TRANSFERING IDEAS IN TO SUCCESS

OROMIA TVET BUREAU INDUSTRY EXTENSION SERVICE DEPARTMENT

Entrepreneurship Development
Training for Industry Extension
Service Zonal and Cluster College
Actors
Contents Introduction
Entrepreneurship Overview
PART1 : Understanding Basic Concepts of Entrepreneurship
PART 2: Generating a Business Idea
PART 3: DEVELOPING A BUSINESS PLAN
PART 4: MARKETING
PART 5: GROWTH STRATEGIES IN BUSINESS
PART 6: RECORD KEEPING
PART 7: SAVING
1. INTRODUCTION
 Economists and business people differ in their definitions of

entrepreneurship. Most, however, agree that entrepreneurship is vital for

stimulating economic growth and employment opportunities in all

societies.

 This is particularly true in the developing world, where successful small

businesses are the primary engines of job creation and poverty

reduction.
Cont’d
• Micro and Small Enterprises (MSEs) are the biggest employment creators in both

industrialized and emerging economies. In cases where formal labor markets do not

offer enough jobs, out of necessity, people often turn to entrepreneurial activities for

economic survival.

• Opportunity entrepreneurs are a major source of job creation and growth while

necessity entrepreneurs secure people’s.

• However, MSEs have high failure rates and face challenges in providing quality

product (goods and service) . Support needs to be provided to entrepreneurs operating

both out of opportunity as well as out of necessity

Cont’d
One of the key elements in improving the survival rate and

the performance of these enterprises is improving the

management competencies of their owners/managers
through Industry Extension Service Especially by
increasing their Entrepreneurship skill to make them
competent in the market. This calls for creating access to
affordable management training and other business
development services for these enterprises.
Brief overview of the Entrepreneurship
Package
By developing entrepreneurial skills, attitude and
mindset, as well as providing knowledge about the
functioning of businesses, the IES package seeks to
prepare young people to be more entrepreneurial in
their work and in their lives in general. In so doing, at
a broader level, the overall objective of
Entrepreneurship is to contribute towards the creation
of entrepreneurial cultures in in a country. The
specific objectives of the Entrepreneurship package
are to:
Cont’d
Develop positive attitudes towards enterprises and
self-employment among the population, by targeting
youth but also stakeholders for enterprise development
Create awareness about entrepreneurship as a career
option for young people
 Provide knowledge and practice of the desirable
attributes for and challenges in starting and operating a
successful enterprise
Facilitate the TVET to work transition as a result of a
better understanding of functions and operations of
enterprises
Cont’d
The expectation is that young people will instantly start
a business after Training and begin their careers as
business owners or as self-employed and to motivate
youth to consider the option of being an entrepreneur at
some point in the future and provide practice of the
opportunities, challenges, procedures,
characteristics, attitudes and skills needed for
entrepreneurship.
This train them about the role of sustainable
enterprises in society and their social and
environmental responsibilities.
PART ONE: Understanding Basic Concepts of
Entrepreneurship

SECTION 1: DEFINITION OF CONCEPTS

Entrepreneurship The word “Entrepreneurship” is derived

from the French verb entrepreneur which means “to

undertake”. The term entrepreneurship thus refers to the
following:
 Cont’d
 It is the process of identifying opportunities in the

market place, arranging the resources required to

pursue these opportunities and investing the resources to
exploit the opportunities for long term gains.
 It involves creating wealth by bringing together
resources in new ways to start and operate an enterprise.
Cont’d
 It is the processes through which individuals become
aware of business ownership then develop ideas for,
and initiate a business.
 “The art of identifying viable business opportunities and

mobilizing resources to convert those opportunities into a

successful enterprise through creativity, innovation, risk
taking and progressive imagination” ...ILO Youth
Entrepreneurship Manual, 2009.
Cont’d
 Entrepreneurship is a practice and a process that results in creativity, innovation

and enterprise development and growth.

 It refers to an individual’s ability to turn ideas into action involving and engaging

in socially-useful wealth creation through application of innovative thinking and

execution to meet consumer needs, using one’s own labor, time and ideas.

 Engaging in entrepreneurship shifts people from being “job seekers” to “job

creators”, which is critical in countries that have high levels of unemployment. It

requires a lot of creativity which is the driving force behind innovation.

Entrepreneur
 An entrepreneur is any person who creates and develops a

business idea and takes the risk of setting up an enterprise to

produce a product or service which satisfies customer needs.
 Entrepreneur refers to the person and entrepreneurship defines

the process. Both men and women can be successful

entrepreneurs; it has nothing to do with gender. All
entrepreneurs are business persons, but not all business persons
are entrepreneurs.
Cont’d

Think of a person who sits by the roadside leading to your

home and who has been selling the same type of food, from
the same size of saucepan or pot, from the same table top,
and may not have been able to change their standard of
living to any appreciable extent. Such a person may be a
business person but not an entrepreneur.
Cont’d
An entrepreneur is therefore a business-minded person who

always finds ways to improve and grow in business.

An entrepreneur can also be defined as a professional who

discovers a business opportunity to produce improved or

new goods and services and identifies a way in which
resources required can be mobilized.
Cont’d
 Finally, an entrepreneur is someone who constantly scans the

environment looking for changes that can provide opportunities

for creating new growth-oriented businesses.
 Entrepreneurs assume significant accountability for the risk and

the outcomes of new enterprises, ventures or business ideas.

 An effective and successful entrepreneur shows creativity and

innovation in business and is an example for other people.

Cont’d
 An entrepreneur is an individual who:
 Has the ability to identify and pursue a business opportunity;

 Undertakes a business venture;

 Raises the capital to finance it;

 Gathers the necessary physical, financial and human resources needed to operate

the business venture;

 Sets goals for him/herself and others;

 Initiates appropriate action to ensure success; and

 Assumes all or a major portion of the risk!

Cont’d

 An entrepreneur is a job-creator not a job-seeker.

 An entrepreneur is a person who:
 Has a dream.

Has a vision.

 Is willing to take calculated risk

Benefits/Importance of Entrepreneurship

 Entrepreneurship allows one to undertake different forms of

self-employment.
 Entrepreneurs are their own bosses giving the man opportunity

to get more job satisfaction and flexibility of the work force.

 Encouragement of the processing of local materials into

finished goods for domestic consumption as well as for export.

 Cont’d
 Healthy competition encourages higher quality products in the market there by

making more goods and services available to consumers.

 Development of new markets

 Promotion of the use of modern technology in small scale manufacturing to

enhance higher productivity.

 Freedom from dependency on the jobs offered by others

 There may be tax advantages

SECTION 2: QUALITIES OF AN
ENTREPRENEUR

In order to be successful, an entrepreneur should have the following

qualities:

1. Opportunity-seeking
 An opportunity is a favorable set of circumstances that creates a need for a

new product, service or business.

 It includes access to credit, working place, education, trainings etc.

 An entrepreneur always seeks out and identifies opportunities. He/she

seizes an opportunity and converts it into a realistic and achievable goal or

plan.
Cont’d
2. Persevering (Persistent)
An entrepreneur always makes concerted efforts towards

the successful completion of a goal. An entrepreneur keep

on and is undiscouraged by uncertainties, risks, obstacles,
or difficulties which could challenge the achievement of
the ultimate goal.
3. Risk Taking
The best entrepreneurs tend to:
Set their own objectives where there is moderate
risk of failure and take calculated risks
Gain satisfaction from completing a job well
Not be afraid of public opinion, uncertainty
Take responsibility for their own actions
Cont’d
Importance of risk-taking
 Build self confidence

 Create a feeling of leadership

 Create strong motivation to complete a job well

 An entrepreneur needs to consider the following issues before taking a

risk:
 Is the goal set realistic?

 How big is the potential reward for this risk?

 How big is the potential loss?

 What is the probability of failure with this risk?

Cont’d
 How can I minimize the potential negative effects of taking this

risk? Examples: starting a business based on market study, market

share, forming cooperatives or associations etc
 What kind of support or resources do I need to have in place to help

minimize or prevent potential negative effects from this risk?

 What further information do I need before taking this risk?
 What past experiences do I need to review in order to inform
the strategy for taking this risk?
4. Demanding for Efficiency and Quality
Efficiency
Being efficient means producing results with little wasted

effort.

Quality refers to:

• The ongoing process of education, communication ,

evaluation and constant improvement of goods/services to
meet the customer’s need in a way that exceeds the
customer’s expectations;
Cont’d

 A characteristic of the product or service that makes it fit

to use. It makes a product, process, or service desirable.

 The ability of a product or service to meet a customer’s

expectations for that product or service.

 The importance of quality management in
entrepreneurship is reflected in the income statement of
the business.
 Cont’d

 Quality plays an important role in this new era of globalization because it

confers certain benefits which include:

 Reduction of waste: quality means examining all processes that contribute

to the creation of a product, to remove non-productive processes and waste.

 If businesses keep to their standard of maintaining the quality of the product,

the number of defective products will be reduced. Consumers prefer to buy

quality products. Hence the quality products/services help in increasing the

share in market and ensure that they will not be returned.

 Cont’d
 Cost-effectiveness: Striving to ensure quality helps businesses to minimize the

chances that they will make mistakes. As a result, the costs of re-doing work or

changing the product after it has been sold are greatly reduced.

 An increase in market share: Customers prefer to buy the same product again

and again if they are satisfied with the quality.

 If they are satisfied with the quality of a product, then they will not only purchase

the product/services more than once, but they will also recommend it to their

friends. As a result, this contributes to an increase in the company’s market share.

Cont’d
Better profitability: Better quality of product satisfies customers. Increased

customers means increase sales, increased shares in market and

consequently increased profits.

Social responsibility: By providing quality products and services, a company

is more likely to be able to fulfill its responsibility to the community and meet

standards set by government.

Reputation: Quality of goods and services improves the reputation (name) of

the business for competition in the market and growth.

Time management
 Time management refers to a range of skills, tools, and

techniques used to manage time when accomplishing specific

tasks, projects and goals.
 Time management is about getting more value out of your time

and using it to improve the quality of your life.

 Initially time management referred to just business or work

activities, but eventually the term broadened to include

personal activities.
 5. Information-seeking
Successful entrepreneurs do not rely on guess work and do not
rely on others for information. Instead, they spend time
collecting information about their customers, competitors,
suppliers, relevant technology and markets. Gathering
relevant information is important to ensure that the
entrepreneur makes well informed decisions.
Types of information that are important
for business
 An entrepreneur should have sufficient information and seek

additional information on various factors that are relevant to his/her

intended new business activity. The different types of information
required are indicated below.

Market

• Market segments for low, middle and high income groups

• Competitors and similar products

• Sales forecast

• Strategic business location

Cont’d
Supply
Machines/equipment
Raw materials
Other assets like office furniture
List of suppliers and prices
Infrastructure
Business building available
Size of building and rooms
Power, water & other facilities
Transport facilities
 Cont’d
Business Management
 Organizational form of the business

 Needs in accounting & accounting courses

 Availability of qualified personnel

 Training facilities for staff and owner

Finance
 Micro-finance loan conditions

 Government financial facilities

Legislation

 Commercial code

 Business registration process

 Tax obligations

 Tender procedures
 6. Goal Setting
 A Goal - is a general direction, or long-term aim that you want to accomplish. It

is not specific enough to be measured. It is large in scope, not necessarily time-

bound, and is something that people strive for by meeting certain objectives

which will hopefully add up to eventually achieving the goal.

 Objectives - are specific and measurable. They can be output objectives, or they

can be attitudinal or behavioral. But most of all, they can be measured. They

are concise. They are specific. Think of the word object.” You can touch it, it’s

there, it’s actual, and it’s finite. An entrepreneur must have a goal and an

objective which is specific, measurable, attainable relevant, and time

bound (SMART).
7. Planning
Planning is making a decision about the future in terms of

what to do, when to do, where to do, how to do, by whom

to do and using what resources. An effective entrepreneur
therefore usually plans his/her activities and accounts as
best as they can for unexpected eventualities.
8. Persuasion and networking
Persuasion is

 A way of convincing someone to get something or make a

decision in your favor

 Inducing or taking a course of action or embracing a point of

view by means of argument, reasoning to convince.

 To succeed in causing a person to do or consent to something;

to win someone over, as by reasoning or personal forcefulness

Cont’d
Importance of Persuasion in Business
 We purchase goods from people

 We sell goods to people

 We need support from people

 We work with people.

 Without people be they suppliers, workers, and most

importantly customers, there is no business.
Cont’d
 Networking is an extended group of people with similar interests or concerns who

interact and remain in informal contact for mutual assistance or support.

Business Networks

 In a business environment where we are in, we network with customers, suppliers,

competitors, various firms, different organizations, government offices and family, etc

Factors that affect persuasion and networking

 Socio-cultural background and perceptions

 Communication skills (both verbal and non-verbal).

 Negotiation skills
9. Building Self-confidence
 Self-confidence is the state of being certain that a chosen course of action is

the best or most effective given the circumstances.

 Confidence can be described as a subjective, emotional state of mind, but is

also represented statistically as a confidence level within which one may be

certain that a hypothesis will either be rejected or deemed plausible.
 Self-confidence is having confidence in oneself when considering a

capability. Overconfidence is having unfair confidence-believing something

or someone is capable when they are not.
 Characteristics of a self-confident person

 A person with self-confidence may exhibit some of the following characteristics:

 Risk-taking: willing to take risks and go the extra mile to achieve better things.

 Independent: entrepreneurs like to be their own masters and want to be responsible for their own decisions.

 Perseverance: Ability to tolerate and survive setbacks and continue to build confidence in whatever you do in

your business.

 Able to learn to live with failure.

 Entrepreneurs are going to make mistakes, they are human, but they learn from these mistakes and then move

on.

 Ability to find happiness and contentment in work , doing what you believe to be right, even if others mock or

criticize you for it.

 Admitting mistakes and learning from them

PART 2: Generating a Business Idea
What is a business idea?

 Every business is born from an idea. Business ideas should come from observation, to

find a potential opportunity, or try to forecast what people or other businesses might

want.

 Business ideas are sometimes developed from someone’s education and past

experience. It should be known that by considering your natural talent you might find the

seed for a good business idea.

 It is an idea about what products you are going to offer, what services you are going to

provide or what goods you are going to sell; where and how you are going to sell them

and who are you going to sell them to.

 Cont’d

A business idea is therefore a short and precise description

of the basic operations of an intended business.

 A good business starts with a good business idea.

Before you can start a good business you need to have a

clear idea of the sort of business you want to run.
Cont’d
A successful business meets the needs of its customers. It
gives people what they need or want. Your business idea
will tell you;
 Which need your business will fulfill for its customers.

 What product or service your business will sell.

 Who your business will sell to.

 How your business is going to sell its products or services.

 Cont’d
 Business ideas are identified through positive, creative

thinking. They can come from different sources such as ideas

built on local resources, local needs, local activities, interests
and hobbies.
 Starting a business is not an easy job - it takes lots of work and

a lot of planning. The effort and money it takes to start a

business may all be lost if you don’t start the right business.
The right business begins with a good business idea.
WHAT MAKES A GOOD BUSINESS IDEA

A good business idea is one that is based on;

 A product or service that customers want

 A product or service you can sell at a price customers can afford

and which will give you a profit

 The knowledge of skills you have or you can get

 The resources and moneyyou are able to invest.

All good businesses begin with a good idea that has been well
thought through.
 How do people find good business ideas?
 Ideas are everywhere, but they need to match what customers want and can pay for.

A good business idea is based on the needs of customers. If a business makes a good

product but nobody needs it, the business will be a failure.

 The people who might want to buy a product or service are called the market for the

product.

 Every good business idea is based on knowledge of what the market wants.

 The market differs from place to place depending on who lives in the area, how they

live and what they spend their money on. When you know about the people in your

area you can find many business ideas that you might have ignored.
ANALYSE YOUR BUSINESS IDEAS AND SELECT THE
BEST ONE

Screen your ideas list

 By now you probably have quite a few possible ideas for your own business

- at least five or over. Your next task is to take this list and try to bring it
down to between three and over ideas- the ones that are most suitable for
you.
 You can select the most suitable ideas from your list by thinking carefully

about each idea. There is probably still a lot you don’t know about the
business on the list but the questions below will help you settle on one
feasible idea.
Cont’d

Which
• Which customer needs do you want to satisfy?
• Which customer needs will your product or service satisfy?
What
• What product or service do your customers want?
• What quality of the product do your customers want?
• What do you know about the product or service for this business?
Who
• Who are your likely customers for this particular business?
•Will they be enough in number to keep your business viable?
• Who are your competitors?
 Cont’d
How
 How will you be able to supply goods and services the customers

want?
 How much do you know about the quality of goods and

services the customers want?

 How does running this sort of business suit your personal

characteristics and abilities?

 How do you know there is need for this business in your area?
JOHARI WINDOW
 The "Johari Window" helps understanding the process

of interpersonal relationship as well as its barriers and

chances within a group set-up. It depicts in a simplified
form the areas of shared knowledge and information as
well as the unshared and the unknown areas. As such, it
provides a theoretical framework for the need to share
information, seek and provide feedback and openly
discuss any matters.
 THE JOHARI WINDOW

Known by me Unknown by me

Known PUBLIC AREA BLIND AREA

by
Others

SECRET AREA UNKNOWN AREA

Unknown
by others
PART 3: DEVELOPING A BUSINESS PLAN
Definition of Business plan

 A business plan is a written summary of your proposed business. It includes

information about the plans, operations and financial details, its marked

opportunities and strategies, as well as the entrepreneur’s personal background

 After you actually begin your business, you will find that the plan needs to be

reviewed on an on-going basis.

 A business plan is a changing, dynamic document. There are no guarantees that

your business will succeed but a well-written and well-researched business plan

plays an important role in a business’s success

 WHY BUSINESS PLANNING IS NECESSARY

 Business plans show you if the business can expect to make

a profit in the future. It shows what money to expect to come into
and out of the business. For instance, if your costs are expected to
be high, there would be need to increase prices.
 A plan will be able to identify parts of the business that
require improvement. In so doing, one will be forced to think
about every part of the business. To work out a plan, one must
therefore think carefully about everything that affects the business
 Cont’d
A business plan makes it possible to access a bank loan

because most banks are interested in knowing the

expected sales, costs and anticipated profits as well as
cash flows before offering a loan.
It forces you to think deeply and plan every detail

properly before you start your business .

 Cont’d
 It helps you to determine the direction you want to move in.

 A business plan serves as a map against which you can determine

your process.
 A business plan provides details of resources required and can be

given to potential investors/financiers.

 A business plan indicates chances for success and potential

critical points
Checklist for business plan:
 The product

 Why would customers buy the product/service?

 Are the product specifications clear and acceptable?

 The market

 Geographical description of the business location

 Is there local demand for the product and if not, how can it be

created?
 Who are the big competitors, how can you counteract them and their

influence?
Cont’d
How many competitors does the business have? If they

are many, your market share is low, which means that

aggressive promotion is necessary to ensure visibility.
Does your product need publicity and if so, what expenses

would that incur?

What is the trend in the selling price? Is there any

seasonality?
 Cont’d
 Technical factors

 Have you selected all the necessary equipment? What are your

reasons for this selection?

 If you buy machinery, check if you have a guarantee and if after

sales service is included.

 Do you know where to source the equipment from? Who is the

supplier?
 Do you have the necessary skills and if not, where can you get them?
Cont’d
 Infrastructure

 Is the working/selling space adequate for your business operation to function?

 Are ownership/tenancy documents for the land/shop/workshop in order?

 If water is required for your business to operate, is it available close by?

 Do you have/need a supply of electricity?

 Is transport of raw materials or finished goods a critical factor and if so, how

do you plan to handle it while minimizing costs?

 Do you need to register your business? What are the legal requirements?
 Cont’d
 Financial analysis

 Have you done financial calculations of needed costs, resources,

income etc?
 Have all the costs of production been included in your calculations?

 Does the business generate enough cash from the beginning so as to

meet immediate liabilities (e.g. rent, loan repayment).

 Check your cash flow projections. Are they realistic?

 Check all estimates of capital required as well as running costs.

SECTION 1: MARKET ANALYSIS
Market research is conducted in order to collect
information, which enables you to make the right decision
on the marketing of your product/service. The main focus
within this activity is to find out as much as possible about
people’s buying habits and your competition.
How to do market research
1) Talk to potential customers.
Ask them, for example:
 What products or services they want to buy?
 What do they currently buy?
 Where do they buy?
 Why do they buy from XY?
 When do they buy?
 How much do they buy?
 Which price do they pay?
 What are their preferences?
 Do they get any extras?
 What do they think about your competitors?
Cont’d
2) Study Your Competitors’ Businesses.
Find about:

 Their products or services, for example quality and design

 What prices they charge

 What exactly do they sell?

 How does their product differ from yours?

 Where do they get their inputs?

 Where do they sell?

 How do they promote their product/service?

 Do they have any special approaches to customer care?

 How can you compete?

Cont’d
 Important note: Be very careful to carry out your research

in a friendly, sensitive way; ask questions and also

observe – be aware: nobody likes more competition!

3) Ask suppliers and business friends

 Which goods sell in their business
 What they think about your business idea
 What they think about your competitor’s product.
SECTION 2: FINANCIAL ANALYSIS

BUDGET
 Every enterprise must have a budget. A budget is a calculated

estimation of the value or price of the project and is always composed

of the expenses the costs of the project and the income the resources
brought into the project to cover the expenses.
 Without a budget, it is impossible to control the project, and it is

impossible to know if it is feasible. If you do not know how much it

costs you will not know how much you need.
 Cont’d

 Resource Mobilization

To mobilize resources effectively, consideration must be given to three

elements, which together are referred to as a resource mobilization

framework.

Resources - Money is one of the key resources that all projects need to be

able to function and carry out their work. However, there are other

resources that are also useful to starting a business. Examples include

skills training, staff, inputs (e.g. seeds, tools, land etc).

Cont’d
 Resource mechanisms : Resource mobilization mechanisms are the ways

that resources can be mobilized from resource providers. Mechanisms are

the actual processes of requesting or getting resources, for example,

writing proposals, holding fundraising events, selling services, Selling

products, face-to-face meetings, etc.

 Resource providers : Resource providers are the sources of funds and

include banks, micro-credit agencies, government financial Institutions,

and charitable organizations.

Source of Budget
Loans from family,
Gifts, offers from friends, informal
family, friends association, savings and
credit groups, banks

Credit from
Funds for your business
Own resources supplier
enterprise
from saving,
sale of assets
 SECTION 3: REALISTIC PLANNING

Milestone-planning for the realization of your business will

have an essential influence on the financing and risks

associated with the business. Planning helps you to think
your way through all the aspects and to analyze the effects
of individual steps in implementation.
Four simple rules can help simplify realistic planning for

you:
1. Subdivide the tasks into packages

 Since there is a great deal of detailed work to be carried

out when setting up a business, there is always the danger

of losing sight of the big picture. Thus you should always
organize the individual activities in “packages.”
 The business plan should, however, not contain more than

ten such packages; you can specify them further at a later

date. A concrete objective is to be set for each package.
2. Ask the experts

Make use of the expertise of specialists in order to

underpin major steps in planning.

Marketing specialists, for example, could show you how

long it will take to develop and conduct a given campaign.

3. Set priorities

 Every overall planning concept comprises a series of events and

assumptions that in some cases run in parallel and are linked with one

another. Certain activities can, if delayed, endanger the entire project

similar to assembly line production that comes to a halt, if certain

parts are lacking. Activities such as these are referred to as the

“critical path.” You should devote particular attention to them in your

planning.

Try to schedule activities that will reduce risks at the
beginning of the implementation. You could, for example,
4. Reduce Risks

carry out a market survey immediately or just shortly after

market entry. If you do not carry out such surveys or polls
until a later point in time and find that there are not
enough customers for your product, all your previous
work may have been ineffective:
 CONTENTS OF A BUSINESS PLAN
 Name of business, business location and address
General  Nature of business activity
1 description of  Type of business organization (partnership, cooperative, new,
business old,)
 Any further explanation summarizing why the business will be
successful

• Name of business owner(s), promoter(s)

2 Personal • Educational, professional background
background • Relevant experience in business-related activities

 Business market area and targeted customers/ customer groups

3 Market plan  Why you will be able to compete with existing products/ services and how do
you compare competitors (price, quality, appearance, performance,)
 Past, current, future (projected) market demand for your product/service (if
possible in terms of volume/units per day/months)
 Suppliers and supply terms and conditions
 Unit pricing and list of all items/services being offered
 How you will be selling your produce (direct, dealers)
 Tip: Include the market research survey report as an annex
Cont’d
4 Business  Who will be the actors in this business
management plan  Specify their roles and the division of labor (if
applicable)
 How will the business work be organized (e.g. working
shifts, working times, working conditions)

Investments required
5 Financial plan Fixed assets/starting equipment (e.g. land, tools,
machinery)
 Preliminary expenses :
• Pre-operative expenses (e.g. legal fees, licensing fees, bank
charges,)
• Start-up expenses (e.g. water, electricity connection,
cleaning of premises, etc.)
• Working capital (raw materials, rent, water, transport, etc.)
CON’T

Total requirements
6 Sources of raising o Own contributions/investments
funds o Family/friends contributions
o Already secured loans, credits etc
o Total funds available
Deficit/funding gap
o Loan support required
 Projected operating income statement
7 Operating plan o Income from sales
forecast o Less cost of production and overhead/fixed costs =Net profit
 Break even analysis
 Cash flow projection
8 Major assumptions Give the assumptions you’ve made that underpin your plan e.g.
assumptions that particular resources will be available
9 Business profile Summary that shows all major aspects on one page
BUSINESS PLAN TEMPLATE
SECTIONS OF YOUR BUSINESS PLAN
A. Cover page
B. Table of contents
C. Executive Summary
D. Statement of Purpose
E. Business Description
F. Organization and Management
G. Production Plan/Operational
H. Risk Reduction
 PART 4: MARKETING

What is marketing?
Marketing is the effort to identify and satisfy customers’

needs and wants. It involves finding out who your

customers are, what they need and want, the prices, the
level of competition. It involves the knowledge and all the
processes you undertake to sell your product.
Marketing answers the following questions;

 Who are my customers?

 People who are buying from you now.

 People you hope will buy from you in the future.

 People who stopped buying from you but you hope to get them back.

 What are my customer’s needs and wants?

An Important point to note is that customers want to look at different products so that
they can choose what they like best. Some customers want a different design and
others want high quality and are willing to pay extra for that.
 Cont’d
 How can I satisfy my customers’?

You need to find out;

• Products/services your customers want.

• Price your customers are willing to pay.

• Location of your business in-order to reach your customers (Place).

• Promotion to use to inform your customers and attract them to buy your products or

services

THE 4 P’S OF MARKETING: Product, price, place and promotion

 How do I make a profit as I satisfy my customers?
PART 5: GROWTH STRATEGIES IN
BUSINESS
Small companies or businesses always look for ways to grow

their business and increase sales and profits. The technique

used by a company to expand business is highly dependent
upon its financial situation, the competition and even
government regulations and policies.
 Cont’d
Some common growth strategies marked in small scale

business are:
 Market penetration

 Market expansion (Market dev’t)

 Product expansion (Product Dev’t)

 Diversification

 Acquisition
 1. Market Penetration
A small company uses a market penetration strategy when

it agrees to market existing products within the same

market. Increasing market share is the only way of
growing through existing products and markets.
Cont’d

Market share is the share of unit and dollar sales a

company acquires within a certain market when compared

to all other competitors. The best way to increase the
market share is by lowering the prices of the commodities.
2. Market Expansion

 which is often referred to as market development that involves

selling current products in a new market. There are different

reasons explaining why a company needs to consider a market
expansion strategy.
 If an entrepreneur is unable to search for new markets, then it is

not possible to increase sales or profits. A small company

considers using market expansion strategy if it successfully finds
use of its product in a new market.
 3. Product Expansion
 A small scale company can expand its line of products or add new

features to increase sales and profits. When small companies use a

product expansion technique, it is also referred as product

development. The selling continues within the current market.

 A product expansion growth strategy basically works well when

there is a change in technology. Companies may also be compelled

to add new products as older ones become outdated.

 4. Diversification

By diversification, we mean a company selling new

products in new markets. This type of strategy is highly

prone to risk and losses.
 A small company acknowledges the plan carefully while

utilizing a diversification growth strategy. Marketing

research is important to identify if consumers in the new
market will potentially like as well as buy the new
products.
5. Acquisition
 In acquisition, a company purchases another company to expand its

functions. A small company uses this type of strategy to bolster its

product line and enter new markets.
 An acquisition growth strategy is very risky, but not as risky as a

diversification strategy, as in this case the products and market are

already authorized.
 A company must have complete knowledge of exactly what it wants

to achieve when using an acquisition strategy, mainly due to the

significant investment required to execute it.
PART 6: RECORD KEEPING
WHAT ARE RECORDS?

 Records refer to the information created, received, and maintained as

evidence by an organization or person, in pursuance of legal obligations or in

the transaction of business. For instance, a receipt book is a record of cash

entering coming into a business or organization.

 This is a systematic process of compiling similar or related information

resulted from business activities or operations into one document, and storing

it in files/folders (accepted formats) for the purpose of tracking and assessing

the performance or operations of a business.

WHY DO WE NEED TO KEEP RECORDS?

 To help find and solve problems in a business

 To control business capital, especially cash

 To show the direction of the business

 To plan for the future

 Records allow business people to oversee expenditures,
costs, and profit
 Records help to analyze business development over time
TOOLS FOR RECORDS-KEEPING

 Record-keeping tools are critical to a successful business, and should be put in place before the business is

launched.

 These tools help to ensure that documents are stored safely and methodologically. Each type of document should

be stored separately, for example:

 Daily sales record

 Credit sales

 Receipt book

 Cash book

 Profit and loss statement (income statement)

 Cash flow statements

 Fixed assets registration

 Stock taking
 PART 7: SAVING

Savings can be done through

 Small but regular deposits: this happen when someone has decide to

sacrifice current consumption (use of assets, e.g. of money and

goods) in order to increase the availability of assets for future
consumption. It therefore involves postponing expenditures in order to
accumulate a sizeable amount of resources for future use.
 Automatic deductions from salaries, wages or income: this type of

saving is not voluntary. It is a system used by most employers under the

labor law.
Advantage of saving

 To provide for specific needs in the future

 To have access to monetary or other assets whenever needed

 To ensure financial independence

 To make one’s own resources inaccessible for others without one’s

approval
 To safely store surplus

 To acquire skills for proper money management and self-discipline

 To qualify for certain types of loans

THANK
YOU!