enterpreneurship ion and processes 2008

8/3/2019 ENTERPRENEURSHIP ion and Processes 2008

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ENTERPRENEURSHIP


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Session objectives

Define entrepreneurship andintrapreneurship

Explain the entrepreneurship process

Validate business ideas to ensure thatthey are opportunities

Identify different ways of financing

business Identify the requirements for starting new

business ideas for the cooperatives


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DEFINING ENTREPRNEUSHIP

Entrepreneurship is creating and building

something of value from practically nothing.

It is the process of creating or seizing an

opportunity and pursuing it regardless of theresources currently controlled.

It involves the definition, creation, and

distribution of value and benefits to individuals,

groups, organization, and society.


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A dynamic process of creating incremental

wealth

Creation of wealth by individuals whoassume major risks in terms of equity

and/or career, commitment of providing

value for some products


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DEFINING ENTREPRNEUSHIP (cont..)

The process of taking or bearing

uninsurable risks in buying and selling

good and servicesProcess ofcombining factors of production

or resources such that wealth is created

Creating and building something of value

from practically nothing


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Pursuing new opportunities without regard

to resources currently controlled

The process of creating new organisation


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An innovative process that involves bringing

new combinations into the production

process such that:New products or services are offered

New methods or technology is applied

New markets are targeted or opened

New sources ofsupply and raw materials areused

New forms oforganisations are formed


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The process ofcreating something new

with value by devoting the necessary time

and effort, assuming the accompanying

financial, psychological and social risk,

and receiving the necessary reward of

monetary and personal satisfaction


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EntrepreneurshipEntrepreneurship

It also requires a willingness to takecalculated risks both personal and

financial and then doing everything

possible to influence the odds.


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Teams and ResourcesTeams and Resources

Entrepreneurship involves building ateam of people with complementary skills

and talents.

Sensing an opportunity where others see

chaos, contradiction, and confusion.

Finding and controlling resources (often

owned by others) to pursue the

opportunity.Entrepreneurship involves making sure

the venture does not run out of money

when it needs money most.


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Basic aspects of being an entrepreneur

Entrepreneurship involves the creation

process

creating somethingnew of value

Entrepreneurship requires devotion of the

necessary time and effortIn order to create something new and

make it operational


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Is it a GetIs it a Get--Rich QuickRich QuickPlan?Plan?


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Entrepreneurship is very rarely a get-rich-

quick proposition.

Rather, it is one of building long term

value.

This leads to long term cash flow

streams.

Entrepreneurship is a human creative act. It involves using personal energy to

initiate and build an enterprise.


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Entrepreneurship usually requires a visionand the passion, commitment, and

motivation to transmit this vision to other

stakeholders.

These are:

Partners

Customers

Suppliers

Employees

Financial backers


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It also requires a willingness to takecalculated risks both personal and

financial and then doing everything

possible to influence the odds.


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(cont..)

Entrepreneurship means assuming the

necessary risks:

Financial psychological

social etc


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(cont..)

Reward for being an entrepreneur:

Independence

Personal satisfactionFinancial


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Myths about Entrepreneurs

Myth1- Entrepreneurs are born, not made

Myth2- Anyone can start a business

Myth3- Entrepreneurs are gamblers

Myth4- Entrepreneurs want the whole

show to themselves

Myth5- Entrepreneurs are their own

bosses and completelyindependent

Myth6- Entrepreneurs work longer and

harder than managers in big

com anies


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Myth7- Entrepreneurs experience a great

deal of stress and pay a high price

Myth8- Starting a business is risky and

often ends in failure

Myth9- Money is the most important start-

up ingredient

Myth10- Entrepreneurs should be youngand energetic

Myth11- Entrepreneurs are motivated

solely by the quest for the almighty


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Myth12- Entrepreneurs seek power and

control over others

Myth13- If an entrepreneur is talented,

success will happen in a year or

two

Myth14-Any entrepreneur with a good idea

can raise venture capitalMyth15- If an entrepreneur has enough

start- up capital, he or she cant

miss


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INTRAPREPNEURSHIP


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DEFINING INTRAPREPNEURSHIP

The practice of entrepreneurship within theconfines of the organisation

Creating something new and of valuewithin the confines of the organisation

Thrives in organisations with anentrepreneurial culture


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Intrapreneurial culture

Intrapreneurial culture:

Employees with talents to act with

freedom to take initiatives or try outnew ideas as if they were running

their own business


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Differences between entrepreneurship

and entrepreneurship

Intrapreneurship

Acts within the confines

of existing organization

Challenges the statusquo and fights to change

the system from within

Has free resources

found in the organisation

Entrepreneurship

Acts outside the

organisation

Challenges the statusquo outside the

organisation

Has to look for his

resources


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Factors retarding intraprenuership

The cost of failure too high, the reward ofsuccess too low

No space is provided for failure

No reward for innovative ideas

Inertia caused by established systems thatno one is willing to changed

we have always done it like this If itaint broken, dont fix it changing nowwould be too much effort


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Factors retarding intraprenuership

(cont)

Hierarchy the deeper the hierarchy, the more

difficult it is to get permission for anything new.

Support from top management

Recognition that entrepreneurship culture needsto be compatible with the overall organizational

culture

Communication system within the organization is

strong so that entrepreneurs within the company

can be heard


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Characteristics of successful

entrepreneurs


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Research has shown thatcertain traits seem to be

associated with entrepreneurs


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Who are entrepreneurs?

Are opportunity driven, not resource driven

Managers ask:

given the resources under my control,what can Iachieve?

Entrepreneurs ask:

Given whatIwant to achieve, what

resources do Ineed to acquire?Good as seeing pattern changes within the

environment


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Who are entrepreneurs? (cont)

The reasonable man adopts him/herselfto the world: the unreasonable one persistin trying to adapt the world to him/herself

The entrepreneur is the unreasonableman/woman who is motivated by thedream of things that conventional wisdomsays cant, wont or shouldnt be

Entrepreneurs have therefore stubbornperseverance


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Stand up to ridicule

Stand up to failure, good at failure but

See failure as a temporary setback and anopportunity to learn and do better next time

success is the ability to go from failure to

failure with no less of enthusiasm


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The two magic words of an entrepreneur

what if ?

What if telephone didnt have to be connected

to each other with wires

Constantly scanning the environment foropportunities


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Entrepreneurs create their own future

get up , look up for circumstances they

want, if they find them, make them


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Characteristics ( cont)

A desire to achieve: The push to conquer problems,and give birth to a successful venture. A strong urge tobuild

Hard work: It is often suggested that many

entrepreneurs are workaholics. Desire to work for themselves/need forindependence Entrepreneurs like to work forthemselves rather than working for an organization orany other individual. They may work for someone to gainthe knowledge of the product orservice that they may

want to produce. They seldom are willing to submit toauthority


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Nurturing quality: Willing to take charge of, and watchover a venture until it can stand alone.

Acceptance of responsibility: Are morally, legally, andmentally accountable for their ventures. Some

entrepreneurs may be driven more by altruism than byself-interest.

Reward orientation: Desire to achieve, work hard, andtake responsibility, but also with a commensurate desireto be rewarded handsomely for their efforts; rewards canbe in forms other than money, such as recognition and

respect. Optimism: Live by the philosophy that this is the best of

times, and that anything is possible.


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Orientation to excellence: Often desire to

achieve something outstanding that they can be

proud of.

Organization: Are good at bringing together thecomponents (including people) of a venture.

Profit orientation: Want to make a profit; but

the profit serves primarily as a meter to gauge

their success and achievement.


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Ingenious and resourceful, they arecunning, opportunistic, creative and nonsentimental

Innovative, calculating inventor, over-optimistic promoter, organizationalbuilder. These four terms are used todescribe the characteristics which is notbased on personality but on the type ofopportunity the entrepreneur faces


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Visionary the entrepreneur ha an

enthusiastic vision which is the driving

force of the enterprise. This vision is

supported by an interlocked collection of

specific ideas not available to the market

Persistence and determination - this

helps the entrepreneur to developstrategies to make the vision into a reality


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Risk taker calculated risks which

includes assessment of costs,

market/customer needs and persuading

others to join and help


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Characteristic of successful

entrepreneurs

Competitive

Hardworking

Forceful

Knowledgeable

Networking

Persuasive

Good communicator

Takes initiative

Independent

Problem solver

Time conscious

Leadership traits

Adaptive to change

Likes people


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Skills and competencies

required for entrepreneurship


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What skills are required of in

entrepreneurship

Technical skills Someone in the business must possess the professional

skill and knowledge to generate the companys product orservice.

The concept for what product or service the company willoffer must become clear before the venture can succeed.

Business management skills

Personal entrepreneurial skills disciplined, risk taker,innovative, change oriented, persistent, visionary etc


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ENTERPRISE CULTURE


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Enterprise culture

Culture is a pattern of share beliefs and values

that provide the members of an organization

with rules of behaviour or accepted norms for

conducting their operations It is the philosophies, ideologies, values,

assumptions, beliefs, expectations, attitudes and

norms that knit an organization or a community

together and are shared by members


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Enterprise culture (cont..)

Enterprise culture, therefore can be

defined as a set of altitudes, values, and

beliefs operating within a community or

environment that lead both to the entering

behaviour and aspiration towards self

employment or venture creation


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Research on enterprise culture

Research findings indicate that:

Those who have parents or relative who

own small businesses are likely to becomeentrepreneurs than those without similar

acquaintances

Those who have worked in small

enterprises are more likely to establish

such enterprises later


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Research on enterprise culture

Those who work in organizations which allowhem greater deal of independence and freedomof operations under conditions of uncertainty aremore likely to establish businesses than others

Those coming from a culture which supportsindividual small business ownership whether for

religious purposes, ethical or moral reasons aremore likely to establish businesses than othersoutside the culture


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Components of an enterprise culture

1. Abundant positive role models of successful independentbusinesses

2. Ample opportunity for familiarization with small business tasksespecially during youth

3. Network of independent businesses family contacts andacquaintances reinforcing familiarity and providing market entryopportunities

4. Provision of formal/informal knowledge and insight into the

process of independent business management

5. Opportunity to practice entrepreneurial attributes reinforced bysociety culture during formative years


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ENTREPRENEURIAL

BEHAVIOUR THEORIES


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Entrepreneurial behaviour theories

Entrepreneurial behaviour looks at activities,interactions, competences and feeling ofentrepreneurs

There exist a number of schools of thoughtwhich view entrepreneurship from afundamentally different perspective.

Such perspectives are:

EconomicPsychological

Social

Managerial


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Economic theories perspective

Economic theories of entrepreneurship focus on theeffects that economic environment has onentrepreneurial activities and what impact entrepreneurshave upon the economy

From the economic perspective, an entrepreneur is aperson who brings together the resources or factors ofproduction into combinations that make their valuegreater than before

Economic theories help in providing missing links in theeconomic environment that are necessary for businessstartup and survival


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Economic perspective (cont)

Proponents of economic theory believe that

entrepreneurship and small business

development is influenced by factors such as:

Market structures and opportunitiesInvestment climate

Government restrictions or encouragement

An entrepreneur is seen as a person who

specializes in taking judgmental decisions aboutthe coordination of scarce resources (Casson,

1982)


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Economic perspective (Cont..)

Classical economist like Keynes emphasis

optimization of existing resources in order

to reach equilibrium.

Here the entrepreneur is defined as:

The stabilizing force that brings market forces

closer to an equilibrium

He/she shifts economic resources out of anarea of lower risk/productivity to areas of higher

productivity/greater yield


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An entrepreneur is the person involved in allocatingscarce resources in order to produce goods/serviceswith utility, hence a forth factor of production he/shedistributes and organizes resources

An entrepreneur is the stabilizing force which bringsmarkets closer to equilibrium and which makes marketforces work more smoothly

The entrepreneur is the person driven by profit motive(profit maximization and cost minimization) and gainssocially and financially from economic activities.


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Entrepreneurs create a dynamic disequilibrium in the economy asopposed to static equilibrium

This he does by creating innovations which introduce newcombinations and production

Entrepreneurial activity is a destabilizing force that starts theprocess of creative destruction, the essence of economicdevelopment

Entrepreneurs are not manage who undertake routine activities on

the basis of past experience without idea of change, rather they arerisk takers in the area of uncertainty and engage in activities thathave not been undertaken before

I th i t


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In summary, the economists see

entrepreneurs as:

Risk takers or the bearer of uninsurable risks

(Cantillon, 1755)

A combiner of resources or factors of production

such that wealth is created (Say, 1832) Innovators who bring new combinations into

production process (Schumpeter, 1942)

Schumpeter saw entrepreneurship as the engine

of economic development which resulted in new

combinations (called an enterprise)


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The new combinations may include:

Introductions of new products or services

Introduction of new method s of production

Opening on new markets

Finding new sources of supply of rawmaterials or components

Providing induction reorganizationNeoclassical economist view


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Implications/comments on this theory

You can train entrepreneurs by enhancing

their creativity and supporting innovating

ideas

People can be trained to sharpen their

decision making abilities to see and

analyse opportunities creatively


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SOCIOLOGICAL THEORIST

PERSPECTIVE

According the this perspective environmental factorssuch as belief systems, cultural values, socialstructure for the basis of entrepreneurial behaviour

Studies by some sociologist indicate that the decision to

become self employed is related to having associationwith another person who is a close relative

Social interactions provide potential entrepreneurs with:

Market/market information

Credit Social support


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SOCIOLOGICAL THEORISTS

PERSPECTIVE (cont..)

The sociological theories have been based

on the premise that members of a given

society generally adhere to system of

structured roles which can encourage or

discourage entrepreneurships.

Entrepreneurship activities will be high in

those cultures where entrepreneurships isheld in high esteem.


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The social influence of entrepreneurshipbehaviour can be explained in terms of:

Family background - the general hypothesis is

that those whose parents are self employed orbusiness owners are significantly more like tobecome business owners themselves

Religion research findings indicate that someparticular religious persuasions tend to haveentrepreneurial spirit. For example, Jews arecommonly perceived as having an enterprisingnature


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Ethnicity research indicates that some ethnicgroups are more inclines to entrepreneurialactivities than others

Education and training research studiesindicate that entrepreneurial activities can beenhances through educational and trainingprogrammes .Relevant training providesprerequisites for business ownership and helps

in reducing business failure ratesCultural values some cultural values

discourage/encourage entrepreneurship


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Comments of this perspective:

It perpetrates the myth and stereotypes

in society related to superiority and class

system and are not healthiest for

development


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PYSCHOLOGICAL THEORISTS

PERSPECTIVE

The psychological theories of entrepreneurshipare based on traits and personalitycharacteristics that are exhibited by successfulentrepreneurs

The central focus of this perspective is that theentrepreneurs have unique values, attitudesand needs which drive them to businesscreation

People behave according to their values, andattitudes irrespective of the different situationsthey might be


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The psychological school focuses on personalityfactors

Believe that entrepreneurs have unique valuesand attitudes towards work and life

This propel the individual to behave in a certainway

According to this theory, some people are morelikely to become entrepreneurs because of their

mental attitude for independence or withdissatisfaction with operating under the directionof others


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Entrepreneurs, as other people acquirethese values attitudes and needs as theygrow up from:

FamiliesSchools

Churches

Communities

These values are learned in the process ofsocialization into a culture.


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Since values are leaned early in life ad are well

established prior to adulthood, characteristics

can only be reinforced in those who portray

them or have them in latent (dormant,concealed) form

It would not be cost effective to try to develop

them in people who do not possess them but toreinforce them in those who already have them


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The major distinguishing features, or quality ofcharacters that have been widely explored within thepsychological perspectives that make entrepreneursdifferent from others are: Need for achievement

Locus of control Risk taking propensity

Positive self image

Initiative

Independence

Future orientation

Goal setting

Time bound planning

Environmental searching


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Extreme psychologist further suggests

that:

The entrepreneur has an ability, sixth sense

and instinct which is inborn

The entrepreneur portrays intuition, energy,

persistence and self-esteem

Entrepreneurs according to this version areborn as they have natural abilities, training

cannot influence in any way


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Comments of this perspective:

It perpetrates the myth and stereotypes in

society related to superiority and class system

and are not healthiest for development

It simply says people are not equal and itwould be difficult to organize

training programmes suitable for all

It can give negative attitude towards young

people who might not be lucky to possess theunique abilities and traits


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MANAGEMENT PERSPECTIVE

This school emphasize organisation of resources in asystematic way to attain maximum profit

Entrepreneurs are therefore organizers of an economic

resource venture They organise, own, manage and assume risks

Entrepreneurships is therefore a series of activists whichfocus on the central function of managing a businesssuch as production, planning, marketing,coordinating, controlling, evaluating and financing


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Management perspective (cont..)

The managerial school therefore emphasizes onimproving a persons capacity throughdeveloping his/her

Analytical

Rational

Cause-effect relationship

Another stand of management view

entrepreneurs as leaders on people They have the capacity to adapt their styles in

order to get maximum out of people


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Management perspective (cont..)

They view people as their greatest resource andrealize that they cannot accomplish goals alonebut must depend on other people and their skills

Training is therefore possible by knowing how to

motivate, lead and direct people Basic questions that people who follow this

school of thought would be asking themselvesare:What are my plans?

What are my capabilities?

What are my credentials?

How do I get most from the people around me?


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CONCLUSION

1. All these theories provide a useful insight inunderstanding and explaining entrepreneurship

2. It is possible that they can complement each

other in developing a rich entrepreneurialprogramme

3. Pre- starters can benefit a lot formpsychological, social and economic schools ofthought

4. Start ups and on going entrepreneurs canbenefit more from management school


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Entrepreneurship Process


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Is everybody who starts a

business an entrepreneur?


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Appreciating entrepreneurship

Right attitude:

Positive entrepreneurship can be a

way of life

Not a get rich quick business

Be motivated to an entrepreneur


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Entrepreneurship Process

Steps:

Appreciating entrepreneurship

Idea generation

Opportunity assessment

Business planning

Registration

Financing

Start up


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ENTREPRENEURIAL

MOTIVATION

ENTREPRENERIAL MOTIVATION


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ENTREPRENERIAL MOTIVATION

.


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ENTREPRENEURAIL MOTIVATION

Entrepreneurial motivation is affected by

two main factors

internal motivating factors

External motivating factors


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Internal motivation

Internal motivation is the inner drive you

get as a result of desire to achieve a

certain goal or fulfill some needs

The goals are the aspirations that define

the base of inner drive of an entrepreneur


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Internal factors affecting motivation

Self actualization

One of the powerful motivators that form the base forinner drive on an entrepreneur is self actualization.Usually a successful venture offers various form ofreward in terms of benefits identity and prestige. Having

achieved the basic human needs, entrepreneurs becomemore confident in their abilities to realize their capabilityof achieving more

Profit maximization

The drive to maximize profits will make potentialentrepreneurs work harder, be more innovative and evenventure into other enterprises

I t l f t ff ti ti ti


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(cont)

Desire to succeed

This is an aspiration to achieve success toward oneswelfare to maximize pleasure and happiness. This willgive an entrepreneur public appreciation and recognition,especially if they have accomplished difficult tasks where

others have failed

Survival

An entrepreneur has to face many challenges,completion, internal and external forces. To succeed,

entrepreneurs have to strive to overcome theseobstacles. This sprit of survive sustains them through achallenging environment

I t l f t ff ti ti ti


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(cont)

Adventure

This is a way of taking risks or challenges without knowing the endresult. This gives a potential entrepreneur an opportunity to exploreand this helps and enhances his knowledge and innovativeness

Independence/self reliance An entrepreneur does not like being controlled by others. They havetheir own original thoughts and ideas and generally do not conformto routine jobs and practices. To satisfy their needs they seekopportunities that provide independent hence become masters oftheir own activist and taking full responsibilities for their outcome

Power The desire to feel in total control of all situations


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External motivation

What external factors would motivate me

to start a business?

External motivation factors are those

factors that expose you to the available

public resources and facilities which

would encourage you to start a business


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External motivation factors

Credit facilities

These are the facilities which would help you to acquirethe necessary capital outlay to be able to set up anenterprise

This capital outlay will assist you to purchase rawmaterials, machinery, equipment and other inputs

Infrastructure

Includes building, communication, informationtechnology, transport and other auxiliary services andutilities

Lack of adequate infrastructure creates physicalconstraint to you when implementing your ideas.


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Access to business information

This includes investment information, smallbusiness development assistance andconsultancy services, fairs and exhibitions

Training In entrepreneurship, small business

management, business planning, services,Access to technology

Technology linkages through research institutionBusiness incubation services to guide

growth


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Access to markets

Access to local markets though subcontracting,international or regional markets through tradeagreements e.g. AGOA, COMESA

Export and import incentive schemes:

These are government schemes used to provideconcessions to you, when you are involved in the exportor import activities. Concessions on taxes, customs andexcise duties, speedy licensing with regard to export andimportation of machinery equipment and raw materials

by the government will reduce your operating costs ifyour are involved in import and export activities. This willreduce your costs of imports and encourage you to setup an enterprise or expand the existing one


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Pricing policy

This is part of government policy which assistsor encourages you to produce and sell goodsand services

It is important that a pricing system must takeinto account the total cost require to produce agood or services whereby you are able torecover production cost and be left withreasonable profit margins which could de usedto improve your business


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Export processing zones (EPZ)

This is a government scheme to assist investorsmanufacture internally competitive goods aimedentirely for export markets

You as a local invest will benefit from not payingheavy freight costs, additional fees on insurancein transit, no delays form lengthy shippingdurations when you purchase from EPZ

If you invest in the EPZ you will benefit formexemption form export earning, raw materials,capital transactions, inputs relating tomanufacturing activities

Idea generation sources of business


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Idea generation sources of business

ideas

Vocational training and experience

Hobbies

Through networking, talking to bankers,sales people, peers

Observing the environment the

unexpected, process needs, change in

technology, demographic changes, law

changes


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Shows, exhibitions, fairs

Brainstorming in groups or community

Newspapers and magazine from special features ( e.g.on value addition), to tenders, adverts, etc

Survey Talking to successful business people - they can advise

you on certain businesses that are profitable

Talking to potential customers - one can get to know

their preferences for certain products or services


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Business opportunity

Not all ideas are opportunities

An opportnity is an attractive project idea

which an entrepreneur accepts for

investment on the basis of what he knows

about the possible success of the project.

Characteristics of a good business


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Characteristics of a good business

opportunity

A business idea will be a businessopportunity if it has the followingcharacteristics:

DemandThere is a good market scope for the

product the available products are notenough to everybody or its not what thecustomers want there is a gap in themarket


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Good return on investment what is the

expected return on investment, when are

you likely to break even

Availability of inputs raw materials,

technology, labour

Skill required available especially

specialized skills

Political and legal framework

Opportunity assessment/validating an


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idea

Purpose:

To assess whether an idea is feasible(workable) and viable (give the owner

good returns)


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Validation process

This requires some sort of feasibility studes

which will look at four things:

Market

Your strengths

Profitability

Environment


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The market

Is there a market

Is there a need that needs to be fulfilled

Do you understand the customers

What is the industry trends


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Your strengths

Do you have:

The required skills and appropriate

technology

An entry strategy

Organizational plan (Technical and

management)

Enough capital to finance the business


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Profitability

How profitable is the business

How long will it take to break even, can

you wait that long

What are the expected risks


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The environment

Evaluate the environment in terms of:

Technology

Resource available

Government policy and laws

Infrastructure

Market conditions

Culture

competition

Economic assessment

Business trends


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Business Planning

Failing to plan is planning to

fail

B i l h i i ?


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Business plan what is it?

A written document with specificprocedures for achieving results within aspecified period of time

It determines what a a business will is, willbe and should be

It is a document which summarizes abusiness opportunity ( why the opportunityexists and why the management team haswhat it takes to achieve it)

B i l i ( t )


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Business planning (cont)

It defines and articulates how the

management team will seize and execute

the opportunity identified

It specifies procedures for achieving

objectives/results within a specified period

of time

It t t


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It states:

What will be done, how it will be done, by

who the work will be performed, under

what time constraints

It is a document which defines the most

desirable, most timely, least hazardous

route to a given destination

Wh l


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Why plan

To raise capital to convince investors

that the new venture:

Has an opportunity

Has an entrepreneurial talent

Has management talent to exploit the

opportunity

Has rational and coherent and believableprogramme for achieving revenue and

expenses targets on time

Wh l


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Why plan

As a means for guiding business growth

to understand growth

to guide growth

it is a flight stimulator

gives confidence in decision making

helps in redefining strategy and in making

difficult decisionsClaries the venture financial requirements

Wh l


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Why plan

Save management time

Ensures management and marketopportunities are not missed

Provide for effective utilization of firmsresources

Encompasses strategies for carrying out

decisionsProvides systematic feedback as a means

of measuring results

Wh l ( t


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Why plan (cont

Analyse the impact of competition

Track changes in customers lifestyles,

wants and needs

Aid in decision making

B i l tli


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Business plan outline

Phase 1: the industry the company,products or services

Phase 2: marketing research, analysis and

marketing planMarketing research and analysis customers,

market size, trends, competition, estimatedmarket share

Marketing plan overall marketing strategy,pricing strategies, sales tactics, advertising andpromotion programs, distribution plan

B i l tli ( t )


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Business plan outline ( cont)

Phase 3: operational analysis and

organizational plan

Designer and development plans

Manufacturing and operational plans (geographical location, facilities and capacity

improvement, strategy and plans

The management team ( organizational

structure, key personnel, compensation,

incentives, support advisors

B i l tli ( t )


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Phase 4: financial analysis and plan

The economics of the business gross and

operating margins, profit potential, fixed and

variable costsFinancial plan pro forma income statements

balance sheet and cash flow, breakeven

analysis

Proposed company financing desired,sources and uses

Business plan outline ( cont )


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Phase 5: Executive summary

Summary description of the business

The opportunity and entry strategy

Target market and sales projection

Competitive advantage

Economics and profit potential

The teamFinancial plan

Overall schedule, critical risks and assumptions

Entrepreneurship financing


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Entrepreneurship financing

Purpose of financing

Types of finance

Sources of funds

Accessing funds

Utilization of funds



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To start a new business

To expand a existing business

To meet an emergency situation

To meet normal operating costs

Types of finances required


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Types of finances required

Long term finances usually for buying fixed

assets

Short time finances for buying stocks,

meeting operational expenses, repairs etc

Sources of financing


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Sources of financing

Sale of personal assets

Savings

Profits that is put back into the business

Donation from friends and relatives

Trade credit

Mortgage

Hire purchase


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Bank loans:

Overdraft

Loans secured or unsecured

Specialized loans ( for specific

sector)

Government and donor funding

What determines which source to go for?


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g

Purpose

Amount

Repayment

Terms and conditions

Security

Availability

costs

Getting started


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Getting started

Meeting all legal requirements

Registration

Identification and recruitment of staff

Creating commitment and buy ins

Opening bank account

enterpreneurship ion and processes 2008

Documents