G8 - Business Basics - L1 PDF

Business Basics Establishing a Business 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 perfor...

Business Basics Establishing a Business 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. www.caribbeanonlineacademy.com What is 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. This Photo by Unknown Author is licensed under CC BY www.caribbeanonlineacademy.com 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 the act of organizing resources and acceptance of risk and uncertainty for the purpose of capitalizing on opportunities with the aim of achieving profit. www.caribbeanonlineacademy.com Why become an Entrepreneur? There are three(3) main reasons: 1. Financial independence 2. Self-fulfilment 3. Self-actualization  Some people set up businesses in order to gain money so that they will not have to rely on others for money for food, clothing and shelter. –financial independence www.caribbeanonlineacademy.com Why become an Entrepreneur? ❏ Entrepreneurs want to be their 'own bosses' and they set up businesses to bring their desire to life. –financial independence ❏ Businesses allow for self-expression, an opportunity to do what you enjoy. – self-fulfilment ❏ Some persons see businesses as an opportunity to contribute to society and be recognised for their efforts. – self-actualization ❏ Some persons may have challenges that they may be seeking a solution for or may have also identify challenges faced by others. – self-actualization www.caribbeanonlineacademy.com Personal traits and leadership qualities When starting new business ventures, entrepreneurs typically display certain characteristics. There are: ❏ Creative. ❏ Innovative. ❏ Flexible ❏ Goal-oriented. ❏ Persistent ❏ Highly committed ❏ Able to take calculated risks. ❏ Able to handle uncertainties. www.caribbeanonlineacademy.com Personal traits and leadership qualities ❏ Creative – is being able to use the imagination to invent something different or original. ❏ Innovative - is being able to find new methods or ways of doing things and to make changes where necessary. ❏ Flexible - means to be easily adaptable. In this rapidly changing world, the entrepreneur must adapt to changes in technology and changes in demand. ❏ Goal-oriented -is where the entrepreneur remains focused on the goals of the business and not get distracted by things that don't help the business succeed. www.caribbeanonlineacademy.com Personal traits and leadership qualities ❏ Persistent – is where the entrepreneur should keep working on their business even when things get tough. This doesn't mean they can't make changes when needed, but they shouldn't quit just because they run into problems. They should solve the issues and keep moving toward their goals. ❏ Highly committed - An entrepreneur with strong commitment will find that hard work and persistence lead to success. www.caribbeanonlineacademy.com Personal traits and leadership qualities ❏ Able to take calculated risks – is where the entrepreneur takes smart risks. This means they look for opportunities, study them carefully, and believe there’s a good chance of success. By doing this, they can spot and take advantage of good opportunities. ❏ Able to handle uncertainties – this is where the entrepreneur must handle risks that cannot be insured, known as uncertainties, and find ways to manage them effectively www.caribbeanonlineacademy.com Roles of an Entrepreneur? The roles of an entrepreneur as follows:  Conceptualizing: The entrepreneur must formulate ideas regarding the type of business and the type of product that can be put on the market. He must also think of the size of the production in order to make a profit. www.caribbeanonlineacademy.com Roles of an Entrepreneur?  Planning: The entrepreneur thinks about the future and plans what needs to be done, both in the short term and long term. This includes deciding on how the business will be organized, setting goals for things like production and sales, and assigning duties to managers. www.caribbeanonlineacademy.com Roles of an Entrepreneur?  Accessing Funds: The entrepreneur is responsible for finding money to start or grow the business. This doesn’t have to come from their own savings. They can borrow money from friends or family, bring in investors, find business partners, or get loans from financial institutions. www.caribbeanonlineacademy.com Roles of an Entrepreneur?  Organizing: This involves bringing together the other factors of production in order to ensure efficiency, maximum output and maximum profits.  Operating: Once an entrepreneur starts a business, they need to decide how they want to run it, make plans for now and the future, and get everything they need, like time and money. After that, they can start the business. Running the business means handling different parts, like making products, selling them, managing money, and taking care of people. The goal is to produce and sell something to make a profit. www.caribbeanonlineacademy.com Roles of an Entrepreneur?  Evaluating the performance of a business: One of the functions of managers is evaluating. This is done at the end of the production process to see if the entire process has been successful and to see if the goals of the organization have been met. Problems and failures are reviewed and suggestions are made and put in place to avoid these in the future. www.caribbeanonlineacademy.com  Roles of an Entrepreneur?  Bearing risks: A risk is a chance. There are two types of risks: a) insurable and b) non-insurable risks. It is the responsibility of the entrepreneur to take out policies against those risks which can be insured, for example, the threat of theft, fire, flooding, etc. Those risks which cannot be insured against must be borne on the shoulders of the entrepreneur. Such risks are referred to as uncertainties, for example, a sudden change in the demand for the product. Entrepreneurs must be willing to take risks or chances in order to make profits. www.caribbeanonlineacademy.com  Roles of an Entrepreneur?  Reaping profits or the bearing of losses: The reward for organizing the factors of production and bearing risks is profit. To gain profit, the entrepreneur must sell the good or service for more than it costs him to produce. That is, average revenue must be greater than average cost. If he sells for less than it costs him to produce, he will make losses.  In some forms of operations by entrepreneurs, profits and losses are shared, for example, partnerships. In other forms, for example, the sole trader, profits and losses belong to the owner of the business. www.caribbeanonlineacademy.com Next… Steps in Establishing a Business (a) conceptualization; (b) research (market probe); (c) identification of resources (financial, human, material); (d) creation of business plan; (e) acquisition of funds; and, (f) operation of the business. www.caribbeanonlineacademy.com  Busines s Basics Caribbean Online Academy Instructor: Mrs. S. Spencer www.caribbeanonlineacademy.com END OF LESSON www.caribbeanonlineacademy.com  Business Basics Establishing a Business Objectives ❏ Outline the role of the entrepreneur in economic development. ❏ Outline the essential steps in establishing a business. ❏ Identify reasons for preparing a business plan. www.caribbeanonlineacademy.com Role of the Entrepreneur in Economic Development 1. Collaboration Entrepreneurs can come together to execute shared objectives. This can be in the form of operating a larger operation together or just providing/sourcing materials for each other. This Photo by Unknown Author is licensed under CC BY www.caribbeanonlineacademy.com Role of the Entrepreneur in Economic Development Collaboration - examples A group of small farmers can come together to start a farmers' market. By pooling their resources, organizing a common space, promoting the market and working together they can: a. provide fresh, local produce to the community b. create jobs for other sellers, organizers, and suppliers Another benefit is the money spent at the market stays This Photo by Unknown Author is licensed under CC BY in the local economy, boosting the development of the town www.caribbeanonlineacademy.com Role of the Entrepreneur in Economic Development 2. Provide goods and services that satisfy societal needs Customers' needs change constantly and entrepreneurs can come up with new ideas to provide those needed goods and services of society. This Photo by Unknown Author is licensed under CC BY-SA www.caribbeanonlineacademy.com Role of the Entrepreneur in Economic Development Provide goods and services - examples An entrepreneur may notice the need for persons in their community wanting clean, filtered water. They think of ways they can get the resources needed to make and bottle filtered water and also allow customers to refill their bottles By providing this product and service it gives their customers access to clean water and also make it more www.pexels.com accessible to them. www.caribbeanonlineacademy.com Role of the Entrepreneur in Economic Development 3. Creating jobs By starting a business, the entrepreneur can create new job opportunities that will aid in reducing the level of unemployment. This Photo by Unknown Author is licensed under CC BY-NC. www.caribbeanonlineacademy.com Role of the Entrepreneur in Economic Development Creation of jobs - examples An entrepreneur starts a new café in their neighbourhood. To be successful they need to hire cooks, cashiers, waiters, and cleaners. They now have created an opportunity for people in the community to be employed. This Photo by Unknown Author is licensed under CC BY www.caribbeanonlineacademy.com Role of the Entrepreneur in Economic Development 4. Nation Building Entrepreneurs start companies that produce goods and offer services that consumers require. When these companies are successful, the GDP (the total value of goods produced and services provided in a country during one year) of the nation rises and more individuals can live better lifestyles. www.caribbeanonlineacademy.com Role of the Entrepreneur in Economic Development 4. Nation Building continued Entrepreneurs frequently give back to their communities by participating in initiatives that benefit charities, schools, or the environment. www.caribbeanonlineacademy.com Steps in Establishing a Business When starting a business, there are a few steps to follow to ensure the business start-up is successful. The six essential steps are: 1. conceptualization 2. research (market probe) 3. identification of resources (financial, human, material) 4. creation of a business plan 5. acquisition of funds 6. operation of the business www.caribbeanonlineacademy.com Steps in Establishing a Business 1. Conceptualization; The person who desires to set up the business must come up with ideas regarding the product, type of business, size of business, etc. This Photo by Unknown Author is licensed under CC BY-SA-NC 2. Market research (market probe); This is done in order to be aware of customers' needs, which the business will attempt to satisfy, with the aim of making a profit. This is done to find This Photo by Unknown Author is licensed under CC BY out what the public wants www.caribbeanonlineacademy.com  Steps in Establishing a Business 3. Identification of resources; Resources refer to the factors that will be utilised in producing the good or service. A decision must be taken as to the type of resources and where they will come from. These resources include financial resources, man- made resources (capital) human resources (labour and enterprise) and the natural resource (land). Time is also a resource that must be considered. 4. Creating a business plan; a business plan is a written summary of an entrepreneur's proposed business venture. It includes its operational and financial details, its marketing strategies, its management skills and abilities, etc. www.caribbeanonlineacademy.com  Steps in Establishing a Business 5. Acquisition of funds; having already decided how much funds will be required for the business; the future business owner must decide how the funds will be obtained. 6. Operation of the business; producing or selling your goods and services. For this to happen, an organizational structure must be in place and each department of the business must realize its role in the successful operation of the business. www.caribbeanonlineacademy.com Remember Entrepreneurs Help Economies Grow by : ○ collaborating with others to help their communities ○ providing products and services customers need ○ create opportunities for employment ○ help their communities and nation to grow and increase the standard of Starting a business requires: ○ choose a business idea ○ research the market ○ identify needed resources ○ create a business plan This Photo by Unknown Author is licensed under CC BY-ND ○ get funding launch & operate www.caribbeanonlineacademy.com Next… (a) identify the reasons for preparing a business plan (b) describe the elements of a business plan www.caribbeanonlineacademy.com  Busines s Basics Caribbean Online Academy Instructor: Mrs. Senior-Spencer www.caribbeanonlineacademy.com END OF LESSON www.caribbeanonlineacademy.com  Business Basics Establishing a Business Objectives ❏ define a business plan ❏ identify the reasons for preparing a business plan ❏ describe the elements of a business plan www.caribbeanonlineacademy.com Business Plan A business plan is a written document describing an entrepreneur's proposed venture. It includes information on its proposed production, marketing, and finance. www.caribbeanonlineacademy.com Business Plan Importance  A business plan is like a map for someone starting a business. It shows where the business is going, what goals it wants to achieve, and how it plans to get there.  Think of it like planning a road trip. You need to know your destination (the business goals), the route you'll take (the steps to achieve them), and what you'll need along the way (like money, products, or services). Without a map, you might get lost or waste time going in the wrong direction. www.caribbeanonlineacademy.com Business Plan Importance  A business plan also helps explain the entrepreneur’s ideas to others, like investors or banks, to show why the business will be successful. It describes who the customers will be, how the business will attract them, and what it expects to earn in the future.  In short, having a business plan keeps the entrepreneur focused and helps them make smart choices to grow the business. www.caribbeanonlineacademy.com Why Prepare a Business Plan?  To ensure careful research into feasibility  To attract potential investors  To source financing.  To guide the operations when making decisions www.caribbeanonlineacademy.com Why Prepare a Business Plan?  Feasibility: Helps test if the business idea is realistic through market research, analysis, and projections.  Attract Investors: A well-written plan convinces potential investors by showing profitability and potential growth.  Source Financing: Essential when applying for loans or seeking other forms of financial support.  Guide Operations: Acts as a roadmap for the business, assisting in strategic decision-making. www.caribbeanonlineacademy.com Elements of a Business Plan A business plan usually has the following sections: A business plan starts with a brief overview of the business and then provides details on how the business will be structured. Note: in some instances the operational plan and the business opportunity in given in a switched order. Image: Principles of Business for CSEC 2nd Edition by R. Dransfield www.caribbeanonlineacademy.com The Executive Summary  The executive summary states briefly the key features of the proposed venture. This will include: i. The name of the business ii. The type of business iii. Information about the owners, for example, their names, addresses, qualifications and work experience iv. A description of the product (detailed) v. A statement of the financial needs. This includes how much is needed, what the funds will be used for and what will be the proposed means of repayment. vi. An overview of the planned strategic actions to ensure that the business is a success. www.caribbeanonlineacademy.com The Executive Summary  The executive summary can be useful when individuals are too busy to read the whole business plan but need some vital information about the proposed business. For example, a loan officer at the bank  This is the first part of the business plan, but it is usually done last. www.caribbeanonlineacademy.com The Executive Summary - example Business Name: Donya’s Dough & Delight Business Type: Sole Trader Owner: Donya Powell Donya’s Dough & Delight operates out of her aunt’s kitchen in Kingston, Jamaica. It will specialize in homemade, custom cakes, cupcakes, and pastries. Initially, the bakery will focus on online orders and catering for small events like birthdays and family gatherings. Donya’s Dough & Delight plans to leverage social media to attract customers and will handle deliveries within Kingston. With minimal start-up costs, he projects earning JMD 1.5 million in revenue in the first year, with a long-term goal of expanding into a dedicated space. www.caribbeanonlineacademy.com The Operational Plan  This section explains how the business will run day-to-day  It shows the detailed plan for how the business will operate, including location, staff, and equipment. It includes:  The business’s name and location.  The type of business (e.g., sole trader, partnership).  The number of employees and their roles.  The equipment and suppliers the business will use. www.caribbeanonlineacademy.com The Operational Plan - example Location: The business will operate out of the owner’s aunt’s kitchen in Kingston. Equipment: A small-scale commercial mixer, cake pans, and storage containers, which will cost around JMD 150,000. Suppliers: Ingredients will be purchased from local grocery stores and markets, focusing on sourcing fresh, local products like Jamaican sugar and organic eggs. Staffing: Initially, Donya will manage the baking, customer service, and deliveries herself, with help from her aunt during busy periods. www.caribbeanonlineacademy.com The Operational Plan - example Hours of Operation: Donya will bake on-demand, primarily filling orders placed online. Kitchen hours will be flexible based on customer needs but plans to fulfill orders six days a week. Online Orders and Delivery: Customers will place orders via WhatsApp, Instagram initially and then and a simple website will be created later on. Donya will personally deliver the orders within Kingston, charging a small delivery fee of JMD 700 for locations in the city. www.caribbeanonlineacademy.com The Business Opportunity  This is a description of the product or service the business will offer.  It shows why the product or service is needed in the market and how it will stand out from competitors. It includes:  A description of the product or service.  Why it is special or different.  Who the customers will be (target market).  The problems it solves or the needs it meets. www.caribbeanonlineacademy.com The Business Opportunity - example The owner has identified a growing demand for custom, homemade baked goods for small events like birthday parties, baby showers, and family gatherings. Larger bakeries in Kingston are often expensive or unable to accommodate smaller, highly personalized orders. Donya’s Dough & Delight home-based business allows the owner to offer lower prices while maintaining high-quality ingredients. The unique selling point is offering customizable, freshly baked cakes and treats with a personal touch that appeals to families and individuals who want homemade quality without the hassle. www.caribbeanonlineacademy.com The Marketing Plan  This is the strategy for how the business will reach and attract customers.  It helps the business figure out who its customers are and how to get them to buy the product or service. It includes:  A description of the target customers (age, location, habits).  How the business will stand out from competitors.  Pricing strategy (how much the product or service will cost).  Ways to promote the business (advertising, social media, special deals).. www.caribbeanonlineacademy.com The Marketing Plan - example Target Market: Donya’s Dough & Delight’s target market includes families and individuals in Kingston looking for affordable, homemade treats for small events. It will also target young professionals who want custom cakes for special occasions. Branding: The focus will be on homemade, personal service with an emphasis on local, fresh ingredients. The branding will highlight affordability and high-quality, homemade taste. Pricing: The pricing will be competitive, with cakes starting at JMD 3,000 for basic designs and cupcakes at JMD 250 each. Special event packages, such as a birthday package with a cake and cupcakes, will start at JMD 12,000. www.caribbeanonlineacademy.com The Marketing Plan - example Social Media Marketing: Donya’s Dough & Delight will use Instagram and Facebook to post pictures of its creations, build a following, and engage with potential customers. It will also offer limited-time promotions, such as discounts for first-time orders or special deals for holidays. Word of Mouth: Donya’s Dough & Delight will rely on word-of-mouth marketing by delivering consistently excellent products. It will offer referral discounts to encourage customers to spread the word. www.caribbeanonlineacademy.com The Financial Forecast  This is a prediction of how much money the business will make and spend.  It shows whether the business will make a profit and how much money it needs to get started. It includes:  Start-up costs (money needed to start the business).  Sales forecast (how much the business expects to sell).  Profit and loss statement (expected income minus expenses).  Cash flow (money coming in and going out each month)... www.caribbeanonlineacademy.com The Financial Forecast - example Start-up Costs: It initial start-up costs are minimal, around JMD 300,000, which include: JMD 150,000 for small-scale baking equipment (mixer, pans, and storage). JMD 50,000 for initial inventory (ingredients and packaging). JMD 50,000 for marketing (creating a website and running online promotions). JMD 50,000 as a cash reserve for unexpected expenses. Revenue Projections: Donya’s Dough & Delight expects to generate JMD 1.5 million in the first year, averaging around JMD 125,000 in monthly sales. This revenue will come from small custom cake orders and event packages. With a profit margin of about 40%, the hope is to net around JMD 600,000 by the end of the first year. www.caribbeanonlineacademy.com The Financial Forecast - example Break-even Analysis: With a low overhead (no rent or utilities), Donya’s Dough & Delight expects to break even within the first six months of operation if it maintains steady sales growth. Funding Needs: The owner will use personal savings to cover her start-up costs and won’t require a loan for this initial phase. If successful, she plans to reinvest profits into upgrading her kitchen equipment. There will be a need to acquire a loan when she decides to move into a commercial space within two years. www.caribbeanonlineacademy.com Next… (a) identify sources of information for conducting research into the establishment of businesses; (b) discuss the significance of conducting a feasibility study into the establishment of a business www.caribbeanonlineacademy.com  Busines s Basics Caribbean Online Academy Instructor: Mrs. Senior-Spencer www.caribbeanonlineacademy.com END OF LESSON www.caribbeanonlineacademy.com  Business Basics Establishing a Business This Photo by Unknown Author is licensed under CC BY Objectives ❏ identify sources of information for conducting research into the establishment of businesses ❏ discuss the significance of conducting a feasibility study into the establishing of a business www.caribbeanonlineacademy.com Business Research Research is essential for understanding the market, customer needs, and competition. It turns a business idea into a well-informed plan. Every part of a business plan relies on research: Customer Insights help shape products and marketing. Competitor Analysis reveals opportunities in the market. Cost Estimates guide budgeting and financial planning. Research makes the business plan realistic and This Photo by Unknown Author is licensed under CC BY increases the chances of success. www.caribbeanonlineacademy.com Primary Sources of Information The research plan can call for the gathering of primary data, secondary data or both. Primary Data Primary or field research is the collection of original or new data using various techniques. Some of these techniques include: Surveys/Questionnaires Interviews focus groups observations. Example: A new gym might survey local residents to understand their workout preferences or visit competitors and observe the preferences of customers. www.caribbeanonlineacademy.com Primary Sources of Information Questionnaires are the most common survey method. It may be written or orally administered. It is designed specifically for the task and is normally completed face to face, by telephone or through the post or email. Interviews may be formal or casual. They may be conducted on an individual or a group basis. Observation is watching people’s reactions quietly while they shop. This provides information from the This Photo by Unknown Author is licensed under CC BY-SA-NC This Photo by Unknown Author is licensed under CC BY marketplace. www.caribbeanonlineacademy.com Primary Sources of Information The benefit of primary research is that the entrepreneur is personally aware of why they are gathering the data and has the direct experience of collecting data. The data would also be fresh as it is likely recently collected. When setting up a business, the entrepreneur can draw on certain sources of information such as Their own experience from working for someone else Talking with another business owner Conduct market research, like giving questionnaires to likely customers. Approaching lending institutions about possible financial assistance. Create a sample product/service and testing to see how successful it could be. This can be done through pop up shops or attending a fair where you can showcase your product www.caribbeanonlineacademy.com Secondary Sources of Information Secondary Data Secondary data research uses existing information gathered from other sources. Some of these techniques include: sales records official publications statistical and newspaper reports government publications trade association studies university journals This Photo by Unknown Author is licensed websites under CC BY Example: A local café might check reports on coffee trends or study large chain cafés for ideas. www.caribbeanonlineacademy.com Secondary Sources of Information The benefit of secondary research is that it can be broader in extent, particularly if it has been collected by a larger research company using large samples. Among the disadvantages is the fact that it is sometimes out of date and the research is more time-consuming than the primary type of research. This Photo by Unknown Author is licensed under CC BY-SA-NC www.caribbeanonlineacademy.com Secondary Sources of Information When setting up a business, the entrepreneur can draw on certain secondary sources of information such as Books and leaflets about starting a business and how to make it successful. Government publications or websites about starting up a business and the requirements Published market research information about the type of market the entrepreneur wants to operate in Brochures and online information provided by financial This Photo by Unknown Author is institutions about starting a business and requirements for licensed under CC BY-SA-NC getting a business loan. Research published by a research institution like the Scientfic Research Council in Jamaica www.caribbeanonlineacademy.com How Research Helps Each Part of the Business Plan Market Analysis -Understanding the Customer: Who are the customers? What do they want? This highlights the target audience’s age, lifestyle, income and preferences, such as tastes, style, or price sensitivity. Competitive Analysis - Knowing the Competition: "Who else is offering similar products or services?” This indicates the strengths of other businesses and areas where the business can stand out. Financial Plan -Estimating Costs and Projected Earnings: "How much will it cost? How much can we expect to earn?“ This provides a clear view of costs (equipment, rent, salaries) and helps set realistic income targets based on research done. www.caribbeanonlineacademy.com Feasibility Study Once you have a business idea and a detailed business plan, you then have to carry out a feasibility study. A feasibility study assesses whether the business idea can succeed. It aims to identify the strengths and weaknesses of a proposed idea to ensure it makes sense to go ahead with it A feasibility study outlines a) Viability b) Cost c) Sources of Finance www.caribbeanonlineacademy.com Feasibility Study a) Viability In completing a feasibility study, the entrepreneur should be able to ascertain if they should go ahead with launching the business idea they proposed. If the study results in the business not being viable, at the current time, then the entrepreneur should not proceed. www.caribbeanonlineacademy.com Feasibility Study a) Viability A business may not be viable for the following reasons It’s the wrong time, for example, the potential market is in a bad state. This could mean that the conditions for starting a business or maintaining a business in that particular product or service market are not favourable (low customer demand or too much competition) www.caribbeanonlineacademy.com Feasibility Study a) Viability Not enough experience from the entrepreneur in that area to make it a successful business. This means the entrepreneur lacks the skills, knowledge, or background in that specific industry, making it hard to manage or grow the business effectively. They could struggle with some tasks that could lead to losing a lot of money. www.caribbeanonlineacademy.com Feasibility Study a) Viability Not enough money is available to make the idea work and business there failing as it will run out of money sooner than later www.caribbeanonlineacademy.com Feasibility Study b) Costs Businesses may fail due to insufficient attention being given to identifying the costs of running the business. There are multiple business costs that a lot of new business owners are not aware of including Materials Equipment Transport www.caribbeanonlineacademy.com Feasibility Study b) Costs Power Borrowing (interest charges) Marketing Seller costs Labour and other production costs Government costs( taxes and licences) www.caribbeanonlineacademy.com Feasibility Study b) Costs A business may prove to be unfeasible not because of the overall level of costs but also due to the timing of the costs. Meaning, that payments are going out way faster than payments are coming in A study them will identify how great the costs will be and when the costs be due for payment. www.caribbeanonlineacademy.com Feasibility Study c) Sources of Finance Some entrepreneurs may believe that getting the money to start a business may be easy and while this may be true for a few, it’s not usually the case for most. The feasibility study will assess if the business can attract investors or loans and when payments can be made. www.caribbeanonlineacademy.com Summary Research + Feasibility = Strong Business Plan Primary Research (like surveys or interviews) highlights customer preferences, helps tailor products or services to meet market demand. Secondary Research (such as industry reports) provides broader market and competitor data, revealing trends and potential challenges. www.caribbeanonlineacademy.com Summary These research findings feed into the feasibility study, which assesses if the business idea is realistic and financially sound. By understanding demand, costs, and competition, the feasibility study supports each section of the business plan, from market strategy to financial forecasts. With solid research and a feasibility study, a business can reduce risks and plan effectively! www.caribbeanonlineacademy.com Next… (a) explain the relationship between planning and the operation of a business (b) identify regulatory practices instituted by governments for the establishment and conduct of different types of businesses www.caribbeanonlineacademy.com  Busines s Basics Caribbean Online Academy Instructor: Mrs. Senior-Spencer www.caribbeanonlineacademy.com END OF LESSON www.caribbeanonlineacademy.com  Business Basics Establishing a Business This Photo by Unknown Author is licensed under CC BY Objectives (a) Explain the relationship between planning and the operation of a business (b) Identify regulatory practices instituted by governments for the establishment and conduct of different types of businesses www.caribbeanonlineacademy.com Planning in Business Planning is setting goals and outlining steps to achieve them. Planning is important because  Helps businesses set direction.  Aids in resource allocation and budgeting. All these elements—planning, market research, feasibility, and regulations—are interconnected as these are the blocks on which strong business foundations are built on. www.caribbeanonlineacademy.com The Relationship Between Planning and Operations Planning vs. Operations: - Planning: Deciding what needs to be done. - Operations: Implementing the plan in day-to-day activities. For example a restaurant sets a goal (increase sales by 20%) and plans promotions (planning). The team then applies these promotions to make it happen (operations). Business Owners and managers must continue to plan to ensure that their operations meet all long–-term, medium–term, and short–term goals. www.caribbeanonlineacademy.com The Relationship Between Planning and Operations Types of Plans: 1. Short-term Planning 2. Medium-term Planning 3. Long-term Planning Successful businesses are built around creating these types of plans. If a business only has a short-term plan, it will always be in fight mode to survive, as there is no clear sense of where the business is going and how it could get there, and also no plans for dealing with future issues. www.caribbeanonlineacademy.com 1. Short-Term Planning (0-1 year) This covers the daily operations and immediate goals. Short-Term Short-term plans are made daily, Medium-Term weekly and monthly by supervisors or persons in lower-level management Long-Term positions. These plans are centred on meeting daily, weekly and monthly production targets. www.caribbeanonlineacademy.com 1. Short-Term Planning (0-1 year) A short-term plan enables the business to make the best use of the limited resources it currently has available. It also enables the business to manage the risks with which it is faced (for example risks resulting from new competitor activity and changing customer perceptions). Short-term planning is often easier than long-term planning, as shorter periods are often more predictable. www.caribbeanonlineacademy.com 2. Medium-Term Planning (1-3 years) This covers growth strategies and product launches. Short-Term Medium-term plans are made by department managers or persons in Medium-Term middle management positions. Medium- term plans include increasing the Long-Term efficiency of a department in order to increase the quality and quantity of output. www.caribbeanonlineacademy.com 2. Medium-Term Planning (1-3 years) This would involve implementing training programmes for staff and identifying equipment that would increase efficiency. Short-Term For instance, a short-term plan might focus on Medium-Term optimizing the use of currently available funds, Long-Term while a medium-term plan aims to explore strategies for securing additional sources of financing. www.caribbeanonlineacademy.com 3. Long-Term Planning (3+ years) This covers vision for the future and market positioning. Short-Term Long-term plans determine the direction of the company. These plans set out the Medium-Term firm’s overall strategy to move from its present position to where it intends to be. Long-Term Long-term plans are made by the directors or persons in senior management positions of a company. www.caribbeanonlineacademy.com 3. Long-Term Planning (3+ years) Long-term plans include expansion plans and plans to create new products and services. For instance, many companies in the Caribbean install solar panels and develop long-term plans that highlight the increasing demand for renewable energy as it replaces fossil fuels. Although there is an initial installation cost, solar panels are cost-effective in sunny countries, making these plans convincing. www.caribbeanonlineacademy.com Example of Planning A restaurant planning may look like: Short-term: ○ Adjust daily menu offerings based on inventory. ○ Implement weekend promotions to boost immediate sales. Medium-term: ○ Introduce seasonal menu changes based on customer feedback. ○ Train staff to enhance service quality and efficiency. Long-term: ○ Expand to a second location within five years. ○ Develop a brand identity and loyalty program for sustained customer engagement. www.caribbeanonlineacademy.com Summary Types of Planning: Short-term: Focuses on immediate goals for consistent operations. Medium-term: Allows for strategic adjustments and adaptability to change. Long-term: Guides overall growth and sustainability. Effective planning is essential for aligning organizational strategies with regulatory practices, ensuring compliance while fostering innovation and competitiveness. www.caribbeanonlineacademy.com Question For each of the following, state whether they are likely to be found in a short-, medium- or long-term plan. (a) Details of the product promotion required to launch a new product. (b) An outline of how the business will expand over a period of ten years. (c) The business has already created an outline of how finance will be secured to set up the business but has created an additional plan for the period which goes beyond the first year and into the second year. www.caribbeanonlineacademy.com Question www.caribbeanonlineacademy.com