Entrepreneurship

Entrepreneurship Education
and Training
MODULE 2
Contents
HANDOUT 1:Training Program .......................................................................................................2

HANDOUT 2: Key success factors in setting up a small business...................................................5
HANDOUT 3: The Ten Success Factors for Entrepreneurs ............................................................6
HANDOUT 4: Steps in starting a business ......................................................................................7
HANDOUT 5: Portrait of an entrepreneur ........................................................................................8
HANDOUT 6: Weekly report Mini business ....................................................................................9
HANDOUT 7: Checklist preliminary selection of business idea .....................................................10
HANDOUT 8: Micro screening table..............................................................................................11
HANDOUT 9: Definitions of the parameters applied......................................................................12
HANDOUT 10: Other suggested parameters for micro screening .................................................14
HANDOUT 11: Information requirement sheet ..............................................................................16
HANDOUT 12: The marketing mix: points to remember ................................................................19
HANDOUT 13: Marketing in my mini-business: checklist ..............................................................20
HANDOUT 14: SWOT Analysis Framework ..................................................................................21
HANDOUT 15: Personal SWOT Analysis .....................................................................................22
HANDOUT 16: Components of SWOT Analysis............................................................................23
HANDOUT 17: Case study: Josef the economist ..........................................................................25
HANDOUT 18: The business plan .................................................................................................28
HANDOUT 19: Mini business plan ................................................................................................32
HANDOUT 20: Cash book.............................................................................................................38
HANDOUT 21: Simple cash book .................................................................................................39
HANDOUT 22: Share certificate....................................................................................................40
HANDOUT 23: Marketing..............................................................................................................41
HANDOUT 24: The four Ps of the marketing mix ..........................................................................42
HANDOUT 25: Mr. Kawewe's carpentry workshop .......................................................................43
HANDOUT 26: Costing exercises .................................................................................................44
HANDOUT 27: Break Even analysis .............................................................................................47
HANDOUT 28: Break-even and pricing exercises .........................................................................49
HANDOUT 29: Basic recordkeeping exercises .............................................................................50
HANDOUT 30: Hollow Block Factory ............................................................................................54
HANDOUT 32: Stock Control ........................................................................................................56
HANDOUT 32: Cash management exercises ...............................................................................60
HANDOUT 33: Smith Ltd. The Queen of footwear ........................................................................63
HANDOUT 34: Mini business evaluation form ...............................................................................65
HANDOUT 35: Personal Action Plan ............................................................................................67
HANDOUT 36: Evaluation form Module 2 .....................................................................................70
1
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.1
Business opportunity seeking
LESSON 1
Introduction to Module 2
HANDOUT 1: Training Program
UNIT 2.1: DESIGN OF THE MINI BUSINESS

Element 2.1.1: Business opportunity seeking
Week Lesson Tasks Mini business Theory lessons
1 1 -- • Introduction to program
• Climate setting
• Program objectives
• Schedule
2 2 -- Refreshment Module 1:
• Entrepreneur & entrepreneurship
• PECs
• Action plans
3 3 -- Basic requirements to start a business
4 4 Group formation Introduction to the mini business
Task division in groups
5 5 Mini business opportunities Business opportunity seeking
Weekly report
6 6 Selection business idea Preliminary selection of business idea
Weekly report
Element 2.1.2: Selecting suitable markets for products and services

7 1 Weekly report Introduction to marketing
8 2 Market research Preparation of market research
Weekly report (information seeking)
9 3 SWOT Mini business Results market research and
Weekly report introduction to SWOT
10 4 Final choice mini business idea Presentations SWOT analysis and final
Choose name of the business choice mini-business
Weekly report
Element 2.1.3: Developing a mini business plan

11 1 Develop mini business plan Introduction to the business plan
Weekly report
12 2 Setting up a cash book Develop the mini business plan (cash
Weekly report book)
2
13 3 Marketing plan Develop the mini business plan
Finding investors and (marketing plan, finding investors)
shareholders
Weekly report
Cash book
14 4 Finalization mini business plans Presentation mini business plans
Weekly report
Cash book
15 5 Finalization mini business plans Presentations mini business plans
Weekly report
Cash book
UNIT 2.2: ORGANIZATION AND MANAGEMENT OF THE MINI BUSINESS

Element 2.2.1: Marketing
16 1 Product development, promotion Marketing
activities, location, pricing
Weekly report
Cash book
Element 2.2.2: Costing & pricing of products/services

17 1 Running the business: purchase, Costing
produce, selling
Setting up basic records
Weekly report
Cash book
18 2 Running the business: purchase, Costing
produce, selling
Cost calculation and price setting
Keep records
Weekly report
Cash book
19 3 Running the business: purchase, Pricing
produce, selling
Keep records
Weekly report
Cash book
Element 2.2.3: Keeping records in business

20 1 Running the business: purchase, Recordkeeping
produce, selling
Keep records
Weekly report
Cash book
21 2 Running the business: purchase, Record keeping
produce, selling
Keep records
Weekly report
Cash book
22 3 Running the business: purchase, Record keeping
produce, selling
Keep records
3
Weekly report
Cash book
23 4 Running the business: purchase, Business & Family
produce, selling
Keep records
Weekly report
Cash book
24 5 Running the business: purchase, Stock control
produce, selling
Keep records
Weekly report
Cash book
Element 2.2.4: Preparing financial statements

25 1 Running the business: purchase, Cash management
produce, selling
Keep records
Weekly report
Cash book
26 2 Running the business: purchase, Profit & Loss
produce, selling
Keep records
Weekly report
Cash book
27 3 Running the business: purchase, Calculation final results
produce, selling
Keep records
Weekly report
Cash book
UNIT 2.3: EVALUATION OF THE BUSINESS EXERCISES

Element 2.3.1: Presentations and Business Development Services Fair
29 1 Preparation of presentations mini --
businesses
30 2 BDS Fair --
Presentations mini businesses
31 3 Presentations mini businesses --
Award winner mini business of the
year
Element 2.3.2: Career planning (PAP)

32 1 Personal Action Plan/Personal --
business plan
Evaluation Module 2
4
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.1
LESSON 3
Basic requirements to start a business
HANDOUT 2: Key success factors in setting up a small business1
Motivation and
Idea and Market
Determination
Entrepreneur
Resources Ability
1 ILO KAB Module 4: How do I become an entrepreneur?
5
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.1
LESSON 3
HANDOUT 3: The Ten Success Factors for Entrepreneurs2

1. Willingness to succeed: Successful entrepreneurs spare no expenses. They must be prepared
to work 50 to 60 hours a week and give up holidays. For that, they need the supports of their
families.
2. Self-confidence: Only those who believe in themselves will achieve their goals. That calls for
optimism and trust in the future. Founders must take on challenges and confront constant
changes and should not be afraid of making mistakes.
3. A clear business idea: The idea has to be right. The heads of companies know their strengths
and weaknesses and the competition. They know the reason for their success; whether it's
because they have better products, better service, or a more intelligent sales and marketing
approach.
4. The Business Plan: The Business Plan is the key to building up a company. This instrument,
which is always being adapted to the latest developments, makes it possible to proceed with a
systematic plan of action, to recognize problems in their early stages so that the proper
corrective measures can be taken in plenty of time.
5. Exact control of finances: A young entrepreneur doesn't have to be swimming in money. But
success usually doesn't come as quickly as anticipated. That's why financial resources should
be calculated somewhat generously. An entrepreneur must understand something about
business management, know how to react quickly, and have finances and cash flow under
control. Any profits are reinvested in the company.
6. Targeted marketing: Only entrepreneurs who have a clear concept about how to introduce a
product or service to the market will be able to succeed.
7. A step ahead of the competition: Success must be worked on constantly. It includes a plan for
research and development, so that an advantage in the market isn't lost. Acting instead of
reacting will supply the advantage.
8. Managing support: Young entrepreneur's powers increase if they can fall back on the
knowledge of experienced entrepreneurs. Possible advisers to call on would be financiers or
successful colleagues who are also entrepreneurs. This can also open doors for company
founders that might otherwise be closed to them.
9. Cooperation: No one is top in every field. Building up a network of cooperation often provides
access to additional know-how that would otherwise cost a lot of money.
10. Clear company structures: A successful company has a clear structure. The employees are
motivated and know exactly what their responsibilities are. The customers know who to
contact.
2J.D. Ryan and Gail P. Hiduke. Small Business - An Entrepreneurs Business Plan. Thompson
Southwestern. 2006. Pages 15-16.
6
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.1
LESSON 3
HANDOUT 4: Steps in starting a business
Step Topics
Generate a business idea

Design of the business Market research
SWOT
Prepare a business plan

Arrange finance (own capital, family, bank)
Develop the business
Find location
Arrange logistics
Costing & pricing

Marketing
Record keeping
Managing the business Time management
Financial management
Stock control
Business and private
Financial results
Evaluating the business Business results
Adjustments of plans
7
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.1
LESSON 3
HANDOUT 5: Portrait of an entrepreneur

Brain: for generating
creative, innovative
ideas
Eyes:
for vision, goal setting
and seeking Ears: for listening to advice
opportunities and hearing about changes
and opportunities
Neck: for sticking

Nose: for smelling out and taking
troubles & problems calculated risks
Mouth: effective
communication and Heart: passion, commitment,
selling ideas perseverance and pride
Arms: for
hugging
team
members Fingers: counting
learning
opportunities
from mistakes
Hands: for
shifting gears
when needed Backbone:
confidence and
believe in one self
Knees: for bending and

trying in troubled times
Legs: for jumping over

barriers and obstacles
Feet:
for kicking
when
needed
8
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.1
LESSON 4
Introduction to the mini business
HANDOUT 6: Weekly report Mini business
Name mini business:

Week number:
Date:
Activities:
Results last week Planning next week Who will do it? Planned results
Coaching instructor:
0 Cash book control

Signed by instructor: Date:
0 Meeting mini business team

Signed by instructor: Date:
The next meeting will be:
Date: Time: Place:
9
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.1
LESSON 5
HANDOUT 7: Checklist preliminary selection of business idea
1. What is the product?
2. How is quality and price as compared to competitive products?
3. Where will the business be located?
4. What geographical areas will be covered by the business?
5. Within the market area, to whom will the business sell its products?
6. Is it possible to estimate how much of the product is currently being sold?
7. What share or percentage of this market can be captured by the business?
8. What is the selling price of the product?
9. How much of the product will be sold?
10. What promotional measures will be used to sell the product?
11. What marketing strategy is needed to ensure that sales forecasts are achieved?
12. What do you need to promote and distribute your product?
10
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.1
LESSON 6
Preliminary selection of business idea
HANDOUT 8: Micro screening table
Scoring system: 5 – extremely high; 4 –high; 3 – average; 2 – fair; 1 – poor; 0 – absent

Critical success factors: write text
PROJECT Solvent Availability of Availability of Availability TOTAL Competitors Corrected Critical
good or service demand qualified technology / of raw TOTAL success
personnel equipment material factors
(+) (+) (+) (+) (=) (-) (=)
11
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.1
LESSON 6
HANDOUT 9: Definitions of the parameters applied

Solvent demand
If there is no assurance of an adequate market, there is no sense going to business. The market must
be large enough to enable the entrepreneur to capture a substantial market share and in the process,
make an attractive profit from the transaction after deducting his costs from sales. Indication of
availability of market includes, among others:
a) existing demand is presently not served at all;
b) existing demand is not at present adequately served by existing suppliers;
c) existing demand is presently served by imports;
d) the product has significant uniqueness or unique selling features;
e) supply of similar products/services is not reliable;
f) demand for the product/service is expected to increase significantly or substantially in the future;
g) supply of the product is presently served through smuggling.
Availability of qualified personnel

Availability of qualified personnel can be gauged by the following factors:
a) different skills (conceptual, managerial, technical and manual) needed by the project are available;
b) supply of skills is relatively steady and stable so as not to jeopardize the project in case of sudden
or unforeseen labor changes, unusual turnover, or unexpected problems;
c) cost of labor is projected to be fairly steady and predictable.
Availability of technology / equipment

Availability of technology can be evaluated in terms of the following indicators:
a) the technology or technologies to be used have been proven;
b) reasonably priced technologies are available to produce the product;
c) technology is appropriate for the level of production, level of investment and desired product
quality;
d) the project will not suffer from technology obsolescence which will render the project not
viable;
e) nearness of sales centers for the required machinery / equipment;
f) seasonal availability of the required M/C.
Availability of raw material

Availability of raw materials is indicated by the following considerations:
a) raw materials are available in adequate quantity locally;
b) there is reliability of supply - whether local or imported source;
c) seasonal availability; keeping qualities, quality and variability of raw materials have been
considered and found to be satisfactory;
d) price of raw materials is reasonable;
e) increase in the price of raw materials in the future is perceived to be reasonable and predictable;
12
Competitors (ATTENTION! Deduct score from total!)
More there are competitors offering the same kind of goods or services, less likely is the survival of
the entrepreneur planning to go into the respective business. That’s why the score obtained (5 for
many competitors, 0 for none) is to be deducted from the total obtained so far. Based on this, the
participants can calculate their ”corrected total”.
Critical Success Factor

After the above mentioned parameters have been evaluated and rated, the participant goes into a
finer cross-checking of the key variables affecting the success or failure of the project idea. This is
called the Critical Success Factor (CSF). CSF means a certain factor particular to the identified project
which is very important for the success of that specific project. If that certain factor is missing, is
inadequate, or is not properly taken into account, it can indicate that the project may not be feasible in
the long run.
A project's CSF can be anyone of the parameters above. However, it must be further refined or
qualified. For example, not just raw materials, but seasonal availability of raw materials, keeping
qualities of raw materials, lack of standardization of raw materials, unpredictability of availability of
supply (perhaps due to import restrictions, infrastructure problem, weather condition, etc.). In other
circumstances, prevalence of peace, the good maintenance of high ocean (lake) water quality or the
availability of petrol (diesel) throughout the year might be decisive for the success of tourism projects.
If absent, the project is bound to die very soon.
13
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.1
LESSON 6
HANDOUT 10: Other suggested parameters for micro screening
Select from among the below mentioned parameters according to your own intimate knowledge of
the respective economic environment in which the majority of the participants will be trying to set
up (or to expand/diversify( their businesses.
Strategic Fit
The strategic fit of the projects under consideration is indicated by the following criteria:
• proposed project fits well within the competence and expertise of the entrepreneur or key staff;
• proposed project fits well within the existing product line, technology, marketing set up,
production system, facilities and resources of the entrepreneur or the firm;
• project complements and enhances the existing set up, viability or growth of the firm through a
positive synergy.
Ease of Implementation
Ease of implementation can be measured by the following criteria:
• project can be implemented within a short gestation period or reasonable preparatory period (e.g.,
3 months to one year);
• project can start operation within one year from the completion of the training;
• any unforeseen difficulties can be controlled by the entrepreneur or management.
Risk Exposure
The project is rated excellent if it is considered less risky, or risks are very minimal while projected
profits are more or less assured. Degree of risk can also be assessed in terms of the following factors:
• the product or service can readily be copied or imitated if the project is found very profitable by
others;
• competitors who have more resources and expertise may effectively fight back if threatened by
the project;
• changes in customers' and consumers' lifestyle, buying habits, consumption and spending
pattern, etc. may take place anytime before the project can service the market;
• the project may suffer from unforeseen factors such as weather conditions, availability of raw
materials, technology obsolescence, changes in government policies, priorities or programs;
• dependency of the project on imported inputs whether raw materials, technology, skills or other
resources.
14
Investment
At this point in the training, the participants are already aware of their financial resources (equity) and
they might have a general idea about project costs involved. This criterion can be rated in terms of
whether the necessary investment can be provided by the entrepreneur him(her)self or with outside
financial help:
5 – totally self-financed; 4 - external finance of approximately 25%; 3 - external finance of

approximately 50%; 2- external finance of approximately 75%; 1 - external finance of approximately
90%; 0 - completely external finance required.
Cost / benefit
This factor is practically the summation of all other criteria and gives an overall impression regarding
the desirability and feasibility of undertaking the project. The various considerations to be taken into
account in rating this factor include:
• whether the benefits of the project in terms of profitability, risk, investment requirement,
availability of inputs, etc. are worth all the efforts in conceptualizing, organizing, and
implementing the project;
• the project provides sufficient (tangible and visible) benefits to the community - either through
employment generation, backward or forward linkages with other industries or other economic
activities; availability of needed products and services, etc.;
• the project is economically viable through its own merits and not through artificial government
interventions.
Government support
Government priority is indicated by the following considerations:
• the project is listed under the government's list of priorities for promotion or investment;
• the project receives government incentives whether fiscal (e.g. tax exemption or reduction,
tariff protection, import privileges, etc.) monetary (priority lending status, reduced interest rate),
or other support assistance (e.g., marketing, technical or consultancy services);
• the project falls under the government's priorities of import substitution, export promotion,
employment generation, rural industrialization programs, technology development/transfer, etc.
15
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.1
LESSON 6
HANDOUT 11: Information requirement sheet
Information Requirement Sheet
In the spaces provided below, list all the information required for each element of the marketing
plan considering your specific product or project idea.
a) Demand for the Product – How many people need it/can afford it/buy it?
Information Required Possible Sources Deadline
b) Competitors/Other Suppliers – Who is already offering the product

c) Target Market or Buyers: Who do we intend to sell our product?

16
d) Where are we going to sell our product or through whom?
e) What kind of promotion do we need? (if any?)

f) How do we organize ourselves in our mini-business? Who does the selling? Who
does the bookkeeping? Etc.
g) Pricing. What should be the price of our product?

17
h) What costs can we expect? (raw materials, rent, transport, etc.?)
18
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.2
Selecting suitable markets for products and services
LESSON 1
Introduction to marketing
HANDOUT 12: The marketing mix: points to remember
1. PRODUCT:
• type of material used
• sizes
• colors
• designs
• styles
• quality
• variety
• packaging
• service to the customer
2. PRICE:
• selling price
• cash discounts for paying cash
• quantity discounts for bulk purchases
• seasonal discounts
• special offers
• giving credit facilities to customers
3. PROMOTION:
• advertising
• posters
• displays
• personal selling
• shows
• publicity
• mailing
4. PLACE:
• location
• storage
• use of wholesalers
• use of retailers
• selling direct to customers
• purchase of raw materials
• when and how to deliver to customers
19
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.2
LESSON 1
Introduction to marketing
HANDOUT 13: Marketing in my mini-business: checklist
PRODUCT:
• Do I sell products/services that people want and need? (e.g. my products sell easily or it takes
long for them to sell?)
• Are there many other businesses that are offering the same products/services?
• Are my products/services different from those of my competitors? If so, how?
• What do I have to change in my products/services so that more people get attracted and will buy
my products?
PRICE:
• Do I know what people will be able to pay for my products/services?

• Do I know the prices of my competitors?
• How do I set my prices?
• Do I ever give discounts to my customers?
• Do I give credits to my customers? Does that give me problems?
• What do I have to change in my prices so that more people get attracted and will buy my
products/services?
PROMOTION:
• Do people know my mini-business and are they attracted to buy my products/services?

• Do I use ways to promote my products/services? If so, in what way?
• What do I have to change in my promotion so that more people get attracted and will buy my
products/services?
PLACE:
• Is the location of my mini-business o.k.? (E.g. near the customers, near the suppliers, near
competitors?)
• Can I easily get the materials for my mini-business?
• Can customers easily find my mini-business?
• Do I have any problems with transport? If so, what problems?
What do I have to change in my mini business so that more people get attracted and will
buy my products/services?
20
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.2
LESSON 3
Results market research & introduction SWOT
HANDOUT 14: SWOT Analysis Framework
Strengths: positive factors, to be capitalized

Weaknesses: negative factors, to be eliminated
Opportunities: to make use of them
Threats: to avoid them
STRENGTHS WEAKNESSES
List strengths and weaknesses related

to your specific project idea which can
be controlled by the entrepreneur such
as: technical, financial, promotional
factors, networking, knowledge,
competencies
OPPORTUNITIES THREATS
List opportunities and threats beyond

the control of the entrepreneur related
to your specific project idea such as:
sociological, political, demographic,
economic factors
21
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.2
LESSON 3
HANDOUT 15: Personal SWOT Analysis
Strengths: positive factors, to be capitalized

Weaknesses: negative factors, to be eliminated
Opportunities: to make use of them
Threats: to avoid them
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
22
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.2
LESSON 3
HANDOUT 16: Components of SWOT Analysis

Strengths Weaknesses
Strengths are within the control of the Weaknesses are within the control of the
entrepreneur and they occur at present! entrepreneur; they occur at present. They are
Strengths should be capitalized and "lack of...", "missing...", or weak points. As far
harnessed to make weaknesses redundant. as possible, weaknesses should be
✓ Technical expertise eliminated!
✓ New improvements of product ✓ No control over raw material
✓ Good network with customers ✓ Limited product life
✓ Managerial experience ✓ Poor design of product
✓ Distribution system ✓ Weak selling effort
✓ Comparatively cheap price ✓ Comparatively high price
✓ Packaging ✓ No technical expertise of owner
✓ Superior technology ✓ Lack of promotion experience
✓ Product features (utility, durability) ✓ Technological obsolescence
✓ Inexperienced managers/owners
✓ Lack of working capital
✓ Low level of stocks in times of peak sales
Opportunities Threats
Opportunities are positive or favorable factors Threats are negative or unfavorable external
in the environment which the entrepreneur factors in the environment and normally beyond
should make use of or which make his project the control of the entrepreneur. They adversely
idea potentially viable. They are, however, affect the business, if not eliminated or
mostly beyond the control of the entrepreneur. overcome.
They are different from strengths in the sense Threats differ from weaknesses in as much as
that strengths are positive internal factors of the they are beyond the control of the
business. entrepreneur. Both have a negative impact on
✓ Few and weak competitors the business. The purpose of analyzing threats
✓ Rising income of target market is to look for ways of hedging against them, i.e.,
✓ Growing demand trying to avoid them or lessening their negative
✓ Similar products making profit impact by making counterbalancing actions.
✓ Technical assistance available ✓ Rising raw materials costs
✓ Access to cheap raw material ✓ Government bureaucracy
✓ No such products in the market ✓ Raw materials shortages
✓ Scarcity of product in the local market ✓ Natural disasters
✓ Favorable government policy ✓ Graft and corruption
✓ Favorable government programs ✓ Changing government regulations
✓ Adequate training opportunities ✓ Too much competition
✓ Low interest on loans ✓ Restive labor force
✓ Piracy of skilled labor
✓ Insufficient power
✓ Poor infrastructure
✓ Smuggling
23
Coverage
Generally speaking, you should cover the following aspects, while making a SWOT analysis for
your project idea:
Financial Aspects Physical Resources

✓ Capital of owner ✓ Buildings
✓ Cash flow ✓ Plant & machinery
✓ Access to additional resources ✓ Technology / incubator parks
✓ Investment requirement ✓ Location
✓ Profitability ✓ Transport facilities
✓ Risk ✓ Infrastructure & utilities
✓ Industrial flats/estates
Management, Supervisory and Operator Market

Capabilities ✓ Profile of target market
✓ Management competence ✓ Competitors' marketing strategy
✓ Age/experience ✓ Market share
✓ Skills availability ✓ Product features/quality
✓ Technological know-how ✓ Expanding/contracting/stagnant market
✓ Management contacts/network ✓ Market niche for new/existing product
✓ Salesmanship of owner/staff ✓ Demand /supply situations (past,
✓ Personnel management present, future)
Management Information Supply of Raw Materials

✓ Is the necessary information available? ✓ Are the sources adequate in terms of
✓ Is it available in time to aid in decision quantity, quality & price?
making and in taking corrective actions? ✓ Are new materials becoming available
which would be useful to the company?
✓ Will they continue to be adequate?
Social Environment Production Process

✓ How is the small business getting ✓ Is the product going to be mass
adjusted to the markets? produced?
✓ Are people accepting the product? ✓ Is it labor intensive?
✓ Is there any particular prejudice likes or ✓ Is it a job order or a continuous
dislikes for the product? operation?
✓ Is it based on product or process
technology?
24
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.2
LESSON 3
HANDOUT 17: Case study: Josef the economist
Josef is an economist in a provincial capital in Zambia. He has completed a master’s degree but he
has no experience yet and is still very young. There are only a few jobs for economist in this town,
at least not the type of jobs that were promised to him when he started studying and that are
usually desired by economists. In fact, these jobs are getting less everyday. In the old times with
central planning, the government departments were big and most economists would be offered a
job with the government. Now it seems that only NGOs employ economists, but they only want to
employ them if they have experience. Josef has noted that a lot of experienced economists that
were previously working in abroad are now returning to Zambia.
While studying he was told that, and he agrees, he is not so good at macro economics. Frankly
speaking, he doesn’t like that at all! He was best at the more business type of economics; he was
good at business administration and commercial management. He has a lot of fun in managing the
football club, whereby he is praised for his skills to manage people. He can really motivate the
youngsters and he is also good in talking to business owners and government officials in making
funds available for the club. In fact, some people refer to him as a fast talker, but then in a positive
way.
When Josef talks to these business owners, a lot of them complain about the changes in the
system. The former big shop owners, especially the rural based traders, complain that things are
changing and that they can't understand it anymore: their business is going down. On the other
hand, Josef sees a lot of new companies from abroad who seem to have a lot of money to spend
and that are setting up enterprises in this town. They have a problem in finding qualified personnel,
especially bookkeepers and managers. Some of them bring their staff from Lusaka or even from
further!
25
Josef one day sits down on the veranda to reconsider his position. He lists down al the positive and
negative aspects for his situation as follows:
Positive aspects Negative aspects
He is a qualified economist He has no experience in 'real jobs'
NGOs are looking for economist with experience He is still young
He is good at managing people There are fewer jobs offered by the government
The business owners don't understand the There are more experienced economist
changes in the economy (and realize that!) There are experienced economist returning
There are new business coming in from abroad He is not good at macro economy
He is a fast talker
He is experienced in fund raising
He has experience with football club management
These new companies have a lot of money
These new companies look for personnel
Bookkeepers and managers seem difficult to find
Josef is somehow pleasantly surprised that there are still so many positive aspects: he just
wonders why he is still unemployed!
Controllable or non controllable aspects

The above listing of positive and negative aspects can be specified further. Some aspects are
typically for Josef: they are his strengths and weaknesses. He himself can do something to change
them!
One of his strengths is that he is a qualified economist, he has done a masters degree. If he would
do his PhD, he would be more qualified: so he would improve one of his strengths even more.
One of his weaknesses is that he is not so good at macro economics. If he would take extra
lessons or another course, he might make that weakness less weak, or turn it even into strength by
getting better at macro economic issues.
Yet, there is nothing he can do about the fact that the government is offering less jobs: he can not
influence that policy: he can apply for the few jobs on offer, but he can not make the government to
offer more! That is why this is not a weakness of Josef but it is something negative that is out of his
control. We therefore call it a threat!
Josef can also not do anything about the fact that new companies are looking for staff, that is a
fact, but that fact offers an opportunity for him: it is positive but not controlled by him!
This is the basis for the SWOT analysis; we look at all the (positive and negative) aspects and
separate between controllable aspects (strengths and weaknesses) and not-controllable aspects
(opportunities and threats). The non-controllable aspects are important even though we can’t do
something about them directly. We need to realize that these threats and opportunities exist for us
to define strategies. Sometimes we also refer to the controllable aspects as internal and to the not-
controllable aspects as external. It is scheduled as follows:
Positive Negative
Internal Strengths Weaknesses
External Opportunities Threats
26
Josef thus re-organizes his list as follows:
Positive Negative
Strengths Weaknesses
• A qualified economist. • Not good at macro economy.
• A fast talker. • No experience in 'real jobs'.
Internal • Experience with football club • Still young.
management.
• Experienced in fund raising.
• Good at managing people.
Opportunities Threats
• NGOs are looking for economist with • Fewer jobs offered by the
experience. government.
• The business owners don't understand • More experienced economist.
the changes in the economy (and realize • Experienced economist returning.
that!).
External • There are new businesses coming in from
abroad.
• These new companies have a lot of
money.
• These new companies look for managers
and bookkeepers.
• That type of staff seems difficult to find.
Josef now realizes that most of the positive aspects are actually opportunities and not so much his
strengths. At first he is not that happy, but then he realizes that opportunities are at least as
important as his strengths! He also realizes that a weakness of others (such as the problem the
business owners have) might actually be an opportunity for him!
27
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.3
Developing a mini business plan
LESSON 1
Introduction to business plan
HANDOUT 18: The business plan
What is a business plan?
A business plan is:
A document prepared by somebody who intend to start a business or who is already in business. It
gives a complete description of the business and its plans for a period of time (e.g. from one to five
years).
Why do you need a business plan?

A business plan is like a map. A map shows a traveler:
• Where he is
• Where that traveler wants to go
• The distance and time that the traveler has to cover
• The obstacles on the route
• What is required to get there
• How to get there
If you are thinking of starting a business, you will also need some kind of a map, a business plan, to
show you what you need to set up your business, what the new business hopes to achieve in a given
period of time, the objectives of the business and the activities that the business must carry out to
attain what it wants to achieve.
In short, a business plan is a statement, prepared by people intending to start a business, who should
find themselves answers to the following questions:
a) What is the present position of the person that wants to go into business?
b) What does the business hope to achieve in the duration that the business plan is prepared for?
c) What activities should be undertaken in order to achieve the set objectives?
d) What does the business need in terms of resources, i.e. money, raw material, labor, machinery
etc. in order to achieve the given goal?
In other words, a business plan guides an entrepreneur in his business operations.
What is the business plan used for?

A business plan has two uses. It can be used internally or externally in one’s business.
a) Internal use of a business plan
This is when a business plan is used as a working document in the business to enable the owner to
see how the business is progressing and to spot problems or opportunities as they arise.
28
When a business plan is used as a management tool in the business, it enables the entrepreneur to:
• plan in a good way for the growth of his/her business
• think of what type of changes might be needed in the business
• know how to control the business
• find out the resources needed for the business to achieve its plan. These resources will not only
be financial but could also include:
- additional management
- skilled labor
- production capacity
- product development needs
- marketing drives
b) External use of a business plan
When a business plan is used to get a loan from any lending institution, it has been used externally.
Nowadays, any lending institution (bank) will need to see an entrepreneur’s business plan to assist
the bank in finding out the following:
• How much does the entrepreneur want to borrow?
• What does the entrepreneur want the money for?
• When will the entrepreneur be able to repay the borrowing?
• Will the entrepreneur be able to pay the interest?
• Can the business survive a set back in its plans?
• What security is available for the lending institution?
However, the business plan is not only used for borrowing money from banks but it can also be used
as a means of planning and controlling a business internally.
Can you start a business without a business plan?

Though you can start a business without a business plan the risks of failing are high. It is therefore
advisable to always prepare a business plan.
As stated, a business plan is like a map. If a traveler like David Livingstone started off his journey
without a map, he would probably have got lost.
That is the same for you: if you are running a business without a plan you are likely to fail in running it
properly.
In fact, because most small businesses do not start with a business plan, they are responsible for
most of them not doing well. To be on a safe side, you should always start a business with a business
plan.
What common problems do people face in preparing business plans?

Most problems arise when people thinking of starting a business set their objectives too high. It is for
example very unrealistic for a traveler to think that he will walk from village A to village B, a distance of
400 Km, in one day.
Therefore, when you are starting a business and preparing the business plan, you need to be sincere
to yourself about what you want to do. It is advisable to think small. It is also for the above reason that
you need to conduct a detailed market research and keep your requirements in terms of money, raw
materials to a reasonable limit you can afford.
How to prepare a business plan?

A business plan consists of a different number of elements. This however depends on the nature and
position of a business or the type of business.
If you are starting up a business, your plan will usually have to show the following:
29
1. Details of the business
Some background information on your business. This includes:
• The name of the proposed business
• The type of products you intend to deal in, e.g. Making chairs and beds
• The date you intend to start operating your business, e.g. 1 september 2006
• Your name(s) as the owner(s) of the business, e.g. Marion and jack
• Your experience in running a business, e.g. 2 years experience as a carpenter.
2. Location
The location is the place where you intend to run your business. It should include some information
such as:
• Are the premises owned or rented?
• Does the place have any water and/or electricity?
• Is the business located near the source of (raw) materials or near the customers or competitors?
3. Product
Explain the type of product(s) your business will deal in.
Under this element you can explain whether your product needs government approval which is
normally required if your business deals in manufacturing cosmetics (vaseline, hair creams etc.),
processing foods and fruit (jams, wines etc.) as this may be harmful to consumers and users if they
are not made properly.
4. Marketing plan
In a business plan a detailed report on the market is very important. To get this information you can do
a market research and ask yourself the following questions:
• Are you sure that there will be people who will buy from you?
• Why will people buy from you? Is it because your product will be cheaper or is it not available
locally, or is your product of better quality?
• How will you let people know about your product? Are you going to place posters at markets or
are you going to visit people at their homes and introduce the product?
• How will you sell the product? Will you sell directly to the end users or will you sell through a
middleman?
• Who will be your competitors and what are their products, prices etc.?
5. Production plan
Here you should clearly show that you fully understand the process of producing your product(s).
Also make clear how much it will cost to produce/sell the products and what will be your pricing.
In addition, you should indicate what capacity you intend to operate on (production forecast): how
much do you think you can produce/sell in e.g. one month?
6. Management and organization

Here you have to write down how many people you will need to run your business. That is, you may
be starting alone but as time goes on you will probably need assistance.
You should also give an estimate of how much you are going to pay yourself and your workers.
7. Supply of (raw) materials

Here you should write down:
• Where you will get your (raw) materials
• How much you will need
• What will be the costs
8. Plant and equipment

A plant is the place you are working from.
Here you have to write down:
• What equipment you will use,
• What you will need for your plant (building, shelter, stand etc.)
• Where you will get the equipment etc. And how much it will cost.
30
9. Investment and finance plan
Here you need to give a summary of how much money you will need to start your business and where
you intend to get it from:
• How much money do you need (= investment) and how do you intend to spend it (e.g. on tools,
materials, building)
• How much of your own money are you going to put in your business (= owners investment)
• How much money do you need to borrow?
10. Cash flow forecast

Last but by no means the least you must prepare a cash flow forecast. That is, you should show for a
period of e.g. 1 year:
• How much money you expect from sales in each month
• How you intend to spend the money, clearly stating the items on which the money is to be spent
and the month at which it will take place
• How you are going to repay the loan(s), showing the loan and interest repayments in each month.
31
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.3
LESSON 1
Introduction to business plan
HANDOUT 19: Mini business plan
Mini Business
_____________________________
Run by:
________________
________________
________________
________________
________________
Date: ____________
32
Mini-Business Plan
EXECUTIVE SUMMARY
1. Brief Description of the Mini-Business
2. Brief Profile of the Entrepreneurs
3. Key financial figures (planned investments, sales forecast, costs and

expected profit)
MARKETING PLAN
1.1 Description of the Product/service
1.2 Comparison of the Product/service with its Competitors
Competitive Analysis of Product

Features3 Proposed Competitor Competitor Competitor
Business 1 2 3
Product Quality
Price
Delivery Lead
time
Multiple Use
Taste
1-Outstanding 2-Very Satisfactory 3-Good 4-Fair 5-Poor
3 Adjust the features to match with your product/service.
33
1.3 Location
1.4 Market Area
<List of market areas and size of market>
1.5 Main Customers
<List of major customers and their requirements>
1.6 Total Demand
Table 1.6 Projected Demand
Months (or weeks) Quantity Amount
1.7 Selling Price
Table 1.7 Comparison of Competitors’ Selling Prices

Project’s Project’s Prices of Competitors Competitors’
Product(s) Selling Average
Price Price
Competitor Competitor Competitor
1 2 3
1.8 Sales Forecast
Table 1.9 Projected Sales by Months or weeks, Sales Volume and Amount
Months (or weeks) Sales Volume (units) Sales Amount (in K)
34
1.9 Promotional Measures
1.10 Marketing Strategy
1.11 Marketing Budget
Production PLAN
2.1 Production Process
2.2 Fixed Assets
Table 2.2-A List of Machinery, Number, Specifications and Purpose

Machines, Tools and Number Suppliers Price
Fixtures
2.3 Projected Production Volume by Month or week
Months (or weeks) Volume
2.4 Terms and Conditions of Purchase of Equipment
2.5 Raw Materials Needed
35
2.6 Cost of Raw Materials
Table 2.6 List of Raw Materials, Sources and Price
Type of Materials Suppliers Unit Price
2.7 Labor
2.8 Cost of Labor
2.9 Production Cost
Financial PLAN
Estimated turnover (total sales): ______________________
Estimated total cost4: ______________________
Projected Profit or Loss: ______________________
Planning Activities
Activities Timetable (In Weeks)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Developing
1. Business
Idea
Preparing
2. the Business
Plan
Applying/
3. Approval of
Loan
Contacting
4. Equipment
Suppliers
4 We only mention costs here as there will be no long term investments in the mini businesses.
36
Activities Timetable (In Weeks)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Setting up
5.
location
6. Hiring Labor
Installing the
7.
Equipment
Purchasing
8. Raw
Materials
9. Production
10. Sales
Report on
11.
Results
37
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.3
LESSON 2
Cashbook
HANDOUT 20: Cash book
All the day to day transactions involving cash repayments and receipts are recorded in this book.
Information in the cash book includes:
• Cash in hand
• Cash purchases
• Daily expenses
• Cash receipts
EXAMPLE:
Month: April
Date Details Cash in Cash out Balance

1 April Deposit for 1 cupboard 10,000 10,000
3 April Deposit for 2 dining 20,000 30,000
tables
4 April Bought material 15,000 15,000
8 April Sold 2 dining tables 20,000 35,000
REMEMBER:
For balancing:
• When you take money out = SUBTRACT
• When money comes in = ADD
38
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.3
LESSON 2
Cashbook
HANDOUT 21: Simple cash book
John has been in business for the past three years. He wants to expand his business and obtained
a bank loan on January 23. Below is a list of transactions for his business between January 23 and
February 4. If John had 3,500 cash in the business on January 23, how much cash will he have on
February 4?
Date Transaction (Debit) (Credit)

Current
Money in Money out
balance
(+) (-)
23 Balance as of Jan 23 3,500
23 Receives cash loan 20,500.00
24 Paid R.J. Smith Cash for building & 8,000.00
land
24 Purchased equipment 2,875.00
24 Purchased fixtures 895.00
25 Purchased supplies 175.00
25 Purchased merchandise 150.00
28 Sold merchandise 125.00
28 Withdrew cash for personal use 175.00
31 Sold merchandise 3,101.00
31 Paid power bill 1,500.00
2 Paid part time help 86.00
3 Paid for repairs 65.00
4 Paid freight charges 13.00
4 Ending balance
Make the entries: what is the written balance on February 4?
39
UNIT 2.1
DESIGN OF
THE MINI BUSINESS
ELEMENT 2.1.3
LESSON 3
HANDOUT 22: Share certificate
EUVETA PROGRAM
(Example)
Share number:
Name shareholder:
Name mini business:
Name mini business member:
Name VTC:
Name VTC instructor:
Share value: K. ………
Place: Date:
Signed by shareholder:
Signed by mini business member:
As part of the EUVETA entrepreneurship program, trainees of the above VTC are setting up a mini
business. The mini business is a learning company in which the trainees learn by doing what it is to
run your own business. The trainees will run the business for approximately 28 weeks. Coaching of
the mini business is done by the VTC instructor of the VTC.
By selling shares, trainees arrange business capital to set up the mini business.
Thank you for your cooperation.
40
UNIT 2.2
ORGANIZATION
AND MANAGEMENT
OF BUSINESSES
ELEMENT 2.2.1
Marketing
LESSON 1
Marketing
HANDOUT 23: Marketing
Now this is what is called marketing
Father: “I want you to marry a girl of my choice”

Son : "I will choose my own bride!"
Father: "But the girl is Bill Gates’ daughter."
Son : "Well, in that case...ok"
Next, father approaches Bill Gates.
Father: "I have a husband for your daughter."

Bill Gates: "But my daughter is too young to marry!"
Father: "But this young man is a vice-president of the World Bank."
Bill Gates: "Ah, in that case...ok"
Finally Father goes to see the president of the World Bank.
Father: "I have a young man to be recommended as a vice-president."

President: "But I already have more vice- presidents than I need!"
Father: "But this young man is Bill Gates’ son-in-law."
President: "Ah, in that case...ok"
This is how business is done!
41
UNIT 2.2
ORGANIZATION
AND MANAGEMENT
OF BUSINESSES
ELEMENT 2.2.1
Marketing
LESSON 1
Marketing
HANDOUT 24: The four Ps of the marketing mix
In each of the following examples one of the P's must be changed so that more customers will buy the
product. Try to find out which P should be changed in each example. Present the results to the rest of
the group.
1. You make tractors of good quality and for a reasonable price. You placed advertisements in
newspapers. You start selling the tractors in the Northern Province. The commercial farmers who
use tractors live in the Southern Province.
2. You make clothes. You ask high prices. Your shop is located in one of the rich compounds. You
placed nice posters everywhere to promote your clothes. The material you use for the clothes
easily looses color and is not very strong.
3. You make tomato chutney. The taste is very good and people like it. Your shop is near a bus
stop where a lot of people pass by. You made a poster to promote your chutney. Your price is
very low and you found out that it doesn't cover the costs.
4. You make chairs of several designs of good quality. The price is reasonable. Your workshop is
located in the main street where many people pass by. However, the people don't know that
your workshop is there.
Present the results to the rest of the group.
42
UNIT 2.2
ORGANIZATION
AND MANAGEMENT
OF BUSINESSES
ELEMENT 2.2.1
Marketing
LESSON 1
Marketing
HANDOUT 25: Mr. Kawewe's carpentry workshop
Mr. Kawewe has a workshop just outside the centre. He makes the following items:
Single beds K 300,000

Dining chairs 70,000
Double beds 500,000
Dining tables 300,000
Panel doors 600,000
His customers come and collect the items themselves. Mr. Kawewe is not satisfied about his sales.
He bought some tools so that he could produce more and better items. But still his sales are low.
How can Mr. Kawewe increase his sales?
43
UNIT 2.2
ORGANIZATION
AND MANAGEMENT
OF BUSINESSES
ELEMENT 2.2.2
Costing and pricing of products and services
LESSON 1
Costing
HANDOUT 26: Costing exercises
A: Costing for a manufacturer

• You manufacture leather jackets
• You make 10 jackets per month
• You work 20 days in a month.
• To make 1 jacket takes you 2 labor days
• For the production of 1 jacket you need for material:
- 2 meters of leather at K 1,000 per meter
- Lining: K 500 per jacket
- Buttons: K 200 per jacket
- Strips: K 100 per jacket
- Labels: K 200 per jacket
• You pay yourself for labor K 1,000 per jacket
• Transport to sell and buy the jackets is K 8,000 per month
• Stationery costs are K 500 per month
• The depreciation for your sewing machine is K 2,000 per month
• For maintenance and repair you pay K 1,000 per month
• You rent your building for K 8,500 per month
Calculate:
a. Direct material costs per jacket
b. Labor costs per jacket
c. Indirect costs per jacket
d. Total costs per jacket
B: Costing for a manufacturer

You own a small carpentry shop and you manufacture dining tables. You are supervising the
production and marketing as well as the administration and procurement.
• You manufacture dining tables
• You make 4 tables per month
• It takes your personnel 5 labor days to produce one table.
• For 1 labor day you pay K 1,000
• For material you use:
- Planks: 6 meters at K 1,000 per meter
- Kapollos: 5 meters at K 800 per meter
- Glue: 1/4 liter at K 4,000 per liter
- Screws: 12 at K20 per screw
- Nails: 1/8 kg at K 4,000 per kg
• Your own salary is K 20,000 per month
• You work 20 days in a month
44
• The value of your tools is K 120,000. The tools will last for 5 years. So, tools depreciation per
month = K 2,000
• The depreciation of your shelter is K 1,000 per month
• You buy stationery for K 2,000 per month
• Transport costs for selling your items are K 5,000 per month
• You have a loan over which you pay K 10,000 interest per month
Calculate:
a. Direct material costs per dining table
b. Direct labor costs per dining table
c. Indirect costs per dining table
d. Total costs per dining table
C: Costing for the mini business

REMEMBER:
Total costs per product =
Direct material costs/product + direct labor costs/product + indirect costs/product
Now look at the costs you make in your mini business and calculate for your products/services:
a. Direct material costs
b. Direct labor costs
c. Indirect costs per month
d. Indirect costs for the products/services
e. Total costs for the products/services
D: Costing for a Service operator

• You have a barber shop
• On average you have 16 customers per day
• The service takes you 30 minutes
• Your material costs are K100/service
• Your costs of living are K 20,000 per month
• You work 20 days per month, 8 hours per day
• The value of you instruments, building etc. is K 20,000
• Depreciation per month = K 1,000
• Stationery costs are K 500 per month
• The rent of the building is K 1,500 per month
Calculate:
a. Direct material costs per service
b. Direct labor costs per service
c. Indirect costs per service
d. Total costs per service
E: Costing for a Mini-Business

Now look at the costs you make in your own mini business and calculate for one service:
a. Direct material costs
b. Direct labor costs
c. Indirect costs per month
d. Indirect costs per service
e. Total costs per service
45
F: Costing for a trader
You are selling grocery goods.
Last month you had the following expenditures in your business:
• You went for 7 days to Dar for procurement of goods:
Public transport:
- K 7,000/person (single journey)
- K 10,000 for all goods
- Food & accommodation: K 3,000/day
• Goods purchased:
Shoes K 30,000
10,000
Soap 30,000
Chitenges 5,000
Lotions 20,000
• Salary owner: K 15,000/month

• Salary saleslady: 8,000/month
• Rent of building: 2,000/month
• Water & electricity: 500/month
• Stationery: 800/month
Calculate:
a. Direct costs
b. Indirect costs
c. Total costs for that month
G: Costing for a Mini-Business

Now look at the costs that you make in your mini business and calculate for one month:
a. Direct costs
b. Indirect costs
c. Total costs
H: Calculation of depreciation
You are a carpenter. You have the following equipment:
Tool Current Replacement

price after
1 Plane no. 7 60,000 15 yrs
1 Crosscut saw 20,000 5 yrs
1 Chisel 10,000 2 yrs
1 Handdrill 30,000 5 yrs
1 Sash clamp 60,000 15 yrs
Calculate:
a. Total depreciation per year
b. Total depreciation per month
I: Calculation of break even point

You are a carpenter. You make tables. You want to know the break even point for your business.
What you know:
Direct cost per table: K. 15,000

Total indirect costs: 35,000
Selling price of 1 table: 20,000
What is your Break Even Point?
46
UNIT 2.2
ORGANIZATION
AND MANAGEMENT
OF BUSINESSES
ELEMENT 2.2.2
LESSON 2
Pricing
HANDOUT 27: Break Even analysis
The "break-even" point is the point at which total revenues equal total costs. At this point, a
business begins to earn a profit.
Companies tend to look at the break-even point in terms of sales volume.

For example: "Business A will break even after selling 500 tables."
Companies also look at the break-even point in terms of time.

For example: "Business B will break even after 2 years."
No matter how companies refer to the break-even point, they always begin with the Break-Even
formula:
Break Even Point = Indirect costs

--------------------
(Price per Unit – Direct costs per Unit)
A break even analysis depends on the following variables:
1. The indirect production costs for a product.

2. The direct production costs for a product.
3. The product's unit price.
4. The products expected unit sales [sometimes called projected sales.]
On the surface, break-even analysis is a tool to calculate at which sales volume the direct and
indirect costs of producing your product will be recovered. Another way to look at it is that the
break-even point is the point at which your product stops costing you money to produce and sell,
and starts to generate a profit for your business.
You can also use Break Even Analysis to solve managerial problems:
• Setting price levels

• Targeting optimal variable/ fixed cost combinations
• Determining the financial attractiveness of different strategic options for your company
47
Definitions used in Break-Even Analysis:
• Indirect (Fixed) Costs:

The sum of all costs required to produce the first unit of a product. This amount does not vary
as production increases or decreases, until new capital expenditures are needed.
• Direct (Variable) Costs:

Costs that vary directly with the production of one additional unit.
• Expected Unit Sales:

Number of units of the product projected to be sold over a specific period of time.
• Unit Price:
The amount of money charged to the customer for each unit of a product or service.
• Total Costs:
The sum of the fixed cost and total variable cost for any given level of production.
Fixed Cost + Total Variable Cost
• Total Revenues:
The product of expected unit sales and unit price.
Expected Unit Sales * Unit Price
• Profit (or Loss):

The monetary gain (or loss) resulting from revenues after subtracting all associated costs.
Total Revenue - Total Costs
• Break Even point:

Number of units that must be sold in order to produce a profit of zero (but will recover all
associated costs).
Break Even = Fixed Cost / (Unit Price - Variable Unit Cost)
48
UNIT 2.2
ORGANIZATION
AND MANAGEMENT
OF BUSINESSES
ELEMENT 2.2.2
LESSON 2
Pricing
HANDOUT 28: Break-even and pricing exercises
A. Break-even point for Mr Juma’s Furniture workshop
Mr Juma’s Furniture workshop has a Sales Turnover of 4,000 furniture units at K 1,000 in a year.
K. 980,000 fixed costs are incurred in the same year, whereas the variable cost per unit amount to
650 per unit
Calculate the workshop’s break even point sales (i) units and (ii) shillings
B. Pricing for a trader
You have a grocery stand. This month you bought the following goods to sell in your in store::
• Groceries K. 100,000
• Shoes 50,000
For transport you paid:

• Goods: K. 5,000
• Person: K. 5,000
You have the following costs in a month:

• Rent of stand K. 2,000
• Selling costs 20,000
• Salaries 20,000
• Stationery 3,000
You bought the shoes for K. 2,000 each pair. Your profit % is 10%
Calculate the selling price for 1 pair of shoes.
49
UNIT 2.2
ORGANIZATION
AND MANAGEMENT
OF BUSINESSES
ELEMENT 2.2.3
Keeping records in business
LESSON 1
Basic recordkeeping
HANDOUT 29: Basic recordkeeping exercises
A. Mr. Kapalu's orders

Mr. Kapalu was sometimes getting orders from his special customers.
He used to keep the records of the orders that he received but sometimes it was difficult to know what
orders were given to him. That's why he wants to have the records in good order.
The records that he kept up to 28th January were as follows:
Jan. 17th Mr. Kayombo placed an order of 2 blankets of 193x73 cm at K.3,000. He paid a
deposit of K.1,500. Delivery of the blankets will be on 21st January.
Jan. 18th Ms. Womba placed an order of 2 pairs of shoes at K. 8,000. She paid a deposit of K.
2,000. She wants to collect the shoes on 25th January
Jan. 19th John placed an order of 3 x 2 mtrs. chitenge at K 6,000. He paid a deposit of K
2,500. He wants to collect the chitenge on 24th January.
Jan. 21st Mr. Kayombo collected the blankets.
Jan. 24th John collected the chitenge.
Jan. 26th Ms. Womba collected the shoes.
Assignment:
Make an order book for Mr. Kapalu's business and fill in all the orders for the month of January.
B. Mr. Kapalu's business purchases

Mr. Kapalu used to keep records of all his day to day business purchases on a piece of paper. He
now wants to put his monthly purchases in order.
At the 28th of February his list of purchases was as follows:
Feb. 17th Bought 10 blankets of 193x73 cm. at K.10,000 from Patel GD.
Bought on credit 10 pairs of shoes at K.30,000 from DHM dealers.
Feb. 21st Bought 10 dresses at K. 20,000 from DHM dealers.
Bought 10 blankets of 193x73 cm. at K. 8,000 from DHM dealers.
Bought on credit 10 chitenge of 2 mtrs. at K.10,000 from Patel GD.
Feb. 24th Bought 10 pairs of shoes at K. 20,000 from Patel GD.
Assignment:
Draw up a purchase book for Mr. Kapalu and fill in his total purchases by 28th February.
50
C. Mr. Kapalu's money
Mr. Kapalu realized that he should keep a cash book for his small shop business money. He had kept
a careful note of all transactions relating to his business. On 30th January, when he had operated his
business since the beginning of the month, the list was as follows:
Jan. 4th Money in the cash box K. 60,000

Jan. 5th Paid for various goods 20,000
Transport for goods 1,500
Jan. 6th Paid by Kayombo for trousers 6,000
Paid sales lady 5,000
Paid by Womba for dress 3,000
Jan. 8th Paid for purchase of 10 blankets 10,000

Paid by John for 2 blankets 3,000
Jan. 25th Paid rent for shop 2,500
Paid by Womba for 3 blankets 4,500
Paid wage for watchman 4,000
Assignment:
Draw up a cash book for Mr. Kapalu and record his cash receipts and payments. Find out the correct
balance at 30th January.
D. Mr. Kapalu's cash and credit sales

Mr. Kapalu found out that he should sometimes also sell things on credit to his customers. He
therefore started allowing a few of his trusted customers to buy goods on credit. Sometimes he asked
them to pay a deposit.
He keeps a careful record of all his cash and credit transactions, but he should like to have a better
system than the existing one.
On 28th February the list of transactions reads as follows:
Feb. 17th Womba bought 2 blankets for K 3,000. She paid cash K 1,500, remaining with a
credit of K 1,500.
Feb. 19th Kayombo bought trousers at K 4,000 on credit.
John bought a pair of shoes at K 6,000 and gave K 3,500 cash, remaining with K
2,500 credit.
Feb. 21st Womba bought shoes for K 4,000 and paid cash.
Kaumba bought 2 chitenge at K 4,000, paid K 1,500 cash and remained with K
2,500 credit.
Feb. 24th Kaumba bought shoes at K 6,000 and paid cash.
Kayombo bought 1 blanket at K 1,500 on credit.
Assignment:
Draw up a sales book for Mr. Kapalu, showing the cash, credit and total sales for his business in
February.
E. Mr. Tebeka`s carpentry workshop I

Mr. Tebeka has just started his carpentry workshop. From the beginning he wants to keep records of
what he is selling and buying so that he knows what is going on in his workshop. He
made an order book, purchase book, sales book and cash book to start with.
In the month of April, he had kept a careful note of all the orders, purchases, sales and all the money
he had after selling his items:
51
April 1st Mr Soneka placed an order for a cupboard. They agreed on a price of K 90,000.
Mr. Soneka gave a deposit of 50 % of the selling price. The cupboard should be
ready on 18th April.
April 3rd Mr. Maseka placed an order for three (3) dining tables (150 x 90 cm ) at K 32,000
each. He gave a deposit of 25 % of the selling price. Mr. Maseka insisted on a
delivery at 17th April.
April 4th Mr Tebeka bought cash and on credit from Zamamu:
• 2 planks 3 mtr * 20 cm at K. 1000/mtr (credit)
• 4 kapollos 3 mtr at 900/mtr (credit)
• 0.5 ltr of glue at 3000 (cash)
• 0.5 kg of nails at 1500 (cash)
April 9th Mrs. Kafweka came to order 4 dining chairs. She brought her own timber. They
agreed on a price of K 3500 per chair. She wants to collect them on 22 April.
April 15th Mr. Tebeka bought from Mr. Silenga (cash):
- 3 planks of 3 mtr * 25 cm at K 900/mtr.
- 2 kapollos of 3 mtr @ K. 700/mtr
April 17th Mr. Maseka comes to collect his dining table and he pays cash.
April 19th Mr. Soneka comes to collect the cupboard. He wants to pay the remaining amount
on credit.
April 20th From off-cuts Mr. Tebeka made two local stools and sold them at the market for K
1000 each.
April 22nd Mrs. Kafweka comes to collect the dining chairs. She pays cash.
Assignment:
Enter all the information required in the order book, purchase book, sales book and cash book
F. Mr. Tebeka`s carpentry workshop II

After some months of operation, Mr. Tebeka started to allow a few well known and trusted customers
to buy furniture on credit. However, he wants to know what customers owe him when they com to pay
their debts. That's why he decides to keep records of all credit transactions. In July he lists down the
following:
July 3rd Mrs. Mulenga bought 2 panel doors at K. 25,000 each. She gave a deposit of 50%.
She now pays her first installment of K. 5,000.
July 10th Mr. Mupinga bought 1 cupboard at K 90,000. He deposited K. 45,000. He now pays
his first installment (K. 15,000).
July 13th Mr. Shikunda bought 4 dining chairs at K. 10,000 each and a dining table at K.
32,000. He deposited K. 30,000. He now pays his first installment (K.12,000).
July 15th Mrs. Mulenga pays the remaining debt of the 2 panel doors.
July 16th Mr. Mupinga bought 1 dining chair at K. 10,000 and pays K. 5,000 installment.
July 17th Mr. Shikunda pays an installment of K. 1,000.
July 19th Mr. Mupinga pays an installment of K. 15,000 for the cupboard.
July 22nd Mr. Shikunda pays K. 10,000.
July 23rd Mr. Mupinga pays K. 15,000 for the cupboard
July 25th Mr. Shikunda pays K. 10,000
Enter the information in your debtor’s book.
52
G. Mr. Tebeka`s carpentry workshop III
Mr. Tebeka's workshop is operating well. He has a lot of customers and produces many items.
However, sometimes he buys some timber and inputs on credit. Also he applied for some loans to be
able to expand his business. At the end of August he had put together all the transactions which he
now wanted to write in his creditor’s book:
August 5th Mr. Tebeka received a credit from Zamamu for timber and inputs. Amount: K. 20,000.
From each item sold 15% of the price will be deducted for repayment.
August 10th Mr. Tebeka got a loan from Bank X for the purchase of some tools. Amount: K.
100,000.
Repayment should be within 12 months. An interest rate of 50% is
charged.
August 12th Mr. Tebeka sold a double bed to Zamamu at K. 40,000. 15% of the
price is deducted for the timber credit.
August 20th Mr. Tebeka pays the monthly installment of K. 10,420 to Bank X.
August 21st Mr. Tebeka sells 3 dining chairs to Zamamu at K.10,000 each. 15%
of the price is deducted for the timber credit.
August 29th Mr. Tebeka sells 2 panel doors to Zamamu at K.25,000 each. 15%
of the price is deducted for the timber credit.
Fill in the information in the creditor’s book.
53
UNIT 2.2
ORGANIZATION
AND MANAGEMENT
OF BUSINESSES
ELEMENT 2.2.3
LESSON 2
Business and family
HANDOUT 30: Hollow Block Factory
In 1963, as a road foreman in a big logging company in a city in the Southern province, THOMAS
was earning well, but his wife LITA was earning even more. She had put up a canteen selling
drinks and foodstuff to employees of the logging company. From an initial capital of K 5000, she
was able to make the business grow to around K 2,500,000 worth of goods in five years. Thus,
Thomas and Lita lived well and saved for the future education of their children aged one to eight
years.
In the summer of 1964, Thomas travelled with his fighting cocks and three friends to a cockfight
derby in Northern Province. He brought some of the family savings along as well, in the hope of
doubling the amount. While in Northern Province, he successfully located a long-lost brother of his
father. He saw that his UNCLES’ family was not well off. The uncle worked as a utility man in a
local rice mill, and his wife (AUNT) helped earn as a dressmaker. Their five children were working
their way through school (one in high school and four in college). Thomas wanted to impress his
poor relatives and decided to give them most of the money he brought along - leaving only a little
sum for the derby. In addition, he promised to help them financially from then on. It came to pass
that Thomas's fighting cocks won and brought him triple the original amount he had brought to
Northern Province. He believed that his reunion with his uncle perhaps brought him good luck.
On Thomas's request, Lita began sending K 75,000 a month as contribution to the education of
Thomas's cousins in Northern Province. After two years, the monthly allowance Lita sent had
increased to K125,000. At this time the regular transmittal was beginning to hurt because it
seemed endless and ever increasing. When news came that Thomas's uncle had become jobless
because the rice mill had closed, Lita talked Thomas into asking his relatives to move to their place
where job opportunities were more abundant. She hoped that the relatives would be self-sufficient
later.
Thomas's uncle, Aunt and one cousin moved to Southern Province in 1966. The uncle found plenty
of work available as a carpenter. Very soon, he became renowned as a master builder. As
carpenter, he saw that the hollow blocks used in all construction work in town were made by hand
(pounding style). He went to Lita and proposed that she put up a Hollow Block Factory, which the
uncle himself promised to supervise and run for her. Lita studied the matter and saw that there was
indeed a good business opportunity for hollow blocks. She agreed to put up the capital (75% of her
children's savings) for the factory.
Because the uncle was a master builder, he knew of upcoming constructions and saw to it that the
hollow blocks came from him. Before long, the uncle proposed that Lita stopped sending
allowances to Thomas's other four cousins in Northern Province; the profits in the business would
take care of that. Lita agreed.
54
The uncle ran the business well and became known in town as a successful businessman. When
all four of his older children finished their studies (accounting, medical technology, education, and
engineering), he and his wife moved out of the house which Thomas and Lita provided for them
and started to build their own house on a nice piece of land by the river. When the income of the
hollow block factory continued to be very good, Thomas's aunt put up a dressmaking shop of her
own.
Soon after the oil crisis in the early '70s, the logging industry declined, and Thomas's company
reached the verge of bankruptcy. There were threats of mass lay-offs. Lita's canteen business was
badly affected and her family was soon living in hard times. Thomas and Lita looked around for a
new business venture.
Their attention fell on the hollow block factory. They felt that, having provided the capital, Lita still
owned the factory. They also felt that they had helped their relatives enough through the years.
After all, their cousins were now professionals while their own children's education prospects were
now financially in peril. Moreover, the couple felt that the uncle had become arrogant lately. He had
even been going around town as if he owned the factory, and was acting as one without any plan
of ever turning the business over to the couple.
When Thomas and Lita talked to the uncle about their wish to take back the business, a bitter fight
of words ensued, potentially destroying the relationship forever.
55
UNIT 2.2
ORGANIZATION
AND MANAGEMENT
OF BUSINESSES
ELEMENT 2.2.3
LESSON 3
Stock control
HANDOUT 32: Stock Control
Generally, any business keeps goods and materials in stock.
Why should you keep stock?

If you have your goods and materials in stock, then you can always satisfy your customers’ needs.
Also, when the supply of goods and materials is very irregular and uncertain, then it's good to keep a
large stock so that you don't run out of materials.
You must avoid running out of stock because then you must say 'no' to customers. They may go to
competitors and may not come back to you again.
Another good reason to keep stock is because it is way of storing your cash. Especially when prices of
products go up all the time (inflation), it is better to invest your money in goods and materials and keep
it in stock. In that way your money will keep its value!
Stock control means:

Keeping a check on your stock of goods, materials and parts.
You have to control your stock:

- To make sure that you don't run out of stock.
- To make sure that you don't keep too much stock of products that are not selling well.
- To make sure that the goods and materials are protected from all kind of hazards.
If you keep stock you have to make sure that the goods and materials do not get lost or spoiled. They
should be protected against:
• Waste:
Certain goods can get rotten if you don't sell them within a short period (e.g. meat, milk, bread).
• Deterioration:
Certain goods deteriorate in quality if they are not sold within a certain period of time (e.g.
medicine, tinned goods).
• Fire:
Certain goods are dangerous to store long and unprotected (e.g. petrol, kerosene).
• Fashion changes:
Certain goods, esp. clothing, lose their appeal because other styles come into fashion.
• Damages:
While in stock, goods can be damaged or made unappealing because they for example get dirty,
break etc.
56
• Theft:
Goods can be stolen if they are not secured against theft by customers, employees or other
people.
• Drawing loss:
Sometimes the business owner will take goods and materials for personal use. These items must
be recorded!
Rules of stock control

1. Check your stocks regularly.
How often you have to check your stocks depends on your type of business, how fast your stocks
move and how much stock you keep.
2. Take note of goods and materials which are selling fast and those which are selling slowly.
If you know the speed at which your goods are sold, you will also know how much you have to
keep in stock.
3. Keep your stocks well set out so that they are easy to see and easy to count.
If your stocks are arranged in a proper way it will attract customers. The customer does not need
to search for the item and the employee can easily see whether the item is available. Also good
stock arrangement will make it easier to count your stock. If you have a large number of different
stock items, you should set them out in separate groups.
E.g. Pots together, plates together, shoes together, dresses together etc.
4. Protect your stocks against damages, theft, fire etc. so that they don't get spoiled.
Stock records
To be able to control your stock, you have to keep some basic records. These records will assist you
to know the total value of the goods and materials that you have in stock (remember that stock is also
money!). It will also assist you to know the number of units you have in stock of each item, so that you
don't run out of stock.
The best method for stock records is to record the value of all your stock at selling price. It is easier to
use selling prices since they are often marked on the goods and they are used when sales are
recorded and when stock is taken.
There are two basic stock records:
1. Stock control book

2. Stock cards
1. Stock control book

The easiest way to record your stock is to use the stock control book as shown below:
EXAMPLE:
Month: June
Date Details Stock in Stock out Balance stock
1 June Opening stock 200,000
2 June Sales 20,000 180,000
3 June Sales 25,000 155,000
4 June Sales 18,000 137,000
5 June Purchase in DeS 120,000 257,000
57
In the stock control book you record the value of the materials and goods that have physically gone
out of stock (cash sales, credit sales whereby the item has been collected) or have come in stock
(purchase of goods and materials).
The stock control book shows you the total value of your stocks.
2. Stock cards
The stock cards show you the number of units that you have in stock form each item.
Under this system you have a separate card for each of the different types of items that you have in
stock. Stock cards can be used by manufacturers as well as service operators or traders.
EXAMPLE:
STOCK CARD
Article: batteries Re-order level: 100
Cost price: K 200
Selling price: K 350
Date Details Stock in Stock out Balance
1 June Purchased 200 200
3 June Sold 10 190
4 June Sold 13 177
8 June Sold 30 147
11 June Sold 20 127
16 June Sold 27 100 (!)
Each time you buy or sell batteries you enter it on the card. The balance column shows you how
many batteries are still in stock.
It is important to re-order in time so that you don't run out of stock. Don't wait with purchasing new
items until all your items have finished!
To find out when you have to re-order e.g. new batteries, you must know:
• How many batteries you sell every week or every month
• How long it takes you to get new batteries
On average you sell 40 batteries in a week. It takes |you one week to get new batteries. Therefore,
you |should re-order when your stock is at 100. This gives you 40 for the week's delay and 60 in
case you can't |get the new batteries in time or in case you sell more than 40 in the next week. 100
is your re-order level.
Stock taking
The purpose of stock taking is to know the total number of unit you have in stock of each item at a
certain date. By means of stock taking you can compare the stock that is physically in your business,
with your stock records. It will also show which items are slow selling and which fast selling. In
addition, it shows the physical condition of your stock (did it get dirty, are items rotten etc.).
How often you have to do a physical stock taking depends on the type of business and the speed that
your items are being sold. It is advisable to do it regularly (e.g. the last day of each month).
For stock taking you can use a stock taking form:
58
EXAMPLE:
Date of stock taking: 31 May

Begin Purchases Total sales Total stock End stock Physical
stock since last (3) (4) remarks
(1) stocktaking
(2)
Chitenge 20 30 40 10 10
Trousers 15 10 10 15 14 stained
Shoes 20 15 20 15 15
Combs 100 150 80 170 170
Lotion 30 20 25 25 22 damaged
Uniforms 30 15 10 35 35
All items are counted in the shop. Be sure that you have not double counted or missed some items
when counting.
The end stock counted should be:
Begin stock + Purchases - Sales = End stock

(column 1) (column 2) (col.3) (column 4)
So, column 4 (end stock) should give the same number of items as you have physically counted in
your shop. If they differ then count again!
If the number still differs then try to find out what could cause the difference: waste?, damages?,
theft?, the owner used it?
59
UNIT 2.2
ORGANIZATION
AND MANAGEMENT
OF BUSINESSES
ELEMENT 2.2.4
LESSON 1
Cash management
HANDOUT 32: Cash management exercises
Case Study 1
Maude trading fabric
1. Maude is a young woman who has inherited the sum of 80,000 K from a deceased great
cousin. She decides to take the opportunity and to create her own business in trading with
fabric. In January of the year she buys fabric for 70,000 K. She spend 10,000 K for the
transport to the capital, where she bought the fabric. She sold the fabric for 100,000 K.
Is her business profitable? How much profit or loss did she make?
2. If we suppose that Maude did not sell her merchandise for cash but on credit (for two months):
Is her business still profitable?
Case study 2
The commercial enterprise “Olive’s Heaven”
A little commercial enterprise trading olive oil starts its activities on January 2007 with 100,000 K in
its cashbox.
During January, the enterprise pays 70,000 K for salaries and other expenses. It receives 130,000
K from its customers.
During February, the enterprise pays 130,000 K for salaries and other expenses. It receives 80,000
K from its customers.
During March, the enterprise pays 150,000 K for salaries and other expenses and it receives
30,000 K from its customers.
How much money does “Olive’s Heaven” have in its cashbox at the end of March?
60
Case study 3
SMITH LTD. – THE QUEEN OF FOOTWEAR
On 31st December, Mrs. Smith owns cash 200,000 K and equipment with a value of 1,000,000 K.
She has a small business producing and selling sandals. She plans to take 20,000 K per month out
of the firm for her own needs.
She is a careful person and respects strictly the rule to sell 80% of her products for cash and only
20% on credit to clients she knows well (1 month). After she has finished her market study, she
estimates to be able to sell 100 pairs of sandals per month at a price of 2,000 K per pair. She
thinks that in the beginning she might only be able to sell 50 pairs in the first month and 75 in the
second month.
Mrs. Smith buys raw materials for production of the first three months of the year.
Her expenses per month are the following:

• Raw material 700 K per pair
• Salary employees 30,000 K
• Monthly rent 20,000 K
• Transport 5,000 K
• Office equipment 2,000 K
• Depreciation 200,000 K per year
The rent is always paid by trimester, and at the beginning of each trimester. The salaries are paid
at the end of each month. All other expenses have to be paid when due.
In addition, Mrs. Smith decides that she needs 5,000 K in her cashbox at the beginning of each
month.
Moreover, if Mrs. Smith needs a credit, she can get it from the local bankers at a monthly interest
rate of 5%.
1. Evaluate the cash flow of SMITH Ltd. from 1st January until 31st March.
Use the attached form.
61
SMITH LTD – THE QUEEN OF FOOTWEAR
CASH FLOW TABLE
January February March
A. Beginning cash balance

(amount carried over from last balance)
B. Cash receipts
Receipts from sales
• Cash sales
• Credit payments of the clients
Intake
Loans
Total cash receipts
C. Total beginning cash balance and cash

receipts (A+B)
D. Cash payments
• Raw material
• Salaries
• Rent
• Office equipment
• Transport
• Other expenses
Total cash payments
Balance (C-D)
62
UNIT 2.2
ORGANIZATION
AND MANAGEMENT
OF BUSINESSES
ELEMENT 2.2.4
LESSON 2
Profit and loss
HANDOUT 33: Smith Ltd. The Queen of footwear
On 31st December, Mrs. Smith owns range for 200,000 K and equipment with a value of 1,000,000
K. She has a small business producing and selling sandals. She plans to take 20,000 K per month
out of the firm for her own needs.
She is a careful person and respects strictly the rule to sell 80% of her products for cash and only
20% on credit to clients she knows well (1 month). After she has finished her market study, she
estimates to be able to sell 100 pairs of sandals per month at a price of 2,000 K per pair. She
thinks that in the beginning she might only be able to sell 50 pairs in the first month, and 75 in the
second month.
Mrs. Smith buys raw materials for production of the first three months of the year.
Her expenses per month are the following:

• Raw material 700 K per pair
• Salary employees 30,000 K
• Monthly rent 20,000 K
• Transport 5,000 K
• Office equipment 2,000 K
• Depreciation 200,000 K per year
The rent is always paid by trimester, and at the beginning of each trimester. The salaries are paid
at the end of each month. All other expenses have to be paid when due.
In addition, Mrs. Smith decides that she needs a minimum of 5,000 K in her cashbox at the
beginning of each month.
Moreover, if Mrs. Smith needs a credit, she can get it from the local bankers at a monthly interest
rate of 5%.
1. Please calculate the financial results of SMITH Ltd. for the first trimester.
Use the attached form.
63
SMITH LTD. – THE QUEEN OF FOOTWEAR ESTIMATED GROSS COMPANY PROFIT FIRST
TRIMESTER
Month 1 Month 2 Month 3
Sales
Operational Costs
Raw material
Personnel
Other operational
costs
Rent
Transport
Office equipment
Others, unforeseen
Depreciation
Total operational
costs
Operating profit
(or loss)
Financial expenses
Result (profit or loss)
64
UNIT 2.3
EVALUATION OF
THE BUSINESS EXERCISES
ELEMENT 2.3.1
Presentations and business development services fair
LESSON 2
BDS Fair
HANDOUT 34: Mini business evaluation form
Name Mini Business: ___________________________
I Feasibility of the mini business
A. Marketing aspects ____

B. Technical aspects ____
C. Management aspects ____
D. Financial aspects ____
E. Own personal resources ____
Total ____max. score = 25
II Innovation on business
A. The mini business idea ____

Total ____ max. score = 25
III The team
A. Knowledge of the business ____

B. Self confidence ____
C. Clarity of the objectives ____
D. Competencies ____
IV Mini-business Results
A. Profits/Results ____
B. Return on Investment ____
Remarks/advices concerning:
1. Feasibility of the mini business:
65
2. Innovation on business:
3. The team:
4. Mini-business Results:
Final appraisal: Rejected

To be improved
Acceptable
Excellent
66
UNIT 2.3
EVALUATION OF
ELEMENT 2.3.2
Career planning
LESSON 1
Personal Action plan & evaluation Module 2
HANDOUT 35: Personal Action Plan
Name: ________________
Date: ________________
My personal vision (what do you want to achieve in life? What is your ‘’dream’’?):
What do you want to have realized in one year?
The objectives should be Specific, Measurable, Accessible, Realistic and Time-bound: SMART.
Reformulate your one-year objective in key-words
67
1. How will this objective help you to come closer to your vision?
2. How are you going to realize your objective?
Activities Resources required Time required
3. How are you going to measure your progress?
4. What kind of problems/obstacles are you expecting?
Personal Environmental
5. What are your (planned) strategies to overcome and/or avoid the above listed
problems/obstacles
68
List the concrete activities you are planning to undertake in the next 6 months
Month 1:
1
2
3
4
Month 2:
1
2
3
4
Month 3:
1
2
3
4
Month 4:
1
2
3
4
Month 5:
1
2
3
4
Month 6:
1
2
3
4
I , ………………………., declare to respect and execute the above described plan to my best
abilities.
Signature:_________________ Date:
69
UNIT 2.3
EVALUATION OF
ELEMENT 2.3.2
Career planning
LESSON 1
Personal Action plan & evaluation Module 2
HANDOUT 36: Evaluation form Module 2
☺
Happy

Undecided

Unhappy
1. Training materials
2. Training room
3. Training equipment
4. Presentations of instructors
5. Learning from other participants
6. Achievement of expectations
Could you please answer the questions below? Your co-operation will help us to improve the
quality of our training. Thank you for your answers.
1. Which aspects of the training did you find most useful?
Could you elaborate on your answer?
2. Which aspects of the training did you find least useful?
Could you elaborate on your answer?
3. Have you got any suggestions to improve the training?
4. Please, rate the course as a whole, how would you rate it?
1 10
2 3 4 5 6 7 8 9
(low) (excellent)
Thank you for your cooperation.
70

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Entrepreneurship Education

HANDOUT 1:Training Program .......................................................................................................2

HANDOUT 1: Training Program

UNIT 2.1: DESIGN OF THE MINI BUSINESS

Element 2.1.2: Selecting suitable markets for products and services

Element 2.1.3: Developing a mini business plan

UNIT 2.2: ORGANIZATION AND MANAGEMENT OF THE MINI BUSINESS

Element 2.2.2: Costing & pricing of products/services

Element 2.2.3: Keeping records in business

Element 2.2.4: Preparing financial statements

UNIT 2.3: EVALUATION OF THE BUSINESS EXERCISES

Element 2.3.2: Career planning (PAP)

HANDOUT 2: Key success factors in setting up a small business1

1 ILO KAB Module 4: How do I become an entrepreneur?

HANDOUT 3: The Ten Success Factors for Entrepreneurs2

HANDOUT 4: Steps in starting a business

Generate a business idea

Prepare a business plan

Costing & pricing

Basic requirements to start a business

HANDOUT 5: Portrait of an entrepreneur

Neck: for sticking

Knees: for bending and

Legs: for jumping over

HANDOUT 6: Weekly report Mini business

Name mini business:

0 Cash book control

0 Meeting mini business team

The next meeting will be:

Date: Time: Place:

HANDOUT 7: Checklist preliminary selection of business idea

1. What is the product?

2. How is quality and price as compared to competitive products?

3. Where will the business be located?

4. What geographical areas will be covered by the business?

6. Is it possible to estimate how much of the product is currently being sold?

7. What share or percentage of this market can be captured by the business?

8. What is the selling price of the product?

9. How much of the product will be sold?

10. What promotional measures will be used to sell the product?

12. What do you need to promote and distribute your product?

HANDOUT 8: Micro screening table

Scoring system: 5 – extremely high; 4 –high; 3 – average; 2 – fair; 1 – poor; 0 – absent

HANDOUT 9: Definitions of the parameters applied

Availability of qualified personnel

Availability of technology / equipment

Availability of raw material

Critical Success Factor

HANDOUT 10: Other suggested parameters for micro screening

5 – totally self-financed; 4 - external finance of approximately 25%; 3 - external finance of

HANDOUT 11: Information requirement sheet

Information Requirement Sheet

b) Competitors/Other Suppliers – Who is already offering the product

c) Target Market or Buyers: Who do we intend to sell our product?

e) What kind of promotion do we need? (if any?)

g) Pricing. What should be the price of our product?

HANDOUT 12: The marketing mix: points to remember

HANDOUT 13: Marketing in my mini-business: checklist

• Do I know what people will be able to pay for my products/services?

• Do people know my mini-business and are they attracted to buy my products/services?

HANDOUT 14: SWOT Analysis Framework

Strengths: positive factors, to be capitalized

List strengths and weaknesses related

List opportunities and threats beyond