vacancies existing and expected
o labour turnover
o % of overtime worked to total hours worked
o absence from work
o cost of recruitment
o number of applicants per advert
o number of employees per advertising campaign
o staff evaluation techniques
o pay and conditions vs. competition

 Environment
o work place environment yardsticks
o cleanliness
o tidiness
o catering facilities vs. competition
o other facilities vs. competition

305
 46. LIFE CYCLE OF AN ENTERPRISE

State the strategies needed at each stage of an enterprise cycle;

Enterprise passes through a life cycle. Life cycles are development stages from start
through growth and maturity to a stability stage. This is followed by business decline as a
result of management succession difficulties. Within the cycle seven key crises are
identified:
 Starting crises;
 Cash Crisis;
 Delegation crisis;
 Leadership crisis;
 Finance crisis;
 Prosperity crisis;
 Management crisis.

Propose measures to reduce the level of crisis.

306
 47. TOTAL QUALITY MANAGEMENT

State TQM for the enterprise

The concern for quality by enterprises cannot be left to large enterprises. One of the
major complaints about small enterprises is the low level of quality of their products and
services. A small enterprise that introduces total quality management has made a strategic
decision that will establish it as a unique enterprise and generate the trust and confidence
of customers. The essential requirement of quality is to look at it from the customers’
point of view.

Introducing TQM requires:

 Incorporate quality into all processes;

 Build teams among the various departments;
 Procurement should not rely on price alone;
 Training managers and employees in quality management;
 Motivate employees at all levels to propose quality improvements;
 Ensure that management is committed to the values of quality improvements;
 Improve the way products and services are delivered to customers;
 Recognise, praise and reward employees for quality work;
 Develop ways of regularly and widely making product and service quality
improvements;

Propose quality improvements to your enterprise.

307
 48. MANAGING CHANGE

Employ strategies for managing change

Change will come invited or uninvited to your enterprise. Change means that there is a
noticeable difference between a situation, person, team members, relationship or
enterprise between points in time (A and B). When change occurs whether planned or
unplanned, beneficial or dangerous, it is normally resisted. It is advisable to manage
change so that disruptions to enterprise operations are avoided.

The reasons for resistance to change are many

 Not convinced change is necessary;
 Imposed changes;
 Changes come as a surprise;
 Fear of the unknown;
 Reluctance to deal with unpopular issues;
 Fear of failure;
 Disturbing familiar relationships and practices;
 Mistrust of the person proposing change;

Propose strategies to manage change smoothly.

308
 49. STRATEGIES FOR ENTERPRISE GROWTH

Select strategies for growth of the business

All entrepreneurs dream of growing their enterprises to large corporations one day.
Growing a business is possible but one needs to go beyond dreams. The starting point is
developing enterprise growth strategies. The strategies may vary from one enterprise to
another.

Finance Strategies
 Propose ways to:
o Explore and taking advantage of every conceivable source of finance to
make our business grow.
o Improve accuracy and timeliness of accounting so that information on
performance is available as soon as possible after a day, week, a month, or
when the job is over.
o Utilize financial information as a positive instrument for tracking and
monitoring performance on key activities.
o Key areas in which the company can save money by improving
performance.
o Generate a more positive attitude in your company regarding the way
money is used to motivate employees and vendors?
o Keep expenditure within or below budgeted levels.

Human Resource Strategies

 Propose ways to
o Employ people with a high level of energy and good health.
o Link compensation directly with performance for every job.
o Introduce profit-sharing to make our people feel ownership of the
enterprise.
o Develop the physical and technical skills of your people through formal
training programmes.
o Recruit people with the right type of personality to work well in your
enterprise and implement its values.
o Recruit people with the highest possible level of education and experience.
o Develop the managerial and psychological skills of your people through
formal training and personal guidance;
o Actively involve and encourage your people to propose increases in
efficiency, improve communications, encourage cooperation and promote
harmony within the enterprise.

309
Organizational Strategies
 Propose ways to:
o Establish clear job descriptions for every position
o Evaluate the jobs of managers and supervisors to identify tasks that can be
delegated to lower levels;
o increase speed, reduce cost, eliminate unnecessary steps, and improve
quality;
o Asses the effectiveness of important procedures in the enterprise in terms
of their speed, their personnel requirements, quality of work, cost of
operations, and whether fully being utilized.
o coordinate and integrate operational procedures;
o Apply organizational values;

Product and Service Strategies

 Propose ways to:

• Adjust products/services to meet a psychological need of the client/customer,

• Improve organization (structure, activities, systems, job positions, procedures,
rules, and regulations) that will improve the development and operation of your
technology (including product/services).
• Introduce new or improved technologies internally that will improve the
functioning of the enterprise;.
• Become fully knowledgeable about all new emerging technologies that are
directly or indirectly related to the business.
• Identify and adapt new technologies to better meet the needs of your customers.
• Continuously expand and upgrade the product/service knowledge and technical
expertise of your people.
• Selling the products or services to a wider market;
• Advertise and sell on the internet;
• Increase sales outlets and sales personnel;
• Encourage sales through a market expansion pricing policy.

With these examples propose, enterprise growth strategies for your business.

310
50. REFERENCES

6. Armstrong Peter, Critique of Entrepreneurship – People and Policies, Palgrave

Macmillan, New York, 2005;
7. Birley Sue and Muzyka Daniel, Mastering Enterprise, Pearson Professional,
London, 1997;
8. Burn Paul, Entrepreneurship and Small Business Mathew, Palgrave Macmillan,
New York, 2001;
9. Calvin Robert J. , Entrepreneurial Management, McGraw-Hill, New York, 2002;
10. Cole G A, Strategic Management, Letts Educational, London, 1997
11. Don Hofstrand & Mary Holz-Clause, Co-Directors, Ag Marketing Resource
Center, Iowa State University,Nigel Atkin’s, A Guide for Communications ,
Planning , 1997
12. Entrepreneurship Development Institute, International Training Programme for
the New Enterprise Creation - Reading Materials Module – 6, 7, 8 and 9 India,
Oct. 01 – Nov. 09, 2001
13. Griffin W. Ricky, Fundamentals of Management, Houghton, New York, 2000
14. Institute of Chartered Accounts, Risk Management for SMEs – www.icaew.co.uk
15. Kelly Kevin, New Rules for the New Economy, Fourth Estate, London, 1998;
16. Kubre Milan, Management Consulting, ILO, Geneva, 1996;
17. Livesay Harold C. Entrepreneurship and the Growth of Firms, Edward Elgar,
Aldershot, UK, 1995;
18. Mathew Sartwell, Napoleon Hill’s Keys to Success; Piatkus, London, 1995
19. Mdaan Anil, Illustrated World of Internet and E- Commerce, Dreamland, New
Delhi, 2001;
20. Maude J. Timothy, the Internet Investors, CIB, Kent, 1999;
21. Hill Napoleon; “Positive Action Plan – How to Make Every Day a Success”,
Piatkus, London, 1996;
22. Perry Martin, Small Firms and Network Economies, Rutledge, New York, 1999;
23. Starkey Paul, Networking for Development, IFRTD, New Premiur House,
London, 1997;
24. Taylor Shirley, Communication for Business, Pearson, Essex, 1999;
25. Thomas W. Zimmerer and Norman M. Scarborough, Essentials of
Entrepreneurship, and Small Business Management, Pearson International New
Jearsey, 2005.,

311