Untitled Quiz

Business Basics - Establishing a Business

• A business is an organization or activity that provides goods or services to customers with the goal of making a profit. It involves the exchange of products or services for money or other forms of value.

Objectives

• The concept of entrepreneurship
• Reasons for wanting to start a business
• Personal traits and leadership qualities
• Role of the entrepreneur in conceptualizing, planning, accessing funds, organizing, operating and evaluating the performance of a business.

Entrepreneur & Entrepreneurship

• An entrepreneur is a key factor in production who organizes resources and takes on risks. They start new businesses, aiming to make a profit by spotting opportunities and bringing together the resources needed to succeed.
• Entrepreneurship is the process or act of organizing resources and accepting risk and uncertainty for the purpose of capitalizing on opportunities with the aim of achieving profit.

Why Become an Entrepreneur?

• Financial independence
• Self-fulfillment
• Self-actualization

Personal Traits and Leadership Qualities

• Creative: Using imagination to invent something different or original.
• Innovative: Finding new methods or ways of doing things.
• Flexible: Easily adapting to changes.
• Goal-oriented: Staying focused on the business goals.
• Persistent: Keeping working even when things get tough.
• Highly committed: Strong commitment leads to success.
• Able to take calculated risks: Looking for opportunities and believing in success.
• Able to handle uncertainties: Managing risks that cannot be insured.

Roles of an Entrepreneur

• Conceptualizing: Formulating ideas about the type of business and product, and production size for profit.
• Planning: Planning for the future, short and long term, the organization of the business, setting goals, and assigning duties to managers.
• Accessing Funds: Finding money to start or grow the business.
• Organizing: Bringing together the other factors of production to ensure efficiency and maximum profits.
• Operating: Deciding how to run the business, making plans, getting necessary resources, and handling different parts, like production, sales, managing money and people.
• Evaluating Performance: Evaluating the production process to see if the goals have been met. Reviewing problems and failures to avoid them in the future.
• Bearing Risks: Taking out policies against insurable risks, and bearing uncertainty.
• Reaping Profits / Bearing Losses: Selling goods/services for more than production cost yields profit; otherwise, losses.

Steps in Establishing a Business

• Conceptualization
• Research (market probe)
• Identification of resources (financial, human, material)
• Creation of a business plan
• Acquisition of funds
• Operation of the business

Reasons for preparing a business plan

• To ensure careful research into feasibility
• To attract potential investors
• To source financing
• To guide the operations when making decisions

Elements of a Business Plan

• Executive summary
• Operational plan
• Business opportunity (description of product or service)
• Marketing plan
• Financial forecast

The Executive Summary

• The executive summary briefly states the proposed venture's key features, including business name, type, owners, qualifications, description of product, financial needs, and overview of success plan.

The Operational Plan

• This plan details the day-to-day operations of the business, such as location, staff, equipment, and suppliers needed to operate the business.

The Business Opportunity

• Describes the product or service, why it's needed in the market, how it stands out from competitors, target customers, and the problems it solves.

The Marketing Plan

• Describes the strategy for reaching and attracting customers, who the customers are, how the business stands out from competitors, the pricing strategy, and promotional methods.

The Financial Forecast

• Predicts the business's income and expenses, start-up costs, sales forecasts, profit and loss statements, and cash flow. It determines if the business will make a profit.

Feasibility Study

• Viability: Assesses if the business idea can succeed.
• Costs: Identifies all costs of running the business (materials, equipment, labor, borrowing, selling, government). The timing of those costs is also an important aspect.
• Sources of Finance: Assesses if the business can attract investors, or loans, and when payments can be made.

Research

• Primary Research: Gathering original data, e.g., surveys, interviews, focus groups, and observations.
• Secondary Research: Using existing information, e.g., sales records, official publications, statistical reports, trade journals.

Planning in Business

• Setting goals and outlining steps to achieve them.
• Setting the direction of the business, resource allocation, and budgeting.

Planning vs. Operations

• Planning: Deciding what needs to be done.
• Operations: Implementing the plan in day-to-day activities.

Types of Plans

• Short-term: 0-1 year, daily/weekly/monthly targets
• Medium-term: 1-3 years, covering growth strategies, product launches, and optimizing efficiency for quality and quantity.
• Long-term: 3+ years, covers vision, future direction, and company strategy. Covers expansion and new products/services.

Summary

• Research and Feasibility Study: Essential for creating a sound business plan.
• Primary research helps with understanding customer preferences and market demand, while secondary research provides broader market data and competition analysis supporting each section of the Business Plan, from marketing to financial forecasts.