Download enterpreneurship defination and

ENTERPRENEURSHIP
Session objectives
Define entrepreneurship and
intrapreneurship
Explain the entrepreneurship process
Validate business ideas to ensure that
they are opportunities
Identify different ways of financing
business
Identify the requirements for starting new
business ideas for the cooperatives
DEFINING ENTREPRNEUSHIP
 Entrepreneurship is creating and building
something of value from practically nothing.
 It is the process of creating or seizing an
opportunity and pursuing it regardless of the
resources currently controlled.
 It involves the definition, creation, and
distribution of value and benefits to individuals,
groups, organization, and society.

A dynamic process of creating incremental
wealth
Creation of wealth by individuals who
assume major risks in terms of equity
and/or career, commitment of providing
value for some products
DEFINING ENTREPRNEUSHIP (cont..)
The process of taking or bearing
uninsurable risks in buying and selling
good and services
Process of combining factors of production
or resources such that wealth is created
Creating and building something of value
from practically nothing
DEFINING ENTREPRNEUSHIP (cont..)
Pursuing new opportunities without regard
to resources currently controlled
The process of creating new organisation
DEFINING ENTREPRNEUSHIP (cont..)
An innovative process that involves bringing
new combinations into the production
process such that:
New products or services are offered
New methods or technology is applied
New markets are targeted or opened
New sources of supply and raw materials are
used
New forms of organisations are formed
DEFINING ENTREPRNEUSHIP (cont..)
The process of creating something new
with value by devoting the necessary time
and effort, assuming the accompanying
financial, psychological and social risk,
and receiving the necessary reward of
monetary and personal satisfaction
Entrepreneurship
 It also requires a willingness to take
calculated risks – both personal and
financial – and then doing everything
possible to influence the odds.
Basic aspects of being an entrepreneur
Entrepreneurship involves the creation
process
 creating something new of value
Entrepreneurship requires devotion of the
necessary time and effort
In order to create something new and
make it operational
Basic aspects of being an entrepreneur
(cont..)
Entrepreneurship means assuming the
necessary risks:
Financial
 psychological
 social etc
Basic aspects of being an entrepreneur
(cont..)
Reward for being an entrepreneur:
Independence
Personal satisfaction
Financial
Is it a Get-Rich Quick
Plan?
Entrepreneurship
 Entrepreneurship is very rarely a get-richquick proposition.
 Rather, it is one of building long term
value.
 This leads to long term cash flow
streams.
 Entrepreneurship is a human creative act.
 It involves using personal energy to
initiate and build an enterprise.
Entrepreneurship
 It also requires a willingness to take
calculated risks – both personal and
financial – and then doing everything
possible to influence the odds.
Myths about Entrepreneurs
 Myth1- Entrepreneurs are born, not made
 Myth2- Anyone can start a business
 Myth3- Entrepreneurs are gamblers
 Myth4- Entrepreneurs want the whole
show
to themselves
 Myth5- Entrepreneurs are their own
bosses
and
completely
independent
 Myth6- Entrepreneurs work longer and
harder than managers in big
companies
Myths about Entrepreneurs
 Myth7- Entrepreneurs experience a great
deal of stress and pay a high price
 Myth8- Starting a business is risky and
often
ends in failure
 Myth9- Money is the most important startup
ingredient
 Myth10- Entrepreneurs should be young
and
energetic
 Myth11- Entrepreneurs
are
motivated
solely
by the quest for the almighty
Myths about Entrepreneurs
 Myth12- Entrepreneurs seek power and
control over others
 Myth13- If an entrepreneur is talented,
success will happen in a year or
two
 Myth14- Any entrepreneur with a good idea
can raise venture capital
 Myth15- If an entrepreneur has enough
startup capital, he or she can’t
miss
INTRAPREPNEURSHIP
DEFINING INTRAPREPNEURSHIP
The practice of entrepreneurship within the
confines of the organisation
Creating something new and of value
within the confines of the organisation
Thrives in organisations with an
entrepreneurial culture
Intrapreneurial culture
Intrapreneurial culture:
Employees with talents to act with
freedom to take initiatives or try out
new ideas as if they were running
their own business
Differences between entrepreneurship
and entrepreneurship
Intrapreneurship
 Acts within the confines
of existing organization
 Challenges the status
quo and fights to change
the system from within
 Has “free” resources
found in the organisation
Entrepreneurship
 Acts outside the
organisation
 Challenges the status
quo outside the
organisation
 Has to look for his
resources
Factors retarding intraprenuership
The cost of failure too high, the reward of
success too low
• No space is provided for failure
• No reward for innovative ideas
Inertia caused by established systems that
no one is willing to changed
“we have always done it like this’ If it
ain’t broken, don’t fix it” “changing now
would be too much effort”
Factors retarding intraprenuership
(cont…)
 Hierarchy – the deeper the hierarchy, the more
difficult it is to get permission for anything new.
Support from top management
 Recognition that entrepreneurship culture needs
to be compatible with the overall organizational
culture
 Communication system within the organization is
strong so that entrepreneurs within the company
can be heard
Characteristics of successful
entrepreneurs
Research has shown that
certain traits seem to be
associated with entrepreneurs
Who are entrepreneurs?
Are opportunity driven, not resource driven
Managers ask:
 “given the resources under my control,
what can I achieve?”
Entrepreneurs ask:
 “Given what I want to achieve, what
resources do I need to acquire?”
Good as seeing pattern changes within the
environment
Who are entrepreneurs? (cont…)
“The reasonable man adopts him/herself
to the world: the unreasonable one persist
in trying to adapt the world to him/herself”
The entrepreneur is the unreasonable
man/woman who is motivated by the
dream of things that conventional wisdom
says can’t, won’t or shouldn’t be
Entrepreneurs have therefore stubborn
perseverance
Who are entrepreneurs? (cont…)
Stand up to ridicule
Stand up to failure, good at failure but
See failure as a temporary setback and an
opportunity to learn and do better next time
“success is the ability to go from failure to
failure with no less of enthusiasm”
Who are entrepreneurs? (cont…)
The two magic words of an entrepreneur
“what if …?”
What if telephone didn’t have to be connected
to each other with wires”
Constantly scanning the environment for
opportunities
Who are entrepreneurs? (cont…)
Entrepreneurs create their own future –
get up , look up for circumstances they
want, if they find them, make them”
Characteristics ( cont…)
 A desire to achieve: The push to conquer problems,
and give birth to a successful venture. A strong urge to
build
 Hard work: It is often suggested that many
entrepreneurs are workaholics.
 Desire to work for themselves/need for
independence Entrepreneurs like to work for
themselves rather than working for an organization or
any other individual. They may work for someone to gain
the knowledge of the product or service that they may
want to produce. They seldom are willing to submit to
authority
 Nurturing quality: Willing to take charge of, and watch
over a venture until it can stand alone.
 Acceptance of responsibility: Are morally, legally, and
mentally accountable for their ventures. Some
entrepreneurs may be driven more by altruism than by
self-interest.
 Reward orientation: Desire to achieve, work hard, and
take responsibility, but also with a commensurate desire
to be rewarded handsomely for their efforts; rewards can
be in forms other than money, such as recognition and
respect.
 Optimism: Live by the philosophy that this is the best of
times, and that anything is possible.
 Orientation to excellence: Often desire to
achieve something outstanding that they can be
proud of.
 Organization: Are good at bringing together the
components (including people) of a venture.
 Profit orientation: Want to make a profit; but
the profit serves primarily as a meter to gauge
their success and achievement.
Ingenious and resourceful, they are
cunning, opportunistic, creative and non
sentimental
Innovative, calculating inventor, overoptimistic promoter, organizational
builder. These four terms are used to
describe the characteristics which is not
based on personality but on the type of
opportunity the entrepreneur faces
Visionary – the entrepreneur ha an
enthusiastic vision which is the driving
force of the enterprise. This vision is
supported by an interlocked collection of
specific ideas not available to the market
Persistence and determination - this
helps the entrepreneur to develop
strategies to make the vision into a reality
Risk taker – calculated risks which
includes assessment of costs,
market/customer needs and persuading
others to join and help
Additional Characteristic of successful
entrepreneurs
 Competitive
 Hardworking
 Forceful
 Knowledgeable
 Networking
 Persuasive
 Good communicator
 Takes initiative
 Independent
 Problem solver
 Time conscious
 Leadership traits
 Adaptive to change
 Likes people
Skills and competencies
required for entrepreneurship
What skills are required of in
entrepreneurship
 Technical skills
 Someone in the business must possess the professional
skill and knowledge to generate the company’s product or
service.
 The concept for what product or service the company will
offer must become clear before the venture can succeed.
 Business management skills
 Personal entrepreneurial skills – disciplined, risk taker,
innovative, change oriented, persistent, visionary etc
ENTERPRISE CULTURE
Enterprise culture
 Culture is a pattern of share beliefs and values
that provide the members of an organization
with rules of behaviour or accepted norms for
conducting their operations
 It is the philosophies, ideologies, values,
assumptions, beliefs, expectations, attitudes and
norms that knit an organization or a community
together and are shared by members
Enterprise culture (cont..)
Enterprise culture, therefore can be
defined as a set of altitudes, values, and
beliefs operating within a community or
environment that lead both to the entering
behaviour and aspiration towards self
employment or venture creation
Research on enterprise culture
Research findings indicate that:
Those who have parents or relative who
own small businesses are likely to become
entrepreneurs than those without similar
acquaintances
Those who have worked in small
enterprises are more likely to establish
such enterprises later
Research on enterprise culture
 Those who work in organizations which allow
hem greater deal of independence and freedom
of operations under conditions of uncertainty are
more likely to establish businesses than others
 Those coming from a culture which supports
individual small business ownership whether for
religious purposes, ethical or moral reasons are
more likely to establish businesses than others
outside the culture
Components of an enterprise culture
1.
Abundant positive role models of successful independent
businesses
2.
Ample opportunity for familiarization with small business tasks
especially during youth
3.
Network of independent businesses family contacts and
acquaintances reinforcing familiarity and providing market entry
opportunities
4.
Provision of formal/informal knowledge and insight into the
process of independent business management
5.
Opportunity to practice entrepreneurial attributes reinforced by
society culture during formative years
ENTREPRENEURIAL
BEHAVIOUR THEORIES
Entrepreneurial behaviour theories
 Entrepreneurial behaviour looks at activities,
interactions, competences and feeling of
entrepreneurs
 There exist a number of schools of thought
which view entrepreneurship from a
fundamentally different perspective.
 Such perspectives are:
Economic
Psychological
Social
Managerial
Economic theories perspective
 Economic theories of entrepreneurship focus on the
effects that economic environment has on
entrepreneurial activities and what impact entrepreneurs
have upon the economy
 From the economic perspective, an entrepreneur is a
person who brings together the resources or factors of
production into combinations that make their value
greater than before
 Economic theories help in providing missing links in the
economic environment that are necessary for business
startup and survival
Economic perspective (cont…)
 Proponents of economic theory believe that
entrepreneurship and small business
development is influenced by factors such as:
Market structures and opportunities
Investment climate
Government restrictions or encouragement
 An entrepreneur is seen as a person who
specializes in taking judgmental decisions about
the coordination of scarce resources (Casson,
1982)
Economic perspective (Cont..)
 Classical economist like Keynes emphasis
optimization of existing resources in order
to reach equilibrium.
 Here the entrepreneur is defined as:
 The stabilizing force that brings market forces
closer to an equilibrium
 He/she shifts economic resources out of an
area of lower risk/productivity to areas of higher
productivity/greater yield
Here the entrepreneur is defined as:…

An entrepreneur is the person involved in allocating
scarce resources in order to produce goods/services
with utility, hence a forth factor of production he/she
distributes and organizes resources

An entrepreneur is the stabilizing force which brings
markets closer to equilibrium and which makes market
forces work more smoothly

The entrepreneur is the person driven by profit motive
(profit maximization and cost minimization) and gains
socially and financially from economic activities.
Here the entrepreneur is defined as:…
 Entrepreneurs create a dynamic disequilibrium in the economy as
opposed to static equilibrium
 This he does by creating innovations which introduce new
combinations and production
 Entrepreneurial activity is a destabilizing force that starts the
process of creative destruction, the essence of economic
development
 Entrepreneurs are not manage who undertake routine activities on
the basis of past experience without idea of change, rather they are
risk takers in the area of uncertainty and engage in activities that
have not been undertaken before
In summary, the economists see
entrepreneurs as:
 Risk takers or the bearer of uninsurable risks
(Cantillon, 1755)
 A combiner of resources or factors of production
such that wealth is created (Say, 1832)
 Innovators who bring new combinations into
production process (Schumpeter, 1942)
 Schumpeter saw entrepreneurship as the engine
of economic development which resulted in new
combinations (called an enterprise)
The new combinations may include:
Introductions of new products or services
Introduction of new method s of production
Opening on new markets
Finding new sources of supply of raw
materials or components
Providing induction reorganization
Neoclassical economist view
Implications/comments on this theory
You can train entrepreneurs by enhancing
their creativity and supporting innovating
ideas
People can be trained to sharpen their
decision making abilities to see and
analyse opportunities creatively
SOCIOLOGICAL THEORIST
PERSPECTIVE
 According the this perspective environmental factors
such as belief systems, cultural values, social
structure for the basis of entrepreneurial behaviour
 Studies by some sociologist indicate that the decision to
become self employed is related to having association
with another person who is a close relative
 Social interactions provide potential entrepreneurs with:
 Market/market information
 Credit
 Social support
SOCIOLOGICAL THEORISTS
PERSPECTIVE (cont..)
The sociological theories have been based
on the premise that members of a given
society generally adhere to system of
structured roles which can encourage or
discourage entrepreneurships.
Entrepreneurship activities will be high in
those cultures where entrepreneurships is
held in high esteem.
SOCIOLOGICAL THEORISTS
PERSPECTIVE (cont..)
 The social influence of entrepreneurship
behaviour can be explained in terms of:
 Family background - the general hypothesis is
that those whose parents are self employed or
business owners are significantly more like to
become business owners themselves
 Religion – research findings indicate that some
particular religious persuasions tend to have
entrepreneurial spirit. For example, Jews are
commonly perceived as having an enterprising
nature
SOCIOLOGICAL THEORISTS
PERSPECTIVE (cont..)
 Ethnicity – research indicates that some ethnic
groups are more inclines to entrepreneurial
activities than others
 Education and training – research studies
indicate that entrepreneurial activities can be
enhances through educational and training
programmes .Relevant training provides
prerequisites for business ownership and helps
in reducing business failure rates
 Cultural values – some cultural values
discourage/encourage entrepreneurship
Comments of this perspective:
 It perpetrates the myth and stereotypes
in society related to superiority and class
system and are not healthiest for
development

PYSCHOLOGICAL THEORISTS
PERSPECTIVE
 The psychological theories of entrepreneurship
are based on traits and personality
characteristics that are exhibited by successful
entrepreneurs
 The central focus of this perspective is that the
entrepreneurs have unique values, attitudes
and needs which drive them to business
creation
 People behave according to their values, and
attitudes irrespective of the different situations
they might be
PYSCHOLOGICAL THEORISTS
PERSPECTIVE (cont..)
 The psychological school focuses on personality
factors
 Believe that entrepreneurs have unique values
and attitudes towards work and life
 This propel the individual to behave in a certain
way
 According to this theory, some people are more
likely to become entrepreneurs because of their
mental attitude for independence or with
dissatisfaction with operating under the direction
of others
PYSCHOLOGICAL THEORISTS
PERSPECTIVE (cont..)
Entrepreneurs, as other people acquire
these values attitudes and needs as they
grow up from:
Families
Schools
Churches
Communities
These values are learned in the process of
socialization into a culture.
PYSCHOLOGICAL THEORISTS
PERSPECTIVE (cont..)
 Since values are leaned early in life ad are well
established prior to adulthood, characteristics
can only be reinforced in those who portray
them or have them in latent (dormant,
concealed) form
 It would not be cost effective to try to develop
them in people who do not possess them but to
reinforce them in those who already have them
PYSCHOLOGICAL THEORISTS
PERSPECTIVE (cont..)
 The major distinguishing features, or quality of
characters that have been widely explored within the
psychological perspectives that make entrepreneurs
different from others are:
 Need for achievement
 Locus of control
 Risk taking propensity
 Positive self image
 Initiative
 Independence
 Future orientation
 Goal setting
 Time bound planning
 Environmental searching
PYSCHOLOGICAL THEORISTS
PERSPECTIVE (cont..)
Extreme psychologist further suggests
that:
The entrepreneur has an ability, sixth sense
and instinct which is inborn
The entrepreneur portrays intuition, energy,
persistence and self-esteem
Entrepreneurs according to this version are
born as they have natural abilities, training
cannot influence in any way
Comments of this perspective:
 It perpetrates the myth and stereotypes in
society related to superiority and class system
and are not healthiest for development
 It simply says people are not equal and it
would be difficult to organize
training programmes suitable for all
 It can give negative attitude towards young
people who might not be lucky to possess the
unique abilities and traits
MANAGEMENT PERSPECTIVE
 This school emphasize organisation of resources in a
systematic way to attain maximum profit
 Entrepreneurs are therefore organizers of an economic
resource venture
 They organise, own, manage and assume risks
 Entrepreneurships is therefore a series of activists which
focus on the central function of managing a business
such as production, planning, marketing,
coordinating, controlling, evaluating and financing
Management perspective (cont..)
 The managerial school therefore emphasizes on
improving a persons capacity through
developing his/her
 Analytical
 Rational
 Cause-effect relationship
 Another stand of management view
entrepreneurs as leaders on people
 They have the capacity to adapt their styles in
order to get maximum out of people
Management perspective (cont..)
 They view people as their greatest resource and
realize that they cannot accomplish goals alone
but must depend on other people and their skills
 Training is therefore possible by knowing how to
motivate, lead and direct people
 Basic questions that people who follow this
school of thought would be asking themselves
are:
What are my plans?
What are my capabilities?
What are my credentials?
How do I get most from the people around me?
CONCLUSION
1. All these theories provide a useful insight in
understanding and explaining entrepreneurship
2. It is possible that they can complement each
other in developing a rich entrepreneurial
programme
3. Pre- starters can benefit a lot form
psychological, social and economic schools of
thought
4. Start ups and on going entrepreneurs can
benefit more from management school
Entrepreneurship Process
Is everybody who starts a
business an entrepreneur?
Appreciating entrepreneurship
Right attitude:
Positive – entrepreneurship can be a
way of life
Not a get rich quick business
Be motivated to an entrepreneur
Entrepreneurship Process
Steps:
Appreciating entrepreneurship
Idea generation
Opportunity assessment
Business planning
Registration
Financing
Start up
ENTREPRENEURIAL
MOTIVATION
ENTREPRENERIAL MOTIVATION
.
ENTREPRENEURAIL MOTIVATION
Entrepreneurial motivation is affected by
two main factors
internal motivating factors
External motivating factors
Internal motivation
Internal motivation is the inner drive you
get as a result of desire to achieve a
certain goal or fulfill some needs
The goals are the aspirations that define
the base of inner drive of an entrepreneur
Internal factors affecting motivation
 Self actualization
 One of the powerful motivators that form the base for
inner drive on an entrepreneur is self actualization.
Usually a successful venture offers various form of
reward in terms of benefits identity and prestige. Having
achieved the basic human needs, entrepreneurs become
more confident in their abilities to realize their capability
of achieving more
 Profit maximization
 The drive to maximize profits will make potential
entrepreneurs work harder, be more innovative and even
venture into other enterprises
Internal factors affecting motivation
(cont…)
 Desire to succeed
 This is an aspiration to achieve success toward ones
welfare to maximize pleasure and happiness. This will
give an entrepreneur public appreciation and recognition,
especially if they have accomplished difficult tasks where
others have failed
 Survival
 An entrepreneur has to face many challenges,
completion, internal and external forces. To succeed,
entrepreneurs have to strive to overcome these
obstacles. This sprit of survive sustains them through a
challenging environment
Internal factors affecting motivation
(cont…)
 Adventure
 This is a way of taking risks or challenges without knowing the end
result. This gives a potential entrepreneur an opportunity to explore
and this helps and enhances his knowledge and innovativeness
 Independence/self reliance
 An entrepreneur does not like being controlled by others. They have
their own original thoughts and ideas and generally do not conform
to routine jobs and practices. To satisfy their needs they seek
opportunities that provide independent hence become masters of
their own activist and taking full responsibilities for their outcome
 Power
 The desire to feel in total control of all situations
External motivation
What external factors would motivate me
to start a business?
External motivation factors are those
factors that expose you to the available
public resources and facilities which
would encourage you to start a business
External motivation factors
 Credit facilities
 These are the facilities which would help you to acquire
the necessary capital outlay to be able to set up an
enterprise
 This capital outlay will assist you to purchase raw
materials, machinery, equipment and other inputs
 Infrastructure
 Includes building, communication, information
technology, transport and other auxiliary services and
utilities
 Lack of adequate infrastructure creates physical
constraint to you when implementing your ideas.
 Access to business information
 This includes investment information, small
business development assistance and
consultancy services, fairs and exhibitions
 Training
 In entrepreneurship, small business
management, business planning, services,
Access to technology
 Technology linkages through research institution
 Business incubation services – to guide
growth
 Access to markets
 Access to local markets though subcontracting,
international or regional markets through trade
agreements e.g. AGOA, COMESA
 Export and import incentive schemes:
 These are government schemes used to provide
concessions to you, when you are involved in the export
or import activities. Concessions on taxes, customs and
excise duties, speedy licensing with regard to export and
importation of machinery equipment and raw materials
by the government will reduce your operating costs if
your are involved in import and export activities. This will
reduce your costs of imports and encourage you to set
up an enterprise or expand the existing one
 Pricing policy
 This is part of government policy which assists
or encourages you to produce and sell goods
and services
 It is important that a pricing system must take
into account the total cost require to produce a
good or services whereby you are able to
recover production cost and be left with
reasonable profit margins which could de used
to improve your business

 Export processing zones (EPZ)
 This is a government scheme to assist investors
manufacture internally competitive goods aimed
entirely for export markets
 You as a local invest will benefit from not paying
heavy freight costs, additional fees on insurance
in transit, no delays form lengthy shipping
durations when you purchase from EPZ
 If you invest in the EPZ you will benefit form
exemption form export earning, raw materials,
capital transactions, inputs relating to
manufacturing activities
Idea generation – sources of business
ideas
Vocational training and experience
Hobbies
Through networking, talking to bankers,
sales people, peers
Observing the environment – the
unexpected, process needs, change in
technology, demographic changes, law
changes
 Shows, exhibitions, fairs
 Brainstorming in groups or community
 Newspapers and magazine – from special features ( e.g.
on value addition), to tenders, adverts, etc
 Survey
 Talking to successful business people - they can advise
you on certain businesses that are profitable
 Talking to potential customers - one can get to know
their preferences for certain products or services
Business opportunity
Not all ideas are opportunities
An opportnity is an attractive project idea
which an entrepreneur accepts for
investment on the basis of what he knows
about the possible success of the project.
Characteristics of a good business
opportunity
A business idea will be a business
opportunity if it has the following
characteristics:
Demand
There is a good market scope for the
product – the available products are not
enough to everybody or its not what the
customers want – there is a gap in the
market
Good return on investment – what is the
expected return on investment, when are
you likely to break even
Availability of inputs – raw materials,
technology, labour
Skill required available – especially
specialized skills
Political and legal framework
Opportunity assessment/validating an
idea
Purpose:
To assess whether an idea is feasible
(workable) and viable (give the owner
good returns)
Validation process
This requires some sort of feasibility studes
which will look at four things:




Market
Your strengths
Profitability
Environment
The market
Is there a market
Is there a need that needs to be fulfilled
Do you understand the customers
What is the industry trends
Your strengths
Do you have:
 The required skills and appropriate
technology
An entry strategy
Organizational plan (Technical and
management)
Enough capital to finance the business
Profitability
How profitable is the business
How long will it take to break even, can
you wait that long
What are the expected risks
The environment
 Evaluate the environment in terms of:
Technology
Resource available
Government policy and laws
Infrastructure
Market conditions
Culture
competition
Economic assessment
Business trends
Business Planning
“Failing
to plan is planning to
fail”
Business plan – what is it?
A written document with specific
procedures for achieving results within a
specified period of time
It determines what a a business will is, will
be and should be
It is a document which summarizes a
business opportunity ( why the opportunity
exists and why the management team has
what it takes to achieve it)
Business planning (cont…)
It defines and articulates how the
management team will seize and execute
the opportunity identified
It specifies procedures for achieving
objectives/results within a specified period
of time
It states:
What will be done, how it will be done, by
who the work will be performed, under
what time constraints
It is a document which defines the most
desirable, most timely, least hazardous
route to a given destination
Why plan
To raise capital – to convince investors
that the new venture:
Has an opportunity
Has an entrepreneurial talent
Has management talent to exploit the
opportunity
Has rational and coherent and believable
programme for achieving revenue and
expenses targets on time

Why plan
As a means for guiding business growth
to understand growth
to guide growth
it is a flight stimulator
gives confidence in decision making
helps in redefining strategy and in making
difficult decisions
Claries the venture financial requirements
Why plan
Save management time
Ensures management and market
opportunities are not missed
Provide for effective utilization of firms
resources
Encompasses strategies for carrying out
decisions
Provides systematic feedback as a means
of measuring results
Why plan (cont…
Analyse the impact of competition
Track changes in customers lifestyles,
wants and needs
Aid in decision making
Business plan outline
Phase 1: the industry the company,
products or services
Phase 2: marketing research, analysis and
marketing plan
Marketing research and analysis – customers,
market size, trends, competition, estimated
market share
Marketing plan – overall marketing strategy,
pricing strategies, sales tactics, advertising and
promotion programs, distribution plan
Business plan outline ( cont…)
Phase 3: operational analysis and
organizational plan
Designer and development plans
Manufacturing and operational plans (
geographical location, facilities and capacity
improvement, strategy and plans
The management team ( organizational
structure, key personnel, compensation,
incentives, support advisors
Business plan outline ( cont…)
Phase 4: financial analysis and plan
The economics of the business – gross and
operating margins, profit potential, fixed and
variable costs
Financial plan –pro forma income statements
balance sheet and cash flow, breakeven
analysis
Proposed company financing – desired,
sources and uses
Business plan outline ( cont…)
Phase 5: Executive summary
Summary description of the business
The opportunity and entry strategy
Target market and sales projection
Competitive advantage
Economics and profit potential
The team
Financial plan
Overall schedule, critical risks and assumptions
Entrepreneurship financing
Purpose of financing
Types of finance
Sources of funds
Accessing funds
Utilization of funds
Purpose of financing
To start a new business
To expand a existing business
To meet an emergency situation
To meet normal operating costs
Types of finances required
Long term finances usually for buying fixed
assets
Short time finances for buying stocks,
meeting operational expenses, repairs etc
Sources of financing
Sale of personal assets
Savings
Profits that is put back into the business
Donation from friends and relatives
Trade credit
Mortgage
Hire purchase
Bank loans:
Overdraft
Loans – secured or unsecured
Specialized loans ( for specific
sector)
Government and donor funding
What determines which source to go for?
Purpose
Amount
Repayment
Terms and conditions
Security
Availability
costs
Getting started
Meeting all legal requirements
Registration
Identification and recruitment of staff
Creating commitment and buy ins
Opening bank account