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A
BASIC COURSE
INENTREPRENEURSHIP
Leslie Nii Tete Annan
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Table of Contents
1. ENTREPRENEUR ........................................... 4
Why start a business? ................................................ 6
Qualities of an entrepreneur .................................. 9
2. WHY SMALL BUSINESSES FAIL IN
GHANA! .................................................................... 133. HOW NOT TO FAIL AS AN
ENTREPRENEUR! ................................................20
4. BUSINESS PLANNING............................... 23
5. TIME MANAGEMENT................................. 24
6. EMPLOYMENT.............................................. 26
Self-employment ................................................. 27
Wage Employment ............................................. 29
Unemployment ..................................................... 31
Causes of Unemployment ................................. 347. BUSINESS COMMUNICATION ............... 37
Forms of communication................................... 38
Types of Communication................................... 39
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Barriers to communication in Business .......... 44
8. SMALL SCALE BUSINESS ......................... 46
9. SOURCES OF BUSINESS FINANCE ...... 49
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1. ENTREPRENEURAn entrepreneur is a person who creates a new
business in the face of risk and uncertaintyfor the purpose of achieving profit and
growth by identifying opportunities and
assembling the necessary resources to
capitalize on those opportunities. The
entrepreneur therefore combines the factors of
production to produce goods and services with
the aim of making profits.
TYPES OF ENTREPRENEURS
1. The Artisan Entrepreneur: This entrepreneurmay have technical job experience but may
lack essential skills like communication and
management. An example is a carpenter.
Some characteristics of such an entrepreneurare:
I. He rarely delegates authority
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II. He uses little capital resource to createand operate the business
III. He does the selling personallyIV. His planning focus is usually limited to
the present.
2. The Opportunistic Entrepreneur: Thisentrepreneur supplements his/her technical
expertise with managerial and
administrative skills. The contractor is anexample.
Some characteristics of such an entrepreneur
are:
I. He often delegates authorityII. He mobilizes more capital resource toocreate and operate the business than the
artisans
III. His planning focus goes beyond thepresent, he plans for the future
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FUNCTIONS OF AN
ENTREPRENEUR
1. Takes risks to make use of theseopportunities
2. Introduces innovations- newness, variationor uniqueness
3. Mobilizes capital for a business4. Organizes labour and production5. Plans ahead- aiming to limit the factors of
uncertainty and increase his chances of
success
6. Perceives opportunities in the environment7. Sells his products at a profit. Without profit
there will be no entrepreneur. It is both thereward and motive for entrepreneurship
WHY START A BUSINESS?
You start business:
1. To make a lot more money2. To get out of a professional rut
Bureaucracy
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3. To be ones own boss4. To prove to others that one can do it5. To advance technology, society etc.6. To develop and deploy talents one feels that
he has outside his specialization7. To compete with somebody
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Motivations for Starting a Business
Pull Influences
a. Desire for independenceb. Desire to make use of an opportunityc. Turning a hobby or previous work
experience into a job
d. The possible profit you will makePush Influences
a. Redundancy or being out of workb. Unemployment (or threat of)c. Disagreement with previous employer
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QUALITIES OF AN ENTREPRENEUR
1. He is an Active rather than a reactivepartaker in his own business. He makes
the most strategic decisions and sees to itthat he is part of the team that is
working on achieving it.
2. An entrepreneur has a Bold self-confident personality. An entrepreneur
with relevant knowledge, skills,
information and having a successful
experience in the past possesses great
degree of self-confidence. He thus
confidently puts forward his case andgets needed help or gets people to
patronize his products and services.
3. Innovativeness is one of the qualities ofan entrepreneur. This quality helps him
to create new products and services tobeat competition. He uses feedback and
the habit of learning from mistakes and
setbacks, to create new products and
services.
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4. Determined: shows itself in his eagernessto make the enterprise succeed and a
determination to organize the resources
necessary for success. He does not easily
become disappointed, discouraged ordepressed by setbacks or failures. He is
always optimistic in his outlook.
5. Although he likes challenges, he prefersnot to gamble. He is a Moderate Risk-
Taker. Moderate risks are those whichprovide a reasonable and challenging
chance of success.
6. He has a sense of personal responsibility.He takes responsibility of the outcome of
his actions and decisions. In the process ofdecision making he commits his efforts,
knowledge, skills and investments.
Should he fail, therefore, he only has
himself to blame, not his workers or his
clients. And should he succeed, he onlyhas his entrepreneurial skills to attribute
his success.
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7. He seeks concrete feedback onperformance. He wants to know how he
is doing-whether good or bad. The
feedback may be in the form of profits,
sales, percentage control of the market,size of the firm in terms of number of
workers, volumes of production, rate of
growth and customers reaction. Thusthey are excellent listeners.
8. He is more concerned with task ratherthan people. He cares about what is
supposed to be done first and then
about the people who will do it second.
That is why he puts profits and business
goals ahead of personal rivalries and
hostilities. He is objective and always tries
to keep personal relationships apart
from business matters. He shuns
favoritism and nepotism.
9.
He is achievementoriented. It is what hegets in the long run that they are
concerned with. He tends to like the
feeling of having accomplished
something by his own efforts. More often
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he competes on the basis of excellence. A
Successful entrepreneur possesses a desire
to overcome hurdles, to solve problems
and to reach his goals. He is extremely
persistent, but he is also very realistic inrecognizing what he can and cannot do.
By knowing the past and present, he is
able to predict the future events about
the business.
10.He tolerates uncertainty. Well awarethat there is great uncertainty with new
start-up businesses, he is comfortable
with it. That he wont make money earlyin his business doesnt push him awayfrom his goal.
11. He is self-starter. When opportunitystrikes him he takes the initiative to
work on it or not. Successful
entrepreneur are experienced, including
having intimate knowledge oftechnology and market place in which
they will compete and have some
general management skills. He exerts
influence without formal power. He
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knows when to use logic, and when to
persuade, when to concede and when to
maintain his stance.
2. WHY SMALL BUSINESSES FAIL INGHANA!
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There are countless reasons why small businesses
fail, but over here we will discuss a few we
consider pertinent.
A. Lack of ExperienceSome entrepreneurs go into SSBs with the
philosophy of What- Kwame-is-doing-I-can-
also-do. They follow their pride and desire to
compete. They then enter into businesses theylack the requisite experience for. If you want to
establish a school, you dont do so because you
have the money. You should have the
experience of managing a school or an
establishment similar to school.
Furthermore entrepreneurs are so caught up in
their lofty ideas that they disdain the need for
experience in the field they are pursuing.
B. Poor Financial ControlThey must admit it. SSB owners must own
up to their financial illiteracy. Most business
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owners especially the artisan entrepreneurs lack
basic accounting and book keeping skills that
go against them in the long run. They
consequently misappropriate money that comes
into the business. On other occasions too since
they have everything under their control -
including the income being gained, they use the
business resources for personal interests. This
creates a shortage in terms of the money thebusiness accrues in the long run.
C. Management IncompetenceYes, you could have a vision for a grand
business and might also have a lot of energy tosee to its operation. Nevertheless, when a
management expert is lacking in the
organization then the company is bound to fail.
D. Lack Of CapitalEven though SSBs are the easiest businesses to
start, people still dont find the capital to start
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their own business. This most surely is owned to
the fact that Ghanaians have a poor saving
habit. Else most adults by age thirty could have
some savings to rely on to start their own
business in Ghana.
Capital for a business comes in two forms,
working capital and seed/starting capital. These
different capitals are all important for the
business to succeed. When you lack the seed
capital the enterprise doesnt even come to
being. And when you have the seed capital but
do not have the working capital to sustain it
then your initial efforts would be in vain.
Getting money in the form of loan from other
individuals or institutions is rather a pain in the
neck for up-and-coming entrepreneurs. You lose
so much time and money in the process of
securing a loan. When secured, the loan has aninterest rate that eats into your income with
each passing month.
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E. Careless Customer CreditAn advantage consumers think Small Scale
Business have over other business is the credit
owners give to customers who patronize their
products. However when the credit is given,
poorly recorded or unwisely monitored credit
becomes bad debt for the business owner.
F. Over investing in fixed AssetsHaving fixed Assets is good for a business. It is
good because at a time you need a loan for
expansion or what not these fixed assets like the
building and equipments could serve ascollateral. Yet when you over invest in fixed
assets you leave less money for the operation of
the business. There is need for real cash to
operate the business. On the other hand fixed
assets too could be destroyed over night.
G.Failure to Plan
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It is said that, failing to plan is planning to fail.
Most small business owners tend to think that
the small size of their business is reason enough
not to have a Business Plan. But this is a wrong
notion since every business that seeks to make
profit should go by a plan. Lacking a business
plan gives room for misuse of income and
unnecessary expenditure. These two problems
can sink any business.
H.Inability to make theentrepreneurial transition
The entrepreneurial transition is the point where
the custodian of the business relinquishes some
or full control of the business to others so that
the business would thrive better in the
competitive environment. Sometimes
entrepreneurs are so tied to their companies
that even their death could spell the collapse of
their companies. However entrepreneurs are
advised to learn to give up some of the control
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of the organization to experts for their own and
their business sake.
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3.HOW NOT TO FAIL ASAN ENTREPRENEUR!
A. Know Your Business in DepthA man who knows what he is about hardly
falters. An entrepreneur- whether artisan or
opportunistic, is called upon to know his business
in depth. New technologies and techniques drop
in an entrepreneur who yearns to be successful
doesnt allow these things to pass him by.
Knowing more about what you do makes you a
formidable opponent to your competitors.
B. Prepare a Business PlanIt is very necessary to have a plan. You take any
route if you dont know where you are going.
The future of your business shouldnt be onlyclear in your mind but also it must be written in
black and white on paper. Have a documented
plan. Seek the advice of a consultant if you
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cant write one because running a business is as
complicated as building house, no matter the
size you still need to have a plan.
C. Manage Financial ResourcesGood financial discipline helps you to avoid
mismanaging you already scarce resources. You
need not take it for granted that your business
might be making profit or not. Seriously keeprecords of cash that flows into and out of the
business. This tells you whether you are actually
in business or you are playing cha-cha with
your money.
D. Understand Financial StatementsA small business owner should learn to
understand some basic accounting to make
head and tail of financial statements. When youunderstand financial statements you can make
strategic plans for the business.
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E. Learn To Manage PeopleEffectively
The human resource in the company is
considered as a vital asset of the organization.
This being the case, the entrepreneur should
learn to communicate and interact with his
workers for the progress of the organization. If
mismanaged, people could bring down a
company with gossip, unnecessary competition
and envy.
F. Keep In Tune with YourselfMost often entrepreneurs are the life wire oftheir businesses. Many businesses have folded up
with the death of the owner. But entrepreneurs
are urged to delegate some unimportant tasks
so that they dont end up doing everything and
suffering for it.
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4.BUSINESS PLANNINGA Plan is the conception of objectives or an aim,an end or a goal that you deliberately decide to
accomplish and how you will go about to do
this.
A BUSINESS PLAN
A business plan is a written document of how
you will do your business, who you will do yourbusiness, what you will do it with, where you will
do it and why you will do it.
IMPORTANCE OF A BUSINESS PLAN
1. It focuses attention on objectives in termsof mission and vision of the business.
2. It facilitates control of the business assetsand liabilities.
3. It gives room for innovation andcreativity.
4. It helps in better co-ordination so thatevery employee does his/her work
effectively and efficiently.
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5. It eliminates uncertainty in businessactivities.
ADVANTAGES OF PLANNING
1. Planning brings about flexibility inbusiness operation
2. You avoid pressure3. You work to your maximum ability4. It enables workers to produce more
within a short time.
5.TIME MANAGEMENTHe who is faithful in what is least is faithful alsoin much; and he who is unjust in what is least is
unjust also in much.
Luke 16:10
Time Management is defined as becoming more
efficient at doing things that are important
within a given period of time.
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Characteristics of someone who manages histime well
a. His work is of a great qualityb. He produces/ does more than his colleagues
in a given time.c. He does/accomplishes whats important.
How to Manage Your Time Well
Appropriate delegation
Dont give the very important work tosomeone else, yet dont be afraid to askfor help on a given task.
Broach difficult tasks first
You attack tasks that you know you can
tackle but seem very difficult, firstly.
Control Interruption-
Handle interruptions to suit you dont letthem handle you. Learn to say nograciously to tasks that are not relevant
at a particular moment in time.
Define the task
How long will the task take?
What to do about the task?
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Whom to deal with in accomplishing the
task?
Evaluate your used time, what do you and how
do you use your time? Do you do more work oryou play more?
Feel at ease; enjoy yourself while getting at a
goal
Go D & C: Divide and conquer tasks that seem
overwhelming, larger than your presentcapacity.
Have alternatives for how you spend time
Institute some free time. Where there is a
prospect of free time you dont feel anxiouswhen you are busy.
6.EMPLOYMENT
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Some Keywords
Employee is someone who works for aperson or an organization in return for
payment. Employer is an individual or an
organization that hires or recruits others
to render service in the name of the
company he owns.
Self-employment
It is when an individual combines the factors of
production to come out with a product or a
service that meet the needs or wants of the
market.
Advantages of Self employment
1. There is only one person taking decisions-this should lead to decisions being made
quickly.
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2. As soon as an element of the marketalters, the entrepreneurs recognizes it
and acts quickly
3. A lack of chain of command and thesmall size of the organization should
mean that the entrepreneur has control
over the Workforce.
Disadvantages of Self-employment
1. If the organization grows, one person willnot be able to cope with the increase
volume of decision
2. There is inadequate capital for one-manbusiness, because the owner may find it
difficult to raise large sums of money due
to lack of collateral security.
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3. The liability of the owner is unlimitedbecause, if the owner incurs heavy losses,
his assets can be sold to pay off the debt.
4. The success of the business dependsmostly on how active the owner is.
Consequently in the event of sickness,
retirement or death of the owner the
business might collapse if there is nobody
to manage it.
Wage Employment
Wage employment is when an individual is
willing and prepared to offer his skills and time
in exchange for a salary or a wage from an
employer. This employer could be an individual
or an institution. A Secretary working in
Procredit Savings and Loans Company Ghana is
in wage-employment.
Advantages of Wage Employment
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1. The employees get a token in the formof salaries or wages at an agreed period.
2. The management and the success of thebusiness do not solely depend on theemployee though he has a part to play
to uplift the image of the business and
also contributes too to the achievement
of the companys goals.
3. He has the chance to seek for a new jobif he wants to. That is, he can choose to
leave or stay in the business if there is no
job satisfaction.
Disadvantages of Wage Employment
1. Any abnormal profit only accrues to theemployer. Since you are given
remuneration at a given time, the
employer can choose to offer you a
bonus to serve as a motivation if he
wants.
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2. With the wage employment yourfreedom is sometimes restricted because
your employer can sometimes let you
work on non-working days such as a
weekend or a holiday.
Unemployment
This is where people are willing to work at the
current wage rate and actively looking for workbut cannot find one. This can also be described
as proportion of the labour force that is
involuntarily without work.
Types of Unemployment
Seasonal UnemploymentThis is the type of unemployment that is mostly
experienced by companies whose production is
structured according to seasons and changes.Some Ghanaian agricultural farmers are
confronted with seasonal unemployment.
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Frictional UnemploymentWhen there is change in the methods of
production frictional unemployment could
occur. For instance as technology has increased
some companies start to employ the use of
machines to do certain jobs instead of humans.
The messenger who used to carry hand written
and spoken message from one worker to
another or from one company to another is no
more in employment. This is because the fax
machines as well as telecommunications
machines have been introduced in these
companies. Also the introduction as the combine
harvesters, bulldozers into agricultural
operations has replaced farm labourers. So its
said that the messengers and the farm laboures
are frictionally unemployed.
Structural UnemploymentThis is the type of unemployment caused by
technical changes that brings about changes in
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the composition of demand or pattern of
demand. Changes in demand due to the
invention of new commodities or even changes
in taste and fashion may bring about declining
industries. For example a Ghana grown rice
industry collapses because people are no more
interested in buying Ghanaian rice. The
employees working in this industry would find
themselves without work. They are then in asituation of structural unemployment.
Cyclical UnemploymentAlso known as Mass Unemployment, Cyclical
Unemployment happens anytime there iseconomic depression in a country. Economic
depression is a situation where the demand for
goods and services are reduced because even
the means to pay for these things are small or
no more.
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Causes of Unemployment
1.
Lack of Skills
Employable skills are lacking in Ghana. You see
many Ghanaians who boast of diverse skills but
they lack the requisite ones such as Information
Communication Technology and Interpersonalskills to help them get and maintain an
employment.
2. Lack of Entrepreneurial skillsWhile there are so many graduates from
tertiary institutions of education, there are not
many who have the entrepreneurial skills to
establish and run their own business.
3. The Introduction of newtechniques/Technological
advancement
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When there is an introduction of new techniques
workers especially lay ones are declared
redundant. Machines then come to the work
that they used to do at the work place.
4. Lack of capitalThose who lack employment almost always lack
the capital to start their own businesses. So in
the long run they remain the unemployed.
5. Too Few CompaniesOur technical and secondary schools continue to
churn out graduates, yet only few vacancies- if
any exists at all- can be found in the companies
around. Ghana for many years has remained
more of a consumer than a producer and for
that matter the import margin is greater than
the export margin. Where a country is aproducer you find more factories and companies
around, which inevitably provide employment
opportunities for the youth.
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6. Rural Urban DriftThe rural urban drift has caused over
population and a high demand for employment
in the cities and towns. The youth desert their
rural dwellings into the urban areas seeking
white-collar jobs that dont exist.
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7.BUSINESSCOMMUNICATION
Generally, the exchange of information between
people, e.g. by means of speaking, writing, or
using a common system of signs or behavior is
considered communication. Communication can
also be defined as the process by which peopleshare information, ideas and attitudes.
Importance Of Communication
1. Communication makes it possible formanagement to give instructions tolower level workers to work
2. Workers problems and grievances can bemade known to management
3. Communication helps workers to knowall decisions taken by management thatreally affects them and the firm as whole
4. Through communication, a report onwork done is sent to management for
control purposes.
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5. Communication makes it possible forworkers to make suggestions or decision
to management as to the best method
of work.
6. Communication aids in the appraisal ofemployees. Through effective
communication, management is able to
evaluate the work of subordinates, give
feedback on performance, and jointlydraw plans to eradicate any weakness as
well as improve their strength
Forms of communication
Formal communication
This is the official means of sending information
relating to work. It takes the form of letters,
memoranda, report and speeches presented at
meetings, workshops and seminars.
Informal Communication
This is the information given without the
authority or permission of any superior. Informal
communication takes place among superiors,
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subordinates as well as peers. It takes the form
of rumour or gossip.
Types of Communication
1. Internal CommunicationIt takes place within an organization. Internal
communication occurs among employees,
between a manager and his subordinates,
between a director and his departmental heads.
This type of communication originates and ends
within the same organization, takes the form of
memo or letter.
2. External CommunicationIt takes place between an organization and the
outside world. It may be between a business
and its suppliers, creditors, customers, the
government etc. It originates from themanagement of one organization to an
individual or group of individuals outside the
establishment or from one management to
another companys managements.
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Business Communication Tools
The primary tools for communicating
information in business include e-mail messages,memos, letters, reports, phone calls, meetings,
and conversations. To determine which is the
best to use in a given situation, start by asking
yourself the following questions:
How much information do I have to passalong?
How many people will receive themessage?
How quickly does it need to reach them? How much time do the recipients need
to respond to it?
How formal should the presentation be? Is the message confidential? How are people likely to respond to it?
E-mail Messages
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Because of its speed and informality, e-mail is
ideal for routine communication between
coworkers. For instance, an e-mail message is
usually the best means of announcing a new
policy, introducing a recent hire, informing
colleagues of a meeting time, and reminding an
employee of an approaching deadline.
E-mail messages are also useful for day-to-day
or extremely timely exchanges with peopleoutside the company. Because of their low cost,
they often are preferred for communicating
with overseas contacts.
E-mail EtiquetteExchanging e-mail messages is like having a
conversation without seeing the face or hearing
the voice of the other person. You have only the
persons words, but none of the visual and
auditory cluesinflections, facial expressions,and gestures, for instancethat help explain the
underlying meaning of the words.
Because of the impersonal and often informal
nature of e-mail, the tone and substance of
messages can easily be misinterpreted. To help
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avoid confusion and hurt feelings, Internet users
have developed a loose set of rules known as
netiquette (network etiquette), including
guidelines for being a responsible and courteous
e-mail correspondent.
Memos
Although e-mail messages are now used instead
of memos for most intercompany
communication, memos are still suitable for
notes sent to people higher in the company
hierarchy, especially in conservative companies.
The memo is also appropriate for lengthy,
formal communications to coworkers that may
eventually be circulated to your supervisors or
to contacts in other companies.
Letters
The letter is now used primarily for formal
correspondence with clients, customers, and
others outside the company, particularly people
you have not met.
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Imagine, for instance, that you need to ask for
advice or information from someone you do not
know personally. The person will likely give a
letter more attention than an e-mail message
because a letter conveys an added element of
formality and courtesy.
Reports
A complex document of more than ten pages,
especially one that will be shown to outside
contacts, is best presented as a report. A routine
report can be easily produced using a word
processor and a laser printer. Important reports
for potential clients, stockholders, or others you
might want to impress usually should be
professionally designed and printed, often in full
color on heavy or glossy paper.
Phone Calls, Conversations, and Meetings
The main advantage of a phone conversation is
that it allows both parties to respond to each
other immediately. If you and a coworker have
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several questions for each other, asking them in
a single phone call is usually less time-consuming
than exchanging a long series of e-mail
messages.
Personal matters or topics that might elicit a
highly emotional response are best discussed in
person. As common sense will tell you, sending
an e-mail or memo reading Youre fired! is not
the most delicate or responsible way of dealingwith a difficult situation.
Face-to-face meetings are usually the safest
way of communicating confidential information.
Meetings are also useful when a quick group
decision is needed on a particular problem orissue. Important side benefits of meetings are
that they allow employees in different
departments or divisions to become acquainted
and can often foster a sense of shared mission
among coworkers.
Barriers to communication in Business
1. Psychological:
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a. Semantic problems- meaning ofwords that differ in peoples minds.
b. Emotional hang-ups-anger,frustration and excitement.
c. Stereotyping- Prejudice,discriminationd. Distorting information intentionally
for personal gain
2. Physiological:a. Bad handwritingb. Hearing problemsc. Bad eyes
3. Physical: Noise in the environment,outdated equipment, poor or bad
lighting
4.
Cultural: Different spoken language,meta-linguistic incompetence that
affects your understanding of innuendoes
and metaphors.
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8.SMALL SCALE BUSINESSCHARACTERISTICS OF SMALL SCALEBUSINESSES
A. A business that employs from one totwenty nine (29) people. It may also be a
business that employs ten or fewer
people with an initial capital of 25
Million Ghana Cedis
B. The managers of small scale businessesare its owners who are accountable and
responsible to themselves.
C. They are responsible for all liabilityincurred by the business and of course
they are the sole beneficiaries of the
profits.
Examples of Small Scale businesses are tailoring,
carpentry, weaving, carving, retail outlets,communication and catering services.
ADVANTAGES OF SMALL SCALE BUSINESS
1. Easy and simple formation, since littlecapital is needed to start it.
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2. Quick decision-making: owner does notneed to consult anybody in taking a
decision
3. There is the sense of independencebecause the manager is the owner andhe report to no one.
4. Enjoyment of privacy: Business Plans aremostly kept secret by the owner since
hes not compelled by law to publish.
5. Theres flexibility: one can react quicklyto change and can adopt his or her
operations to local conditions.
6. Opportunity to be a jack of all trades.On is able to acquire varying degrees ofknowledge and skill.
7. Customers are offered goods and servicesto their specification. That is according to
the quality and quantity that suits them.
8. The nation gains by means of theinnovation and creativity that Small
Scale Businesses introduce.
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DISADVANTAGES OF SSBS
1. Inadequate financial capital: they donthave collateral security to qualify them
for loans from the banks.
2. Inefficient management: Lack ofmanagement knowledge and expertise
on the part of the owners.
3.
Theres no advantage of large scaleproduction hence theres no advantageof larger profit margin.
4. Bad judgement can lead to collapse andthis comes as a result of sole
responsibility.
5. Owners of SSBs usually depend onoutmoded technology since they cantafford the new technology.
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9.SOURCES OF BUSINESSFINANCE
This refers to the various means by which peopleor organization can get money to operate a
business. There are two sources namely short
term source and long term source.
SHORT TERM SOURCES
1. Trade Credit: This involves the purchaseof products that is backed by a promise
to pay later.
2. Loans: they are either short-term orlong-term money borrowed by theentrepreneur form financial institutions
or individuals. Interest is charged on a
loan. There is need for collateral for large
sums.
3. Overdraft: A customer of a bank isallowed to withdraw more money than
that which is in his account to a certain
limit. Interest is charged only on the
actual amount overdrawn. There is need
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for collateral security in case of large
sum.
4. Personal Savings: An entrepreneur mayuse his past savings at a bank or with asusu collector.
5. Venture Capitalist: Investment groupswho are interested in ingenuous and
creative ideas to develop into profitable
businesses.
6. Leasing: some organizations lease outsome fixed assets which are lyig idle and
would not be used immediately at a fee.
7. Hire purchase: under this theentrepreneur undertakes (promises) topay for items purchased in installments
after an initial deposit has been paid.
The entrepreneur (here the buyer) takes
the product completely after paying the
last installment.
8. Gifts from friends and family membersare short-term sources of finance.
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LONG TERM SOURCES
1. Shares: usually for large companiesshares (units of a companys capital) are
bought by investors (shareholders).
2. Debentures: These are securedtransferable loan stocks and are usually
secured against an asset of a company so
that should the business fail to pay them
back they can lay claim to the asset.
3. Sale of Assets: the company sells someassets to obtain some required cash.
4. Retained Profits: This involves puttingaside part of the net profit to beploughed back into the business.
5. Sale and Lease Back: A company couldsell its buildings or assets for a capital
sum and at the same time, lease the
asset back for its own use form thepurchaser for a long term at a specificrent.