DREAMLAND

COLLEGE

ACCOUNTING AND FINANCE LEVEL II

Learning guide
Unit of Competence: Develop Entrepreneurship and Employability
skills-MODULE 1
Module Title: Developing Entrepreneurship and Employability
skills-MODULE 1
TTLM Code : LSA TCEE-I M10 1221
LO1: Understanding Entrepreneurship Skills
LO2: Starting an enterprise
LO3: Generating Business Ideas and Recognizing Opportunities
LO4: Understanding Employability Skills
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Occupational Standard: Accounting and Finance Level II
Unit Title Entrepreneurship for employability – I
Unit Code LSA TCEE-I 10 1221
Unit Descriptor This unit describes the provide knowledge, skills and attitudes required in
promoting, improving and growing business operations..

Elements Performance Criteria

1.1 Basic Concepts of
1. Understanding
1.1.1 Entrepreneurship
Entrepreneurship
1.1.2 Entrepreneur and intrapreneur
Skills
1.1.3 Entrepreneur and manager
1.1.4 Enterprising and Enterprise
1.1.5 Identify the role of Entrepreneurship in Economic Development
1.2 Developments of Entrepreneurial mindset
1.2.1 Overview of Mindset
1.2.2 Entrepreneurial mindset
1.2.3 The importance of an entrepreneurial mindset
1.2.4 Distinguishing characteristics of entrepreneurial mindset
1.2.5 Developing Positive mindset towards work
1.2.6 Positive mindset to work
1.2.7 Developing effective work habit (Culture)
1.3 Understanding Entrepreneurial Competencies and Environment
1.3.1. Identify Personal Entrepreneurial competencies (PECs)
1.3.2. Assessing Entrepreneurial potential
1.3.3. Understanding Entrepreneurship and Environment
1.4 Entrepreneurial motivation and Decision
1.4.1 Entrepreneurial motivation
1.4.2 Entrepreneurial Decision
2.1. Business Ideas
2. Starting an
2.1.1. Definition of business ideas
enterprise
2.1.2. Identify Sources of business ideas
2.1.3. Generating and Screening business ideas
2.1.4. Applying Creativity and innovation in generating business

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 ideas
2.2. Business opportunities
2.2.1. Definition of business opportunities
2.2.2. Identification of business opportunities
2.2.3. Assessment of business opportunities
2.3. Conducting a Feasibility study
2.3.1. meaning of feasibility study/ analysis
2.3.2. components of a feasibility study
2.3.3. steps in conducting a feasibility study
3.1. Understand Classification of enterprises
3. Generating
3.2. Distinguish legal forms of business ownership.
Business Ideas
3.3. Realizing facts of Micro and Small Enterprises in Ethiopia
and Recognizing
 Key success factors for setting-up Micro, Small and Medium
Opportunities
Enterprises
3.4. Establishing an enterprise
3.5. Basic Concepts of Marketing
3.5.1. Definition of Marketing
3.5.2. Importance of marketing
3.5.3. Identify Marketing Mix
3.5.4. Selection of Business Location
 Major factors for selecting business location/
3.5.5. Selling and Customer service
3.6. Financing a business enterprise
3.6.1. Identify Sources of capital
3.6.2. Start-up Capital
3.7. Basics of Business Plan (Definition, importance and standard
structure and format of business plan
4.1. Definition of Employability Skill
4. Understanding
4.2. Importance of employability skills
Employability
4.3. Common Elements of Employability skills
Skills

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 Learning Outcome- 1 Understanding Entrepreneurship Skills

This lesson discusses about Entrepreneurship and how to become an entrepreneur. It explains the
major steps to be followed in applying of entrepreneurship. It also discussed the similarities
between an entrepreneur and a manager. The roles of entrepreneurship in the economy and the
principles of entrepreneurship are elaborated.

This lesson also elaborates mindset in general and entrepreneuria l mindset in particular. It also
emphasizes the importance of developing a positive mindset (attitude) for a person’s life as well
as for entrepreneurship. It indicates how trainees can develop an entrepreneurial mindset in order
to be future entrepreneurs.
This lesson discusses about the major competencies that should be developed by entrepreneurs in
order to be successful in their businesses. It also explains in environment in which the
entrepreneur performs his or her activities as a business owner. An entrepreneurial potential of
an individual and how it can be measured will be explained.
This learning guide is developed to provide you the necessary information regarding the
following content and topics:
 Basic Concepts of Entrepreneurship
 Developments of Entrepreneurial mindset
 Understanding Entrepreneurial Competencies and Environment
 Entrepreneurial motivation and Decision

Learning Objectives
This guide will also assist you to attain the learning outcome below. Specifically, upon
completion of this Learning Guide, you will be able to

 Understand Basic Concepts of Entrepreneurship

 Know Developments of Entrepreneurial mindset
 Develop entrepreneurial mindset
 Understand Entrepreneurial Competencies and Environment
 Identify Entrepreneurial motivation and Decision
Learning Instructions

1. Read the specific objectives of this Learning out come.

2. Follow the instructions described below 3 to 5.

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3. Read the information written in the “Information Sheets Try to understand what
are being discussed. Ask you teacher for assistance if you have hard time
understanding them.

4. Accomplish the “Self-check” given at the end of each information sheet

5. If you earned a satisfactory evaluation, proceed to next information sheet.
However, if your rating is unsatisfactory, contact your teacher for further
instructions

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Information Sheet 1 Basic Concepts of Entrepreneurship

Pre lesson activities

 What is an Entrepreneurship? Discuss in a class.(5minute)
 What is a Entrepreneur? Discuss with your friends in a class .(5minute)
 Do you know someone in your town who is an Entrepreneur .(5minute)

1.1.1 Entrepreneurship
The word “Entrepreneurship” is derived from the French verb entreprendre which means “to
undertake”. The concept entrepreneurship refers “The process of identifying opportunities in the
market place, arranging the resources required for pursuing these opportunities and investing the
resources to exploit the opportunities for long term gains. It involves creating wealth by bringing
together resources in new ways to start and operate an enterprise.”

I. Elements (steps in the implementation) of Entrepreneurship

1. Observing the environment/identifying gaps,

2. Identifying opportunities,

3. Gathering the necessary resources

4. Implementing the activity and

5. Receiving rewards for engaging in the activity

II. Entrepreneurial Functions in Business

1. Identify gaps in the market and turn these gaps into business opportunities.
2. Finances and mobilizes resources for the business
3. Organize andmanage the business.
4. Bear /tolerate/ the uncertainties and risks of the business.
5. Encourage competition
6. Self-employed and applying entrepreneurship

III. Economic Principles of Entrepreneurship

1. Works best in an open market economy

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 2. Promotes private enterprise
3. Adds value to products and services (creates wealth)
4. Providing needed products/service
5. Developing new markets
IV. Rewards for Being an Entrepreneur
1. Self-actualization /personal fulfillment
2. Feeling of freedom and independence
3. Providing jobs and benefits to others (investors, suppliers, bankers, subcontractors, work
force, and customers)
4. Economic goods (product/service, incomes for workers, profits for shareholders/partners)

V. Importance of entrepreneurship
The followings are the major benefits of entrepreneurship
1. Employment creation
2. Local resource utilization
3. Decentralization and diversification of business
4. Promotion of technology
5. Capital formation
6. Promotion of an entrepreneurial culture

VI. Meaning of Entrepreneur

Entrepreneurs are individuals who undertake an economic activity. On one extreme, an

entrepreneur is a person who brings change, possessing characteristics found in only a very small
fraction of the population. On the other extreme of definition, anyone who wants to work for
him/her is considered to be an entrepreneur.

VII. Types of entrepreneurs

Generally, there are four types of entrepreneurs as indicated here under:

 Personal achiever  Real manager
 Super-salesperson  Expert Idea Generator

Personal achiever

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Personal achievers are the classic entrepreneurs. They are the types of people that we picture
when the term “entrepreneur” is used. They are the only types who must become entrepreneurs
to succeed in life. If they are placed in a non-entrepreneurial environment, they stand a good
chance of failure. They possess seven characteristics that relate to entrepreneurial success:

 Need for high achievement

 Need for performance feedback
 Desire to plan and set goals
 Strong individual initiative
 Strong personal commitment
 Internal locus of control

Super-salesperson
Generally, onlookers don’t view super sales people as having the potential for entrepreneurial
success. Their entrepreneurial strength is their approach to selling. They truly cater to the needs
of clients and customers, thus placing a strong stress on service. Super sales people are interested
in managing the customer into a sale, not in applying pressure tactics.
 Capacity to empathize
 Social interaction and relationships are important
 Need to have strong positive relationships with others
 Sales force is critical
 Background: less education, more experience

Real manager
Real managers exhibit some of the traits of established entrepreneurs and some of the abilities of
corporate managers. They possess the following traits
 Desire to be corporate leader  Desire of power
 Desire to compete  Desire to stand out in a crowd
 Decisive

Expert Idea Generator

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 Expert idea generators are people who have ideas for a business that can provide a real
competitive advantage. They become tremendously enthused about their ideas and spend a great
deal of time implementing them. Unlike personal achievers, who spend energy on an overall
venture, expert idea generators tend to focus on the idea exclusively. Very often, they will try to
persuade others to contribute to implementation and, if unsuccessful, they will abandon the idea.
They possess a majority of the following five characteristics:
 Desire to innovate
 Love of ideas, curious
 Belief that new products are crucial
 Intelligence is the competitive advantage
 Desire to avoid taking risks

VIII. Personal efforts to be an Entrepreneur

The nature of entrepreneurial activity requires the following extra efforts from an entrepreneur
 Works long hours
 Always concerned about the business
 Needs high energy
 Sacrifices other important aspects of life
 Limited social life
 Not much time with family and friends
 Financial investment

Selected Ethiopian Entrepreneur

As the dynamism and momentum of Ethiopia’s economy keep growing remarkably, here are the
list of Ethiopian entrepreneurs in different sectors of the economy.

1. Bethlehem Tilahun Alemu

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Owner of sole Rebels makes beautiful shoes and she makes them in Ethiopia with zero carbon
omissions and local materials. Her story is amazing. She grew up in an impoverished area of
Addis with very few jobs. She decided early on that she was going to change things and in 2005
after graduating from Unity University , a private university in Addis, she convinced her
grandmother to let her open a workshop on her land. From a small space she began creating
footwear based on traditional Ethiopian footwear. She has managed to bridge the African/West
divide by combining local products including recycled tire soles (her trademark) and locally
sourced fibers with more western style designs. From this humblest of beginnings, Bethlehem
has built Sole Rebels into the world’s fastest growing African footwear brand and the very first
global footwear brand to emerge from a developing nation.

Sole Rebels is the first African consumer brand to ever open standalone branded retail stores
around the globe with stores now open in Germany, Greece, Singapore, Spain, Switzerland,
Taiwan and the USA (Silicon Valley). “Roots. Culture. Tyres” is the motto printed on the walls
of every Sole Rebels store. Named by Forbes Magazine as one of Africa’s most influential
women, Bethlehem recently began a new venture, a coffee store chain named Garden of Coffee.
She plans to open 100 outlets in China by 2022. In her own words, “We are changing as a
country. There is a lot of hope and lots of dialogues and discussions around what’s happening in
Ethiopia.”

(Taken from www.solerebels.com )

2. Ms. Tseday Asrat, Kaldi’s Coffee, coffee shop chain

Tseday Asrat, Founder of Kaldi’s Coffee © Photo courtesy of Kaldi’s Coffee

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Tseday Asrat is the founder and managing director of Ethiopia’s largest coffee shop
chain, Kaldi’s. Ethiopia’s coffee is world famous, dark and rich; the Arabica beans are
savoredby coffee connoisseurs around the globe. Coffee is part of every Ethiopian’s life and
Ethiopians love their coffee and have always reserved a special place in their hearts for roasting
their own beans carefully selected at the Merkato market from small kiosks or street-side
markets. Traditionally, Ethiopians have taken their coffee at home, drinking slowly, with only
close friends and family. They roasted the beans on the spot, part of an elaborate coffee
ceremony that remains an important part of Ethiopian culture.

As day-to-day life has changed that practice is not always practical especially for those on the
move. Recognizing this change, Tseday saw an opening in the market for combining Ethiopians
love for coffee with their need for speed and convenience. She had often accompanied her
Ethiopian Airlines pilot husband on trips to the US and was amazed at the success of Starbucks
and brought the concept back to Ethiopia. She called her chain “Kaldi’s” named after the
shepherd who, according to Ethiopian folklore, first identified coffee after watching the reaction
of his goats who had been grazing on a coffee bush. The Kaldi’s coffee shops clearly draw more
than a little inspiration from Starbucks – the logo, green aprons, and decor of the coffee shops –
will be familiar to anyone who has visited a branch of the Seattle-based chain. Did she feel guilty
about stealing ideas from Starbucks? “Not at all”, she apparently replied. “After all, they stole
our coffee.” Established in 2005, Kaldi’s success has been resounding with more than 38 coffee
shops in the country.
As the company grew in size Tseday faced an unexpected problem with consistency in the coffee
and milk products which led to customer complaints. Like a true entrepreneur, she faced the
problems head-on and started her own supply company. Now the product quality is consistent
across all branches and in an unexpected positive outcome, more jobs were created through the
company she founded, Loni Agro, a dairy producer, milk processor along with a roaster which
also buys coffee on the Ethiopian Commodity Exchange (ECX). Today, the company employees
about 2,000 coffee loving Ethiopians and there are plans to continue opening more branches.

3. Ms. Samrawit Fikru, Hybrid Design Plc and RIDE, ride sharing app

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Samrawit Fikru, Creator of RIDE ride sharing app © Photo courtesy of Glimug.com

“Necessity is the mother of invention” is certainly the case when it comes to the creation of
RIDE, a ride sharing app similar to Uber, created by Samrawit Fikru. Before becoming a tech
entrepreneur, Samrawit was a computer programmer and software developer who often found
herself staying late at the office. When she went to get a taxi, it took forever to find one late at
night and the drivers would charge double the day time rates. On top of this, she did not feel safe
getting into a taxi with a driver she did not know.

At the age of 22, having identified the gap in the market, she took $2,000 of her own savings and
started Hybrid Design, software and applications developing company. Shortly after, the
company introduced RIDE, a transport and booking platform in Ethiopia that is phone-based just
like Uber. RIDE started as an SMS-focused request in 2014. For those first two years, as with
many startups, there was little to no profit. By 2017, understanding the need for a revamp, she
single handedly re-launched RIDE where users either use an app downloaded to their
smartphone or call into a call center to schedule a ride 24 hours a day, 7 days a week including
holidays. To get a RIDE, users now only have to dial 8294 (or TAXI on a keypad) or download
the RIDE app from anywhere within Addis Ababa to use the service.

RIDE is now used by tens of thousands of users and has had 50,000 downloads on just the
Google Play Store. Like Uber, the app provides the driver’s picture, vehicle license plate and
side numbers and brief information on the driver. RIDE also does not charge surge pricing
during popular times of the day and amazingly 90% of its staff are women, this in an industry
dominated by men.

The launch of RIDE could not have come at a better time. The general opinion is that Prime
Minster Ahmed will want to begin removing the traditional blue taxis that have been plying the

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streets of cities across the country for as long as 60 years with newer, more fuel efficient taxis.
As a result of extremely high tariffs, Ethiopia has one of world’s lowest rates of car ownership
and people rely on car-ride services to a great extent for their transportation needs. This offers a
great opportunity for RIDE to really make an impact. Ironically some of the same taxi drivers
who used to charge her double to get home are now working for her!
The sky is the limit for RIDE! In November 2019, Samrawit met Twitter CEO Jack Dorsey who
later Tweeted a photo of the two of them and tagged Elon Musk saying “She’d love to introduce
Tesla to Ethiopia!”
4- Mr. Getaw Mekonnen Cherinet, Tulip Addis Water Filter

Getaw Mekonnen Cherinet, Founder of Tulip Addis Water Filter © Photo courtesy of Ryan
Rowe

Almost 31% of the Ethiopian population relies on unprotected water for their daily needs. That’s
33 million people. Getaw Mekonnen Cherinet, founder and manager of Tulip Addis Water
Filter, was a small land owner in Ethiopia, who saw his workers getting sick because they did not
have access to clean drinking water. Bottled water was too expensive and there were no low cost
filter systems in place. Getaw saw a need and designed an inexpensive ceramic water filter and
thus began Tulip Addis Water Filter.

Getaw’s story is amazing. When he was a university student during the Ethiopian Civil War
(1974-1991) the government passed a law requiring all university students to go into military
service. In order to avoid the service, Getaw escaped to the Kakuma Refugee Camp in the
northwestern region of Kenya, where food and water were provided, but not much else. He was a

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model resident and the camp, run by the UNHCR offered him an opportunity to travel to New
Zealand through one of their sponsored programs to study and develop business skills. During
this time Getaw attended university where he focused on classes taught in the business school.
He was particularly interested in issues of international trade where he learned the importance of
networking skills.

He returned to Ethiopia and with the savings he had accrued in New Zealand decided to invest in
some farm land. It was then that he saw first-hand the labor costs associated with his workers not
having access to clean water, a problem that simply did not exist in New Zealand. He
remembered the filter systems he had seen in people’s homes during his time in New Zealand
and decided to see if he might be able to raise the capital to begin his own production company.
In his research he came across a Dutch company called Basic Water Needs and partnered with
them to create Tulip Addis Water Filter, a private company that sells low-cost ceramic water
filters and a siphon device with a ceramic element to quickly make safe water from unsafe water.

Initially the products were manufactured in India and, in addition to Ethiopia, were sold by other
partners in at least half dozen other countries. However, Getaw had always wanted the
production to take place in his home country and, in late 2019, construction began in Debre
Birhan on a plant where the products will be manufactured. The plant will employ 60 local
Ethiopian workers with plans to make up to 500,000 filters per year in two models. A 13 liter
model will be sold for 700 Birr or $22 and the larger 20 liter model will be sold for 1,000 Birr or
$31. Although considered a low-cost product outside of Ethiopia, the filters are still unaffordable
to many low-income workers and

. Getaw is working on finding ways to continue to bring the cost down. Many of his customers
are NGOs, including Rotary International and the Ethiopian Red Cross Society, who give the
filters away at no cost to the recipients.

Even today after all his success, Getaw feels being a refugee still influences his life. He was the
first investor to hire refugees in Ethiopia and he regularly hosts entrepreneurial sessions giving
Ethiopians confidence and new skills which, he hopes, helps them to be productive members of
society, to earn their own income and to live their lives with dignity.

Table 1: The relationship between entrepreneurship and entrepreneur

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1.1.2 Entrepreneur and Intrapreneur
Intrapreneurs are individuals who notice opportunities and take initiative to mobilize resources;
however they work in large companies and contribute to the innovation of the firm.Intrapreneurs
often become entrepreneurs. Diagrammatically, the differences between entrepreneurs and
intrapreneurs are shown below

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Table 2:The relationship between entrepreneur and Intrapreneur

1.1.3 Entrepreneur and manager

A manager is a person who plans, organizes, directs and controls the activities of an established
business. It is the manager who leads the business to its targets and who is responsible for the
business's success or failure. However, unlike the entrepreneur, a manager is not necessarily the
owner or the founder of the business.

Alternatively, the entrepreneur may or may not be the manager of the business. Even though it is
true that most entrepreneurs are the managers of their businesses, an entrepreneur may hire a
manager to run her/his business. Moreover, a manager may not have the qualities of an
entrepreneur while the entrepreneur may not have the skills to effectively manage an
organization like a good manager does. In fact, the problem many entrepreneurs face is leading
their businesses to success in today's dynamic environment.

The entrepreneur is the person who makes judgmental decisions under conditions of uncertainty
and who creatively turns the uncertainty into an advantage for the business she/he runs.

A manager is an employed person while an entrepreneur manages the enterprise for his/her
personal gain. The role of the entrepreneur and the manager may, however, overlap in many
cases. Generally, the major points of differences between the managerial and entrepreneurial
qualities are summarized below.

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 Table 3:Summarized differences between the entrepreneur and manager
Point of
Entrepreneur Manager
Distinction
He starts a venture by setting up a The main aim of a manager is to
Goal
new enterprise for his personal render his/her service in an enterprise
Management
satisfaction. already set up by someone.

Entrepreneur is the owner/founder of A manager is a servant in the

Status
the enterprise. enterprise.

An entrepreneur bears all risk and A manager does not bear any risk
Risk
uncertainty involved in the enterprise. involved in the enterprise.

Entrepreneurs for his/her risk bearing A manager receives salary as a

role he/she receives profits. The reward for services rendered which is
Rewards
reward is not only uncertain and fixed and regular. It can never be
irregular but can at time be negative. negative.

As an innovator s/he is called as

A manager executes the plans of the
change agent who introduces goods
Innovation entrepreneurs/owners/founders of the
and services to meet changing needs
business.
of the customer.

1.1.4 Enterprise and Enterprising

Enterprise means always finding a way to keep yourself actively working towards your ambition.

Enterprise is two things. These are:

 Creativity
 The courage to be effective

An enterprise is considered to be any entity engaged in an economic activity, irrespective of its

legal form.

Meaning of Enterprising

An enterprising person is one who sees opportunity in all areas of life. To be enterprising is to

keep your eyes open and your mind active. It’s to be skilled, confident, creative and disciplined
to seize opportunities that present them regardless of the economy.

 Enterprising people always see the future in the present. 

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  Enterprising people always find a way to take advantage of a situation, not be
burdened by it. 
 Enterprising people aren’t lazy. They don’t wait for opportunities to come to them,
they go after the opportunities. 

Being enterprising doesn’t just relate to the ability to make money. Being enterprising also

means feeling good enough about yourself, having enough self-worth to want to seek advantages
and opportunities that will make a difference in your future. And by doing so, you will increase
your confidence, courage, creativity and self-worth which are aspects of an enterprising nature.”
Enterprising men and women exhibit the following characteristics
E: Energy R: Risk-taking
N: Need to achieve I: Innovation
T: Task oriented S: Skills
E: Empathy I: Independence
R: Resourcefulness N: Networking
P: Planning G: Goal oriented

On a personal level/in its wider sense, enterprising can be any identified idea that a person can
translate into a planned and satisfactorily implemented activity. In the business sense/in its
narrower sense/, enterprising refers to a business venturing or undertaking. Practically all
undertakings can be referred to as enterprising if they fulfill the followings.
 Idea identification
 Planning
 Implementation,
 Successful completion of an activity and
 Receiving the rewards.

1.1.5 Identify the role of Entrepreneurship in Economic Development

Entrepreneurship helps to effectively utilize all the economic resources. More specifically,
human being can be better off, educated and modernized through entrepreneurship. Government
and individuals need to know that money can also be created when there
is entrepreneurial activity.

Entrepreneurship plays a key role in enhancing an economy in terms of the following:

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  Creating jobs and additional wealth creation
 Promoting free enterprise and healthy competition
 Spreading prosperity and promoting economic growth
 Ensuring innovation and creativity
 Encouraging grassroots development
 Improving social and community conditions
 Shifting the mind set of being employed to self-employment.

Self-check question 1
Part 1: Choose the best answer

Read each question carefully and choose the best answer from the given alternatives.

1. Elements (steps in the implementation) of Entrepreneurship includes

A. Observing the environment/identifying gaps,

B. Identifying opportunities,

C. Gathering the necessary resources

D. All.

2. Employment creation, Local resource utilization Decentralization and diversification of

business etc… refers to
A. elements of Entrepreneurship C. function of entrepreneur
B. benefits of entrepreneurship D. All

3. Self-actualization /personal fulfillment, Feeling of freedom and independence etc.. are

A. elements of Entrepreneurship C. Rewards for Being an Entrepreneur

B. function of entrepreneur D. All

4. Which of the following is considered as a classification of entrepreneurs

A. Personal achiever C. Real manager
B. Super-salesperson

5. All _______________ is a person who plans, organizes, directs and controls the activities
of an established business
A. Manager B. Entrepreneur

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C. Super-salesperson D. All

6. _________________ is considered to be any entity engaged in an economic activity,

irrespective of its legal form.

A. Enterprising C. An enterprise
B. Personal achiever D. All

Part 2: Short answer questions

Instructions:- Discuss the followings in brief

1. List the five key elements of entrepreneurship

2. Define entrepreneur
3. Define entrepreneurship
4. Describe the role of entrepreneurship an Economy.
5. What is entrepreneurship?
6. What is a Manager?
7. Who are intrapreneurs?
8. What are the economic principles of Entrepreneurship?

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Information Sheet - 2 Developments of Entrepreneurial mindset

Pre lesson activities

 What is a mindset? Discuss in a class.( 5 minute)

 What does positive mindset means and its importance?.( 5 minute)

 How can an individual develop a positive mindset?.( 5 minute)

1.2.1 Overview of mindset

“Success and failure begins in your mind and it starts today.”Robert van der Wolk
A mindsetis the sum of your knowledge, including beliefs and thoughts about the world and
yourself in it. It is your filter for information you get in and put out. So it determines how you
receive and react to information. Mindsetcan be:
 fixed or
 growth oriented.

While a fixed mindsetassumes your talents and abilities are set, the growth mindset believes
your talents and abilities can be developed. It is pointed out that a mindset can change. Much of
this occurs through developing a greater awareness of your current mindset, and taking steps to
purposely start thinking and reacting in new ways.

Our current mindset guides the collection and interpretation of new information. To the extent
that this new information is consistent with the current mindset, it reinforces that mindset. From
time to time, however, new information appears that is truly novel and inconsistent with the
existing mindset. When this happens, we either reject the new information or change our
mindset. The likelihood that our mindsets will undergo a change depends largely on how
explicitly self-conscious we are of our current mindsets: the more the hidden and subconscious
our cognitive filters, the greater the likelihood of rigidity.

Thus, while our mindsets can be shaped by an intentional awareness, they are also largely driven
by our experiences and what we are (intentionally or unintentionally) exposed to. Yet, as

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 mindsets evolve through an interactive process, it is not simply a “one and done” effort. Rather,
it mustbe reinforced and practiced. In this sense, a mindset is a habit that requires practice.

Activity 2: Teacher please organizes groups having 5 trainees and helps them to accomplish the following
activities.
Determining the state of a mindset (15 minute total)
Consider your current mindset and discuss with your classmates the followings
1. What was the state of your mindset some 6 years before about your current field of training?
2. What was the state of your mindset at present about your current field of training?
3. If there are changes or no changes at all in your mindset, what are the factors for this?

1.2.2 Entrepreneurial mindset

An entrepreneurial mindset is a set of beliefs, thought processes, and ways of viewing the world
that drives entrepreneurial behavior. Typically, entrepreneurs firmly believe it’s possible to
improve their life situation and live life on their own terms. They also believe in their ability to
learn, grow, adapt, and succeed.

The mindset of successful entrepreneurs is different from mindset of traditional workers in many
ways. For example, if a traditional worker needs to earn more money they’ll often brush up their
resume and look for a better paid job. However, someone with an entrepreneurial mindset would
look for ways to earn money by starting or growing a business

Here’s the thing: Anyone can develop the mindset of a successful entrepreneur.

As the founder of Ford Motor Company, Henry Ford once said, “Whether you think you can or
think you can’t you’re right.”

A positive mindset helps motivate entrepreneurs to focus on desired activities and events and the
results they hope to achieve. The characteristics of the entrepreneurial mindset which are
common for all entrepreneurs are:

1. They passionately seek new opportunities.

2. They pursue opportunities with enormous discipline.

3. They pursue only the very best opportunities and avoid exhausting themselves and their
organizations by chasing after every option.

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 4. They focus on execution specifically, adaptive execution.

5. They engage the energies of everyone in their domain.

1.2.3 The importance of an entrepreneurial mindset

The power of an entrepreneurial mindset is obvious when you think about it. Entrepreneurs
succeed like they do because they think, act, and view the world differently from most people
There are so many reasons why an entrepreneurial mindset matters. For example, developing an
entrepreneurial mindset can help to reduce doubt, fear, and anxiety. It can also help to drive
action, focus, and growth. In short, an entrepreneurial mentality is the foundation of business
success. Now, let’s explore how entrepreneurs think.

The factors that help entrepreneurs to develop a positive mindset include:

• Focus on opportunities to learn from each experience.

• Being involved in positive activities.
• Choose work objectives that are achievable and have an impact.
• Make friends with other entrepreneurs.
• Acquire the thinking, mannerisms, and characteristics of successful entrepreneurs.
• Have successful entrepreneurs serve as role models and mentors.
• Avoid negative thoughts and ideas.
• Take advantage of opportunities to improve your situation, whether it is your personal
life, work life or life in the community.

Successful entrepreneurs need to develop a positive mindset and observe their environment. In
order to do this, the process described below in sequential order should be followed;

1. Attention (focus on something)

2. Retention (what observed must be retained)
3. Reproduction (behavior must be practiced again and again)
4. Motivation (learner must be motivated to learn from it)

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1.2.4 Distinguishing characteristics of entrepreneurial mindset

If you want to learn how to build an entrepreneurial mindset, you need to know how successful
entrepreneurs think. So, let’s take a closer look at 19 essential entrepreneurial mindset
characteristics. Entrepreneurs are:

Independent: This is one of the most important aspects of the entrepreneurial mindset.
Entrepreneurs don’t follow the crowd or look to others to be given instructions. Instead,

Responsible: The independent mindset of successful entrepreneurs stems from taking full
responsibility. Entrepreneurs don’t blame others for their life situation they empower themselves
by taking responsibility for improving it.

Abundant: A key part of the entrepreneurial mindset is abundance. Entrepreneurs know they can
improve a situation, make more money and create new opportunity. The sky is always the limit.
As a result, entrepreneurs don’t hoard money or knowledge. They’re open, generous, and
understand that “you get what you give.”

Goal-Oriented: Entrepreneurial thinking is goal-orientated. In other words, successful

entrepreneurs don’t have wishes and dreams they have goals and plans.

Not Afraid of Failure: When learning how to think like an entrepreneur, you need to look at
failure differently to most people. Entrepreneurs don’t fear failure – they appreciate it. Each
“failure” is simply a stepping stone to learn from, helping to move you closer to success.

Growth-Oriented: Entrepreneurs believe that they can grow as people, learn new things, and
develop new skills. They believe that with some consistent effort they can shape themselves into
whoever they want to be.

Feedback-Seeking: The most successful entrepreneurs aren’t worried about looking cool they
just want to succeed, and they know that learning from feedback will help speed up the process

Learning-Oriented: Most people spend their spare time seeking entertainment, whether it’s
social media, Netflix, gaming, reading novels, or hanging with friends. However, entrepreneurial
thinking is more concerned with learning and development. For example:Instead of watching
TV, entrepreneurs may take an online course to help them move toward their goals.

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Forward-Thinking: If you want to learn how to think like an entrepreneur, you need to think
long-term. Successful entrepreneurs know that big goals take a long time to achieve. So, they
start with their goal and work backward, reverse-engineering every step of the way. In other
words, “If I want this, I need to do that. But to do that, I need to do this,” and so on.

Self-Accepting: Many people struggle with self-acceptance. When you don’t like something
about yourself, it’s easy to devalue or even hate yourself. But if you develop a growth mindset,
you know you can always change and improve. So, successful entrepreneurs accept themselves
as they are, warts and all. They know who they are is transient, and they’re working on becoming
the person they want to be.

Self-Aware: Entrepreneurs practice self-awareness. They pay close attention to their strengths
and weaknesses, which allows them to improve faster and play to their strengths.

Collaborative: Great businesses require teamwork after all; Jeff Bezos didn’t build Amazon alone.
So, if you want to think like an entrepreneur, you need to think in terms of “we” instead of “I.”

Comfortable with Discomfort: Courage leads to an essential entrepreneurial mindset

characteristic: learning to be comfortable with discomfort. Growth and expansion require you to
move beyond your comfort zone. So, when developing an entrepreneurial mindset, someone
should overcome any uncomfortable feeling such as rejection.

Adaptable: Entrepreneurs have big goals, and they know it’s impossible to see the entire
staircase before climbing. But they climb anyway, safe in the knowledge that they can always
adapt to new developments.

Problem-Solving: Entrepreneurs look for problems and try to find ways to solve them. If you
think about it, this is the essence of every business. For instance, plumbers fix broken pipes;
Netflix cures boredom, and car manufacturer’s help people get around.

Driven and Tenacious: Drive is an essential part of the entrepreneurial mind. Entrepreneurs are
self-motivated and driven to achieve their goals. They work hard and enjoy the ride, knowing
that they’ll reap the rewards down the line.

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Focused: Successful entrepreneurs are focused on achieving their goals. They’re focused, never
procrastinate, and always prioritize the most important tasks. To do this, ask yourself, “Will this
help me to achieve my long-term goals?” If the answer is yes, then ask, “Is this the most
important thing to do right now?”

Action-Oriented: Entrepreneurs have a bias for action. They know that knowledge without
action is meaningless. As the entrepreneur Walt Disney said, “The way to get started is to quit
talking and begin doing.”

Decisive: The entrepreneurial mind is decisive. Entrepreneurs must confront problems and make
many decisions every day often with inadequate information to help. So practice decisiveness for
example, next time you’re in a restaurant, look at the menu once, decide, and order with
confidence.

1.2.5
Developing Positive mindset towards work

“Whether you think you can or think you can’t, you’re right”
“The best and most beautiful things in the world can’t be seen or touched ... but are felt in the
heart.”
Helen Keller - was a blind and deaf author and lecturer

“If you’re not aiming for success, than you’re either aiming for failure or not aiming at all”

Science today says that we can influence our outer world by influencing our inner world. Instead
of being passive observers, we now have the power to participate in the world by using our mind
at a level where it changes what we think and feel, what we believe and which emotions we
experience. You have the power to start making the changes you want and getting the kind of life
you’ve always wanted. And it all begins in one place; your mind. Because our mind is just like a
supercomputer: what you put in, you take it out. Having the right mindset makes all the
difference in the world.

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Positive thinking means seeing opportunity where negative thinking means looking at what is
missing or what is wrong. Of course this doesn’t mean that positive thinking is all only about
seeing the nice and happy things in life and not focusing on the potential dangers. If you choose
between positive thinking and negative thinking, the only difference is that with positive thinking
your outcome will not be determined in either disappointment, feeling like a failure or
depression. So, if you choose to have a positive mindset, you make the absolute very best choice.

It will change your self-image, will get you the best results and will allow you to make the best
choices in your life.

This also works for positive thinking. If you focus on your thoughts consciously, you take
control of your thoughts and you can if necessary redirect them towards a more positive mindset.
By focusing on what’s good in your life, and not what’s missing or what doesn’t work, you
change your point of view, and thus the way of your results. It’s the way you state things or
reframe them, as you want them to be. So, instead of using negative terminology, try to find
something positive in your statement. You’ll see that the way you start talking about yourself
andthe things around you, will change the way you perceive new information and digest
situations as they occur in your life.

Activity 3: Determining positive and negative mind set (10 minute)

1. Do you have a positive or negative mindset? Why?
2. Have you changed your mindset through time or not? If your answer is yes, how? If your
answer is no, why?
3. Discuss to your classmates how you can develop a positive mindset?

Practical Activity 1: Analyzing a positive and negative mindset (10 minutes)

Go to a nearby place from your class and talk with at least 2 individuals about their nature of
mindsets. Based on your findings,
1. Are their mindsets positive or negative?
2. What are the reasons for their negative or positive mindset

1.2.6 Positive mindset to work

There are several factors that may contribute to unhappiness at work ; like a difficult supervisor,
tasks that are too mundane, too stressful, or too difficult, challenging coworkers, or maybe just a
general dissatisfaction with where you are as opposed to where you want to be in your career.

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The good news is that job satisfaction has much more to do with internal factors such as having
positive expectations, developing a healthy self-image, and being flexible than it does external
factors such as the work itself or the people it involves. Research confirms that we are only as
happy or unhappy as we make up our minds to be, therefore, we each have the power to choose
if we want to respond to our jobs and to the world around us positively or negatively.

The following are some tips for how you can develop a more positive mindset at work in general
and entrepreneurship in particular; no matter how dissatisfied you may feel in your current
position.

 Pay attention to what you’re telling yourself throughout the day(Ex: “I hate my job,” “I
can’t believe I have to be here,” etc.) and recognize that thinking negatively about your job
doesn’t change anything about your situation.
 Look for other points of view. Keep in mind that you are viewing your situation from only
one perspective. While you may not think that your work situation is ideal, other people
may envy certain aspects of your job. Think about how you could view your situation
differently.
 Be sure to take breaks. Of course, follow your workplace guidelines about timing and
duration, but make the most of your allotted time by physically removing yourself from
your work station, touching base with someone from the “outside world” (friend, family
member, etc.), or simply taking a few moments to breathe deeply and do nothing.
 Try out some new communication strategies at work. For instance, try matching a positive
comment to every negative comment you say or hear to set a more positive tone to the
conversation. You may be surprised to learn how contagious a positive outlook can be to
those around you. Work on improving your assertiveness skills by standing up for yourself
when necessary, but also stay professional and polite and accept responsibility for your
own feelings and actions. Treat everyone around you with respect, whether or not you feel
you are getting the same in return.
 Your home should be a place in which you can safely leave behind the daily stresses of
your job. Use a ritual, such as stopping by the gym, going for a walk, changing out of your
work clothes, etc., that serves as a link between work and home.

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  Improve your life outside of work. Pursue personal interests and hobbies outside of your
job, spend more quality time with your friends and family, and/or do something generous
for someone else.
 Explore your options. When you’re employed, you have the luxury of searching for a
position you really like, not just one that you need. Explore different positions with your
same employer, find out if a promotion is possible in your area, look for the same type of
job with a different employer, or look into a new career altogether.
 Design long-term goals. Instead of dwelling on how bad you think things are right now,
focus on what you would like your life to be like in five, ten, even twenty years. Write down
where you’d like to be professionally, financially, emotionally, spiritually, physically, and
socially and set attainable goals for yourself. Research these goals by reading books, viewing
software, taking an interest/ability test at your local community college or workforce center,
etc.

Practical Activity 2: Analyzing the nature of a mindset towards work (2 hour)

Visit any nearby business and ask a worker or manager about his/her mindset towardshis work.
Based on this finding, answer the following questions;
1. What is the nature of mindset of the person you ask? Is it positive or negative?
2. How do you determine the nature of mindset?

1.2.7 Developing effective work habit (Culture)

Work habits refer to a person’s characteristic approach to work, including such things as
organization; priority setting, and handling of paperwork and e-mail. Some people have great
work habits. Others, however, require intervention to rehabilitate poor work habits. Left
unaddressed, poor work habits can lead team members to assume that such behavior is
acceptable. Discussing concerns such as absenteeism, foul language, and dress and grooming
habits can certainly be difficult, but such discussions are a necessary part of leading a team.
Correcting work habits requires careful attention and skill, so supervisors, team leaders and
managers must learn how to maintain a team member’s self-respect during these discussions so
the employee doesn’t feel alienated.

Employees with good work habits are more successful in their careers, and they are more
productive and attentive to quality than employees with poor work habits. For some, good work
habits come naturally. Others, however, easily slip into poor work habits and need a manager or

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team leader’s intervention. These discussions are rarely easy; however with careful planning,
they can go smoothly and yield a positive outcome.

People with good work habits tend to achieve higher career success and have more time to invest
in their personal lives. They also enjoy their personal lives more because they are not
preoccupied with unfinished tasks. Effective work habits are also beneficial because they
eliminate a major stress or the feeling of having very little or no control over your life. Being in
control also leads to a relaxed, confident approach to work.

In order to develop effective work habits and became more productive person, things that should
be considered include
1. Overcoming procrastination
2. Developing attitudes and values that foster productivity.
3. Developing skills and techniques that lead to personal productivity.
4. Overcoming time wasters.

Of all the above factors, overcoming procrastination is the most important. So it is discussed as
follows:

Overcoming procrastination

The leading cause of poor productivity and career self-sabotage is procrastination. It is delaying
of a task for an unacceptable or weak reason. Procrastination is also the major work habit
problem for most workers and students.

People procrastinate for many different reasons. The common ones are
1. Thinking that the task to be done (such as quitting a job) is unpleasant.
2. Another reason we procrastinate is that we find the job facing us to be difficult
3. A fear of the consequences of our actions
4. Negative evaluation of your work
5. The fear of success
6. A way of rebelling against being controlled
7. To achieve the stimulation and excitement that stems from rushing to meet a deadline

Techniques for reducing procrastination

To overcome or at least minimize procrastination, we recommend a number of specific tactics.

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1. Calculate the cost of procrastination
You can reduce procrastination by calculating its cost. One example is that you might lose out on
obtaining a high-paying job you really want by not having your résumé and cover letter ready on
time. Your cost of procrastination would include the difference in salary between the job you do
find and the one you really wanted. Another cost would be the loss of potential job satisfaction.

2. Counterattack
Forcing yourself to do something difficult, frightening, or uncomfortable helps you to prove that
the task was not as bad as initially perceived. Assume that you have accepted a new position but
have not yet resigned from your present one because resigning seems so uncomfortable.

3. Jump-start yourself
You can often get momentum going on a project by giving yourself a tiny assignment simply to
get started. One way to get momentum going on an unpleasant or overwhelming task is to set
aside a specific time to work on it. If you have to write a report on a subject you dislike, you
might set aside specific day and time as your time to first attack the project.

4. Peck away from overburden task

A good way of minimizing procrastination is doing a task bit by bit, by breaking down to
manageable size and, therefore, not seem so overwhelming too much burden.

5. Motivate yourself with rewards and punishments

Give yourself a pleasant reward soon after you accomplish a task about which you would
ordinarily procrastinate. You might, for example, have a walk through the forest after having
completed a tough take-home exam. Punish yourself if you have engaged in serious
procrastination.

6. Follow the WIFO principle

This principle recommends that you use the technique of worst in, first out (WIFO) for dealing
with unpleasant tasks you would prefer to avoid. A related motivational principle is that after
completing the unpleasant task, moving on to a more pleasant (or less unpleasant) task functions
as a reward.

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Self-check Questions- 2
Part I: Choose the best answer
1. _______________is the sum of your knowledge, including beliefs and thoughts about the
world and yourself in it.
A. Characteristic
B. mindset
C. Opinion
D. All
2. Focus on opportunities to learn from each experience, being involved in positive activities,
avoid negative thoughts and ideas, make friends with other entrepreneurs are:.
A. factors that help entrepreneurs to develop a negative mindset
B. factors that help entrepreneurs to develop a positive mindset
C. Factors that stops entrepreneurs to develop a positive mindset.
D. All
3. Essential entrepreneurial mindset characteristics includes
A. Independent, responsible, abundant, goal-oriented and not afraid of failure
B. growth-oriented, learning-oriented, forward-thinking and self-accepting
C. Self-aware, collaborative, comfortable with discomfort and adaptable
D. Driven and tenacious, focused, decisive action-oriented and problem solving
E. All
4. Why People mostly procrastinate tasks and works in general
A. They think that the task to be done is unpleasant.
B. They fear the consequences of the actions
C. Negative evaluation of their work
D. All

Part II: Fill in the blank spaces with the most appropriate answers

1. ____________is delaying of a task for an unacceptable or weak reason.

2. Developing an entrepreneurial mindset can help to reduce _______, ______, and ________
and it can also help to drive ______, ______, and ________.
3. Things that should be considered in order to develop effective work habits are:
____________, ____________, __________ and ________.

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 Understanding Entrepreneurial Competencies
Information Sheet 3
&Environment

Pre lesson activity

 What is Competency? Discuss in a class.( 5 minute)

 What does Entrepreneurial Competencies? (5 minute)

 Discuss Entrepreneurship and Environment in group (5 minute)

1.3.1 Identifying Personal Entrepreneurial competencies (PECs)

Competencies: are defined as a body of knowledge, a set of skills and a cluster of traits.

Knowledge: consists of a set or body of information stored, which may be recalled at an

appropriate time.

Skill: is the ability to apply knowledge.

Trait: is the total of peculiar qualities or characteristics that constitutes personal individuality.

Entrepreneurial competencies:refer to the key characteristics that should be possessed by

successful entrepreneurs in order to perform entrepreneurial functions effectively.

I. Levels of competencies required by entrepreneurs

There are three levels of competencies, which all entrepreneurs need:

1. Personal competencies: creativity, determination, integrity, persistence, emotional
balance and self-criticism.
2. Interpersonal competencies: communication, engagement, delegation, respect.
3. Business competencies: business vision, resource management, networking, negotiating
skills.

Personal Entrepreneurial Competencies (PECs) are specific characteristics/ traitsthat can be

achieved through education, hard work, and planning. There are ten most common Personal
Entrepreneurial Competencies, often calledthe 10 PECs, required by an entrepreneur; which can
be grouped into three clusters as follows:

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 Table 4: Entrepreneurial Competency and Its Clusters
No Personal Entrepreneurial Competency Cluster
1 Opportunity seeking and initiative
2 Persistence
3 Fulfilling commitments Achievement
4 Demand for efficiency and quality
5 Taking calculated risks
6 Goal setting
7 Information seeking Planning
8 Systematic planning and monitoring
9 Persuasion and networking
Power
10 Independence and self-confidence

i. Opportunity seeking and initiative

An opportunity is a favorable set of circumstances that creates a need for a new product, service
or business. An entrepreneur always seeks out and identifies opportunities. The opportunities
may include access to credit, working premises, education, trainings etc.

Entrepreneurs come up with new ideas. This is an important area for an entrepreneur as it
determines his/her rate of expansion in business, e.g. new designs and use of products.

Quotes

 “Successful people move on their own initiative but they know where they are going
before they start.” – Napoleon Hill
 “What is not started will never get finished.” – Johann Wolfgang von Goethe

 A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in
every difficulty. Winston S. Churchill

ii. Persistence

True entrepreneurs face bureaucracy, make mistakes, receive criticism, and deal with money,
family, or stress problems. But they still stick to their dreams of seeing the venture succeed.

It is the ability or the determination to takes action in the face of significant obstacles and
challenges. True entrepreneurs take personal responsibility for the performance necessary to

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 achieve goals and objectives.

Quotes
 “If you can’t fly, then run, if you can’t run then walk , if you can’t walk then crawl, but
whatever you do you have to keep moving forward” -Martin Luther King, Jr.
 “Success in life is not for those who run fast, but for those who keep running and always on
the move.” -Bangambiki Habyarimana

iii. Fulfilling commitments

An entrepreneur makes a personal sacrifice and extraordinary effort to complete a job, pitches in
with employees, or takes their place if needed, to get a job done and strives to keep customers
satisfied and places long-term good will above short-term gain.

Quotes

 “If there is no struggle there is no progress” –Frederick Douglass

 “I never dreamed about success. I worked for it. –Estee Lauder

iv. Demand for efficiency and quality

Efficiency refers to the means of producing results with little wasted effort while quality refers to
the standard of something as measured against other things of a similar kind; it is of excellence
of something.

In pursuit of demand for efficiency and quality entrepreneurs tend to:

 find ways to do things better, faster and cheaper
 act to do things that meet or exceed standards of excellence
 develop and uses procedures to ensure that work is completed on time and that work
meets agreed upon standards of quality.

Quotes

 “We are what we do repeatedly. Therefore, excellence is a habit, not an incident.” -

Aristotle
 “Almost all quality improvements come via simplification of design, manufacturing,
layout, processes, and procedures.”-Tom peters

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  “If a thing is worth doing, it is worth doing well”- Chinese proverb

v. Taking calculated risks

Businesses face risk. Successful entrepreneurs take risks in business such as starting businesses
which have an equal chance of success or failure or resigning from a secure job to start a
business. Taking risks, however, does not mean going in to business blindly and then expecting
grate result; Taking risks involves careful planning and hard work.

Most entrepreneurs take calculated and moderate risks. Entrepreneurs avoid low-risk situations
because there is lack of challenge, but they also avoid high-risk situations because they want to
succeed. They set high goals and enjoy the excitement of a challenge, but they do not gamble.
Hence, low-risk situations and high-risk situations are avoided because these risks do not satisfy
the entrepreneur. In short, the entrepreneur likes a difficult but achievable challenge.

Quotes
 “If there is no risk, there is no reward.” -Christy Raedeke

 “Life is all about risks. If you never take a risk, you will never achieve your dreams. Take
risks: If you win, you will be happy ;If you lose, you will be wise” – Unknown

Activity 1 – Group Discussion (20 minute)

Instruction: Read all of above quotes and answer the questions given.

1. How do you think that thesequotes are related toeach entrepreneurial competency?
2. What can you say or quote in relation to these competencies in your own culture?

vi. Goal setting

Goal setting is the process of deciding what you want to accomplish and devising a plan to
achieve those desired result. Successful entrepreneurs have the ability to set goals and objectives
which are personally meaningful and challenging andarticulate clear and specific long-term
goals.

Quote

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  “If you don’t know where you are going, you’ll end up someplace else.” ― Yogi Berra

 “The wind never helps the boat that has no clear destination.” Seneca

vii. Information seeking

Successful entrepreneurs do not rely on guesswork and do not rely on others for information.
Instead, they spend time collecting information about their customers, competitors, suppliers,
relevant technology, markets and they also consults experts for business or technical advice.
Gathering relevant information is important to ensure that the entrepreneur makes well informed
decisions. Information on the area of market, supply, operations, finance, legislation, and
infrastructure are important for entrepreneurs.

Quotes
1) “Information means power” Unknown
2) “There are no foolish questions, only fools who do not ask questions.” Unknown

viii. Systematic planning and monitoring

Systematic planningis a planning process that is based on the scientific method and includes
concepts such as objectivity of approach and acceptability of results; while Monitoring is the
systematic process of collecting, analyzing and using information to track a program's progress
toward reaching its objectives and to guide management decisions.

Successful entrepreneurs are good planners and monitors. They:

 plan by breaking large tasks down into sub-tasks with clear time-frame

 Revise plans in light of feedback on performance or changing circumstances

 Keep financial records and uses them to make informed decisions

Quote
 “By failing to prepare, you are preparing to fail.” ― Benjamin Franklin

 “Give me six hours to chop down a tree and I will spend the first four sharpening the
axe.” ― Abraham Lincoln

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ix. Persuasion and networking

Persuasion is a way of convincing someone to get something or make a decision in your favor. It
is inducing or taking a course of action or embracing a point of view by means of argument,
reasoning, or appeal; to convince; to succeed in causing a person to do or consent to something.

Networking is a socioeconomic business activity by which businesspeople and entrepreneurs

meet to form business relationships and to recognize, create, or act upon business opportunities,
share information and seek potential partners for ventures. Entrepreneurial networks are
important for the mobilization and acquisition of scarce resources that are crucial to starting and
developing a business.

Successful entrepreneursuse deliberate strategies to influence and persuade others,take action to

develop and maintain a network of business contacts anduses key people as agents to achieve
their objectives.
Quotes
 “Everyone you will ever meet knows something you don’t.” Bill Nye
 “Networking is more about farming than it is about hunting.” Ivan Misner

x. Independence and self-confidence

Self-confidence is the state of being certain that a chosen course of action is the best or most
effective given the circumstances and independence may refer to the ability to do what one
wants, when s/he wants and where. Entrepreneurs want to be their own boss this is what we call
independence.

Entrepreneurs believe in themselves and the desire for control and the ability to make decisions
often makes it difficult for them to work in a controlled environment. Hence Entrepreneurs:

 Seeks autonomy from the rules and/or control of others

 Attributes the causes of successes and failures to oneself and to one’s own conduct
 Expresses confidence in own ability to complete a difficult task or to face a challenge

Quotes
 “The best way to gain self-confidence is to do what you are afraid to do.”-Unknown

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  “When you question if you have what it takes to be an entrepreneur, confidence says to
you “of course you do! You have me! With me on your success team you can do
anything.” –Adalia

Activity 2: Group Discussion (20 minute)

Instruction: Read all of the above quotes and answer the following questions given.
1. How do you think that thesequotes are related toeach entrepreneurial competency?
2. What can you say or quote in relation to these competencies in your own culture?

 Inviting guest speaker or an entrepreneur (4 hours)

Trainers, this is the right time for you to invite a well-known entrepreneurs around your town who can
share their experience to your trainees.
 The guest should be a known and respected person by the society
 The speaker should be a known entrepreneur
 Do not focus on the size of the company or companies he/she owns
 Remember the speaker should have good speaking and persuading ability

1.3.2 Assessing Entrepreneurial potential

Entrepreneurial potential is a set of attitudes, motives and knowledge that enables

entrepreneurial activity. Such a definition shows the place of entrepreneurial potential in the
whole process of becoming an entrepreneur.

A self-assessment (personal-assessment) is an evaluation of your actions and attitudes. Self-

assessmentsassist individuals get in touch with what their core competencies are and how those
may overlap with what's needed to take on running a business.

If you're starting or leading a company, it's beneficial to know yourself inside and out. Even
though you've been with yourself your whole life, it's hard to identify your qualities. Assessing
your-self with professional self-assessment tools can:
 Help you to understand how you perform your work, so you can make appropriate
changes.

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 Help your employees to understand what are your motivates and drives.
 Help you to recognize when you're in over your head difficulties and need someone’s
help.
 Help you to recognize your strengths and weaknesses.
 See holes and spots where you need help.

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Table 5: Entrepreneurial Qualities Self-Assessment
Scoring-5 – Always 4 – Often 3 – Sometimes 2 – Rarely 1 – Never
S/No Characteristic 1 2 3 4 5
I enjoy doing things on my own. Nobody has to motivate me to get started on a
1.
task
2. If I make up my mind to do something, I don’t let anything stop me.
I do not hesitate to undertake risks related to creating and operating an
3.
enterprise.
4. I plan my time and resources well so I produce high quality products.
5. I assess the time and capacity I have before I commit to accomplishing a job.
6. I act upon the opportunities that needs and problems present.
7. I keep trying again and again despite great challenges and failure.
8. I work hard to try to foresee potential risks so as to prevent future risk.
I make personal sacrifices to complete jobs in order to keep my word and meet
9.
promised deadlines.
I always strive for improvement and progress despite feedback from people that
10.
they are satisfied with my work.
Before undertaking my job I try to gain as much information about it as I can, and
11.
verify the accuracy of the information I amreceiving.
12. I set short and long-term goals for my personal life and business.
I do everything I can to accomplish set business goals, through careful
13.
planning and implementation.
14. I team up well with others for tasks which I cannot accomplish on my own.
I am able to make decisions on my own, incorporating the suggestions and ideas
15.
of others as part of that process.
16. I collect all the necessary information I need before I start a job or task.
17. I set goals based on the resources and skills I have.
18. I have the skills to persuade and communicate with people.
19. I regularly evaluate my job performance, looking for areas of improvement.
I am happy with my work and am confident that I will make progress and
20.
improvement in the future.

Analysis of the Result

Analysis one:

Now evaluate how you ranked yourself for that characteristic (based on your score for each of
the questions). For example, if you rated yourself a “5” for both questions 1 and 6, then
according to the key above, you have a strong opportunity seeking trait. If you rated yourself a
“1” or a “2” for questions 14 and 18, then perhaps persuasion and networking are not among

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your strengths right now and could be skills for you to workon.
Analysis two: Add up your total score from all the numbers you wrote in each row. Write
your total sum here, and then interpret it below:Total Sum = ------------------
Table 6:Entrepreneurial Quality Self-Assessment Result
Result Interpretation
Score Meaning
Limited entrepreneurial qualities at the moment. It does not mean you are not meant
< 50: to be a business person. It only means that you should spend more time preparing
yourself to handle any problems you might face once you start a business.
Average - there are gaps that need to be filled or improved upon. You might consider
Between 50 – 80
upgrading your knowledge or skills. Consider taking some courses.
>80 Good entrepreneur - keep it up and continue to develop.

Analysis two: Each statement is focused on different entrepreneurial qualities as stated below.
 Question 1+ Question 6 =Opportunity-seeking
 Question 2+ Question 7 =Perseverance
 Question 3+ Question 8 =Risk-taking
 Question 4+ Question 10 = Demand for efficiency andquality
 Question 5+ Question 9 = Commitment to workcontract
 Question 11+ Question 16 =Information-seeking
 Question 12+ Question 17 =Goal-setting
 Question 13+ Question 19 =Planning
 Question 14+ Question 18 = Persuasion &Networking
 Question 15+ Question 20 = SelfConfidence

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ENTREPRENEUR’S NAME: Manuel Lopez.

(Manuel owns an art gallery which specializes in signed prints and art posters.)
When I first thought of opening a gallery, I went around and talked to people in the art
community. I asked them what I needed to know to open a gallery. The more people I talked to,
the more ideas I got. You never should be shy about asking other business owners for help. Not
everyone’s going to be nice about sharing ideas, but most business owners are friendly and
believe that competition is healthy. Besides, successful entrepreneurs love to talk about their
successes.

Running a business takes a great deal of time. You have to be willing to work seven days a week.
You have to think about the business 24 hours a day and all the problems are yours. Having
some experience in sales helped me in the business. But many specific things had to be learned
on-the-job. Business schools don’t teach you how to wrap or cover up packages, but that’s an
important part of the retail business.

My advice to anyone thinking about going into business, especially a retail business, is to be
flexible. Move with the market trends. My gallery is a great source of pride to me. Still, I always
have to keep working to make my business grow. I don’t feel I’ll ever be able to sit back, put my
feet up and say “I’ve done it.” I shall always have problems, and my task is to solve them.

ENTREPRENEUR’S NAME: Hamed Al-Bitar.

(Hamid and his partner own a business which offers food, drink and music and has been open
almost a year.)

I have always been interested in music and have friends who are singers. My partner and I had
thought about opening a place like this for a long time. Last summer, a friend of mine saw this
storefront for rent. He and I had some money, and we decided to rent it. The location seemed
ideal. It’s located in what seems to be a growing area for live music. There are now nine places
around here offering live talent. I think there’s more live entertainment around here than in any
other area of the city. And all that competition generates increased the number of people coming
into the neighbourhoods.

The great thing about being in this business is that I’m exactly where I want to be and I’m
working with nice people. I enjoy the public relations part of my job. Not that there aren’t
problems. Owning a business always has its own challenge. Mostly, I’m happy with the

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business. I’m responsible for cleaning the place every night. I actually enjoy doing it because
it’s my place.
Table 7:Personal Entrepreneurial Competencies Answer Sheet
Personal entrepreneurial competencies answer sheet
Entrepreneur Personal characteristics of entrepreneurs (PECS)
Manuel Lopez
Hamed Al-Bitar

1.3.3 Understanding Entrepreneurship and Environment

Business environment refers to the factors external to a business enterprise which influence its
operations and determine its effectiveness. Business environment may be healthy or unhealthy.

 Healthy business environment means the conditions are favorable to the growth of
business.
 Unhealthy environment implies conditions hostile or unfavorable to business
operations.
Business and its environment interact with each other. Economic system and other conditions in
the environment determine the success of business enterprises. Therefore, business enterprises
and their management have to adjust to the conditions prevalent around them.

I. Classification of Business Environment

Business environment may be classified into two broad categories; namely: external; and internal
environment

i. External Environment
It is the environment which is external to the business and hard to influence independently.
The following are the components of external environment:

1. Economic Environment
Economic environment is of multidimensional in nature. It consists of:
 the structure of the economy,
 the industrial, agricultural, trade and transport policies of the country,
 the growth and pattern of national income and its distribution,
 the conditions prevailing in industrial, agricultural and other sectors, t
 he position relating to balance of trade and balance of payments, and
 other miscellaneous conditions of the economy.

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There is a close relationship between a business firm and the economic environment around it.
The success of a business enterprise depends significantly upon the State and growth of the
economy.

2. Legal Environment
Business must function within the framework of legal structure. Therefore, adequate knowledge
of laws and rules is necessary for efficient managerial performance.

There are several business laws (such as law of contract, law of sales, law of agency, law of
bankruptcy, law of negotiable instruments etc) in our country. A working knowledge of these
laws is very helpful for the entrepreneur. Such knowledge will keep them away from innocent
breaches and resultant penalties.

Group Assignment 1
Instruction: Prepare a brief note on the following types of business laws:
Law of contract
Law of sales
Law of negotiable instruments
Law of agency
Law of bankruptcy

3. Political Environment
Businessmen should learn to take public opinion into account in the decision-making process
because today's public opinion becomes tomorrow's legislation. Therefore, managers and
entrepreneurs should understand the working of the political system in order to discharge their
responsibilities to the satisfaction of the public.

4. Socio-Cultural Environment
It consist the social and cultural norms/customs of a society in a given period of time. The level
of rigidity/flexibility of a given society towards a new Product/service/concept depends on
thesocio-cultural practicesof that particular society such as values, beliefs, norms, fashions and
fads. It is important to protect traditional culture as long as it is not a hindrance to innovation,
motivation, and development.

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 5. Demographic Environment
It assesses the overall population pattern of a given geographical region.
It includes variables like age profile, distribution, sex, education profile, income distribution etc.
The demographic assessment can help in identifying the size of target customers.
ii. Internal Environment
Internal environment is the environment which is under the control of a given organization.
Following are the components of internal environment of a business:
1. Raw Material: It assesses the availability of raw material now and in the near future.
2. Production/Operation: It assesses the availability of various machineries, equipment,
tools and techniques that would be required for production/operation.
3. Finance: It assesses the total requirements of finance in terms start-up expenses, fixed
expenses and running expenses. It also indicates the sources of finance that can be
approached for funding.
4. Human Resource: It assesses the kind of human resources required and its demand and
supply in the market. This further helps in estimating the cost and level of competition in
hiring and retaining the human resources.
Identifying Environmental Factors Affecting Entrepreneurship
A complex and varying combination of financial, institutional, cultural and personality factors
determines the nature and degree of entrepreneurial activity at any time. The following are some
of the environmental factors which hinder/delay entrepreneurial growth:
 Sudden changes in Government policy.
 Outbreak of war or regional conflicts.
 Political instability or hostile Government attitude towards industry.
 Excessive red-tapism and corruption among Government agencies.
 Ideological and social conflicts.
 Unreliable supply of power, materials, finance, labor and other inputs.
 Rise in the cost of inputs.
 Unfavorable market fluctuations.
 Non-cooperative attitude of banks and financial institutions.

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Self-check questions 3
Part I: fill the following spaces with the most appropriate answers

1. ___________are defined as a body of knowledge, a set of skills and a cluster of traits

2. The key characteristics that should be possessed by successful entrepreneurs in order to
perform entrepreneurial functions effectively are known as _______________.
3. The power cluster includes _________________and _________________Personal
Entrepreneurial Competency
4. ______________refers to the factors external to a business enterprise, which influence its
operations and determine its effectiveness.
5. What are the components of external business environment
A. _____________________
B. _____________________
C. _____________________
D. _____________________
E. _____________________

6. Internal business environment includes

A. _____________________
B. _____________________
C. _____________________
D. _____________________

Part II: discuss the following in brief

1. What is Opportunity seeking and initiative

2. What is Goal setting
3. What is Entrepreneurial potential

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 Information Sheet - 4 Entrepreneurial motivation and Decision (4hrs)

Pre lesson activity

What is Entrepreneurial motivation? Discuss in a class.( 5 minute)
What is Entrepreneurial Decision? (5 minute)
1.4.1 Entrepreneurial Motivation

Figure 1: Entrepreneurial Motivation

Generally, motivation is the set of forces that cause people to do something. It is an inner state
that energizes and directs behavior toward goals. So, motivation is the set of intangible forces
that stimulate someone to take a desired course of action. Thus, we can say that entrepreneurial
motivation is the set of forces that energizes, directs and encourages a person to take initiative
and carry out entrepreneurial activities. It is defined as diverse factors arouse desires and activate
eagerness in entrepreneurs which make them accomplish an exacting goal.

The entrepreneurial motivation is the procedure that activates and motivates the entrepreneur to
make use of higher level of efforts for the accomplishment of his/her entrepreneurial goals.
Scholars have conducted various researches on entrepreneurial motivations and have come up
with numerous factors that motivate people to become entrepreneurs.

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Motivating Factors:

Let us address to the larger question what factors motivate entrepreneurs to start enterprises.
Many researchers have tried to understand and answer this question by conducting research
studies to identify the factors that motivate people to take all the risk and start a business
enterprise

While some researchers have classified the factors motivating entrepreneurs into ‘push’
(compulsion) and ‘pull’ (choice) factors, most of the researchers have classified all the factors
motivating entrepreneurs into internal and external factors as follows:

Internal Factors:

Among many internal factors motivating entrepreneurs;

1. Desire to do something new.
2. Become independent.
3. Achieve what one wants to have in life.
4. Be recognized for one’s contribution.
5. One’s educational background.
6. One’s occupational background and experience in the relevant field.

External Factors:
1. Government assistance and support.
2. Availability of labor and raw material.
3. Encouragement from big business houses.
4. Promising demand for the product

1.4.2Entrepreneurial Decision
As an entrepreneur, you must make different types of decisions on the everyday basis. You must
choose directions. Also, you must solve problems. You must take actions. The decision-making
process is one of the most critical processes in your company.

Simply, you as an entrepreneur will make decisions about everything.

Some decisions are more influential on your overall business processes, but some of them are
small decisions without significant effect on your business as a whole.

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Let’s try to describe the decision-making process that you can use in your business as an
entrepreneur.

Decision-Making Process

Decision-making process is one of the most critical processes in your business. You can see
different types of this process in reality, but generally, they all have the same purpose effective
and efficient decision that will bring results to your business.

The most common used approaching in the decision-making process is according the following
steps:

1. Recognize the problem/the gap

Every decision-making process starts with the problem or some discrepancy that exist between
the desired and current state. You have the desired state, and you have an existing state.
The difference between these two is the gap or problem that you must solve through the
decision-making process.

In this step, you can start with your vision about the desired state of your company and goals you
want to achieve.

Here are some questions you need to answer as a part of this step in your decision-making
process:

 What are the most critical desired states for your small business?

 How close is your small business to these states?

 Why are you close or not close to the desired states?

 What are the most significant problems here?

2. Analyze the problem

After you find possible problems that require solutions you can start with the analysis of already
defined problems. How these problems impact on the achievements of your small business?

At the end of this step, you will need to have a list of possible problems sorted by their urgency
for the solution. In your analysis, you need to find causes and how the problem impact on your
small business. If the impact of the problem is higher, also the importance of the problem will be
higher.

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3. Define possible solutions

This is the step when you need to start brainstorming all possible solutions for a given problem,
or problem you want to solve with that solutions. For the most critical problems, you analyze in
the previous step, create possible solutions.

When you think about solutions, also think about the causes of the problems. If you don’t
remove the causes, your solutions will be only a temporary solution. Your decision-making
process needs to include possible causes of each identified problem.

4. Analyze all possible solutions

Because in the third step you come to more than one possible solution for a given problem, in
this step you need to analyze all proposed solutions to rank them and make a decision that you
will implement in the future. This step will need to give you the rankings of all possible solutions
from the best ones at the top to the worst ones at the end of your list for each problem you
discover at the beginning of the decision-making process.

5. Select the best solution for the application

Now is time for the real decision. The final result from the decision-making process is a selection
of the best possible solution to the problem. What will you implement as a solution for the given
problem? The answer to this question will be the decision you are making.

6. Implement the decision

We can’t talk about decision-making process without the implementation of the decision you
have made. You will not finish the job until you don’t implement what you have decided. Can
you solve the problem only by discovering the solution and making the right solution? No, you
will not solve your problem. You need to implement the solution and check the results to see if
the specific solution really solves the identified problem.

As you can see the overall process described above can be divided into the following four parts
as shown in the diagram below.

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Figure 2: Decision making process elaborated in fish

Summary
Entrepreneurship offers a greater possibility of achieving significant financial rewards than
working for someone else.

Entrepreneurs are their own bosses. They make the decisions. They choose whom to do business
with and what work they will do. They decide what hours to work, as well as what to pay and
whether to take vacations.

It provides the ability to be involved in the total operation of the business, from concept to design
and creation, from sales to business operations and customer response.

It gives an individual the opportunity to build equity, which can be kept, sold, or passed on to the
next generation.

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The Entrepreneurial Perspective sees the business as a system for producing outer-directed
results, for the customer and other stakeholders, resulting in profits.

The Entrepreneurial Perspective starts with a picture of a well-defined future and then works to
change the present to match that picture

Developing an entrepreneurial mindset can help to reduce doubt, fear, and anxiety. It can also
help to drive action, focus, and growth. So try to develop an entrepreneurial mindset in different
ways.

Self-Check Question 4
Part I: fill the following spaces with the most appropriate answers

1. ______________ is the set of forces that cause people to do something

2. The two types of factors that motivate entrepreneurs to start enterprises are
________________and ____________________.

3. What are the most important decision making process that an entrepreneurs follow during
decision making

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 Learning Outcome- 2 Business Ideas, opportunities and feasibility study

Introduction

This lesson tries to discuss the meaning of a business idea, how a business idea is generated,
sources from which a business idea can be created and the steps that should be followed to arrive
at the best viable business idea,

In this lesson, a business opportunity is explained. The factors to be considered in identifying a

business opportunity are discussed. The methods for assessing a business opportunity are also
elaborated.
Learning Objectives
This guide will also assist you to attain the learning outcome stated below, Specifically, upon
completion of this Learning Guide, you will be able to
 Define a business ideas
 Generate and Screen business ideas
 Understand and identify a Business Opportunity
 Identify and Assess Business Opportunities
 Understand a feasibility study/analysis and its major components
 Understand the steps to be followed in conducting feasibility study

Learning instructions

1. Read the specific objectives of this Learning Guide.

2. Follow the instructions described below 3 to 5.
3. Read the information written in the “Information Sheets Try to understand what are
being discussed. Ask you teacher for assistance if you have hard time understanding
them.
4. Accomplish the “Self-check” given at the end of each information sheet
5. If you earned a satisfactory evaluation, proceed to the next information sheet . However,
if your rating is unsatisfactory, contact your teacher for further instructions.

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 Information Sheet -1 Business Ideas

Pre lesson Activities

1. What is business idea?
2. How can you generate business idea?
3. What are some sources of a business idea?

2.1.1 Definition of business ideas

A business idea is a short and precise description of the basic operation of an intended business.
Before you start a business, you need to have a clear idea of the sort of business you want to run.
Your business idea will tell you:
 Which need will your business fulfils for the customers and what kind of customers will
you attract?
 What good or service will your business sell?
 Who will your business sell to?
 How is your business going to sell its goods or services?
 How much will your business depend upon and impact the environment?
A good business idea will be compatible with the sustainable use of natural resources and will
protect the social and natural environment on which it depends. A good business idea is essential
for starting a successful venture and to stay ahead of competition in the market. Finding a good
business idea is the first step in transforming the entrepreneur’s desire and creativity into a
business opportunity. Good business ideas, however, do not usually just occur to an
entrepreneur.

2.1.2. Generating and Screening business ideas

Sources of Business Idea
The followings are some of the sources from which business ideas are generated
 Mass Media (newspapers, magazines, TV, Internet)
 Hobbies/Personal Interest  Natural scarcities and pollution
 Personal Skills and Experience  Changes in Society
 Business Exhibitions  Brainstorming
 Surveys  Being Creative
 Customer Complaints

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Some tips to generate a successful business idea
 Start thinking! Get your brain to work
 Buy a note book  Capitalize on your strengths
 Follow your passion  Explore new things
 Keep your eyes open  Check your bank account
 Know what you want in life
 Choose a business that suits your personality
 Read about other people that started their own business

Steps in generating and screening the best viable business idea

Out of the business ideas generated through brainstorming, the best business idea can be screen
out using the following steps:
Step 1: Brain Storming
Step 2: Macro Screening
Step 3: Micro Screening
Step 4: SWOT analysis
These steps are shown in the following table using example of 500,000 business ideas generated
at the first step of generating and screening business idea i.e., brainstorming:

Figure 3: Steps of generating and screening business ideas

Step 1: Brain Storming

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Brainstorming is a creative idea generation technique. It is also a problem solving technique.
This technique provides free environment to present individual ideas, without attracting criticism
from any one. Every generated idea is recorded and considered as solution to a problem.
Brainstorming shows collective creative power of a group of people. It is group productivity.
This is used to find out large number of business ideas in shorter time. This is accepted as one of
the tool in quality management. It is also useful to generate a large number of ideas about a
problem. Brainstorming provides an environment free of criticism for creative and free
exploration of options and ideas to solve problem.
Step 2: Macro screening
In this step, the viability of the business idea is checked according to the following criteria:
1. Marketability
2. Availability of raw materials &other inputs
3. Ease of implementation
4. Financial ability of the entrepreneur
5. Consistency with government priorities
Step 3: Micro Screening
In this step, the viability of the business idea is checked according to the following criteria:
1. Marketing Viability
2. Technical Viability
3. Organizational and Management Viability
4. Financial Viability
5. Environmental Viability
6. Ecological Viability
1. Marketing Viability
Target market for the products and why customer would buy the product
 Size and growth rate of target market
 The level of actual market demand and anticipated future market potential
 Demand and supply situation, factors and trends
 Direct and indirect competition
 Marketing Practices
2. Technical Viability
 Technology & its source

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  Machines and equipment’s
 Production process
 Raw Materials, power& other inputs
 Infrastructure and Facilities
 Location &layout of site, building & plan
3. Organizational and Management Viability
 Abilities, competencies, skills, experience, valuesand motivations of management/key
officers as per the Good network with customers
 Managerial experience
 Superior technology
 Distribution system
 Product requirements of project
 Sketch personnel requirements: what people will be needed now, in a year, in the long term?
 What skills and qualifications are required and what financial implication results?
4. Financial Viability
 Project startup capital
 Sources of financing/capital
 Balance sheet projections
 Cash flow projections
 Profitability/Income projections
 Break even analysis (BEA)
 Expected return on investment (ROI) & its viability for the entrepreneur (Cost benefit
analysis)
5. Environmental Viability
 What are the types of effluents and emission generated?
 What needs to be done for proper disposal of effluents and treatment of emissions?
 Will the project be able to secure all environmental clearance and comply with all
statuary requirements?

6. Ecological Viability

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  What is likely damaged caused by the project to the environment?
 What is the cost of restoration measures required to ensure that the damage to the
environment is contained within acceptable limits?

Step 4: SWOT Analysis

A SWOT analysis is a simple tool to help you work out the internal and external factors
affecting your business. The S stand s for strengths, the W stands for weaknesses, the O stands
for opportunities and the T stands for threats. It is one of the most commonly used business
analysis and decision-making tools. A SWOT analysis helps you to build on strengths (S),
minimize weakness (W), seize opportunities (O)andcounteract threats (T). In order to get the
most out of a SWOT analysis, you need to conduct it with a particular business objective in
mind. For example, a SWOT analysis can help you decide if you should introduce a new product
or service or change your processes.

Strengths
Strengths are within the control of the entrepreneur and they occur at present. Strengths should
be capitalized and harnessed to reduce or eliminate weaknesses. Examples of strengths may
include technical expertise, new improvements of product, good network with customers,
managerial experience, superior technology, distribution system, and product features (utility
durability, etc.

Weaknesses
Weaknesses are within the control of the entrepreneur; they occur at present. They are "lack
of...", "missing...", or weak points. As much as possible, weaknesses should be eliminated.
Examples of weaknesses include weak selling effort, lack of working capital, inexperienced
managers or employees, technological obsolescence and poor design of product.

Opportunities
Opportunities are positive or favorable factors in the environment which the entrepreneur. They
are, however, mostly beyond the control of the entrepreneur. They are different from strengths in
the sense that strengths are positive internal factors of the business. Examples of opportunities
include few and weak competitors, no such products in the market, rising income of target
market Scarcity of product in the locality, growing demand for the product, favorable

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government policy/programs, availability of technical assistance, low interest rate on loans,
access to cheap raw material and adequate training opportunities.

Threats
Threats are negative or unfavorable external factors in the environment and normally beyond the
control of the entrepreneur. They adversely affect the business, if not eliminated or overcome.
Threats differ from weaknesses in as much as they are beyond the control of the entrepreneur.
Both have a negative impact on the business.Examples of threats include hanging government
regulations, smuggling, Raw materials shortages, insufficient power, corruption, poor
infrastructure, rising costs of raw materials, too much/Unhealthy competition, government
bureaucracy

Reasons for generating business ideas

There are many reasons why entrepreneurs or would-be entrepreneurs need to generate business
ideas. Here are just a few:
 You need a great idea to start a new business
 Business ideas need to respond to market needs
 Business ideas need to respond to changing consumer wants and needs
 Business ideas help entrepreneurs to stay ahead of the competition.
 Business ideas are needed to exploit technology and do things better
 Business ideas are needed because the life cycles of products are limited.
 Business ideas help to ensure that businesses operate effectively and efficiently.
 Business ideas help to solve natural resource scarcity, pollution and depletion.

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 Self-Check 1 Written Test

Part 1: Short answer questions

1. What is a business idea?

2. What are the steps to screen out the best business idea?
3. What is brainstorming?

Part II. Say True or False for the following statements

1. All business ideas are viable.

2. SWOT analysis is one of the steps to screen out a viable business idea.
3. Ease of implementation is one of the factors considered in macro screening stage.

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 Information Sheet - 2 Business opportunities

Pre lesson Activities

1. What is a business opportunity?

2. What is the difference between a business idea and a business opportunity?

2.2.1 Understanding Business Opportunity

A business opportunity is an attractive investment idea or proposition that provides the

possibility of a return for the person taking the risk. Such opportunities are represented by
customer requirements and lead to the provision of a product or service which creates or adds
value for its buyer or end-user.

In other words, a business opportunity is a business idea that has been researched upon, refined
and packaged into a promising venture that is ready to launch.

Multiple business ideas may be generated on a daily basis but only few of them will be profitable
in the long run based on market research and feasibility study conducted. Only these few are the
real business opportunities.

An opportunity, in order to be a business opportunity, must fulfill the following criteria:

 There should be a real demand
 Return on investment
 Availability of resources and skills
 Meet objectives
 Be competitive
 It must have a high level of gross profit margins
 It must have the potential to start generating profit within 12 months – 36 months
 The startup capital investments must be realistic and within the range of what an
entrepreneur can provide.
 It must have the potential to keep on improving with time
 It must have a low level of liability to risk

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2.2.2 Identifying and Assessing Business Opportunities

Ideas and opportunities need to be screened and assessed for viability once they have
been identified or generated. Identifying and assessing business opportunities involves
determining risks and rewards/returns reflecting the following factors:
 Market
 Length of the “window of opportunity”
 Personal goals and competencies of the entrepreneur
 Management team
 Competition
 Capital, technology and other resource requirements
 Environment
The above factors are elaborated below:

Market
Is there a market for the idea? Are there any customers’ people with money who are able
and willing to buy the product or service? Can you provide what they need or want? How
many are there?

Length of the ‘window of opportunity’

Can you create or seize the opportunity until its full utilization?

Personal goals and competencies of the entrepreneur

Do you really want to venture into the business? Do you have what it takes? Are you
motivated enough?

Management team
Who else will be involved with you in the business? Do they have the experience, know-
how, contacts or other desirable attributes required?

Competition
Who are your competitors? Do you have something customers want that your competitors
do not have? For example, can you produce or market at lower costs?

Capital, technology and other resource requirements

How much capital, technology or other resources are required? Do you already have them

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or could you get them?

Environment
Are the political, economic, geographical, legal, and regulatory contexts favorable? Will
the business do any damage to the physical environment?

Responses to the above questions will determine the attractiveness of any business
opportunity.

Self-Check 2 Written Test

Part 1: Choose the best answer from the given alternatives

1. One of the followings is not a factor to identify a business opportunity

A. Market
B. Length of the “window of opportunity”
C. Competition
D. Customers

Part II: say true or false

1. All opportunities in a market environment can be business opportunity

2. All business opportunity is a business idea that has been researched upon.

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 Information Sheet - 3 Feasibility study/analysis

Introduction
This lesson explains a feasibility analysis and its major components. It also discusses each and

every step to be followed to make a feasibility analysis.

Pre lesson Activities …. 20 minutes

1. What is a feasibility study?
2. What are the common components of a feasibility study?
3. Discuss the main reasons why an entrepreneur will make a feasibility study/analysis.
4. What are the steps in conducting a feasibility study?

2.3.1 Meaning of a feasibility study/analysis

Feasibility study/analysis is the process of determining if a business idea is viable. As a

preliminary evaluation of a business idea, a feasibility analysis is completed to determining if an
idea is worth pursuing and to screen ideas before spending resources on them. It comes before
the development of a business Plan. When a business idea is deemed unworkable, it should be
dropped or rethought. If it is rethought and slightly different version of the original idea emerges,
the new idea should be subject to the same level of feasibility analysis as the original ideas. A
feasibility study can be carried out on an idea, a campaign, a product, a process or an entire
business.

A feasibility study precedes a business plan. Before writing a business plan, one needs to
identify how, where, and to whom they intend to sell a service or product. One also needs to
assess the competition and to figure out how much money they need to start the business and to
keep it running until it is established where all of these are achieved through a feasibility study.
Feasibility studies address things like where and how the business will operate. They provide in-
depth details about the business to determine if and how it can succeed. They serve as a valuable
tool for developing a winning business plan.

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Benefits of a feasibility study/analysis
The followings are the major benefits of any feasibility study/analysis
 It enables to identify problems that may encounter the business and their solutions;

 It enables someone to develop marketing strategies to convince a bank or investor that

your business is worth considering as an investment;

 It serves as a solid foundation for developing a business plan

 It enables someone to know what customers want, test a product's usability and the
quality of the user's experience

2.3.2 Components of a feasibility study/analysis

The components of a feasibility study/analysis include all the things that should be considered in
conducting a feasibility study/analysis. These are shown in the following diagram:

Figure 4: Components of a feasibility study

1. Description of the Business
Here, there should be descriptions of the following issues:

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  The product or services to be offered and how they will be delivered.
 How customers would use and buy the product or service
 Key components or raw materials that will be used in the product, how the business will
source these and how available they are.
 Plans to test the product to ensure it works as planned and is sufficiently durable, strong,
secure, etc.
2. Market Feasibility study
Here, there should be descriptions of the following issues:
 The industry in which the business operates. Include the size, growth rate, etc
 Demand and supply factors and trends
 Target market for the products and clearly state why would customers buy the produce
 The level of actual market demand and anticipated future market potential
 Direct and indirect competition (as it pertains to the target market only).
 Unique about the enterprise’s product compared to the competition?
 List all key barriers to entry
3. Technical Feasibility study
Here, there should be descriptions of the following issues:
 Details how you will deliver a product or service (i.e., materials,
 Labor, transportation, where your business will be located, technology needed, etc.).
 additional or ongoing research and development needs
4. Financial Feasibility study
Here, there should be descriptions of the following issues:
 Projects how much start-up capital is needed and when? What sources will provide the capital?
 balance sheet projections
 income projections
 cash flow projections
 When will the enterprise begin to turn a profit, Break even analysis (BEA)?
 What is the expected return on investment (ROI)?
 Will the enterprise provide a viable return on investment (ROI) for the entrepreneur (cost
benefit analysis)?

5. Organizational and production feasibility study

Here, there should be descriptions of the following issues:

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  Defines the legal and corporate structure of the business (may also include professional
background information about the founders and what skills they can contribute to the
business).
 What physical premises are required? Give location, size, condition, and capacity of
planned production and warehouse facilities.
 How complex is the manufacturing process? Describe equipment needed and costs.
 Will space be owned or leased? Will renovations be required? At what costs?

6. Management and personnel Feasibility study

There should be descriptions of the following issues:
 List the proposed key managers, titles, responsibilities, relevant background, experience,
skills, costs
 Sketch personnel requirements: what people will be needed now, in a year, in the long
term? What skills and qualifications are required and what financial implication results?

2.3.3 Steps for conducting feasibility study...

The basic steps that apply to all feasibility studies are the followings:
Step 1: Assessment Stage
Step 2: Analysis Stage
 Conducting Market Research
 Performing Organizational and Technical Analysis
 Performing Financial Analysis
Step 3: Interpretation Stage
 Completing the Feasibility Study

Each step is described below:

Step 1: Assessment Stage
In this step, decision is made if you need to do a feasibility study or not
 Conduct a preliminary analysis: A little bit or early research will help you determine if
you need to proceed with a complete study.
 Consider your options: Completing a thorough feasibility study is a time-consuming and
sometimes expensive process. Thus, you want to try to save your time and money for study
only the most promising of your ideas. For example, you should carefully identify other

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 possible alternatives to this business before you decide to jump full steam into a feasibility
study.
 Begin to assess the demand for your idea: Before you decide to invest the time and
money into a complete feasibility study, you need to realistically assess whether or not
 there is a need or demand for your idea. If there is, then you can proceed to study the idea
in more depth. If not, then you can move on to your next idea.
 Begin to assess the competition: Perhaps you've determined that there is in fact a demand
for your idea or services
 Assess the challenges. Before you move on to the active stages of your feasibility study,
you should consider whether or not there will be any impossible obstacles.
 Decide if you should hire expert consultants. If you initial investigation suggests that it
looks like you have an idea that may be successful, it could be helpful to hire a consultant
to manage and conduct your feasibility study.
 Set a time-table. Performing a feasibility study can be an involved process and can easily
taken up a lot of time. If your initial analysis has indicated that you're sitting on a good idea
and that you thus need to complete a more detailed study, you'll want to make sure that you
can get the job done in a timely manner.

Step 2: Analysis Stage

In this step, three things are done; these are
 Conducting a market research
 Performing Organizational and Technical Analysis
 Performing Financial Analysis
Conducting a market research
 Learn about the market. Once you've determined that you have a potentially workable
idea, you need to learn as much as you can about what the market currently for your product
or service is like, if it's changing, and how you can fit into it.
 Use data from the Economic Census. You should be able to find even more detailed
information for the demand for your product or service by studying the results of the
government's Economic Census, which is conducted every time.
 Survey people directly. A great way for you to learn as much as possible about what your
potential consumers or audience want and need is to interview them and ask them specific

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 questions
 Design your surveys carefully. Make sure that whatever methods you choose to learn
about your audience's needs and wants, you take the time to compose detailed, specific
questions for your survey
 Analyze the competition's claim on the market. It's also important that you try to
determine how much of a share your top competitors have, and how long they've held on to
that position.
 Identify your potential share of the market. Once you understand how your competitors
fit into the market, you should be able to estimate how you'll be able to fit in.

Financial feasibility analysis

The final part of your study should address the financial feasibility of the business idea which
involves the following:
 Preparing a sales forecast;
 Estimating start-up and working capital requirements;
 Estimating profitability;
 Assessing financial viability

Performing Organizational and Technical Analysis

 Determine where you'll need to work: Part of your feasibility study should be devoted
to exploring the details of where you'll be working.
 Decide how your company or team needs to be structured: If you won't be heading
this project alone, you'll have to think about what sort of help (paid or volunteer) you'll
need from others.
 Determine what materials you will need: This is the point at which you'll have to
carefully research and list all of the materials you'll need for each specific stage of your
project
 Identify the cost of your materials. While you will get more specific with the details of
your budget in the next phase of the feasibility study, make sure to record the prices of
the materials you'll need as you research their availability

Performing Financial Analysis

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  Outline your start-up costs. An important part of your feasibility study is a detailed
budget, which should include the costs that you'll need to handle as you start your business
 Estimate your operating costs. These are the everyday costs of running a business, and
will include such things as rent, materials, and wages that you'll need to account for
regularly
 Estimate your revenue predictions. Use your prior research on the current prices of
comparable items to help you set the price of your services or goods.
 Identify your funding sources: You need to know how you'll be able to cover all of your
costs throughout this operation. Thus, carefully outline all of your available sources of
income and funding
 Interpreting the data : The final step when considering the financial aspects of your idea
is to perform what is called a profitability analysis

Step 3: Interpretation Stage

This is the last stage to complete the Feasibility Study by doing the following tasks
 Compile all of the information: Once you've completed all of the stages of the study,
you'll need to organize your findings.
 Look at your financial predictions first: In most cases, the ultimate feasibility of your
idea will come down to questions about money. Take a hard, honest look at what your
anticipated profit margin for your business will be, and determine whether or not you can
be satisfied and secure with those numbers.
 Balance your estimated business profits against your personal financial needs: If you
hope to make a living off your new business, you will need to have your personal budget
outlined
 Consider the human costs of your business: Even if the numbers look decent to you,
you should think about how much time, effort, and attention this new business will
demand.
 Analyze your findings: Considering all of the associated risks and potential benefits, does
it look and evaluate it.
 Write it up and distribute it: You may have completed this feasibility report just for
your own sake—to learn for yourself whether or not your idea was workable

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 Practical Activity 2: Applying the components of a feasibility study … 2hrs.

Go to one business in the nearby area and describe each and every component
of a feasibility study for that business

Self-Check - 3 Written Test

Part 1: Say true or false

1. Another name for a feasibility study is a feasibility analysis.

2. Production viability is one of the components to be considered in a feasibility study.
3. The first step in preparing a feasibility study is an analysis stage of the market.

Part 2: Fill in the blanks with appropriate terms

1. The second step in the preparation of feasibility study is __________________.
2. Conducting a market research is one of the activities of ___________________stage in the
preparation of feasibility study

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 Learning outcome - 3 Starting an Enterprise

Instruction Sheet
In the previous sections of the training contents, we have seen what entrepreneurship is all about,
type of entrepreneurs and entrepreneurial personal competencies. This section presents how an
entrepreneur with entrepreneurial mind set can establish a business organization. It is not an easy
task to start and run a successful business enterprise; there are some issues to consider when one
decides to establish an enterprise. In this section, classification of enterprises, legal forms, how
an enterprise can be financed, and development of business plan and concepts of marketing are
discussed.

Lesson ObjectivesAt the end of the training lesson, trainees will be able to:
 Understand the classification of enterprises
 Distinguish legal forms of a business organization
 Understand the steps to establish an enterprise
 Identify sources of finance
 Explain the importance of marketing and Identify marketing mix.
 Understand the components for preparation of business plan

Learning Instructions
1. Read the specific objectives of this Learning Guide.
2. Follow the instructions described below
3. Read the information written in the Information Sheets and try to understand what are being
discussed.
4. Accomplish the “Self-checks” in each information sheets
5. Ask from your teacher the key to correction (key answers) or you can request your trainer to
correct your work. (You are to get the key answer only after you finished answering the Self-
checks).

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Information Sheet - 1 Enterprise and Enterprising

Pre lesson Activities:

1. What is enterprise and where do we find it?
2. How to start and organize an enterprise
3. Discuss the various enterprises in the local business community.
4. What are Micro and Small Enterprises Important to the Economy?

3.1.1 Definition of Enterprise and Enterprising

An enterprise is a business-oriented organization formed specifically so founders can pursue
entrepreneurial endeavors for a profit. While enterprises have social elements, they are different
from clubs or other non-commercial organizations because of their entrepreneurial purposes. The
first step in organizing is to identify and enumerate the activities required to achieve the
objectives of the enterprise.

An enterprise is for the purpose of attracting customers, selling goods and services and earning
profit. Enterprises are either formal or informal. The term enterprise is more commonly used in
reference to informal entrepreneurial activities. An enterprise is considered to be any entity
engaged in an economic activity, irrespective of its legal form.

On a personal level, enterprising can be any identified idea that a person can translate into a
planned and satisfactorily implemented activity. In the business sense, enterprising refers to the
implementation of a business venture or undertaking. By understanding the enterprising concept,
one can appreciate that all people have the potential to be enterprising. Enterprising men and
women are able to deal positively with the challenges and problems they face in their daily lives.

Being enterprising helps an individual to become a valued member of a family, community,

place of work and society. By applying an enterprising approach to business activities, it will be
easy to know what to do in whatever circumstances. This kind of approach is an effect way to
appreciate the challenges in which an entrepreneur will be able to translate challenges into
positive results.

In the business sense, enterprising refers to the implementation of a business venture or

undertaking.

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3.1.2 Concept of enterprising
By understanding the enterprising concept, one can appreciate that all people have the potential
to be enterprising. Enterprising men and women are able to deal positively with the challenges
and problems they face in their daily lives.

Practically all undertakings can be referred to as enterprising it fulfills the followings.

 Idea identification,
 Planning,
 Implementation,
 Successful completion of an activity and
 Receiving the rewards.

Terms to Explain Enterprising

Table 8: Terms and elements involving in enterprising

Enterprising involves
TERM ELEMENTS
Identification
Idea Imagination
Thought
Thought out
Planned
Written down
By men and women
Using materials
Implemented
Using money
Using natural resource
Can be seen
Activity Can be touched
Satisfying outcome
Reward Acceptable Feed back
Effect on Environment
Impact Enterprise in action

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The Enterprise in action boxes provides examples of the practical application of the concepts of
enterprise, entrepreneurship and innovation. The aim has been for the settings for these
illustrations to be as diverse as possible, on the basis of business sector, and size and type of
organization and its market situation as well as different geographies and cultures, to try to help
the trainees consider the situations described from alternative perspectives. They often highlight
the decisions made at a Critical time that ultimately prove to be crucial for successful
entrepreneurship or innovation. .

Electronics maintenance
shop
Merchandising Business

Construction

Kindergarten

Figure 5:Some examples of the Enterprises in Your Community

Classification of Enterprise /Types of Business
In business, generally one needs to know what form of business he or she wants to start. The
owner of the business may be an individual or a group or the general people. So, the ownership
of a business organization may take different legal forms, each of which carries privileges and
responsibilities.

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In this sub lesson, we will discuss the classification factors determining forms of business. The
basic forms of business organizations are further discussed separately. These include Sole
Proprietorship, Partnership, Joint stock Company, and Corporation.

1. Based on the nature and function of Business of operation

i. Service giving enterprise: - Business enterprises that render service to customers.

ii. Merchandise enterprise: - an enterprise that purchases goods for resale in normal operation
of the businesses.
iii. Manufacturing enterprise: - is purchases raw materials and different components and
convert it into end products.

2. Based on the size/scale of the operation

i. Micro enterprise
ii. Small enterprise
iv. Medium enterprise
v. Large enterprise

3. Based on the nature of ownership

i. Proprietorship
ii. Partnership
iii. Joint stock company (Share Company)
iv. Corporation

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 Table 9:Some Function of business operation based classifications of Enterprises
Function of business operation based classifications of Enterprises

No Service giving enterprise Merchandising enterprise Manufacturing enterprise

Cosmetic/beauty care Wholesale trade (durable
1 Food and kindred products
service goods)
Wholesale trade( non- Furniture and fixtures ,
2 Educational services
durable goods) Wood products (except furniture)
Building materials, Measuring, analyzing and controlling
a dry cleaner, an accountant,
3 hardware. Garden supplies instruments (photographic, medical &
or a car wash
dealers optical goods ;watches & clocks)
General merchandizing
4 Repairing items Apparel and other finished products
stores
Food stores, drug, or Electrical and electronic machinery,
5 Postal (mail/courier) service
grocery store equipment and supplies

Automotive dealers and

6 Miscellaneous repair service Textile mill products
petrol service stations

Hotel and lodging houses Apparel and accessory Paper and allied products
7
Motion pictures stores
Health services Furniture, home furnishing Printing, publishing and allied
8
and equipment stores industries
Eating and drinking Chemicals and allied products
9 Legal service
establishments
Mailing service/delivery Miscellaneous retail Petroleum refining and related
10
service industries
Motor vehicle repairs. Rubber and miscellaneous plastic
11
Service and garages products
12 Postal(mail/courier)service Leather and leather products
Amusement and recreation Stone, clay, glass and concrete
13
service products
14 Hotel and lodging houses Transportation equipment
Computer/office service, Fabricated metal products,
15 Information/technology machinery and transportation
services equipment)

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3.1.3 Legal forms of business enterprises

The enterpreneur has to be sure of the administrative and legal issues involved in the business
project which is going to be selected. These includes,choice of the form of the business
ownership, registration and clearness and approval from the authorities.

Types of business ownership in Ethiopia

The concepts and legal forms of business enterprises in Ethiopia/ need contextualized example.
Every small business must select a legal form of ownership. The most common forms are sole
proprietorship, partnership, and corporation. A limited liability company (LLC) is a relatively
new business structure. Before a legal form is selected, however, several factors must be
considered, not the least of which are legal and tax options.
A. The sole proprietorship has only one owner.
B. A partnership has two or more co-owners.
C. A limited company is an association of stockholders or owners chartered by the
government. It has the authority to transact business in same manner as one person.
D. A cooperative is a group of people operating a business through a jointly owned and
democratically run organization.

1. Sole proprietorship/Sole trader

A sole proprietorship is a business that is owned and operated by one person. The enterprise has
no existence apart from its owner

Table 10:Advantage and Disadvantageof Sole proprietorship

Advantage
Simplicity: it is very easy to establish and dissolve
the business., Quick decision
No separation of tax return
High secrecy, Low costs to start, Minimum
regulations, Low working capital requirement
Direct control of business/ personal touch: the
owner can maintain personal contact with his
employees & clients.
Tax advantages, Owner receives all profits/ direct
motivation, Flexibility
Disadvantage
Unlimited liability, Limited skills
Potential difficulty in borrowing money
Lack of continuity/uncertain life: The business is
terminated upon the death or incapacity of the
owner.
Difficulty in raising capital/limited financial
sources
The sole proprietor is responsible for all
decisions

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2. Partnership
 It is formed through an agreement among two or more persons to carry on jointly a
legalized business as co-owners.
 Like the sole proprietorship, it is not a separate legal entity from its owners. 
 It is recommended that a partnership agreement, called the Articles of Co-partnership or
Memorandum of Association, be prepared in writing by a competent attorney.

In case of Ethiopia, as per the commercial code of 1960 Article 211,”A partnership agreement is
defined as a contract where by two or more persons who intended to join together, make
contribution for the purpose of carrying out activities of an economic nature and of participating
in the profit and loses arising out there of it any”

Characteristics of Partnership
 Association of two or more persons, Contractual relationship/ mutual agreement
 Existence of lawful business, Sharing of profit and loss
 Mutual agency among partners: Each partner is responsible and liable for the faults and
wrongful acts of a co-partners with regard to business obligations.
 No separate legal entity of the business, Unlimited liability
 Restriction on transfer of interest, Utmost good faith

Table 11:Advantage and Disadvantageof Partnership

Advantage Disadventage

Easy to form , Low costs to start, Larger/added Unlimited liability, Lack of continuity, Lack
capital sources of harmony

Business secrecy as compare to corporation

Difficulty in finding suitable partners
business type

Protection of minority interest: each partner has

Risk of implied agency, Shared authority,
an equal role in management of firm’s affair. ,
Non-transferability of interest
Shared management/specialization

Tax advantages as compare to corporation Difficulty in raising additional capital/limited

business type financial sources

Classification of partnership

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Based on the organization characteristics partnership form of business organization is classified
in to two:

i. General partnership: A partnership in which all partners have mutual agency and
unlimited liability for partnership debt.
ii. Limited partnership: A partnership that has two classes of partners:
a) Limited partners
b) General partners

a) Limited partners: A partners who have no personal liability for debts of partnership beyond
the amount they have invested in the partnership.

b) General partner: a partner who assume unlimited liability for the debt of the partnership.
Hence, general partner in the limited partnership are responsible for its management.

3. Share Company (Corporation)

 It is an association of stockholders that has been established to allow a group of
entrepreneurs to act as one.
 The officials of the share company must file a special document, called the Articles of
Incorporation/Charter.
 It is essentially an "artificial person" created and operated with the permission of the state
where it is incorporated.
 It's a person like you, but only "on paper.’’

Characteristics of Share Company

 Artificial personality: separate legal personality distinct from owners., Limited liability
 Continuity: it has a separate and continuous life of its own, and does not dissolve if a
stockholder dies or the stock is sold to another person.
 Double taxation/taxed twice: first there is tax on the amount of the business profits. Then
the owners are also taxed on any dividends they may receive.
 Managed by professional managers

Table 12:Advantage and Disadvantageof Share Company

Advantages Disadvantages

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Limited liability, Management can specialize, Closely regulated by state, Most expensive
Transferable of ownership form to organize (cost, time and paperwork)

Easier to raise capita, Separation of ownership

Double taxation (company and stockholders)
and management

Continuous existence/perpetuity, Separate legal Red-tape , Charter restrictions, Extensive

entity, Potential tax advantages record keeping required

4. Cooperative

It is a group of ten or more people operating a business through a jointly owned and
democratically run organization.The cost of registering a cooperative is usually lower than the
cost for registering a share company. A written cooperative agreement is required and must be
filed with the appropriate government authorities.The management of a cooperative is elected by
the members of the cooperative.

Principle of Cooperative
 Registered and have limited liability for its members
 Members have an equal vote in decisions
 Membership is open to everyone who fulfils specified conditions
 Assets controlled and usually owned jointly by members
 Profit shared equally b/n members with limited interest payable on loans made by members
 Share capital remains at its original value
 Members benefit from participation, not investment
Table 13: Advantage and Disadvantage of Cooperative
Advantage and Disadvantage of Cooperative
Advantages Disadvantages
Means to empower poor women, disabled Hard to keep qualified members, Members
persons and other groups who often lack a voice contributing to cooperative unequally
Joint self-help, Organizational structure helps Shared authority, Gender issues, Governance
all members challenges
Shared risk-taking, Easier to raise capital,
Combines individual skills

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 Types of Business Structures
Personal Formation
Ownership Tax Management
Liability Documents
None but doing
Sole Unlimited personal liability Business not taxed.
business as
Proprietorshi One owner for obligations of the Owner taxed on Owner
Certificate may be
p business profits and losses.
needed
None but General
Unlimited Unlimited personal liability Business not taxed.
Partnership Partners have equal
General number of general for obligations of the Profits and losses are
Agreement may be management rights unlessthey
Partnership partners business passed through to
needed to set agreeotherwise
partners
forthpartner duties
Limited number Unlimited personal liability
Certificateof Limited Business not taxed. General Partner manages the
of general ofthe general partners;
Limited Partnership Profits and losses are business, subject to the
and limited liability for limited partners
Partnership Limited Partnership passed through to Limited Partnership
partners is generally based on the
Agreement partners Agreement
invested. amountinvested.
Board of Directors has
Unlimited Articles of
Tax on earnings at overall Responsibility with
number of Limited liability Incorporation
Corporation corporate level officers having the day-to-day
shareholders Bylaws
responsibility
t

Table 14: Types of Business Structure

 Information sheet - 2 Micro and Small Enterprises in Ethiopia

Pre- leson Activity

1. Do you know the difference between Micro, Small and Medium Enterprises? Elaborate it
2. What are the opportunity and challenges of small businessEnterprises?

3.2.1 Facts of Micro and Small Enterprises in Ethiopia

Small and medium enterprises (SMEs) cover a wider spectrum of industries and play an
important role in both developed and developing economies. Ethiopia is no exception and SMEs
occupy a prominent position in the development of the Ethiopian economy. MSEs are the
natural home of Entrepreneurship. The sector is also an important force to stimulate economic
development by:
 Generate employment , Equitable income distribution , Activate competition
 Exploit niche markets , Enhance productivity and technical change

The government’s recent industrial development strategy identifies MSEs as key priority
No single definition for MSEs. The definitions vary from country to country and mainly depend
on its purposes. Enterprises in the MSE sector are defined both in terms of paid up capital
(asset)and number of employees. For example

Table 15:Proposed classification of enterprises based on size in Ethiopia

Size Based Classifications of Enterprises
Level of No. of Total Asset in Total Asset in
Economic Sector
Enterprise Employees ETB USD
Industry < 10 employees < 250,000 <7,500
Micro Service &
< 10 employees < 200,000 < 6,000
Agriculture
11 –50 250,001 –4
Industry 7,500 – 115,000
employees Million
Small
Service & 11 – 50 200,001 – 2.5
6,000 – 75,000
Agriculture employees Million
51- 100 4,000,001 - 45 115,000 – 1.5
Industry
employees Million Million
Medium
Service & 51- 100 3,000,001 - 25 75,000 –
Agriculture employees Million 750,000
Industry >100 employees >50 Million > 1.5 million
Large Service &
>100 employees >25 Million > 750,000
Agriculture
1) Previous Definition of Enterprises in Ethiopia:
This definition of MSMEs is provided in the Federal Urban Job Creation and Food Security
Agency establishment regulation No 374/2016.
 Micro enterprises: means an enterprise having a total capital, excluding building, not
exceeding Birr 50,000 in the service sector or not exceeding Birr 100,000 in the industrial
sector and engages 5 workers, including the owner, his family member and other
employees.

 Small enterprises: means an enterprise having a total capital, excluding building, from
Birr 50,001 to Birr 500,000 in the case of service sector or Birr 100,001 to Birr 1,500.000
in the case of urban agriculture, artisanal mining and construction sector engages from 6 to
30 workers including the owner, his family members and other employees.

 Small manufacturing industry is an industry with total capital, excluding building, from
Br. 100,001 to Br. 1,500,000 with 6 to 30 workers

 Medium manufacturing industry is an industry with total capital, excluding building

from Br. 1,500,001 to Br. 20,000,000 engaging from 31 to 100 workers

There are two main approaches to define MSEs. These are:

1) By some measure of Size/Quantitative Approach
2) Using an economic/Control definition/ Qualitative Approach

1) By some measure of Size/Quantitative Approach - Size refers to the scale of operations.

Some criteria are applicable to all industrial areas, while others are relevant only to certain types
of business.
Examples of Criteria used to measure size/ Quantitative Approachare:
 Number of employees is the most widely used criteria because it is inflation proof,
transparent, comparable, and available
 The best criteria in any case depends up on the user’s ,
 Volume/value of sales turnover
 Asset size , Insurance in force, Volume of deposits, Total capital investment ,

Total investment in plant and machinery, Volume/Value of production, A combination of the

above. This size criteria based definition of SMEs varies from country to country. All over the
world, number of employees or capital investment or both has been used as the basis for defining
SMEs. The following are size criteria definitions of SMEs in some of the developing and
developed countries:
Table 16:Size Based Classifications of Enterprises in different countries
Country Types of service Number of employees

Australia Manufacturing services <100 employees <20 employees

Germany SME <500 employees

France SME 10 -499 employees

Depends on product group.Usually 100 employees:

China SME
investment ceiling US $8 million.
Indonesia SME <100 employees

Malaysia SME <175 full time workers investment US $1 million

3.2.2. Using an economic/Control definition/ Qualitative Approach

Size does not always reflect the true nature of an enterprise. In addition, qualitative
characteristics may be used to differentiate small business from other business. The
economic/control definition covers:
 Market share
 Independence
 Personalized management

All three of these characteristics must be satisfied if the business is to rank as a small business.
 Market share: The characteristic of a small firm’s share of the market is that it is not
large enough to enable it to influence the prices of national quantities of goods sold to
any significant extent.
 Independence: Independence means that the owner has control of the business himself.
It, therefore, rules out those small subsidiaries which though in many ways fairly
autonomous, nevertheless have to refer to major decisions (e.g., on capital investment) to
a higher level of authority,
 Personalized Management: It is the most characteristics factor of all. It implies that the
owner actively participates in all aspects of the management of the business, and in all
major decision-making process. There is little delegation of authority. One person is
involved when anything material is involved.
  Technology: Small business is generally labor intensive. Only few are technology
intensive.
 Geographical area of operation: The area of operation of a small firm is often local.
Generally, small business is a business that is privately owned and operated, with a small number
of employees and relatively low volume of sales. Small businesses are normally privately owned
companies, partnerships, sole proprietorships, or cooperatives.

3.2.3 Economic social & political contributions of small business enterprise

Small and medium enterprises (SMEs) cover a wider spectrum of industries and play an
important role in both developed and developing economies. Ethiopia is no exception and SMEs
occupy a prominent position in the development of the Ethiopian economy. Over the years, the
number of SMEs is growing form time to time. They need a strong support on Scio- economic
and political ground. Some of the contributions are hereunder.
 Equitable distribution of wealth and decentralization of economic power
 More Employment creation capacity
 Removing Regional Imbalance
 Ancillary Function - (supply parts and accessories to bigger enterprises)
 Export Promotion

Characteristic and role of small business

Characteristics of Micro and Small Scale Industries The following are some of the important
characteristics of small scale industrial sector/unit.
1) Closely held
 Mostly managed by single person/one man show
 All activities are usually carried out by the owner
2) Personal Character
 The owner his/her self is generally the manager of small scale industries.
 Owners actively participates in all aspects of business decision making such as:
purchasing, production, Labour, Sale of product
3) Limited scale of operation
 It has lesser gestation period, It has limited share of a given market
 Its size in the industry is small
4) Indigenous resources
 They can easily located anywhere subject to availability of raw materials, labour, finance, etc..
 They use local resources
5) Labour intensive
 The capital investment is limited due to the use of simple technology
6) Local area of Operation
 Except marketing activities, all operation of MSEs industry are local/domestic
7) Simple Organization
 MSE unit has few or no layers of management

Why are Micro and Small Enterprises Important to the Economy?

According to ILO (2003), MSEs are pulling economic and employment growth worldwide.
 They can spark off socio-economic revival, as they need little small capital to operate,
but can contribute much
 They use minimum, simple, and inexpensive equipment and inputs
 They often available locally, use limited space, operate with basic technical and
management skills., adapt swiftly, (quickly , rapidly , fast ), repair or replace
infrastructure and equipment
 They produce basic tools for Agriculture, manufacturing, and Construction
 They fabricate basic goods and services needed by societies
 They create quickly self-employment and jobs
 Too many eggs in one basket(no expansion or product diversification)
 Greater flexibility, Less bureaucracy

. Advantages of Going in to small Businesses

The desire of individuals to own and operate their own small business is growing
For individuals pursuing a career in business ownership, numerous benefits can be attained
personally and professionally.
The following are more common advantages of owning a MSEs:
 Independence, Financial opportunities, Community service, Job security, Family employment

Disadvantage of going in to Small Businesses

The major disadvantages of going in to business include the following:
 Sales Fluctuation ,Competition, Increased responsibilities, Financial loses
 Employee relations, Laws and regulations, Risk of failure

Factors that support the success of small business

 Special contribution of Small Businesses

 As part of the business community, small firms unquestionably contribute to our nation’s
economic welfare.
 They produce substantial portion of our total goods and services.
 Thus, their general economic contribution is similar to that of big business
 Their special contribution include the following:
 Providing new jobs,Introducing innovation,Stimulating economic competition
 Aiding big business, Producing goods and services efficiently

Small Business Failure Factors

 Every year many small business firms cease operations
 Most of the time small business failed because of failure to pay debts.

Some Specific causes of failure

1) Incompetence - The owners simply do not know how to run the enterprise
2) Unbalanced experience - This means owners do not have well-rounded experience in the
major activities of the business, such as finance, purchasing, selling, and production
3) Lack of managerial experience - The owners simply do not know how to manage people.
4) Lack of experience in the business line (field) - The owner has entered a business field in
which he/she has very little knowledge
5) Others such as neglect, fraud, and disaster, (mischance, Bad luck, tragedy, accident

Challenges and Opportunities of Ethiopian MSEs

Challenges
Most MSEs face critical constraints, at both operation and start up level. Some of the constraints
include:
 Lack of access to finance, Lack of access to premise, Lack of infrastructure,
  Lack of training in entrepreneurial and management skills, Social and cultural facts,
 Lack of information on business opportunities, Deficient entrepreneurial culture
 Excessive corruption, Technology, Market problem
Opportunities
Some favourable factors for entrepreneurial activities in Ethiopia include:
 Liberalization of policies, Exemption from paying import duties and various taxes,

 Availability of untouched natural resources, Availability of labour forces,

 Favourable physical environment

Reasons for Interest in Small Business

 Small business operators constitute a large political pressure group whose voice and
concerns cannot be ignored.
 There are large numbers of people involved in small enterprise.
 Employees and sometimes owners of small enterprises tend to be underprivileged.
 Small enterprises offer many job opportunities.
 Small enterprises reduce poverty and contribute to development.
 Self-employment may appeal to many women and men, especially some persons with
disabilities or for those who have family responsibilities.

3.2.4 Key success factors in setting up a micro and small enterprises

Figure 6: The MAIR Model

Motivation and Determination
It is widely acknowledged that, to be successful, the individual or group needs to be highly
motivated and determined to set up the business to make it succeed. This will be reflected
Example
 Persistent ,Information seeking ,Opportunity seeking
Ability
Another important question is whether the individual or others involved have particular abilities
– these may be knowledge, technical or managerial skills of relevance to the business or project.
One way of making up for any lack in this area could be to team up with people who have the
necessary expertise, or buy it in.

Idea and Market

The important issue to be determined here is the viability of the idea, project, product or service
to be offered. In other words, does the idea, product or service meet a need or want for which
there are customers who can afford it and are willing to use/purchase it in sufficient quantities to
make the whole project worthwhile (i.e. return a profit, in a business context)? How the
proposition to be offered is more desirable or better than what is currently available and how will
competitors react?

Resources
Acquire or organize resources in adequate measure such as capital, cash, premises, materials,
equipment and labor. The availability of infrastructure (e.g. utilities like electricity, telephone,
roads) and support services might also be important.

Business plan
In order to turn the above 4 components into reality, a plan would be required. In business, this is
normally referred to as a Business Plan. On the whole a business plan should show main things,
namely:
 Where you currently are with your idea, project or business;

 What you wish to do;

 How you propose to go about it; and that the project is worthwhile.
 Organization and Management
The business then needs to actually start operating and, once this is done, it would need to be
managed. The whole business and the process need to be managed, and how well this is done –
in particular, finding and dealing with customers, management of cash and finances, marketing,
handling employees, dealing with suppliers, control systems – will all affect performance.

Activity 3.2 (Group work)

Group work and presentation:How to operate an enterprise.
1. Explain the Special contribution of Small enterprise?
2. Have learners conduct a survey of business located in their community. Divide the class into groups
of 3 to 5 trainees. Divide the community into geographical sections so that each group will have a
Specific area of the business to survey and there will be no overlap. Have each group identify 10
businesses in their specific area of the business Community. The groups should interview 2 or 3
business owners using the questions to get an idea of what type of activities the Business owners are
engaged in
Make a group, Have the class analyze the 10 sample enterprises they have identified according to the
classifications in enterprise. (Each example can be placed in more than one form of classification). Discuss
each forms of classification of business in different bases.
3. Describe the potential success factors to establish small business
Information sheet- 3 Establishing an enterprise

Pre – lesson Activity

Visit a nearby business of any kind. Ask the business owner or manager of business about theway how
established that business and what the problem they faced. Then reflect their answer to the class.

3.3.1 Buying an Existing Business versus Starting a New Business

1. Buying an existing business

If someone has never owned a business, buying and operating an existing business offers
many advantages such as established customers and business procedures, trained
employees, inventory and premises which are in place and a business which already has a name
in the market.

There are many questions which the potential entrepreneur needs to ask about any business
which is for sale:
• Why do I want to buy this business?
• Why does the owner want to sell?
• Does the business have a future where it is and the way it is operating?
• Will I be happy operating this business?
 Do I have the skills?

The question of price is a difficult one. Consider what you are getting for the price you are
paying.
 Are you getting land and buildings?

 Are you buying the stock, furniture and appliances?

 Are you buying the name of the business and the rights to use that name forever?
 • Are you paying for the present owner of the business not to set up another business
nearby?

There are several ways of putting a price on a business. By comparing several similar businesses
you will get a “feel” for a reasonable price. However, no matter how much you pay, that amount
is your investment in the new business.
Table 17:Advantage and Disadvantage of Buying an Existing Business
Advantages Disadvantages

Less risk legality Product or service may be in a declining market

Significant personal freedom Limited growth potential
Cash flow already being generated Debts or stock may be too high
Relationships have been established with
Merchandise may be obsolete
suppliers and banks
An established service or product, with
Seller may have hidden reasons for selling: the
customers, a method of operation, staff
business may have been declining for years
and a name
The business may have a bad reputation in the
Location may be excellent
neighbor hood. Location may be poor

2.Starting a new business

Most people who want to be entrepreneurs think that the best approach is to start their own new
business and not to buy one that already exists. This approach gives the potential owner a great
deal of satisfaction. It also means taking a relatively high risk compared to buying an established
business.

Starting a new business means allocating a great deal of time to planning and
investigating the potential market for the products or services to be sold by the new business.

3. Becoming a franchisee
Franchising is a system where a franchiser has developed and implemented a business that he
offers for replication to a franchisee. The franchisee opens a business by using the business
idea of the franchiser against a fee. In return, the franchisee gets training, the marketing concept,
the brand name and the product or service. He also has the guarantee that no other franchisee
from the same franchiser will have the right to do business in the same area.

All these elements are fixed in a franchising contact that is binding for both parties. Franchising
lowers the risk as the product is usually well known in the market. On the other hand it limits
entrepreneurial decision-making and shrinks the profit margin as a fee or a percentage of the
turnover has to be paid to the franchiser.
 Table 18:Advantage and Disadvantage of Becoming a franchisee
Advantages Disadvantages

Lower risk for the start-up Less entrepreneurial decision-making power

Start-up investment cost well known Franchising fees would decrease profits

Good market introduction of the product or No possibility of introducing a new product from
service other suppliers

Proven marketing concept Strong dependency on the franchiser

If the franchiser’s business loses the market, your

Training assured by the franchiser
business loses the market

Activity
1. There are different ways of establishments of business activities .which way is preferable to an
entrepreneurs? Why?
 Information sheet - 4 Basic Concepts of Marketing

3.4.1. Definition of marketing

The following are some of the important definitions of marketing by Philip Kotler and et.al

1. Marketing is too often confused with selling. Today, marketing must be understood not in
the old sense of making a sale—“telling and selling”—but in the new sense of satisfying
customer needs. “Selling is the art of finding clever ways to dispose of what you make. It
focuses on creating sales transactions rather than on building long-term, profitable customer
relationships.
2. But Marketing is the art of creating genuine customer value. It is the art of helping your
customers become better off. The marketer’s mottos are quality, service, and value.”
3. Broadly marketing is defined, as social and managerial process by which individuals and
organizations obtain what they need and want through creating and exchanging value with
others. In a narrower business context, marketing involves building profitable, value laden
exchange relationships with customers. Hence, we define marketing as the process by which
companies engage customers, build strong customer relationships, and create customer
value in order to capture value from customers in return.
Generally Marketing answers the following questions:
1. Who are your customers?
 2. What are my customer’s needs and wants?

1. Who are your customers? Your customers are the people or other businesses that want
your products/ services and are willing to pay for them. They include;
 People who are buying from you now.
 People you hope will buy from you in the future.
 People who stopped buying from you but you hope to get them back.
2. What are my customer’s needs and wants? - An important point to note is that
customers want to look at different products so that they can choose what they like best.
Some customers want a different design and others want high quality and are willing to
pay extra for that.

How can I satisfy my customers’?

You need to do everything to find out who your customers are and what they need and want in
order to satisfy them improve your sales and make a profit. You need to find out;
 Products/services your customers want.
 Price your customers are willing to pay.
 Location of your business in-order to reach your customers (Place)
 Promotion to use to inform your customers and attract them to buy your products or
services
3. Understanding the Market place and Customer Needs - Marketing is all about creating
value for customers. Marketers need to understand customer needs and wants and the
marketplace in which they operate. We examine five core customer and marketplace
concepts: 1) needs, wants, and demands; 2) market offerings (products, services, and
experiences); 3) value and satisfaction; 4) exchanges and relationships; and 5) markets.
1. Customer Needs, Wants, and Demands

Need: Human needs are states of felt deprivation. They include basic physical needs for food,
clothing, warmth, and safety; social needs for belonging and affection; and individual needs for
knowledge and self-expression. Marketers did not create these needs; they are a basic part of the
human makeup.
Wants: wants are the form human needs take as they are shaped by culture and individual
personality. Example a person in Ethiopia needs food but wants Burger. Wants are shaped by
one’s society and are described in terms of objects that will satisfy those needs.

Demand: when backed by buying power, wants become demands. Given their wants and
resources, people demand products and services with benefits that add up to the most value and
satisfaction. Outstanding marketing companies go to great lengths to learn about and understand
their customers’ needs, wants, and demands. They conduct consumer research, analyze mounts
of customer data, and observe customers as they shop and interact, offline and online. People at
all levels of the company—including top management—stay close to customers.

2. Market Offerings—Products, Services, and Experiences

Consumers’ needs and wants are fulfilled through market offerings—some combination of
products, services, information, or experiences offered to a market to satisfy a need or a want.

Market offerings are not limited to physical products. They also include services—activities or
benefits offered for sale that are essentially intangible and do not result in the ownership of
anything. Examples include banking, airline, hotel, retailing, and home repair services.

3. Customer Value and Satisfaction

“Always give the customer quality, value, selection, and service”(Fred G. Meyer)
In terms of marketing, the product or offering will be successful if it delivers value and
satisfaction to the target buyer. The buyer chooses between different offerings on the basis of
which is perceived to deliver the most value. We define value as a ratio between what the
customer gets and what we gives .Customer satisfaction depends on a product‘s perceived
performance in delivering value relative to a buyer‘s expectations. If the product‘s performance
falls short of the customer‘s expectations, the buyer is dissatisfied. If performance matches
expectations, the buyer is satisfied. If performance exceeds expectations, the buyer is delighted.
Smart companies aim to delight customers by promising only what they can deliver, then
delivering more than they promise.

4. Exchanges and Relationships

Exchange is the act of obtaining a desired object from someone by offering something in return.
Marketing consists of actions taken to create, maintain, and grow desirable exchange
relationships with target audiences involving a product, service, idea, or other object. Two
parties are engaged in exchange if they are negotiating-trying to arrive at mutually agreeable
terms. When an agreement is reached, we say that a transaction takes place. Relationship
marketing aims to build long-term mutually satisfying relations with key parties: customers,
suppliers, distributors in order to earn and retain their long-term preference and business
effective. And Companies want to build strong relationships with different stakeholders by
consistently delivering superior customer value.

5. Markets
The term market ‘has traditionally been used to describe a place where buyers and sellers gather
to exchange goods and services (for example, a fruit and vegetable market or a stock market).

A market is the set of actual and potential buyers of a product or service. These buyers share a
particular need or want that can be satisfied through exchange relationships. Sellers must search
for buyers, identify their needs, design good market offerings, set prices for them, promote them,
and store and deliver them.

A market for a business consists of all the potential customers within a specific geographical
area, who need or want a specific product or service and are willing and able to engage in
exchange to satisfy the need or want. Every business sells some type of product or service to
people. Potential customers can be described as:
1. People who need or want the product or service.
2. People who are able to buy the product or service.
3. People who are willing to buy the product or service.

What should entrepreneurs know about potential customers?

1. Know the customers: The market can be segmented either by dividing it into meaningful
buyer groups or dividing it according to characteristics such as age, sex, marital and family
status, employment, income and trends regarding any of these characteristics.
Figure 7:Know the Customer

2. Know what different customer groups wants: By segmenting the marketing into groups,
it is easier for entrepreneurs to determine what products or services each group wants or
needs.

Figure 8: Know the different Customer Groups’ wants

3. Know where the customer buys: Entrepreneurs need to find out where the customers in
their market are presently buying, and determine what factors will cause them to switch and
buy from their new businesses.
4. Know when the customer buys: By knowing when customers buy (daily, weekly,
monthly, yearly, seasonally), entrepreneurs will be able to determine such things as possible
hours of operation, when to advertise and quantity of merchandise to have on hand at
specific times of the year.
5. Know how the customer buys: Knowing how the customer pays for products and services
can help the entrepreneur to determine a credit policy as well as a pricing policy for the
business.

Traditionally the term market stood for the place where buyers and sellers gathered to
exchange their goods, such as Shola Gebeya and Markato.

Marketers are no longer asking only “How can we influence our customers?
 But also “How can our customers influence us?
  How can our customers influence each other?”

 Activity : Differentiate the following statements as marketing and selling

1. When a firm makes a product and then tries to persuade customers to buy it, and In
effect, the firm attempts to alter consumer demand to fit the firm’s supply of the
product.
2. When a firm finds out the customer wants and develops a product that will satisfy that
need and also yield a profit. And the company adjusts its supply to the will of consumer
demand.

3.4.2. Importance of Marketing

Marketing plays a major role in achieving organization goal and socio-economic system of a
given country and further in the global economy. Since marketing is consumer oriented, it has a
positive impact on the business firms. It enables the entrepreneurs to improve the quality of their
goods and services.

Marketing helps in improving the standard of living of the people by offering a wide variety of
goods and services with freedom of choice, and by treating the customer as the most important
person. Marketing generates employment both in production and in distribution areas.

Since a business firm generates revenue and earns profits by carrying out marketing functions, it
will engage in exploiting more and more economic resources of the country to earn more profits.
A large scale business can have its own formal marketing network, media campaigns, and sales
force, but a small unit may have to depend totally on personal efforts and resources, making it
informal and flexible.

A customer purchases a product because it provides satisfaction. That something that makes a
product capable to satisfying want is its utility. And it is through marketing that much of a
products utility is created.

While the benefits of channel systems are clear, these cannot be enjoyed without an element of
cost. When responsibilities are shared or passed on, the company must pay a cost in terms of loss
of control. Ideally, the channel structure should operate to the mutual satisfaction of all members
The advantages of the channel system can be summarized by describing the utilities that
channels create:

1. Possession utility- Possession utility is created when a customer buys the product. That is,
ownership is transferred to the buyer. Thus, for a person to consume and enjoy the product a
transaction must take place. This occurs when you change your money for a product.
2. Time utility - Time utility refers to having a product available when you want it. Having a
product available when we want it is very convenient but it means that the retailers must
anticipate our desires and maintains an inventory. Thus, there are costs involved in providing
time utility.

3. Place utility - Place utility exists when a product is readily accessible to potential customers.
So physically moving the products to store near the customers add to its value.

4. Information utility - Information utility is created by informing prospective buyers that a

product exists. Unless you know a product exist and where you can get it, the product has no
value. Advertising that describes a sales person answering a customer question about the
durability of a product creates information utility. Image utility is a special type of
information utility. It is the emotional or psychological values that a person attaches to a
product or brand a person attaches to a product or brand because of its reputation or social
standing.

5. Form utility - Form utility is associated primarily with production – the physical or chemical
changes that makes a product more valuable. When limber is made into furniture, form utility
is created. This is production not marketing. However, marketing research may aid in decision
making regarding product design, color, quantities produced, or some other aspect of product.
All of these things contribute to the product form utility.

3.4.3. Sales and customer service

Customer Service: customer service means providing a quality product or service that satisfies
the needs/wants of a customer and keeps them coming back. Good customer service means much
more – it means continued success, increased profits, higher job satisfaction, improved company
or organization morale, better teamwork, and market expansion of services/products.

Customer Service Qualities:

 Customer Service = Accountability + Delivery
Good customer service means accountability, responsibility and taking action to satisfy the
customer. If your customer is unsatisfied (for just or unjust reasons), you will have to use some
of the many techniques of the customer service professional to win their support and continued
loyalty.

When coming into contact with a customer, communicating with him/her, or analyzing
problems, do not forget to use the following methods or qualities of the customer service
professional: Listen: It is of primary importance when dealing with an unsatisfied or complaining
customer to listen attentively to his/her complaint, gripe, frustration or grievance. Be patient,
attentive, and friendly.

Express you are sorry: better to say ‘We are sorry for this mistake/problem.” “We are terribly
sorry for this inconvenience.” “How can we work to solve this problem together?” “I can
imagine how frustrated you are.”Do not argue and do not interrupt: This will only worsen the
situation, especially if the customer is angry. Let him speak before you try to discuss with him
what has happened.

Do not lose your self-control: If you stay relaxed, customers will calm down.
Point out facts: Listen carefully – and write everything down. Do not make any comments until
the customer is finished talking.

Admit the problem: If you can suggest a solution do it. If not tell the customer what actions you
will take and what actions will follow. Never make the mistake of promising something you are
not able to do.

Involve the customer in problem solving: Suggest the customer alternative solutions, if they
exist. Customers appreciate the opportunity to choose the ways of problem solving.

Follow-up: Make sure that the promised measures are taken. If you do not fulfill what was
promised and ignore the customer’s complaint, the problem will grow. Next time it will be more
difficult to solve.

Give the customer a “way back”: Sometimes customers are wrong. You should let them leave
with dignity, without feeling embarrassed.
Do not question the customer’s correctness: From the very beginning you should believe that the
customer may be right. Always be open minded toward the customer’s opinion, make them feel
they deserve to be listened to.

When you listen to the customer’s complaint you take responsibility to solve the problem by:
o Listen without interruption and with full attention.
o Behave without aggression, and without arguing.
o Do not extend excuses for the problem, and thank the customer for drawing their
attention to it and helping solve it.
o Find out exactly what the customer needs you to do for them
o Explain first what you can do, and then gently add what you cannot do
o Undertake immediately what was discussed
o Check the result to make sure the customer is completely satisfied

Table 19: Helpful Reminders for Polite and Friendly Responses to your customers
Wrong Approach Polite and Friendly Alternative
“I don’t know.” “I’ll find out.”
“No.” “What I can do for you…”
“That’s not my job.” “Let me find the right person who can help you with …”
“You’re right – this is bad.” “I understand your frustrations.”
“That’s not my fault.” “Let’s see what we can do about this.”
“You want it by when?” “I’ll try my best.”
“Calm down.” “I’m sorry.”
“I’m busy right now.” “I’ll be with you in just a moment.”
“Call me back.” “I will call you back, what is your telephone number.”
You Need to Talk to My Supervisor “Let me find that out for you.”

 Activity:
Think about where you enjoy doing business as a customer - stores, suppliers, banks, café
and restaurants, beauty salon, hotels and let’s review a business you like and dislike,
why? Briefly explain in terms of customer service

Sales
Selling is important enough to be considered as a function of marketing in its own right, even
though it is not included separately as one of the ‘Four Ps’ of the marketing mix. Selling
contributes to the overall effectiveness of the marketing effort; however, it also has a more
fundamental role to play, in that the act of selling is the end result of all marketing activity.

A company’s philosophy of business and its particular merits combine to form a company
message, and it is the job of the salesperson to communicate this message to customers. Buyers
usually require more than the physical product when they consider potential suppliers; at the
same time, the salesperson is helped by being able to talk about the company in addition to the
products on offer. As well as considering their selling skills, it is important when recruiting sales
personnel that companies take into account how well the applicant ‘fits in’ with the desired
company image and how well the company image will be transmitted.

The basic difference between marketing and selling lies in the attitude towards business. The selling
concept takes an inside-out perspective. It starts with the factory, focuses on the company‘s existing
products, and calls for heavy selling and promoting to produce profitable sales.

Table 20:Marketing Vs. Sales

Marketing Selling

It focus on customer needs It focus on sellers need

Customer enjoys supreme importance Product enjoys supreme importance

Converting customer’s needs into product. Converting product into cash.

Profits through customer satisfaction Profits through sales volume.

Emphasis is given on product planning and Emphasis is placed on sale of products already
development to match products with the market produced

Integrated approach to marketing is practiced. Fragmented approach to selling is practiced.

The principle of caveat vendor (let the seller The principle of caveat emptor (let the buyer
beware) is followed. beware) is followed.

General Skills Every Salesperson Should Have;

A sales person needs to develop important skills for successful marketing. Some of the skills are
discussed as follows:
Listening Skills - Effective salesperson must be able to listen to what a potential customer or
customer is saying to them as well as what is not being said. They must be willing to take the
time to understand what the customer truly needs and identify the problem the customer trying
to solve. In order to be a good listener, you should practice active listening skills. There are five
key aspects of becoming an active listener those are Pay close attention, demonstrate physically
that you are listening, check for understanding, don’t interrupt and respond appropriately to
your customers.

Effective Communication Skills – in addition to listening, you must be able to respond well. You
must be able to offer solutions to the customer’s problems if the customer is ever going to buy
from you or your company

Problem Solving Skills – good salespeople are always working to solve problems – they
understand that problem solving is what their real jobis

Interpersonal Skills – beyond communication skills, salespeople should know how to work well
with their customers and with each other in order to be most effective. They should be courteous,
respectful, and skilled at building relationships

Organization Skills – good salespeople are well-organized. This doesn’t necessarily mean their
desk is well organized, but it does mean that they have a system for maintaining information
about prospects, customers, products, and any other information their customer mightneed

Self-Motivation Skills – if you’re going to be good at sales, you have to be able to motivate
yourself. There will be those times that you don’t want to take the next step in the sales process,
but you’ll need to know how to work through those feelings and take the steps that your
customers need – and that will help you be successful in your job.

Persuasion Skills – customers almost always have a choice in the company they work with or
choosetobuyfrom.Persuasionistheartofhelpingthecustomertochooseyourofferoverothers

Customer Service Skills – once you know how to make a sale, do you know how to keep that
customer coming back? Do you view them as a one-time sale or as someone who could be a
continual source of sales over the life of a relationship with them?
Integrity – in any relationship, including a salesperson-customer relationship, integrity is vital.
Without it, you will lose the customer’s trust, their business, and possibly the business of others
that the customer will tell about your company and you

Activity 1.
Let the learners sell any a self-made /readymade items to the class one after another, after that let
the learners reflect the salespersons(learner) skill that he/she have or don’t. By adding the reflection
of seller (learner) and facilitate every learners should prepare an action plan to improve skill that
they lack.

3.4.4. Marketing Mix

Marketers use numerous tools to elicit the desired responses from their target markets. These
tools constitute a marketing mix. Marketing mix is the set of marketing tools that the firm uses to
pursue its marketing objectives in the target market. These tools are classified into four broad
groups that are called the four Ps of marketing: product, price, place, and promotion. Marketing-
Mix decisions must be made to influence the trade channels as well as the final consumers.
Typically, the firm can change its price, sales-force size, and advertising expenditures in the
short run. However, it can develop new products and modify its distribution channels only in the
long run. Different scholars state marketing mix as seven PS but for this topic we use the
marketing mix stated by Philip Kotler.

1. Product
The marketing mix is a combination of many factors, but consumers tend to view the whole of
marketing effort in more tangible terms of the product or service. It is important for marketers to
recognize that much of the ‘want satisfying’ nature of the product is derived from consumer
perceptions of the product. The true nature of the product is always what the consumer perceives
it to be, and not what the company thinks it is or would like it to be

Product refers to goods/services produced for sale, the product /service should relate to the needs
and wants of the customers. Thus, a product is anything tangible or intangible that can be offered
for purchase or use by consumers.
Some important questions you need to ask yourself include;
 What products/services do I sell?
 Why did I decide to sell these products?
 Do I have the products customers want?
 Do any of my products not sell well?
 Do I stock products that do not sell well?
 Always listen to what your customers like and don’t like. When their needs change,
change your products and services to satisfy the new needs.
 Do more market research in order to provide those products or services and increase
your sales. If your product is not selling well, think of new ideas like finding new
customers.

Figure 9:Block diagrams

Product attributes- such as quality, features, style and design of product
 A brand: is a name, term, sign, symbol, or design or a combination of these, that
identifies the maker or seller of a product or service.

 Packaging: involves designing and producing the container or wrapper for a product.

 Labeling: Labels may range from simple tags attached to products to complex graphics
that are part of the package.
 Product support services: services that augment actual products.

2. Pricing
Price is a particularly potent element of the marketing mix because of its direct impact on the
customer, the company and the economy. To the consumer, price is a major indication of quality
and an important factor in the decision-making process. For the company, the price at which a
product or service is sold represents the sole means of recouping costs and making a profit.

Price is simply the amount of money that consumers are willing to pay for a product or service
Pricing refers to the process of setting a price for a product/service.
To set your price you need to;
 Know your costs / cost based approach
 Know how much customers are willing to pay/ Demand based approach /
 Know your competitors price / Competition based approach
 Know how to make your prices more attractive
3. Place
Place means the different ways of getting your products or services to your customers. Place
refers to having the right product, in the right location, at the right time to be purchased by
consumers.
It is also referred to as distribution. If your business is not located near your customers, you must
find ways to get your products/services to where it is easy for customers to buy. You can
distribute your products to your customers through; different channels
 Selling directly to the consumers of the products or
 Indirectly through intermediaries (consumer intermediaries or business intermediaries)

Figure 10: Distribution Channels

4. Promotion
The purpose of promotion is to create and stimulate demand. No product can be sold if the target
market is unaware of its existence. It is also undeniable that no amount of promotion will help to
sell a product that is not acceptable to the market.

Promotion means informing or communicating your customers about your products and services
and attracting them to buy the given product /service. Promotion includes advertising, sales
promotion, publicity, personal selling, direct and internet marketing

Figure 11:The Promotion Mix

Some useful ways of advertising include signs, boards, posters, handouts, business cards,
brochures, Price lists, photos and newspapers. You can use sales promotion to make customers
buy more when they come to your business, you could also;

 Ensure you maintain attractive displays.

 Let customers try new products.
 Have competitions
 Give demonstrations
 Sell complementary products (products that go together)

3.4.5. Selecting suitable market

Choice of market is a strategic long-term decision that cannot be changed except at considerable
loss. Therefore, great care and planning is required to select the most appropriate market.
Marketing analysis is the dynamic process of analyzing and comparing the appropriateness or
otherwise of alternative market with the aim of selecting the best market for a given enterprise.
 It consists of the following:
a. Trade area analysis: It is an analysis of geographic area that provides continued client or
customer to the firm. Convenience and accessibility to the trade area from alterative site,
needed to be analyzed.
b. Demographic Analysis: It involves study of population in the area in terms of total
population, age composition, perception income, education level, occupation structure, etc.
c. Competitive Analysis: It helps to judge the nature, location, size and quality of competition
in a given area. You must study your competitors by gathering information on their
strengths and weaknesses. You should know how many competitors you have and where
they are located. There are three favorable conditions for opening a new firm. First, no
competitors are located in the area. Second, competitors’ businesses are poorly managed.
Third, customer demand for your product is growing.
d. Traffic Analysis: The relative desirability of alternative sites can also be judged in terms of
pedestrian and vehicular traffic passing a site. It will give an idea about the number of
potential customers passing by the proposed site during the work hours of the shop.

Locations with greater customer traffic usually cost more to buy or rent, but they require
less spending for advertising to attract customers. This is especially true of retail businesses
where traffic count and accessibility are critical.

e. Economics: A major concern in choosing a community in which to initiate a small business

is the economic base of the community. Why do people live in the area? What is their
standard of living? Why are other businesses located in the area? A study should be made of
the industries in the area.
It is necessary also to judge and compare the cost of establishment and operation at various
sites under consideration.
 Activity 1.- Group Work:
Instruction: Divide the learners into groups. Each group would select a business to start (welding shop,
grocery store, auto repair shop, beauty salon, café and restaurant, super market etc.) have each group collect
information in their town to determine the best market for that business. Have each group present their findings
to the class. The group should give both positive and negative factors regarding the given market place.
 Activity 2 - Self-check question
1.List and explain the difference between Marketing and sales?
2.Discuss the Importance of marketing?
3. Briefly describe marketing mix?
4. Product is generally regarded as being the most important of the ‘Four Ps’. Why
Information sheet 5 Financing an Enterprise

Introduction

Whether one is starting a new business or buying an existing business, there is almost always the
problem of having enough capital to operate the business. Starting a new business is an easy task.
The entrepreneur can have a great and clear idea with ability to translate it into a successful
business. However, it is difficult to start and run the business without the money required at
initial stage. The financial concerns need to be considered when planning to start a business

The initial money required to start the business is referred to as start-up capital which consists of
initial investment capital and working capital. Investment capital refers to the fund to be spent on
the acquisition of equipment, furniture, building and other properties and working capital is the
money needed to cover the operation of the business.

Raising finance for start-up capital requires careful planning. The entrepreneur needs to decide:
 How much finance is required?
 When and how long the finance is needed for?
 What security (if any) can be provided?
 Whether the entrepreneur is prepared to give up some control (ownership) of the start-up
in return for investment?
The finance needs of a start-up should take account of these key areas:
 Set-up costs (the costs that are incurred before the business starts to trade)
 Starting investment in capacity (the fixed assets that the business needs before it can
begin to trade)
 Working capital (the stocks needed by the business –e.g. r raw materials + allowance for
amounts that will be owed by customers once sales begin)
 Growth and development (e.g. extra investment in capacity)

3.5.1. Sources of Finance

Generally, the source of finance for a start-up is divided into sources. These are internal source
(equity financing) and external source (debt financing).

Figure 12: Different sources of Financing

Internal sources (Equity financing)
The main sources of equity financing includes personal investment, funds obtained from family
members or parents, partners, venture capital, angles among others.

1. Personal Sources - A large number of start-ups are 'self-funded' through savings or existing
sources of personal borrowings. Sometimes it can be difficult to raise funds from other
sources if entrepreneur business plan is not easily understood by third parties, so personal
funding is often the only realistic source of initial funds. However, it is practically difficult
to raise adequate fund from such sources.
Saving - Saving refers to the money set aside for future use. It can be made through
 Small but regular deposit in financial intuition
 Automatic deduction from salary or wage
Forms of Saving
 Formal saving : it refers to saving made in formal financial institutions such as banks and
microfinance institutions
 Informal saving; it is saving made in village based or community based financial setup
such as credit and saving associations
 Traditional saving: this saving is made through the purchase asset which can be
liquidated into investment capital such as jewelry , house, Edir .and Equib

Activity (saving)
1. Discuss in class the advantages of saving to business enterprise
2. Visit some of the EQUIBS undertakings in your area and observe how they are
operated? Present your findings in class.

2. Venture Capital - Venture capital is obtained by large companies who are interested to
have ownership in exchange for capital. The percentage of ownership is negotiable. This
kind of financing is the best option for entrepreneurs who do not have adequate collateral to
get bank loan. The benefit of venture capital is not only financial; the relationship an
entrepreneur establishes with the company can get knowledge, clear direction and new skill
to grow the business.
3. Angels / Investors - If entrepreneur are seeking an outside investor for entrepreneur
business, entrepreneur will typically seek 'business angels' who look for interesting projects
to invest in. These may be wealthy individuals, retired company executives or other
businesses. Some experienced entrepreneurs say “…there is no point in borrowing money
just to lose it later, angles (accelerators) can save entrepreneurs a lot of money in the
future” to show the importance of Angles investors as a source of finance.
Unlike banks, outside investors will provide funds in return for a share in the business. They may
also provide expertise to the business which is as valuable as a cash injection in some cases.

Investor’s money is better for entrepreneurs than creditor’s money; because:-

 Creditor’s money involves a definite promise to repay a lender.

 It has double obligation- repaying the loan and paying the interest on the loan.

 If entrepreneurs can’t meet this obligation, it results in failure. But;

 Investor’s money doesn’t involve a definite promise to repay.

 Investors buy shares at their own risk.

 If they want to sell their share, entrepreneurs are not enforced to buy, investors themselves
search for buyer to sell their share.

4. Families, Friends and Relatives - At times, loans from friends or relatives may be the only
available source of new financing. Such loans can often be obtained quickly. This type of
financing is based more on personal relations than on financial analysis. However, friends
and relatives who provide business loans sometimes feel that they have the right to offer
suggestions concerning the management of the business. Included in this category is “Love
Money” as a source of finance; it refers to the money obtained from spouse or finance. It is
also called patient money.
5. Partner Financing - This is a type of financing in which a partner who has interest in the
business raises some capital to finance the operation of the business

3.5.2. Debt Financing

Debt financing is a financing method involving interest payment. Debt financing requires the
entrepreneurs to pay back the amount of funds borrowed with an interest within predetermined
period of time. Debt financing is asset based financing in that it requires collateral of fixed asset
(such as car, house, plant, machine, or land).

The most common source of funding comes from commercial banks and micro finances. There
are prerequisites to get loan from financial institutions. The common requirement include the
following
 Decision on the amount and installment plan
 convincing business plan
 collateral
 appraisal by the bank
1. Bank loan - Commercial Banks are sources of short-term funds most frequently used by the
entrepreneurs when collateral are available. The funds provided are in the form of debt
financing and requires some tangible collateral. The collateral can fixed asset such as land,
equipment, building, car and other assets.

2. Loan from Micro-Finances - Microfinance is the provision of financial services to low-

income clients for personal consumption or investment. The beneficiaries of this loan are
those who lack access to banking and related services or are not able provide collateral for
bank loan or those who do not want to go through hectic bureaucratic process to get loan
from banks. Usually microfinance provide finance to unemployed or low-income people or
groups. The loan can be given against small collateral or written guarantee. These
institutions are operating in every corner of the country. Dire Microfinance, Addis
Microfinance are some of the examples

3. Trade credit -It is a credit obtained from suppliers who sell goods and service on credit.
The credit is usually paid within 30-90 days. It is a short term financing scheme.

4. Lease Financing - Lease financing is one of the important sources of medium and long
term financing here the owner of an asset gives another person with a right to use it against
periodic payment. The owner of the asset is named as lesser and the user as lessee. The
periodic payment a lessee makes is referred to as lease rental. The ownership title belongs to
the leaser until the asset is returned to the leaser on expiration of a lease contract. There can
be some arrangement to transfer the ownership to the lessee through purchase or renew the
lease agreement.
5. Other Sources - Other sources of funding include grants (both Government and private
sector) - there are thousands of grants available depending on entrepreneur industry and
location. Entrepreneur can also have the following alternative sources of finance..
 Crowd financing
 Business Incubators
 Hire Purchase
Before a decision is made on the selection of an alternative source of finance, it is important to
understand the advantages and disadvantages of alternative source of finance discussed above as
show in the following table.

Post –Lesson Activity: (Source of Finance)

1. Write the similarities and differences of Venture Capital and Angles Investor
2. Write similarities and difference of bank loan and loan from microfinance
3. Which do you think is the best source of finance for small business? Support your
argument with evidence (group work)

Information sheet - 6 Basics of Business Plan

 Pre lesson: Activity (Business Plan)

1. What is a Business Plan?
2. What is the importance of business plan?

3.6.1. Business Plan

When an entrepreneur intends to start a business or to expand the existing business, it is wise to
prepare and use a business plan. In the preparation of a business plan, one can put into practice
the personal entrepreneurial competencies.

A business plan is a written document prepared by the individual entrepreneur or partners that
describes the goals and objectives of the business along with steps necessary to achieve those
goals. A Business Plan sets objectives, defines budgets, engages partners, and anticipates
problems before they occur. The preparation of a business plan requires considerable investment
of time, effort, and energy.
3.6.2. Uses of the Business Plan?

Once completed, there are many potential uses of a business plan for entrepreneurs. First, it is a
powerful sales document for raising money. A business plan is a prerequisite for talking to a
venture capitalist, and/or other investors. If entrepreneurs want to borrow money, it is an
impressive document to convince bankers to consider a request for a loan. As a rule of thumb,
the more entrepreneurs want to borrow, or the more money entrepreneurs want to raise capital
from investor, the more thorough the business plan must be.

A second major use of a business plan is that it serves as an operational plan to direct
entrepreneur’s operations. Like a blueprint for a house, entrepreneur’s plan will tell what
entrepreneur to do and when to do it. Many entrepreneurs use their business plan for the critical
start-up and expansion periods of operation so that they will stay both on target and on budget.

Generally, the business plan benefits the internal and external users
 The plan helps the enterprise to develop a “road map” to follow in executing its strategies
and plans.
 The plan introduces potential investors and other stakeholders the business opportunity the
firm is pursuing and how it plans to pursue it.

3.6.3. Contents of the business plan

There is no a general all-purpose business plans because each venture has its own unique set of
factors and conditions. For example, the new start-up has no financial history; hence, none of its
financial projections can be based on past sales, profits, and so on. Besides, a purely service-
oriented firm, such as a consulting firm, must present a different kind of business plan from that
of a manufacturing firm.

It should be remembered that a business plan is not the same as a financial proposal or “loan
package”. A loan package may be extracted from a business plan since a package is mostly
comprised of the financial portion of the business plan. Not all business plans are intended for
financing however, and some may be used only as an operational plan

A standard business plan contains the following elements.

Contents of a Standard Business Plan

1. Cover page
2. Executive summary
3. Company Description
4. Product/service
5. Market Analysis
Figure 13: Business Plan Element
The brief reference to each content of the business plan is given below
1. Cover page contains the name of the business, name of the applicant and the date .
2. Executive Summary gives an overview of the whole document in which the main contents
are summarized.
3. Company description presents organizational set up, vision, mission, objective, core values
and success factors.
4. Product/service. this part describes the type of products or service the prospective business
has to offer to the market
5. Market analysis presents the market situation including industry analysis, competition,
current and future markets trends
6. Marketing plan sets out the plan to reach target customers and get products/services sold
7. Operation Plan deals with how the work is organized and done
8. Management plan shows the human resource requirement for the planned operation and
appropriate structure is proposed.
9. Exit Strategy talks about future development plan and milestone.
10. Financial Plan projects the financial requirement to start up and run the business
11. Economic Analysis points out the economic benefits of the business to the individual
entrepreneur, the local community and the nation
12. Environmental Analysis presents the impact of the the business on the ecosystem of the
environment and mitigation strategies
13. Risk Analysis project potential risks and risk management plan.

Anyone can talk about an idea, but putting it down on paper takes commitment, research and a
lot of hard work. If an entrepreneur does not work on paper, it is rather certain not to work in the
market place. Writing a business plan is a unique opportunity for entrepreneur to think through
business idea as thoroughly as possible before spending any money on hunches or half-baked
ideas.

Business model Canvas

Business model canvas is a model that Summarize a series of untested hypotheses of framework,
use customer development to test their hypotheses and Practice agile development (developing a
product iteratively and incrementally).Business model describes how a company creates value
for itself while delivering products and services for customers.
• Business model canvas is a language that describes, challenge, design and invent business
models more systematically.It is used for preparation and easily understands main
components of business plan.
The following Business model Canvas is a guideline for trainees to prepare mini business plan.
Figure 14: Business Model Canvas (The nine Building Blocks for business plan)

1. Customer Segments
 Define the different groups of people or organizations a business targets to reach and serve
  Make a conscious decision about which segments to serve and which segments to ignore
Separate customer segments if:
 Their needs require and justify a distinct offer;
 They are reached through different distribution channels;
 They require different types of relationships;
 They have substantially different profitability’s; and
 They are willing to pay for different aspects of the offer

2. Value proposition
 It solves a customer problem or satisfies a customer need.
 It also describes the uniqueness of a business.
 For each customer segment identified
 Describe the bundle of products and services that create value for each specific customer
segment
 Identify the reason why customers will turn to your company over its competitors. It
solves a customer problem or satisfies a customer need

3. Distribution Channels
 Describes how your company communicates with and reaches its customer segments to
deliver the value proposition
 Functions of distribution channels include:
 raising awareness among customers about a company’s products and services;
 helping customers evaluate a company’s value proposition;
 allowing customers to purchase specific products and services;
  delivering a Value Proposition to customers; and
 Providing post-purchase customer support.

4. Customer Relations
 Describes the types of relationships your company needs to establish and nurture with
specific customer segments
 Focused on:
 Customer acquisition
 Customer retention

5. Revenue streams
  For what value is each customer segment truly willing to pay?
 Identify and quantify the cash your company can generate from each customer segment
through one or more revenue streams (sales pipelines)
 Consider two different types of revenue streams:
 Transaction revenues (resulting from one-time customer payments)
 Recurring revenues (resulting from ongoing payments)

6. Key Resources
 Identify, describe and quantify assets required to deliver on the value proposition to each
of the identified customer segments
e.g. Land, Buildings, Equipment ,Facilities ,Platforms ,Systems ,Technology

7. Key Activities
 Identify, define and describe the most important things (actions) your start-up company
must do to: create and offer a value proposition ,reach markets, maintain customer
relationships ,earn revenues, to make its business model work and to operate successfully

8. Key Partnerships
 Identify and describes the network of suppliers and partners that make the business model
work, e.g.:
 strategic alliances between non-competitors;
 co-operation: strategic partnerships between competitors;
 joint ventures to develop new businesses;
 buyer-supplier relationships to assure reliable supplies
9. Cost Structure
 Describe the most important costs incurred while operating under a particular business
model to:
o creating and delivering value,
o maintaining customer relationships,
o Generating revenue.
 Such costs can be calculated relatively easily after defining key resources, key activities,
and key partnerships.

Post Lesson Activity/Group work (Business Plan and Business model Canvas)
Personal project – Summary
1. Prepare mini business plan for a small business which you can operate in your locality
(Develop your personal project by using all skills you‘ve learned in this training course with
your major competencies by using Business Model Canvass)
Summary
Business can be established either by one individual or a group of individuals. In this connection,
the ownership of a business organization may take different legal forms, each of which carriers
certain privileges and responsibilities. A person thinking to own a business need to examine the
following factors: Capital requirement, risks, managerial, abilities, government regulations, time
requirements, and tax liability. Each of these factors should be considered along with personal
values and philosophy before choosing the type of business ownership.

There are three main types of business based on the nature of operation .These are Service giving
enterprise, Merchandise enterprise, manufacturing enterprise. Each types of business. .

There are different enterprise based on the size/scale of the operation, Micro enterprise, Small
enterprise, Medium enterprise and large enterprise in their function .And also There are three
main legal forms of business. These are Sole Proprietorship, Partnership, Joint stock Company,
and Corporation. Each form of business ownership has advantages and disadvantages. If you are
planning to go into business, you need to review the Marketing strategies, marketing mix
elements as four p’s and analyses the source of finance and also review pros and cons of each
one and determine each form of ownership meets your need, style, and talents. The final point of
all the above concepts can summarize through preparation of Business plan by developing
Business Model Canvas.
Practical Task- OPERATION SHEET- Project work
Operation Title: preparing a business plan
Instruction; Use the business plan format appendix I and prepare a comprehensive business plan
in group which you think to use it after your graduation.
1. using the appropriate business plan format, prepare a complete business plan
2. Request your teacher for evaluation and feedback

Purpose: To prepare a comprehensive and feasible plan

Equipment Tools and Materials:

Computer, printer, pen, pencil, paper, marker, sample business plan, demonstration room.

Conditions or Situations for the Operations:

A Cooperativeness of business enterprises, trade organizations, government agencies, NGOs,
chamber of commerce, MSEs, and other specialists.

Procedure:
1. Select the appropriate business plan format
2. Describe the business
3. Prepare the marketing plan
4. Prepare operation plan
5. Prepare organization and management plan
6. Prepare financial plan
7. Checking the feasibility of the plan

Precautions:
• Adequate and reliable data/information
• Basic entrepreneurial competencies
• Fulfilling legal requirements
• Business ethics
Quality Criteria:
• Marketability, Technical and managerial feasibility, and Finical feasibility
 Self-Check Questions

Part I
Instruction:- Say True / False
1. A ratio between what the customer gets and what he gives is demand
2. Providing a quality product or service that satisfies the needs/wants of a customer and
keeps them coming back is customer service.
3. Combination of goods and services offered to satisfy needs and wants of customers is
called promotion
4. Place utility exists when a product is readily accessible to potential customers.
5. A market is the set of actual and potential buyers of a product or service.
6. Business plan is part of financial plan package.
7. A ratio between what the customer gets and what we gives is demand
8. Business model canvas is a model that Summarize a series of untested hypotheses of
framework,
9. Trade Credit is a credit obtained from suppliers who sell goods and service on cash.
10. An enterprise is for the purpose of attracting customers, selling goods and services and
earning profit.
11. Providing a quality product or service that satisfies the needs/wants of a customer and keeps
them coming back is customer service.
12. Combination of goods and services offered to satisfy needs and wants of customers is
called promotion
13. Place utility exists when a product is readily accessible to potential customers.
14. A market is the set of actual and potential buyers of a product or service.
15. Providing a quality product or service that satisfies the needs/wants of a customer and keeps
them coming back is customer service.
16. Combination of goods and services offered to satisfy needs and wants of customers is
called promotion
17. Place utility exists when a product is readily accessible to potential customers.
18. A market is the set of actual and potential buyers of a product or service.

Part II: Choose

1. Which one of the following is a market offering
A. Product D. All of the above are answers
B. Information E. None of the above are answers
C. Experience
2. Which one of the following refers wants for specific products that are backed by ability and
willingness to buy
A. Need C. Demand
B. Wants D. None
3. Which one of the following is the emotional or psychological values that a person attaches
to a product or brand because of its reputation or social standing
A. Place utility C. Image utility
B. Form utility D. None of the above are answers
4. Which one of the following is not Polite and Friendly Responses to your customers
A. What I can do for you D. All of the above are answers
B. I will try my best E. None of the above are answers
C. Calm down
5. Which one of the following is marketing characteristics
A. It focus on sellers need C. Converting product into cash
B. Product enjoys supreme importance D. Customer enjoys supreme importance
6. Which one of the following qualities of customer service professional states that we are
terribly sorry for this inconvenience
A. Point out facts C. Admit the problem
B. Do not lose your self-control D. None of the above are answers
7. Which one of the marketing mix refers having the right product, in the right location, at the
right time to be purchased by consumers
A. Promotion C. Place
B. Price D. product
8. Which one of the following is a market offering
A. Product D. All of the above are answers
B. Information E. None of the above are answers
C. Experience
9. Which one of the following refers wants for specific products that are backed by ability and
willingness to buy
A. Need C. Demand
B. Wants D. None
10. Which one of the following is the emotional or psychological values that a person attaches
to a product or brand because of its reputation or social standing
A. Place utility C. Image utility
B. Form utility D. None of the above is answer

11. Which one of the following is not Polite and Friendly responses to your customers
 A. What I can do for you D. All of the above are answers
B. I will try my best E. None of the above are answers
C. Calm down
12. Which one of the following is marketing characteristics
A. It focus on sellers need C. Converting product into cash
B. Product enjoys supreme importance D. Customer enjoys supreme importance
13. Which one of the following qualities of customer service professional states that we are
terribly sorry for this inconvenience
A. Point out facts C. Admit the problem
B. Do not lose your self-control D. None of the above are answers
14. Which one of the marketing mix refers having the right product, in the right location, at the
right time to be purchased by consumers
A. Promotion C. Place
B. Price D. product

Part III: Short Answer Questions

1. What are the three legal forms of business organization with their ownership?
2. What are the two main approaches to define MSEs. ?
3. Describe Key success factors in setting up a micro and small enterprises.
4. What are the ways to establishing an enterprise?
5. Mention the elements of marketing mix of products
6. What are the two main source of finance?
7. ____________is a written document prepared by the individual entrepreneur or partners that describes
the goals and objectives of the business along with steps necessary to achieve those goals.

8. ___________is a model that Summarize a series of untested hypotheses of framework, use customer
development to test their hypotheses andPractice agile development (developing a product iteratively and
incrementally).

9.__________is a credit obtained from suppliers who sell goods and service on credit.

10. _________means informing or communicating your customers about your products and services and
attracting them to buy the given product /service.
BUSINESS PLAN
EXECUTIVE SUMMARY

Name of Business _________________________________________________________

Legal Form _______________________________________________________________

Contact Address _________________________________________________________

Tel. _____________________E-mail________________________

Fax.____________________

Type of Business:
􀂉 Manufacturer 􀂉 Service provider 􀂉 Retailer 􀂉 Wholesaler

Brief Description of the Business Idea

Products or services
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________

Customers / Target Group

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________

Owner(s) (Name, Address, Qualification, Function in the Business, Relevant Experience)

1.________________________________________________

2.________________________________________________

3.________________________________________________

4.________________________________________________

Business Idea and Market

 Description of the business idea
(e.g. identified needs (market gap), who are the customers, type of products or services to
satisfy the needs, how to reach the customers, etc.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________

Marketing Plan

Description of the market

(e.g. geographical area, town, type of customers, size of total market, description of competitors,
market share for the new business, etc.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
___________________________________

MARKETING PLAN PRODUCT

Detailed description of the product or product range or service

Product/service type
______________________________________________________________________________
______________________________________________________________________________
__________________________________________

What is special about the product/ the unique characteristics of the product?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________

Specification of the product (e.g. size, color, quality, Packaging etc)

______________________________________________________________________________
______________________________________________________________________________
____________________________________________________________

After sales service

______________________________________________________________________________
______________________________________________________________________________
______________________________

Marketing Plan Price

How much are customers willing to pay?
 Highest _____
 Average ____
 Lowest _____
How much are competitors’ price?
 Highest _____
 Average ____
 Lowest _____

How much is your price?

 Highest _____
 Average ____
 Lowest _____

What are the reasons for setting your price?

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_______________________________________

Product/service Type(1) Type(2)

Highest ;
Average;
Lowest

Highest ; Highest ;
Average; Average;
Lowest Lowest

Highest ; Highest ;
Average; Average;
Lowest Lowest

Margin for discount? No Yes(_____ %) No Yes(____%)

Marketing Plan Place

Location of the business

Description of the planned location for the business
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________

Reason for choosing this location

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
________________________________________

Reaching the customers by selling to:

􀂉 Individuals 􀂉 Retailers 􀂉 Wholesalers 􀂉 Others

Reason for choosing this way of distribution

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________

MARKETING PLAN PROMOTION

Description of the planned actions to inform customers about the opening of the new business
(e.g. printed information, brochures, posters, newspaperarticles, radio advertisements, opening
ceremony, etc. Also make inquiriesabout the costs for the different types of promotion)

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________

Legal Form

The legal form of the business will be:-

□ Sole proprietorship □ partnership □ limited company □ Corporation

Reason for choosing this legal form

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________

Start-up Capital

Estimation of Start-up Capital Amount

Investment

Land

Building

Equipment

Total Investment
Working Capital
____ months of staff costs
____ months of operational costs
Total working capital

Total Start-up Capital

List Fixed Assets Needed and Their Cost

No. Item Quantity Amount

1
2
3
4
5
Total

List of Raw Materials Needed

 Raw materials
No Dimension Quantity Unit Cost Total Cost
needed per month
1
2
3
4
Total cost

Sources of Start-up Capital

Sources of Funding

Conditions
Type Source Amount
(duration/interest)
􀂉 Own savings
Equity capital
􀂉 Partner

􀂉 Family

Loan 1 􀂉 Friends

􀂉 Money lender

􀂉 Credit cooperative

Loan 2 􀂉 Government scheme

􀂉 Bank loan

Total Funding

Information about funding sources

Loan 1

Name and address of creditor or credit institution

______________________________________________________________________________
______________________________________________________________________________
____________________________________________________________

Credit Agreement 􀂉 under discussion 􀂉 finalized

 Money available on (date) ________

Loan 2

Name and address of creditor or credit institution

______________________________________________________________________________
______________________________________________________________________________
____________________________________________________________

Credit agreement 􀂉 under discussion 􀂉 finalized

􀂉 Money available on (date) ________

Debt Service

Repayment 1 2 3 4 5 6
period Amount Amount Amount Amount Amount Amount
Loan 1
Installment/principal
Interest
Loan 2
Installment/
principal
Interest
Debt service
Sum of Installments

Organization and Staff

Staff costs

Position Qualifications Salary Social Total

Per month security staff cost
1. __________ ___________ _________ ________ ______
2. __________ ___________ _________ ________ ______
3. __________ ___________ _________ ________ ______
4. __________ ___________ _________ ________ ______
5. __________ ___________ _________ ________ ______

Organization of Business Premises

(Sketch of planned shop, office or workshop)

Business Operation ond Costs

Monthly Sales Plan

All products, product range or services

Month 1 2 3 4 5 6 7 8 9 10 11 12
Price
Product
Quantity
1
Turnover
Price
Product 2 Quantity
Turnover
All
Turnover
products
 Monthly Operational Cost Plan

Planning is based on the monthly sales plan

Month 1 2 3 4 5 6 7 8 9 10 11 12

Product 1 Quantity
Materials All costs
Product 2 Quantity
Materials All costs
Materials Total costs
+ Staff Total costs
+ Others Total costs
Operation Total costs
+ Capital Interest
cost Depreciation
Grand Total
=
costs

Cash Flow Plan

Monthly Cash Flow Plan

Pre
Month 1 2 3 4 5 6 7 8 9 10 11 12
operation
Cash beginning of
the month
+ Equity
+ Loans
+ Sales
+ Any other
I: Total cash in
+ Investment
+ Operational cost
+ Interest
+ Any other
II: Total cash out
I – II Cash at the
end of the month
 Profit Margin

Monthly Estimation of Net Profit

Month 1 2 3 4 5 6 7 8 9 10 11 12
Quantity
Product 1
Turnover
Quantity
Product 2
Turnover
I. Total Sales
- Operation Total costs
II. Total Costs
I – II Profit
(before tax)
- Income tax _____%
Net profit
(after tax)

Opening Balance

Opening Balance of My Business (Date)

Assets Value Equity Value
Current Assets Liabilities
Cash and bank Current Liabilities
Accounts receivable Accounts payable
Inventory Taxes payable
Total Current Others payable
Total Current Liabilities
Fixed Assets Long-Term Liabilities
Land
Mortgage
Building
Loans
Equipment
Others
Others
Total Long-Term Liabilities
Total Fixed Assets
Total Liabilities
Net Worth/Capital

Total Assets Total Liabilities and Net Worth

 Learning Outcome- 4 Employability skills

Introduction
This lesson focuses on Employability skill the word that can be used in different contexts and
with different meanings. In this course, we are discussing employability as it relates to higher
education, so we will use the following definition. Employability is:

“a set of achievements skills, understandings and personal attributes that makes graduates more
likely to gain employment and be successful in their chosen occupations, which benefits
themselves, the workforce, the community and the economy.”

Every prospective TVET graduate should develop awareness and skill on how to stand out from
the crowd in the job market.

Employability, therefore, is not just about getting a job; it is about a broader set of skills and
attributes that will enable a graduate to be successful throughout their working life
Instructions Sheet
This learning guide is developed to provide you the necessary information regarding the
following content and topics:
 Definition of Employability Skill
 Importance, techniques and application of employability skills
 Common Elements of Employability skills
This guide will also assist you to attain the learning outcome stated in the cover page.
Specifically, upon completion of this Learning Guide, you will be able to

 Understand Employability Skill

 Identify Importance of employability skills

 Identify Common Elements of Employability skills

Learning Instructions

1. Read the specific objectives of this Learning Guide.

2. Follow the instructions described below 3 to 5.

3. Read the information written in the “Information Sheets 1, 2 and 3. Try to understand
what are being discussed. Ask you teacher for assistance if you have hard time
understanding them.

4. Accomplish the “Self-check” given next to each information sheet

5. If you earned a satisfactory evaluation proceed to next information sheet “Operation.

However, if your rating is unsatisfactory, see your teacher for further instructions
 Information Sheet - 1 Definition of Employability Skill (5 hour)

Pre lesson Activity:

Discuss in groups on the following topics (15 minute)
What skills should new TVET graduates need to possesses to join the world of work
What are some of the personal attribute/ character a job seeker develop to convince
potential employers
 What is a written letter by mean
 Have you any experience in writing any type of latter.
4.1.1 Employability Skill
The ILO defines employability as relating to “portable competencies and qualifications that
enhance an individual’s capacity to make use of the education and training opportunities
available in order to secure and retain decent work, to progress within the enterprise and between
jobs, and to cope with changing technology and labor market conditions. Individuals are most
employable when they have broad-based education and training, basic and portable high-level
skills, including teamwork, problem solving, information and communications technology and
communication and language skills... This combination of skills enables them to adapt to
changes in the world of work.

Employability skills are defined as skills required not only to gain employment, but also to
progress within an enterprise so as to achieve one’s potential and contribute successfully to
enterprise strategic directions.

4.1.2 Core Employability Skills

Core skills refer to skills knowledge and competencies that enhance workers ability to
secure and retain a job, progress at work and cope with changes. Individuals are most
employed when they have broad based education and training, basic and transferable skills;
the combination these skills enable job seekers to adapt to changes and join the world of
work. The skills in demand are increasingly core skills for employability.

The core skills are:

1. Basic/foundation skills
 2. Vocational/technical skills
3. Professional/personal

4. Core work skills

The following table sets out the main types of skills required in today’s world of work with
corresponding definition.

Table-21: Core Employability Skills and their Definition

Type of skill Definition

The literacy and numeracy skills necessary for getting work that can
pay enough to meet day-to-day needs. These skills are also a
Basic/foundation prerequisite for continuing in education and training, and for acquiring
skills other vocational, professional and core work skills that enhance the
prospect of getting a good job

Vocational or Specialized skills, knowledge or know-how needed to perform specific

technical skills duties or tasks
Professional or Individual attributes relevant to work, such as honesty, integrity, work
personal skills ethic
The abilities to learn and adapt; to read, write and compute
competently; to listen and communicate effectively; to think
creatively; to solve problems independently; to manage oneself at
Core work skills
work; to interact with co-workers; to work in teams or groups; to
handle basic technology; and to lead effectively, as well as follow
supervision

Important core skills necessary for employability skills include the following though it is not an
exhaustive list:
 Communication skills that contribute to productive and harmonious relations between
employees and customers;
 Team work skills that contribute to productive working relationships and outcomes;
 Problem-solving skills that contribute to productive outcomes;
 Initiative and enterprise skills that contribute to innovative outcomes;
 Organizational skills :planning and organizing skills that contribute to long-term and
short-term strategic planning;
 Self-management skills that contribute to employee satisfaction and growth;
  Learning skills that contribute to ongoing improvement and expansion in employee and
company operations and outcomes; and technology skills that contribute to effective
execution of tasks.
 Numeracy skills : literacy in basic arithmetic and statistical tools
 Negotiation skill: ability to engage with others
 Valuing diversity and difference
 Digital skills (technology).

The following table shows the range of core skills for employability identified into four broad
categories

Table-22: The broad categories of core employability skills for

Broad skill
Core work skills/abilities
category
 Willingness to learn
 Using learning techniques to acquire and apply new knowledge and skills
 Working safely
 Pursuing independent learning
 Taking responsibility for own learning
Learning to  Thinking abstractly
learn  Organizing, processing and holding information
 Interpreting and communicating information
 Conducting systematic enquiry, following through to find answers
 Using time effectively and efficiently without sacrificing quality
 Selecting the best approach for tasks
 Beginning, following through and completing tasks
 Reading competently
 Reading, understanding and using materials, including graphs, charts and displays
 Understanding and speaking the language(s) in which the business is conducted
 Writing effectively in the language(s) in which the business is conducted
Communication  Listening and communicating effectively
 Listening to understand and learn
 Using numeracy effectively
 Articulating own ideas and vision
 Being adaptable
 Managing oneself at work
 Working in teams or groups

Teamwork  Interacting with co-workers

 Respecting the thoughts and opinions of others in the group
 Working within the culture of the group
  Understanding and contributing to the organization’s goals
 Planning and making decisions with other sand supporting the outcomes
 Taking accountability for actions
 Building partnerships and coordinating a variety of experiences
 Working towards group consensus indecision-making
 Valuing others’ input
 Accepting feedback
 Resolving conflicts
 Coaching, mentoring and giving feedback
 Leading effectively
 Mobilizing a group for high performance
 Thinking creatively
 Solving problems independently
 Testing assumptions
 Identifying problems
Problem-solving
 Taking the context of data and circumstances in to account
 Identifying and suggesting new ideas to get the job done(initiative)
 Collecting, analyzing and organizing information (planning and organization)
 Planning and managing time, money and other resources to achieve goals

4.1.3 Personal Attributes of Job Seekers

Prospective graduates of TVET programs are expected to build the skills and confidence that
create impression in the job market. Along with basic employability skills, the following
personal, attributes are important to create attractive impression in the minds of employers.
 Loyalty  Enthusiasm  Balanced attitude towards
 Commitment  Commonsense work and home life
 ‘honesty and integrity  Positive self esteem  Ability to deal with
 Reliability  Sense of humor pressure

 Personal presentation  Motivation

 adaptability

Activity: 1
1. List some of the importance of employability skills
2. Discuss the interrelation of personal attributes and employability skills in group
Self-Check 1
Instruction I: Choose the best answer.

1. ____________________ are developed over a life-time in all aspects of life experience,

self-employment, and formal education and community activities etc…
A. Working skill
B. Employability skills
C. Communication skill
D. All
2. Skills, knowledge and competencies that enhance workers ability to secure and retain on
their job as well as progress at work and cope with changes is called _______________.
A. Core skills
B. Speaking skills
C. Writing skills
D. Working skills
3. Which of the following cannot be categorized under Problem-solving core skill?
A. Thinking creatively
B. Solving problems independently
C. Managing oneself at work
D. Testing assumptions
4. ____________is being truthful, sincere and free of deceit/ trickery.
A. Loyalty
B. Commitment
C. Honesty and integrity
D. Reliability

5. _____________ process that initiates, guides, and maintains goal-oriented behaviors.

A. Motivation C. Commitment
B. Reliability D. Honesty and integrity
6. _____________ Specialized skills, knowledge or know-how needed to perform
specific duties or tasks

A. Basic/foundation skills C. Professional/personal

B. Vocational/technical skills D. Core work skills

7. An Individual attributes relevant to work, such as honesty, integrity or work ethic is

known as

A. Basic/foundation skills C. Professional/personal

B. Vocational/technical skills D. Core work skills

8. ____________ is the ability of a person to learn and adapt, to read, write and compute
competently; to listen and communicate effectively to think creatively; to solve
problems independently.

A. Professional/personal C. Vocational/technical skills

B. Basic/foundation skills D. Core work skills

9. Learning to learn skill category includes

A. Willingness to learn C. Thinking abstractly

B. Working safely D. All

Instruction II: Answer the following questions

1. List down a minimum of seven personal attributes that the job seekers should develop in
different ways.
 Information Sheet 2 Importance of Employability Skills
Pre lesson Activity:
Have you an idea about the importance of employability skills in the job market? Discuss in
groups

4.2.1 Why Employability Skills are Important?

These set of "job-readiness" skills are, in essence, behaviors that are necessary for every job and
are essential attitudes that allow you to grow in your career and also efficiently let you:
 Connect with co-workers
 Solve problems 
 Be a part of and understand your role within the team
 Make responsible choices for your job and your career
 Be independent and take charge of your career 

Personal characteristics, habits, and attitudes influence how you interact with others. Employers
value employability skills because they regard these as indications of how you get along with
other employees and team members and customers and how efficiently you are likely to handle
your job performance and career success. 

Employers value these unique attributes in their potential employees because they have always
been necessary for a productive and smoothly functioning workforce. Enterprises spend a
substantial amount of time and money, developing these foundational and work-readiness skills.
But in today's world, where jobs are few, employers enjoy more options and would like to hire a
technical expert who also displays well-rounded employability skills. 

Employability is not just securing one job. It has traits and factors that decide the skill of
retaining or hiring employees. These are the reasons why employability is important:

Competitive World

In a world it is difficult to judge the individuality of the candidate? Many might say that college
is different. Though, that is true in some sense. The larger point is that the basic education for
every one is the same. However, even good colleges can just offer good jobs to their students.
Retaining that job defines that student. Thus, this is the unique factor in each candidate.

Adapt to changing situations

Work-life is fickle. As they say, the market can change every second. So can the insides of an
office. Not just in terms of emotions, the real change comes in the form of changes to job
descriptions. Over time, you will go up the ranks of the company. You will be required to do
various jobs that are needed at different stages. Hence, employability helps you gather and retain
these traits.

Helps you explore self

The best thing about employability is that it is entirely in your hands. Thus, only you can find
your true employability. Thus, exploring yourself urges you to become employable. You try to
learn new things. Also, you retain more information for future use. And, you go through many
work lives to finally select the one that works for you.

Return on Investment

Costs for completion of higher education are getting higher every year. Students are walking out
of colleges with large debts and are in need of a job. This is why maintaining employability is
important.

A degree is not enough

Truthfully, in today’s day and age, even students from well-reputed colleges are lacking job
opportunities because they have not developed their skills in different areas. Though, Having
managerial skills, even in non-business related fields like medicine, greatly improves your
employability.

Post lesson Activity:

Discuss why employability skills are important more critical in this day. Share your
understanding to others
Are you ready to enhance these skills to be competent in this crowded job market?

Information Sheet - 3 Common Elements of Employability Skills

Pre lesson Activity: (10 minutes)

1. What do you think about elements of employability skills? Discuss your understanding
4.3.1 Employability skills

Employability skills are transferrable skills that are useful in nearly every job. They involve the
development of an expertise, knowledge base or mindset that makes you more attractive to
employers. Employability skills are also often referred to as employment skills, soft skills, work-
readiness skills or foundational skills. They often improve your performance, minimize errors
and promote collaboration with your coworkers, enabling you to perform your role more
effectively. 

Employability skills may not be listed in a job description, but they are important skills that can
make you more attractive to prospective employers. The main benefit of having these traits is
that it can help you stand out among other job candidates who are vying for the same position.
While other candidates may have the same qualifications and experience, you may have a better
chance of getting hired if you have employability skills that are particularly useful for the role.
Certain employability skills are more sought after in specific industries. You can prepare
yourself for an interview or write your resume for a particular position by researching which
employment skills are essential in your industry.

3.3.2 Elements of Employability Skills

Employers have high regard for employability skills because they are much harder to teach than
job-specific skills. Some employable qualities come naturally, while others can be acquired
through education, work or daily practice. You may already have some of the key employment
skills, but you can work to improve those skills and develop new ones. Here are 10 common
employability skills that employers look for:

1. Communication 6. Initiative
2. Teamwork 7. Self-management
3. Reliability 8. Leadership
4. Problem-solving 9. Learning
5. Organization and planning 10. Technology
1. Communication

Communication is one of the most important employability skills because it is an essential part
of almost any job. The communication process involves five elements:

a. Sender, d. Medium and

b. Receiver, e. Feedback.
c. Message,

When these elements work together, you can deliver and understand messages clearly and
efficiently, eliminating unnecessary misunderstandings and errors. Excellent communication
skills make you more employable because they can enhance a company’s productivity and
efficiency and help prevent the waste of valuable time and resources.

Being an effective communicator involves conveying your thoughts and ideas clearly to achieve
certain outcomes, as well as listening to your coworkers’ instructions, ideas and intentions.
Depending on the job you want, you may have to be competent in several different types of
communication, such as verbal, nonverbal, written and visual. For instance, a customer-facing
employee needs to have excellent verbal and nonverbal communication skills.

The best way to improve your communication skills is to communicate as frequently as possible.
Some of the activities that can help you develop better communication skills include:
1. Communicating on social media
2. Joining a local club 
3. Practicing awareness of your facial expressions and body language

4.3. Job Application

How to Fill Out a Job Application

One of the first things an applicant will be asked to do for an interview is fill out a job
application. Employers get more information from an application than facts and numbers. They
check the neatness, spelling and grammar and organizational skills

The application is one more chance for an applicant to keep the name in the “prospective
employee” file and out of the wastebasket. As an application is a legal document. Fill it out
completely and honestly.
 4.3.1. Resume

What is a resume?

A short document showing an employer that an applicant is a desirable candidate for a job.
Resume is a Statement of facts (using keywords and action verbs) that highlights the
accomplishments, skills and education/training.

Creating effective Resumes

What is the purpose of a resume?

 To gain a potential employer’s interest.

 To obtain an interview.

The resume makes an appeal to, the prospective employer. A job-seeker simply cannot succeed
these days with just the traditional formatted resume intended to be printed out as a visually
pleasing marketing piece. The formatted “print” resume is still important, but it can no longer be
the only resume tool in the kit. An applicant need at least one other version of the resume that
can go directly into a keyword-searchable database with no obstacles. The e-resume, short for
electronic resume, is a vital tool for today’s job-seeker.

Contents of a Resume

The sections most commonly included in a resume are the following:

i. Heading

 Create a heading/letterhead that An applicant can use on all of the employment documents
 Tell the employer who an applicant is and how they can reach out.
 The name should stand out slightly more than the rest of identifying information.
 The header should include the name, complete mailing address, and the telephone number
with area code.
 Include the cell phone number if this is the easiest way to reach you. Make sure thevoice
mail message is professionally stated.
 Include the email address and make sure it is appropriate and reflects positively on you. If
an applicant doesn’t have business email address, create one using one of the free sources
such as Gmail, yahoo, or Hotmail.
 ii. Objective

 Objectives help to sharpen the focus of the resume.

 An objective should be specific, not vague and meaningless.
 Objectives should reflect the employer’s perspective, not the jobseekers. It should
demonstrate the value the candidate will add to the organization. It should be as concise as
possible.

iii. Strengths or Skills Summary

 This section supplements (or replaces) the objective section.

 This section spotlights the skills that an applicant need to contribute to the
position/organization.
 The keywords utilized in this section can help increase the number of hits if the potential
employer uses an electronic process to match applicants with job requirements.

iv. Education

 List the most recent education first.

 List school name, city and state, expected date of graduation or completion, and any
specific programs of

v. Study/special training

 List the employability essentials for Success that an applicant has learned.
 List related classes an applicant has taken.
 Use actual course titles not abbreviations or acronyms.

vi. Work Experience

 Show current or most recent job first.

 List job title, name of employer, city/state of employer and dates of employment. This is
the order of importance to the reader. For dates of employment, month and year is sufficient.
If an applicant are still working, state “Present” for the ending date.
 The ideal resume is accomplishments driven rather than duties driven. As a high school
student, it can be challenging to follow this format. How did an applicant does the job better
than anyone else? How did the company benefit from the performance?
  An applicant should have at least three accomplishments/duties for each position listed on
resume. More is always better! Think about accomplishments first and combine both
accomplishments and duties on the resume as needed. When describing job responsibilities,

vii. Volunteer Experience/Community Service

 Show current or most recent volunteer experience first.

 List type of volunteer experience, name of organization, city/state, and time period or
number of hours volunteered.
 List responsibilities and experience gained.

viii. Activities/Awards/Special Skills

 List skills that an applicant acquired through the course work or work experience be
specific Example - Proficient in Microsoft Word 2010.
 List clubs and organizations to which an applicant belongs.
 List special awards and certificates.

References

Do not list any references on the resume. Instead key the phrase, “References available on
request” at the bottom of the page. This is optional because all employers expect that references
will be provided if requested. The line can serve the purpose of signaling the end of the resume;
but if an applicant doesn’t have room, leave it off.

 On a separate sheet of paper have the references listed so an applicant will have them
available. On this sheet, use the same heading as the resume page.
 Use three to five adult references. Include full name, title (relationship to you), organization
with which the person is affiliated, complete address, phone number and e-mail address.
 Suggestions for good references include past and present employers, volunteer work
supervisors, teachers, coaches, counselors, etc. Do not use family members or school
friends.
 Make sure the references can discuss the work-related qualities positively.
 Get permission before an applicant use anyone for a reference.
 Keep the references informed about key accomplishments and make them aware of
positions an applicant is seeking.
 Homework Activity: 1
Prepare a resume of your own as part of a job application to be submitted to ABC Company.

Cover Letter

Why Is A Cover Letter So Important?

The first contact with a prospective employer may be the cover letter. Employers use cover
letters to efficiently sort out those applicants they wish to interview. It is essential that the cover
letter be well written so that yours is one of those that obtain an interview. Few employers
seriously consider a resume that is not accompanied by a cover letter. Employers may ask for
cover letters to see how much effort an applicant is willing to make to get the position. They may
also want to know how well an applicant expresses himself in writing.

A cover letter has several purposes:

 A cover letter tells the employer the type of position you’re seeking.
 A cover letter tells the employer exactly how an applicant is qualified for the position.
 A cover letter highlights the aspects of the experience that are most useful to the
employer.
 A cover letter can explain things that the resume can’t.
 A cover letter can serve the same function as the “objective” on the resume, and expand
upon it.
 A cover letter is a little window in to the personality.

The cover letter is all about specifics:

1. Always address the letter to a specific person. “Dear Sir” or “To Whom It May Concern” is
unacceptable. Call the company and ask who the hiring manager is for a given position if it
isn’t stated in the job posting. The worst-case scenario is that the letter will begin “Dear
Hiring Manager for (name of position).” This is the way an applicant should address a blind
job ad also.
2. Target the letter to a specific position and be very specific when describing the skills and
qualifications related to that position. Be sure to refer to the job posting and use key words
mentioned. Use specific examples to demonstrate the claims about yourself. If An applicant
say An applicant are organized, give an example of how An applicant have used this skill.
3. Demonstrate specific knowledge of the company An applicant are writing to. This isn’t a
must, but will help to grab the attention of a potential employer. It shows An applicant took
extra time to research what they are about.
4. Specifically ask for an interview and tell the company how an applicant will follow up. If
An applicant take this proactive approach and follow up, An applicant will be much more
likely to get an interview

Tips for Completing a Job Application

1. Follow all directions printed on the job application. Look the application over carefully
before an applicant begins working on it. Show the employer that an applicant can do what
is expected of you.
2. Fill out the application yourself. Employers want to know how well an applicant read and
write, not how well the friend or parents can write.

3. Print using black ink. Printing is much easier to read. Use the best penmanship.

4. Think before an applicant write to avoid mistakes. If an applicant does make mistakes, draw
one line through it. Don’t blot it out!

5. Have all of the data handy. It is a good idea to fill out a “pocket resume” or extra application
ahead of time and take it with you. Then an applicant will have all of the information ready.
It also shows good planning on the part. 6. Put something on every blank. The employer
needs to know that an applicant did read it, but it just doesn’t fit the situation.
So, if it doesn’t apply, put N/A (this means it does not apply to you), or draw a line in each
box. Do not write “see resume” even though an applicant is attaching one.
6. Be as specific as possible with all answers.
7. Be specific about employment history in the application. Make sure an applicant know
starting and ending dates of all the jobs. Employers are looking for a complete work history,
including gaps in employment.
8. Proofread the application before submitting it. Don’t forget to sign it and be sure to read
what an applicant are signing
9. Salary desired? Do not pin yourself down to a dollar figure. An applicant may: oversell
yourself and the employer will think an applicant is too expensive undersell yourself and
ask for less than the employer was planning on paying for that position

Homework Activity: 2
Prepare a cover letter for job application for a business officer position in ABC
Company

Where to Look for a Job

Once an applicant has the above information organized, it is time to start looking for a job.

Here are some common sources of job information:

1. Word of Mouth/Networking - The best source is the old reliable “grapevine.” Ask around!
Ask family, friends, neighbors, and co-workers if they know of any businesses who are
hiring. Talk with the parents of the friends. Ask them for leads and let them know an
applicant is looking for a job. More job leads are discovered through networking than any
other method.
2. Pounding the Pavement - This is the oldest method of job hunting, especially for entry-
level positions. This means literally going door-to-door and submitting job applications. Be
sure to always dress professionally for those rare occasions where an applicant may be
interviewed on the spot.
3. “Help Wanted” Signs - Maybe the simplest method of all is the good old “Help Wanted”
sign in the front window. If an applicant sees one, don’t go in right away. Take some time to
prepare. Practice writing a cover letter and prepare a resume. Also, brush up on how to fill
out a job application and practice the interviewing skills.
4. Public Employment Agencies - Youth Opportunities Unlimited (YOU) provides various
career services including job placement assistance for students in Kalamazoo County. Some
of their services are based on income eligibility. School credit may be available in certain
situations. The phone number for an applicant
5. Newspapers - Newspapers usually list jobs under the “Help Wanted” column of the
classified ads. Many newspapers are now putting their Help Wanted ads on their websites.
These are usually unique listings specific to a certain location. One website to try for
Michigan classifieds is www.mlive.com/jobs. Some companies are advertising in
nontraditional sites such as www.craigslist.org. The key here is to be persistent!
6. List of Employers - Check the yellow pages of the telephone book, industrial directories,
and the local Chamber of Commerce listings. They will tell an applicant about local
businesses or employers.
7. Government - Civil Service Commission jobs involve working for the local, state, or
federal government. In order to get a civil service job, an applicant must take a civil service
occupation-specific test. Candidates for civil service jobs are then contacted based on their
test score. Most post offices have application forms and information on civil service
opportunities. The armed forces offer job training and career opportunities.
8. Unions - Industrial and trade unions have exclusive hiring authority for some companies,
usually through apprenticeship programs. Listed below are some of the unions represented
in the area that have apprenticeship programs. The first step in becoming part of an
apprenticeship program is filling out an application, which can be obtained by calling the
numbers listed below. Most applicants take some type of aptitude test and must receive a
certain score to be asked back for an interview. After the interview process the union selects
who they will invite to be part of their program. The apprenticeship programs last 4-5 years.

Online Application Process

Many companies are now having prospective employees apply online. Sometimes this is the only
way to apply and there isn’t a paper application that can be filled out. An applicant may be able
to access the site from any computer or an applicant may have to go into the business to use a
specific computer that is set up for online applications.

Tips for Completing Online Applications

1. The focus should be on making the application unique, to avoid its being swallowed up in
the technology abyss.
2. Follow directions. Be careful to enter the correct data in the correct field.
3. Tailor the information to the position. Don’t copy and paste text from the resume.
 4. Use key words, buzz words, and industry verbiage. Use the verbiage in the job ad as the
model. Employers search key words when they’re looking for people to fill specific
positions. Key words are very important and will help an applicant get past the computer to
a live person.
5. Create a skills-inventory section even if the application doesn’t require it. An applicant
might put this in a “comments” section.
6. Include numbers and statistics if available. Example counted five cash drawers daily;
Responsible
7. Complete all fields – even those that aren’t required
8. If the company offers an optional assessment test online, take it. Some employers have
said that candidates who don’t take the optional assessment test are automatically screened
out.
9. Make sure the resume can hold its own in a very simple format. Fancy bullets, text, italics,
and bold do not convert well in an electronic application.
10. Spell check and grammar check the application before submitting it. Have an error-free
application because this application serves as the employer’s first impression of you.
11. Include a strong objective tailored to the specific job for which an applicant is interested.
12. Another use for the comments section: use it to demonstrate that you’ve done research on
the company and the industry.
13. Follow-up the electronic application with a personal e-mail to the hiring manager. A
follow-up phone call is acceptable if the ad does not say “No phone calls.”

1. Interviews

After the application is made for a job, the next step is interview if the employer finds an
applicant attractive. The job interview can be one of the most important few minutes of the life.
The job application and cover letter may have impressed the employer, but it’s the interview that
will be the deciding factor regarding whether or not An applicant get the job. First impressions
are formed within three to eleven seconds.

2. Teamwork

Good teamwork skills refer to the ability to work harmoniously with your colleagues to achieve a
shared goal. Teamwork skills such as collaboration can increase your hiring chances because you
may be able to help a company reach its goals more effectively. These skills can also contribute
to a more positive work environment. To become a great team player, you need to be
comfortable working with people, take responsibility for your share of work and contribute to
team goals. 
There are many things you can do to boost your teamwork skills, including:
 Volunteering to help coworkers with projects
 Working with others in a local organization
 Joining a sports team

3. Reliability

Reliability makes you more employable because it promotes trust between you and your
employer. You are a reliable employee if you can consistently complete your tasks on time,
deliver quality work and make minimal mistakes. You must also be able to respond to inquiries
and emails promptly and only make promises you can keep.
You can become more reliable by:
 Consistently meeting or exceeding your expected levels of work performance
 Creating schedules for your daily tasks and maintaining them
 Acknowledging your mistakes and making a conscious effort to avoid them in the future

4. Problem-solving

Problem-solving involves identifying key issues and their implications, having a clear
understanding of problems and determining the most effective solutions. For more complex
problems, you need to know how to divide them into smaller parts that are easier to understand
and more manageable. 
Problem-solving skills can set you apart from other job candidates because they can help your
potential employer maintain an efficient operational process and achieve objectives more
effectively. If you are a good problem-solver, you can play an important role in troubleshooting
issues, which can enable your team to overcome obstacles and solve complex problems.
Depending on the position you are applying for, you may need a certain set of sub-skills to solve
problems effectively, including research, analysis and decision-making. 
You can become a better problem-solver by:
 Undertaking research assignments and projects
 Participating in brainstorming sessions
  Regularly developing your skills by solving puzzles and playing games

5. Organization and planning

Being able to organize and plan effectively is important because it helps you and your employer
save time, effort and money by improving workflow. It ensures that assignments and projects are
completed on time and prevents confusion and errors that can be costly to the company.
To be a good organizer and planner, you should be able to identify tasks, prioritize them, create
schedules for them and complete them on time. If you are in a leadership position, you need to
develop systematic processes for achieving goals and delegating tasks appropriately. 
You can develop organizational and planning skills by:
 Developing a timetable for your daily activities
 Organizing an event
 Writing down your tasks and activities in a planner

6. Initiative
Taking initiative means recognizing a problem and solving it, preparing for a potential crisis by
taking preemptive action, taking advantage of opportunities and having a positive attitude. It
shows that you can think for yourself and take the necessary actions without being instructed to
do so. As a person with initiative, you have a strong drive to succeed and a desire to keep
improving yourself through continuous learning, which makes you valuable to any organization. 
Employers consider initiative one of the key employability skills and value employees who
possess self-motivation to complete tasks without being asked. The flexibility and courage of
such employees can push organizations to innovate and achieve a competitive edge. 
You can improve your ability to take initiative by:
 Approaching companies and other organizations to inquire about job opportunities
 Proposing changes to the policies or activities of a group you belong to
 Setting up a local club or fundraiser

7. Self-management

Self-management refers to the ability to perform job duties satisfactorily with little or no
supervision. For higher-level employees, it also means delegating tasks to ensure you complete
them on time. Additionally, self-managed employees can motivate themselves to deliver solid
work performance consistently.
If you have good self-management skills, you can help your supervisor or manager save time and
effort simply because you need minimal guidance and assistance from them. Also, being a self-
motivated person means you may be less likely to have productivity issues. These abilities can
make you an appealing candidate to most employers. 

You can develop self-management skills by:

 Asking for more responsibilities at work
 Creating schedules for certain activities and maintaining them
 Participating in volunteer work that allows you to work independently
8. Leadership

Employers look for good leaders because they can benefit organizations in many ways. As a
leader, you play an important role in ensuring that your team shares the same vision as the
company and works in unison with other teams and departments to achieve a common goal.
Additionally, you can develop strategies for achieving objectives, keep your team constantly
motivated and monitor work performance to produce better results for the company.
Leadership skills are important at every level. If you are seeking a managerial position, you need
to be a good leader to motivate your team members. You can also benefit from having some
leadership ability in entry-level positions because it may help you stand out and climb the ranks
faster. You can show leadership by directing and motivating your coworkers, setting objectives
and goals for your team, improving work practices and coaching your colleagues. 
You can learn to become a better leader by:
 Attending a leadership course
 Starting a local group
 Reading about the habits of successful leaders, particularly those in your industry

9. Learning

Having strong learning skills means understanding new concepts and methods quickly, taking on
new tasks, adapting to change and having the tendency to improve your knowledge and skills
continually.
Employees who have good learning skills may help employers fill challenging roles more
quickly and reduce the cost of staff training. Good learners are especially desirable to companies
that are at the forefront of innovation because they can help transition to new methods and
technologies more smoothly. 
You can increase your ability to learn by:
 Taking a course to improve your learning skills, such as a speed-reading, memory-
boosting or an accelerated-learning course
 Researching skills and activities related to your job, such as organizing, teamwork or
presentation skills
 Teaching yourself a new skill or hobby
10. Technology

Companies search for candidates with technical skills to help them use the latest technology and
stay ahead of their competitors. Depending on your job, the technology skills you need may vary
greatly, from word processing and sending email to video editing and using programming
languages. If you can grasp technology-related concepts and learn how to use new technologies
quickly, you may be more attractive to employers.
Technology skills are acquired through learning and practice. Some of the ways to develop and
improve technology skills include:
 Enrolling in a technology course
 Trying out new apps and technology in your daily life
 Staying up-to-date with the latest technology in your industry

Summary
 Employability Skills are the transferable skills needed by an individual to make them
'employable'. Along with good technical understanding and subject knowledge, employers
 often outline a set of skills that they want from an employee
 Employability skill is a vital and importance for job seekers so developing these skills is
critical for TVET graduates
 Now a day’s Technology is changed dramatically and creates dynamic and complex
environment as a result, computation became tough and hard both individual and company
level therefore you young peoples who seeks job or maintain your work contract you must
scale up your employability skill continually.
Self-Check Questions 4
Instruction I: Choose the best answer from the given alternatives.

1. A short document that the applicant /job -seeker sent to the employer either in hard
copy or electronic mill is ________________.

A. Resume letter C. Agreement letter

B. Thank you letter D. All

2. Communication process involves:

A. The sender, D. Medium and

B. Receiver, E. Feedback.
C. Message, F. All

3. ________________refers to the ability to perform job duties satisfactorily with little or

no supervision.

A. Self-management C. Learning
B. Initiative D. All

4. understanding new concepts and methods quickly, taking on new tasks, adapting to
change and having the tendency to improve your knowledge and skills continually is
known as _______________________
A. Self-management C. Learning

B. Technology D. All

Instruction II: Answer the Following Questions

1. What are the basic contents that should be included when writing a resume
a. ________________ f. _________________
b. ________________ g. _________________
c. ________________ h. _________________
d. ________________ i. _________________
e. ________________
j. ________________
2. What are the common sources of job information that the job- seeker refers to the
availability of hiring somewhere else.
 a. ____________________
b. ____________________
c. ____________________
d. ____________________
e. _______________
f. _______________
g. _______________

3. What is the purpose of a resume?

a. _______________________
b. _______________________

LO 3 Answer key for Part III – Short Answer Questions

1. A. The sole proprietorship has only one owner.

B. A partnership has two or more co-owners.
C. A limited company(Corporation) is an association of stockholders
. D. cooperative is a group of people operating a business through a jointly owned

2. a) By some measure of Size/Quantitative Approach

b) Using an economic/Control definition/ Qualitative Approach
3. These are MAIR model (Motivation, Ability, Idea and Resource)

4. The ways to establishing an enterprise are by:

 Buying an existing business
 Starting a new business
 Becoming a franchisee

5. They are 4’ps (product ,Price, promotion and placement)

6. These are internal source (equity financing) and external source (debt financing).

7. A business plan

8. Business model canvas

9. Trade credit
10. Promotion
 REFERENCE
1. Entrepreneurship[ training Guide for TVET….(prepared by Federal TVET Agency)
2. Budget and Accounts supports Level II with selected Competency assessment questions and their
answers (prepared by Ahmed Melke)

OTHER REFERENCES

1. COMCEC (2017). Training on Entrepreneurship and Management of Small Business for Women
in Gambia, Senegal and Sierra Leone.
2. Geoff Lancaster and Paul Reynolds (2002). Marketing: The One-Semester Introduction. Reed
Educational and Professional Publishing Ltd .ISBN 0 7506 4381 1
3. ILO (2008).Know about Business. ISBN 92-9049-396-8
4. Federal Urban Job Creation and Food Security Agency establishment regulation No 374/2016.
5. Philip Kotler and Gary Armstrong (2018). Principle of marketing (17th edition). Global edition.
Pearson Education company.
6. HailayGebretinsaeBeyene(2007). Entrepreneurship and Small businessmanagement, Mekelle
7. KAB/Know about the business(2008)
8. Internet: Citigroup(2006)
9. Timothy S. Hatten (2012) Small Business Management : Entrepreneurship and beyond
10. COMCEC (2017). Training on Entrepreneurship and Management of Small Business for Women
in Gambia, Senegal and Sierra Leone.
11. Geoff Lancaster and Paul Reynolds (2002). Marketing: The One-Semester Introduction. Reed
Educational and Professional Publishing Ltd .ISBN 0 7506 4381 1
12. ILO (2008).Know about Business. ISBN 92-9049-396-8
13. Philip Kotler and Gary Armstrong (2018). Principle of marketing (17th edition). Global edition.
Pearson Education company.
14. HailayGebretinsaeBeyene(2007). Entrepreneurship and Small business management,Mekelle
15. KAB/Know about the business(2008)
16. Internet: Citigroup(2006)
Website link
1. https://www.yourarticlelibrary.com/entrepreneurship/motivation-entrepreneurship/
entrepreneurial-motivating-factors-internal-and-external-factors/40682
2. https://qsstudy.com/business-studies/entrepreneurial-motivation
3. https://riseupaddis.wordpress.com/2018/02/05/top-seven-ethiopian-entrepreneurs-to-watch-in-
2018/
4. https://www.solerebels.com/pages/bethlehem-tilahun-alemu
5. http://www.simplynotes.in/mbabba/entrepreneurial-competency/