ENTREPRENEURSHIP & SMME S

Facilitator Guide
(SAQA USID 115857, 115827, 110507, 115816, 117244, 10006)

NEMISA © 2009 1

This module has been written and compiled by Antoinette C Young Franschoek IT Centre © NEMISA First Edition 2009

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SOUTH AFRICAN QUALIFICATIONS AUTHORITY REGISTERED UNIT STANDARD: Demonstrate an understanding of entrepreneurship and develop entrepreneurial qualities SAQA US ID 10006 ORIGINATOR Interim SGB for Business, Commerce, Mgmnt Studies FIELD Field 03 - Business, Commerce and Management Studies ABET BAND ABET Level 4 REGISTRATION STATUS Reregistered UNIT STANDARD TYPE Regular REGISTRATION START DATE 2007-01-23 SUBFIELD Generic Management NQF LEVEL Level 1 REGISTRATION END DATE 2010-01-23 LAST DATE FOR ACHIEVEMENT 2014-01-23 CREDITS 2 SAQA DECISION NUMBER SAQA 0160/05 UNIT STANDARD TITLE Demonstrate an understanding of entrepreneurship and develop entrepreneurial qualities REGISTERING PROVIDER

LAST DATE FOR ENROLMENT 2011-01-23

This unit standard does not replace any other unit standard and is not replaced by any other unit standard. PURPOSE OF THE UNIT STANDARD A candidate credited with this general competence will be able to: discuss entrepreneurship; identify and describe the charac teristics of a successful entrepreneur; identify, assess and improve learners? individual entrepreneurial characteristics and discuss business ethics and social responsibility. LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING None. Specific Outcomes and Assessment Criteria: SPECIFIC OUTCOME 1 Discuss entrepreneurship. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 1. Entrepreneurship is described and discussed. ASSESSMENT CRITERION 2 2. Different types of business are identified, described and discussed. ASSESSMENT CRITERION RANGE Service providers; manufacturing, trade and retail industries; Sole Traders ; Partnership ; Close Corporations ; Co-operatives and Companies

ASSESSMENT CRITERION 3 3. Advantages and disadvantages of entrepreneurship are discussed. ASSESSMENT CRITERION RANGE At least 3 of each

ASSESSMENT CRITERION 4 4. The role of entrepreneurship in social development is explained and discussed. ASSESSMENT CRITERION RANGE

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SPECIFIC OUTCOME 3 Identify. Enabling programs for the entrepreneur are identified. Khula. assertiveness training. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 1. ASSESSMENT CRITERION RANGE Ability to identify opportunities. Individual/personal entrepreneurial characteristics are identified and listed. ability to make informed decisions. ASSESSMENT CRITERION 3 3. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 1.Job Creation. Empowerment ASSESSMENT CRITERION 5 5. Ability to manage risk. Local Wealth Creation. ASSESSMENT CRITERION 4 4. Negation of the Migrant Labour. Ability to managerisk. Characteristics of a successful entrepreneur are listed and described. skills training. Ways to address shortcomings is developed. Ntsika. Strategies to address shortcomings are implemented. Individual/personal characteristics are assessed against the general entrepreneurial characteristics. ASSESSMENT CRITERION RANGE Ability to identify opportunities. ASSESSMENT CRITERION RANGE e. The importance of each characteristic is analysed. Urbanisation. ASSESSMENT CRITERION RANGE Assessment should be followed by confidential counselling by the facilitator ASSESSMENT CRITERION 3 3.g. Characteristics of a successful entrepreneur are identified. ASSESSMENT CRITERION RANGE Case studies should be used to analyse successful entrepreneurs. local business service centres and providers SPECIFIC OUTCOME 2 Identify and describe the characteristics of a successful entrepreneur. ASSESSMENT CRITERION RANGE Could include e. ASSESSMENT CRITERION RANGE Questionnaires should be developed for personal entrepreneurial characteristics ASSESSMENT CRITERION 2 2.g. 4 . time management. ability to make informed decisions. time management ASSESSMENT CRITERION 2 2. assess and improve individual entrepreneurial characteristics.

Reflecting on and exploring a variety of strategies to learn more effectively. UNIT STANDARD CCFO COMMUNICATING Communicate effectively using visual. The importance of business ethics is discussed. UNIT STANDARD CCFO SCIENCE Use science and technology effectively and critically. UNIT STANDARD CCFO WORKING Work effectively with others as a member of a team. The inter-relationship between business ethics and a code of conduct is discussed. showing responsibility towards the environments and health of others. organisation and community. national and global communities.SPECIFIC OUTCOME 4 Discuss business ethics and social responsibility. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 1. UNIT STANDARD CCFO COLLECTING Collect. UNIT STANDARD CCFO DEMONSTRATING Demonstrate an understanding of the world as a set of related systems by recognising that problem-solving contexts do not exist in isolation. ASSESSMENT CRITERION RANGE Honesty. UNIT STANDARD DEVELOPMENTAL OUTCOME 1. Inter-relationship between ethics and a code of conduct will be discussed ASSESSMENT CRITERION 3 3. Participating as responsible citizens in the life of local. and 5. Critical Cross-field Outcomes (CCFO): UNIT STANDARD CCFO IDENTIFYING Identify and solve problems in which responses display that responsible decisions using critical and creative thinking have been made. Justice. 3. Developing entrepreneurial opportunities. analyse. 5 . group. The need for social responsibility in business is discussed. Fairness. ASSESSMENT CRITERION RANGE Social responsibility is used to redress imbalances. 4. mathematical and/or language skills in the modes of oral and/or written presentation. Honouring of contracts ASSESSMENT CRITERION 2 2. Exploring education and career opportunities. Being culturally and aesthetically sensitive across a range of social contexts. 2. UNIT STANDARD CCFO ORGANISING Organise and manage oneself and one?s activities responsibly and effectively. organise and critically evaluate information.

SECTION A ENTREPRENEURSHIP SAQA US ID 10006 6 .

An entrepreneur innovates that means he/she comes up with something new. in lay terms it is someone who starts and runs his/her own business. Entrepreneurship is described and discussed WHAT IS ENTREPRENEURSHIP? Entrepreneurship. in an effort to make a profit. As with all things.40 years ago a young man called Raymond Ackerman began a grocery store in Bellville. What is a profit? Profit is the price charged for a product that is over and above the cost of goods that the entrepreneur can use to sustain his personal life. how did companies come into being? Let s look at Pick n Pay. a manager manages an existing business for someone else. you need to have done or be doing one of the following things: y y y y Developed a new or improved product or service Develop a new type of business Introduced an existing product to a new group of people Find a different source of raw materials from the usual It is important to understand that there is a distinct difference between being an entrepreneur and being a manager. one who undertakes a business or an enterprise. It is one of South Africa s largest supermarket chains. Does that mean that all enterprises will/must achieve the same things? No. but how did it get there? +/. All entrepreneurs play a role in the economy of the country. So let s have a look. (We will discuss this further on in the course) Why do we need Entrepreneurs? Why can t everyone just work for a company? Well.MODULE 1 What is Entrepreneurship? (SO1) Discuss Entrepreneurship MODULE OUTCOMES (Assessment Criteria) 1. So. be they street vendors or huge conglomerates. entrepreneurship has its good side and its bad side. Through good management and wise investment Pick n Pay has become what it is today. One of an entrepreneur s main aims would be to make a profit. 7 . according to the Oxford Dictionary is a person in control of a commercial undertaking. According to Bowler (1996:5) in order to be considered an entrepreneur.

Salary potential: The entrepreneur can make all the decisions regarding salaries. ACTIVITY 1 Look around you. All risk and mistakes are yours to make alone. Do you see any needs in your community that you think need filling? It needn t be something that you think you could do just any need that could or should be filled. The entrepreneur can take time off if needed. Incompetent Staff: If there are staffing issues you may be forced to work exceedingly long hours to ensure the work is done by deadline. ________________________________________________________________________________ ____________________________________ ____________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ____________________________________________________ ____________________________ ________________________________________________________________________________ ________________________________________________________________________________ ____________________________________________________________________ ____________ ________________________________________________________________________________ ________________________________________________________________________________ ____________________________________ 8 . I want you to make a list of ideas for a new business.Advantages Independence: Since you are the boss you decide on all the rules and regulations and you could make quick decisions because you don t have to get company approval. Put them into the space provided below. and with that security. Salary: There is a possibility that should there be a shortage of cash. we will discuss them further in the course. the entrepreneur may have to for go his/her salary. Disadvantages Administration: All the decisions regarding the business are up to the entrepreneur. the entrepreneur can draw a comfortable salary. and provided the company can afford it. Flexibility: Entrepreneurs can decide on their work hours.

The learners need to understand the process of entrepreneurship in order to be able to put it into practice. 9 .FACILITATOR NOTES: y y The notes are fairly theoretical but the lecturer will need to go through this section carefully and explain each step of the process.

(Small business. etc) Entrepreneurs encourage production. For that reason an entrepreneur is someone who: y y y Can see an opportunity Grasp an opportunity And responsibly manage the opportunit y It is important that an entrepreneur follow a moral code i. They sell their products and create an income for themselves and families. entrepreneurs generate wealth. An entrepreneur sees a need in the market and tries to fill it.. gardening etc. which in turn helps to increase the basic standard of living. (Job creation. Negation of Migrant Labour. Not only do they design and develop new and innovative products. With the driving force of an entrepreneur these natural resources would remain undeveloped. Most mining in S. These are people who would otherwise not have an income.. One of the most important roles of an entrepreneur is job creation. As in the example of Raymond Ackerman. Mining contributes billions to the economy annually. Entrepreneurship is described and discussed 2. Local Wealth Creation. usually from rural areas to urban areas to seek employment. People who sell wire goods on the side of the road are entrepreneurs. Urbanisat ion.MODULE 2 Role of an Entrepreneur (SO1) Discuss Entrepreneurship MODULE OUTCOMES 1. informal sector. These people are not employed on a full time basis but usually for a specified time period. they 10 .A. Migrant Workers Migrant/Seasonal workers are workers who travel. many people have no way to make money. Entrepreneurs contribute as much as 80% of all jobs across the sectors. What does that mean? Well an entrepreneur starts a business and is then able to earn money he could otherwise not earn. is privately owned. The role of entrepreneurship in social development is explained and discussed.e. They sign contracts with their prospective employees and when the job is done. they also render necessary services like babysitting. We all know there is a huge job shortage in South Africa. Therefore it required an entrepreneur to begin and develop the mining industry. Empowerment) THE ROLE OF AN ENTREPRENEUR What is the role of an entrepreneur in the economy? Economic growth and development relies on entrepreneurship.

11 . The information is from the 1996 census. This puts a huge strain on the economy of an area from a number of points. One of the major problems with Migrant labour is that it causes friction in the local communities. more and more immigrants. schooling systems and thus forcing the locals to suffer further. putting strain on the housing. (building of huge informal settlements) clinics. This is called empowerment. Migrant labour is more prominent amongst women than men. In a country that is supposed to be democratic. Women can no longer r ely on men to support them. 2. it is time we took responsibility for our own lives. 4. This means the local people are now out of a job because rural residents are taking them. The rural workers who come in are now no longer employed either and can often not afford to return. the likes of which we experienced in 2008. This chart shows the ratio of migrant women to migrant men. policing. so they get jobs that would otherwise go the locals. More men are hired on a full time basis than women. The resentment that builds up leads to violence and xenophobia. The local labour force is out of work. Workers are coming in from other areas and rural labourers are usually willing to work for less. More and more in South Africa we see that seasonal workers are not only South African Citizens but also refu gees and people coming from outside our borders to try to find work. women are still being marginalised. often illegal immigrants are also vying for these positions and they are in turn willing to work for less than the rural workers. By getting involved in home industry aimed at tourism or getting a thriving industry going women and men will be able to empower themselves and their families.often return to their homelands. but rural labourers are not the only problem. 1. so they stay and further tax the area 3. it is the job of the woman of this country to ensure that we and our children work hard to attain the necessary skills to make us self sufficient. The immigrant workers flood an area.

South African youth are not taking their education seriously.This gives us an outlook on migrant worker in the lower rungs. In the days of slavery workers were not paid but instead beaten severely for not working. Migrant workers do not only count in the unskilled labour market. The workers left are not qualified to ta ke up the open positions and so we are faced with having to import skilled labour from other countries. (brain drain). or someone you worked for. Make a list of these. The Moral Code I think an entrepreneur should follow: ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ______________________ ______________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________ ________________________________ ____________________________________________________________________________ ____________________________________________________________________________ __________________________________________________________________ __________ ____________________________________________________________________________ ____________________________________________________________________________ 12 . These are jobs that should be going to South Africans of all colours and instead are going to foreigners. Today there are laws governed by the government to ensure equality. They need to be honest and upfront with their customers and employees if the y ACTIVITY 2 Make a list of ethics that you would require from someone you did business with. but there are further issues that also should be given credence. A successful entrepreneur has the responsibility to help our children and youth get an education so that we might be able to take up the shortfall in the skilled labour department What is a moral code? A code of ethics have any. either due to lack of interest or in some instances in lack of facilities and opportunities. South Africa currently faces a shortage of skilled labour. Apart from these laws there are other qualities that a good boss/business owner should follow. due to many factors skilled workers are leaving the country at an alarming rate.

human resources and infrastructure.____________________________________________________________________________ ____________________________________________________________________________ ACTIVITY 3 Using google run a search on urbanisation. natural resources. What is urbanisation? Write a short paragraph explaining what urbanisation is and how it impacts on people. 13 .

This paragraph will be discussed in detail once the students have some understanding. calamity will follow! What is urbanisation? It is important for students to have an understanding of urbanisation in the effects it has on society a s a whole. If an entrepreneur cheats others or takes a short cut. Basic codes of ethics have to be ta ken into consideration for any business to survive. 14 . Students may work in groups of 2 or 3. how they think they should conduct business. Open debate and discussion allows for free thinking and innovation.FACILITATOR NOTES y y y y y y Learners need to be encouraged to think about the type of service they expect when dealing with a business and as such.

either a financial contribution and/or a skill. Disadvantages: y If one of the partners leaves or dies.MODULE 3 Types of Business (SO1) Discuss entrepreneurship MODULE OUTCOMES (Assessment criteria) 1. 3. Co -operatives and Companies) 2. Banks are more likely to lend money to a group of partners than a single person. and his personal belongings can be atta ched should the business run into financial difficulty. The owner gets all the profit. Different types of business are identified. described and discussed. Easy to adapt as only one person has to make decisions. trade and retail industries. the partnership must be dissolved and reformed. Disadvantages: y y y Owner is fully liable. Limited financial resources may limit expansion. Advantages: y y y It is easy and cheap to start. Advantages: y y y Easy to set up as there are not a lot of legal requirements. 15 . Each person contributes something to the business. Sole Traders. People who have various skills can work together. (Service providers. Partnership: A partnership is an agreement/contract between a minimum of 2 people or a maximum of 20. Advantages of entrepreneurship are discussed (At least 3 of each) TYPES OF BUSINESSESS 1. Partnership. manufacturing. Financially the sole proprietor is held responsible for all debts incurred by the business. A partnership is not a legal entity so therefore the Partners are held jointly liable. Sole Proprietor: This is a single individual who operates a business. Close Corporations. If the owner is sick the business may not have anyone else to run it.

y Partners are liable in a personal capacity. The name usually ends with Limited or (PTY) LTD . A company consists of a g roup of individuals who together are called a company. Not individually liable.e. Advantages: y y y Easier to get financing. the credit institutions are more likely to lend you money. You can make a profit. If a member is negligent or incompetent the other members can hold him liable. A CC falls u nder the Close Corporation Act of 1984. 4. Spur. Close Corporations (CC): A CC consists of a group of between 1 and 10 members. Banks may be less inclined to lend money as the members have limited liability. If your franchise is well known. Advantages: y y y Members are personally interested in the CC as it affects their profit margins. Disadvantages: y Many members could cause a delay in decisions. All Spur s look the same and sell the same food for the same price. Members are not personally liable. More continuity. 5. Franchising: When you come to a legal agreement to sell or market a specific product according to stringent guide lines. It is not difficult to set up. A CC is a legal entity which means members do not carry liability. therefore a dishonest partner may get the rest of the group into trouble. Disadvantages: y y 6. Company: Companies fall under the Companies Act 61 of 1973. 16 . Advantages: y y Your brand is already established. but a certain amount must be paid to the franchisee i. A company is a legal Entity which means that the individual members cannot be held liable.

Sole traders are usually creative and show initiative. Disadvantages: y y y ACTIVITY 4 What is a Co-Operative? Fill in the details below for a Co-Op. Unlawful products are sometimes sold. Management restrictions may become pedantic. Informal Sector: The informal sector is governed by local government and is usually only owned by one person. The person is solely responsible for debts incurred. like stolen goods or knock offs. If one franchise gives bad service. Set up is cheap. 7. Don t usually have a high turnover.Disadvantages: y y y Limited ownership is usually given. Advantages y y y ___________________________________________________________ ___________________________________________________________ ___________________________________________________________ 17 . Advantages: y y y Easy to start. all franchises are stereotyped. street corners. 8. Co-Operative _______________________________________________________________________ _______________________________________________________________________ _____________________________________________________________________ __ ________________________________________________________ Usually sell cheap products which are of a poor quality. usually at flea markets.

________________________________ 6. _________________________ _______ 18 . ________________________________ 8. ________________________________ 7. ________________________________ 2. ________________________________ 3. ________________________________ 4. 1. ________________________________ 5.Disadvantages y y y ___________________________________________________________ ___________________________________________________________ ___________________________________________________________ ACTIVITY 5 List 1 company for each type of business.

and why you think they were successful. Preparation/ Research Presentation: Boring/compelling Validity of information Confidence Total 2 2 2 2 8 19 . (Community Projects) You may also visit the local library or community upliftment organisations to find the information.Assessment 1 Name: _____________________________ Student #: ______________ Date:___________________ Total [40] Using the internet run a Google search and find out about local (South African) entrepreneurs who have started enterprises that have benefited local communities. Prepare a two minute oral discussing on the company you found.

Each type of business has a specific use . STEERS. Lecturer needs to make a list of businesses that represent the various types of business. Franchise: SPUR. Partnership: Doctors. Large companies are normally companies. Company: Anglo American Farms (Boschendal. Co-Op: Fruit packers. smaller companies like pool companies. CC: Developers. Wineries. window framers. attorney s and doctors usually set up partnerships. both of which will hopefully lead to inspiration! Sole Proprietor: General Dealer. Independent research allows for initiative and exploration. Lawyers. Informal Trader: Street vendors. This module may have to broken into two lessons as there may be too much information for learners to assimilate in one hour. 20 . Learners need to understand that they cannot just open a restaurant and call it a SPUR as there are franchising laws.FACILITATOR NOTES y y y y y y Each type of business needs to be discussed and understood. Learners need to be able to identify various businesses in the community. Restaurant. SPAR. Rhodes Fruit Farms). Café.

paper. lakes and seas Mining: government and privately owned mining of minerals and metals. global positioning systems to find large shoals of fish etc. Wood is used to produce furniture and hou sing as well as wood by products. sole traders. There are no hard and fast rules that determine what type of business operates on which level but we will find out later. These primary industries have traditionally been very labour intensive. PRIMARY SECTOR In this sector we have all the businesses that have to do with the collecting of the raw materials from which all things are made: What types of industry are in this sector? Fishing: large and small scale fishing from dams. described and discussed. combine harvesters. oil) Farming: crops and livestock. Different types of business are identified. Each of these businesses operates on a different level. (gold. partnerships etc. www.com (retrieved 11 July 2008) BUSINESS SECTORS In the previous module we discussed the different types of businesses.e. which means that most of the work was done by people. rivers.e.docs. Nowadays we make use of technology in the fo rm of machinery to minimize the labour requirement i.MODULE 4 Business Sectors (SO1) Discuss Entrepreneurship MODULE OUTCOMES (Assessment Criteria) 2. which includes growing and managing of forestry. coal. Food production Forestry: production of wood. i. silver. with little or no technological help.paperless-school. 21 .

Manufacturing: cars. What are basic services and who should have access to them ? As previously stated.e. clinics. dams. Santam Delivery Services: TV repairman. TERTIARY SECTOR The tertiary sector involves mainly service industries. roads. The industrial revolution changed the way that almost all production took place. A service industry is an industry that provides a service to its customers. Banking. pasta does not grow on a tree. flour into bread. Appletiser has a bottling plant in Springs that runs so quickly it cannot be followed by the human eye. however. the Government is responsible for ensuring that the basic services are available for all South African s. ABSA. psychologists Police Service: South African National Police Service Banking: Standard Bank. infrastructure. plumbers. Nowadays most manufacturing takes place with the use of computers and large machinery that works at a most fantastic pace. teachers use Computers to design lessons. wheat into flour. What types of industry are in this sector? Building: builders build buildings. couriers These industries also make use of technology to help them. search for information on the internet etc. the government has the right to expect that the people who receive these services make use of them in a responsible manner. colleges. It is my right to have medical and educational benefits for myself and my children but also my responsibility to pay my taxes which go towards the funding of these 22 . universities Health Services: Hospitals. When we look at the Tertiary industry we see that they are mainly responsible for service delivery. It is my right to receive water and electricity at home but my responsibility to pay the bill for the water and electricity I consume. Food and beverage: changing water and sugar into coke. This sector has had large development on the technological front. What types of industry are in this sector? Education: Schools. According to the Constitution of the Republic of South Africa (1993) the government has a responsibility to provide basic services to all communities. insurance and health services make use of computers to keep records and to replace calculators and old adding machines. In South Africa the Government is one of our major service providers. That means they are changed from their raw form into finished products i. These services have to be provided within a secure and healthy environment.SECONDARY SECTOR In this sector raw materials collected in the primary sector are processed. It does not really make/manufacture goods. doctors. Nedbank Insurance: Outsurance.

Basic services: Water Electricity Education Healthcare Housing Children who receive free or paid for education have the right to this education but also the responsibility to work hard at school and ensure that the tax payers /parents money is not wasted! People who have the right to medical facilities also have the responsibility to ensure that they don t travel to the Doctor every time they have a minor cut or bruise. This wastes resources. 23 . in time and money.organizations. by stealing electricity or falsifying records to get social grants or pension. and people who truly need it do not receive it. It is also my responsibility NOT to defraud the government/public of funds or services. This money ultimately is compensated for by increased taxes.

QUESTION 1 Companies 1. let s see how much you have learnt. What is a sole trader? _________________________________________________________________________ (1) 2.ASSESSMENT 2 ENTREPRENEURSHIP Total Marks (25) Name: _____________________________________ Date: ____________________ Before we move on in this module. What type of businesses usually has partnerships? __________________________________________________________________________(1) 6. Why is it safer to open a CC or Company (Pty) LTD which has its own liability? ____________________________________________________________________________ __________________________________________________________________________(2) 3. Is it necessary for all businesses to register for tax regardless of their turn over? __________________________________________________________________________(1) 24 . ____________________________________________________________________________ __________________________________________________________________________(4) 4. Can you list two advantages and two disadvantages of a Partnership. Do not ask fellow students for help. Answer the following questions as completely as possible. if you are not sure about the answers try to work it out. What is a Co-Operative? ___________________________________________________________________ _________ __________________________________________________________________________(2) 5. I need to assess you.

a) What type of business would you be likely to find in the Primary Sector? List at least three. How does the Government pay for the services it provides? __________________________________________________________________________(1) 5. How is an entrepreneur different from a manager? ____________________________________________________________________________ ___________________ ______________________________________________________ (2) 25 . to which sector does Volkswagen belong? __________________________________________________________________________(1) 6. Who is the main service provider in South Africa? _________________________________________________________________________ (1) 4. In which sector would you expect to find service s like Telkom. The Coke a Cola factory produces beverages (cool drinks) and Simba produces snack foods (chips). they have a factory based in Port Elizabeth where they manufacture cars. ___________________________ ___________________________ b) d) ______________________________________ ___________________________________ (4) a) c) 2. Think of things that you would expect from a good businessman/businesswoman.QUESTION 2 Business Sectors 1. Volkswagen is a car manufacturer. _________________________________________________________ b) _________________________________________________________ c) _________________________________________________________ (3) 2. List four good business ethics/morals. Education or Health? ________________________________________________________________________ (1) 3. To which sector would you say they belong? __________________________________________________________________________(1) QUESTION 3 1.

They must be within the scope of reality. ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________ ________________________________________________________________ ________________________________________________________________________________ ________________________________________________________ 26 . Big or small ideas. but not impossible ideas.QUESTION 4 Make a list of the services that all South Africans should have access to and say whether that service is available in your area or not: Service Provided Yes No Think of ways to alleviate poverty and improve service delivery in your area.

In a market oriented mixed market. in trying to boost your sales you improve your product and lower your cost thus providing the consumer with a better deal. A market mechanism means that we have freedom to invest and spend out money as we see fit. therefore businesses compete against each other to make money. This year saw the introduction of the second service provider NEOTEL. the price we pay for them. which means we have a market mechanism as well as a command mechanism that determines out economic structure. Some stores however will decrease the quality of the product in order to cut the cost.MODULE 5 South Africa and the Government (SO1) Discuss Entrepreneurship MODULE OUTCOMES (Assessment Criteria) 4. and how it is divided between the citizens. I am the only supplier of cak e in the area. Local Wealth Creation. so he starts making them. Empowerment). Then along comes Simple Simon he decides that he also wants to sell cakes. people endeavour to make money for themselves and their families. Urbanisation. they are the same quality and size as mine but he sells his cake for R 15. where are you going to buy from? The only way for me to then compete is to lower my price.00 a slice.00 per slice of cake. in that instance the consumer must decided whether he wants quality or a cheaper price. 27 . In that way the customer gets a good product for less. but the government maintains control of certain state owned facilities like ESKOM (Electricity supplier). We may own property. (Job Creation. ISCOR (Iron and metal production). so I make the cakes at a cost of R 5. South Africa and the Government It is important to have an understanding of the markets and how government works in terms of the economy. Competition is of the utmost importance in a marke t economy because. we have a mixed market which means that we have a bit of both of these mecha nisms. People come to buy from me because there is nowhere else to go. For the large part our economy is free. Let s say I decide I want to make and sell cakes. Let s put it in simple terms. A com mand mechanism means that the government determines how and when things are produced. TELKOM (telecommunications supplier). As previously stated. The point of starting and running a business is to make a profit. a privately owned communications company. a market mechanism. The government has no control over price.00 a slice but I charge my customers R 20. The role of entrepreneurship in social development is explained and discussed. and trade freely with each other. Up until this year (2008) TELKOM was the only provider of telecommunications in the country and is partially state owned. South Africa is what we call a Mixed Market. to successfully run a business. Negation of the Migrant Labour.

What does that mean? At the moment we have a large amount of workers that come from other 28 . Urbanisation. That then makes 2 members of the community who are now earning. Empowerment). He in turn can perhaps hire an extra person to work for him because he has more business. The Spaza shop owner now has more money than he did before because he has a new customer. ENTREPRENEURSHIP IN SOCIAL DEVELOPMENT How does entrepreneurship play a role in social development? Isn t the government responsible for social development? As we saw in the last module. With an improved education local children can study further and thereby improve their wealth and in turn the communities.MODULE 6 Entrepreneurship in Social Development (SO1) Discuss Entrepreneurship MODULE OUTCOMES (Assessment Criteria) 4. Local Wealth Creation. They are responsible for making sure we have access to our basic needs like education. Negation of the Migrant Labour. People who stop along the road buy from the vender. How can we help? The government has made a pledge to cut down the unemployment rate. One person starts selling cultural art along the side of the road. You are however at the same time taking on the responsibility to give back to the community. He goes back to the community and now has money to buy food from the Spaza shop. If parents have more money they can afford to pay more school fees. This local community is then empowered to make decisions regarding themselves and are not at the mercy of people who have little or no understanding of the communities needs. Eventually the whole community is employed and the local area s wealth is improved. So how or why should business take a role in social development? Well as much as we may not like it. If local communities have an educated labour force the need for migrant labour can be negated. While we expect certain things (and we have the right to) some responsibility must fall on our shoulders. Let s say we live in a community where there is not a lot of money as most of the people in this area are unemployed. is unable to provide for all our nee ds. One very effective way to do this is to empower/educate p eople so that they might help themselves. By offering you the opportunity to do this course they are providing you with a foundation on which to build a better life for yourself and your family. Each job created by the entrepreneur including employing him/her self decreases the unemployment levels of our society. The role of entrepreneurship in social development is explained and discussed. you are potentially putting yourself in a position to eventually be able to employ someone else to help you. If you use the information you have learnt on this course and go out and start a business no matter how small. which. This circle of job creation often leads to urbanization. If you follow this chain of thought you will see that this is an escalating chain. for various reasons. in turn helps the school to improve its facilities and thereby improve its level of education. This decrease in unemployment has a knock on effect. the government is one of South Africa s largest service providers. Like this course. health and safety. the government. With more money the community can develop a better infrastructure that improves the lives of all who live in it. (Job Creation.

Balindile Ndlovu. "Someone. an organisation that promotes conservation-based community development in KwaZulu-Natal." 29 . However." says Charmaine Veldman. Their example may be just the thing for unemployed yo ungsters looking for gaps in the job market. with the help of low-tech equipment supplied by a foreign donor. The women themselves cleared the bush and levelled the land on the site. Homeless but not helpless: (taken from My Clever Economic and Management Sciences through Issues: p 39) For the woman of the Victoria Mxenge Savings Scheme.locally known as the "Green Team" . project manager of the Wildlands Conservation Trust. With little knowledge of conservation but much enthusiasm. Their client list soon grew to include landscaping contracts. These people take jobs that could otherwise go to local people.countries or areas to work in our area.are based in a small rural settlement next to the Dukuduku Forest on the fringes of the Greater St Lucia Wetland Park in Zululand. they approached me and offered their services. there is no choice other than to employ outsiders. They were still a long way from having homes to move into. But Siphiwe Mjadu. but t he presence of a site and R 19 000. if the local community lacks the skills to do these jobs. celebrated the first stage of their plan to build a neighbourhood from scratch: they had levelled the land on a site donated by the Catholic Church at Philippi and built a life -size wood and canvas prototype house on it. contributing to the project phys ically.00 in the bank were tributes to the tenacity of women who weren t prepared to wait around to be rescued by the reconstruction and development programme. The Khula Village Environmental Group . the group of 200 homeless women from Khayelitsha. Four women volunteered to learn how to cast blocks and tiles from concrete. recycle refuse and clear alien vegetation. Bongumusa Dube and Sibusiso Bukhosini have one thing in common: they realise the environment has economic value. So they set up a small business to plant trees. that the environment is important. Many of the woman were unemployed. aged between 22 and 28. Sustainable development Khula's green entrepreneurs 15 July 2005 DaimlerChrysler South Africa has awarded a group of young KwaZulu-Natal entrepreneurs R100 000 for their environment-friendly business. if not financially. had no jobs and little chance of finding work. development started with coins in a jam jar under the bed. somewhere made an impression on them. "Entirely of their own volition they started an environmental group. On Saturday. Not long ago the group's five men and women. Sizakele Mngomezulu.

(Bongile is an elderly gentleman living in the same informal settlement near Cape Town) We need to get rid of all these alien trees near Cape Town." Veldman says. Read the discussion below. Everything they have achieved has been from their own efforts. enabling their communities. Where am I going to get wood for my fire? (Sipho is a young man with a small family. Do you think there is a way that all three people can solve their immediate dilemma? Write a short paragraph stating how you think these problems could be solved." ACTIVITY 6 The information above shows two groups of people who decided to make a difference in their own and other people s lives. "We taught them about alien plants and the damage they do to the ecology. There are no jobs. They are really passionate about the environment. "The remarkable thing about this group is that they are not only doing this to make money.The group wrote a constitution and formalised their setup. 2. 1. Find out if there are any such projects in your area. They live in an informal settlement near Cape Town) We are so poor. and they began removing the aliens and replanting indigenous vegetation. (Gladys is a ranger with the department of nature conservation) Sipho: Bongile: Gladys: 30 .

(www. you will find information to start and run your own business. 77 Mentjies Street.org. The list of topics to the left should give you a good start ing point. Block G. These are companies and initiatives that have been established mainly by government and big businesses to promote and sustain Small and Medium business development.seda.za 31 .seda. you could approach one of these companies for financing and advice. Particularly with regard to previously disadvantaged communities.za info@seda. Sunnyside. If there is a particular task you want to accomplish.za PO Box 56714. Khula. The Small Enterprise Development Agency (seda) is the Department of Trade and Industry's agency for supporting small business in South Africa.org. 0007 The DTI Campus.za retrieved 7 July 008) Website: E-mail: Mail: Street: Tel: Fax: E-mail: www.MODULE 7 Enabling Programs (SO 1) Discuss Entrepreneurship MODULE OUTCOMES (Assessment Criteria) 5. Enabling programs for the entrepreneur are identified (Ntsika. visit the following sites. In your journey through our website.org. PRETORIA (012) 441 1000 / 0860 103 703 (012) 441 2053 info@seda. ARCADIA. These initiatives are promoted and in some cases funded by the DTI (Department of Trade and Industry) In other words if you were to have a good sustainable business plant.org. local business service centres and providers) ENABLING PROGRAMS Using the internet. you may find a fact sheet on this topic by clicking on the Factsheets button at the top of the page.

as well as links to business centres throughout the country.co. The organisation s pover ty targeting tool. (www.Khula Enterprise Finance Ltd (Khula) was established in 1996 as an independent agency of the Department of Trade and Industry.za retrieved 7 July 2008) The Small Enterprise Foundation Envisioning a world free from poverty The goal of the Small Enterprise Foundation. SEF has gained considerable international recognition for its poverty -targeting methodology and its success in reaching and ensuring positive impact on the very poor. SEF.sef. As the flagship development finance institution focusing on small businesses. offering basic information and essential service links to entrepreneurs.org. was one of the first such tools officially recognised and promoted by the Microcredit Summit Campaign. FRAIN 32 . Khula has for more than 10 years operated as a financial facilitator for the development of the rapidly growing Small and Medium Enterprise (SME) sector of the South African economy. The organisation follows a solidarity group lending methodology very similar to that pioneered by the Grameen Bank of Bangladesh. (www. The BRAIN website includes information about the government s incent ives and SMME support agencies. Participatory Wealth Ranking. combined with savings mobilisation and a methodology that substantially increases the chances of successful self-employment amongst the poor. is to work towards the elimination of poverty and unemployment in a sustainable manner by providing credit for self-employment.khula.za retrieved 7 July 2008) BRAIN The DTI has launched a comprehensive online initiative known as BRAIN (Business Referral and Information Network).

products and projects. The emphasis is on Historically Disadvantaged Individuals' Tourism Enterprise Programme The Tourism Enterprise Programme (TEP) falls within the policy -vehicle of the government's Tourism Action Plan (TAP).info . It is implemented by Namac (National Coordinating Office for Manufacturing Advisory Centres). it represents a component of a larger a nd longer-term strategy to both attract and effectively cater for the expected growth in domestic and international tourism. y Namac has developed an extensive delivery structure across South Africa that serves as a channel for the application of new tools. at the World Parks Congress the TEP was instrumental in facilitated deals which provided (www. retrieved 7 July 2008) ACTIVITY 7 Independent research. y Primary emphasis is placed on historically disadvantaged entrepreneurs and enterprises. It is widely recognised as one of the most successful SMME development and support agencies in South Africa. information. The main objectives of the programme are to encourage and facilitate the growth and expansion of small and medium enterprises in the tourism economy. thus enabling the effective delivery of solutions aimed at SMMEs.The Franchise Advice and Information Network (FRAIN) strives to supply high quality information and support services to individuals and small business (SMM Es) to ensure growth and improvement of new and existing franchise businesses in South Africa. go onto the internet and do some research. 33 . y FRAIN is a support project of the DTI. The TEP is funded by the Business Trust and implemented by ECI Africa. resulting in job creation and revenue generating opportunities. Save the information onto a disk/memory stick for future use. Time will be allowed during class for internet access to find this information. For example. As such. with assistance from the Council for Scientific and Industrial Namac Trust The National coordinating Office for Manufacturing Advisory Centres (Namac) is an SMME support agency within the DTI. Find a list of requirements for applying to one of the above-mentioned organizations.SouthAfrica.

Unit Standard CCFO Collecting Collect. but it is a good exercise as it empowers students to think in terms of the possibilities that await them. Students will have to use some initiative in searching. analyse. There are a number of other sites that offer similar help.FACILITATOR NOTES y y y Learners will need help to access the sites and navigate them. organize and critically evaluate information 34 .

7. ability to make informed decisions. Characteristics of a successful entrepreneur are identified (Ability to identify opportunities. do I know anything about hair?) Am I skilled in the industry? Do I need a formal qualification? (To become an electrician I need to know about electricity. how much will it cost me and are there suitable prospective employees in the area? If you a producing something. How much start up capital do I need to st art the business? What is capital? (The amount of money required to either buy the stuff I m going to sell / buy the equipment I m going to need to provide a service / set up a shop or factory or office from which I will work) Do I know anything about the industry I am trying to enter? (I m a gardener. 8. plus I need a wirem an s license) Where will I run my business from? Is the area accessible. MODULE OUTCOMES (Assessment Criteria) 1. 5. 3. safe. . Go through the ideas that you had for starting a business and using the following questions determine if your ideas are viable. 10. Are they viable/sustainable can they support you and your family and will they generate enough income to sustain the business itself? What questions do we ask? 1. is the raw material readily available? Can you transport it to where it is needed? How long will it take before I generate an income? How will I survive in the interim? How much working capital will I need? Am I actually interested in this line or work or will I become e asily bored by it? Is your area legal? Does it infringe on the rights of others? 35 2. I now want be a hairdresser. time management) CHARACTERISTICS OF SUCCESS One of the main reasons businesses fail is due to mismanagement and neglect of a viability study! What is a viability study? Let s look at the business ideas you came up with in the last module. 9. 6. ability to manage risk. 4. big enough.MODULE 8 Characteristics of Success (SO 2) Identify and describe the characteristics of a successful entrepreneur. suitable? If I need staff.

WORKSHEET 1. 36 . How long will it take before you generate an income? ______________________________ How will you pay your bills in the mean time? ____________________________________ 8. Do I need a formal qualification? Yes/No If yes. Do you have premises from where you can run the business? ____________________ Are these premises suitable? _______________________________________________ 5. what qualification do you have? _______________________________________ Is it a formal qualification? ________________________________________________ Is the industry regulated by any qualification board? ____________________________ 4. If you a producing something. Am I actually interested in this line or work or will I bec ome easily bored by it? Yes/No Is your area legal? Does it infringe on the rights of others? Yes/No Do you need to get permission from the municipality or neighbours? Yes/No Keep this worksheet with your portfolio for future use. draw up a viability study for the business you think is the most likely to succeed. is the raw material readily available? Yes/No Can you transport it to where it is needed? Yes/No How? _______________________________________________ ____________________ 7. Check each idea against the above questions. Will you need help in the form of staff? Yes/No Is there available labour to hire if you need? ____________________________________ 6. Is it an industry you know anything about? Yes/No If yes do you know enough? ______________________________________________ Am I skilled to do the work myself/ _________________________________________ 3. 9.ACTIVITY 8 Look at the list of business ideas you had in the beginning of this module. Using the attached worksheet. Do I need start-up Capital Yes/No If yes how much? ______________________________________________________ How will I get it?________________________________________ _______________ 2.

they could use it as part of their business plan that can submitted to the DTI for funding. Most small businesses fail due to mismanagement and lack of a viability study. Discuss all the points in detail to ensure that students fully understand the implications for each of these points. by keeping all the information gathered during this course.FACILITATOR NOTES y y Worksheet should be kept and used at a later date. The idea behind this whole course is that should there be students who are interested in starting a business. y y 37 .

do a viability study and then once this is analysed proceed with caution. Making decisions without thinking it through first is like gambling. Below are a list of international entrepreneurs who have made a huge success through dedication and hard work. Richard Branson. Opening a new business is not easy. The world is very diverse and it can change very quickly. ability to manage risk. Therefore you need to be a people person. but I will attempt to give you some insight into the life and world of a good entrepreneur. or like things best th e old way. 8. An entrepreneur must have tenacity! You can t be put off by the first obstacle that comes your way. Entrepreneurs need to be motivated and be able to motivate others in their work. MODULE OUTCOMES (Assessment Criteria) 1. an entrepreneur must be able to adjust his/her thinking quickly and tackle all the new challenges with enthusiasm and gusto. A good entrepreneur will not try to blame others for mistakes that have been made. New and innovative ideas must be a part of your life. You need to have the confidence that you can make a success of your venture and you need to have the courage to go out an d try. (Case studies should be used to analyse successful entrepreneurs) CHARACTERISTICS OF A GOOD ENTREPRENEUR What are the characteristics of a good entrepreneur? There are no hard and fast rules. If John hadn t told me it was a good idea. You can t afford to be stuck in a rut. 2. Virgin Empire 38 . I would not be in trouble now . rushing in where angels fear to tread and taking calculated risks. An entrepreneur should be good at identifying and grabbing new ideas and opportunities to improve existing products and/or services. A lazy entrepreneur is a bankrupt entrepreneur. you are responsible for it. 1. Why didn t you make sure? 7. There is a distinct difference between. You need to be able to choose the right people to work for you and ensure that they are dedicated and hardworking. time management) 2. As an entrepreneur you should believe in yourself. Characteristics of a successful entrepreneur are listed and described. 3. ability to make informed decisions. What s the difference? Well a calculated risk is one in which the odds have been weighed up. Once you have made your decision. 4. You first need to edge your bets. it requires long hours of hard work and dedic ation. Characteristics of a successful entrepreneur are identified (Ability to identify opportunities. Make a list of pro s and con s. When life hands you lemons a good entrepreneur will make lemonade! 5. 6.MODULE 9 Characteristics of a good Entrepreneur (SO 2) Identify and describe the characteristics of a successful entrepreneur.

calculated risk taking and loads of hard work he now owns his own Island among other things. Edison went on to found 13 companies including the General Electric company. Ever watched Monsters Inc. Virgin Mobile. built in a rural area of Kwa -Zulu Natal. In 1920 Disney began working on animated cartoons. In doing this he discovered that he had a gift for business. Inc. Virgin Active. Created the Ford Motor Company and was the first person to mass produce motor vehicles. As a child he began selling sweets. Apart from this she has also invested in the Seven Fountains school. At the age of 3 she was sent to live with her grandmother.Richard Branson. Through innovation. her father was in the military and her mother was a maid. Goofy and all the rest. Oprah Winfrey. Incredibles etc it is an international animation studio. In total Edison attended 3 months of school. 39 . newspapers and vegetables to supplement his family s income. He also later invented the first electric light bulb. It was not until 1932 that Disney won an Academy award for Mickey Mouse. Walt Disney one of the worlds most loved cartoon creators. Not only did he produce motor vehicles he also began mass production in factories using new technological break troughs. He now owns Apple Macintosh. a school in Limpopo and a school in Vryheid. Virgin Airlines to name a few. Virgin Records. Fortunately for the world Disney did not give up but moved to Hollywood to try aga in. Thomas Edison. Her grandmother lived in such abject poverty that when Oprah was young she used to wear dresses ma de out of sack cloth. She has however not forgotten her roots and has established the Angle Network. also began Apple in his garage. and Pixar animations. The man behind Disney World. Once she started concentrating on her education she won scholarships to study further and today is listed on the Forbes list as the Wealthiest Woman in the world. Microsoft Bill Gates is the founder of Microsoft Corporation and one of the richest men in the world. Steve Jobs. Disney s first company Newman Laugh -O-Grams went bankrupt due to high overheads. At the age of 9 she moved to the inner city ghettos and at age 13 ran away from home. they had a good idea and the courage to go after it. His first invention was the phonograph (an early version of a vinyl record). because his teacher was of the opinion that young Thomas could not be taught because him mind wondered. He broke convention when it came to business ideas and innovated a large and powerful company. Bill Gates. She was then sent to live with her father who was strict and insited on her education tak ing priority. Donald Duck. The local children used to tease her about her clothes. one of the largest publicly traded companies in the world. a charity organisation that helps people all over the world. Henry Ford. before being home schooled by his mother. Apple and Pixar Steve Jobs. Oprah was born to an unmarried couple. Harpo. the only competition for Microsoft. One of her many projects is the school for girls that she runs in Johannesburg. Mickey Mouse. putting a ford dealership in every town in America. started the Virgin Records label in his garage. General Electric The 17th and last son of Samuel The Iron shovel Edison Jnr. Ford introduced the Franchise system.

You will get time in class to work on this project. confidence Research/Quality of information Power Point Presentation Bibliography Total eye catching & informative? 3 2 3 2 2 12 40 . did student s work well together? Presentation: Language use. It must not be longer than 2 minutes. Group Work. Prepare an oral to accompany this presentation. Working in groups of 3. prepare a Power Point presentation to display the information.ASSESSMENT 3 Name: _____________________________ Student #: ______________ Date:___________________ Total [40] Find information on any successful South African Entrepren eur.

and ties in with Unit Standard CCFO Communicating. 41 . there are many like Cyril Ramaphosa. This integrates with Computer studies and Communication. Students have to make the Power Point presentation on 1 successful South African Entrepreneur. This module will probably take at least 2 3 lesson hours to complete.FACILITATOR NOTES y y y y y Lecturer needs to go through this section very carefully and discuss entrepreneurs that have made a success of their businesses. etc. While students need to be encouraged with these stories they need to understand that success does not come easily. Thokyo Sexwale.

or do you need someone to help you and tell you what you need to do? ____________________________________________________________________________ ____________________________________________________________________________ 2) Are you responsible? Cake you make decisions with confidence. well we are going to look at ourselves and see if we have what it takes to be good entrepreneurs. Honouring of contracts) DEVELOPING ENTREPRENEURIAL CHARACTERISTICS In the last module we had a look at famous entrepreneurs and the characteristics of a good entrepreneur now let s do some introspection. this is not a test and the information you fill in will be kept in the strictest of confidence. Answer the following activity sheet as honestly as possible. ACTIVITY 9 What does it take to be a good entrepreneur? Answer the following questions 1) Are you a go-getter? Do you like to take on projects and tasks as soon as you get them. Justice. Individual/personal entrepreneurial characteristics are identified and listed. 2.MODULE 10 Developing Entrepreneurial characteristics (SO 3) Identify assess and improves individual entrepreneurial characteristics. 4. Fairness. The importance of business ethics is discusses. 5. Individual/personal characteristics are assessed against the general entrepreneurial characteristics. (SO 4) Discuss business ethics and social responsibility MODULE OUTCOMES (Assessment criteria) 1. Ways to address shortcomings is developed Strategies to address shortcomings are implemented. and accept responsibility for them whether they turn out to be good or bad? ____________________________________________________________________________ __________________________________________________________________________ __ 3) Are you self-motivated? Do you have lots of energy and drive to keep working until the job is done or do you prefer to work from 9 5? ____________________________________________________________________________ 42 . (Honesty. What s that. 3.

or do you agonize in indecision before you make a choice? _____________ _______________________________________________________________ ____________________________________________________________________________ 8) Do you get along well with people or do they generally irritate you? Would you rather work on your own? ____________________________________________________________________________ ____________________________________________________________________________ 9) Are you up for a change? Do you like to change things or would you rather they stay the way they were? ____________________________________________________________________________ 43 ._______________________________________ _____________________________________ 4) Can you manage your time? If you have a job to do. or will you rather keep quiet and let others find the problems on their own? ____________________________________________________________________________ _____________ _______________________________________________________________ 6) Are you tenacious? Do you give up when things get tough or can you work through the hard times and keep yourself motivated? ____________________________________________________________________________ ____________________________________________________________________________ 7) Can you make quick decisions. can you get it done on time or does someone have to chivvy you on? ____________________________________________________________________________ ____________________ ________________________________________________________ 5) Are you honest and up-front.

prairiepublic. This list is taken from www. When you conduct business you need to decide on a value system that you will adopt. Below is a list of morals/values. Choose 3 values you feel the strongest about and write a short paragraph stating how you will ensure that this value is highlighted in your business. A successful entrepreneur needs to be morally aware. Having a strong sense of morals will make certain decisions easier to make.____________________________________________________________________________ 10) Are you healthy and energetic would you rather exercise and be active or are you always tired? Are you a couch potato? ____________________________________________________________________________ ____________________________________________________________________________ ACTIVITY 10 There are also moral traits that play a part in entrepreneurship. ___ Honesty ___ Service ___ Quality ___ Customer Service ___ Neatness ___ Winning ___ Innovation ___ Commitment ___ Professionalism ___ Teamwork ___ Independence ___ Being on time ___ Growth ___ Power 44 . tick off which ones you aspire to exercise in your business.org (Retrieved 7 July 2008). Your business value system will probably derive from your moral values.

___ Justice ___ Fairness ___ Honouring of contracts 45 .

ENTREPRENEURIAL TRAITS Not Important 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Somewhat Important 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Very Important 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 Quality or Charecteristic A high level of energy Good physical health A strong need to achieve A willingness to take risks A desire to create A need to closely associate with others A strong desire for money A willingness to tolerate uncertainty An ability to get along with employees Being well organised Self-reliance A need for power Patience Competiveness Desire and willingness to take the initiative Self-confidence Versatility (ability to do many things) Perseverance (sticking at something difficult) Innovativeness (willingness and ability to do something untried) Ability to lead effectively Source: Adapted from Entrepreneurship by William B Jennings. Canadian Foundation for Economic Education. 1985 in Master Curriculum Guide: Economics and Entrepreneurship. 46 .

McClelland in Entrepreneurship and Venture Capital. by D. Prentice-Hall.RATING OF TRAITS BY ENTREPRENEURS A. Important for success y y y y y y A willingness to take risks (4) A high level of energy (1) An ability to get along with employees (9) Versatility (17) A desire to create (5) Innovativeness (19) C. 1975. (The numbers in parenthesis correspond with the numerical listing shown for Activity 2) 47 . Least important for success y y y y y y y Ability to lead effectively (20) A willingness to tolerate uncertainty (8) A strong desire for money (7) Patience (13) Being well organised (10) A need for power (12) A need to closely associate with others (6) Source: Based on testing reported in That Urge to Achieve.C. Most important for success y y y y y y y Perseverance (18) Desire and willingness to take the initiative (15) Competitiveness (14) Self-reliance (11) A strong need to achieve (3) Self-confidence (16) Good physical health (2) B.

MODULE 11 Drawing up a Budget (SO 2) Identify and describe the characteristics of a successful entrepreneur. MODULE OUTCOMES (Assessment Criterion) 1. Characteristics of a successful entrepreneur are listed and described. By the end of this lesson the student should be able to: y y Correctly set up and run a budget. Understand the importance of budgeting, especially with regard to running an enterprise.

Let s look at some business terms and documents you will need to use to run your business. 1. Budget What is a budget? A budget tells you how much money comes into your business and how much money you have to spend. We usually use a budget to run a business but a budget should also be used to run your personal financial details. A business budget may look like this
Debit (DR) (The spend/expenses) Income Sales Expenses Water Electricity Telephone Refreshments Stationery Stock money you Credit (CR) (The earn/Income) R5 000.00 money you

R 170.00 300.00 87.00 100.00 50.00 1 780.00

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ACTIVITY 11 Use the template below to fill in your personal budget. The money you earn/your salary goes in the credit column and the money you spend in the debit column. Make sure you remember things like groceries, entertainment money, and services. Debit (DR) (The spend/expenses) Income money you Credit (CR) (The earn/Income) money you

Expenses

Total 1. Draw up a budget for Ubuntu General Dealers. The income for the month amounts to R 10 000.00 Their expenses are; Electricity R 1200.00, Telephone R 450.00, Water R 300.00, Wages R 2500.00, Stationery R 200.00, Staff refreshments R 350.00, Stock R 5000.00. Make sure you put the amounts in the correct columns. 2. Using the information you collected for your own business draw a preliminary budget for your company.

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FACILITATOR NOTES y Being able to draw up and use a budget can be a very useful tool for learners to have. It is difficult to make sure that you do not over extend your finances if you don t have any idea of what need to pay. This module runs in conjunction with the Budget module in the Excell section of Basic IT. The format is the same, this is just page 1.

y y

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or as indirect tax VAT.00 per year your company will deduct tax from your salary before you get paid. maize etc are VAT free. either as direct tax which would be personal tax. which means everyone HAS to pay tax. So when you see a price on a product that is what you will actually be paying. Some goods such as bread. Over and above that all citizens pay tax in the form of VAT. roads. It is the role of government to try to ensure that all its citizens are happy. however the VAT at 14% has already been calculated. They don t always achieve this goal but they do try. MODULE OUTCOMES (Assessment Criterion) 1. disability and child grants to name a few. The company is then responsible for paying this tax over to the government on a monthly basis. They us e the money to finance RDP housing. With VAT the price gets added before the sale price is stipulated. The company charges this extra 14% but they then have to pay it over to the government on a bimonthly basis. If you have a job and you earn more than R 45 000. TAX What is tax? Why do we have to pay tax? What does the government do with the tax it collects? The government collects tax from all its citizens to finance all the services it provides.MODULE 12 TAX (SO 2) Identify and describe the characteristics of a successful entrepreneur. the tax you pay on your salary every month. Now that we know the government is receiving all this money. Education. 51 . is the tax the government charges on the sale of most goods in the country. housed and healthy. Characteristics of a successful entrepreneur are listed and described. what do they do with it? The government is responsible for the entire infrastructure in the country. educ ated. There are two main ways in which the government collects tax. Tax is compulsory. VAT is one of the most important forms of revenue for the government. beans. Before the change of government in 1994 if you went to buy a product. So while it s our right to expect that government do their job correctly it is also our responsibility to attempt to gain employment and look after ourselves and our families . old age pensions. Medical Care in the form of clinics and State hospitals. companies also pay tax on the profit they make on a biannual basis. VAT or value added tax. you would have to add 10% to the price on the shelf in order to determine what the price is.

It is the responsibility of the entrepreneur and/or business owner to ensure that all legal. We also need to make sure that other people are not negatively impacted by your business. Successful entrepreneurs have a responsibility to give back to the community. as we need to take the environment into consideration when planning and running our business. fairness and honouring of contracts. with regard to running an enterprise. MODULE OUTCOMES (Assessment Criteria) 3. there was a night club that opened in Somerset West s industrial area without doing a viability study. The loud noise which went on into the small hours of the night affected the local residents to such a degree that they formed an action group and got a petiti on going. By the end of the lesson the student should be able to: y Understand the importance of ethics and social responsibility. social. Not exclusively in the form of money or donations. A couple of years ago. In this lesson we take it one step further.MODULE 13 Relationship between ethics and conduct (SO 4) Discuss business ethics and social responsibility. justice. Eventually the authorities closed the club. 52 . An entrepreneur cannot develop an area without making sure that such development does not have a negative impact on the surrounding areas. While the above mentioned ethics are important to consider when you are running a business. but also by proving employment opportunities in their community. or running bursar ies or education programmes that can help with the upliftment of these communities. it is boarding school where the children stay and get a good education. there are other issues that must also be taken into account. Nelson Mandela runs the Nelson Mandela Children s Fund which helps to feed and educate thousands of children in South Africa annually. Social responsibility is also a responsibility to our communities. Plans need to be made to ensure that factory run off or waste products are safely disposed of and not dumped into local water sources or land fills. Oprah Winfrey runs a school in Gauteng for previously disadvantaged girls. In previous lessons we discussed social responsibility with regards to ethics like honesty. political and environmental obligations are met. Social responsibility goes one step further. When we did the viability study the last question we asked was does my business impact on the environment or others negatively? What exactly does that mean? The world is made up of a large number of ecosystems that support various life forms. She also runs what she calls the Angle Network which provides resources for people in need all over the world. The inter-relationship between business ethics and a code of conduct is discussed. So we see that social responsibility encompasses a range of different aspects. This business had a negative impact on the community and therefore the authorities closed the club causing a loss of business capital and loss of income for the club s owner.

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TAX 13. Types of Businesses 4.What is Entrepreneurship? 2. Entrepreneurial Characteristics 11. Drawing up a Budget 12.3 AC 1 &4 AC 2 &3 AC 5 AC 4 AC 4 AC 5 AC 1 AC 1+2 AC1-5 AC1 AC1 AC3 Activity 9 Activity 10 Activity 11 Assessment 4 Exam Activity 6 Activity 7 Activity 8 Assessment 3 Research Project ACTIVITIES Activity 1 Activity 2 Activity 3 Activity 4 Activity 5 ASSESSMENT DATE COMPLETED Assessment 1 Research Project Assessment 2 Exam 54 . Relationship between ethics and conduct SPECIFIC OUTCOME SO1 SO1 SO1 SO1 SO1 SO1 SO1 SO2 SO2 SO3/SO4 SO2 SO2 SO4 ASSESSMENT CRITERIA AC 1 . South African Government 6. Entrepreneurship in Social Development 7. Characteristics of a good Entrepreneur 10.DAILY RECORD SECTION TITLE Entrepreneurship MODULE 1. Role of Entrepreneur 3. Characteristics of Success 9. Enabling Programs 8. Enabling programs 5.

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SECTION B STARTING AND RUNNING AN SMME (Small and Medium Enterprise) 56 .

underwriting agents. theft. UNIT STANDARD RANGE The typical scope of this unit standard is: 1.All qualifications and unit standards registered on the National Qualifications Framework are public property. Commerce and Management Studies ABET BAND Undefined REGISTRATION STATUS Reregistered UNIT STANDARD TYPE Regular REGISTRATION START DATE 2007-11-20 SUBFIELD Finance. Making and supporting a decision as to whether to establish a SMME. It is illegal to sell this material for profit. SOUTH AFRICAN QUALIFICATIONS AUTHORITY REGISTERED UNIT STANDARD: Investigate the possibilities of establishing and running a small business enterprise (SMME) SAQA US ID 117244 ORIGINATOR SGB Insurance and Investment FIELD Field 03 . fire. cleaning services. IT services. unplanned growth. Explaining the financial aspects involved in running a SMME. franchises. brokerages. Mathematical Literacy and Financial Literacy at NQF Level 3. 3. Identifying the risk associated with a SMME. death cover. inadequate financial controls. SMMEs include vendors. Poor financial management includes poor cash flow planning. poor screening of debtors. etc. Long term insurance needs include key-man insurance. cover to repay business loans. The qualifying learner is capable of: Identifying and researching the potential for a SMME as an own business. Economics and Accounting NQF LEVEL Level 4 (Grade 12) REGISTRATION END DATE 2010-11-20 LAST DATE FOR ACHIEVEMENT 2014-11-20 CREDITS 3 SAQA DECISION NUMBER SAQA 0160/05 UNIT STANDARD TITLE Investigate the possibilities of establishing and running a small business enterprise (SMME) REGISTERING PROVIDER LAST DATE FOR ENROLMENT 2011-11-20 This unit standard replaces: US ID Unit Standard Title 10386 NQF Level Level 4 Credits 3 Replacement Status Complete Investigate the possibilities of establishing and running a small business enterprise (SMME) PURPOSE OF THE UNIT STANDARD Learners who achieve this unit standard know their own strengths and weaknesses and can use their self-knowledge to make a decision on a possible business option for self-employment. 4. computer insurance. etc. spaza shops. movable assets. the South African Qualifications Authority (SAQA) should be acknowledged as the source. lack of understanding of overdraft requirements. Learners should be competent in Communication. 2. vehicle. bad debts.Business. poor management of debtors and creditors. Short term insurance needs include building. If the material is reproduced or quoted. stock. buy and sell agreements with partners. Specific Outcomes and Assessment Criteria: SPECIFIC OUTCOME 1 57 . LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING There is open access to this unit standard. Thus the only payment that can be made for them is for service and reproduction. temporary disablement.

ASSESSMENT CRITERION 6 The risks associated with stock and other business assets are described and an indication is given of possible measures to re duce the risk. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 Personal strengths. ASSESSMENT CRITERION 5 A decision is made and supported on a suitable location for a selected SMME. ASSESSMENT CRITERION 3 The need for advertising and marketing by a SMME is explained and an indication is given of the associated risks. ASSESSMENT CRITERION 2 A personal profile is matched to type of work. ASSESSMENT CRITERION 4 The need for the identified product or service and possible competition is researched in a selected area and a decision is ma about de possible distribution channels.Identify and research the potential for a SMME as an own business. SPECIFIC OUTCOME 2 Identify the risk associated with a SMME. ASSESSMENT CRITERION 4 Risks associated with growth are discussed for three different scenarios. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 The financial risks encountered by SMMEs are described with examples. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 58 . SPECIFIC OUTCOME 3 Explain the financial aspects involved in running a SMME. abilities and passions are analysed and a personal profile is compiled in order to match pers onal traits and abilities to a business opportunity. ASSESSMENT CRITERION 3 Training required to ensure the success of a SMME is identified and a decision is made on when and where to access training. ASSESSMENT CRITERION 5 The insurance needs of a SMME are investigated for a specific enterprise. product or service that has potential as an SMME. ASSESSMENT CRITERION 6 Municipal by laws and other constraints on trade are investigated for a selected SMME in a specific location. weaknesses. ASSESSMENT CRITERION 2 Risks associated with being an employer are explained for a SMME. ASSESSMENT CRITERION 7 The importance of networking for a SMME is explained with examples.

The learner can explore education and career opportunities by investigating the possibilities of running a small business. ASSESSMENT CRITERION 3 Financial controls required to ensure that a business is viable are explained with examples.The concepts of start up and working capital are explained with reference to a specific SMME. ASSESSMENT CRITERION 4 Three selected SMMEs are surveyed to establish quality of produce and potential productivity required for success. UNIT STANDARD ESSENTIAL EMBEDDED KNOWLEDGE N/A UNIT STANDARD DEVELOPMENTAL OUTCOME This Unit Standard supports in particular. ASSESSMENT CRITERION 3 A decision is made to establish or not establish a SMME supported by the findings of an investigation. ASSESSMENT CRITERION 5 The types of contract that a SMME could enter into are named and a contract wording is interpreted and explained in plain language. ASSESSMENT CRITERION 2 The relationship between cash flow and profit is explained for three case studies. The learner can participate as a responsible citizen in the life of the local and national community by investigating possbilities for i self-employment. ASSESSMENT CRITERION 2 Three selected SMMEs are surveyed to establish the service levels required for success. SPECIFIC OUTCOME 4 Make and support a decision on whether to establish an SMME. The learner can be culturally and aesthetically sensitive across a range of social contexts in deciding on the need for and location of a SMME. ASSESSMENT CRITERION 6 The tax responsibilities of a SMME are explained and an indication is given of when a businessis liable for each form of tax. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 The concept of an entrepreneur is explained with reference to risk. UNIT STANDARD LINKAGES N/A Critical Cross-field Outcomes (CCFO): 59 . ASSESSMENT CRITERION 4 The implications of poor financial management are explained with examples. the following critical cross field outcomes at Unit Standard level: The learner can reflect on and explore a variety of strategies to learn more effectively in knowing his/her own strengths and weaknesses and deciding how to access appropriate training. UNIT STANDARD ACCREDITATION AND MODERATION OPTIONS This Unit Standard will be internally assessed by the provider and mo derated by a moderator registered by a relevant accredited ETQA or an ETQA that has a Memorandum of Understanding with the relevant accredited ETQA.

60 . It is illegal to sell this material for profit. Thus the only payment that can be made for them is for service and reproduction. UNIT STANDARD CCFO WORKING The learner can work effectively with others as a member of a community in surveying the need for a business and the service levels necessary for success. UNIT STANDARD CCFO COMMUNICATING The learner can communicate effectively using visual. mathematical and language skills in oral and written presentation when supporting a decision to establish a business enterprise and interpreting a contract wording. organise and evaluate information researching the need for a service and possible competition. UNIT STANDARD CCFO DEMONSTRATING The learner can demonstrate an understanding of the world as a set of related systems by relating own personality traits and strengths to selecting a business opportunity and the risk associated with SMMEs. UNIT STANDARD CCFO ORGANISING The learner can organise and manage him/herself and his/her activities responsibly and effectively in matching his/her personal profile to a possible business enterprise and planning for self-employment. QUALIFICATIONS UTILISING THIS UNIT STANDARD: ID Elective Elective Elective Elective Elective Elective Elective Elective Elective 49089 50285 QUALIFICATION TITLE National Certificate: Financial Services National Certificate: Professional Driving LEVEL Level 3 Level 3 Level 4 Level 4 Level 4 Level 4 Level 4 Level 4 Level 5 STATUS Reregistered Registered Registered Reregistered Registered Registered Registered Registered Registered END DATE 2010-1120 2009-0629 2011-0611 2011-1118 2010-1128 2009-0209 2009-1116 2010-0208 2010-1018 61669 Further Education and Training Certificate: Community Water. the South African Qualifications Authority (SAQA) should be acknowledged as the source.UNIT STANDARD CCFO IDENTIFYING The learner can identify and solve problems in which responses show that responsible decisions using critical and creative th inking have been made in deciding whether establish an enterprise and where it should be located. UNIT STANDARD CCFO COLLECTING The learner can collect. If the material is reproduced or quoted. selectinga location for an enterprise and investigating municipal by laws and constraints on trade. Health and Sanitation Facilitation 49649 Further Education and Training Certificate: Long-term Insurance 58350 Further Education and Training Certificate: Perishable Produce Exportation 49929 Further Education and Training Certificate: Short Term Insurance 57613 Further Education and Training Certificate: Short-Term Risk Management 57917 58978 Further Education and Training Certificate: Wealth Management National Certificate: Journalism Elective 49123 National Certificate: Journalism Level 5 Passed the End Date 2007-1018 Status was "Registered" Reregistered 2011-0122 Elective 49023 National Diploma: Liaison Interpreting Level 5 All qualifications and unit standards registered on the National QualificationsFramework are public property.

Let s try a simple Test: ACTIVITY 1 Read through the table below and mark off the personality type that you think best describes you. weaknesses. machinery. SMME POTENTIAL In Section A of this book we discussed Entrepreneurial qual ities and which qualities are best suited to being an Entrepreneur. A personal profile is matched to type of work. add to it and try to determine a personal profile basically an idea of what type of industry you will be best suited to work in. product or service that has potential as an SMME. and from there we will begin compiling a plan for your own business. Inquisitive type Career Possibility Veterinarian Engineer Mechanic Carpenter Entrepreneur Geologist Weatherman Mathematician Entrepreneur Artistic and creative type Freelance writer Musician 61 . and intellectual and analytical thinking. Turn back to that section an d let s have another look at your answers. 2. Personal strengths. through Language and literature. animals and/or plants This type of person shows a preference for activities which involve problem solving. abilities and passions are analysed and a person profile is compiled in order to match personal traits and abilities to a business opportunity. We will start with Holland s model: personalities and career possibilities Holland distinguishes between six types of personalities.MODULE 14 Potential for an SMME (SO 1) Identify and research the potential for an SMME as an own business MODULE OUTCOMES 1. In this section we are going to take the self-knowledge we acquired in the first section. This person shows a preference for creating something. and then matches the different personalities to possible career options: Personality Type Realistic type Description This type of person has a preference for working with hand tools. fine arts and performing arts or music.

2 Below is a copy of Nelson s test for interest: field or pattern (Nelson 1993:28 -34 in Gouws 2003:166-168) INTEREST EXERCISE Do you like to help friends with their homework? Do you enjoy solving mathematical problems? 1 2 3 4 5 6 7 Have you taken a leading part in a play or concert? Do you plan your savings and expenses well? Are you good at selling things? Can you remove the lid from a jar or bottle more easily than your friends? Do you hate to spend time indoors after school hours? Do you frequently help people by babysitting. One of the most important rules when running your own business is that you must like what you are doing.Social and serving type This type of person prefers communicating with other people and likes to render services to others. ACTIVITY 1. Teacher Minister Nurse Hairdresser Fireman Paramedic Manager Sales manager Entrepreneur Bank clerk Typist Enterprising type This person prefers to take the lead. well . to manage and to persuade others in order to reach certain goals. Conventional type Right so now you have an idea of what type of person you are. This type of person prefers activities where clerical skills and clear procedures are to be followed. why is this important. 62 . If you do a job purely because it is a job that brings in money you will be less likely to be successful working for someone else but especially as an entrepr eneur. it s important because it will help you to get an idea of what type of business you could run.

painting for drawing? Do you think that one should plan carefully and in detail before starting a project? Would you like to work for a newspaper or TV newsroom as a reporter? Are your fingers nimble.or by visiting the sick or the old? 1 Would you rather study science than play sport? Do you like to spend time on activities such as music. flexible and sensitive? 2 3 4 5 6 7 Do you like to be alone for long periods? Do you sometimes help to organize a group of people for a sports activity? Do you like to find out what makes things work? Do you make special efforts to attend plays. dancing. concerts or films? Do you normally use facts and figures to prove an argument? Have you been involved in debating or public speaking? Do you have some tools or materials with which you practice your skills? Are you tough. can you stay outdoors in bad weather? Do you try to help the sick or comfort those who have lost a friend? Have you spent much time doing scientific or mechanical experiments on your own? Do you spend a lot of time drawing? Would you dislike working with a problem without knowing all the facts? In your career do you want to express yourself and communicate ideas? Do you enjoy working on cars or broken 63 .

etc)? Do you like watching films about space adventures/ science fiction? Has anybody who is already employed as an artist said that you should make a career of art? Do you like solving problems and puzzles? Have you read more than five books not required for your studies in the past 12 months? Do you want to make a career out of your practical abilities? Do you think that formers have a good life? Would you like to work in an open plan office? Do you enjoy fixing electrical appliances? Do you want to obtain further training in music. including your own? Are you interested in discussing medical problems? Do you think you would enjoy creating advertisements for TV. (debating society. lively person? 2 3 4 5 6 7 Have you ever been in charge of a group of people.appliances? 1 Are you a very active. painting or drawing? Would you like to keep the financial records for a business/ Do you speak more than two languages/ Have you ever made a dress or piece of furniture? Do you like to see things grow and watch animals and birds outdoors? Do you make friends with people of all age groups. dancing. church group. magazines and radio? 64 .

open debate? Have you ever made a model car. house or aeroplane? Would you like to be a game ranger? 2 3 4 5 6 7 So how do you work out what your answers mean? Add up the number of ticks you have put in each column and enter the number in the relevant square.1 Do you know how much your parents pay for your school fees and books? Do you enjoy participating in an organised. words and ideas? Making/fixing things with your hands? Working out of doors? These tests will give you an idea of what type of personality you have and what your interests are. when we were trying to determine whether you had a busi ness aptitude. together they will give us an idea of whether you are suited to being an entrepreneur. The highest score indicates the interest category which applied to you. or indication as to what interests you most. a worker or a business manager and your strongest field of interest. 65 . The idea is to look a these tests in conjunction with the tests we did in the first section. they are included to give you an idea. Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Dealing with People Science and technology? Artistic and creative activities? Facts and figures? Communicating. They are not meant to be hard and fast rules that determine what type of business you must run.

FACILITATOR NOTES y y Please ensure that students understand that the tests above are designed as a help technique to find direction. This should be broached as a journey of discovery in self -knowledge. There is NO stipulation that students HAVE to complete the tests but they need to understand that they are there as a help mechanism. 66 . NOT has the bottom line for their careers.

Try to decide exactly which business you want to begin. 67 . Make a list of the qualifications/abilities you will need to run this industry If you require further training find at least 2 institutions that offer the necessary course/s. we need to determine if you need any extra training to achieve your goals. Look over the list of possible business ideas we collected in the first section of this course. y Make a list of the courses you need or would like to do o include in this list the price o the type of qualification you will get o how long it will take o Any other information that may be pertinent to your chosen course. Now that you know what type of person you are. Training required to ensure the success of a SMME is identified and a decision is made o when and where to access training. and where your interest lies. Do you require any further training for your chosen business? ACTIVITY 2 y y Using the internet. search for more information about your chosen industry.MODULE 15 Training Schedule (SO 1) Identify and research the potential for an SMME as an own business MODULE OUTCOMES 3.

where the student could study and work a the same time UNISA. INTEC etc. Offer part time solutions. 68 . Make sure students are aware of the fact that there are bursaries available in most courses.FACILITATOR NOTES: y y y y Allow students enough time to look for options regarding studying Make sure students understand the time and cost implications of studying but don t put them off.

Municipal by laws and other constraints on trade are investigated for a selected SMME in a specific location. 6.MODULE 16 Needs Assessment for your product (SO 1) Identify and research the potential for an SMME as an own business MODULE OUTCOMES 4. Product Assessment. ACTIVITY 3 This is practical activity: Think about the type of business you think you want to open. do you have a liquor licence? Do you need to change the zoning on the property? 69 . if you want to run a day care centre: y y y y y y y y What age of children will you take? What will your hours of operation be? Will you run your centre throughout the year or will you close for school holidays? Will you only take small children or will you offer an aftercare/homework centre for children in Primary school? Will you include a meal in your service or must the children bring their own lunch? How many children will you take? How many staff will you need? (this will depend on the previous question. I want you to think about the area/location. researched any training that may be needed or my be beneficial to your chosen business. is there enough trade in the area to be able to support both of you? Are there any municipal by laws that you w ill have to conform to in order to run your enterprise? e. The need for the identified product or service and possible competition is researched in a selected area and a decision is made abou t possible distribution channels. If you plan to run a shebeen. 5.g. where you will be operating from. e.) Where do you plan to run the business from? Once you have written down all your details for your business. Are there any businesses that operate in this area that currently offer the same products/services you intend to offer? y y y y If yes. make a detailed list of all the products/services you want to offer in your business. A decision is made and supported on a suitable location for a selected SMME.g. We have now discussed our ideas. so lets move on and assess our product/service.

Contact your local municipality and get all the information you need including cost and time frames.gov.za 70 .za www.drakenstein. Bring all your paperwork and information to class by ______________________ we will then discuss your information and make a decision as to what needs to be done.capetown. Is it good to proceed or do you need to rethink and re -evaluate your idea? You may visit the following web sites to find information.gov. they have quite a lot of information: y y http://www.

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6th Floor. Tel. unless otherwise indicated. o Massage or infra-red treatments.Contact CIPRO for registration of the following type of companies .483 3091 & Fax 021 .FACILITATOR NOTES: Business Licenses Why do you need to Apply? If you open a business that requires a license.Address: Block F.483 5066 72 . saunas and health baths. Health and Entertainment Facilities need a license for: o Turkish baths. o Three or more snooker or billiard tables. begin trading before a license has been issued. where live or loud music is played. 77 Meintjies Street. DTI Campus. Address : The Liquor Board. o Nightclubs and discotheques. you may not. Which businesses need to apply for a License? y y y y y Food Provision needs a license to sell or supply meals. Licensing is governed by the Business Act No. 71 of 1991. you need a license Other types of Licensing Bodies for Licenses (Registrar of Companies . which you take from place to place or sell from a vehicle. o Three or more slot machines and electronic games. 80 St George's Mall. PO Box 979. Cape Town. o Adult premises. take-aways or perishable food. Schedule 1 of the Business Act No 71 of 1991 lists the businesses which need a license. Waldorf Building. Sunnyside. Hawkers: If you are a hawker selling food and meals. Pretoria): o Close Corporation o Company o Copyright o Designs o Patents Liquor Licenses: To apply for a liquor license. Entfutkweni. 021 . Trading without a valid license is a punishable offense . contact the Liquor Officer at your nearest Police Station or the Liquor Board. o Male and Female escorts. which is national law.

Bergriver Boulevard.Thursday 07g45 .403 1934 Steps on how to Apply for a Business License Step 1: You need to complete a business license application forms (L1) which is available from the Civic Centre. 2267 or 021 807 4593 or 082 375 2447 Tel: 021 873 1121 ext. 2206 or 021 807 4557 Monday . Zolile Charles Quwe Tel: 021 873 1121 ext.489 5000 & Fax 011 . 011 . If your application complies with the aforementioned requirements. For enquiries contact: Licence Officer Mr. cnr.17h00 Fax: 021 864 2412 Administrative Officer Wendy Philander Office Hours Fax: 021 864 2412 Friday 07h45 . as well at the Municipal Offices. the application process can proceed. De Beer. 73 . Address : 73 Juta Street.15h45 Step 2: The application must be completed and submitted to the License Officer. Paarl. Wellington. Braamfontein Tel. Step 3: Payment of Fee y y An application fee (annually increased as per Council's tariff structure) is payable at the cashiers for the application of a business license A receipt will be issued for the fees paid. y y The Town Planning Department will assist you to establish whether there are business rights on the property and whether the zoning rights comply with the Scheme Regulations.y Music Rights : You also have to apply to the South African Music Rights Organisation (SAMRO) to play any kind of music. 1st Floor.

the new owner will have to apply for a licence What happens if a person sells food and does not get a business licence? It is a criminal offence to operate without a licence. Licensing.Step 4: Circulation for Comments y The application is then sent to the relevant Departments for comments and recommendations. It is also a criminal offence 74 . Planning. which may include : Environmental Health. They do have to apply for a new licence: y y if they move their business to other premises if they sell the business. when the business has anything to do with: y y making or selling food which can go off certain types of health or entertainment activities The owner could be fined up to R1000 or be given a prison sentence o f up to 3 years. will issue the license Other Requirements which may need to be met If reports received from the relevant departments indicate that other requirements need to be met. the Department of Community Services will send a notice to the applicant. Does the business licence have to be renewed? Traders do not have to apply for a new licence every year. The applicant must comply with the requirements and then arrange a re-inspection with the officer concerned. License Issued The license will be issued only once ALL relevant departments have returned a recommendation of approval. Fire Services and Electricity Step 5: Issuing of License y Once the comments of all relevant departments have been received. the Department Community Services.

to sell alcohol without a liquor licence Note: A business license or application can not be transferred with a change of ownership. A business license can be withdrawn or suspended if there is a failure to comply with an endorsement. Working together to create a place of opportunity
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MODULE 17 Networking
(SO 1) Identify and research the potential for an SMME as an own business

MODULE OUTCOMES 7. The importance of networking for an SMME is explained with examples. 8. Identify the risk associated with an SMME.

NETWORKING What is networking and why is it important in business? There is an old saying that goes It s not what you know, but who you know. This is especially true when it comes to business; people do business with people they like. If you go into a store and the clerk is rude and abrupt with you, will you go back there again? By building up a network of friends, colleagues, and acquaintances you broaden your business base. If I need a plumber and I know someone who is a plumber I will rather call the person I know than look in the yellow pages and find a plumber I don t know, even if the guy I know is a bit more expensive I will rather use him because I know what type of work he does, I kno w he is a trustworthy person, and I know I will be happy with the end result. A more diverse network of acquaintances will ensure that you have access to various groups across cultural, class and geographical boundaries. How do you go about meeting peo ple? You can t just walk up to strangers and introduce yourself, this is called cold calling and people especially in South Africa are not very receptive to it. Image you are walking down a road and a complete stranger approaches you and wants to chat, wh at do you think your initial reaction would be? There are various organisations and meetings that are set up where entrepreneurs can go and socialise and network. The chamber of commerce is one such group, they organise meetings or breakfast talks where business people from the area can get together and discuss business, get to know each other, exchange business cards and socialise. In most towns there are forums and groups that meet in different industries, there you will meet people who are in similar industries to you, you can share information, an d exchange business cards. Remember that people who attend these meetings are also networking, so while you are making contacts and broadening your business base, they are doing the same thing. First impressions are lasting so try to attend these gatherings looking the part, if you arrive after having worked in the kitchen the whole day, you are not likely to get a very warm welcome. When you are networking you are not only meeting people who may become cus tomers you are also getting your name in the market place. Let s say I meet a guy at one of the meetings who is looking for a plumber, I can then tell him about my friend who is a plumber and recommend he contact my plumber, and so the plumber s name and market spread this is known as word of mouth.

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Once you have contact, you could occasionally do favours for your contacts this gives you credibility and goodwill. If you can help someone out without incurring a major loss on your part, it could prove to b e very beneficial for your business. Networking also allows you the opportunity to gather new ideas that can improve your business, or diversify (include new lines). You can also listen to the general consensus on various issues and perhaps come up with ideas to fulfil gaps in the market e.g. John goes to a business forum meeting and a few of the people are complaining that their workers are always late back from lunch because they have to walk 4 blocks to the nearest shop to get lunch, there is also always a long queue at the shop, by the time the staff manage to get lunch they are late. John runs a take away store in a different area but he is thinking about opening a second store in the factory area the other men are talking about. He hears the discussion and approaches the group, introduces himself and presents an offer. With prior arrangement from the owners of the factories he sends one of his staff down to the factories just before lunch time and sells pre-packed meals to the workers, they no long er have to walk so far to get to the shop or stand in the long queue, the managers are happy because the staff are no longer late, and John is happy because he has just increased his market share. Within a few month John has increased the number of custo mers he has in the new area sufficiently to warrant opening his second store. At a business forum you have the opportunity to market yourself and your business in a relaxed, social situation. (http://www.foxnews.com/story/0,2933,362704,00.html )

Here are some guidelines you could follow to make the most of your networking opportunities: y y y y y y y y Arrive early, that way you get to chat to people while there is still not too much melee Set a goal before you go, decide before hand what you plan to achieve from the meeting, don t be listless and pap , be driven and dynamic! Make sure you arrived armed with business cards and/or brochures, and wri ting implements should you need to jot down some information. Make sure you have a briefcase/purse handy to deposit all the information you may acquire. Don t sit in an exclusive group with colleagues or people you know, be open an d approachable, mingle. Don t be afraid to introduce yourself, be confident without being loud and obnoxious. Make eye contact when you talk to people and speak clearly, shake hands on meeting. While you are trying to market your business don t actively punt, this is supposed to b e a social event, answer questions openly and truthfully without going over board. Pay attention to your personal appearance before you go: o Make sure you have a good haircut/ hair do o Make sure you are appropriately dressed, not over dressed or sloppy o Pay attention to small details, make sure your nails are clean, your stockings don t have holes, and your clothes don t have stains. 77

com by Lauren Neilson." (www.Networking may cost a bit in the form of luncheons or fees but if you use it as a marketing strategy. make a list of these and keep them in your portfolio for later use.) 78 . it will pay for itself. y http://www. find out about networking opportunities that may exist in your area/field of work.za/sbw/capetown.htm visit this web site. "Effective business networking is the bringing together of like minded individuals who.thebigidea. it promotes the Small business week in Cape Town y Find more information regarding the small business week in Cape Town.co. talking advertisements for one another. ACTIVITY 4 y Research Activity: Using what ever means you want.articlealley. through relationship building. become walking.

Seeing a potential money spinner. in this section we will go into a little more detail. and or furniture or any other investments you may have. Everyone has what is called a risk tolerance level. I might consider climbing to the top of a ladder a great risk. depending on the type of business you decide to run. This section is not geared towards putting you off running a business but merely to inform you of the potential pitfalls a s a means of avoiding them. What is this? Well it s similar to a pain tolerance level or threshold. some people don t feel pain to the same degree as others. you could find yourself personally liable for any debt the business incurs. The risks associated with stock and other business assets are described and an indication is given of possible measures to reduce the risk. The insurance needs for an SMME are investigated for a specific enterprise. with great risk comes great reward. while someone else may not be willing to invest in the same project because he/she is afraid that it might not work. This can sometimes create a huge amount of stress. 2. The financial risks encountered by SMMEs are described with examples. All this responsibility now falls squarely on your shoulders. What does this mean exactly? Well it means that all your personal possessions become jeopardised by bad business decisions. calcula ted risk is the best way to go. in business is goes about taking business risks. squandering good will. We discussed certain risk factors with regards to the type of business you decide to open. be they losing money invested. One of the greatest risks as a business owner is that you are now responsible for your self and your family. one person may be willing to go out on a limb and invest money into a proj ect that may or may not succeed. No risk at all could lead to a mediocre performance. I might find a blister unbearably sore. There are steps that can be taken to limit your potential risk. yo u might not even notice it! A risk tolerance threshold is similar. Risk associated with being an employer are explained for and SMME. If you are running a small business the chances of facing major losses are a lot less than if 79 .MODULE 18 Risks associated with SMMEs (SO 2) Identify the risk associated with an SMME MODULE OUTCOMES 1. by carefully choosing an appropriate form of business you can avoid personal sureties or guarantees. business failure as well as success. It is advisable to make sure your business will earn enough money to support you befo re you give up your paying job. Should your company become insolvent creditors may come after you personally and you could loose your house. 4. A balance needs to be found between the two. As the owner of a business you will bear all the risk and responsibility for decisions made. car. Risks associated with growth are discussed for three different scenarios. however continual reckless risks could mean bankruptcy. and my 12 year old daughter thinks nothing of jumping off a 65m high bridge attached to a bungy rope! Now that is physical risk. There is no longer a boss who pays you a salary at the end of each month. 5. 6. Another very serious risk to running your own business is.

HOWEVER make sure you check your policy very carefully since most of these policies have exclusion clauses and when it comes time to pay and your claim may not be valid. Personal liability risks include: y y y y Personal surety for bank loans or other forms of credit the business may incur. If your business however deal in hundreds of thousands of Rands per month. Avoidable risks in business would be running into legal trouble. Both of these risks are easily avoidable provided you take note of and educate yourself regarding all the rules and regulations (legal requirements) to running a business The final risk is the risk of loss of income due to accidental injury or illness. Lawsuits against the company for any number of reasons. Failure to comply with tax requirements resulting in failure of payments Incompatibility between partners Criminal liability due to failure to comply with laws and regulations in regard to your business. like failure to pay Tax or fraud. BEE non-compliance. these are problems that can be avoided if you pay attention to them and put plans i n place to prevent the eventuality of these risks. and sexual harassment claims. Late or unpaid taxes incurred by the busine ss Long term leases or other obligations the business may enter into. In order to manage risk you need to: y y y y y Make sure you know what the risks are Predict when a risk might occur Identify factors influencing the risk Evaluate the identified risk Constantly reassess the risk cycle Risks associated with growth? How can there be risk associated with the growth of your business? If your business is growing doesn t it stand to reason that you are doing w ell and should go with the flow? Well yes and NO! 80 .you were running a major organisation with a high monthly turn over. Some business risks are seen as avoidable risk. Below is a list of risks that may cause a business to fail: y y y y y y y Non compliance with legal and licensing requirements and regulations Lax or sloppy accounting procedures and standards leading to Late payment of bills and late/non collection of accounts payable Failure to comply with conditions of employment and/or labour issues s uch as discriminations claims. the risk is exponentially greater. There are insurance policies that you can take out to cover yourself should you become incapacitated and u nable to work. If your business deals in thousands of rands a month you only stand to loose thousan ds of Rands.

you will probably need bigger premises . Let s take a little child for example. increased salaries that you will have to pay. Not only are there not enough hours you may also discover that the books are now getting a little more complicated. or the production now needs a specialist to handle all the aspects. With hiring new staff comes a whole lot of new risks. in a small family business you can and usually do.As businesses grow. we usually also end up having more children. Some risks may not be things that you would necessarily call avoidable risks but should none the less be kept in mind: y y y y y y y y y y y y y y y y y y y y y Competition Product substitution Product life cycles Barriers to entry Narrow customer base Lack of consistency Supplier base may be limited Price Wars with competitors Sales fluctuations Problems with cash flow Money lenders and Banks Poor productivity Costing and pricing issues Insufficient provisions Over-reliance on staff members High staff turnover Confidentiality Breach Ownership continuity Poor management Excessive spending Expiring lease/difficult landlord 81 . As the business grows you will soon discover there are not enough hours in the day to do everything. you then need to hire specialist staff to handle specialist functions. Your role as the business owner now changes from chief cook and bottle wash to Manager . it needs nurturing and pampering and we give all our attention to it constantly. become more corporate suddenly that little family atmosphere is gone. they usually take on a more formal nature. hence increase rent or a bigger bond. growing your business is a similar concept. Your finger is on the pulse of the business and you are involved with and supervise every aspect of the business. and they also need our attention. No. There are also legal implications regarding registrations etc that will have to be taken into account. As the baby grows its needs change. your little business is outgrowing your mental capacities as well as your physical time frames. it means there is more. your turn over will increase but so will your expenses. You now take on the role of managing and overseeing all aspects of the business instead of actually doing all the work. when we first have children we have a cute little baby that needs our constant undivided attention. do everything. this doesn t mean that there is less work.

choose six of the above headings and find more information about the type of risk and possible ways you could avoid or minimise your risk. we will then discuss the results and add the information to our course notes.y y y y y y y y Rising rental costs Need to upgrade/fix assets Bad Debt Act of God Incentives and Taxes Strikes. labour unrest Crime Environmental awareness. ACTIVITY 5 Working in groups of 3. Type your information into an informative detailed document. 82 .

wind. it depends largely on the type. hairdressers. a thing providing protection against a possible eventuality. The insurance needs for an SMME are investigated for a specific enterprise. It is also a good idea that restaurants and fast food outlets have this type of insurance. 6. You will also have to register the drivers of your vehicles with your insurance company. Lets take a look at a few types of insurance that may be necessary when you start your business. 83 . Professional Liability (Errors & Omissions) Insurance This type of insurance is recommended for but not limited to computer technicians. Should a driver be involved in an accident and not be in possession of a licence the insurance may be able to refute the claim. Auto policies cover physical damage to the vehicle but not its contents. You have insurance in case. lawyers and consultants.askoxford. Public Driving Permit. which certifies that they person is responsible and can then transport goods and people. Business Owner s Policy A business owner s policy provides coverage for fire. 1. my father-in-law always says if you can t afford insurance then that is when you need it the most! In a perfect world insurance would not be necessary but since we do not live in Utopia we have to accept insurance as a necessary evil. 3. INSURANCE FOR SMMES What is insurance? According to the Oxford English Dictionary insurance is . size and location of your business.com) It is like hedging your bets. Commercial automobile Insurance Cars.. injury of someone in your business or injury of someone by your product (liability) and the interruption of business (this means you will lose money whi le your business is interrupted) 2. Does this mean it is an unnecessary expense? NO. systems analysts. theft etc on you property.MODULE 19 Insurance for SMMEs (SO 2) Identify the risk associated with an SMME MODULE OUTCOMES 5. you may not need to have all of these types of insurance. (www. It is also essential that all staff driving company vehicles have a valid drivers licence relevant to the type of vehicle they are driving. It is an insurance that covers you should your work incur injury or financial loss to someone who does business with you. best case scenario you won t need it. accountants. vans or trucks used mainly for business will need a separate business auto policy. Some insurance policies stipulate that the driver of a commercial vehicle have a PDP. The risks associated with stock and other business assets are described and an indication is given of possible measures to reduce the risk.

Professional camera. toys etc. What they offer. 5. Specialised Equipment Coverage This coverage is available for equipment you use to do your job but th at doesn t fit into standard coverage or is used in unusual ways. 84 . If there is a fire in your business the business income policy will pay for the income you loose while the building is being repaired. what type of cover etc.4. which means that it can be added to your BOP insurance and the coverage will reimburse your business for income lost during downtime caused by damage or loss of property. should their equipment g et damaged in anyway they may not be able to continue working. Business Income/Extra Expense Insurance This type of coverage is called an add-on. computers etc that you take with you to do your business. plumbers or electricians carry expensive drills and ladders when they go to do a job. Search insurance web sites and get more information about the type of coverage. Product liability Insurance Product liability insurance protects you in the event that your product harms or injures the user of the product or his property. If you run a fast food busin ess and someone gets food poisoning from eating something from your store you can be sued. 6. ACTIVITY 6 Decide on the type of insurance you will require for your chosen industry. you need information from at least 2 different companies. the product liability insurance will then cover the costs. the Extra expense insurance will pay for you to rent a temporary office while you wait for the repairs to be completed on your burnt building. Food. This type of insurance is imperative for companies that manufacture something.

equipment. Working capital this refers to current assets. foreign investments) . Don t get over stressed we will go through this section slowly. or a development company. There are always costs involved in starting a business wether you are starting it from your home or renting or purchasing premises. This is your own personal money that you will be putting into the business to start it. this is one of the major obstacles to businesses becoming a success. (Khula. bui ldings or other assets. once we have finished you will be able to differentiate between profit. 3. Capital supplied for a period of 12 months or more is called long term capital. Financial controls required to ensure that a business is viable are explained with examples 4. (If you are going to start a close corporation this type of capital is called me mbers interest. The major types of capital are: Equity (Owners Capital) This is the capital supplied by the owner/partners of the business. The implications of poor financial man agement are explained with examples. as long as you know the fundamentals of the finance function you can run the financial aspect of your business yourself. Outside Capital (bank loans. SEDA etc. It is also a form of outside capital. Current capital/liability is capital that is used on a short-term basis and should be used to finance part of the current assets. both in getting off the ground and long term. Your first order of duty on the financial front will be to secure start up ca pital. Trade credit is also classified under outside capital since it involves suppliers supplying you with stock/raw materials on credit or a bank overdraft. We talk about mismanagement. The relationship between cash flow and profit is explained for three case studies. Small Business entrepreneurs do not have to hire chartered accountants or specialist s in money markets to help them with the day to day running of their business. Start up capital is the money that you will need to start your business. THE FINANCIAL FUNCTION OF AN ENTREPRENEUR What is the financial function of an entrepreneur and is it really important? YES. nine times out of ten mismanagement means misappropriation of funds not necessarily criminal fraud but simply over spending or overextending credit or cash flow problems.This is all the capital (money) made available by your bank.) y y y y y y Capital is not isolated to money it can come in the form of cash.MODULE 20 Financial Function of an Entrepreneur (SO 3) Explain the financial aspects involved in running an SMME MODULE OUTCOMES 1. Capital supplied for a period of 12 months or less is called short term capital. cash flow and capital. The concepts of start up and working capital are explained with reference to a specific SMME 2. 85 .

your net working capital will be the money you have made from the 5 pockets you sold minus the amount of money you will need to pay for the 10 pockets you bought. A good businessman will look at gross profits on a regular basis. Gross profit is the profit left after you have deducted the cost price of your good from the selling price.00) Your gross profit is thus R 50.00 = R50. Over heads exclude stock purchases these are taken into account when calculating the gross profit. Gross profit percentage is the gross profit divided by the selling price and then represented as a percentage: R150. you go to your fresh produce wholesaler and organise to buy 10 pockets of potatoes on credit. you start your shop and sell 5 of pockets of potatoes. Lets say you are running a fast food business.00 -Cost = R 100. monthly or annual basis.00 Gross profit is NOT the money you can now spend! Gross profit is used to pay for overheads. Analysis of profit helps you to identify products and activities that may require attention. y y y y You buy a box of 10 chocolate slabs for R100. and revise the amount and cost of work that goes into supporting and selling that product. water. Your overheads include things like rent. generally the more gross profit a business makes. OVERHEADS Overheads are the typically recurring expenses that your business will incur on a day to day. insurance.00 for the box (selling price) You minus your cost price from your selling price (Selling Price = R150. wages. electricity.00 each i. the easier it is to pay overheads. Often this analysis will determine that the products selling the highest volume are those that create the most work and offer the lowest gross profit.00 (cost price) You sell the chocolates for R 15.e. Small changes in gross profit have large effect on profitability in a business. PROFIT Profit is the most widely used measure to determine the success or failure of a business.00 R 100. The owner of a small business expects to earn a profit.y Net working capital this refers to current assets minus current liabilities. 86 . week to week. your working capital will be the 5 pockets left plus the monies you made during the sale of the first 5 pockest. you make R 150.00 = 50% If Gross profit is not the money you can spend then why is it important? Gross profit is the MOST IMPORTANT aspect of your business.

ACTIVITY 7 Make a list of all the overheads that you think your business may incur. OVERHEAD ESTIMATED COST 87 .

Cell Phone Any travel expenses that may be incurred by yourself or staff Savings for in case This is usually the last salary that gets paid Borrowed capital or cash flow. bonuses Workmen s compensation. Entertaining customers. tea and coffee for staff Water and Electricity See section on insurance Monthly subscription fees to a service provider or trade magazines Liquor licences. transport. it becomes worth less. Entertainment & Staff Refreshments Municipal Bills: Insurance Internet & Subscriptions: Licences: Legal Fees: Maintenance: Motor Vehicle Costs: Printing and Stationery: Rent/Bond: Staff Costs: Security Levies: Communication: Travel: Contingency: Owners Salary: Loan Repayments: Update your list if you have left anything out. staff functions. but may be required from time to time. At the bre akeven point the business is neither making a profit nor a loss. Fax. Salaries and Wages Overtime. UIF. it is simply covering costs. credit cards etc. withdrawals. monthly service fees etc Certain assets deteriorate while you se them. Equipment and premises maintenance Petrol and Oil Servicing and maintenance Tyres No matter how small your business you will need stationery For your premises For equipment such as photocopy machines etc.Compare your list with mine and see if there is anything that you may have left out. Why is it important to know what your breakeven point is? Well it allows you to know exactly how much money you NEED to make each month to keep the wolf from the door. If you buy a car for R100 000. This makes up your OVERHEADS! BREAK-EVEN POINT Ever heard of a Break-even Point? A businesses break-even point is the amount of money the business needs to generate from sales in order to pay for all its overhead expenses. for tax purposes formulas are used to determine the value of the item on a yearly basis.00 each year you drive it. 88 . SDL Telephone. the bank charges a percentage of the income. Accounting Costs: Marketing & Promotions Bad Debts Credit card commission: Bank Charges: Postage Depreciation: VAT and TAX returns If you offer a credit card facility to your customers. PDP or other licences a business may require This should not be a monthly expense for a small business.

It is a vital piece of information and should be seen as confidential information. In other words it is not something you should need to inform everyone about. How do you calculate the break-even point in a business? Add all your overheads tog ether Divide your overheads by the Gross profit This will give you your break-even point.

your costs price.

Vuyelwa wants to make pancakes and sell them at the local craft market, Her overheads would be: Rental for the stall Gas for her stove Taxi Fair to the market Rental for a pergola tent R 60.00 (for the day) R 150.00 R 30.00 R 100.00 ________ R 340.00 Overhead Expenses

Cost to make Pancakes: Flour Eggs Sugar Cinnamon Lemon Juice Wax Wrap Oil R 35.00 R 25.00 R 15.00 R 8.00 R 12.00 R 10.00 R 16.00 _______ R 121.00 Cost for 200 pancakes R 121.00 / 200 = 0.60c per pancake R 3.00 per pancake

Cost per unit: Selling Price for the Pancakes: 340___ 3.00 -0.60 ___340___ 2.4

=

=

141.666 (142)

So Vuyelwa s break-even point is 142 pancakes In other words she needs to sell 142 pancakes to cover her cost. Now depending on the number of people that visit the craft market, this may or may not be a good way to make money. Perhaps she should think about other types of food, and try a new cost analysis.

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ACTIVITY 8 Working in groups of 4, do some research, decide on a product you think you could sell. Go to the shops and cost the ingredients you will need to make your product. Decide on a selling price for your product and using the overhead analysis above; find your break even point. Once you have done that analyse your break-even point and make a decision on whether you think your idea is viable or not. If not, then go back to the beginning of this Activity and try again until you have a viable product. You have to be reasonable when you determine your selling price, remember people will not pay outrageous prices for goods. CASH FLOW

Cash flow is the money (cash) that moves in and out of your business. Cash flow is NOT profit, it would include profit but it is not entirely profit, it will include the monies needed to pay overheads as well as monies used to purchase new stock, if there was not any money coming into the business there would not be any funds available to pay for expenses. It is important to keep a close eye on the cash flow of your business . Lets have a look at an example: When you are employed, you can usually work out exactly how much money you will be bringing in each month, wether you be paid weekly or monthly is irrelevant, you still kn ow that on X date you will be paid X amount of money. With this information you can plan your month s finances accordingly. Example: Vusi earns R 5 000 a month. He knows that on the 25 th of each month his employer is going to put R 5 000.00 into his ba nk account. So Vusi works out his budget, he knows what he can spend Rent: Telephone: Electricity & Water: School Fees Taxi Fares Groceries R 1 500.00 R 100.00 R R R 400.00 200.00 250.00

R 2 000.00 R 4 450 .00

At the end of the month Vusi knows he has R 650.00 left for emergencies, so if he needs money during the month he knows he has money he can use. When you are an entrepreneur running your own business you have no guarantees as to the money you will or won t be getting so h ow do you budget? Well you would still list all your expenses and at the end of the month you will see how much money you will get in. If your business does well you will have e nough money to pay all your expenses including your salary and there will be money left in your account, your business is then 90

solvent and running at a profit. In the beginning few businesses are able to run so smoothly. So you get to the end of the month, pay your expenses and staff salaries. When it comes to paying the expenses you realise that you have no money left in the bank. You are not bankrupt because you have your stock and your expenses have been paid but you have no cash for emergencies. There are times in all businesses when there is just not enough money at pay all the accounts wether you may want to or not. The first thing to keep in mind is that not all expenses are the same, certain expenses are vital, they simply have to be paid, electricity, water, rent, if those expenses are not settled timeously you may not be in a position to continue your business, so those are the expenses you settle first. For the rest of your bills there are a few tips on how to proceed. 1. Communicate with the company or individual you need to pay. Ignoring their calls or pretending you are not in if they come see you will only exacerbate the problem. Be honest telling them that you are having a cash flow problem but that they will be paid as soon as you are able. 2. Ask for payment terms, if you owe a lump sum ask if you could pay it of over a period of time, in smaller payments. 3. Try to find common ground, find out if there is a need that they might have that you could help with (barter system). 4. DO NOT make promises you can t keep. Don t promise the cheque will be there on Friday when you are not 100% certain that you will be able to pay on Friday, rather be honest and say you are not sure but you will try, should this not work out, call them timeously and let them know that there is a complication. 5. Don t overextend your self, don t agree to pay or actually pay more than you can realistically afford, overextending will only jeopardize your cash flow even further. 6. Credit cards are NOT the answer! The temptation to use your credit cards to alleviate financial stress is huge, just pull out the card and pay the bill. The problem is that it is a short term solution, you still have to pay the money back to the bank. You are not removing the problem just transferring i t. Your supplier is waiting for money which you pay back with (normally) between 5 10% interest on late monies. Credit card companies usually charge in the vicinity of 25% interest. Credit cards look attractive because they are: y simple to use, y the money is available immediately, y the monthly payments look low The reality of the situation however is: y Interest rates are really high y Debt is not paid just transferred to another account y Next months cash flow is now hampered by having to service extra debt y Gives you a false sense of security Constant use of a credit card for business can lower your credit rating thus making it more difficult for you to get access to credit or lower interest rates.

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SATISFYING SARS SOUTH AFRICAN REVENUE SERVICES American President Benjamin Franklin s quote in this world nothing is certain but death and taxes is as true today as it was then. The types of contract that an SMME could enter into are named and a contract wording is interpreted and explained in plain language. It is not a social grant! SDL: All businesses are required to pay a monthly contribution to the SDL(Standard Development Levy). and need medical attention. Should an employee by injured during working hours. 2. the employee can claim from workman s compensation. the company is required to pay an addition 1% on behalf of the employee. Almost since the beginning of time or at least the beginni ng of civilisation. UIF: If you employ any person on a full time/permanent basis you are required to register your business and that person for UIF. All South African citizens from the poorest of the poor. are required to pay tax in one form or another. It thus protects the employer from having to cover the bills and helps the employee who may not have medical aid to afford medical attention. This is also a fund run by the government and protects the employer while providing much needed support to employees. and they will receive 45% of their monthly salary for a period of no longer than 6 months. This fund is run by the government and should the employee become unemployed due to maternity. 1. All employees pay a contribution of 1% of their annual salary to the UIF (Unemployment Insurance Fund). Nothing has changed except maybe the tax scales. This means that the more you earn the higher the percentage of personal tax you pay. to the richest of the rich. retrenchment or being fired. they can apply to the fund. (in the line of work). SDL and Workman s Compensation. 3. 6. until they are able to find new employment. Persons who w illing give up their employment are not eligible to claim from the UIF. Over the years Trevor Manual (Minister of Finance) has increased the taxable ceiling thus increasing the tax burden on the wealthy but 92 . The tax responsibilities of an SMME are explained and an indication is given of when a business is liable for each form of tax All businesses who have any employees what so ever are required to register for UIF.MODULE 21 TAX (SO 3) Explain the financial aspects involved in running an SMME MODULE OUTCOMES 5. The fund will cover all medical expenses incurred by the employee. This is also a fund run by the government for the upliftment and education of employees. Tax is the gove rnments number one source of income. WORKMAN S COMPENSATION: The workman s compensation fund is paid on a monthly basis by the business. If a company offers educational incentives for it s employees like sending them on courses to further their education the company may claim from the SDL. taxes have been an undeniable fact. The income tax act of 1962 lays out a sliding scale for tax.

The value added would be the value of the product plus the profit. Pest control and maintenance on buildings from which the business operates. groceries. hotel accommodation etc) Development and/or registration of a patent. trademarks. buildings. (taken from: Entrepreneurship and New Management ventures. Subscriptions to trade/professional associations associated with your line of work. Any expenditure on scientific research done with the express purpose of development of the business Travelling expenses incurred while on business trips (petrol or airfares. Below is a brief list of these non-deductible expenses: y y y Capital expenditure (the purchase of new machinery and or buildings) Personal domestic expenditure (new furniture for your house. e. designs or royalties that form an integral part of your business. Lets look at the table below as an indication of how VAT is paid. and businesses. copyright or design. The cost price of your trading stock. machinery and articles used in the business. and cleaning costs. Income tax is assessed on all taxable income in any one tax year. in other words the extra money it makes. The income tax payments for businesses and provisional tax payers are usually split up over two payments per year (every six months).providing much needed tax alleviation for the poor. Van Aardt et al 2000:pg 239) 93 . Any rental of land.g. Bad debts. If you run your business from home you may deduct part of your home expenses. over and above running costs. telephone. In other words you would only pay tax on the profit you make from any item. y y y y y y y y y y Certain expenses cannot be deducted from your annual taxable income. rental. personal vehicle etc) Expenses you plan to claim back from your insurance or other third parties. Below is a list of expenses that may be deducted from the taxable income of individuals. Expenditure on improvements or renovation of the buildings leases as business premises. rates.) y y Depreciation which is wear and tear on vehicles. Interest paid on busines s loans. What is taxable income? Taxable income is all income (cash) that the business makes in profit. These deductions however can only be a portion of the total bill. VAT VALUE ADDED TAX All businesses with an annual turnover that exceeds ____________________ are required to register for and pay VAT. money that is owed to you by debtors who are unable to make the payments . (This is a brief li st for further details please see the 2008 tax laws. Companies and close corporations pay a flat rate of 35% of their total profit in tax. machinery. The tax year usually runs from 1 March to 28 February of each year. VAT is the tax on the value added to a product. trademark.

Your customer pays the VAT to you.00 per loaf.00 on each loaf you sell. The 84c you charge in VAT goes into your output VAT: If you buy 10 loaves: Input vat = 10 x 70c = R 7. We said that the R 5. Now we have to take the VAT into account.00 per loaf The tax man gets R 0.62c.00 Output VAT = 10 x 84c = R8. (Sasko will pay that to the tax man) Now you want to make R 1. you are then required to pay this amount on to the receiver of revenue.30.00 you pay per loaf includes the VAT so we have to minus the 14% because we can claim this back from the tax man.00 R 600.00 R 2 000.00 R 1 400.38 a difference of R 0. You then resell the item including VAT. When you purchase stock or raw materials for your business you are entitled to deduct the VAT you paid on the item.14 You now sell the bread at R 6. You buy the bread at R 5. The 70c you pay in VAT goes into your input VAT.00 Value added R 1 000.84c per loaf. Therefore you can claim 70c back for each loaf of bread you buy.00 R 2 000.Selling price Manufacturer manufactures and sells the product Wholesaler resells its Retailer resells it TOTAL R 1 000.00 R 400.00 to your cost price of R 4.00 The receiver of revenue will supply you with a VAT return form on a bi -monthly basis. This form has to be filled in and returned with the relevant payments before the 8 th of the month. so you add R1.00 R 280. Sasko sells you the bread at R 5.14 per loaf.38 + R 1. This is called input VAT. R 5.00 profit on each loaf you sell.00 VAT payable R 140.00 R 84. then you still need to add the VAT you will have to pay: R 5. it is the VAT that you paid. For example: You purchase bread from Sasko to sell in your shop.14 per loaf The bread costs you R 4.40 94 . R 4.00 R 56.30 per loaf You make a profit of R 1. (this five rand includes 14% VAT) You then want to make a profit of R 1.00 = R 5.00 / 1.38 + 14% = R 6.38.14% = R4.00 per loaf You sell the bread at R 6.

R 1 300. IRP -2 this form must be completed by all employees.00 per month would pay 35% tax ( R 17 500. pension. Insurance is there for the 95 . disciplinary actions and termination of employment. For example if you were to earn R 10 000.Total VAT owing by you = R1.00 may pay 13%. ADDITIONAL REQUIREMENTS Insurance: Although insurance is not actually a legal requirement for owning a business it is definitely necessary. and any other perks or benefits from each employee. these are commonly refered to as the tax tables or tax scales. A business needs to appoint a public officer to represent it for tax purposes. IRP-5 this form reflects the annual earnings. The employer needs to deduct the correct amount of money (as stipulated by the income tax tables. They give you a list of income and the relevant taxable amount for each level of income.14 that is the amount you pay the tax man.00 in tax). you really need it .00 would be exempt from tax and a person earning R 50 000. All employers are required to have a copy of the IRP10 forms. working hours. There are 3 forms that employers are required to fill in with regard to income tax.00. PAYE UIF. Employees who earn less than R __________ per month are not required to pay personal tax. available from SARS) from the employees monthly salary and transfer this money to the Receiver of revenue. these can be downloaded from the Department of Labour or collected from your nearest Labour office.00 per month you would pay 13% of your salary to tax i. sick leave. leave. Insurance may seem like a waste of money that you may or may not get back. giving their full personal particulars IRP-4 this form is used to fill in the monthly return of tax as deducted from the employee as stipulated by the tax scales. The Basic Conditions of Employment stipulates all the laws that govern employees and employers and endeavours to protect the rights or both. However the burden of actually paying the tax falls on the employer. As stated earlier this is a sliding scale so while someone earning R 10. PAYE PAY AS YOU EARN Essentially PAYE is the personal tax payable by your staff to the receiver of revenue on a monthly basis. 2. Other legal requirements to consider would be the Basic Conditions of employment. Companies an d corporations require the services of an auditor in addition to the public officer because their books need to be audited for tax purposes. overtime rate. One of the rules for insurance would be if you can t afford it.e. a person earning R 5 000. 1. The IRP5 is done annually at the end of February. 3.000. Minimum wage.

eventuality that something does go wrong. Contracts: All businesses will at some point be involved in a contract. contracts cannot stipulate conditions that are in contravention of the employment act but they can protect both the employer and employee. Are there any similar businesses in the area? Are there enough customers to satisfy both businesses? 96 . Privately & Business. Make a list of the legal requirements and how you plan to satisfy them. contact a number of insurance companies. 4. ACTIVITY 9 1. It is advisable to draw up employment contract with all employees. Contracts between your business and other businesses to either purchase or supply stock are also there to protect both sides of the deal. Find out what the minimum amount of income is before you have to register for tax. Decide on where the business will be located. Shop around. Write an analysis on what type of equipment you will need 5. There are various forms of insurance:  Personal accident and life insurance  Fire and general property insurance  Burglary insurance  Plate-glass insurance  Goods in transit  Money in transit  Vehicle insurance Your insurance broker can advise you. and in South Africa the crime rate is high so it is definitely advisable to have some form of insurance. you will be surprised at the differences between the cost of their policies. be it an employee contract o r a contract between yourself and a supplier or customer. Check the policies carefully because some may seem cheaper but the benefits are substantially less. 3. Decide on the type of business you would like to form for running your business. 6. 2. Keep in mind what the business is selling and what the different requirements are. It is advisable to contact an attorney should you require a contract drawn up or advice before you enter a contract.

97 .

2.2. Insurance for SMME s 7.5 & 6 AC 5 & 6 AC 1. Risks associated with running an SMME 6. Needs Assessments 4.3 & 4 AC 5 & 6 ACTIVITIES 1. Training Schedules 3. Networking 5. Personal Assessments 2.2 2 3 4 5 6 7 8 9 ASSESSMENT DATE COMPLETED 98 .1 1. TAX SPECIFIC OUTCOME SO1 SO1 SO1 SO1 SO2 SO2 SO3 SO3 ASSESSMENT CRITERIA AC 1&2 AC 3 AC 4.5 & 6 AC 7 & 8 AC 1. Potential for an SMME.DAILY RECORD SECTION TITLE SMME s MODULE 1. Financial Function 8.4.

SUCCESS FACTORS (SAQA US ID 110507) 99 .

Business. It provides an understanding of their application through studying SMMEs. Specific Outcomes and Assessment Criteria: 100 . export promotion. skills in place. If the material is reproduced or quoted.sustainability Strategies and tools include (the categories of) industrial recruitment and place marketing.All qualifications and unit standards registered on the National Qualifications Framework are public property. advisory and development centres. investment promotion (domestic and foreign). community development. human capital development and capacity building. key stakeholder involvement. Thus the only payment that can be made for them is for service and reproduction. or seek to be. the South African Qualifications Authority (SAQA) should be acknowledged as the source. UNIT STANDARD RANGE Success factors include: available resources. People credited with this Unit Standard are able to: Define the concept of success in the local economic development environment and identify and discuss a range of factors th at contribute to success Identify the success factors relevant to a specified SMME promotion project and present them in a report Apply a success factor analysis process to some other local economic development strategies and tools. Economics and Accounting NQF LEVEL Level 5 REGISTRATION END DATE 2010-01-23 LAST DATE FOR ACHIEVEMENT 2014-01-23 CREDITS 12 SAQA DECISION NUMBER SAQA 0160/05 UNIT STANDARD TITLE Identify and explain the typical success factors for SMME promotion and a range of other local economic development strategies and tools REGISTERING PROVIDER LAST DATE FOR ENROLMENT 2011-01-23 This unit standard does not replace any other unit standard and is not replaced by any other unit standard. It introduces the learner to measures of success for typical local economic development strategies and tools. PURPOSE OF THE UNIT STANDARD This Unit Standard is intended for people who are. political will. Commerce and Management Studies ABET BAND Undefined REGISTRATION STATUS Reregistered UNIT STANDARD TYPE Regular REGISTRATION START DATE 2007-01-23 SUBFIELD Finance. local and regional trade. It is illegal to sell this material for profit. LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING It is assumed that learners are competent in Communication at NQF Level 4. direct interventions. active in the local economic development context in South A frica. SOUTH AFRICAN QUALIFICATIONS AUTHORITY REGISTERED UNIT STANDARD: Identify and explain the typical success factors for SMME promotion and a range of other local economic development strategie s and tools SAQA US ID 110507 ORIGINATOR SGB Economics FIELD Field 03 .

ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 1. SPECIFIC OUTCOME 3 Apply a success factor analysis process to some other local economic development strategies. Anyone assessing a learner against this Unit Standard must be registered as an assessor with the relevant ETQA. ASSESSMENT CRITERION 2 2. or with an ETQA that has a Memorandum of Understanding with the relevant ETQA. The concept of success is defined in the local economic development environment. The link between these factors and a successful outcome is discussed by using an example of a local economic development project or programme. ASSESSMENT CRITERION 3 3. The success factor analysis process is applied to the selected local economic development strategies and tools and the findings are compiled and presented in the form of a report with recommendations to encourage future success. Information on what constitutes success in the case of a specified SMME promotion project is gathered from a variety of sources. Any institution offering learning that will enable achievement of this Unit Standard or will assess this Unit Standard mus be t 101 . 2. ASSESSMENT CRITERION 3 3. OUTCOME NOTES Define the concept of success in the local economic development environment and identify and discuss a range of factors that contribute to success. UNIT STANDARD ACCREDITATION AND MODERATION OPTIONS 1. ASSESSMENT CRITERION 3 3. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 1. SPECIFIC OUTCOME 2 Identify the success factors relevant to a specified SMME promotion project. stakeholders and role players. A development plan for taking corrective action to achieve a greater level of success is compiled and presented in the form of a report with recommendations to encourage future success. A success factor analysis process is defined by drawing an annotated diagram. The selected local economic development strategies and tools are described in terms of the specific local economic development goal(s) they are expected to achieve. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 1. OUTCOME NOTES Apply a success factor analysis process to some other local economic development strategies and tools. Factors that contribute to success are identified in terms of the local economic development environment. ASSESSMENT CRITERION 2 2.SPECIFIC OUTCOME 1 Define the concept of success in the local economic development environment. A list of relevant success factors is compiled and how each will be measured isagreed with reference to quantitative and qualitative assessment criteria. ASSESSMENT CRITERION 2 2.

UNIT STANDARD CCFO COMMUNICATING 102 . Identify the success factors relevant to a specified SMME promotion project and present them in a report Apply a success factor analysis process to some other local economic development strategies and tools. Identifying and explaining the typical success factors for SMME promotion and a range of other local economic development strategies and tool according to the assessment criteria for specific outcome: Define the concept of success in the local economic development environment and identify and discuss a range of factors th at contribute to success. and the time value of money Nature of own work context in terms of the various success factors i. UNIT STANDARD CCFO WORKING Work effectively with others as a member of a team. e.accredited as a provider with the relevant ETQ.g. analyse. e. Compiling a list of relevant success factors and how each will be agreed according to assessment criterion: A list of relevant success factors is compiled and how each will be measured is agreed with reference to quantitative and qualitative assessment criteria. Therefore. Identify the success factors relevant to a specified SMME promotion project and present them in a report Apply a success factor analysis process to some other local economic development strategies and tools. Identifying and explaining the typical success factors for SMME promotion and a range of other local economic development strategies and tools according to the assessment criteria for specific outcome: Define the concept of success in the local economic development environment and identify and discuss a range of factors th at contribute to success. UNIT STANDARD CCFO COLLECTING Collect. or with an ETQA that has a Memorandum of Understanding with the relevant ETQA 3. impact etc. e. assessor or provider institution that is accredited by the relevant ETQA or with an ETQA that has a Memorandum of Understanding with the relevant ETQA. contextual awareness Details of local economic development projects and programmes and their histories The assessment process and rules of evidence Benchmarking and best practice and its application to local economic development. organize and critically evaluate information by. organization and community by. Compiling and presenting a development plan for corrective action according to assessment criterion: A development plan for taking corrective action to achieve a greater level of success is compiled and presented in the form of a report with recommendations to encourage future success.e.g. Moderation of assessment will be overseen by the relevant ETQA according to the moderation guidelines in the relevant qualification and the agreed ETQA procedures or with an ETQA that has a Memorandum of Understanding with the relevant ETQA 4. UNIT STANDARD ESSENTIAL EMBEDDED KNOWLEDGE Budgeting and/or financial analysis Measures of performance. group. UNIT STANDARD DEVELOPMENTAL OUTCOME N/A UNIT STANDARD LINKAGES N/A Critical Cross-field Outcomes (CCFO): UNIT STANDARD CCFO IDENTIFYING Identify and solve problems in which responses display that responsible decisions using critical and creative thinking have b made een by. anyone wishing to be assessed against this Unit Standard may apply to be assessed by any assessment agency.g.

Describing the selected local economic development strategies and tools in terms of the specific local economic development goal(s) they are expected to achieve according to assessment criterion: The success factor analysis process is applied to the selected local economic development strategies and tools and the findin are gs compiled and presented in the form of a report with recommendations to encourage future success.Communicate effectively using visual. If the material is reproduced or quoted.g. Defining a success factor analysis process according to assessment criterion: A success factor analysis process is defined by drawing an annotated diagram. 103 . Thus the only payment that can be made for them is for service and reproduction. e. QUALIFICATIONS UTILISING THIS UNIT STANDARD: ID Core 36438 QUALIFICATION TITLE National Certificate: Local Economic Development LEVEL Level 5 STATUS Reregistered END DATE 2010-01-23 All qualifications and unit standards registered on the National Qualifications Framework are public property. Discussing the link between these factors and a successful outcome by using an example of a local economic development pro ject or programme according to assessment criterion: The link between these factors and a successful outcome is discussed by using an example of a local economic development project or programme Compiling and presenting a development plan for taking corrective action to achieve a greater level of success in the formof a report with recommendations to encourage future success according to assessment criterion: A development plan for taking corrective action to achieve a greater level of success is compiled and presented in the form o a f report with recommendations to encourage future success. mathematical and/ or language skills in the modes of oral and/ or written presentation by. It is illegal to sell this material for profit. the South African Qualifications Authority (SAQA) should be acknowledged as the source.

If there is a down turn in business you will immediately be aware of it and pre-emptive steps can be taken to secure the finances. however being book smart does not necessarily mean you have the brains to run a company. An education is always worthwhile. HR. What does every businessman/woman need to succeed? Guts: Guts refers to instinct. a dedicated commitment to attain a goal that you have set. someone to love or is it being financially rich? Well in the grand scheme of life we are lead to believe that succes s is to be wealthy! So. The concept of success is defined in the local economic development environment. is it having a good education. an irresistible desire to have your own business. grab it with both hands and don t let go. wage clerk! 104 . because a small business usually has limited staff the owner must do everything him/herself. Use common sense. Without capital you have no where to go. combined with knowledge of the business you are trying to run. In a small business venture success is when you are able to be self sufficient. experience and brainpower to make the right decisions. A business owner must also be aware of his/her limitations. if you have any way to study. if you want to start your own business make sure it s something you are passionate about. When your company makes enough money to pay its bills and support you in a comfortable fashion. That your tax us up to day and everything balances. marketing. another important key to success in business is ensuring that your business books are in order. procurement manager. There are NO nasty shocks awaiting you. It is best if you have your own money to invest but short of that a loan with a good interest rate and enough running capital to keep your business running in the positive is a MUST! Brains: Capital: According to an article in the Gauteng Business 21 June 5 July 2005. What is success? How do we define success? To different people success means different things. Having your books in order allows you to apply for government tenders. stock control. a happy life. 2. The link between these factors and a successful outcome is discussed by using an example of a local economic development project or programme. One of the main factors that can help you to achieve this goal is to enjoy what you are doing. technical know how. Don t start a business just because it s something to do and because it provides an income. As the owner you are responsib le for all the functions of the business from Accounting. an innate instinct. if your business is not making you rich is it a failure? Do we measure success against that bar that is Donald Trump? NO. MODULE OUTCOMES 1. as well as ensuring that you have a handle on the pulse of the company. In flying they call it flying by the seat of your pants. Factors that contribute to success are identified in terms of the local economic development environment 3. You don t have to have the keys to Grace Land to be successful.MODULE 22 Success SO1 Define the concept of success in the local economic development environment. production manager.

sabusinessplans. .za) One of the greatest concerns for small business is not however planning but usually cash-flow and/or Crime. the taking of calculated risks and charm and charisma. One of the greatest of these being technology. director of business banking at Standard Bank. availing yourself of the latest technology and technological advances can give your business the competitive edge it needs to survive. (www. businesses that have access to the internet are more able to seek advice and keep abreast of new developments. While the above factors play a role and influence your business the key factor for success according the numerous sources is what is called the X -Factor they dynamic leadership ability of the entrepreneur. businesses that make use of professional and mentoring services have a more strategic focus on the business as o pposed to and operation focus. he is working on the business.A survey conducted in 2007 reveals that a range of resources give small businesses a competit ive edge. as opposed to working in the business. Owning a business is NOT for sissies! 105 . Access to high speed internet links such as ADSL. 3G or wireless also played a key factor. In the survey it was discovered that the use of computers dir ectly linked to the enhanced competitiveness of the business. according the Melt van der Spuy. Back to knowing your strengths and weaknesses. HSDPA. Having your business listed on the internet is also highly advisable since many people nowadays search on line. his prowess in the business area.co. Using software packages such as Accounting software can streamline the accounting process in your company and save you a huge amount of time.

A development plan for taking corrective action to achieve a greater level of success is compiled and presented in the form of a report with recommendations to encourage future success.MODULE 23 Success factors for a fast food takeaway. Information on what constitutes success in the case of a specified SMME promotion project is gathered from a variety of sources. 2. MODULE OUTCOMES 1. SO2 Identify the success factors relevant to a specified SMME promotion project. stakeholders and role players. A list of relevant success factors is complied and how each will be measured is agreed with reference to quantitative and qualitative assessment criteria. 106 . 3.

how many toasted sandwiches you sell and how many salad rolls you sell. It is basically a list of things that you need and need to plan and think about in ord er for your business to succeed. Secondly you could then foc us on the sales of the salad rolls. you increase your advertising and encourage your staff to encourage customers to buy salad rolls. Critical success factors are not the same for all businesses. some businesses may have more critical factors than others. With this information you could also determine whether you got new customers with your salad rolls or if the burger sales were down significantly you could determine that b urger customers were now buying rolls. profit and a positive cash flow. E. If your sales don t improve then perhaps it s time to ditch the salad rolls and try something else? Money: Your future: Customer satisfaction: Quality: Product/service development: Income. Each of these factors should be measurable. if your sales increased. MODULE OUTCOMES 1. At the end of the month you can go and tally your sales and see if your marketing worked. Setting and maintaining a high level of service.g. If you knew that you sold 20 burgers. The selected local economic development strategies and tools are described in terms of the specific local economic development goal(s) they are expected to achieve 3. Increasing profitable products. products and income. Securing new customers and distributors Ensuring your customers are happy. 35 toasted sandwiches and 10 salad rolls how would this help you? Well you should have done your cost analysis so you will know how much each product costs to make so you will be able to determine which of your sales are the most profitable and which one makes the most money. The success factor analysis process is applied to the selected local economic development strategies and tools and the findings are compiled and presented in the form of a report with recommendations to encourage future success. Keep in mind the critical factors are items that are imperative to the running of your business. Critical Success Factors Critical success factors are activities that are needed to ensure that your business is a success. you could decide that for the next month you are going to do a promotion on salad rolls.MODULE 24 Success factors SO3 Apply a success factor analysis process to some other local economic development strategies. if you measure an area it becomes a focus. Your ability to keep business running smoothly Intellectual capital: Strategic relationships: Employee attraction & retention: Sustainability: 107 . A success factor analysis process is defined by drawing an annoted diagram 2. Attracting qualified employees and keeping them happy. Keeping up to date with new trends and implementing new ideas to increase your customer base and keep old customers happy. you run your fast food outlet and you sell your goods everyday but you never stop to work out how many hamburgers you sell. New business sources. below is a list of things that could be on your list.

You employ someo ne to do the cooking for you. web pages or customer complaint boxes or files. the staff. but for some small businesses more so. When we make use of this method of analysis we look at 4 critical areas of business. Learning and growth: here we look at any businesses key keepers of knowledge. It is not a once of plan you come up with and then file. In all businesses this is a key area. Business process: Internal management processes must be monitored and tested to ensure that the product/service your business offers is functional and suites the needs of your customers and shareholders. ensure that your staff and happy and well trained. In doing this you will improve internal and external communications and keep an eye on the company s performance against a given set of goals. another key issue would be if your chef becomes unhappy and leaves you will then have wasted the money you invested in training him/her and you will lose a good employee. once a week or as often as is necessary you should look over the plan and refine areas that are not working. So you need to keep control of the situation. This method of analysis was developed by Professor Robert S. what are you going to do to rectify the problem? Financial: Your companies financial details need to be available all the time. make sure he knows all the latest trends and he/she makes use of them. the information in the books must be up to date and accurate. They use the information gathered from these sources to determine wether the customer is happy/satisfied with the service deliver of your business. If your company can afford it. Norton . Customer: Is the customer happy with the product/service that you offer? Many businesses nowadays have toll free call centres. It is a work in progress. Below is a schematic diagram that depicts a basic balanced scorecard. David P. or simply streamline processes ensuring that your business operates as effectively as possible thereby generating enough money to support itself. your customers will complain and stop coming to buy from you. Let s say you run your fast food takeaway and you are a good businessman but a lousy chef.Success factor analysis? Let s try that again in ENGLISH!!!! Simply put a success factor analysis is a way of analysing (studying) various aspects of your business and trying to find the best way to correct any problems you may be encountering. This process of analysis should be an ongoi ng process whereby your business is continually improving. as your business grows you can add levels to the scheme and add more detail. If the chef becomes unhappy and his food becomes dissatisfactory. One of the most well known success factor analysis methods is called the balanced scorecar d method. Kaplan. send your chef for courses. You need and rely on this person to make sure that the food he/she prepares is of the highest quality and it is what your customers want. Often in small businesses where the owner is also the accountant the workload becomes too heavy and one of the first things to be neglected is the financial side of the business. 108 . This backlog causes delays in payments and reconciliations and can ultimately leave you in some hot water. Should the customer not be happy. it is a system used to bring business activities in line with the vision and strategy of the organisation.

109 . PLEASE keep in mind this is a BUSINESS presentation. find out about SWOT analysis. What is it and how can it be used in your business? Prepare a presentation on SWOT analysis to be presented to th e class.ACTIVITY Working in groups of 3. make sure you are WELL prepared and use business manner and language. Any information you use must be credited in a bibliography. Guidelines: y y y You may make a poster or design a Power Point Presentation to accompany your presentation.

He s business has been going for 3 years now but he doesn t seem to be making enough money to grow his business. analyse John s business and give ideas on ways he could improve the business. for the last 3 months he has not been able to keep up to date with his company s accounts so some of his creditors have not been paid.ACTIVITY John runs a fast food take away in Paarl. an assistant chef. John works very hard and often gets home late at night. Recently a fast food o utlet opened down the road from John. His staff are getting tired of working for him because he is always in a bad mood because the money is tight. he thinks they may be taking some of his customers but he is not sure how to get them back. 2 cashiers and a janitor. use the same guidelines as you did i n the previous activity. Sometimes the orders get put on top of each other so the cu stomer at the bottom has to wait the longest although their order was placed first. he then has to run to the spar and buy rolls there. He employs a short order chef. Present your ideas in the form of a presentation. John has thought about using a computer in the shop but his staff don t know how to use computers so they write down all the orders and put them in the kitchen. 110 . Make a list of Critical success factors that would play a role in John s business. Some of the customers say that they don t come to John s shop anymore because it takes too long to get the food. John also often runs out of things that he needs like rolls for burgers. Using either SWOT or Balanced Scorecard analysis.

Marketing For SMME s 111 .

UNIT STANDARD RANGE N/A Specific Outcomes and Assessment Criteria: SPECIFIC OUTCOME 1 Identify the success factors of a business. Assessing the performance of a business in meeting its objectives. It is illegal to sell this material for profit. the South African Qualifications Authority (SAQA) should be acknowledged as the source. If the material is reproduced or quoted. The qualifying learner is capable of: Identifying the success factors of a business. Accountancy and Communications at NQF level 4 or its equivalent. Thus the only payment that can be made for them is for service and reproduction. Identifying potential improvements that a business can make to be more successful. SOUTH AFRICAN QUALIFICATIONS AUTHORITY REGISTERED UNIT STANDARD: Identify business success issues for SMMEs SAQA US ID 115816 ORIGINATOR SGB Generic Management FIELD Field 03 . PURPOSE OF THE UNIT STANDARD This Unit Standard is designed for persons who are responsible for evaluating the factors that contribute to the success of a business and who have to give advice to businesses on how to make them more successful. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 The factors that are contributing to the success of a business are identified and an explanation given of the role each playsin that 112 .All qualifications and unit standards registered on the National Qualifications Framework are public property. Mathematical Literacy at NQF Level 4.Business. LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING It is assumed that learners accessing this Unit Standard are competent in: Computer Literacy at NQF Level 3. Commerce and Management Studies ABET BAND Undefined REGISTRATION STATUS Reregistered LAST DATE FOR ENROLMENT 2011-10-30 UNIT STANDARD TYPE Regular-Fundamental REGISTRATION START DATE 2007-10-30 SUBFIELD Generic Management NQF LEVEL Level 5 (National Diploma) REGISTRATION END DATE 2010-10-30 LAST DATE FOR ACHIEVEMENT 2014-10-30 CREDITS 6 SAQA DECISION NUMBER SAQA 0160/05 UNIT STANDARD TITLE Identify business success issues for SMMEs REGISTERING PROVIDER This unit standard does not replace any other unit standard and is not replaced by any other unit standard.

SPECIFIC OUTCOME 3 Identify potential improvements. Anyone assessing a learner against this Unit Standard must be registered as an assessor with the relevant ETQA. ASSESSMENT CRITERION 2 The performance of the business is evaluated against its stated objectives and a written report made of the findings. 113 . ASSESSMENT CRITERION 3 Ways to monitor the implementation of the improvements are written into a manual so as to aid the early identification of pro blems and any amendments that need to be made. Moderation of assessment will be conducted by the relevant ETQA at its discretion. ASSESSMENT CRITERION 3 The strengths. UNIT STANDARD ACCREDITATION AND MODERATION OPTIONS An individual wishing to be assessed (including through RPL) against this Unit Standard may apply to an assessment agency. Business evaluation techniques.success. Basic business principles. the balance sheet. assessor or provider institution accredited by the relevant ETQA. UNIT STANDARD ESSENTIAL EMBEDDED KNOWLEDGE Sources of information to determine operational success. the cash flow statements and any other financial reports and reported on in a format understandable to the client. ASSESSMENT CRITERION 2 An action plan to implement the improvements is drawn up giving sequences of actions and timelines for implementation. weaknesses. SPECIFIC OUTCOME 2 Assess the performance of the business in meeting its objectives. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 Potential improvements are identified and their intended effects on the business are explained to the client. ASSESSMENT CRITERION 2 The factors that are hindering the performance of a business are identified and an explanation given of how they are impeding the success of the business. ASSESSMENT CRITERION 3 The financial status of the business is evaluated using the profit and loss account. Any institution offering learning that will enable achievement of this Unit Standard or assessing this Unit Standard mustbe accredited as a provider with the relevant ETQA. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 The objectives of a business are identified using its mission and vision statements and its business plan. opportunities and threats of the business are analysed based on the real situation and a written report made indicating how strengths and opportunities can be maximized and threats and weaknesses minimized. ASSESSMENT CRITERION 4 Performance data is communicated and discussed with client using language and formats that are appropriate for the business and the client.

114 . UNIT STANDARD CCFO COLLECTING Collecting. UNIT STANDARD CCFO ORGANISING Organising and managing oneself and one`s activities responsibly and effectively to collect data correctly and to write reports and recommendations. group. If the material is reproduced or quoted. the South African Qualifications Authority (SAQA) should be acknowledged as the source. analysing. UNIT STANDARD CCFO DEMONSTRATING Demonstrating an understanding of the world as a set of related systems by recognising that problem-solving contexts do not exist in isolation when seeing that poor performance in one area of the business effects the profitability and viability of the busine as a ss whole. UNIT STANDARD CCFO COMMUNICATING Communicating effectively using visual. social and economic factors affecting the business community. Thus the only payment that can be made for them is for service and reproduction. QUALIFICATIONS UTILISING THIS UNIT STANDARD: ID Elective Elective 48886 59550 QUALIFICATION TITLE National Certificate: Business Advising National Certificate: Agricultural Extension LEVEL Level 5 Level 6 STATUS Reregistered Registered END DATE 2010-10-30 2011-02-06 All qualifications and unit standards registered on the National QualificationsFramework are public property. mathematical and/or language skills in the modes of oral and/or written persuasion when writing reports. organization when looking at the way the business functions and eliciting information from staff members. UNIT STANDARD CCFO WORKING Working effectively with others as a member of a team. organising and critically evaluating information when demonstrating competence in all aspects of this Unit Standard. UNIT STANDARD CCFO SCIENCE Using science and technology effectively when writing reports and making recommendations using the computer. Technological and scientific innovations affecting the business community. UNIT STANDARD DEVELOPMENTAL OUTCOME N/A UNIT STANDARD LINKAGES N/A Critical Cross-field Outcomes (CCFO): UNIT STANDARD CCFO IDENTIFYING Identifying & solving problems in which responses display that responsible decisions using critical and creative thinking hav been e made when identifying how a business can improve its effectiveness and profitability. It is illegal to sell this material for profit.Political.

The following are guidelines. The performance of the business is evaluated against its stated objectives and a written report made of the findings. they vary greatly from company to company there are however a few guidelines that should be followed when writing a mission statement for your company. It should provide the answer to the question. y y What needs or opportunities to we address? How are we going about addressing these needs? What do we do? 115 . opportunities and threats of the business are analysed based on the real situation and a written report made indicating how strengths and opportunities can be maximized and threats and weaknesses minimized. a vision statement should be in the present. the balance sheet. its goals. This SO is covered in the previous three modules. You should include the values of your company. The company s pledge towards its customers and the objectives is employs to ensure it accomplishes its mission. A vision statement focuses on the company s future. what you offer in terms of products or service. the cash flow statements and any other financial reports and reported on in a format understandable to the client. The objectives of a business are identified using its mission and vision statements and its business plan. The financial status of the business is evaluated using the profit and loss account. Why do we exist? It defines the company s purpose. for people who are part of the company and outsiders. MODULE OUTCOMES 1. 2. it gives an outlook and what the company hopes to achieve. 4. they don t have to be put in the same order. keep in mind the difference between a mission and vision statement. Mission and Vision Statements: A mission statement is a short description of a company or organisation s purpose. 2. Performance data is communicated and discussed with client using language and formats that are appropriate for the business and the client.MODULE 25 SO 1 Identify the success factors of a business MODULE OUTCOMES 1. The factors that are contributing to the success of a business are identified and an explanation given of the role each plays in the success. The strengths. SO2 Assess the performance of the business in meting its objectives. weaknesses. There is no hard and fast rule regarding what your mission or vision statements should be. Financial Assessment of a business. 3. your primary target audience. The factors that are hindering the performance of a business are identified and an explanation given of how they are impeding the success of the business. 3.

write a short report on what you think the company does what its policy towards customers is and if you think it sounds plausibl e. This can be done by the company owner. The financial year usually runs from 1 March to 28 February of the following year. Choose one of the companies and write a short report and what you think the financial position of the company is. Over the last couple of years accounting has been made simpler due to the advent of accounting software packages. For a regular partnership. are they running well. It shows the difference between the income and expenses and shows wether the company is making a profit or running at a loss. a comprehensive record of all financial transactions is kept. Income Statement: Statement of Retained Earnings: Statement of Cash Flow ACTIVITY Look at the attachments. income statement (this shows income and expenses). CC or sole proprietor you will not need audited books. let s go through the financial statements of the various companies. Very few companies still keep manual books. are they making a profit? Do they seem to be paying their bills comfortably or do you think there are cash flow problems? If you have concerns give one or two ideas of how you think these problems could be solved. This statement shows the amount of earnings that has been accumulated since the company opened. During the financial year of a company.y What values and principles do we employ to guide our efforts? ACTIVITY Look through the mission statements provided .) At the end of the financial year. owners equity and a cash flow statement. the information gathered is used to prepare the businesses financial statements. 116 . The statement of cash flow shows where all the cash the company received for the year comes from as well as all the expenses paid for the year. L et s have a closer look: Balance Sheet: The balance sheet shows everything the company owns (assets). This total will then be the opening balance for the following year. The balance sheet is like a photo of the financial position of a company or organisation. an accounting clerk or you could out source it to an accountant. The amount of profit the company has made since it s inception. Does the mission statement answer the necessary questions? UNDERSTANDING FINANCIAL STATEMENTS Understanding the financial statement of a company is not as difficult as you might think. The income statement is a breakdown of all the expenses occurred during the year as well as all the income generated throughout the year. everything the company owes (liabilities) and the value of the owners equity or capital. th e previous years earnings is shown as the opening balance for this year and this years earnings is then added to it and totalled. (Please note that depending on the type of business you run will determine wether you need to have your books audited or not. A financial statement usually comprises of a balance sheet.

Prepare a written report giving your ideas. 117 . use appropriate language. including the correct terminology and make sure you have checked your document for spelling errors and typo s.

3. each member of the group MUST contribute to the end product. This report must be in Word format so that John can use it as a day to day business guide. attached is a copy of John s financial statements. 2. 118 . Potential improvements are identified and their intended effects on the business are explained to the client.MODULE 26 Business Action Plan SO3 Identify potential improvements MODULE OUTCOMES 1. Ways to monitor the implementation of the improvements are written into a manual so as to aid the early identification of problems and any amendments that need to be made. use appropriate language. use these in conjunction with your previous assessment of John s company and write a report proposing changes that John can make to improve his company s image and viability while keeping his staff happy and making a profit. Problems must be listed and solutions provided under each problem. ACTIVITY Using the information from the last 3 activities build a report and proposal for John s company. including the correct terminology and make sure you have checked your document for spelling errors and typo s. An action plan to implement the improvements is drawn up giving sequences of actions and timelines for implementation. You will then give this report to the class in the form of a presentation. For this activity you can work in groups of 3. Where p ossible provide time frames for each change. Prepare a written report giving your ideas.

selling. the South African Qualifications Authority (SAQA) should be acknowledged as the source. local government. sales promotions. suppliers. sponsorship. It is illegal to sell this material for profit. PURPOSE OF THE UNIT STANDARD The person credited with this Unit Standard is able to define marketing pertaining to SMMEs and how market segmentation. marketing mix. management. Commerce and Management Studies ABET BAND Undefined REGISTRATION STATUS Reregistered LAST DATE FOR ENROLMENT 2011-10-30 UNIT STANDARD TYPE Regular-Fundamental REGISTRATION START DATE 2007-10-30 SUBFIELD Generic Management NQF LEVEL Level 5 REGISTRATION END DATE 2010-10-30 LAST DATE FOR ACHIEVEMENT 2014-10-30 CREDITS 6 SAQA DECISION NUMBER SAQA 0160/05 UNIT STANDARD TITLE Explain marketing for SMMEs REGISTERING PROVIDER This unit standard does not replace any other unit standard and is not replaced by any other unit standard.All qualifications and unit standards registered on the National Qualifications Framework are public property. direct marketing and relationship marketing. storing and buying Stakeholders will include customers. Thus the only payment that can be made for them is for service and reproduction. marketing promotion. trade unions and financial institutions. They will also be able to seek or resolve customer service problems in SMMEs This will also help the learner to be able to provide a better quality service to the SMMEs they serve The qualifying learner is capable of: Identifying and defining marketing within the SMME environment Describing market segmentation and marketing segmentation processes for SMMEs Explaining positioning strategies for chosen segments Explaining the nature and the extent of the competitive environment for SMMEs LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING It is assumed that learners are competent in: Computer Literacy at NQF Level 3 Mathematical Literacy at NQF Level 4 Accountancy and Communications at NQF level 4 or its equivalent UNIT STANDARD RANGE Marketing including all forms of marketing communications. Specific Outcomes and Assessment Criteria: 119 . SOUTH AFRICAN QUALIFICATIONS AUTHORITY REGISTERED UNIT STANDARD: Explain marketing for SMMEs SAQA US ID 115857 ORIGINATOR SGB Generic Management FIELD Field 03 . marketing planning. economic development. If the material is reproduced or quoted. macro marketing.Business. event marketing. the public. micro marketing. employees. positioning and the competitive environment impacts of the SMME. consumer councils. public relations and alternative strategies Marketing principles including marketing definition. marketing concepts. shareholders.

SPECIFIC OUTCOME 3 Explain positioning strategies for chosen segments. SPECIFIC OUTCOME 4 Explain the nature and the extent of the competitive environment for SMMEs. ASSESSMENT CRITERION 3 The potential for segmentation is assessed and explained in line with company andindustry standards. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 Marketing for SMMEs is explained and all the elements of marketing are defined in line with industry norms. SPECIFIC OUTCOME 2 Describe market segmentation and market segmentation processes for SMMEs. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 Target market segments for SMMEs are identified and explained as per industry norms. ASSESSMENT CRITERION 2 Position variables in SMMEs are identified and explained for each target market. ASSESSMENT CRITERION 4 Practical marketing processes for SMMEs are identified and explained in line with industry standards and processes. ASSESSMENT CRITERION 4 The segmentation basis for the SMME in question is identified and explained and includes geographic. end use and operational basis. ASSESSMENT CRITERION 3 The principles of marketing for SMMEs are explained in line with industry norms. ASSESSMENT CRITERION 2 Market segmentation implications for SMMEs are identified and described in line with industry practices. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 The purpose and types of market segmentation in SMMEs are listed and explained according to standard practice. psycho grap hic and behaviouristic. ASSESSMENT CRITERION 5 Profiles for market segmentation are explained and identified in line with existing profile types.SPECIFIC OUTCOME 1 Identify and define marketing within the SMME environment. ASSESSMENT CRITERION 2 The marketing function for SMMEs is put into context with other organisational/business functions. ASSESSMENT CRITERION 3 Product positioning strategies to be communicated to the SMME target market are identified in line with strategic positioning methodologies. demographic. ASSESSMENT CRITERIA 120 .

ASSESSMENT CRITERION 1 Issues surrounding the competitive environment for SMMEs are identified and explained according to historical data. ASSESSMENT CRITERION 2 Strengths, weaknesses, opportunities and threats of the competitive environment for SMMEs are identified and explained based on factual data. ASSESSMENT CRITERION 3 Organisational tactics for SMMEs to match competitive strategies are explained and identified in line with industry trends. ASSESSMENT CRITERION 4 Roles and responsibilities of team members within the competitive environment are identified and explained in line with organizations organogram. SPECIFIC OUTCOME 5 Maintain customer satisfaction and relationships. ASSESSMENT CRITERIA ASSESSMENT CRITERION 1 Processes that establish communication with customers are implemented according to organisation requirements. ASSESSMENT CRITERION 2 Product and service support is provided that is consistent with identified customer needs and the resources of the organisation. ASSESSMENT CRITERION 3 Opportunities for the recognition of feedback from all stakeholders are implemented in relation to maintaining and improving customer satisfaction and relationships. ASSESSMENT CRITERION 4 Methods and techniques that provide for the ongoing identification of customer satisfaction are followed in accordance with established requirements.

UNIT STANDARD ACCREDITATION AND MODERATION OPTIONS An individual wishing to be assessed (in cluding through RPL) against this Unit Standard may apply to an assessment agency, assessor or provider institution accredited by the relevant ETQA. Anyone assessing a learner against this Unit Standard must be registered as an assessor with the relevant ETQA. Any institution offering learning that will enable achievement of this Unit Standard or assessing this Unit Standard must be accredited as a provider with the relevant ETQA. Moderation of assessment will be conducted by the relevant ETQA at its discretion. UNIT STANDARD ESSENTIAL EMBEDDED KNOWLEDGE Methods and techniques for maintaining a competitive environment Methods and techniques for obtaining competitive information, yet remaining ethical and within legal boundaries Marketing principles, methods and techniques Positioning and repositioning including needs, wants, features, advantages, benefits, usage, users and competition Methods and techniques for responding to customer needs and requests Methods and techniques for measuring and evaluating customer satisfaction levels Methods and techniques for improving customer satisfaction levels UNIT STANDARD DEVELOPMENTAL OUTCOME N/A UNIT STANDARD LINKAGES N/A

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Critical Cross-field Outcomes (CCFO): UNIT STANDARD CCFO IDENTIFYING Identify and solve problems pertaining to maintaining a competitive environment for the SMME and thus enhancing customer satisfaction. UNIT STANDARD CCFO ORGANISING Organise oneself and one`s activities so that own knowledge of marketing for SMMEs is kept up to date at all times in order to maximise marketing advice to clients. UNIT STANDARD CCFO COLLECTING Collect, analyse, organise and critically evaluate information pertaining to marketing issues and to the level of customer satisfaction. UNIT STANDARD CCFO COMMUNICATING Communicate effectively when dealing with clients regarding marketing issues and the provision of superior customer satisfaction. UNIT STANDARD CCFO SCIENCE Use science and technology in the orientation and persuasion of computers in a marketing culture in SMMEs. UNIT STANDARD CCFO DEMONSTRATING Understand the world as a set of related systems where accurate marketing information impacts on both the success of the SMME and customer satisfaction. UNIT STANDARD CCFO CONTRIBUTING Contribute to the full personal development of each learner and the social and economic development of the society at large, by making it the underlying intention of any programme of learning to make an individual aware of the importanc of being culturally e and aesthetically sensitive across a range of social contexts in marketing SMMEs. QUALIFICATIONS UTILISING THIS UNIT STANDARD: ID Core 48886 QUALIFICATION TITLE National Certificate: Business Advising LEVEL Level 5 STATUS Reregistered END DATE 2010-10-30

All qualifications and unit standards registered on the National QualificationsFramework are public property. Thus the only payment that can be made for them is for service and reproduction. It is illegal to sell this material for profit. If the material is reproduced or quoted, the South African Qualifications Authority (SAQA) should be acknowledged as the source.

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MODULE 27 Marketing
SO1 Identify and define marketing within the SMME environment MODULE OUTCOMES 1. Marketing for SMMEs is explained and all the elements of marketing are defined in line with industry norms. 2. The marketing function for SMMEs is put into context with other organisational/business functions. 3. The principles of marketing for SMMEs are explained in line with industry norms. 4. Practical marketing processes for SMMEs are identified and explained in line wit h industry standards and processes. Let s start by defining marketing; according to the Oxford English dictionary marketing can be defined as: noun: the promotion and selling of products or services. (www.askoxford.com) According to Wikipedia, the American Marketing Association define it as .the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large (http://en.wikipedia.org/wiki/Marketing) In lay terms it is promoting your goods in an effort to entice others to buy them. I think the reason marketing is important to any business is pretty self explanatory, if you don t sell any of your products you will not make any money and as we said before the main reason for starting a business or working is to generate and income. In our modern world marketing has come to play a vital role, we are so bombarded by marketing, we don t know where to look or what to buy. Billions of Rands are spent annually on marketing campaigns; we see it on TV in magazines on trucks, busses, bill boards, newspapers, pamphlets, posters. Marketing is seen as a creative process and can be a lot of fun. Marketing budgets can run into the millions, think of companies like Pick n Pay, or the banks, they have advertisements on TV all the time, open any magazine and you are almost guaranteed to find a bank advertisement. Some companies sponsor large sporting events like the Pick n Pay, Cape Argus cycle tour or the Standard Bank Pro 20 Cricket. As an SMME it is unreasonable to think you could or would need to afford such expensive marketing. We will have a look at the basic principles of marketing and then decide what is possible and necessary for a small business. A marketing plan is usually part of a business plan and includes all the details necessary to achieve the marketing objectives for your product, service, brand or product line. THE MARKETING PLANNING PROCESS 1. 2. 3. 4. 5. Market and environment analysis Fixing marketing targets Setting marketing strategy Marketing mix Marketing control. 123

Where will it be sold. There is little point in setting out on a m arket strategy and then not checking on the efficiency of the plan. In the 1960 s a Harvard Business School professor. to determine what is needed in the market. At the heart of any marketing plan is the company s mission.wikipedia. Neil Borden identified a number of actions that could have an influence on the decisions that customers make when de ciding to purchase goods or services. which stores will carry it and where will it be placed in the store? The final P is promotion. place and promotion. this includes advertising. Pricing refers to the process of determining what the product will cost. who is most likely to want to buy your product or use your service. We will then go about setting goals to achieve the marketing mix. price. placement refers to the way in which the product will get to the customer.(http://en. and how best to fulfill that need. refers to the actual item/s you want to sell. person selling. publicity and branding. are you establishing a good name for the product? The best way to set out on your marketing plan is to write it down. the product. make it a formal plan that can be referred to. who needs the product you will be offering. The first of the four Ps. it would be unreasonable to produce a product like a chocolate and then to set the cost at R 50. and amended if necessary. He called these actions the Marketing Mix . Marketing deals with that aspect as well as taking the customer into account.00 a bar. The last part of the plan concerns the control of the marketing. sales promotion. the specifications of the product and how it relates to the customers needs. how to get the product known.org/wiki/Marketing_plan) The marketing process model above is based on the work of Phillip Kotler. Is it working is your product selling. Professor E Jerome McCarthy suggested that this so called Marketing Mix was made up of 4 elements: product. The mission 124 . We spoke earlier in the course about setting prices according to their cost price. how will you make sure the product catches the customers attention. He breaks the marketing process into 5 steps. Secondly you need to d ecide on your target market. Who would buy it at that price? Placement is next on the list. The first step is to make an anal ysis of the market and environment.

We need to plan our company s marketing strategy to be in line with the company s mission statement and vision statement. Marketing can be a useful tool to help the company achieve its envisioned goals as set out in the vision statement. S M specific goals should be set measureable. 4.) A R T What should be included in a marketing plan: 1. Charts and graphs are eye catching and if properly labelled and well constructed easy to read. (I want to reach 20 new customers in the next month. market objectives should be quantifiable . y Who they are. An advertising and promotional plan in cluding the marketing budget 3. the goal should have a specific time limit in place. y socio-economic group 6. you must be able to see and measure the impact the objectives are having on the business. y their age group. Competition Other aspects to keep in mind would be: y Is the demand for your product/s likely to grow in the future. there is no point setting goals that are impossible to achieve. You can make use of Excel to draw up your charts and graphs. how are you going to get the infor mation you require? A good action plan is needed and perhaps the help of a few friends to do some market research. attainable. your goals should be relevant to your business. They sho uld be objectives that can be measured. and could become quite complicated. A description of the product or service that you plan to offer 2. y likes and dislikes. Once you have got the information good idea is to include charts and graphs in your document. A description of the location of the business and the advantages and disadvantages of the location on marketing. if you think it will why. 125 . time bound. (To sell 1 000 000 burgers in the next 3 months when you don t have the capacity do manufacture that many burgers) relevant. As with all business strategies.statements we discussed in the previous section of the course. The graphic representation makes it easy to see and understand what you are trying to say. Strategy for pricing 5. y population group. because. SMART objectives should be employed. and how you plan to counte r this y Do you have any plans to increase the range of products you offer or diversify? The market analysis section of your business plan can take quite a long time to compile. Target audience. and by how much? y Do you think your competition will get stronger.

o advertising reach. and media o sales force requirements. Current Situation . sales meetings y Promotions: specials. competitions y Public relations: getting media coverage because you supported a local charity. 1. sales. going face to face with customers. frequency. web pages.You can also include the sales strategy in this sec tion of your business plan. Marketing Strategy . displays y Personal selling: telemarketing.Product o product mix o product strengths and weaknesses 7. Situation Analysis o external threats o external opportunities o internal strengths o internal weaknesses o Critical success factors in the industry 5. Current Situation o market size o Porter 5 forces analysis o competitors' strengths and weaknesses 3. brochures. Marketing Strategy o Promotional mix looking at the four main aspect of the promotional mix: y Advertising: any promotion you have paid for: television. posters. flights. telemarketing. gave a seminar. and management 8. radio. theme. do you intend selling via the internet. Title page 2. Below is a more comprehensive list you may use to build your marketing section of the business plan. Marketing research o research methodology o research results 6. newspaper or magazine articles or reports. techniques. catalogues. direct sales. Implementation o personnel requirements 126 .Internal o company resources  financial  people  time  skills o objectives  mission statement and vision statement  financial objective  marketing objectives  long term objectives 4.

(see module on competition) o The first thing he mentions is the threat of substitute products: going back to John s fast food business. o Next we look at the threat of the entry of new competitors. If you choose to price your product out of the market (too expensive) people may purchase it from you as long as they have no alternative but should another shop open near you that is cheaper. opened his shop and over priced his items. Appendix o pictures and specifications of the new product o results from research already completed    In the list above we mentioned Porter 5 force analysis: This is a model designed by Michael E Porter in 1979. This framework should also be used when analysing competition in the market place. why would John s customers leave him. and you should list the likely hood of it happening. It s a short list of things that one should keep in mind when working out a marketing strategy for your business. i.e. It may seem complicated but it is relatively easy to fo llow. if as in John s case he saw a good market and took action. o The bargaining power of customers. With food this is difficult but if you start a business that sells a new or novel product you could look at patents or copyrights to prevent companies from copying your ideas and then starting their own businesses. you can rest assured you may lose quite a few customers. we already discussed that a second fast food business opened down the road from John and that John thought they were taking his customers. the likely hood of other people thinking they could sell better food at lower prices is very great and competition is sure to follow. y The intensity of competitive rivalry has to do with how competitive the market is likely to get.assign responsibilities give incentives training on selling methods o financial requirements 9. to change the price of a product by a few rand may not seem much to some but customers who are counting pennies will feel the 127 . Do your customers have the potential to force you out of business. this would be especially true when working with low income groups. innovation or marketing. When working out your marketing proposal you need to keep in mind that this may happen. The only way to prevent competition would be if there were barriers to someone starting a similar business. and whether the competition is likely to be purely cost driven or competition in a non -price dimension. are they sensitive to price changes. Remember however that copyright and patent licenses can be quite expensive and this expense must be taken into account. well his competitor is selling a similar product and one can only assume that the product is either better or cheaper.

when looking at your pricing structure. make sure you have checked for spelling and grammar errors and that you have used the above fo rmat. Can you bargain with your suppliers to get a better price on your raw materials. There may be changes that have taken place in your work environment. Draw up a good marketing plan. going over them with your Marketing plan and reviewing what has been ac hieved. Keep in mind the new competition that has opened. what did we sell the least of. even a change of season. now it s time to measure. why did this product sell well. is it a good product to keep. Building sales statistics. is your supplier maybe giving your competition a better price? Are there alternative suppliers that you could use? The second factor on our SMART objectives was Measurable. o The bargaining power of suppliers. once your company has been running for a few months it would be important to look at the original set of objectives you set out to achieve. is there a way we can improve sales? Did we run any promotions or advertising. what did we sell the most of. Yes it s your business but without customers you would not have a business. there could be more competition. Hotdogs and sandwiches are great for summer but maybe some soup and hot chocolate for winter? It is important to stay abreast of changes and be sensitive to the needs and wants of your customers. use the information you have about John s business and develop a marketing strategy for John s take away. You can include diagrams and charts. relates to the people you buy your raw materials from. did we see a return from this advertising or promotions? Quantifying your outcomes to streamline and refocus your business efforts. If the majority of your customers are in the low income bracket you need to keep their needs in mind . 128 .increase. We said that objectives need to be measurable. a new factory could have opened where you could sell your lunches. ACTIVITY Going back to the last module.

There are normally between four and five different dividers that we would use to divide our market. in John s case he is working in the industrial area therefore his geographic area would be the industrial area surrounding his shop. psychographic and behaviouristic. 1. attitudes. gender etc. If you look at their advertisement campaigns. Behaviouristic Usage rate. of the people wh o work in the industrial area will determine who will potentially buy from John. Demographic The average age. When we discussed target markets earlier in this course we were basically talking about targeting a group of people who we though would be interested in our business. Psychographic The personalities of the potential customers. The purpose and types of market segmentation in SMMEs are listed and explained according to standard practice 2. Geographic The area in which we will operate. crust less cucumber sandwiches and tea? How would we determine what will sell best? We would have to look at the people that work in that area and dete rmine from that what would sell. Market segmentation is the same thing. the people on the 129 . brand loyalty would all play a part in this factor. In a way these groups would be stereotypical and we would head for the stereotype when choosing your marketing strategy. 4. If the majority of the people in the area are middle age Muslims and John does not cater halal food do you think the food will sell? 3. price sensitivity. caviar. think in terms of companies like Woolworths who direct their brand at a very specific market. 5. their values. 2. The segmentation basis for the SMME in question is identified and explained and includes geographic. the lifestyles. In John s case. If we John s take away store in the industrial area what sort of food do you think would sell best? Sushi. the stores project an atmosphere of refinement. Let s think of it in simpler terms. and the people that work there. they don t sell cheap products. The reason we would do this is to target a specific audience. religion. end use and operational basis.MODULE 28 Market Segmentation SO2 Describe market segmentation and market segmentation processes for SMMEs MODULE OUTCOMES 1. When we talk about market segmentation we are talking about breaking the population down into groups. occupation. Profiles for market segmentation are explained and identified in line with existing profile types. we would break the market down into segments. Large corporate companies spend a large amount of cash and resources trying to identify d ifferent market segments. The music usual ly plays quietly in the background and the assistants are well dressed. culture. demographic. Market segmentation implications for SMMEs are identified and described in line with industry practices 3. their stores are always neat and clean. The potential for segmentation is assessed and explained in line with company and industry standards 4. socio-economic.

brochure are well dressed. you would try to focus on the similariti es in the market as opposed to the differences. wealthy people. 130 . talk to your suppliers and get information about what they think is selling well. the group they are trying to target. chat to your customers and determine what they would like to see in the shop. There are three main types of segmentation: Mass Marketing. It is more cost effective since you only run a single marketing campaign. there is no point advertising on national radio since people in Gauteng cannot purchase from your store because it is too far away. in mass marketing you would try to reach the whole market with one product. If your business is a local business and you decide to run a radio advertisement. Or use secondary resources and qualitative research: contact or subscribe to trade publications. this is the best way to go for SMMEs. so that is their market segment. the premium account for the business executive who earns in excess of R 20 000. a lot of banks make use of this form of marketing. by targeting a specific market you can develop promotions and advertising material that appeals to your specific market. where you choose your market and target one specific area. This obviously saves on marketing costs. Differentiated marketing. they have different products that target different segments of the market.00 per month. How does market segmentation help a business? Well it enables the business to streamline its marketing efforts. SMMEs can make use of the following ways to collect information on their segment of the market. Target marketing. In that instance it would make more sense to run your advertisement on the local community radio where people who can get to your shop can hear the advertisement. they have different advertising campaign for different target segments Standard Bank has an e-plan account for the mass market. Use informal cluster analysis to glean information: Watch your competitors and try to copy them. (low in come groups). the student achiever for your people who are studying towards a degree. that is aimed as a very specific audience.

ACTIVITY Store Geographic Demographic Psychographic Behaviouristic Shoprite BMW Legit Billabong KFC Gucci 131 .

3. wants and desires of y our target market segment. reliability. The important factor for positioning your product means. benefits and specific features. MODULE OUTCOMES 1. 132 .MODULE 29 Positioning Strategies SO3 Describe Explain positioning strategies for chosen segments. Everything about the product and its marketing revolves around the specific needs. 2. Product positioning strategies to be communicated to the SMME target market are identified in line with strategic positioning methodologies. Target market segments for SMMEs are identified and explained as per industry norms. Once you understand what the customer wants you need to select the best position for your product and design a marketing program that helps you best achieve this goal particularly with regard to quality. understanding the criteria your customers use to evaluate your business in relation to others offering a similar product and what induces the customer to purchase a specif ic product. Product positioning involves taking a marketing program and building it to specifically meet the needs of the consumers in a specific market segment. Position variables in SMMEs are identified and explained for each target market. In their book Advanced Marketing Strategy Glen L Urban and Steven H Star wrote that Product positioning takes place within a target market segment and tells us how we can compete most effectively in that market segment.

HIGH PRICE HIGH QUALITY LOW QUALITY LOW PRICE Woolworths Pick n Pay Spar Shoprite Seven Eleven Savers Lane 133 . plot the following retail outlets according to how you think they fit in the market.ACTIVITY Making use of the positioning map below.

all three washing powders have different target audience. for example Skip. plot a map of your competition that offer the same or a similar products in your area. stores like Shoprite Checkers who target low income groups with low prices. because it is a large market. high quality range he would make money? Why? ________________________________________________________________________________ ___________________________ _____________________________________________________ The idea with positioning yourself in the market is to try to maximise the amount of customers you have by allowing them the maximum benefit from your company. ACTIVITY Make a list of as many companies as you can that address the mass market in their marketing strategies. Think of advertising campaigns. Do you want to set your company close to your competitors. radio. where you only offer the best quality products. The Mass market is essentially the low income earners. there has been a trend in developing countries to target the mass market this up till recently has been a hugely untapped market and in countries like South Africa the mass market is a huge untapped resource. another option would be to offer a unique business with benefits that consumers would not easily find else where in the market. different marketing strategies and are situated in different market positions. In recent years companies have began zoning in on the mass market. A similar product is produced in the same factory but given a different name so as not to confuse the customer. List the company and the advertisement/product that you think attracts the mass market. outstanding service and a type of exclusivity. 134 . their quality is not always good but for the people of the low income groups it is an entry level. or would you rather be far away. so if we go back to John s fast food store where would we plot him? Think about his clientele. You could decide to go for a Quality emphasis in your business. why is this such a huge market.The next step would be to plot a map for your own envisaged company. TV. Surf and Omo. While it seems on the outset better to go for a high quality market. who did we decided ma de the most use of his services? Do you think that if we tried to position John in the high price. all three brands belong to Unilever. press. One of the tactics that companies use to maintain a greater share of the market is to develop different brands. Once you understand where your competitors are you can begin the process of deciding where you want to be.

HIGH PRICE HIGH QUALITY LOW QUALITY LOW PRICE Sarita Brutal Fruit Castle Light Castle Lager Black Label Castle Milk Stout Reds Pilsner Urquelll 135 . plot the different products manufactured by SAB Miller into their relevant market segments.ACTIVITY Below is another positioning map. using the advertising provided.

Franklin. and something that an emerging small business may not be able to finance. Franklin would buy several pairs. recognized a hole in the hosiery marketplace and came up with an idea for hosiery for women of color. The benefit of working within such a small market segment is that you will require fewer resources to market to a small group. Cinnamon. Niche markets are often customers who are less price sensitive. understood first-hand the plight of women of color looking for flesh -matching hoisery. most of which didn't match her skin tone. A new entrepreneur s instinct is to go for as many customers as possible but this is not always the answer. plus your product line may be smaller because you are appealing to a very specific group. you often walk past them in the mall and wonder how th ey survive. and Mahogany. The idea is that by filling the niche you will be able to gain a greater percentage of that market segment resulting in less competition and higher profits.. Franklin. she would buy everything in stock so that she wouldn't have to hunt for them again. The company has been growing at a rate of about 20% annually. they are selling high cost good to high end purchasers who would rather pay for what they want than settle for something else. but they could go much higher if pending deals with Nordstrom and Macy's come through. sidestepping the challenge of locating a pair that wasn't a match.000. Atlanta-based Accents of Color Hosiery. Using a list of hosiery manufacturers provided by The Hosiery Association. A niche market product may target young women. 48." Franklin admits. and cream. Her brainchild. Gentle Brown. plus five other outlets she has targeted for 2006. Franklin expects 2006 sales to total $200. So why aren't more entrepreneurs adopting a niche strategy? "Many are afraid that it will limit their opportuniti es.NICHE MARKETS Having looked at various market strategies for defining your target market segment and discussing companies that market different brands to different markets to gain greater share. navy. a niche within a niche may target black young women. "We've all worn some hideous colors. summarizing the experience of many women who have been frustrated by the sparse selection of hosiery in pleasing deeper brown tones. when the opposite is really true. one thi ng becomes clear. Sometimes. At the outset. When she found a color that accentuated her legs. navy. was launched in October 2002 and boasts seven shades of brown and five other hues -. white. Having once worn pantyhose with names like Red Fox.jet black. Is there a cheaper option? The answer is to carve out a niche market. Think of small exclusive boutique shops. small segment of a segment of a market. It has b een proven that entrepreneurs who manage to carve out a successful niche market are more likely to succeed and thrive in the market. this looks like a very costly affair. have hundreds of locations that could sell her hosiery. Franklin looked to her own experiences and recognized the potential for success in niche marketing." says Terri Franklin. A niche market is a market within a market. or a color that complemented a particular outfit. This type strategy flies in the face of what we ordinary would think when starting a new business. Franklin's solution was to buy pantyhose in black. off black. many small business owners are concerned with attracting as much business as they can and have trouble accepting that narrowing their customer focus may be more profitable. 1 . an entrepreneur from Atlanta who started her own hosiery business. Franklin began 136 . a sales specialist at AT&T. Those retailers.

PUEBLA SERVES HER NICHE CUSTOMERS BY SELLING INTERRACIAL WEDDING-CAKE TOPPERS Having worked in the wedding industry f or years as an event planner. The second was that the number of interracial marriages has increased more than tenfold in the last few decades. Rena Puebla knew this when she bought her wedding cake toppers -. Attendance at bridal shows and appearing in an issue of Cosmopolitan during the summer of 2005 has boosted their visibility and their business considerably. The research reported that. the first being the dearth of competition. it would be easier to identify their market and sell to them. with an average wedding costing more than $26.000. and more than 3 million by 2000. Couples can choose from among 98 possible combinations of Renelli brides and grooms. In fact. florists. to target brides. Therefore. established Renelli International to fill a niche market need.000 -. African American women purchase 24 pair of hose annually and make up 24% of the pantyhose market. Puebla. 137 .$655 is often spent on the cake alone. increasing to 1.com. California. MARRYING EXPERIENCE AND OPPORTUNITY When it comes to planning a wedding.000. In total. with 2006 sales projected to be $500. for several reasons. according to the Washington based Population Reference Bureau.contacting potential manufacturers in search of one willing to take a chance on a startup.4% of the married population. the amount of money spent on weddings has been increasing for years. Renelli invests in marketing through major wedding channels. such as TheKnot. not a retailer. After an exhaustive search.com.a specific type of cake topper within the wedding accessories category -. decided that she had found a business opportunity worth exploring. in January 2005 she and one of her former gift-basket suppliers. Ellie Genuardi. also knew that interracial marriages had become more common. She had to settle for two doves on top of her wedding cake instead of an attractive cake topper featuring an African American bride and an Asian groom. she h ad no luck finding figurines that suited her and her fiancé.5 billion.5 million in 1990.the little bride and groom that have traditionally adorned wedding cakes. Another way the owners have differentiated the company is by positioning it as a wholesaler.they've successfully carved out their own space.000 interracial couples made up 7% of all marriages. on average. bakeries. and then refers them to local retailers who carry Renelli toppers. attention to detail is important. Puebla knew that the wedding market was strong. By staking out a niche within a niche -. marketing its products to salons. Puebla. She also spent months studying major hosiery marketers and learning about her market." says Puebla. according to theweddingreport. Although it was initially challenging to land accounts. But instead of accepting that there were fe w options for interracial couples. the 2006 wedding market is valued at $58. Puebla and Genuardi also believed that by pursuing a well -defined niche. whose husband is Japanese. and wedding boutiques. "We zeroed in on interracial wedding-cake toppers right away. Rather than target the niche. of Costa Mesa. Sales are up 400% over last year's sales of $100. 2. or 5. "we had to be persistent " says Puebla. In 1970. 300.

and personalized or designer pantyhose from Accents of Color. especially from couples in Canada." he says. you may not be able to survive.which are interchangeable. The durable polyresin stone figures have delicate facial features and sophisticated tuxedos and gowns commonly found on more expensive toppers. is that "Once you've built one successful niche business and understand the thought process behind it." Crossover expansion is also underway at Renelli. with sales of same-sex toppers now accounting for 50% of the company's sales. Saudi Arabia." says Franklin. knee-highs. "I thought my target market was darker-toned women of color. and dark or blond hair with Caucasian features. Peter Sander says niche bus inesses almost always have a better chance for success. shimmers. Germany. ladies all over the world are finding me. The slogan of her company is now. and sale s to women in countries such as Romania. but I've found that all women of color have trouble finding the right shade.. who frequently have the same problems that interracial couples do when looking for wedding accessories.S. while the opportunities for niche businesses seem limitless. To broaden her product line beyond plain pantyhose. They will soon be able to buy Lycra support hose. and Africa are proof. she is in the process of adding a number of new products that her customers have been asking for. she says. thanks to her Website. In addition. there are a few ways you can attempt to find the right niche for you. There was also a strong indication of a void in the market. CROSSOVER TO HIGHER PROFITS One of the benefits of establishing a niche business. Canada. The company is also pursuing private-label opportunities. HOW TO FIND YOUR NICHE If you think that creating a niche market s ound like a good idea. which she didn't expect. where she has focused her marketing efforts. "To my surprise. say the Sanders. "If you start broad-focused. thigh-highs." Franklin saw an opportunity to increase sales by selling other products to her customer base. Franklin is adjusting her marketing to reflect the broader appeal of her products. "Accent your legs colorfully.to crossover. manufacturing wedding cake toppers for other retailers under their brand name. She also discovered that this challenge was not limited to women in the U. "Women go to great lengths to get the right pantyhose. Although Accents of Color Hosiery initially specialized in ultrasheer pantyhose for women of color. Franklin has since recognized the potential to expand her niche -. Renelli's retail for $69. where the company's target market has broadened to include same-sex couples. including dark hair with African American features. which she knew she could fill.99. what is to stop you from using that same knowledge to build a similar business that serves a slightly different niche. Although starting any business has its risks." she says. England. "It's a global issue. 138 . or add products and services to more profitably serve the existing niche?" Through a phenomenon called "cross -over niching. The response has been enthusiastic. reports Puebla." she explains." so as not to exclude lighter -skinned women who have also embraced her line. dark ha ir with Latino features.

Find something that has worked somewhere else. Are there any missing in your locale? 3. Sheri s husband saw a potential niche market business and they decided to create a unique accessory brand of colourful snap-on trinkets specifically suited for Crocs shoes. a name that came from Sheri s nick name Flibberty-Jibbit . Instead of trying to come up with a new idea. they were an instant hit. Once you think you have found a potential niche opportunity you need to do some market research to ensure that there is a large enough market to support your new business. In December 2006 Crocs Inc offered to buy Jibbitz for a sizable amount and the Schmelzers were offered positions as President and Chief Design Officer of the Company. well have you seen the little trinkets you can get to put in the holes of your crocs. Business ideas that have worked in other markets. Refocus a big idea but change it to suite a specialised market. Try to find an idea that has worked somewhere else. 139 . Take the croc story for example. they are called Jibbitz. or would use. The started with a few designs and launched a website to sell the goods. remember when Starbucks was a Seattle phenomenon? Think about the products and services you use regularly. within 1 year Jibbitz were sold in thousands of stores around the world. 2. They did not come up with a whole new design they came up with a twist to an existing idea. We all know what crocs are. Working from home with a small loan and small assembly line in their basement they launched Jibbitz. or try to identify types of businesses that are missing in particular geographic areas. For example. Jibbitz originated in 2005 when Sheri Schmelzer a stay at home mom. Using clay and rhinestones they developed unique little charms that fit in the holes of the crocs. Look for business concepts that have succeeded in other markets that haven't yet appeared in yours.1. try think of someway to put a spin on an existing product. Break off a small piece of a big market and target it at a different market. Rich Schmelzer. maybe overseas or in a different town and try the same idea where you are. From there you can start compiling your business ideas and formal business plan. and where you go to get them. and her three children decided to decorate their croc shoes.

FACILITATORS NOTES: HIGH PRICE WOOLWORTHS SEVEN ELEVEN SPAR PICK N PAY HIGH QUALITY SHOPRITE LOW QUALITY SAVERS LANE LOW PRICE 140 .

There are a plethora of companies that offer similar or the same products and marketing strategies are fierce. Issues surrounding the competitive environment for SMMEs are identified and explained according to historical data. technology improved at a drastic rate and we now talk about living in a global village. opportunities and threats of the competitive environment for SMMEs are identified and explained based on factual data. We as South Africans are much more likely to accept bad service but this is changing. In the restaurant industry you can have the most wonderful restaurant but if your customers have to wait an hour for poor service your business will go down hill fast. service has been an issue for years.MODULE 30 Competition for SMMEs SO4 Explain the nature and extent of the competitive environment for SMMEs MODULE OUTCOMES 1. In our stressful lives we need to see happy smiling faces. although Telkom is probably not the best example since they still do not have enough competition. 20 years ago the world was quite a different place. This forces them to improve their service or lose our business. good staff training ensuring friendly efficient service is the a key issue to grabbing customers. We have also seen in recent years how the cost of certain products like electronic good have come down. Strengths. weaknesses. the required stock is purchased just in time for it to be manufactured. companies like Telkom who have ALWAYS offered headaches now have competition. Big business makes up a large sector of the economy and by making use of economies of scale (purchasing large quantities of stock or manufacturing large quantities of stock can reduce the cost price per item) they are able to supply products at cheaper costs than most SMMEs are able to do. we had TV and Radio but not much on the internet scope. Particularly in South Africa. thereby alleviating huge amounts of capital that would otherwise be tied up in stock ) are important tools for competitiveness. In South Africa we have certain marketing restrictions. For businesses that plan to serve other businesses. it is unlikely that cost alone with give you a sustainable competitive advantage. Over the last 20 years the market place has grown. 141 . I can purchase products from anywhere in the world without leaving my chair. when products become cheaper the small variation that you could offer the customer becomes negligible. A company cannot sell products at cost price for any long term period without impacting on the quality of its products. So how are small companies supposed to compete with large multinationals? It has become nigh impossible to compete by superior design or function and it is difficult to manufacture goods while maintaining a large profit margin. 2. People no longer look to the cheapest price but the company that can deliver a quality product in the shortest space of time with good service backup. flexibility and just in time delivery (just in time production works on the basis that a company does not carry stock for production. we cannot directly slate a brand so when we advertise we have to push the upside of our business where as in Countries like the USA open competition is allowed. So how to improve your market share if costing is not the only alternative. Companies that can deliver high levels of customer service efficiently will take the lion s share of the market. Service delivery is the new buzz word in industry.

but also be competing against tomato sauce or hot mustard. (refer to Porters 5 Factors [page 126]). Manufacturing companies also make use of just in time produ ction models. By building customer relations you build interdependence between them and you thus reducing customer churn . you may not have direct competition. People like to feel like individuals. you could be selling a specialised type of chilli sauce. If you r employees have good relationships with their customers you are also likely to build a certain amount of loyalty amongst your staff. 142 . Have a look at your product and its market. don t assume because it s a new or innovative product there will be no competition. don t assume you don t have any. You may not be able to spot competitors immediately. they like to talk to people and build relationships with their suppliers. look at products that your customers can bu y as alternatives to what you are offering. A good competition analysis will help to determine where and when you are likely to have strong competition and allow you time to define a strategy for dealing with this competition. You may wonder how it is possible to offer a high quality of service while running a lean operation. turnover of trained staff can negatively affect your ability to provide a professional service and it becomes costly to be continually training new staff. If you know your customers you can offer a more personalised service by anticipating their needs. arm your self with knowledge about your competitors.There is a verse in the Bible that says my people perish for a lack of knowledge this is true in business also. the key is to make your service personal. Lean Operation A lot of small business are turning to a new way of running called lean operation lean operation has staff members fulfilling multiple work roles in a number of company locations.

Developing a marketing plan Below is a sequence of steps that indicate the procedure to developing a marketing plan : Advantages of planning: y Encourages methodical thinking about the future. Executive summary is written after the marketing plan is written. the product or service. decisions and recommendations that appear in the marketing plan. competitors and expected sales levels. y Marketing opportunities are more easily identified. target markets. y Improves communication and co-ordination between different departments and level of management y Results can be measured against established performance standards y Decision making can be based on a logic y In a rapidly changing business environment the ability to cope with change is increased. Executive Summary: A short summary of the main objectives. Current Marketing Situation: o Market description major market segments and targets o Productive review product mix 143 . It describes the plan.

Set the budget for marketing plan: This is a planning and control mechanism. ensuring standards have been met and comparing actual performance with performance standards. 144 . their size. sales quotas. goals. socio -cultural variables Marketing analysis: SWOT S W OTSetting objectives: For each marketing instrument and target market.o Competitive analysis identifying competitors. when and who will be responsible. market share. economic variables. marketing communication budget. product quality and past behaviour. o Broad business environment trends in the macro environment. Establish control Methods: Set performance standards. objectives need to be met within the constraints of the budget. including exactly what will happen. SMART objectives. (SMART objectives) Corrective action when the deviation between objectives and achievements is too great. All standards must be realistic Evaluation of performance by the marketing manager. Strengths Weaknesses Opportunities Threats Action programme: At this point a timeline for your strategic plan should be drawn up. political or legal variables. o Distribution review identifies changes and developments in the distribution channels.

manufacturing or service delivery etc. 4. the line of work. However there will still always be some forms of organisation structure.MODULE 31 Communication and Organisation (Roles and responsibilities) SO4 Explain the nature and extent of the competitive environment for SMMEs MODULE OUTCOMES 3. Organisational tactics for SMMEs match competitive strategies are explained and identified in line with industry trends. A large corporate company will look significantly different from a smaller SMME or a little Sole Trader. what and how many staff are employed. The company s organisation chart will depend on the positions that the company makes available. downward and horizontally. The Organo gram below is a typical organogram for a large corporate company. That manager is responsible for the sales and marketing of that product and or as we saw in the module on brand management he/she could be given the title of brand manager. There is not one right way to organise the flow of information or roles and responsibilities in a company. Roles and responsibilities of team members within the competitive environment are identified and explained i nline with organisations Organo grams. A company s organisation structure needs to be determined to fit in with the company s strategic plan. Members of staff need to ensure good communication. 145 . A smaller SME may not have managers for each product line and may in fact only carry one product line. Certain positions will be created or removed in accordance with the strategic plan the company is following. In the above model each product has a specific manager. upward.

this is usually a useful means of organisation if your company provides multiple products to a few large companies. Some of the less senior AE s may be given two or more small companies. 146 .In the chart above we see what are called Account Executives. Each AE is responsible for one company only. each account Executive is responsible for a single customer.

This type of measuring is often done in hotels and restaurants where critics will go incognito and then give the establishment a rating. 147 . In your business to this point we ha ve learnt about management strategies. if the customer is not happy neither will we be. a sort of market analysis.MODULE 32 Customer Satisfaction SO5 Maintain customer satisfaction and relationships MODULE OUTCOMES 1. we can find our target market and aim a strategic marketing plan at the customer. When we put the marketing strategy in place we need to remember to incorporate Customer controls under marketing control. How do we know if this is enough to run a successful company? We have discussed financial and marketing control measures o measure our success or failure. customer satisfaction . both with regard to government legislation and tax. service or staff. I think we can all agree that. Focus groups: A panel of people are selected and they then have a recorded discussion on your product or service. legal requirements to business. an unhappy customer will not return to our business. Below are a few customer satisfaction measuring ideas. Complaint and suggestion systems: A book or a box where customers can enter complaints. If you are not sure which one is best to use. Proactive or pre-emptive strategies have the benefit of avoiding pitfalls before you end in them. suggestions or compliments regarding your company s products. read through the advantages of planning in the previous module again. these should be read through on a regular basis and acted on to ensure optimal use of the system. Opportunities for the recognition of feedback from all stakeholders are implemented in relation to maintaining and improving customer satisfaction and relationships. as with all other business functions we can have either a reactive of a proactive approach to customer satisfaction. Detailed questionnaires are sent out to current customers asking about their purchase or experience of your service. this is often done before the launch of a new product to test the market. Mystery shopping: you can have people who have been hired to shop in your store and they can then give you a genuine critical view of shopping in your store. 2. What this means is we can anticipate problem areas and implement strategic plans to avoid the problem developing by staying abreast of customers trends and comments or we can wait till a problem occurs and then try to fix it (crisis management). Product and service support is provided that is consistent with identified customer needs and resources of the organisation 3. Methods and techniques that provide for the ongoing identification of customer satisfaction are followed in accordance with established requirements. Customer satisfaction index (CSI) : this is a survey that measures the experience of your customers over a period of time. Processes that establish communication with customers are implemented according to the organisation requirements. 4. Now to the crux of the entire discussion proceeding.

product purchases. if a customer who has always bought the same product at more or less simi lar intervals and then stops.Customer value analysis: A database is compiled and maintained on current and potential customers. 148 . how often they come back for more and if it s always the same product. the manager or owner of a company wanders around observing the behaviours of staff and customers. you can contact the customer to ascertain why and try to remedy the situation. This information can be used to determine future purchases and purchase trends. the database contains identification and personal data on the customer. MBWA: Management by wandering around. product usage and consumption patterns.

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Big Vision.gov.O. Yours Sincerely Girshwin Fouldien Manager: Local Economic Development Directorate: Strategic Services Drakenstein Municipality P. JW (ed).Walters. Strydom. Box 1 Paarl 7622 Tel 021 807 4737 Fax 021 871 1037 Cell 082 497 9304 E-mail: girshwinf@drakenstein. Juta. San Francisco. Young Your request to use the Drakenstein Web-page on Business Licencing refers. Berrett-Koehler. Kenwyn Dear Ms. 2002. We therefore do not have any objection to the use of the Business Licencing Webpage as part of your course material. Small Business. 4 Keys to success without Growing Big.za 151 . Introduction to Marketing. The Drakenstein Municipality supports SMME & skills development initiatives.1998. JS.