INTRODUCTION TO ENTERPRENEURSHIP Entrepreneurs are defined a as people who have ability to see and evaluate business opportunities, gather

necessary resources to take advantage of opportunities and initiate appropriate action to ensure success. Entrepreneurs are action oriented they are highly motivated individuals who take calculated risks to achieve their goals. Entrepreneurs try doing the same things in different ways that are more profitable. Entrepreneurs are people who realize that life is changing at all time and that new ideas new method and new fresh opportunities are important to cope to current change. Entrepreneurs are different from ordinary people because they have more self confidence, they can get things done without too much help. They try hard to keep on trying. They set for themselves standards and they are always trying to put themselves a little better than others. Entrepreneurs are good at estimating how risky something is before taking up the opportunity to avoid high risks. They get bored with routine activities and they believe in getting alternatives. They are good at making decisions and they are able to evaluate the pros and cons of the situation before making up the decisions. Thus they take calculated risks in all their moves. What is entrepreneurship? The word entrepreneurship is defined from French word ''entreprendre'' meaning to undertake . !t is important to realize that human needs are endless and they have to be satisfied by use of limited resources and entrepreneurial person has to incorporate the scarce resources to satisfy the endless human needs at a profit. This activity is said to be entrepreneurship once it is accompanied with the identification of business opportunities, evaluation of the business opportunities, the gathering of necessary resources to take advantage of them and initiation of appropriate action to ensure success. IMPORTANT ENTREPRENEURIAL TRAITS i. Hardw r!in" "unning a business re#uires a lot of energy and drive. This involves ability to work for long hours when necessary, to work intensively and cope with less than the normal amount of sleep in pursuit of new ideas new opportunities and new methods of doing things. ii. Se#$ % n$iden%e To succeed in business people have to believe in themselves and the ability to achieve goals they set for themselves. This is shown by a belief if you want something badly enough and are prepared to work for it, you will always get it. iii. &ui#ds $ the $uture The goal for most successful entrepreneurial people is to build a secure $ob and income for themselves which rests upon their own abilities. This means understand that it may take several years to build up business income generating activities to a reasonable start but for entrepreneurs they believe in themselves and they are able to build businesses that can stand future challenges. i'. Pr $it riented Entrepreneurs have interests in generating money which is a clear indicator of sustainability for the enterprise. This means entrepreneurs recognize that business comes first money must be generated and this can only be accompanied by evaluation of decisions. '. ( a# riented %uccess in business depends upon being able to get realistic goals or targets and work with determination to achieve them. This ability to get targets and to work to achieve them is fundamental. 'i. C pes with $uture &ll business ventures contain disappointments and failures as well as success. 'oping with failures involves recognizing failures, learning from them and seeing new opportunities. (ithout this characteristic, earlier failures may spell the heart of a persons attempt at self employment.

'ii. Resp nse t $eed)a%! The concern to know how well one is doing to keep track of performance is important. To get useful feedback and advice from others is another important characteristic of entrepreneur. 'iii. De* nstrate initiati'es "esearch shows that successful business people seek to take initiative and put themselves in positions where they are personally responsible for success or failure. i+. Wi##in"ness t #isten %uccessful business group is not an inward looking group that never listens to or uses outside resources. %elf reliance does not e)clude the ability to ask for help when needed from such people like accountants, business advisers, marketers, administrators etc. Entrepreneurs are known to listen when given advice. +. Sets wn standards %etting standards for performance and then working to achieve them is an indicator of a successful entrepreneur. This state can include income to be realized, *uality of products to be produced, sales turnover etc. +ost businesses want to do better each year, to set and achieve higher standard than those of the current year. +i. C pes with un%ertaint, ,usiness undertaking is much more uncertain than formal employment. This uncertainty is about sales and turnover. ,ut it is also e)ists in other areas such as material delivery, price fluctuations, change of workers and also bank support. +ii. C **it*ent %tarting and running an enterprise demands total commitment in terms of time, money and lifestyle. Thus commitment has to be prime priority for an entrepreneurial person. +iii. &ui#ds n stren"ths %uccessful entrepreneurial person bases his-her ability - work upon his-her strengths. Thus they take time to evaluate their manual skills, interpersonal skills, selling skills, original skills, writing skills, knowledge of a particular product or service, knowledge of people in the same business and ability make and use contacts. +i'. Re#ia)#e and has inte"rit, Entrepreneurs posse #uality of honesty, fare dealing and reliability in terms of doing what one has promised, the customers and other associates. +'. Ris! Ta!ers &ll business involves some risks, entrepreneurs have the ability to take.up measured or calculated risks. This involves working at the likely cost and gains the chance of success and the belief in oneself to make the risk pay off. ROLES O- ENTREPRENEURS i. Entrepreneurs are pri*e * 'ers in an, )usiness 'enture , without the entrepreneurs there will be no business in the first place. %ince he-she is the one who identifies gaps in the markets and then turns these gaps into business opportunities thus initiating businesses. It is the entrepreneur wh $inan%es the )usiness. &fter identifying a business opportunities the entrepreneur takes and mobilizes the necessary resources to e)ploit the opportunity. ,y so doing he becomes the financier of the enterprise. /e does not of course have to finance the business from personal savings alone but is able to organize finance and other resources from different sources. Entrepreneurs *ana"e the )usiness. This is a function that can be delegated to other people but the entrepreneur has to remain with ultimate responsibility of managing the business. A)i#it, t %reate / )s. ,y starting a business, it leads to creating employment. Maintainin" $ $ree enterprises. ,y different people starting their own business. Pr * ti n $ hea#th % *petiti n Creatin" wea#th. ,y mobilizing funds, working hard, creating employment, generating income providing goods and services. Spreadin" $ pr sperit,. ,y creating employment opportunities, by being innovative, to fulfilling-satisfying needs. The, enhan%e wea#th sta)i#it,. ,ecause the idea of today is not of tomorrow.

ii.

iii. iv. v. 'i. vii. viii. i).

+. +i. )ii. )iii.

Ensures inn 'ati n and %reati'it, En% ura"es "rass r t de'e# p*ent Cha*pi ns in s %ia# % n"ress i.e. progress in society Enhan%in" "r wth i.e. in ideas, minds, body, e)panding infrastructures

N0& Enterprises are able to achieve the above by0 i. /aving the ability to identify gaps in the market-%ociety ii. !mplementing and managing the business iii. 1reparedness of bearing discomforts of uncertainties T1PES O- ENTERPRENEURS Entrepreneurs are classified according to why they start businesses into following categories0 i2 Se#$2e*p# ,ed . These entrepreneurs-people who perform all the work and keep all the profits. They start the business with intentions of employing themselves e.g. 3octors, 4awyers. ii2 Opp rtunisti% entrepreneurs . These are entrepreneurs who identify opportunities within their environment and they start businesses to e)ploit the opportunity. These type of entrepreneurs start a business, e)pand it in order to employ others. They en$oy utilizing skills or e)pertise of their own employees. iii2 In'ent rs . These are entrepreneurs with particular inventive ability. They invest new products, new services and then they create businesses i.e. companies to produce and design new products. iv2 E% n *, $ s%a#e e+p# iters . These are entrepreneurs who benefit from large volumes of sales by offering discounts and operating within very low overhead costs. v2 A%3uintres . These are entrepreneurs who take over business that have been started by someone else and use their own ideas to make the business more successful. vi4 Spe%u#at rs . These are entrepreneurs who purchase a commodity and resale at a profit e.g. broker. vii2 Interna# Entrepreneurs . These are entrepreneurs who create new ideas within organization and they make them move successful and they run them as businesses. N0& Intra2preneurs0 . !ntra.preneurs is entrepreneurship within an e)isting organization. ,usiness organizations have the financial resources, business skills, marketing skills and advantage of distribution systems, thus when management becomes entrepreneurial, it makes the best use of the above resources. The cooperation that recognizes entrepreneurship encourages development of new ideas creativity and innovation thus establishing entrepreneurial spirits in their organization. ENTREPRENEURSHIP E5OLUTIONS The word entrepreneurship is derived from French word ''entreprendre'' meaning to undertake . The entrepreneur is the one who0 . i2 5ndertake to organize ii2 5ndertake to manage iii2 5ndertakes to assume risks of the business Today an entrepreneur is an0 i2 !nnovator-developer who recognizes and identifies opportunities ii2 'onverts those opportunities into workable, marketable ideas iii2 &dds value through time, effort, money and skill iv2 &ssumes the risks of the competitive market place to implement these ideas v2 "ealizes the rewards from these efforts

Thus an entrepreneur is the aggressive catalyst for change in the world of business. /e-she is an independent thinker who dares to be different in a background of common events. The recognition of entrepreneurship dates back to 67th' in France when economists "icaldo associated the risk bearing activity in the economy with entrepreneur. !n England during the same period, the industrial revolution was evolving with entrepreneur playing a visible role in risk taking and transformation of resources. &merica currently is en$oying the new wave of business and economic development of entrepreneurship as its catalyst. !n the 89th century the word entrepreneur became synonymous and closely linked to free enterprise. This has led to recognition that entrepreneurs serve as0 . i2 'hange agents ii2 1rovide creative, innovative ideas for business enterprises iii2 /elp businesses to grow and become profitable (hatever activity they play, entrepreneurs in the 86st century are considered the heroes of free enterprise. +any entrepreneurs have used innovation and creativity to build multi.million dollar enterprises. These individuals have created new products and services and have assumed the risks associated with the ventures. +any people today regard entrepreneurship as ''pioneership'' and they relate entrepreneurs with leaders. Thus0. i2 Entrepreneurship is a dynamic process of vision, change and creation ii2 !t re#uires an application of energy and passion towards the creation and implementation of new ideas and creative solutions. Essentia# % *p nents t entrepreneurship i2 The willingness to take calculated risks in terms of time, energy and career ii2 &bility to formulate an effective venture term iii2 The creation of skills and ability to gather the needed resources iv2 The fundamental skill of building a solid business plan v2 The vision to recognize opportunity where others see chaos, contradiction and confusion. The M,ths $ Entrepreneurship +any myths have come about in entrepreneurship due to lack of research thus the following myths have been criticized. i4 Entrepreneurs are 66d ers66 n t 66thin!ers66 !t is clear that entrepreneur do what they think and not what others think for them. Thus today we see thinking entrepreneur think as well as doing entrepreneurs. Thinking and doing both are important activities of an entrepreneur. ii4 Entrepreneurs are 7) rn8 and n t 7*ade8 The idea that characteristics an entrepreneur that he can not be taught and learn, and one is born with entrepreneurial skills, today being is challenged. Entrepreneurs have special traits of course i.e. aggressiveness, initiative, drive, willingness to take calculated risks, analytical ability and skills in human reactions. Today like any discipline, entrepreneurship has models, processes and causes of studies that allow the unit to be studied and knowledge to be ac#uired. 9iii4 Entrepreneurs are 7a#wa,s in'ent rs8 &lthough many inventors are entrepreneurs one can also be an entrepreneur minus being inventive since entrepreneurship covers more than $ust invention, it re#uires complete understanding of innovative behavior in all forms 9i'4 Entrepreneurs are 7a%ade*i% and s %ia# *is$its8

This is as a result of some business owners who are academic and socials misfits having successfully run business after dropping out of school or #uitting employment. /istorically, educational and social organizations did not recognize the entrepreneur they abandoned him-her as a misfit. Today the entrepreneur is considered as a hero, socially, economically and academically and no longer a misfit. 9'4 A## what entrepreneur need is 7#u%!8? ,eing at the right place at the right time is always an advantage, prepared entrepreneurs who identify opportunities when they arise and take advantage of the opportunity and make gains out of the opportunity are not lucky but they are simply better prepared to deal with situation and turn them into success. (hatever that appears to be luck is preparation, determination, desire, knowledge and innovativeness. 9'i4 The E2M,th +ichael :arber has written a book the E.myth which analyses why most businesses do not work and what to do about it by differentiating the roles of entrepreneurs, managers and technicians in business 9a4 R #e $ entrepreneur The entrepreneur invents the business that works without him or her. This person is visionary who makes a business uni#ue by creating special characteristics derived from the purpose or direction of the business. The entrepreneurs; far reaching perspective enables him or her to anticipate changes and needs in the market place to initiate activities and capitalize on them. & manager produces results through employees by developing and implementing effective systems and by interacting with employees /e enhances their self esteem and ability to produce good results. The manager can actualize the entrepreneurs; vision through planning, implementation and analysis. Entrepreneurs use managers to achieve their vision. /e performs specific tasks according to systems and standards set by management. /e does not only gets work done but also provides inputs to supervisors for improvements of the systems and standards

9)4 R #e $ *ana"ers

9%4 R #e $ te%hni%ians

N0& +ost small business do not become successful, because their owners work too work hard in opportunities they have created. /ence, small businesses fall because the owners technicians and owner entrepreneurs. Therefore today;s business owners need to stop being technicians and thinking as entrepreneurs and accept that business can work without them after setting clear policies and strategies for business. ENTREPRENEURSHIP APPROACHES 0THEORIES To understand the nature of entrepreneurship is important to consider some of the theories developed so as to better recognize the emerging importance of entrepreneurship. !n the theory of contemporary entrepreneurship one concept desire that entrepreneurship is interdisciplinary. !t contains various approaches that can increase one understanding of the field. Thus need to recognize diversity of theories as an emergency of entrepreneurship understanding The following are some of the theories used to e)plain entrepreneurship I. The s%h #s $ entrepreneurship th u"ht 5nder this theory there are two views a2 +icro.view b2 +acro.view

a4 Ma%r 2'iew This view of entrepreneurship represents a broad number of factors that relate to success or failure of entrepreneurial venture. They include0 E)ternal factors that are above the control of the entrepreneur thus the following0 i. ii. iii. Environmental school of thought Financial- capital school of thought 3isplacement school of thought

i. En'ir n*ent s%h # $ th u"ht !t deals with e)ternal factors that affect a potential entrepreneur;s lifestyle. They can either be positive- negative the focus is on institution such as families, organizations etc. The values practiced by the institutions contribute a lot to growing an entrepreneurial person. Thus need ask ourselves what values are of good to entrepreneurship and which ones are not< (hat institutions are encouraging and what can be borrowed from them< The atmosphere of friends and relatives can influence the desire for one to become entrepreneur thus the environmental school of thought sees environment to contribute a lot to entrepreneurship. ii. -inan%ia# r %apita# s%h # $ th u"ht This school of thought is based on capital seeking process. !t emphasis that capital is a re#uirement to start a venture and not only the activity to ac#uire the capital but to manage the capital. The theory analysis different stages of business growth and identifies that need for capital and need to manage capital thus the following stages of business growth. a4 Start2up sta"e 5nder this stage business ventures re#uire capital to start the venture or capital to ac#uire the venture. Then there is need to manage the capitals ac#uired to be able to startup the business b2 ,usiness up stage The entrepreneur re#uires top have skills or ability to manage cash flows, investments, financial analysis and evaluation. This enables the entrepreneur to make decisions on whether to0 +aintain the business !ncrease the size of business "educe the size of business

%4 De%#ine sta"e The decline stage indicates decrease in profit and thus ta)ation #uestion. Entrepreneur re#uires ability to monitor and evaluate business performance and make decision such sale the business, retire or dissolve e some of operations. iii. Disp#a%e*ent s%h # $ th u"ht !t focuses on group phenomena. !ts hold that when groups or individuals are threaten and displaced they tend to become more creative, innovative and are likely to start business ventures. 3isplacement can be caused by political issues, cultural issues, economic issues etc )4 Mi%r :'iew This e)amines the factors that are specific to entrepreneurship and are part of the internal focus of control. The potential entrepreneur has ability to control the factors. The theory focuses on internal factors such as0 i. ii. The entrepreneurial traits e.g. hardworking The venture opportunity i.e. the ability to identify a worthwhile venture.

iii.

The strategic formulation.This focuses on the ability to plan the business

N0& The macro.theory emphasizes that there is need to continue entrepreneurial traits with opportunity identification and business planning which can be controlled by entrepreneur. II Pr %ess appr a%hes !ntegrative approach0 The integrative approach emphasizes on a process with both input and output to the entrepreneurial person needs to be prepared well to start at venture and to be able to implement =input2. The preparedness enables the entrepreneur to be innovative, creative, and associative and take risks. :iving a roll of outcomes e.g. value addition, new product-service creation etc HOW TO &ECOME AN ENTREPRENEUR C *peten%ies $ r Su%%ess$u# Entrepreneur For one to start a business or become an entrepreneur following ma$or competencies play a ma$or role. These competencies are0 knowledge, skills, traits re#uired to start a business. Thus for one to be successful in business, re#uires.

Skills

Knowledge
Successful Entrepreneur

Traits

9i4 ;n w#ed"e !t is a set or body of information stored, which may be recalled at appropriate time. For e)ample knowledge -inform on the following0 a. ,usiness opportunity b. 1roduction processes c. The market opportunities d. Technical matters e. 'ustomers f. business management g. 'ompetitors h. %ource of assistance 9ii4 S!i##s %kills are the ability to apply knowledge. The skill may be technical or managerial in nature. %kills relate to abilities to perform tasks such as0 a. Technical e.g. engineering, computing, carpentry, mechanics, catering etc b. +anagerial e.g. marketing, financial, >rganizational, planning leadership etc 9iii4 Traits Traits are personal characteristics of an entrepreneur. E)amples0

a. b. c. d. e. f. g. h. i. $. k. l. m.

To take initiative ,eing persistent 'oncern to high #uality >riented to efficiency &lternative ways of solving problems Taking calculated risks ,eing persuasive %ees and acts on opportunities %eeks information committed to fulfilling contracts & systematic planner &bility to demonstrate self confidence &bility to influence strategies etc

&USINESS IDEAS & business idea is the response of a person=s2 or organization to solving an identified problem in the market community. !t involves perceiving or identifying missing gaps in the market communities and the want to satisfy them. ,usiness ideas are seen as solutions to individual community problems. !dentifying a good business idea is the first step in transforming the entrepreneur;s desire and creativity into business opportunity. The following are what one will re#uire to generate a business idea i.e. re#uirements for a good business idea Environment !dentification of needs in the environment (illingness to respond to market-community needs 5nderstanding change and ability to manage change &bility to understand and manage competition and stay ahead of competitions &ppreciation of technology in doing things better than yesterday =technology remains one of the key drives of competition these days2 vii. &ppreciation that products or services have a life cycle viii. &ppreciation of risk taking, spreading of risks and allowing for failure (ENERATION O- &USINESS IDEAS & good business idea is essentials and a re#uirement for successful business venture. :ood business ideas however, do not usually $ust appears rather they result from handwork and effort on the part of entrepreneur in generating, identifying and evaluating opportunities. S ur%es $ )usiness ideas i. 1ersonal interests-hobbies ii. 1ersonal skills of e)perience iii. The mass media iv. E)hibition v. %eminars-educational seminars and presentations vi. %urveys -research vii. 'omplains Identi$i%ati n $ )usiness pp rtunities %eeing or seeking of businesses opportunities is one of the characteristics of successful entrepreneurs everywhere. !t is also the basis of starting and maintaining successful ventures. !t involves not only generating ideas and recognizing opportunities but also screening and evaluating them to determine the most viable ? attractive that can be pursued. i. ii. iii. iv. v. vi.

Chara%teristi%s $ a ( d &usiness Opp rtunit, & good business opportunity must fulfill or be capable of meeting the following criteria i. ii. iii. iv. v. Rea# de*and 2 "espond to unsatisfied needs or re#uirements of customers who have the ability to purchase and who are willing to e)ercise that choice. Return n in'est*ent 2 1rovide durable, timely and acceptable returns or rewards for the risk on the effort done C *petiti'e 2 ,e e#ual to or better from the point of view of the customers than the other available products-services in the market =in the same industry2. Meet )/e%ti'es 2 +eet the goals and aspirations of the person or organization taking the risk Use a'ai#a)#e res ur%es and s!i##s 2 The opportunity must be within the reach of the entrepreneur in terms of resources, competence, legal re#uirements among others.

Identi$,in" and Assessin" &usiness Opp rtunities !deas and opportunities need to be screened and assessed for viability once they have been identified or generated. This is not an easy task but it is very vital because it can make a difference between successes and failure, thus it helps to minimize the risk and reduce failure. !dentifying and assessing opportunities includes determining risks and rewards and the following points need to be put into consideration@ i. Industr, and *ar!et t ser'e 2 The following #uestions are re#uired to be answered by the entrepreneur to determine and screen the idea in relation to industry and market !s there a market for the idea< &re there any customers< i.e. people with money who are able and willing to buy the product or service. &re you able to provide what they need or want< /ow many are they< >r how much is re#uired< ii. Pers na# " a#s and % *peten%ies $ the entrepreneur 2 The entrepreneur needs to assess himself in relation to the opportunity and the following #uestions can help. a. 3o you really want to venture into the business< b. 3o you have what it takes-re#uires< c. (hat goals would you be satisfying< d. 3o you have the competence to achieve the goals< e. &re you motivated enough< iii. Mana"e*ent tea* 2 !t is not easy for an entrepreneur to succeed in business minus the team to work with. The following #uestions will help the entrepreneur to evaluate his management team in relation to the opportunity (ho will be involved in the business< (ho else can be involved in the business if, the person e)pected to be involved is not there< 3o they have the e)perience how to conduct transaction or do they have the desired attributes< (hat structure will you but in place< =,usiness structure<2 i'. C *petiti n 2 The entrepreneur re#uires answering the following #uestions in assessing the opportunities. a. (ho are the competitors< b. 3o they have something desired by customers that ! do not have< c. (ill ! be able to produce and market at lower costs than my competitors< d. /ow will ! differentiate my products from my competitor products< '. Capita# te%hn # ", and thers res ur%e re3uire*ents 2 There is need to answers the following #uestions a. /ow much capital is re#uired to start business< b. (hat technology is applicable< c. (hat others resources are re#uired< d. 3o you have them, and if not where will you source them< 'i. En'ir n*ent 2 !n starting a business it is important to see to environment thus the following #uestions will assist the entrepreneur. a. (hat is the political environment< !s it conducive, and if not what strategies shall ! have in place< a. b. c. d. a. b. c. d.

b. (hat is the economic state and what strategies should ! have in place in relation to the economy< c. (hat are the geographical legal re#uirements and what strategies should ! have in place< d. (ould the business do any damage to the physical environment< !f so then what strategies should ! have in place< &USINESS PLAN !t is a document which spells out the goals and ob$ectives of business and clearly outlines how and when they will be achieved. Entrepreneurs use business plans as road maps to get to their destination. Entrepreneurial business plans are uni#ue@ they have a lot of creativity, innovativeness as they use them as strategies in differentiating themselves with others in the market through coming out in a more Asmarter; way in the market. This helps them to achieve their ob$ectives in a short time than the other business people in the market. I*p rtan%e $ a )usiness p#an i. & business plan provides information which is re#uired in starting and running the business as well as activities that are used to enhance the information ii. !t provides guidelines for starting a business iii. ,usinesses plan assists in communicating the affairs of the business iv. ,usiness plan assists in communicating the affairs of the business to interested parties as supplier, customers, banking institution when sourcing for funds etc C *p nents $ )usiness p#an The following are components of business plan i. Des%ripti n p#an 2 'overs in detail the background of the business owner, the type of business, location of business, the product or service to be offered and the entry and growth strategy. !t is the first item to be written in preparing a business plan. ii. Mar!etin" p#an 2 !t describes how business intends to sell its products or services. !t identifies the customers and the competition. !t also outlines the pricing, the selling, promotional and distribution strategies. iii. Or"ani<ati n p#an 2 !t e)plains how the business will be coordinated to accomplish its ob$ectives. !t shows the organization structure, identifies key management staff, their duties responsibilities and rewards. iv. Operati na# p#an 2 !t describes how the product-services of the business will be manufactured. !t shows the e#uipments to be used, materials, other costs which will be incurred during the production process etc v. -inan%ia# p#an 2 !t describes financial re#uirements of the business venture. !t produces proposals for the sources or uses of funds, further financial information in relation to proforma income statements, balance sheet, pro$ected cash flow statements etc vi. E+e%uti'e su**ar, 2 !t is the summary of the entire business plan. !t is written last after the preparation of the entire business plan but it is supposed to be in the first page of the business plan. The )usiness des%ripti n The following are the main features of business description a. ,ackground of the owner or supervisor b. Bature of the business c. 1roduct-services to be produced and sold d. Entry strategy e. :rowth strategy a. &a%!"r und $ the wner 2 The following guidelines will help the entrepreneur to describe the owner of the business a. Full name and age b. +arital status c. "esidence

d. 1resent occupation e. Educational and professional #ualifications f. "elevant business e)perience g. 1lans to ac#uire necessary e)perience h. &mount to be invested in the business i. &mount to be borrowed from specified sources and why< N&. The entrepreneur re#uire to identify strengths and weakness in relation to the above points and then come up with strategies on how to meet the weaknesses and turn them to advantage and how to make the best use of the strengths in order to capture the opportunities outside. ). Nature $ the )usiness =i2 3escribe the name of the business . !t is always important to carefully select a business name and it should be a2 & name with few words b2 & name that is easy to remember c2 Easy to pronounce d2 &ttractive e2 "elate to the business activity =ii2 E)act location of the business 3iscuss the location of the business the advantages in relation to the location, challenges to the location and strategies to take advantage of both the advantages and challenges of the location =iii2 4egal form of the business a2 %tate whether sole.proprietorship, partnership or company b2 :ive reasons why the form and how to take advantage of the form c2 !dentify challenges to be faced in that form and how to take advantage of the challenges. =iv2 +a$or activity of the business a2 !dentify the core business activity and other activities that the business can take advantage of which are related to the business. b2 'learly state strategies on how to run the core activity and other activities =v2 1rinciple customers and their location in relation to the business a2 'learly identify customers of the product -services within the location b2 !dentify strategies of converting their needs to demands. %. Pr du%t 0ser'i%es t )e pr du%ed 2 The following points will help the entrepreneur on describing the product -service i. Bame the product-service ii. E)plain the main features of the product -services iii. 3iscus benefits obtainable from the product -service iv. 3iscuss the uni#ue features of the product-service d. Entr, strate", !t describes how the entrepreneur intends to penetrate into the market. !t is always important to prepare well, notify the target customers on your plans to open the business so that they wait for your product-service as you open the business. !t is very disappointing to find the entrepreneur waiting for the customers instate of the customer waiting for the entrepreneur. This happens when the entrepreneur fails to demonstrate his-her entry strategies clearly. !n formulating entry strategies it;s important for the entrepreneur to put the following into consideration@ i. 'ompetitive advantage of the business ii. (eaknesses in the competition iii. Cour pricing strategy iv. 1lans to attract and retain customers e. (r wth strate",

& good entry strategy brings about immediate business growth. !t is important for the entrepreneur to prepare him-herself well with clear entry and growth strategies. !t is therefore important to put the following points into consideration i. ,e aware of the trend which signal business growth e.g. increasing demand, increasing customer;s awareness, increasing sales etc ii. >pportunities arising from the trend iii. 1lans to take advantage of the opportunities arising. MAR;ETIN( PLAN +arketing is one of the key components of a business plan. !t describes the following. i. 1otential customers ii. 'ompetitors-competition iii. 1ricing strategy iv. %ales tactics v. &dvertising and promotion strategy vi. 3istribution strategy 9=4 P tentia# %ust *ers !t is important for the entrepreneur to understand the potential customers he-she has to serve. !t is important too for the entrepreneur to classify customers into0 individuals, institutions, government agencies etc =a2 5nderstand0 a. (hat they buy b. (hy they buy it c. /ow they buy d. (hy they buy how they buy e. (hen they buy and why f. (here they buy and why =b2 5nderstand your customer;s age to be more aware of their needs and how to motivate them =c2 ,e awake of their income levels as this will assist in pricing =d2 Educational attainment contributes a lot to the understanding and serving of the customers =e2 &ppreciate believes held and values cherished by the customers =f2 5nderstand the purchasing pattern of the customers =g2 &lways be aware of the need of customers to be served =h2 5nderstand the occupation of the employees 9>4 C *petiti n0% *petit rs (hen preparing a business plan, it;s important for the entrepreneur to understand the industry he-she is to serve and nature of competition in that industry. &fter describing the industry, it is important to narrow down to potential competitors and take care of the following0 a. Bames of key competitors b. 4ocation in relation to your business c. %ize of competitors d. 'omparison between your product -service and that of your competitors e. %trengths and weaknesses of your competitors 9?4 Pri%in" strate", 1ricing plays a ma$or role in the process of selling goods and services. !t is important for the entrepreneur to consider the following points when preparing a pricing strategy a. Evaluate methods of calculating the selling price of your product -service

b. 5nderstand factors which will influence your price setting e.g. competitors price, overheads costs, cost of the product, nature of the product etc c. 5nderstand the actual selling price of your product -service d. Evaluate credit terms to be offered and discounts to be allowed e. Evaluate what after sales.services to be offered and analyze the cost involvement 9@4 Sa#es ta%ti%s %ales tactics is a component that plays a ma$or role in the selling process. This process begins by identifying who to employ as a sales person i.e. clearly having the description and #ualifications of the person to employ. (hen practicing sales tactics it is important to lay strategies on how to conduct the following0 a. 3irect selling or personal selling i.e. how to organize the sales team, how to motivate them etc b. !ndirect selling0 identify those who need your product and buy it indirectly, then state strategies on how to meet their re#uirements. c. 3escribe how to restrict and retain the sales force d. /ave strategies on how to monitor and evaluate the sales team. e. 'ome up with ways of selecting and motivating distributors or agents f. 'ome up with strategies on how to utilize distributors and agents within your region. g. !dentify the geographical area that you intend to serve 9A4 Ad'ertisin" and pr * ti n strate", !n making your product -services known to your potential customers, it is essential to develop an advertising and promotional strategy. The entrepreneur when formulating the strategy will take the following into account@ a. The role of the business in advertising itself i.e. a business can use itself to attract many customers through satisfied customers. b. +edia to use@ Evaluate cost of media and effectiveness of the media before settling on a media c. 3ecide on the image you wish to portray about your product or service d. !mage you e)pect to pro$ect regarding your firm e. Fre#uency of advertisement f. 'ost per advertisement placed g. +ethods of measuring, effectiveness of the advertisement h. 1lan on how to be carrying out promotional campaigns and especially the first campaign i. /ave a clear plan for regular promotional methods $. ,e aware of the costs of each promotional event k. /ave methods of measuring effectiveness of each campaign 9B4 Distri)uti n strate", The entrepreneur needs to describe how his products -services will be moving from one point to another. The following will help the entrepreneur to come up with clear distribution strategy. i. !dentify the channels to use ii. &nalyze the channel iii. /ave strategies on how to utilize the channel iv. 3iscuss the means of transport to use and $ustify why v. &nalyze cost of transport per month vi. &nticipate-identify distribution problems and how you intend to overcome them N0& !t is very important to understand the nature of a channel to use before making a choice on the channel as it will minimize cost in distribution. LEADERSHIP De$initi n and *eanin" $ #eadership

4eadership is a process of influence on a group. 4eadership is the ability of a manager to induce subordinates to work with confidence and zeal. 1eter F. 3rucker, considers leadership as a human characteristic which lifts a man;s vision to higher sights, raises a man;s performance to higher standards and builds man;s personality beyond its normal limitations. &ccording to &lford and ,eatty is the ability to secure desirable actions from a group of followers voluntarily, without the use of coercion &ccording to Terry a leader shows the way by his own e)ample. /e is not a pusher, he pulls rather than pushing . !n the words of ". T. 4ivingston, leadership is the ability to awaken in others to desire to follow a common ob$ective . &ccording to 1eter F. 3rucker, leadership is not making friends and influencing people i.e. salesmanship, 4eadership is the lifting of man;s vision to higher sights, the raising of man;s performance to higher standards, the building of man;s performance to higher standards, the building of man;s personality beyond its normal limitations . & leader is a person who gets a task completed by developing good relationship with his-her colleagues and harnessing their combined resources. The resources are harnessed by ensuring that0 6. They fully understand their goals and ob$ectives and as far as possible are involved in determining them. 8. They know how and what they are doing to achieve these ob$ectives and are party to deciding and agreeing the course of action to be taken. D. They are empowered to make decisions. E. They know and agree the control to be e)ercised over them. F. They are aware of the rewards and penalties of not achieving their ob$ectives. G. They trust and respect the leader;s $udgment. They arouse and unite colleagues by0. 6. 8. D. E. F. G. 4istening to them and gaining their respect and trust. ,eing friendly and approachable but remaining sufficiently distant to e)ert authority. Treating them as e#uals without losing the capacity to e)ert authority. 1aying attention to their individual as well as their collective needs !nvolving them in agreeing ob$ectives, reviewing results, solving problems etc. "epresenting their interests.

Nature and %hara%teristi% $eatures $ #eadership

6. 8. D. E. F. G. H. 4eadership implies the e)istence of followers 4eadership involves a community of interest between the leader and his followers 4eadership involves an une#ual distribution of authority among leaders and group members 4eadership is a process of influence 4eadership is the function of stimulation & leader must be e)emplary =show good e)ample2 & leader ensures absolute $ustice

Leadership St,#es
6. The manager makes decision and announces it . autocratic leadership 8. The manager sells his decisions . manager takes the additional step of persuading the subordinates to accept his decision

D. The manager presents his ideas and invites #uestions . great involvement of the employees in this pattern E. The manager presents a tentative decision sub$ect to change . decision is tentatively taken by the manager but he is amenable to change and influence from the employees F. The manager may present the problem, get the suggestions and then take his own decision . sufficient opportunity is given to the employees to make suggestions that are coolly considered by the manager G. The manager may define the limits and re#uest the group to make a decision . lets the group have the right to make the decision, but to the limits defined by the manager H. The manager may permit full involvement of the subordinates in the decision.making process .democratic leadership

Leadership S!i##s
The leader is e)pected to play many roles and therefore must be #ualified to guide others to organizational achievement. &lthough no set of absolute traits or skills may be identified, the individual who possess abilities to lead others must have certain attributes to help them in performing their leadership rolls. !n broad way the skills which are necessary for an industrial leader may be summarized under four heads0. 6. /uman skill0. 'o.operation of his followers e.g. empathy, ob$ectivity, communication skill, teaching skill, social skill etc 8. 'onceptual skill0. %ensing of the organisation as a whole and the total situation relevant to it e.g. organisation behaviour, competitors of the firm, and financial status of the firm D. Technical skill0. thorough knowledge and competence in, the principles, procedures and operations of a $ob. E. 1ersonal skill0. getting the best from others. e.g. intelligence, emotional maturity, personal motivation, integrity and fle)ibility of mind

T,pes $ #eaders
The different types of leadership styles are0 6. &utocratic or task management leadership 8. 1articipative or democratic leadership D. 4aissez faire or free.rein leadership E. 1aternalistic leadership =. Aut %rati% r tas! *ana"e*ent #eadership :ives order which he insists shall be obeyed. /e determines policies for the group without consulting them, and does not give detailed information about the future plans. T,pes $ aut %rati% #eadership a2 %trict autocratic leaders0. "elies on negative influence and give orders which the subordinates must accept. /e uses his powers to disperse rewards to his group. b2 ,enevolent autocrat0. !s effected in getting high productivity in many situations and he can develop effective human relationship. /is motivation style is usually positive c2 +anipulative autocrat0. !s one who makes the subordinates feel that they are participating in decision making process even though he has already taken the decision. >. Parti%ipati'e r de* %rati% #eadership !s one who consults and invites his subordinates to participate in the decision making process. ?. Laisse< $aire r $ree2rein #eadership & 4aissez faire or free.rein leader does not lead, but leaves the group entirely to itself. The leader avoids using power and interest in decision making and gives authority to his subordinates. /e does not direct his subordinates and there is complete freedom for the subordinates. @. Paterna#isti% #eadership The leader assumes that his function is fatherly. /is attitude is that of treating the relationship between the leader and his groups like a family with the leader as the head of the family. The leader works to help in work, to help in guiding, protection, and keep his followers happily working together as members of a family, by providing them with good working condition, fringe benefits and employee services.

I*p rtan%e $ #eadership

& good leader motivates his subordinates, creates confidence and increases the morale of the workers. Following are points highlighting the importance of leadership0

6. 8. D. E. F.

!t is a process of influencing the activities of an individual or a group towards the achievement of a goal +otivates the subordinates for higher level of performance 1romotes team.spirit and team.work which is #uite essential for the success of any organisation /elps in the effective use of formal authority 'reates confidence in the subordinates by giving them proper guidance and advice

-un%ti ns $ a #eader
6. 8. D. E. F. G. H. 7. I. To take the initiative /e identifies group goals /e represents the organisation /e acts as a arbitrator.often resolve the differences To assign reasons for his action To interpret To guide and direct To encourage team work /e manages the organisation

Leadership the ries

=. M% (re" rCs The r, D and 1 The r, D 2 /olds that people have an inherent dislikes to work and do not want either to work hard or assume responsibility. The r, 1 2 'ontests that people want to do a good $ob and assume no responsibility. They are always ready to take responsibilities. >. The ries $ #eadership traits &ssumes that leaders have certain personal characteristics of effective leadership, pointing out that the personal traits or personal characteristics of a person make him an effective or successful leader. &ccording to this theory the person who possesses the following traits or personal characteristics could become successful leader0 6. :ood personality 8. !ntellectual ability D. !nitiative E. !magination F. +aturity G. 3esire to accept responsibility H. %elf.confidence 7. Fle)ibility I. Fairness and ob$ectivity 69. 'onsiderate ?. &eha'i ura# the r, $ #eadership &ccording to this a particular behaviour of a leader provides great satisfaction to the followers and so they recognize him as a good leader. The behavioural approach is based on the premise that effective leadership is the result of effective role behaviour. @. The r, $ #eadership st,#e !t;s focused on the emphasis that the leader places on the task and the people undertaking it. 5nder this leaders can be classified as0. a2 Aut %rati%. The leader dictates what he wants. b2 Persuasi'e. The leader sells his ideas. c2 C nsu#tati'e0Parti%ipati'e. 4eader discusses with the team members before reaching decision

d2 De* %rati%. 4eader involves team members in both the discussion and the decision. A. Situati na# the ries !s strongly affected by the situation from which a leader emerges and in which he works. !t emphasizes that the entire action between the group and the leader is the main factor which makes a leader successful. !t relates to the group environment, its physical settings, the size of the group, its technical abilities etc. B. Inte"rati'e the ries They are the most comprehensive and realistic, but least precise or conclusive. They embrace a wide variety of variables. E. (reat*an the r, $ #eadership The theory asserts that leaders are born and not made. This is especially so with great leaders who are natural leaders. 4eadership calls for certain #ualities like commanding personality, charm courage, intelligence, persuasiveness and aggressiveness. /ence the great leaders are assumed to be the gift of :od to man kind.

Leadership de'e# p*ent

Essentially there are three forms of leadership development 6. Formal training. 8. 3evelopmental activities. D. %elf help activities. MOTI5ATION +otivation is a latin word, meaning to move. /uman motives are internalized goals within individuals. +otivation may be defined as those forces that cause people to behave in a certain ways. &lthough it should be kept in mind that what motivates one person may not motivate another. +otivation is a process of channeling a person;s inner drives so that he wants to accomplish the goals of the organization. &s defined by +ichael J. Juicus the act of stimulating someone or oneself to get a desired course of action !n the words of 4ewis &llen motivation is the work a manager performs to inspire, encourage and impel people to take re#uired action . Nature and %hara%teristi%s $ * ti'ati n +otivation is the work a manager performs to inspire, encourage and impel people to take re#uired action. The process of motivation is characterized by the following0 a2 +otivation is an internal feeling b2 +otivation is related to needs c2 +otivation produces goal.directed behaviour d2 +otivation can be either positive or negative I*p rtan%e and )ene$its $ * ti'ati n

+anager;s primary task is to motivate others to perform the tasks of the organization. The various benefits of motivation are0 a2 +anagers direct or guide the workers in the desired direction for accomplishing the goals and the organization b2 'reates the willingness to work c2 !ncrease organizational effectiveness d2 'ontributes to good industrial relations in the organization e2 +otivation is the best remedy for resistance to change f2 Facilitates the optimum utilization of all factors of production =resources2 g2 1romotes a sense of belonging among the workers h2 /elps organizations to develop their employees as future resources T,pes $ * ti'ati n There are two types of motivation0 . 62 P siti'e r in%enti'e * ti'ati n0 !s generally based on rewards. !t is a pull mechanism. !t involves the possibility of increased motive satisfaction. The positive motivation includes@ praise and credit for work done, wages and salaries, appreciation, a sincere interest in subordinates as individuals, delegation of authority and responsibilities etc. 82 Ne"ati'e r $ear * ti'ati n0 !t is based on force and fear. Begative motivation involves the possibility of decreased motive satisfaction. !t is a push mechanism. The imposition of punishment fre#uently results in frustration among those punished, leading to the development of maladaptive behaviour. !t also creates a hostile state of mind and an unfavorable attitude to the $ob. The ries $ * ti'ati n =. MC (re" rCs the r, D and 1 a2 The r, D is ne"ati'e, traditional and autocratic style. 1eople under this naturally dislike work b2 The r, 1 is p siti'e, participatory and democratic. 1eople under this are always ready to take responsibilities >. Mas# wCs need2Hierar%h, the r, $ * ti'ati n. &braham +aslow, a 5.% psychologist states that man is a wanting animal. /e has variety of wants or needs and all motivated behavior of man is directed towards the satisfaction of his needs, which could be arranged in a hierarchy. Mas# w De$i%it and Pr "ressi n Prin%ip#es 6. 3eficit 1rinciple0 . >nce a need is fairly well satisfied, it is no longer a stronger motivator of behavior. 8. 1rogression 1rinciple0. Five categories of needs e)ist in a hierarchy. & need at a given level is not activated until the need directly below it is fairly well gratified. The person is e)pected to progress step.by. step up the need hierarchy.

%elf.actualization
='reativity, self.e)pression etc2

Esteem %elf.respect
=%tatus etc2

%ocial &ssociation with others =,elonging, giving ?

receiving affection etc2

%ecurity =1rotection
against danger, threat, deprivation etc2

1hysiological
=/unger, thirst, rela)ation, se) etc2

?. Her<)er"s the r, $ * ti'ati n /erzberg developed this theory with premise that human nature has two separate elements associated with positive feeling of employees about $ob. =Job satisfaction2 The 64 M ti'ati n0 . +otivation items that determine $ob content e.g. achievement, "ecognition e.t.c 82 H,"iene r *aintenan%e $a%t rs. 2 !nfluence the $ob conte)t e.g. company policy, salary, working conditions, inter.personal relations e.t.c .They create a zero level of motivation and if maintained prevent negative motivation @ 5i%t r 'r *Cs e+pe%tan%, the r, 3eveloped by victor / vroom is based on the notion that human behaviour depends on people;s e)pectation concerning their ability to perform tasks and to receive desired rewards. !t includes three variables which vroom refers to as0 a2 5a#an%e0 . means strength of an individual;s performance for a performance and reward and reward. b2 Instru*enta#it,0 . "efers to relationship between performance and reward. c2 E+pe%tan%,0 . E)pectancies about like hood that an action or effort on their part will lead to the intended performance A M%C#e##andCs need $ r a%hie'e*ent the r, 3avid '. +c'lelland;s, /arvard psychologist, proposed that there are three ma$or relevant motives most needed in work.place situations 6. The need for achievement i.e. strive to succeed 8. The need for affiliation i.e. warm relationships with others D. The need for power i.e. controls other people. Re3uire*ent $ a s und * ti'ati n s,ste* %ound motivation systems should have following essential features 6. 8. D. E. F. Meth d %atisfy the needs and ob$ectives of both the organization and employees. %hould change with the change in the situation %ubordinates should be made to realize that they are stake holders in the organization. %atisfy the different needs of employees. %hould be simple so that it is easily understood by the workers $ * ti'atin" pe p#e

1eople respond to physiological needs, social needs and egoistic needs. /uman needs and desires are the door ways through which the manager channels his motivation efforts. There are three types of motivational programmes to improve a person;s behaviour towards $ob. 6. 1ay incentive plans Kpayment by result 8. Job enrichment D. +anagement by ob$ectives DECISION MA;IN( 3ecision making is the process of choosing between alternatives. !t is a process of narrowing choice. Phases in de%isi n *a!in" pr %ess as % n%eptua#i<ed ), 9=4 Her)ert A Si* n 6. Inte##i"en%e a%ti'it,. 2 'onsists of searching the environmental conditions calling for decision making 8. Desi"n A%ti'it,. 2 !nventing, developing and analyzing possible courses of action take place D. Ch i%e a%ti'it,. 2 &ctual choice selecting a particular course of action from among those available 9>4 Mints )er" and % ##ea"ues 9E*piri%a##, )ased4 6. The identi$i%ati n phase. 2 "ecognition of a problem or opportunity arise and diagnosis is made 8. The de'e# p*ent phase. 2 %earch for e)isting standard procedures or solutions already in place or design of a new, tailor made solution D. The se#e%ti n phase. 2 The choice of a solution is made !dentification
"ecognition 3iagnosis

3evelopment
%earch 3esign

%election
Judgment &nalysis ,argaining authorization

T,pes $ de%isi n *a!in"

6. 1rogrammed or structured decisions 8. Bon.programmed or unstructured decision 6. Pr "ra**ed de%isi ns0. 3ecision maker is aware of the e)tent of the decision and there e)ists a clear set of options from which a choice can be made 8. N n2pr "ra**ed De%isi ns. 2 (hen decisions are uni#ue and not routine.

De%isi n %,%#e
6. 8. D. E. F. G. H. 7. I. M nit r0 . 3ecision maker monitor the environment to detect deviations from plans De$ine. 2 1roblem or situation has to be defined precisely Spe%i$,. . 3ecision ob$ectives have to be specified and the likely risks and constraints be considered. Dia"n se. . problem is analyzed more thoroughly and the causes scrutinized. De'e# p. 2 &lternative courses of action are developed. Esta)#ish*ent. 2 methods to be used in the appraisal of the option are established. Appraise. . &lternative solutions should be appraised Ch se. 2 ,est alternative solution is chosen I*p#e*entati n. . ,est alternative solution is implemented and detailed operational plan is discussed

RIS; TA;IN(

This is the process of personal willingness and readily preparedness to take the challenges with the hope to overcome those challenges. "isk taking whether financial, social or psychological is part of the entrepreneurial process. Ris!.2 The condition of not knowing the outcome of an activity or decision. Bevertheless, risk is capable of being evaluated for relative probabilities. &n effective risk management involves key issues such as0. i. !dentifying risks ii. Evaluating potential effects iii. !dentifying and analyzing possible solutions iv. &dopting the most appropriate solution v. +onitoring the results Ris! %#assi$i%ati n s%he*e Following are different way of classifying risks. 6. Financial risk a2 +arkets-hedging0. ,uyer or seller network for e)change of capital and credit such as the stock, commodities and foreign e)change market b2 4i#uidity-credit0. 4i#uidity is the marketability of an asset =ability of an asset to be converted to cash2 while credit is contractual agreement to receive money, goods or service without paying for them in the near term. c2 "eporting0. 1rocess of capturing data in a meaningful format to provide information t stakeholders for decision making purposes i.e. ta) and accounting issues. 8. >perational a2 1rocess0. 'ombination of resources and the work environment which result in a desired output b2 !nnovation0. The modernization or transformation of some aspects of the business into a novel approach that improves operating performance D. %trategic a2 ,usiness environment0. ,usiness environment wherein buyers and sellers interact to buy or sell goods and services. i.e. change in supply and demand, competitive structure and introduction of new product or technology b2 Transaction0. E)ecution of specific activities to initiate significant change in strategic direction. i.e. asset reallocation via mergers and ac#uisition c2 !nvestor relations0. %trategy for communicating with individuals-institutions who have invested in the business. i.e. communication and turnaround I*p rtan%e $ ris! ta!in" pr %ess 6. :ain or profit . &fter overcoming risk one stand gaining or making profit 8. >pen the scope of thinking K (ith the challenges one will open up mind and learn how to go by different situations D. 'reating space for creativity K makes one more creative E. Encourage hard working K makes one hardworking F. 'reate self confidence and encourages self reliance HIRIN( There are three main activities involved with hiring of employees 6. "ecruitment 8. %election D. 1lacement 6. Re%ruit*ent. . it is the discovering of potential application for actual or anticipated organizational vacancies. !n other words it is a linking activity bringing together those with $obs and those seeking $obs S ur%es $ re%ruit*ent o o o o !nternal sources.present working force E)ternal sources. out the organization !ndirect methods. &dvertisement Third party methods. agencies

8. Se#e%ti n. 2 concerned with securing relevant information about an applicant. This is done to determine whether an applicant meets the #ualifications for a specific $ob and to choose the applicant who is most likely to perform well in that $ob D. P#a%e*ent. 2 This is determining of the $ob to which an accepted candidate is to be assigned and his assignment to the $ob. -IRIN( STA-Firing staff means cessation of service with the organization for one or other reason. This can be done as a result of0 "esignation 3ischarge and dismissed %uspension and retrenchment 4ay.off 6. Resi"nati n. ."esignation may be put in voluntarily by the employees or compulsory when the employee is asked to put in resignation if he wants to avoid termination of his services on the ground of gross negligence of duty on his part. 8. Dis%har"e. 2 !nvolves permanent separation of an employee from the pay.roll for violation of company rules D. Dis*issa#. . Termination of the services of an employee by way of punishment for some misconduct or prolonged absence from duty %uspension0 . is a serious punishment, generally awarded only after a proper en#uiry has been conducted. E. Retren%h*ent. K permanent termination of services of the employee for economic reasons in a going concern. F. La,2 $$. . refer to indefinite separation of the employee from the pay.roll due to factors beyond the control of the employer. The employee is e)pected to be called back in the foreseeable future. -INANCIAL MANA(EMENT Finance management is defined as the management of flow of funds in a firm. !t encompasses the procurement of the funds in the most economic and prudent manner and employment of those funds in the most optimum way to ma)imize the return for the owner. !t is concerned with overall managerial decision making in general and with the management of economic resources in particular. !n order to make right decision at right time, the finance manager has to be e#uipped with sufficient past and present information about the firm and how it is operating and changing overtime available from $inan%ia# state*ents.2 which are the end products of the financial accounting process. Financial statements include0 6. &a#an%e sheet. 2 ,alances the assts to the firm against its financing, 1resents the assets of the firm i.e. resources and the liabilities of the firm i.e. obligations. =Total assets L total liabilities2 8. In% *e state*ent. . &lso known as statement of earnings summarizes the revenues and e)penses of the firm for an accounting period. :ives detail of sources of income and e)penses and thus it provides the summary of the operating results of the firm for a specific period. "evenue.E)pensesLBet profit SOURCES O- -INANCE -OR SMALL ENTREPRENUERS Finance is the life.blood of a business. ,us cannot run efficiently if it does not have ade#uate finance to meet its re#uirements. %ources from which an entrepreneur can meet his financial re#uirement can be classified as follows0 A%% rdin" t peri d a2 L n"2ter* s ur%es0 . shares, debentures, long .term loans e.t.c

b2 Sh rt2ter* s ur%es. . &dvance from banks, public deposits, advances from customers and trade creditors; e.t.c. A%% rdin" t wnership a2 Own %apita#. . share capital, retained earnings and surpluses etc b2 & rr wed %apita#. . debentures, public deposits and loans etc A%% rdin" t s ur%e $ "enerati n a2 Interna# s ur%es.2 retained earnings and depreciation funds etc. b2 E+terna# s ur%es. 2 %ecurities as shares and debentures, loans etc. N te. For the sake of convenience, entrepreneur sources of funds can be classified into three categories a2 %ecurity financing0 . include issue of e#uity and preference shares and debentures. b2 !nternal financing0 . include retained earnings c2 4oan financing0 . include both snort and long.tern loans. >ther sources of finance are0 . a2 b2 c2 d2 e2 f2 g2 %alary or personal income %oft loan from commercial banks ,orrowing from friends %elling of property +ortgaging of property or leasing !nheriting from parents 1romoted by private venture capital funding organizations

Se#$2e*p# ,*ent and entrepreneurship

%elf.employment is regarded by many as something purely and genuinely good. +ore entrepreneurs mean more innovation and new ways of organizing production. 1eople do not only provide themselves with employment, they also employ others. This creates economic growth. &nd the larger number of self.employed will increase competition and efficiency. Taken together, this will increase the real incomes in society. +any governments apparently believe that entrepreneurs create $obs and that higher levels of enterprise promote economic growth.

S!i##s $ r Su%%ess
There is no template for a successful business person, but he or she is likely to have most of the following attributes0 M S *e % **er%ia# 9)usiness4 awareness. reading the Financial Times every day isn;t necessary, but you will need a basic understanding of how to make a profit, attract customers and market whatever you are offering. M The a)i#it, t *u#titas!. setting up your own business may entail having to do everything yourself, from accounts to marketing to web design. Freelancers can find themselves $uggling several $obs at once. %elf.employment re#uires the ability to learn fast and respond #uickly to une)pected situations. M ( d r"ani<ati na# s!i##s. you will need to keep careful track of paperwork, schedules, company e)penditure and deadlines. Cou are also responsible for invoicing your clients and making sure you get paidN M The a)i#it, t netw r!. successful self.employment re#uires contact with as wide a variety of people as possible, so that you can tell others about your business and find new clients or partners. %ome useful networking organizations are included below in the Further !nformation section. M Ener", and resi#ien%e. it takes a lot of effort to build up even a moderately successful business and there are often setbacks along the way. Cou will need considerable emotional stamina to stay optimistic during difficult periods.

Di$$erent R utes t Se#$2E*p# ,*ent

&usiness wner &s a self.employed business owner you set up and run your own company, either as a sole trader =alone2 or in partnership with others. Cou and any colleagues must generate sufficient income on which to live, while building up demand for your services. -ran%hisin" &s a franchisee, you buy into an established business such as a restaurant chain. The company provides raw materials, training, support and a recognized brand name, all of which you pay for. ,eyond this you are largely autonomous and responsible for generating your own profits at a local level. -ree#an%in" 9 r % ntra%tin"4 &s a freelancer, you work for another company on a temporary contract basis covering a particular pro$ect or commission. >nce that has finished you have to look for another assignment. Typically, freelancers need a specific skill =such as !T or writing2 which they can offer to companies.

P #i%, t #s a$$e%tin" se#$2e*p# ,*ent

The most important policy tools affecting self.employment fall into three different categories0 6. Ta)es 8. 1olicies on credit markets D. Training, advice, and support

Se#$2e*p# ,*ent as * ti'e $ r pu)#i% inter'enti n

Creates a res ur%e a## %ati n . 1ositive e)ternalities of ideas, products, and employment might create higher social returns to self.employment. In% *e distri)uti n . %elf.employment might be a road out of poverty, unemployment, and dependence.

Pra%ti%a#ities
!n the rush to get your business up and running, pay attention to0 M Ta+. this should be declared and settled on an annual basis. +any freelancers and small businesses run into difficulties because they forgot to factor this into their financial e#uations, fail to pay up on time and suffer heavy fines as a result. 'onsult an accountant to check what you can legally set against ta) and seek their help with your first ta) return. M Le"a# and $inan%ia# ad'i%e. a small investment of time and money at the outset can pay large dividends in the long run. & partnership document is the business e#uivalent of a prenuptial agreement and minimizes the hassle if you go your separate ways. Cour status =sole trader, partnership, and so on2 needs to be defined from the start. 'opyright and patent issues may need to be sorted out, as will landlord and tenant matters. M Insuran%e. guard against damage to e#uipment and premises, plus some form of health insurance in case you cannot work. M Hea#th and sa$et,. take care of yourself, any employees, clients or visitors and the general environment in which you are operating. M O'erheads. such as rent, repairs and business rates. M Pri'ate pensi n p#ans. unless you want an old age spent in penury. M Me*)ership $ pr $essi na# ) dies. it;s often well worth the annual fee in terms of networking, advice, marketing and access to opportunities.

M Nati na# Insuran%e % ntri)uti ns. these are paid separately if you are self.employed or freelance. 'ontact the local ta) office to register.

Ad'anta"es
Cou;re in chargeN :enerally speaking you have the freedom to make your own business decisions and to grow your organisation in your own way and at your own pace. Cou can work the hours you choose without having to $ustify yourself to a manager, and there are numerous ta) benefits for people who are self.employed. &lso, any profits and kudos are yours alone.

Disad'anta"es
The responsibility for the business starts and ends with you, and one badly.$udged decision can have a ma$or knock.on effect financially. Cou may also end up labouring at all hours of the day and night, particularly if you;re a sole trader@ furthermore, keeping yourself motivated can be a daunting task. &lso if you don;t work, you don;t get paid0 taking a holiday may result in a sharp drop in earnings.

>. The ( 'ern*ent and Entrepreneurship

The government is the most beneficial factor for an entrepreneur. The government has numerous ways to help out the entrepreneur. The most appealing factors are grants, as well as provide free services for initial business start.up. The government knows that entrepreneurs are what make society flourish, and it is their actions and ideas that truly make. &ene$its $ Entrepreneurship t the ( 'ern*ent :rowth Firm survival !nnovation Employment creation Technological change 1roductivity increases E)ports Oehicle for personal development /arness social cohesion . The state of cohering or sticking together

R #e $ ( 'ern*ent
%etting effective :overnment policies and programmes favouring entrepreneurship and encouraging them

Entrepreneurship and S %iet,

From an entrepreneurship point of view economic knowledge and awareness will raise during running the mini. company, while its main aim is creating a culture of entrepreneurship, developing a greater number of entrepreneurs. /owever, economic education is not supposed to be a means of economic policy to increase the number of entrepreneurs in order to create welfare, innovation and $obs, aiming to create an attitude to improve entrepreneurial conditions to increase returns and decrease costsN Economic Education e)ists in order to enlighten individuals about the economic situation they live in, to increase their chances to help them arrange their lives in a self.determined and responsible way. To this view creating enthusiasm seems to be an irresponsible goal, entrepreneurship education at school has to regard the following aims0

Spe%ia# issues $ Entrepreneurship within s %iet,

=. De'e# pin" and re$inin" ideas ), re"ardin" %han%es t s #'e pr )#e*s. Entrepreneurship Education is not directed to a good vision, if its main goal is a self.employed person. %elf employed persons have to do everything by themselves@ they are employed permanently,

overburdened and overworked. !n one person they have to be innovative and creative, they have to be manger, trader, worker, persuader and advertiser. Entrepreneurship education focuses on the idea development instead of business management, adapting society;s values and refining ideas regarding synergies, customers, future business partners and market. entry. !n this way entrepreneurship education can also create new ideas to solve problems of society as well0 !t is not only an economic competence, but it is a competence to citizens, to employees and also to consumers as well, and fits within economic education as a whole. >. Ana#,sis %han%es and ris!s $ entrepreneurship as an indi'idua# %areer pti n Enthusiasm may be a rare product of an educational process, but it is surely is not supposed to its goal. :etting used to the role of an entrepreneur in a mini.company or a simulation game, there is the necessity to compare it with the life of an entrepreneur s can be interviewed, so comparison has also take place with data of survival of firms. of e)amples of the circumstances and obstacles of converting ideas into practice. ?. Understandin" r #eF $un%ti n and interests $ e% n *i% a%t rs and their re#ati n t understand s %iet, Entrepreneurship Education may tend to glorify entrepreneurs, whose unselfish action innovation, $obs and wealth are to be owed. !t seems if profit is not estimated any more as an incentive to bear risks and as an element necessary for survival, growth, and change of a company. Baturally striving for gains is not the only aim of entrepreneurial action, but a necessary one. "egarding this it is necessary that students understand that intention and result can differ learning only by mini.companies or simulation games. Entrepreneurship education can enhance competences which are of great importance for anybody and it can be completed with ethical perspectives. regarding other economic actors as well. and, in most cases, has to be compared to real life. S ur%e Appr priate Te%hn # ", Appr priate te%hn # ", is technology that is appropriate to the environmental, cultural and economic situation. !t is intended for. !t usually describes technologies which are suitable for use in the ma$ority world =or developing nations 2. &ppropriate technology makes use of skills and technology that are available in a local community to supply basic needs, such as gas and electricity, water, food and waste disposal. (hen an entrepreneur is choosing the right type of technology to use following have to be taken into consideration. &vailability and reliability of the technological sources (illingness and ability to buy !mportance of the technology to be adopted &vailability of local knowledge and e)pertise !nfluence ability to operate and maintain &vailability of spare parts and materials.

Le"a# Aspe%ts $ &usiness ,usiness 4egal !ssues0 /andling the 4egal &spects of ,usiness 'ertain legal issues may be specific to the type of business you have. +any issues are common for all types of small businesses. %ome of these are being discussed here. =4 Hea#th and sa$et, Every business owner has to ensure the health and safety of their employees at the workplace. This is one of the ma$or concerns of business owners of all businesses, whether big or small. %uch responsibilities are both ethical and legal. !f your business has a physical location, then you will need to register your business with >%/& =>ccupational %afety /ealth &dministration. This goes double if your employees

face on the $ob hazards, such as building things or handling hazardous materials. Bot following the law when it comes to health and safety is a sure. fire way to get into legal trouble. 82 E*p# ,*ent and a"e !t is necessary for every business owner to ensure compliance of age and employment.related laws along with the health and safety laws applicable to their particular business. !n a case where a business is sold to another owner, the new owner needs to follow and maintain the correct policies and procedures together with appropriate practices that accompany the purchase of the business. !t would be advisable to seek information from EE>' =E#ual Employment >pportunity 'ommission2 to ensure legal compliance and help you stay within the age limitations imposed by the law. ?4 &ui#din"s and pr pert, &s a small business owner, you need to know the building codes in the district where your business will be operating. This will ensure that there are no building code violations and that there are no structural issues or other problems that may invite fines. @4 -air Tradin" Pra%ti%es Fair trading practices help to avoid deceptive conduct and prevent economic in$ury to consumers and other businesses. Fair Trade includes unfair competition, false advertising, copyright infringement, etc. &s a small business owner, you should make sure to ac#uaint yourself with ,etter ,usiness ,ureau guidelines and register your business with them. "egistering with the ,,, shows that your business has an open.door policy and will be fair and e#uitable when dealing with complaints or other issues. !n general, when selling products, either wholesale or retail, all sales should be on e#ual terms and prices must be non.discriminatory. For e)ample, a bo) of cards should not be sold to one or more stores for Psh. F9 and to others for Psh. 689 unless there is an economic $ustification. This $ustification may be that some pay in cash so they get the product cheaper, or they buy in bulk so they get a discount. >ther stores may want to retain the right to return unsold goods, so they may pay a higher price. A4 Li%ensin" and insuran%e !t is important that all relevant and necessary licenses pertinent to the business be obtained. The proper way to proceed in applying for any licenses you need is through your state;s business 4icense division. Cour business should also be insured =in fact, this is often re#uired2, preferably with a reputable insurance company. To get more check with related trade associations, business colleagues and e)perienced consultants. !t is best to hire an attorney to go through all documentation, plans and papers related to the legal aspects of your business. This will help you to comply with any legal re#uirements to ensure that your business is protected from lawsuits and other legal complications

Li%ensin". 4icensing is a contract to gain access to the right of a proprietary product, process, or
technology for commercial purpose. & business owner can also use licensing to e)pand, such as licensing a foreign agent to sell his or her product overseas. &USINESS -ORMATION There are three general categories of legal business formations 6. %ole proprietorships 8. 1artnerships D. 'orporations SELECTIN( A LE(AL -ORMATION This involves a decision with at least three important criteria 62 Pre$eren%es $ the entrepreneur K Entrepreneur tent to want to go it alone and this desire influences their decisions about choosing a legal structure.

82 Pr $i#e $ the enterprise K (hen a new venture is launched, it is almost always small. Therefore it makes sense to adopt a small structure that is easy to administer. &s a venture begins to grow, more resources and people are needed and the basic structure of a one person organization is no longer possible. ?4 Ad'anta"es and disad'anta"es $ a )usiness entit, !t is important to study in detail the advantages and disadvantages of different business entities. This include the ta) regulations, statutory forms of business, owners benefit from preferential ta) rules etc which differ from one type of enterprise to the other. CATE(ORIES O- LE(AL &USINESS -ORMATION 62 S #e pr priet rship K !s the business of one person, independently owned and without partners. The person is the business with full accountability for ta)es, finances and legal liability. 82 Partnerships K !s an association of two or more persons as co.owners to conduct a business $ointly. The purpose of any partnership is to combine forces to pursue a specific business. ,y $oining together, partners can create a synergistic team complementing one another;s talents. There are three types of partnerships. a2 (enera# partnerships2 formal and informal association in which the co.owners share unlimited liability for the business. Each partner is fully responsible for operating the business regardless the percentage of shares. b2 Li*ited partnership. re#uire one or more general partners who are responsible for managing the venture with unlimited legal liability. !s limited to the member;s investments. c2 RGD #i*ited partnerships K Entrepreneurs with high.tech innovations or complicated research ideals can benefit from research and development limited partnerships. D2 C rp rati ns : !s a legal business entity created by law and managed through a board of directors who are responsible to stake holders for appointing and directing operating officers.