1

BUSINESS ENTERPRISE SKILLS

FORM 1

T NYONI

J .S CHITONGA

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 About the publishing house

Dingani Publishers
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Robert Mugabe, Bulawayo

Cover Designed by: Dingani Publishers

Typesetting by: Dingani Publishers
ISBN: 978-1-77931-064-4

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addressed to Dingani Publishers.

Printed by Dingani Publishers in Bulawayo, Zimbabwe

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Contents
TOPIC ONE: THE BUSINESS ENTERPRISE .................................................... 6
Enterprising .......................................................................................................... 6
Skills and personal attributes of an enterpriser. ............................................... 9
TOPIC TWO: THE ENTERPRISING ENVIRONMENT ................................ 20
Internal stakeholders ......................................................................................... 21
External stakeholders ........................................................................................ 21
Roles played by external stakeholders ............................................................. 24
TOPIC THREE: SETTING UP A NEW ENTERPRISE ................................... 37
Unincorporated business enterprise ................................................................. 37
Forms of unincorporated business enterprises ............................................... 38
TOPIC FOUR: BUSINESS PLANNING ............................................................. 47
Business planning ............................................................................................... 47
A business plan ................................................................................................... 47
Business Objectives ............................................................................................ 52
TOPIC FIVE: ENTERPRISE FINANCE AND SECURING INVESTORS .... 58
Need for business finance .................................................................................. 58
Sources of finance .............................................................................................. 65
TOPIC SIX: PEOPLE IN BUSINESS ENTERPRISES..................................... 89
Functions of managers ....................................................................................... 89
Motivation........................................................................................................... 91
TOPIC SEVEN: MARKETS AND MARKETING ............................................ 99
Marketing and markets ..................................................................................... 99
Importance of marketing ................................................................................ 103
Types of markets .............................................................................................. 108
TOPIC EIGHT: OPERATIONS MANAGEMENT ......................................... 112
Nature and location of production ................................................................. 112
Location of production .................................................................................... 126

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REVISION TEST...................................................... Error! Bookmark not defined.

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TOPIC ONE: THE BUSINESS ENTERPRISE
By the end of this topic learners should be able to:

 Define enterprising, enterpriser and enterprise.

 Identify skills and attributes of enterprisers.
 Explain skills and attributes of enterprisers.
 Identify benefits and drawbacks of enterprising

Overview

In this modern world, the concept of business enterprise plays a major role in
our Zimbabwean economy. Individuals are advised to embrace
entrepreneurship skills in order to increase national output.

Enterprising
 Enterprising refers to having or showing the ability to do new or
difficult business activities.
 It is the willingness to start a new business regardless of risks that
could be experienced when running a business.
 It is readiness to undertake new projects.
 For example “an enterprising young man likely to go far”.
 Enterpriser
 An enterpriser is the one who takes risk and initiative to start a
business.
 It could be an individual or a group of people who have an idea that
they want to develop into a project.
 An enterpriser is the one who:
 Organises all factors of production and manages the business.

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  Takes risks in starting a business regardless of whether the business
will succeed or not.
 Is someone who organises a business venture/ project and assumes the
risk of it.
 An enterpriser is also called an entrepreneur.

Enterprise

 Enterprise is the business organisation that is involved in the provision

of goods and services.
 Enterprise can be formed as profit making or non-profit making.
 The purpose of an enterprise is to produce goods and services that
satisfy customer needs.
 Goods include all tangible (physical) items produced to satisfy human
needs and wants, for example, a car, sugar, clothes, food, etc.
 Services are intangible products, for example, medical treatment,
teaching, banking, transport, etc.
 Businesses or enterprises often start on a small scale and they expand
their operations if they become successful.

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Enterprises in Zimbabwe

ENTERPRISES ENTREPRENEUR LOCATION

Econet Wireless Strive Masiyiwa Harare

W Dingani Tradings Witness Dingani Bulawayo

Early Ashes Cephas Murambiwa Bulawayo
TA Holdings Shingai Mutasa Harare

Lunar Chickens Gideon Gono Harare

Examples of enterprises that can be found in local communities are poultry,

cattle fattening, peanut butter making, market gardening, etc.

Other examples of enterprises that can be found in local communities but not
profit making are football clubs, pressure groups like Child line and
Zimbabwe Human Rights Association.

Business enterprise

Activity

 Name other enterprisers within your local community.

 Identify non-profit making organisation in your area.

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 Entrepreneurship

 Entrepreneurship is the activity of setting up a business or businesses,

taking financial risks hoping to make profit.
 It is the process of organising and managing the factors of production
in order to make profit.
 Factors of production are inputs needed to start a business which are
capital, labour, land and enterprise.

Skills and personal attributes of an enterpriser.

Skills

 Skill is the knowledge, understanding and ability to do something well.

 Skills can be obtained through training and experiences.
 Skills are important in running an enterprise.

Personal attributes

 An attribute is a quality or characteristic of a person (enterpriser).

 Personal attributes are character traits or personality traits.
 Trait is a distinguishing characteristic or quality.
 Traits gives distinction between/ among personalities.

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Qualities of a Leader
Leadership Skills
 Leadership means the ability to influence and guide others to behave in
a certain way.
 Leadership skills include the ability to influence, motivate, delegate,
persuade and communicate to employees towards achieving the set
goals.
 A good leader takes necessary measures to underperforming
employees, for example, through training or disciplinary procedure.

Risk Taker
 Risk means a situation involving harm, loss or danger.
 Risk taker is an individual or business that tends to behave in a way
that can potentially cause physical or financial loss.
 Successful enterpriser are risk takers.
 A risk taker evaluates potential risks and tries to minimise risks.
 Risk – an enterprise undertaken without regard to possible loss or
injury.

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TOPIC THREE: SETTING UP A NEW ENTERPRISE
By the end of this topic learners should be able to:
 Define unincorporated business enterprises.
 Identify the forms of unincorporated business enterprises.
 Make a description of forms of unincorporated business enterprises.
 Explain the advantages and disadvantages of unincorporated
business enterprises.
 Explain the purpose of business enterprises.
 Identify forms of incorporated business enterprise
 Explain the features of incorporated business enterprise

Setting up a new enterprise

 The establishment where the business activities are undertaken is
called business enterprise.
 The business enterprise may be owned by one or more individuals.
 There are two types of business enterprises which are incorporated
and unincorporated business.
 Incorporated business are enterprises which have been registered
formally with the registrar of companies.
 Such businesses offers more benefits than unincorporated.
 Examples of incorporated business include limited companies and
non- profit making organisation.

Unincorporated business enterprise

 It is a business that is owned privately by one or more people.
 The government limit control of the activities of a business.

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  Unincorporated business may be registered with the registrar of
companies (legally registered).
 The owner(s) of an unincorporated business have unlimited liability.
 Unlimited liability is whereby owner(s) are held responsible for
paying business debts. In the event of failure to pay business debts,
the owner(s)’ property may be used to cover up for the debt.
 Examples of unincorporated enterprises are sole trader
(proprietorship) and partnership.
 Unincorporated business enterprise are also known as informal
traders.
 Examples are tuck-shop business and fresh produce vendors.

Forms of unincorporated business enterprises

Sole Proprietor
 It is the most common type of business organisation.
 It is a business owned and managed by one person (owner).
 It is often referred to as sole trader.
 The owner’s family can assist in running the business, for instance,
by providing labour, finance and other resources.
 Trading name can be the legal name of the owner, for example, tuck
shops and rural stores named Tafadzwa General Dealer.
 The enterpriser is said to be self-employed.
 He or she provides capital to start up the business.
 The owner has unlimited liability.
 All or most of the decisions are made by the owner.
 The business can be inherited by family members in case of death or
ill health of the owner.

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  Examples of sole proprietors include, tailor shops, bakery shops,
street hawkers, beauty salon and restaurant.

Advantages of Sole Proprietorship

 The owner has complete control and makes all or most business
decisions.
 The owner have personal contact with customers.
 They do not publish their accounts.
 The owner enjoys all the profits.
 There are minimum legal requirements in starting up the enterprise.
 There are lower start-up costs.
Disadvantages of Sole Proprietorship
 Too much work and pressure on the part of the owner in running the
company.
 All responsibilities and business final decisions fall on the shoulders of
the owner.
 There is relatively poor decision making since there is limited no one
to consult.
 The owner of the business is held personally liable for the debts and
obligations of the business (unlimited liability).
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  Bears all risks and incurs all the losses alone.
 Usually lacks continuity (death of the owner leads to closure of the
business).
 Lack adequate capital to finance themselves.

Activity
 List the names of sole traders within your area.
 For every sole trader, identify the type of business he/she does.

Partnership
 It is a business formed by 2 to 20 people with the aim of making profit.
 Owners of partnership are referred as partners.
 They consult each other (partners) when making decisions.
 Professional partnerships are special partnerships formed by
professionals, for example, doctors, lawyers or teachers.
 Partnership operations are governed by an agreement (oral or written)
known as a partnership deed or partnership act.
 Partners normally have unlimited liability which means that they may
lose personal assets in settlement of business debts.
 There are legal requirements needed when starting up a partnership.
These include trading license and partnership deed.
 Partners provide their own capital to start a business.
 They may be involved in the day to day running of the business.
 There are two types of partnerships, these are General partnership and
Limited partnership. Partnership

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General partnership
 A partnership in which all partners manage and control the business
activities.
 The general partners bears risk of losing personal assets when the
business fails to pay its debts (unlimited liability)

Limited partnership
 It consist of one general partner and limited partners.
 A general partner manages the business and have unlimited liability.
 A limited partner does not participate in managing the business and
have limited liability.
Limited liability is whereby partners’ failure to pay business debts does not
result in loss of their personal assets. Business debts are treated separately
from its owners.

Advantages of Partnership
 Partners help each other in raising start-up capital, usually more capital
injection as compared to sole trader.
 It is flexible – A partnership is easier to form and manage.
 Responsibility of running the business is shared among the partners.
 Partners are involved in decision making – partners consult each other.
 Absence of one partner due to social problem or holiday does not
necessarily affect business operations.
 Loss is shared among partners.

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Advantages of Debentures
 Huge sums of money are raised and are payable for a long period of
time.
 The amount of tax is reduced because of interest allowed on
debenture.

Disadvantages of Debentures
 There is interest attached when repaying.
 Some company assets may be used as security and it will limit
control for them.
 Since debentures are obligations they compromise the net-worth and
credit worthiness of the enterprise.

Long-term loan
 It can be classified under debt finance.
 Long-term loans are payable over a long period of time, say ten
years.
 The difference between a debenture and a long-term loan is that a
debenture can be traded on the stock exchange while a long-term
loan cannot be traded on the stock exchange.

Advantages of Long Term Loans

 Shares cannot be diluted.
 Those who lend money have no right when it comes to voting at
Annual General Meeting (AGM).
 It attracts low interest rate.

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Disadvantages
 Assets can be secured (collateral security) for a loan which reduces
control for them.
 If there is a financial need, acquiring further loans will be limited.
 It increases the chances of becoming insolvent (being unable to pay
debts).
Activity
Which external source of finance would you consider the best? Give reasons
for your answer.

Other Sources of Finance

Venture Capital
 It is also called risk capital.
 Venture capital refers to loan capital or equity capital which is
provided by private investors (venture capitalists/ investors) or
special financial institutions.
 Venture capitalists finance small and medium sized companies
which have potential for growth.
 Venture capitalists usually use their own funds and they take risk.

Business angels
 These are successful business people that seek to promote upcoming
entrepreneurs, by providing funds.
 They may be professionals such as doctors, lawyers, and retired
business people.
 Their interest is to help the next generation.
 In return, Angels need equity.

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Donations
 It is money or something given to an individual or organisation as a
way of helping.
 Donations fall into two categories and these are general donations
and specific donations.
 General donations have no specification on how to use the donated
money.
 Special donations are given in order to meet a particular need or
arising.
Grants
 These are funds given by the government to individuals, educational
institutions or businesses.
 Usually organisations which are given grants are non-profit making.
 The funds that are given are not repaid, for example, student grants.
 Granter –one who grants.
 Grantor –the person by whom a grant is made.
 Grantee –the person to whom a grant is made.
Subsidies
 It relates to aid, support usually in form of money rendered from
government to an enterpriser.
 These are funds disbursed by the government to organisations
especially small businesses so that they continue to function and
grow.
 Subsidies are also given to help businesses keep the price of
products lower.
 An example of subsidies in Zimbabwe is provision of agricultural
inputs to farmers at no cost.

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Point to note: Sources of finance for private and public limited enterprises
are the same. The exception is on the mortgage source. Public limited
companies do not use the mortgage source since there is no one owner who
can be held responsible for the debt.

Finance providers
Shareholders
 A shareholder is one who holds/owns a share/ shares in an enterprise
or company.
 These are owners of the company.
 They finance the business by buying shares.
 Shareholders are also known as stockholders or shareowners.
Banks
 Banks are examples of financial institutions.
 They provide short and long term finance.
 Short term finance is provided in the form of overdrafts.
 Long term finance is provided in the form of long term loans or
mortgage to allow the business to purchase land and property.

Financial Institutions
 Financial institutions include Stock Exchange, Banks, Finance
Houses and Insurance Companies, Discount houses, World bank and
IMF.
 Financial institutions help business manage risks for example
providing insurance in the case of a risk and uncertainties.
 Companies are able to raise finance through the stock exchange that
is when selling their shares.

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Government
 The government can allocate funds to various organisations.
 Funds are offered in the form of grants and subsidies as a financial
aid to support business activities.
 Government provides finance to growing businesses and existing
business.
 Government plays an important role in passing laws that allows to
operate legally and to the best of citizens.

Community Sources
 These are funds which are contributed by the people in the
community.
 They can be in form of charities, cooperatives and social enterprises.
 Charities - are organisations set up to provide help and raise money
for those in need.
 Social enterprises - these are businesses which use their surplus
(profit) to reinvest in the community.

Factors to consider when making choice of finance

 There are a number of factors that are taken into consideration when
making choice of finance.
 These factors include amount of money required, purpose, time, size
and form of business, gearing and risk.

Amount of money required

 When a small amount is required, profits will be the most suitable
source of finance.

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  For huge amounts, a loan can be the best option or mortgage.

Purpose
 The reason to which the finance is needed.
 For example solving short-term cash flow problems or acquiring
fixed assets.
Time
 If the finance is required for a short period of time, the short term
sources may be used for example; paying for one month rent, an
overdraft is suitable.
 For long-term project, long term sources will be suitable.

Size and form of business

 Small and large business organisations choice of finance differs.
 Usually small business organisations have a limited choice of
finance.
 Large business organisations have a wide choice of finance due to
their size and they have collateral security which small business
organisations do not have.
Gearing
 Gearing ratio describes the extent to which the business is financed by
debt.
 A company is highly geared when more of its finance is from loan as
compared to share capital.
 A company is lowly geared when more of its finance is from share
capital as compared to loan capital.

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  For example, if a company have a total capital of $3 000. If the share
capital is $700 and the loan capital is $2 300, it is said to be highly
geared.
Risk
 A risk is a danger or harm that is likely to happen during the
operation of business.
 Usually when businesses source finance they consider risks
associated when sourcing that finance.
 For example, taking a long term loan involves risk as compared to
taking a short term loan.
Summary
 Sources of finance can either be internal or external.
 Internal sources are obtained from within the enterprise. Examples
of internal sources include owner(s) savings, sale of assets and debt
collection.
 External sources of finance are obtained from outside the enterprise.
Examples of external sources of finance are trade credit, bank loan,
debt factoring, leasing, mortgage etc.
 There are a number of finance providers which are shareholders,
financial institutions, and government and community sources.
 Enterprisers take into consideration a number of factors when
making choice on finance.
 The factors include amount of money required, purpose, time, size
of business, gearing, etc.

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REVISION

Question 1

a) What are the factors considered when choosing a source of finance?

(5)
 Amount of money required
 Purpose of the business
 Time
 Size and form of business
 Gearing
 Risk of the business

b) List internal sources of finance. (4)

 Owners’ savings / investment
 Sale of stock
 Retained profits
 Sale of fixed assets
 Debt collection

c) Outline the external sources of finance. (8)

 Trade credit
 Debt factoring
 Bank overdraft
 Leasing
 Hire purchase
 Mortgage
 Issue of shares
 Debentures

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  Loans
 Venture capital
 Business angel
 Donations
 Subsidies
 Grants
d) Identify any finance providers. (4)
 Shareholders
 Banks
 Government
 Charity groups
 Social enterprises

Question 2

a) Define finance. (2)

 Finance is referred to as funds a business use to purchase resources
needed in running business activities.

b) Differentiate between investment and savings. (4)

 Savings are funds being kept for specific purpose to be used in a
future date.
 Investment is an act of using saved money to acquire assets that will
help generate more income at the same time building wealth.

c) Name two types of assets. (2)

 Fixed assets (non-current assets)
 Current assets

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d) Why do businesses need finance? (5)
 Businesses need finance to:
 Start up a business.
 Buy raw materials.
 Buy assets.
 Pay creditors, wages and salaries.
 Expand of business operations.

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TOPIC SIX: PEOPLE IN BUSINESS ENTERPRISES

By the end of this topic learners should be able to:

 Explain functions of managers in business.
 Explain the benefits of motivated employees.
 Identify and describe financial and non-financial methods of
motivation.

Functions of managers
Management functions
 A manager is any person or individual who supervises one or more
workers and get things done through other people.
 Management is a process which involves planning, leading, organising
and controlling.
 It is the achievement or attainment of business objectives through
effective utilisation of resources.

Functions of a manager
Planning
 Planning is a management process which is concerned with setting
business objectives.
 It is the expression of what an enterprise wish to achieve or the best
prediction of what might occur in future.
 It is an important management function because other functions
depends on planning.
 Planning also involves the allocation of resources to achieve
Organisational aims.

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Organising
 Refers to the process of arranging, allocating work, authority and
resources among organisational members to achieve organisational
goals.
 Organising is the process of creating framework of authority and duties
for workers to perform tasks efficiently and effectively.
 It is the establishment of rules and reporting relationships that allow
workers to achieve organisational goals.

Leading
 This entails directing, influencing and motivating employees to
achieve set goals of an organisation.
 Managers are leaders responsible for influencing people so that they
perform the assigned tasks.
 Leaders has the ability to command employees to perform certain tasks
so as to achieve enterprise’s goals.
 The main task of managers as leaders is to direct and coordinate people
in an organisation.

Controlling
 It is the process of monitoring the enterprise’s performance by
comparing actual performance with the set goals.
 Controlling involves the correction of organisational activities.
 It establish standards of performance and how it will be measured.
 It also involves the processing of paperwork, staffing, training and
development.
 Assist managers to make correct decisions.

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  Helps in the setting of objectives.

Other functions of managers

 Coordinating activities and assign overall responsibilities.
 Hire, train and deploy the right personnel.
 Communicate the strategy internally.
 Develop and maintain a stakeholder database.
 Develop and maintain a commitments register.
 Track changes in the quality of stakeholder relationship.

Activity
Outline the functions of your parents, friends, and school teacher and church
leaders.

Motivation
 It is the desire that pushes an individual to work well.
 Motivation is set of processes that arouse human behavior towards
attaining certain goals.
 It can be defined as the influence that causes workers to behave in a
particular way.
Motivation at work refers to anything that influence employees to work
willingly.

 Workers can be motivated internally or externally.

Internal motivation
 This type of motivation comes from within an individual.
 It is self-driven.

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  This means that employees do their jobs to achieve personal
satisfaction rather than external gains.
 Examples include self-esteem, sense of achievement, status and
enjoyment of work.

External motivation
 It is that motivation where workers go to work in order to get rewards.
 Workers are motivated by outside motives or rewards like pay rise,
bonuses, medical aid services and vacation trips or tours.

Benefits of motivated employees

 Higher productivity (outputs).
 Improved quality of goods with less wastage.
 Improves efficiency (doing the right thing).
 Low rate of accidents at work place.
 Lower rate of labour turn over (employees leaving the enterprise).
 Lower absenteeism rate.
 Less resistance to change.
 Higher punctuality.
 They accept responsibilities.
 They show a higher levels of commitment.
 They also able to participate and makes suggestions for improvement.

Financial and non-financial methods of motivating employees

 There are basically two methods of motivating employees that is
financial and nonfinancial rewards.

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REVISION TEST

1) What is a resource? (2)

 A resource is anything that can be used to carry out a task or to
achieve something.
2) Name two types of resources (2)
 Tangible
 Intangible
3) What do you understand by the term unincorporated business
enterprises? (2)
 Is a business that is owned privately by one or more people, that is,
the government does not control the activities of that particular
business?
4) Identify three disadvantages of a sole proprietor. (3)

Disadvantages of a sole proprietor are:

 Too much work and pressure in running the company.

 There is poor decision making since there is no one to consult.
 The owner of the business is held personally liable for the debts and
obligations of the business.
 The owner bears all risks and incurs all the losses alone.
 Lacks continuity (death of the owner leads to closure of the
business).
 Lack adequate capital to finance themselves.

5) List and explain two types of partnership. (4)

General partnership

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  A partnership in which all partners manage and control the business
activities.
 The general partners bears risk of losing personal assets when the
business fails to pay its debts.

Limited partnership

 It consist of one general partner and limited partners.

 A general partner manages the business and have unlimited liability.
 A limited partner does not participate in managing the business and
have limited liability.
6) Give three advantages of a partnership. (3)

Advantages of a partnership

 Partners help each other in raising start-up capital.

 It is flexible – a partnership is easier to form and manage.
 Responsibility of running the business is shared among the partners.
 Partners are involved in decision making – partners consult each
other.
 Absence of one partner due to social problem or holiday does not
affect business operations.
 Loss is shared among partners.
7) What is production? (2)
 Production refers to the process of converting inputs into goods and
services.

8) List any two factors of production. (2)

 Land
 Labour

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  Capital
 Entrepreneurship
9) State any two methods of production. (2)
 Job production
 Batch production
 Flow production
10) What are the advantages of batch production? (2)

Materials are bought in bulk which becomes cheaper for the enterprise.

 It reduces unit cost since a large amount of output is produced.

 Specific customer needs are met for instance size, weight and style.
11) State two factors which influence location of a business unit. (2)
 Transport cost
 Energy cost
 Land cost
 Labour cost
 Customer convenience
 Labour skills
 Site suitability
 Image of the site
 Expansion potential
 Political stability
12) What do you understand by the term market? (2)
 A market is where buyers and sellers exchange goods and services
to satisfy customers’ needs and wants.
13) List and explain any two types of consumer products. (4)
 Convenience products - these are products which consumers often
buy, that is, they are bought time and again.
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  Shopping products -these are products which consumers buy less
frequently.
 Specialty products –these are goods and services which consumers
buy because they have a special nature or special features.
14) Give the difference between demand and supply. (4)
 Supply entails the quantity of commodity made available or provided
at a given price at a given time.
 Demand refers to the willingness or desire of the customer to buy a
certain commodity at a given price at a given time.
15) What does the acronym SMART stands for? (2)
 The acronym SMART stands for Specific Measurable Achievable
Realistic Time
16) Define the business objectives below;

i. Growth (1)

 Is when a business aims at expanding its operations in terms of size?

. ii Sales revenue (1)

 Is when a business wants to increase its sales volume?

. iii Profit maximization (1)

 Is whereby a business owner would want to increase revenue at the

same time minimising expenses?

iv. Corporate social responsibility (1)

 Is whereby a company aims at protecting the environment, providing

good and safe working conditions and also participating in
community life?

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17) What is business planning? (2)
 A business plan is a written document that gives full details on how a
business is going to achieve its goals.
18) List four importance of a business planning. (4)
 Increase efficiency – planning helps to reduce wastage of valuable
resources.
 Reduce business risk – it helps the enterpriser to identify possible
threats to the business and take necessary precaution, for example,
change in technology.
 Helps in organising resources – planning brings all available
resources together, amount of resources to be used and when they are
needed.
 Gives right direction – by giving information and guidance on how to
carry out business activities in order to achieve set goals.
 Enables the enterpriser to control all business activities.
19) State any two internal and two external sources of finance for a
business. (4)

Internal sources of finance

 Owner’s investment /savings,

 Retained profits
 Sale of assets
 Debt collection

External sources of finance

 Bank loan
 Debt factoring
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  Trade credit
 Hire purchase
 Leasing
 Mortgages
 Issue of shares
20) State any two factors influencing choice of finance. (2)
 Amount of money required
 Purpose
 Time
 Size and form of business
 Gearing
 Risk
21) Give an example of each of the following;

i. Current assets (1)

 Stock, debtors cash in hand, cash at bank.

ii. Fixed assets (1)

 Vehicles, land, building, plant

iii. Current liabilities (1)

 Short term loan, bank overdraft and creditors.

iv. Capital expenditure (1)

 Purchase of any fixed asset/ extension of building.

22) What is working capital? (2)
 Working capital is the capital of a business which is used in its day-
to-day trading operations.

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23) Why do business need finance? (4)
 Starting up a business
 Buying raw materials
 Buying assets
 Capital expenditure
 Revenue expenditure
24) Briefly explain the attributes of a successful enterpriser. (6)
 Creativity -this is the ability to make new things or to think of new
ideas.
 Leadership means the ability to influence and guide others to behave
in a certain way.
 Team building involves organising the right people with the right
skills to work together effectively within an enterprise
25) Identify any four ideas on how to start a business. (4)
 Self-evaluation – enterprisers assess whether to take risks to start a
new business or not.
 Develop an idea - the idea should not be just any but something that
you are passionate about.
 Market research- finding out if people would be willing to purchase
your product or not, to avoid incurring a loss.
 Determine the cost- before starting a business one should know how
much it will cost to run that business so as to find necessary
resources.
 Finding potential investors- sometimes the owner may fail to have
enough capital to start the business, hence it is important to find
people (investors) who will assist with funding.

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26) Explain any drawbacks of enterprising to the enterpriser. (5)
 It can be risky and uncertain – starting a new business may be too
risky because the outcome is not known. The enterpriser may
experience losses.
 Due to competition from bigger companies an entrepreneur may lose
customers.
 Enterprisers may lack of enough capital to run the enterprise.
 The enterpriser has to work harder and for long hours in order to
succeed.
 Lack of adequate resources to run the business, for example,
warehouse to keep raw materials, vehicle to transport goods, etc.
 The enterpriser may lack knowledge on how to run a business.
27) Define the following terms;

Stakeholders (2 marks)

Stakeholder are individuals or group of people that have interest in the

activities of an enterprise.

Shareholder (2)

A shareholder is an individual or a group of people that owns part of the

company through stock.

Internal stakeholders (2)

Internal stakeholders are individuals that are within the enterprise and are
directly involved in the running of the enterprise.

External stakeholders (2)

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External stakeholders are individuals or group of people that exist outside
the enterprise and are not directly involved in the day to day running of the
enterprise.

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