Practice Of Entrepreneurship EED 218 Notes PDF

**PRACTICE OF ENTREPRENEURSHIP COURSE CODE: EED 218.** **Introduction** An entrepreneur is one who assumes the responsibility and the risk for a business operation with the expectation of making a profit. Entrepreneurship connotes action rather than static events. It involves taking action necess...

**PRACTICE OF ENTREPRENEURSHIP COURSE CODE: EED 218.** **Introduction** An entrepreneur is one who assumes the responsibility and the risk for a business operation with the expectation of making a profit. Entrepreneurship connotes action rather than static events. It involves taking action necessary to analyze business opportunities to launch and/or grow a business, to finance the venture and possibly to harvest it Entrepreneurship can be defined as "the willingness and ability of an individual or group of persons to search for investment opportunities, establish and run a business unit successfully." The entrepreneur generally decides on the product, acquires the facilities, and brings together the labor force, capital, and production materials. If the business succeeds, the entrepreneur reaps the reward of profits; if it fails, he or she takes the loss**Scope of Entrepreneurship.**\ Entrepreneurship as a concept has a lot to do with how several activities are\ carried out in an organization for effective operations, for example:- a. To identify business opportunities b. To make choice of business opportunities c. To decide on the form of business organization d. Selection and blending of the enterprise resources for maximum utilization. e. Good leadership, motivation of employees, coordination and monitoring. f. Assumes risk of different dimensions, etc. **CHARACTERISTIC OF ENTREPRENUERSHIP** There are a great number of common characteristics that are shared by successful entrepreneur. The top ten characteristics found in entrepreneurs are.... 1. Entrepreneurs will take a risk on new opportunities. 2. Entrepreneurs always learn from their mistakes and don\'t make it twice. 3. Entrepreneurs they love what they do and know their market. 4. Entrepreneurs are very passion about succeeding in life. 5. Entrepreneurs are disciplined and can hold them self-accountable. 6. Entrepreneurs are full of physical energy. 7. Entrepreneurs like to be in control. 8. Entrepreneurs are very confident and believe in themselves. 9. Entrepreneurs are willing to keep learning new skills. 10. Entrepreneurs are good leaders and can lead a team to complete a common goal. 1. **Willingness to take action**. This is the first and most important factor for each potential and current entrepreneur. All other factors presented below, won\'t h a v e importance if he or she didn\'t take a real action. 2. **Knowledge**. They must have superior knowledge about business issues for business that they start. 3. **Creativity**. They must have creativity to be unique and continuously improves business. 4. **Skills**. Each entrepreneur and each business need different entrepreneurial skills that in some cases can be crucial for business success. 5. **Intelligence**. They must be intelligent to manage all possible situations and to solve the hardest problems that will be a constant in business life. 6. **Patience**. They must be patient and to continue after losing the first battle, because the war is not finished. It\'s only the beginning. 7. **Persistence**. Persistence simply is a refusal to give up from something, or ability to keep your actions against your personal feelings that you\'re not ready for such actions.. 8. **Teamwork**. Nobody can achieve anything alone so this is true also for an entrepreneur because they\'re not a "Superman". They must be team players for their and business success. 9. **Calculated risk**. More important is how a successful entrepreneur takes a risk? The word **calculated risk** is the most appropriate word for this feature 10. **Self-Confidence**. I think that nobody would be an entrepreneur if don\'t have self-confidence that he knows how to start and manage their own business. 11. **Experience**. They must employ all present and previous experience they had into the business. 12. **Talent**, **Honesty**, **Connections**, **Luck etc.** **CONSEQUENCES OF OVER- RELIANCE ON WAGE EMPLOYMENT.** Wage employment is a situation where a person called a servant is employed by an employer called master under a contract of service to do work for the master and in which the servant is under his control and direction. The servant is always provided with tools to do the work and directed on how the work should be done. And the master pays him salary usually at the end of every month. **SOME OF THE CONSEQUENCES OF OVER RELIANCE ON WAGE EMPLOYMENT ARE:** i. ***Lack of job security*:** The wage earner can lose his job anytime. There is no assurance that the employer will continue to employ him. ii. ***Fixed small income:*** The income of the wage earner is fixed and small when compared with what successful entrepreneurs earn from their business iii. ***Lack of independence and freedom:*** There is no independence and freedom as the wage earner is under the control and direction of his master. The employer can transfer or redeploys him anytime. iv. Lack of initiative: A wage earner lacks creativity and initiative as he is always engaged in the same kind of duty and has no much time to think. v. High rate of crime in the society Over- reliance on wage employment has resulted in youth restiveness in some regions of the nation and some have decided to engage in armed robbery, vi. High rate of rural urban migration: Over reliance has also led to some evil acts like human trafficking, prostitution etc. there is also mass exodus of youths from the rural areas to the urban cities in search of jobs and this has led to neglect of the agricultural sector and other lucrative businesses. vii. Human trafficking/prostitution/death viii. Regional crises ix. Lack of creativity. **Discussion\ 1. Define wage-employment.** **2. Mention any three dangers of over-reliance on wage employment.** **Some of the advantages of self-employment are:** i. It creates a sense of fulfillment and satisfaction ii. It inculcates a sense of independence iii. It encourages initiation and creativity iv. It creates employment for others v. It is an opportunity for higher income and status vi. The entrepreneur leads rather than follows ***Roles of entrepreneurship in the development of the economy\ ***The following are some of the roles of entrepreneurship in the development of the economy. a. ***Products and services**:* The fundament economic function of business is to make and distribute the products and services that people want. Business entrepreneurs fulfill the role both to discover consumer demands and to do whatever is required to satisfy them. b. ***Employment***: Entrepreneurs are the major providers of real jobs that is employment for people who need and want to work. The level of gainful employment is crucial to a nation‟s well-being. c. ***Income wages, salaries and profits:*** Through its employment creation business provides an income base to its stakeholders in terms of salaries, wages, profits and taxes. The task of business to enable the earning of wages, salaries and profits is of crucial importance in order to pay taxes and to provide disposable income to finance consumer spending and savings (investment capital) d. ***Provision of social services:*** Social institutions and services are provided for by the taxes on the incomes of individuals and businesses. E.g. social amenities, security etc. e. ***Investment in productive assets:*** A business needs capital investments to create productive capacity, innovative technology, modernization and the expansion of its productive assets. This is generated through retained profits, borrowings or through sate of equity. f. ***National well-being:*** Most of the capital goods, commercial and social services as well as technological knowhow required to satisfy our needs come from business activity, i.e. through economic development of privately owned resources. g. It changes and rejuvenates market competition. Entrepreneurs stir up the water for competition in the local and international market place. Entrepreneurs are called agents of change in a market economy, because they see environmental change as an opportunity and the use of factors of production to produce goods and services, etc. **Discussion** **1. What do you understand by self- employment?** **2. List the advantages of self- employment.** **THE LEVELS OF ASPIRATION, PERSEVERANCE AND EFFICIENCY OF AN ENTREPRENEUR.** The major asset that can be used to minimize risk in small business is **Aspiration, Perseverance and Personal Efficiency of an Entrepreneur.** - **Aspiration:** This means having a strong desire to achieve something noble. You have the motivation to achieve success and accomplish all the activities you engage in. - **Perseverance:** To persevere is to continue firmly in spite of difficulties. It is a continual steady effort made to fulfill some purpose. There are many - **Personal Efficiency:** This is to be able to work well, quickly and without waste. It is to produce the desired result. - **Creativity** is the ability to process information in such a way that the result is new, original and meaningful. It involves new ideas and the capability of the entrepreneur to do something in a new way that nobody has thought of. - **Innovation** is the ability to apply new ideas that will enable you to undertake activities differently. - Information on different issues and fields is an important input for being innovative. Entrepreneurs therefore place great value on information and are always alert and constantly engaging in research. - **Primary Sources**: When the idea is first conceived by the entrepreneur (which could be through observation or brain storming). - **Secondary Sources**: Are originated from customers, research and development, employees, competitors etc and these can be internal or external. a. ***Internal Sources*** i. Consultants/Top Management Decision ii. Research and Development b. ***External Sources,*** Customers, Employees: Sales personnel and advertising research, distributors, competitors, trade associations/Periodicals, magazines/newspapers/almanacs, Business and educational Organizations, Social Interaction, Books /general references like encyclopedias, dictionaries, workshops, seminars, etc. - ***Speculative Risk:*** This involves a chance of either profit or loss. It includes the chance a firm takes to make extra money by buying new machinery, acquiring more inventory and other decisions associated with relatively low probability of loss. - ***Pure Risk:*** The threat of loss with no chance for profit e.g. threat of fire, theft or accident if such events occur, a company losses money, but if the events do not occur, the company gains nothing. a. **The Loss of a Competitive Niche** A competitor will attempt to gain your competitive niche, if the niche becomes profitable enough. ***Remedy:*** This risk can be minimized by constantly looking for a new niche to keep your business as vigorous as it was at initiation. b. **Changes in Demand** the tastes of the consuming public are difficult to predict. Demand is altered by a number of uncertain factors.\ **Remedy:** You must be constantly be aware of what is occurring in your market. A constant re- evaluation of the factors of the business plan is extremely important c. **Damage to the business** This category covers such areas as natural disasters, theft, fraud, vandalism and carefulness shop -- lifting and employee pilferage are constant problems. Wind, storms, rain, flood and lightening are all damaging disasters. **Remedy:** Insurance is the key protection for disaster remedy that because of inflation you may not be able to replace your assets at their initial cost. d. **Improper financial planning.** This has been noted by almost everyone concerned with small businesses as a primary problem. An inability to predict cash flows and cash equipments can create serious problems. e. **Death of key individuals** A number of organization s grows in size, but remain a " one man company". The majority of contracts and operating produces are all rested in a single individual **Remedy:** There are two ways of protecting your business from the traumatic experience of losing a key individual. I. **Money:-** Money is necessary to obtain goods and services that an entrepreneur wants. A major way in which money is obtained is employment. II. **Materials:-** Determination of the future raw materials requirement of your product line is very important, and government policy is more supportive to business and industries that their raw materials are locally sourced than those depending on import for their input III. Machinery and equipment:-Useful equipment may be as simple as a small knife or a paper clip. It may be a telephone installed by the telephone company, a microwave over with digital electronic controls, or a pocket computer.\ **Human Resources** I. **Energy: -** Good health is essential to maintaining a high energy level. Adequate nutrition, rest and exercise are basic necessities.. II. **Skills:-** The entrepreneur should determine the level of skilled, semiskilled and unskilled labour required for the manufacture of the product.The environment can be scanned for selecting the appropriate combination of skills required. III. **Knowledge:** - A real best for life and an active curiosity stimulate learning. Reading, observing and listening are ways of staying in the main stream of life. Each individual must take responsibility for acquiring a certain amount of knowledge by developing communication and listening. IV. **Time: -** Everyone has the same amount (24 hours a day and 168 hours each week). Any effective entrepreneur or manager needs to know that "the unique difference between success and failure is time". Time is a very precious asset which cannot be stored and cannot be recouped. **LEADERSHIP SKILLS AND MOBILIZING RESOURCES.** A leader should have a vision, idea or objectives that show followers where they should be headed. Allan (1999) defined leadership as „a process whereby one or more persons exert influence over the members of a group. According to sheers (1999), leadership is defined as when a person can influence others to do something at their own violation, instead of doing something because it required or because they fear the consequence of non-compliance. 1. **Energy:** A good leader should be energetic and not weak person. A capacity to performing a wide field of activities appears necessary for leadership. Both mental and physical energy are required. 2. **Emotional stability:** a leader must be emotionally compact and not easily\ irritated. An effective leader is fee from bias, eh is consistent in is action and refrains from the use of anger, that is, not easily provoked. 3. **Knowledge of Human Relation:** A leader needs to know as much as possible about human behavior, that is, how human being behave. He must persuade other who are involved with business to gain there support, and so, to be successful. 4. **Capacity:** this is the ability to look at things objectify and also understanding\ them from others‟ point of view. A leader listings carefully to everyone connected with the business, and translate comments into actions. He always investigates reasons for both new and lost customers. 5. **Personal Motivation:** The desire for leadership must come from within an individual. Successful leaders are doers. They make no excuses, and they do not blame other. They take risks and live with their uncertainty. 6. **Communication Skill: A** leader must be able to talk and write clearly, forcefully and in languages understandable to his subordinates 7. **Objectivity: A** leader is objective in relationship with others. He seeks factual evidence and causes for behavior 8. **Persistence:** the effective leader keeps trying until the right combination occurs. The same mistakes are not made twice. He has the ability to continually look for new methods, products or approaches.. **Constraints of entrepreneurship and problems solving techniques.** i. **Lack of adequate capital** An Entrepreneur is severally limited in his ability to raise initial capital. ii. **Lack of experience in the line of business** Every business undertaking requires its own peculiar skills, abilities and basic experience. Most small business owners that have excelled had prior experience in their lines of business. iii. **Lack of skilled Employees** Most employees of small scale business are relation of the owners. These employees are not usually experts or skillful in the business line, but because the small business owners cannot afford to pay skilled workers, they use these unskilled or semi-skilled employees. iv. **Inadequacy of infrastructural facilities** Infrastructural facilities such as good roads and electricity are necessary facilities for business growth and profitability. Good roads will not only encourage people to patronize a business, but will equally reduce cost of transportation and carriages of raw materials and finished goods to retailers and sales outlets. v. **Natural disaster :**A natural disaster is any occurrence that is external to a business, therefore cannot be controlled by business owners. These include thunder storm, flood or fire or sudden death of the owner, which can wipeout the enterprise. In Nigeria, crises in a town or city usually result in aggrieved youths burning and destroying both business assets and private property.\ vi. **Poor competitive position :**The business environment especially the industry segment is becoming more competitive. Therefore to succeed, business must have good strategies and other very potent tools needed to beat or meet competition. vi. **Higher direct costs :**A small enterprise cannot buy raw material, machinery or supplies as cheaply as a large company, or obtain a large producer‟s economies of scale. So per unit production costs are usually higher for a small enterprise. vii. **Narrowed product line :**The small firm is usually limited to a single or small product or service rang, so that in times of trouble it cannot diversify activities as can large -- scale enterprises. viii. **Lack of creditability** The public accepts a large company‟s products because its name is well known and usually respected. A small enterprise must struggle to prove itself each time it offers a new product or enters a new market. ix. **Change in government policies** There are complex laws, regulations and government agencies and their actions which affect the formation and operation of enterprises. Some entrepreneurs or managers of small enterprises often find it difficult to understand and interpret government policies, regulations, actions, concessions, etc i. **Entrepreneurship education** The entrepreneurship should start from secondary school up to tertiary institution and at all level entrepreneurs‟ education in schools should be available for students and researchers from all terms. ii. **Creating a more SME** -- friendly regulatory and administrative framework A real reduction and implication on administrative and regulatory burdens is needed in relevant areas for business, such as taxation, employment, etc. policy makers should provide support for SMEs in regulating markets or protecting the public interest iii. **Provision for adequate infrastructural facilities\ **Infrastructural facilities need by small business include: roads, land electricity and pipe- borne water supply. All these facilities are provided through heavy capital outlay and it is the government that are responsible for their provision as essential services should therefore, improve on the provision of these facilities, especially the electricity supply. iv. **Acquisition of management skill and abilities** Management skills and ability are necessary and fundamental factors for the\ success of any small business. Management is a complex task that requires necessary skills and ability for effective and efficient utilization of both human and physical resources of an organization. v. **Use of modern technology :**Another source of success for a small business is the adoption of modern technology and scientific approach in solving managerial and business operational problem. vi. **Insurance for measurable risks :**All businesses are exposed to risks. Those risks that cannot be calculated in the event of occurrence are known as non- insurable risks. Measurable risks can be transferred to insurance companies through regular payment of a properly calculated premium. **Achievement Motivation as a Factor for Success**. The role played by achievement motivation in professional success is undisputed. Apart from employee intelligence, it is one of the most important characteristics determining an employee\'s performance, especially in job situations characterized by ample capacity for the use of individual initiative, the need for autonomous decision making, and minimal external constraints. Managerial positions and consultancy jobs are typical examples. A detailed measurement of achievement motivation is especially useful in two areas of personnel work: for the selection of new employees, and as a starting point for individual further development. We have devoted many years of research work to examining both issues, developing a test process for measuring job-related achievement motivation, the Achievement Motivation Test (AMT), and a training program for improving achievement motivation **THE VARIOUS INDUSTRIES AND SUPPORT AGENCIES IN NIGERIA** **Industries and support agencies.** Industry refers to manufacturing activity in general. This involves manufacturing of goods such as; steel, foods, footwear, rubber, textiles etc. The National council on industry (2000) adopted the following as the new classification of small and medium enterprises (SMEs) **Micro/Cottage industry.**An industry with a total capital employed of at least N1.5 million, including working capital but excluding cost of land and or labor size of 11- 100 workers. **Small-Scale industry.** An industry with a total capital employed of not more than 50million including working capital but excluding cost of land or a labor size of 11- 100 Small- scale. OR enterprises, is any business enterprise that is highly personalized, situated within a local area of operation which is relatively small in terms of size, employment, turnover and capital is actively managed by one or few persons for the purpose of making profit. There are various industrial associations and support agencies that are involved in the promotion and development of entrepreneurship in Nigeria. They include the following: **Support Agencies** Several agencies are established for the purpose of regulating business, such regulation involves inspection of facilities, laboratory test of product, approval of facilities and product, etc. These agencies include: - Standard Organization of Nigeria (SON) - National Agency for Food and Drug Administration and control (NAFDAC) - National Drug Law Enforcement Agency (NDLEA) - The National Directorate of employment (NDE) - National poverty Eradication Program (NAPEP) - The Industrial Training fund (ITF) - Bank of industry (BOI) - Small and Medium Enterprises Development Agency of Nigerian (SMEDAN) - The Universities and Polytechnics -  Research institute as FHRO AND PRODA, etc. - Centers for management development, industrial development centers, private consultants. - Trade missions and embassies. - Trade fairs and inventors exhibition - Similar industries. - Magazines and trade journals A businessman must keep check on his technology to keep abreast, or ahead of his competitors. Trade journals will have news of the latest processes or more revolutionary machinery **CONTRIBUTIONS OF SUPPORT AGENCIES IN THE PROMOTION OF ENTREPRENEURSHIP IN NIGERIA.** I. Agricultural finance II. Industrial and commercial finance III. National resources exploitation finance IV. Long-term investment financing and equity funding of small and medium scale enterprises V. Supporting small and medium enterprises through lending funds to commercial and merchant banks. **Possible beneficiaries of BOI** - Small, medium and large enterprises including cottage Industries - New and existing companies seeking expansion, modernization or diversification. - Borrowers with demonstrable ability to meet loan payments - Borrowers with no record of unpaid loan elsewhere, etc **National Directorate of Employment (NDE)** The NDE was established in 1989. The functions of NDE in Nigeria are: - To help in reducing unemployment by creating employment opportunities, through vocational and apprenticeship training for the jobless people on information technology, textiles, fashion design, secretarial studies, computer literacy, catering , hairdressing, etc. - To technical support for food production in Nigeria - To develop and encourage potential entrepreneurs and equip them to successfully manage SMEs, through provision of loans schemes to young entrepreneurs and school leavers to start their small -- scale business. - To help in minimizing rural- urban drift by stimulation of rural development. - To improve the over-all economic, social and political well being of Nigerians **Industrial Training Fund** (I.T.F) The ITF was established on 8th October, 1971 by the federal government for the primary purpose of promoting and encouraging the acquisition of skills in industry and commerce to meet the needs of the Nigerians. Some of the functions of ITF are: i. Identifying the training needs of companies/employers in commerce and industry. ii. Designing vocational and apprenticeship training programs iii. Installing and maintaining audio-visual equipment and advising on their utilization. iv. Organizes workshops, seminars and conferences on specialized areas of commerce and industries v. Establishing training standards in skills and apprenticeship training vi. Managing the career developments of students vii. Coordinates nationwide students industrial work experience scheme (SIWES) **Universities and polytechnics.** Many federal, states and private universities and polytechnics have been established in Nigeria and have contributed immensely to the promotion, growth and development of SMES in Nigeria in the following ways: i. Producing required manpower for the industries who will help to promote the development of entrepreneurship ii. The training of manpower in the art of management. Writing of feasibility reports, investment appraisals and equipping them with right entrepreneurial skills needed iii. They carry out researches on the development of equipment and machinery, row material and overall technological development of Nigeria iv. They provide consultancy services to our entrepreneurs in the areas of raw materials production, finished products, pricing, promotion, packaging, sales distribution of goods and services, and management advisory services, etc I. Market oriented**:** A good business opportunity must be marketable. It should be something that will be accepted by another in exchange for money. It must be something that can be bought or sold. II. Feasible It should be something that is possible of being achieved. There must be possibility of being identified and exploited beyond ones capabilities. III. Profit oriented: The business opportunity should be something that is viable. Profit is very important for business survival, so a business opportunity must be something which will offer you that profit. IV. Specific: A business opportunity must have definition, scope and name. It must be identifiable, specified, definite and exact to be a business opportunity. It must be exact and not vogue. V. Motivational: A business opportunity must be something that is capable of helping someone reach his goals or achieve his objectives. VI. Legal: A business opportunity should be legal i.e. it must be something that is not against the law of government. VII. A true business opportunity should be ethical, as every business has its own ethics. VIII. **A product:** A business opportunity must be a product. It is either tangible or intangible i.e. either goods or services, but it must have something to offer to enable a third party part with his money for it and still feel happy and satisfied. **IDENTIFICATION OF BUSINESS OPPORTUNITIES USING SWOT ANALYSIS**\ To identify and exploit opportunities and avert threats that are found in the external environment of a business organization and also build on her strengths and minimize or remove weaknesses residing in the internal environment of the firm, the entrepreneur can use strategic factors in the form of acronym SWOT technique to analyze and exploit the opportunities. **Activity\ Conduct a market research of two small-scale businesses and select the\ most viable business venture.** **THE FUNCTIONS OF MANAGEMENT AND THE ROLES OF A\ MANAGER IN AN ENTERPRISE.** According to Henry Fayol, to manage is to "forecast and plan, to organize, to command, co-ordinate and to control" According to McFarland, management is defined as the process by which mangers create, direct maintain and operate purposive organization through systematic co ordination and co-operative human effort **FUNCTIONS OF MANAGERS** There are five core managerial functions of the entrepreneur, as identified by Anuwom (2007) 1. **Panning: -** this is the process by which the entrepreneur looks into the future and discovers alternative courses of action. He assesses those alternatives and selects the most viable alternative that will lead to the achievement of his objectives Planning has become inevitable for the entrepreneur because of the following reasons,  Changes in technology, Changes in government Policies,  Changes in the overall economic activities, and  Changes in the nature of competition, fashion and taste, etc. 2. **Organizing: -** this focuses attention on the structure and process of defining and allocating jobs so that the objectives of the entrepreneur is achieved. 3. **Directing: -** this is the process by which the entrepreneur leads, motivates, communicate and ensures co-ordination of activities of the enterprise so that the objectives are achieved. 4. **Co-ordination:-** this is the process by which the entrepreneur ensures that the work by his group or all the operations of his business are integrated and synchronized for efficient and effective achievement of the objectives of the enterprise. 5. **Controlling: -** this is that function of management that provides direction in conformity with plan. Control is that part of management functions that establishes standards, monitors performance, evaluates performance against standard and provides for correction of deviation from standard. **Discussion\ Planning is said to be necessary in an enterprise. Discuss** **COMMUNICATION PROCESS IN THE MANAGEMENT OF AN ENTERPRISE\ **communication can be defined as the transformation from the sender to the receiver with the information been understood by the receiver. **diagram** a. **Ideation:** this is when an idea is created or choices of fact to communicate, it is the basis of the massage b. **Encoding:** the sender organizes his ideas into a sense of symbols that he feels will communicate the intended receiver c. **Transmission:** the sender chooses certain channel or an avenue of communication. He also tries to keep his communication free of barriers and interferences so that his massage has a chance of reaching the receiver intact. d. **Receiver:** the receiver tunes in to receive the massage if is oral, there is need to be a good listener. If the receiver does not function, then massage is loss.(miss call) e. **Decoding (interpreting the meaning of the massage):** The receiver takes meaning from the symbol encoded by the sender. Understanding is the key decoding process. f. **Action:** here the receiver acts according to the message or he decides not to act g. **Feedback:** this is the process letting the sender know the reaction to his massage form he receiver whether positive or negative feedback or active or inactive **THE TECHNIQUES AND SKILLS OF:** 1. **Planning** Planning is the central function of Management; it is that part of Management process which determines the objectives to be achieved and the cost of action to follow to achieve these goals. This refers to forecasting future circumstances and requiring policies to be followed and the standard to be set.\ **Definition of planning** - Planning is simply defined as the thinking that takes place prior to action or\ decision. - Planning is an intellectual process and the mental disposition to do things in an orderly ways to think before acting and to act in the light of fact rather than guess. - Planning is basically selecting the best course of action from the alternatives\ available and deciding in advance what to do, how to do it, by whom it is to be done. Planning is necessary for ding anything as this ensure proper utilization to both human and non human resources (materials) to achieve desired goals. **STEPS IN PLANNING** - Establishing of goals and objectives of the organization - Formulating policies to carry out the objectives - Evaluating possible course of action in order to determine the best goals - Selecting the best possible course of action **Advantages of Planning** - Saves time - Gives room for adjustments - Achieving the set target - Proper capital utilization - Gives strength for growth to the organization **Disadvantages of Planning** I. Costly and expensive both time and fund II. Not every plan made is judiciously and religiously followed III. Can be lead to failure and misfortunes of opportunities. **ORGANIZING\ **This is a process by which management achieve its main objectives and goals by combining the efforts of people under a supervisor. It is one of managerial functions concerned with the distribution of works among members of the organization. **Organizational Structure:** This is an organization structure in which setting functional relationship exists between specialists in their respective sphere of activities. And those with direct responsibility for caring out the main operation of the chief accountant have functional responsibilities for the accounting work carried out in the departments. **Staffing** This is the function of management that brings an organization to life. This staffing function involves recruitment selection, training, development and appraisal of personnel. This is an undoing managerial activity process since some people might resign, be promoted, transfer or die. Two main purposes of training are - for improvement of performance on the job - Preparing a person for a high position There are basically tow sources from which people can be employed to man the organization, these are: 1\. Internal sources 2\. External sources **Directing\ **This is function leading and actuating, the directing function of management involves the ability to guide and motivate subordinate towards the accomplishment of goals. There are three main element of the directing function, these are: 1. Leadership 2. Motivation 3. Communication **Controlling** is that which gives meaning and depth to all other function. The importance of controlling lies in the fact that a manager‟s job is to get things done or more specifically to achieve result in key areas of accountability the managerial functions of controlling are "measurement and correction of the performance of activities of subordinate in other to make sure that events conform to plans and organization objective from which they are derived."\ **Steps in Control** The basic control process where ever it is found involves the following. 1. The establishment of standard 2. The measuring of performance 3. Comparison of performance against standard 4. Correction of derivation (if any) **THE TECHNIQUES OF PRODUCTION AND MARKETING MANAGEMENT.** A. Production is the creation of utilities. It is the process of converting raw materials (tangible goods) intangible goods all activities involved in creating any valuable item whether tangible or intangible for the satisfaction of human needs. It simply means that production is more than conversion of inputs into finished goods (manufacturing) but converse distribution and provisions of other intangible services such as medical consulting counseling, teaching and personal services like barbing dry cleaning, etc To ensure maximum satisfaction of customers, their needs must be carefully investigated. Therefore, research, development and design are all fundamental aspects of production.\ Production management can also be defined as planning, designing, organizing of men, materials and facilities as well as controlling operation for the purpose of creating a product or products to satisfy consumers‟ needs. Examples of production organizations are unilever Nig. Plc, Golden Guinea Breweries, PZ Nig. Plc, Globacom, MTN plc, PHCG, Polytechnics and Universities, etc Production management function therefore, is the art of coordinating all the available resources of a productive organization namely: 5Ps - the plant, the Product, The Process, the Programs and the people through which raw materials or services are converted into finished goods/services. B. Marketing can be defined as the total sum of all the activities that is ravaged in during the process of bringing a product from the manufacture to the consumer. Marketing on the other hand means a societal process by which individual and group of obtain what they need and want through creating, offering and freely exchanging products and services of value with other. Marketing is typically seen according to kotler (2003) "as the task of creating, promoting and delivery of goods and services to consumers and business." **THE TECHNIQUES OF FINANCIAL MANGEMENT.** Business need finance for a large number of reasons and purpose. For any small business to be successful, the following capital a needs must be provided for before it is started. - **Working capital:** This is the capital required for running a business operations from day to day. This includes cash, account receivables, inventories and marketable. - **Fixed assets capital** : Fixed asset consists of tangible long lasing property of a business such as machines, equipment, furniture, fixtures and fittings, others include intangible assets such as goodwill and copyright, While tangible asset are needed to enhance protection and success in the market place - **Fixed security investment**: This includes stocks or shares and contingency funds. Redeemable investment that can be converted into cash through the secondary market(stock exchange), Dividends from shares can boost capital expansion for small business and cushion the effect of losses or un expected expenses. - **Promotional expenses capital**: Promotion is a marketing function involved in communicating with consumers using tolls such as advertising, sales promotion, personal selling, publicity and public relations. The application of these tools is very necessary for achieving marketing objectives. Therefore, a small business owner must make provision for these expenses. - Funds for personal expenses: A small business - owner needs to create a purse or account for personal expenses, whether he operates his business or full time or par-time basis. This is to avoid tampering with the business funds which can obstruct the smooth operations of the business. **RECORDS AND IMPORTANCE OF RECORD KEEPING IN AN ENTERPRISE.\ **Record keeping occupies a vital position in the management of any business. In large business, experts are employed to keep personal and financial records of their operations using well-organized tools and techniques. However, due to financial constraints and attitudes of small business owners, records are not properly kept in a way that the financial position of the business can easily and quickly be ascertained or that its efficiency can be enhanced. **Types of Record Keeping.** The major type of record commonly maintained by small business include the following a. Non -- Accounting records Thee include the following a. Employees‟ records b. Records for internal correspondences such as memos and minutes of meetings c. Records of external correspondences, that is, letters coming into the company and those that go out. b. **Financial Records :**Accounting records includes the following: - **Account payable:-** these are records that show the amount the business is owing to others such as suppliers of row material, rates for water, or electricity supply and rents to land or shop owners - **Accounts Receivables: -** These are record of total money other individuals or organizations owe the business -- due to goods sold to them or services rendered to them that have not been paid for. Such record will always include the date of collection. - **Sales Record: -** Sales records are records of good sold or services offered to customers. These records are kept for numerous purposes such as measurement of advertising effectiveness, market coverage and salesmen compensation especially commissions. - **Production Records: -** These records provide information about raw materials, work-in-progress, finished goods and general production costs such as repairs and maintenance expenses, costs of parts, etc. Production records are necessary to keep track of production efficiency e.g. level of wages, reworks, and losses through damages, theft and spoilage. - **Inventory Record:-** These includes records that provide information on purchasing, movement of stocks and store information, turnover ratio,\ that is, rate of usage and raw material yields. - **Pay Roll Records: -** These are records of total payment to employees (inclusive of Basic pay and incentives). Pay toll equally shows relevant information about each employee, and total number of business employees. - **Cash Records: -** These are records that provide information on cash flow, both inflow and out flow and cash balance at hand. **IMPORTANCE OF RECORD KEEPING** To assist in detection of possible employee‟s frauds, theft, waste and any error so that costs can be minimized and remedial measure can be taken promptly. - To identify trade creditors, amount owed and the due date of collection. - To know how much the business is owing and when such debts are due for payment - To permit easy measurement of a business efficiency and profitability - To enhance easy comparisons of business efficiency between current period and post or between two different units e.g. branches of the business. - To permit prompt filing of suppliers and corporate customers information. - To present clear and easily accessible information about employees e.g. their dates of employment ages, qualifications and other past correspondences. - To provide clear and appropriate reports for management and financers - To show the total worth of a business assets and liabilities at the end of the required period usually annually. - To permit prompt filing of reports and their retrieval when needed especially by the government **THE STRATEGIES FOR CONSOLIDATION AND EXPANSION OF A\ BUSINESS ENTERPRISE.** **Strategy.\ **A strategy is a consistent, appropriate and feasible set of principles or plan of action through which a particular entrepreneur hopes to achieve the objectives set for his business. Strategy looks inwards at the entrepreneur‟s business and also looks outwards at the competition, environment and business climate. Chandler(1962) in Ogedengbe(2007); refers to strategy as "the determination of the basic long term goals and objectives for an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals". **Types of Business Enterprises** A business enterprise refers to any form of organization that seeks to profitability satisfying existing and created needs of customers. Generally, business enterprises can be classified into the following forms via; a. **Sole Proprietorship**: The simplest form of business enterprise it the sole proprietorship. It is a one-person business, so called because the capital is provided by one person who also takes all the risks and all the profits. This person is the sole proprietor, but not the sole trader as at times wrongly called, because this type of business is not found only in trading. The sole proprietor provides the risk capital. If the business fails, the sole proprietor suffers all the loss alone which may even cost him, his private property. b. **Cooperative societies** c. Limited liability companies : d. **The Partnership**: This is the coming together of two or more persons with a view to making profit. A partnership business is an unincorporated business formed by an association of two to twenty persons, who by an agreement usually legal, decide to run a business together in order to share its profit, losses and risks. Partnership act 1890 defines a partnership as the relation which subsists between persons scarring on business sin common with a view of profit. **[Partnership Deeds]** This is also known as articles of partnership. A partnership deed is a written agreement or document establishing the business and the relationship between partners. Types of Partners. The content of the deed includes the following: 1. The name of the partnership 2. The nature of their business 3. Amount of capital to be contributed by each partner 4. The duration of the partnership (if any) 5. How profits and losses should be shared 6. How new partners are to be admitted or withdrawal of an existing partner 7. Salaries to paid to partners 8. Interest on capital and matters relating to drawings, **FEATURES OF PARTNERSHIP.** a. **No corporate existence** unlike a company which has corporate existence and is separate from its owners, a partnership and its owners are not separate from one another. It is not a separate legal entity; therefore it cannot sue or be sued in its own name. b. **Limited Membership** is limited and is form two to twenty, or ten only in the business enterprise is a bank a social club or society is not a partnership because the aim of forming it is not to make a profit. c. **Unlimited Liability** Members of a partnership have unlimited liability for the debts of the firm, and for what is done by any member of the firm, or except the limited partner who has limited liability. d. **Formability Unnecessary** It may be harder to set up when compared with sole proprietorship, but no formality is required to bring a partnership into being. Formation can be done orally, in writing or by conduct. e. **Mutual confidence and trust** In the case of a partnership, the members must have mutual confidence and trust in each other. Any breach of this confidence and trust is subject to payment of damages if take to court. T**YPESS OF PATRTNER** 1. **Limited partner** -- A limited partner is the one who agreed to contribute certain\ amount to partnerships business and is prevented by law from taking any active\ part in management of the business. He is liable for debts and obligation of the\ partnership only up to the amount of capital he has contributed i.e. he has a\ limited liability. 2. **General /Active Partner** -- An active partner takes active part in the management\ of partnership business. He contributes to the financing and formation of the\ business, takes active role in the day to day running of the business and is being\ paid certain amount as his salaries. 3. **Nominal or Quasi Partner** -- These contributes only his name to the formation\ of the business. He neither contributes capital nor takes part in the management\ of the firm. Only his name is used to increase the reputation of the business i.e. a\ political or a successful business man. He shares the profit to debt as specified by\ partnership Act 1890. 4. **Sleeping or dormant Partner** -- these partners take no part in the conduct and\ management of the partnership business. But these dormant or sleeping partners\ are liable to the debt of the firm. **Co-operative societies**: A cooperative society is a voluntary organization in which individuals, businessmen and trader with common interest pool their resources together to\ promote the economic and welfare interest of their members. It is owned and\ controlled by members. **Characteristics of co-operative society** a. Perpetual existence: there is continuity in co0perative societies. Death of a\ member cannot bring the organization to an end. b. Registered as a limited liability: The liability is limited c. Democratic in nature: the activities of co-operative society are democratic in\ nature. Each member is entitled to one vote, irrespective of the total shares. d. Profit is hared base on patronage: Surplus for the year is shared among the\ members on the basis of their patronage during the year. e. The objective is to promote members‟ interest: The aim and objective of the\ society is to promote and advance the interest of their members, by rendering services to them **Limited liability companies:** Corporation is a state chartered legal entity with authority to act and have liability\ separate from its owner. This means that they are not liable for the debts or any other\ problems of the corporation beyond the money they invest. Owners no longer have to\ worry about losing their house, car or other property because of some business problem.\ A corporation enable many people to share in the ownership (and profit) of a business\ without working there. A corporation could be a private limited company or public\ limited company. The private limited company (Ltd) - formed by two to fifty persons who buy shares in the company. The company enjoys limited liability but its shares are not offered for public\ subscription and the shares of one member cannot be disposed off without the agreement of the other member. The public limited company (plc) - it has at least seven members. And no maximum\ numbers of members. The members can dispose of their share in the company whenever\ they wish, through the stock exchange. A public limited company is allowed to appeal to the public for funds through public subscription. **Advantages of corporation** 1. Limited liability -- owners of a corporation have limited liability. 2. Access to fund -- a corporation can easily obtain funds by issuing new stock. 3. Perpetual life -- Because corporations are separate from those who own them 4. Ease of ownership change - it is easy to change the ownership of corporation. All that is necessary is to sell the stock to someone else. **Disadvantage of corporation** 1. Initial cost -- incorporation may cost thousands of Naira and involve expenses, lawyer and accountants etc. 2. Paper work -- The papers filled to stars a corporation are numerous. A\ corporation must keep detailed records, the minutes of meetings and more. 3. Toe tax returns -- If an individual incorporates he or she must file both a\ corporate tax return and an individual tax return. 4. Size-large corporation sometimes becomes too inflexible and too tied down in\ red tape to respond quickly to market changes. 5. Difficulty of terminal. Once a corporation is started, it‟s relatively hard to\ end. **Sources of fund for corporation** a. Trade credit b. Loan and overdraft c. Equity shares d. Debentures -- which are long-term loan, obtain from the public at a fix rate **Licensing and Franchise arrangements.** **Licensing Arrangement.** This is an arrangement whereby entrepreneur buys the rights to manufacture usually a foreign company‟s products in the licenses (entrepreneur‟s) country for an agreed fee (usually in the form of royalties or some percentage commission payments). This can be pursued in manufacturing business only. **Merits of Licensing Arrangement** I. The entrepreneur will not bear the cost of developing the new product or research. II. The company will avoid enormous costs and risks involved in opening up a\ foreign market. III. Licensing is a very attractive option for companies that lack the capital to\ develop operations overseas. **Discussion 1.1\ Distinguish between private limited liability company and public limited liability company** **Demerits of Licensing Arrangement.** I. It does not give a company the tight control over manufacturing and marketing\ functions in foreign countries. II. By licensing its technology, which is the basis of their competitive advantage, a\ company can quickly lose control over it. **Franchising Arrangement.** This is an arrangement whereby the entrepreneur buys a franchise‟s limited rights to use its brand name, goodwill, trademarks or distribution channel in return for a lump, payment and a share of franchisee‟s profits. Franchising is pursued by manufacturing\ firms. Franchising is the granting of license from person/company called the **franchisor** to\ another franchisee to use or wear his image, brand name or title. Under the above\ arrangements/ agreements, the franchisor gives the franchisee, the rights or privileges to\ sell and distribute his products while riding on the past glory of the franchisor‟s business\ name, trademarks, brand name or title and reputation even use his distribution channel for\ the sale of his goods. The franchisor is usually paid a fixed amount as license fee or paid\ royalty depending on their agreement. **Benefits of franchising arrangements.** I. It is an alternative to forming an entirely new business enterprise; as the entrepreneur will not bear development cost. II. An ailing business can avail itself opportunity offered by franchising arrangement to revitalize its business. III. It can overcome competition from companies by going into franchising or merger. IV. An entrepreneur can introduce his products, get wide acceptance through the\ existing goodwill of the franchisor. V. The franchisee can gain some economies of scale. VI. There is higher probability of survival under franchising arrangement than starting a\ business from the scratch. VII. Buying a franchise will avail you opportunity of using existing research facility,\ distribution channels, training, purchasing, supply and maintenance facilities of\ the franchisor. VIII. The entrepreneur can build up a global image quickly and at a low cost. **Franchise fee.** This is the amount of money paid to the franchisor as consideration for the use of his business name, image, brand name, title or goodwill etc. this can be in form of fee that is, fixed amount of money is paid annually to the franchisor or it may be some percentage commission or royalties. **Franchise agreement.** this is an agreement made by franchisor and franchisee which stipulates the terms of the franchise. The area of coverage or the extent of right and privileges to be conferred on the franchisee are enshrined in the franchise agreement. Actually, before a license is granted to the franchisee; there must be an agreement which usually cover among others:. 1. Territory/Segment of the markets to be covered. 2. Prices and channels of distribution. 3. Franchise fee. 4. Advertising, training and management. 5. Transfer of ownership of the business. 6. Tenure-when to terminate or renew the franchise. **Franchise License.** This license is issued to the franchise by the franchisor after the contract is properly drawn and signed, conferring rights and privileges to the franchise either to distribute or market the products or services wearing the image, business name, trademarks, brand name or title, distribution channels or goodwill of the franchisor for a consideration\ known as franchise fee, commission or royalty.