Chapter 1-6

Entrepreneurship and Small Business
Chapter One
Entrepreneurship- An Overview
1.1 Definition and Concept

- Entrepreneurship is the interaction of skills related to inner control, planning and goal setting, risk
taking, innovation, reality perception, use of feedback, decision making, human relations, and
independence.
- Entrepreneurship is an integrated concept that permits an individuals business in an innovative
manner
- The dynamic process of creating incremental wealth
- This wealth is created by individual who assume major risks in terms of equity, time, and/or career
commitment of providing value for a product or service
- The product or service itself may or may not be new or unique but the entrepreneur must somehow
infuse value by securing and allocating the necessary skills and resources
- A dynamic process of vision, change, and creation
- Requires an application of energy and passion towards the creation and implementation of new
ideas and creative solutions.
Entrepreneurship is more than the mere creation of business
- Seeking opportunities
- Taking risks beyond security
-Having the tendency to push an idea to reality
- Entrepreneurship is one of the four factors of production, (land, labor, capital and entrepreneurship)
that is the most important in driving a successful economy. The entrepreneur ventures are carried out
where there is a gap in the development of a product. The entrepreneurs work to fill the gap by
introducing something that increases the effectiveness of the already existing products.
In general, it can be concluded that entrepreneurship is:
Essentially a creative activity that consists of doing things that are not generally done in the
ordinary course of business.
Generally a trait, a skill, and a profession, which must be developed;
Considered as the personal quality that enables people to start new business vigorously and
innovatively and expand an existing one; and
Composed of four crucial elements:
The ability to perceive an opportunity;
The ability to commercialize the perceived opportunity (both leading to innovation);
The ability to pursue it on a sustainable basis; and
The ability to pursue it through systematic means
- In almost all of the definitions of entrepreneurship there is agreement that we are talking about a
kind of behavior that includes (1) initiative taking; (2) the organizing and reorganizing of
social/economic mechanisms to turn resources and situation to practical account; and (3) the
acceptance of risk or failure. (Albert Shapiro)
Entrepreneurship and Small Business Management

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Who is an Entrepreneur?
The following examples indicate the diversity of definitions in literature.
Entrepreneurs are persons gifted with the qualities of judgment, firmness, and knowledge of the
world as well as of business (B. Say)
Entrepreneur is a person who introduces innovative changes. (Schumpeter).
Frank Young described the entrepreneur as a change agent.
Francis A. Walker observed that the true entrepreneur is one who always searches for change,
responds to it, and exploits it as an opportunity.
Robert D. Hirsch said entrepreneur is the person who establishes a new business venture and is a
visionary leadera person who dreams great dreams.
The list is endless and some recent definitions also include definitions of the entrepreneur as:
Entrepreneur is person who has the ability to see and evaluate business opportunities, to gather
the necessary resources to take advantage of them, and to initiate appropriate action to ensure
success (Meredith, 1982).
Entrepreneur is a person who owns, organizes, manages and runs an enterprise assuming the risk
of a business (NIESBUD, 1994).
1.2 Entrepreneurship and Society

Entrepreneurship helps the society as well as the entrepreneur itself. The benefits of
entrepreneurship can be divided into three distinct categories that include the benefits to the nation,
benefits to the society and benefits to the individual.
An effective entrepreneurship venture fosters the production of wealth for a nation. When many of
the entrepreneurship produce and output greater than the input, the economy of the nation is
directly bolstered. Another advantage to the nation is the creation of jobs for its people. Such a job
creation utilizes the human resources of that particular country and helps the natural talent
materialize. With the inventions and development in the new technology a nation can use its
resources more effectively.
The income level of the average person and the standard of living of a society increase with every
successful entrepreneurship projects that is undertaken. There is an increase in the employment level
on the regional scale. It is also noticeable that an entrepreneurship helps to develop other
entrepreneur business because of the extra incentives that it can provide to a new entrepreneur in
the shape of capital, knowledge, and technology. Entrepreneurship helps the societies to fulfill its
basic needs in the world that calls for the survival of the fittest. Entrepreneurs lead by examples in
assisting the society and therefore boost the morale of the public.
An entrepreneur helps himself while creating opportunities for others. It is a fact that by doing so an
entrepreneur fulfills his creative urge. Each successful project carried out by the entrepreneur leads to
self-satisfaction. The greatest satisfaction is derived from the fact that the individual is his own boss
and therefore can use its creativity without any fear of consequence. The quality of every good
entrepreneur project is the profit and the fame that such a career provides. Entrepreneurs always
enjoy respect and high status in their communities.

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1.3 Entrepreneurship and its role within the economy
The role of entrepreneurship in economic development involves more than just increasing per capita
output and income. It involves initiation and constituting change in structure of business and society.
This change is accompanied by growth and increased output which allows more to be divided by the
various participants.
i. Nation Contributions to the nations wealth
- Creates job opportunities/ utilizing human resources
- Invention, innovation and development
- Creates competitive environment
- Glorifying the name of nation/ foreign exchange
ii. Society Raises income and standard of living
- Promotes employment for self and others
- Develop new entrepreneurs
- Fulfill the needs of the people
- Service to the society
iii. Individual- Fulfill creative urge
- Self-satisfaction
- Own boss
- Profit
- Status in the society
1.4 Keys to success ( The 10 PECs)

1. Goal setting: Can a poor person become wealthy? Of course! The unique combination of desire,
planning, effort and perseverance will always work its magic. The question is not whether the formula
for success will work, but rather whether the person will work the formula. That is unknown variable.
That is the challenge that confronts us all. We can all go from wherever we are to wherever we want
to be. No dream is possible provided we first have the courage to believe in it.
The four main components of goal setting:-
A. Evaluating and reflection: the only way we can reasonably decide what we want in the future and
how we will get there, is to first know where we are right now and secondly, what our level of
satisfaction is for where we are in life.
B. Dreams and goals: what are your dreams and goals? Not related to the past or thought through
your life values, and decided what you really want? This is not something that someone else says
you should have or what culture tells us successful people do or have. These are the dreams and
goals that are born out of your won heart and mind. These are the goals are the goals that unique
to you and come from who you were created to be and gifted to become.
C. S.M.A.R.T. Goals: Means Specific, Measureable, Attainable, Time bounded
Specific: - Dont be vague. Exactly what do you want?
Measureable:-Quantify your goal. How will you know if you have achieved it or not?

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Attainable:-Be honest with yourself about what you can reasonably accomplish at this point in your life-
along with taking in to consideration your current responsibilities.
Realistic: - It is got to be do-able, real and practical.
Time bounded;-Associate a time frame with each goal. When should you complete the goal?
D. Accountability: - think of the word accountable It means to give an account when someone
knows what your goals are, they help hold you accountable. Whether it is someone else going
through this program with you or just someone you can give the basic idea to, having a person who
can hold you accountable will give you another added boost to getting your goals!
2. Risk Taking: - Defining and Connecting Risk-Taking and Creativity: - What are these two concepts
and how can we harness (connect) their vital energy? Keep in mind; while they may be interactive, the
two are not necessarily reciprocal. By definition, being creative involves taking chances and risks;
being risk-taking may or may not be creative.
Risk Taking:-taking risk means daring to try new approaches or ideas with no predictable control
over results or consequences, i.e. taking action when the outcome is unknown.
Creativity:-is connection the ability to relate or combine, through flexible persistence and
insight, seemingly remote, contradictory or irrational ideas and elements with and elegant,
unified and complex simplicity. The creative concept, product or outcome is not only novel but
has value and use.
3. Opportunity seeking and initiative: - Somebody said you have to love what you do, but that is
not necessarily true. What is true is that you have to love the opportunity. The opportunity to build
life, the future, your health, success and fortune. Knock on someones door or making that extra
phone call may not be something you love to do so, but you love the opportunity of what might be
behind that door or call.
For example, a guy says, I am digging ditches. Should I love digging ditches? the answer is, No, you dont
have to love digging ditches, but if it is your first entry onto the ladder of success, you say, Im glad
somebody gave me the opportunity to dig ditches and Im going to do so well, wont be here long.
You can be inspired by having found something; even though you are making mistakes in the beginning
and even though it is a little distasteful taking on a new discipline that you havent learned before. You
dont have to love it, you just have to learn to appreciate where you live, appreciate opportunity and
appreciate the person who brought you the good news; that found you.
If you will embrace the disciplines associated with the new opportunity you will soon find that yourself-
confidence starts to grow, that you go from being a skeptic (doubter) to being a believer. So, before you
are tempted to give up or get discouraged, remember all success is based on long term commitment, faith
discipline, attitude and a few stepping stones along the way. You might not like the stone you are on right
now, but it is sure to be one of the stones that to great opportunities in the future.

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4. Persistence: -If you were to choose just one part of your personality to develop that would
virtually guarantee your success, you have to place persistence at the top of your list.
Persistence is a unique mental strength; a strength that is essential to combat the fierce power of the
repeated rejections and numerous other obstacles that sit in waiting and are all part of winning in fast-
moving, ever-changing world.
Persistence is an expression of the mental strength that is essential in almost every profession, where
repeated rejection and obstacles are part of a daily routine.
Four simple steps which will help your persistence in to a habit:
a. Have a clearly defined goal. The goal must be something you are emotionally involved with,
something you want very much.
b. Have a clearly established plan that you can be on immediately.
c. Make an irrevocable decision to reject any and all negative suggestions that come from friends,
relatives or neighbors. Do not give any conscious attention to conditions or circumstances that
appear to indicate the goal cannot be accomplished.
d. Establish a mastermind group of one or more people who will encourage, support and assist you
wherever possible.
What do you dream of doing with your life? Do it. Begin right now and never quit. There is greatness in
you. Let it out. Be persistent.
5. Committed to the work contact: Entrepreneurs always do what they will do. Entrepreneurs keep on
their promises no matter how great the personal sacrifice may.
Behavioral indicators of commitment:-
Makes personal sacrifice or extends extraordinary effort to complete the job.

Pitches in with workers or in their place to get a job done.
Strive to keep customers satisfied and places long-term good will over short term gain.
- When you work, work. When you play, play. Dont mix the two.
- Pay attention. Dont just stagger through the day.
6. Efficiency and quality: Efficiency is doing a thing in the right way; it is doing thing better, faster
and cheaper for fun and profit.
Entrepreneurs try to do things faster, less expensive and more quality than before.
Quality is customers satisfaction and producers dissatisfaction.
Quality is a dynamic improvement of goods and services.
7. Information seeking: Every entrepreneur should always seek information from clients and
employees about the quality of services, problems and etc. Because it helps the entrepreneur to
expand the business by improving the quality of services and by avoiding the problems.
8. Persuasion and networking: Use deliberate strategies to influence or persuade other as to
develop and maintain business contacts and use key people as agents to accomplish own objectives.
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Different persuasion Networking powers;-
A. Coercion:-It is based on fear.
B. Connection power:-Based on network with other influential power.
C. Expert power: - Based on expertise skill and knowledge.
D. Information power:-Based on persuasion or access to valuable information than.
E. Reference power:-Based on your personal treats being liked and admired.
F. Reward power: - Based on an ability to reward.
9. Independent and self-confidence: Self-confidence is an attitude which allows individuals to
have positive yet realistic views of themselves and their situations. Self-confident people trust their
own abilities, have general sense of control in their lives, and believe that, within reason, they will be
able to do what they wish, plan and expect.
People who are not self-confident depend excessively on approval of others in order to feel good about
them. They tend to avoid taking risks because they fear failure. They generally do not expect to be
successful. They often put themselves down and tend to discount or ignore compliments paid to them. By
contrast, self-confident people are willing to risk the disapproval of others because they generally trust
their own abilities. They tend to accept themselves; they dont feel they have to conform in order to be
accepted.
Surprisingly, lack of self-confidence is not necessarily related to lack of ability. Instead it is often the result
of focusing too much on the unrealistic expectations or standards of others, especially parents and society
in shaping feelings about ones self. Students in their college years re-examine values and develop their
own identities and thus are particularly vulnerable to the influence of friends. Self-confidence is not a
feeling of superiority, but of independence
10. Systematic planning and monitoring: Planning and monitoring is very essential. Planning helps
the entrepreneur how to reach to the place where he dreams. And monitoring helps the entrepreneur
to know where he is and to know how much of his objective is achieved.
Plans by breaking large tasks down in to time-constrained sub-tasks.
Revise plans in light of feedback on performance or changing circumstances.
Keeps financial records and uses them to make business decisions.

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Chapter Two
Small Business
2.1 Definition and Importance
2.1.1 Definition of Small business
It is worth that all attempts to define small business in two basic approachesqualitative and
quantitative definitions.
Qualitative definitons: are those which are inherently subjective broad-based and less precise
than the quantitive. Qualitative definitions are gaining prominence as the perception of
practitioners see little point in focusing on characteristics or size of small/micro-enterprises but
prefers to dwell on their role in development such as the creation of employment, income
distribution, poverty reduction etc.
Quantitative definitions: are definitions which rely on clearly defined parameters (or a
combination of paramenters), which include some or all of the following:
Number of employees
Sales turnover
Assets capital net worth
Specific industry wide measures etc.
These sorts of definitions are essential when it is desired to identify specific target groups for the
inclusion or exclusion of certain preferential treatments. Yet there is a wide difference among
countries in adopting quantitative defintions. For example one study cited that for a growing
number of researchers and reporting organizations, the small business is generally considered to
employ no more than 500 persons and to have sales less than USD 20 million while paradoxically
at the other end of the specturm, the 1988 world conference on micro entreprises agreed that
their target group are made up of very small enterprise units, which employ only the owner or
merely few family members.
Therfore, realizing the above diversity of defintions that could prevail and realizing that both
approaches could have limitations, a definition merging both could generally be acceptable.
Hence, taking into consideration the Ethiopian situation, the following may be considered to
comprise
i) Micro enterpries. Those business activities that are:

- Independently owned and operated;
- Have a small share of the market;
- Are managed by the owner; and
- Employing five or less employees.
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ii) Small businesses: are those eterprises which have the first three features of the micro
enterprsies and employing 6 - 49 employees.
iii) Medium scale enterprieses: are those enterprises which have a relatively higher share
of the market are independently or jointly owned and managed by the owner or by
appointed executives and employ 50 - 99 persons.
iv) Those employing above 100 would be considered as large enterprises.
Also recently, Ministry of Trade and Industry and Central Statistics Authority (CSA) have given
the following definitions.
The actual by the Ministry of Trade and Industry adopted official definitions of Micro and Small
Enterprises in Ethiopia are as follows:
Micro Enterprises are business enterprises found in all sectors of the Ethiopian economy
with a paid-up capital (fixed assets) of not more than Birr 20,000, but excluding high-tech
consultancy firms and other high-tech establishments.
Small Enterprises are business enterprises with a paid-up capital of more than Birr 20,000
($2,500) but not more than Birr 500,000 ($62,500) but excluding high-tech consultancy
firms and other high-tech establishments.
The Central Statistical Authority (CSA), for the purposes of its survey on "Urban Informal Sector
Activity Operators and Small-scale Manufacturing Industries," attached various definitions to
enterprises in different sectors, namely: the informal sector, cottage or handicrafts, small-scale
manufacturing industries, and medium- and large-scale manufacturing industries.
2.1.2 Importance of Small business
One of the yardsticks of a countrys economic development and technological advancement is its
progress in business. If we glance around us, we can see how important business is in everyday
lives.
In explaining the importance of small business, Rachman (1985:100), for instance, indicates that
about 60% of all new jobs in the US are generated by small business. Accounting to him, though
the vast majority of the jobs they create are low-paying service positrons like sales clerk, waiter,
or waitress; these nevertheless are jobs that help put cash on peoples tables. Other important
way small businesses contribute to economic growth by fostering innovation.
From all these discussions it can be said that small businesses are very important to the national
economies. Their importance in countries like ours where it is difficult to raise capital by both
individuals and government to establish big businesses cannot be surpassed.
2.2 Economic, Social and political aspects of small business enterprise

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Social issues are clearly centered around the work-place, work life and private life. To many work
is the central activity in their lives and the stresses and pressures of todays workplace are
enormous, overtime, project pressure, sales targets, travel to and from the place of work, to
name but a few. This all causes tension in a partnership, family and leads often to a dysfunctional
family/private life. For example, we need dating agencies and web-sites to find partners, because
we are too busy to find a partner in what used to be a normal way and in this sense we have to
be thankful for the service dating agencies and web-sites provide. These issues are prevalent in
the group of small business owners too.
This brings us to the political issues these micro and small businesses face. The fact that our
society is wholly unprepared for this revolution in the work place and small business
environment, has to do with the fact, that governments often receive no advice from actual
participants in this new home based micro business economy. Studies generally show that
emerging economies are learning from the developed nations like US and will outshine their
economies within the next decades, and will finally stop putting barriers up for micro businesses.
2.3 Small Business Failure factors

Failure can be push upon an entrepreneur through external or personal conditions. Small
business owners are particularly vulnerable to both situations as they are occupied with the
immediate needs of survival.
2.3.1 External Factors of Failure

Every business is affected by externalities factors such as fluctuating interest rates, interrupted
supplies labor, market trends, inflation, government regulations, and unstable financial markets.
The smaller enterprise is far more susceptible to these forces than a large firm. From a financial
standpoint, most small businesses rely on commercial loans tied to top interest rates. Small
changes in economic conditions result in huge changes in profits. Smaller businesses that are
relatively debt free still operate in a more intense price sensitive environment.
Personal Factors of Failure

2.3.2
Studies show that 52% of all business failure attribute to management issues, and as much as
90% of small business failures to incompetent managers. Specifically, the inability of small
business managers to control purchasing costs (inventory), to control capacity (production or
operating costs), to generate customers (lack of marketing expertise), or to manage financial
assets (weak cash control) being the primary issue.
i. Inexperience. Inexperience can be translated to mean lack of technical skills or
management intelligence. Each of these shortcomings can lead to disaster, but they can
be overcome by an individual willing to make the commitment of time and energy to learn
about business.

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ii. Arrogance. Many small businesspersons, particularly inventors and innovative
entrepreneurs with new products, become egocentrically engrossed in their ventures.
They become addicted with their own brilliance, convinced beyond reason (often without
market research) that their bright idea will change the world- its get to sell. Their
arrogance will not allow them to take advice from others. They will avoid all suggestion of
failure.
iii. Mismanagement Given the competitive nature of most small businesses and the volatility
of profits business results are quite sensitive to small errors. Several categories of
management mistakes are critical for small businesses to avoid.
iv. Overinvestment in fixed assets is common. When starting or expanding a business, it is
tempting to buy facilities and equipment rather than lease or subcontract. Everyone likes
to own assets, but greater investment in fixed assets means less flexibility to adjust
adverse conditions.
Other personal factors for failure include
v. Poor inventory control
vi. Poor financial control
vii. Poor Business Philosophy
viii. Lack of Planning, etc
2.4 Problems in Ethiopia Small business (Assignment)
2.5 Setting Small Business Ownership

Basic ways of establishing a business
People become small business owners in one of three ways: by buying an existing business,
inheriting an existing business, or launching a new business. Care should be exercised in entering
business in any one of the three ways mentioned above. Continued operation of an inherited
business may be unwise if it is heavily in debt or has recently lost much of its customer. Similarly,
the purchase of an existing firm can be dangerous. For example, a small factory for sale may have
obsolete equipment and a top-heavy inventory of outdated products. And starting a new
business would be suicidal without a real business opportunity, adequate financing, and genuine
management capacity.
2.6 Project analysis and its important components

1. Market Analysis
Market analysis is concerned primarily with two questions:
What would be the aggregate demand of the proposed product/service in future?

What would be the market share of the project under appraisal?
To answer the above questions, the market analyst needs a wide variety of information and
appropriate forecasting methods. The kinds of information required are:

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Consumption trends in the past and the present consumption level
Past and present supply position
Production possibilities and constraints
Imports and exports
Structure of competition
Consumer behavior, intentions, motivations, attitudes, preferences, and requirements
Distribution channels and marketing policies in use
Administrative, technical, and legal constraints
2. Technical Analysis
Analysis of the technical and engineering aspects of a project needs to be done continually when
a project is formulated. Technical analysis seeks to determine whether the prerequisites for the
successful commissioning of the project have been considered and reasonably good choices have
been made with respect to location, size, process, etc. The important questions raised in
technical analysis are:`
Whether the preliminary tests and studies have been done or provided for?
Whether the availability of raw materials, power, and other inputs has been
established?
Whether the production process chosen is suitable?
Whether the equipment and machines chosen are appropriate?
Whether the proposed layout of the site, buildings, and plant is sound?
Whether work schedules have been realistically drawn up?
Whether the technology proposed to be employed is appropriate from the social point
of view?
3. Financial Analysis
Financial analysis seeks to determine whether the proposed project will be financially viable in
the sense of being able to meet the burden of servicing debt and whether the proposed project
will satisfy the return expectations of those who provide the capital. The aspects which have to
be looked into while conducting financial appraisal are: Investment outlay and cost of project
Means of financing
Projected profitability
Break-even point
Cash flows of the project
Investment worthwhileness
Projected financial position
Level of risk
4. Economic Analysis
Economic analysis, also referred to as social cost benefit analysis, is concerned with judging a
project from the larger social point of view. In such an evaluation the focus is on the social costs
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and benefits of project which may often be different from its monetary costs and benefits. The
questions sought to be answered in social cost benefit analysis are:
What would be the impact of the project on the distribution of income in the society?
What would be the impact of the project on the level of savings and investment in the
society?
What would be the contribution of the project towards the fulfillment of certain merit
wants like self-sufficiency, employment, and social order?
5. Ecological Analysis
In recent Years, environmental concerns have assumed a great deal of significanceand rightly
so. Ecological analysis should be done particularly for major projects which have significant
ecological implications like power plants and irrigation schemes, and environmentalpolluting
industries (like bulk drugs, chemicals, and leather processing). The key questions raised in
ecological analysis are:
What is the likely damage caused by the project to the environment?

What is the cost of re-establishment measures required to ensure that the damage to the
environment is contained within acceptable limits?
2.7 Step s in setting up Small Businesses

10 Steps to Starting a Business
Starting a business involves planning, making key financial decisions and completing a series of
legal activities. These 10 easy steps can help you plan, prepare and manage your business. Click
on the links to learn more.
Step 1: Write a Business Plan
Use these tools and resources to create a business plan. This written guide will help you map out
how you will start and run your business successfully.
A business plan is an essential roadmap for business success. This living document generally
projects 3-5 years or even more, ahead and outlines the route a company intends to take to grow
revenues. The main components of the business plan are the following:
Executive Summary
Your executive summary is a snapshot of your business plan as a whole and touches on your
company profile and goals. Read these tips about what to include.
Company Description
Your company description provides information on what you do, what differentiates your
business from others, and the markets your business serves.
Market Analysis
Before launching your business, it is essential for you to research your business industry, market
and competitors.
Organization & Management

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Every business is structured differently. Find out the best organization and management
structure for your business.
Service or Product Line
What do you sell? How does it benefit your customers? What is the product lifecycle? Get tips on
how to tell the story about your product or service.
Marketing & Sales
How do you plan to market your business? What is your sales strategy? Read more about how to
include this information in your plan.
Funding Request
If you are seeking funding for your business, find out about the necessary information you should
include in your plan.
Financial Projections
If you need funding, providing financial projections to back up your request is critical. Find out
what information you need to include in your financial projections for your small business.
Step 2: Get Business Assistance and Training
Take advantage of free training and counseling services, from preparing a business plan and
securing financing, to expanding or relocating a business.
Step 3: Choose a Business Location
Get advice on how to select a customer-friendly location and comply with local laws. Choosing a
business location is perhaps the most important decision a small business owner or startup will
make, so it requires precise planning and research. It involves looking at demographics, assessing
your supply chain, scoping the competition, staying on budget, understanding state laws and
taxes, and much more.
Step 4: Finance Your Business
Determine and find loans if the need arises based on the outcome of your business plan. There
are lots of factors that determine from where to secure the loan including the interest rate and
collateral pledged for the loan.
Step 5: Determine the Legal Structure of Your Business
Decide which form of ownership is best for you: sole proprietorship, partnership, Private Limited
Company (PLC), corporation, or cooperative. The capability of the enterprising, knowledge of the
business, level of risk and other related factors need to be determined before deciding the
structure of the business
Step 6: Register a Business Name
Register your business name with your state government. Naming your business is an important
branding exercise, and youll need to register it with the appropriate authorities.
Step 7: Get a Tax Identification Number
Learn which tax identification number you'll need to obtain from concerned government body or
your state revenue agency.
Step 8: Register for State and Local Taxes

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Register with your state to obtain a tax identification number, workers' compensation,
unemployment and disability insurance.
Step 9: Obtain Business Licenses and Permits
Get a list of federal, state and local licenses and permits required for your business.
Step 10: Understand Employer Responsibilities
Learn the legal steps you need to take to hire employees. And pay attention to Equal
Employment Opportunity Acts if any.
CHAPTER THREE
DEVELOPING BUSINESS PLAN
3.1 THE CONCEPT OF BUSINESS PLAN
The development and writing of a business plan marks the transition from a strategy formulation to the
implementation stage of new venture creation. As an entrepreneur or entrepreneurial team members
you have, thus, far collected information and analyzed it. You have evaluated the ventures resource base
and determine what is rare, and valuable.
Now it is time for action and producing the final document to implement the business idea. The
document is known business plan. The business plan is the formal written expression of the
entrepreneurial vision, describing the strategy and operation of the proposed venture. It is also called loan
proposal, venture plan, or investment prospectus.
It is a written summary of an entrepreneurs proposed venture, its operational and financial details, its
marketing opportunities and strategy, and its managers skill and abilities. The business plan serves as
entrepreneurs road map on the journey forward in building a successful business. It describes the
direction the company is taking what its goals are, where it wants to be and how it is going to get there. It
is written proof that the entrepreneur has performed the research and has studied the business
opportunity adequately.
3.2 Scope of the Business Plan

The depth and detail in the business plan depends on the size and scope of the proposed new venture. An
entrepreneur planning to establish a cement factory will need a much more comprehensive business plan,
largely because of the nature of the production process and market. On the other hand, an entrepreneur
who plans to open a retail-convenience store will not need the comprehensive coverage required by
cement factory. Thus, differences in the scope of the business plan may be dependent on whether the
new venture is a service, involves manufacturing, or is a consumer good or industrial product. The size of
the market, the level of competition, and potential growth may also affect the scope of the business plan.
For example the business plan tends to be detail when:
It involves manufacturing;
It covers larger market;
The business is to serve larger and disintegrated stakeholders.
The scopes and details of business plan may not be the same because of one or more of the following
reasons.
1. All business plans are not the same because businesses are different.

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A simple stationary retail store would not need a detail marketing plan, since these items are easily sold.
In other businesses, such as perfume or soda, marketing is crucial and is the most important section of the
business plan. Some businesses and their plans emphasize long, stable, safe profits. Other businesses have
never made a profit, but have great future prospects.
2. All business plans are not the same because the products are different.
Some businesses sell new products or services, such as new software or new Web sites (which are
services). New products or services must be explained, and the market size must be explained.
Other businesses, such as conventional homebuilders or gold mines, do not need to explain their products
or services in their business plans.
3. All business plans are not the same because business plans are written for different reasons.
Some business plans are written to obtain a face-to-face meeting with a venture capitalist. These plans
have the same purpose as resumes - attract enough interest for an interview. Other business plans are
written for planning purposes. Here the process of planning is more important than the paper plan.
4. All business plans are not the same because they vary in importance.
Sometimes, the entire future of your business depends on obtaining financing which requires writing an
excellent plan. Sometimes, a business plan is merely a technical or customary requirement, in which case
a low-quality, quick-and-dirty business plan may suffice.
If you are writing a business plan for a bank, friends and family members, or seeking a small amount of
capital, a low-quality, fill-in-the-blank plan may suffice.
3.3 Importance of a Business Plan

A business plan is the most essential for starting, building and making business successful. It allows the
entrepreneur to exploit the opportunities that arise in the life of business from a start-up to maturity. The
major benefits of a sound business plan are discussed below.
1. Arranging strategic alliance

Strategic alliances are arrangements between large and small companies to carry out joint research,
marketing, and other actives. They have become more common in the last few years. For small
companies, arranging a strategic alliance with a large company can mean gaining access to important
financial, distribution and other resources. But, before large company accepts the alliance, its executives
will want to a smaller companys business plan. Hence, developing sound business plan will enable an
entrepreneur to build a strategic alliance with a larger company then to gain the advantage or benefits
from the financial and managerial experience of the larger company.
2. Seeking investment funds

Venture capitalists and other investors require a business plan from any company that wants to be taken
seriously for funding the venture. It is the first thing most ask for, much as a personal manager asks job
applicants for a resume, investors use business plans as screening device, looking to be true on to a
business with a significant growth potentials when something catches their eyes, they read more carefully
and not they are still intrigued, they will come back the executive for further discussion. So, well-designed
business plan is the best way to secure finance from different sources.
3. It reduces the anxieties and tension of the entrepreneur.
By projecting the risk of the new venture into the future, the entrepreneurs come to grasps with potential
negative outcomes and the possibility of failure. The knowledge that comes this experience can reduce
the fear of falling an unknown future.
4. Obtaining bank financing
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For most banks, it is usually enough that an applicant provides past and current financial statements to get
a formal hearing of a loan. But just giving a inquiry/ hearing is not enough. Because more business are
seeking bank financing than banks have money available, only those business that make the best case will
receive funds.
Fortunately, business plan helps get you apart from the crowd companies that submit plans immeasurably
improve your chance of getting the funds you seek. Keep in mind that bankers are nervous, avers to risk.
Written business plan carries an important message even before it is read; it says the companys executive
are serious enough to do formal planning. That is an important message because bankers believe that
those who do so deserve for banks funds.
5. Obtaining large contract
Small companies seeking to obtain a large lump of business from a major corporation can encounter a
common obstacle. It comes when the corporate representative says something like everyone knows who
we are but very few people know who you are. More important, we do not know whether you will be
around long enough to fill the entire obligation we expect for the big cash we will be paying you. At this
point, producing a business plan can go a long way forward reassuring.
6. Completing mergers and acquisitions

Whether you want to sell your company or acquire one, a business plan is very important. When you
want to sell your company, you will be scrutinized by potential buyers who are looking at many
companies. Similarly, if you are doing the acquiring, you will be looking at many companies before you
decide to thrust ahead. You should be in competition to acquire a business; your business plan can once
again inspire the confidence essential to complete the deal.
7. Attracting key employees.

Usually, people doubt about the sustainability of companies during their inception. Hence, sometimes, it
becomes difficult to attract qualified employees into the small business venture. But developing sound
business plan will remove the doubts from the mind of potential candidates.
8. Motivating the management team.
When individuals in a small company have different visions about the companys strategy, customers may
become confused about what the company is trying to accomplish. However, a written business plan that
is based on input from all members of the companys management team and/or distributed to all
managers ensures that everyone understands where the company is headed. In the process, the plan
serves as a motivational tool by laying out the companys financial, marketing and producing goals.
9. It provides self-assessment of the entrepreneur.
A well-prepared business plan enables an entrepreneur to see whether the business is assured of success.
The planning process forces the entrepreneur to bring objectivity to the idea and reflect on such
questions: Does the idea make sense? When will I compute with? This self-evaluation may even be similar
to role-playing since the entrepreneur will be required to play out various scenarios and consider
obstacles that might prevent the venture from succeeding. The acting out of these scenarios allows the
entrepreneur to confront these obstacles and play ways to avoid them.
3.4 Essentials of a Sound Business Plan
Comprehensive, in depth research (SWOT Analysis and feasibility study) is the key to developing an
effective business plan. Without adequate research, your plan will come across as vague or shallow and
anyone receiving your plan will wonder if you are really know what you are talking about.

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As any good salesperson knows, you have to know everything you can about your product in order to
persuade someone to buy it. In this case, you (the potential entrepreneur) are the salesperson and your
product is the business plan. Since you want your customers to believe in you, you must be able to
convince them that you know what you are talking about when it comes to your business. So, to make
persuasive your business plan consider the following points.
1. Comprehensiveness
The business plan has to fully and completely treat all the major issues facing the new venture. This
comprehensiveness enables the entrepreneur to see where trouble might come from and to develop
contingent strategies to reduce the effect of problems.
2. Communicative
The business plan is a document for communicating to various audiences the businesss concept and
potentials. An effective business plan succeeds in communicating the excitement and vision of the
founders and can help to attract resources to the new venture.
3. Guidance.
The business plan sets goals and milestones for the new venture. It layouts the intention of the
entrepreneurial team and the values of the founders wish to preserve in their organization. It describes
what the business will do, how and where it will be started. Therefore, the plan can be referred repeatedly
to guide decisions of the firms managers and employees.
4. The planning process/flexible

The process of putting together a business plan, consulting it frequently, and reviewing and revising it
periodically can improve the ventures performance even though some aspects of the plan may become
obsolete before the ink is dry. This improvement is brought about by collecting information, sharing
analysis, developing norms for decision making within the organization, publicly enunciating the values of
the organizations leaders, reviewing objectives, and linking these with action all elements of highly
effective organizations. In other words, the scanning process itself helps make the company a better
organization.
3.5 Elements of the Business Plan
To become an expert, you must be willing to begin digging through information. Since not all information
that you gather will be relevant to the development of your business plan, it will help you to know what
you are looking for before you get started. To do this effectively, you have to develop an outline of the
essential elements a good business plan will include along with the questions you need to ask yourself as
you gather your research data.
Although all business plans contains certain key elements, the content and organization (format) varies
greatly depending on the nature of the business, the goal of the plan and business plan preparation norms
in different countries.
Outline of a Business Plan
I. Preliminary Section:
1. Cover page
2. Table of contents
3. Executive summary
Description of the venture

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Industry analysis
Development and production
Marketing plan
Organizational and financial plan
II. Major sections
1. Description of the venture.
Mission statement
Objectives
Products (service)
Office Equipment
Background of entrepreneur(s).
2. Industry Analysis / Market analysis
Overall market
Specific market
Competitor analysis
Macro environment influences
4. Development and production
Production process
Resource Requirements
Quality Assurance.
5. Marketing plan.
Overall concept and orientation
Marketing strategy
Sales forecast
6. Organizational plan
Organizational structure
Forms of ownership
Identification of partners or principal share holders
Management team background
Human Resource management strategy.
7. Financial plan
Financial statements
Financial resources
Financial strategy.
8. Assessment of risk and contingencies
Failure to produce the products/services promised
Unforeseen events
New technologies
Contingency plan
9. Scheduling and milestone
10. Appendixes
Letters
Market Research
Price list from different suppliers
Lease of contracts.
3.5.1 Preliminary Sections
It has been reported that, on average, the reader will spend less than ten minutes evaluating the business
plan for a new venture. To make the reader want go on the main body of the document and evaluate the
details, these beginning sections must be both attractive and informative. The preliminary section
contains three sub-sections: Coverage, Table of content and Executive Summary.
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1. Cover Page.
Every business plan should have a cover page that includes the following information:
The company name, address, telephone and fax numbers, and e-mail address.
The name and position of the contact person who should be one of the firms to executives.
The person designated as a contact person should be prepared to answer questions about
the plan.
The date of the business was established (to be establish or be functional) (simply
established 2oo4, for example) and the dates of this particular version of this particular
business plan, if it is an update of the previous one.
The companys logo. A logo is a design picture or ideograph chosen to represent the
company. The association of the company name with a pictorial design gives the reader (and
eventually the customer) two ways to remembering your company and its products. A new
venture can employ clip art or the latest computer technology to design its own logo, using a
graphics or drawing program from a personal computer.
2. Table of Contents
The first page after the cover page is the table of contents. The table should follow the format of the
elements of the business plan should above. Each major section should be numbered and divided into
sub-sections. If the plan has significant number of tables, figures, drawing and exhibits, a separate table
can be prepared that lists these with their titles and page numbers.
3. Executive Summary.
The executive summary is the most important part of the business plan because it is the first section of
substance that the reader sees. Most readers of a business plans, especially investors, and lenders will
never read beyond the summary. Thus, if the summary is not convincing, the reader does not go on to the
next plan.
Although the summary is the first part of the business plan that is read, it should be the last part written.
It highlights in one to three pages, in convincing and concise manner, the key points in the business plan:
Description of the venture, Industry analysis, development and production, marketing plan, organizational
and financial plan.
3.5.2 Major Sections of the a Business Plan
The main body of the business plan contains the strategic and operating details of the new venture.
1. Description of the venture
The new venture should be described in detail in this section of the business plan, which enables the
investors to ascertain the size and scope of the business. The key elements included under this section
are:
a. The mission statement.
In describing your venture, you have to begin with your mission statement: a one or two sentences
description of the purpose of the business and to whom the product or services is targeted. Not being
clear in the mission statement indicates that one is not clear about the purpose of ones company. It can
also indicate that the business is not prepared for the market. The entrepreneur should pay very close
attention to this statement, as all else hinges on it.
b. Objectives.
Objectives are desired outcomes. Usually, the new venture has three broad objectives: Creation, Survival,
and profitability. These objectives are relevant for all ventures, although for firms with an operating
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history, of course, only survival and profitability are pertinent. In addition, objectives can be dealt in
terms of time frame: short-term and long-term.
c. The ventures products/services

The other key element under description of the venture is its products or services. It is important to point
out how your particular enterprise is different from other similar businesses. Just saying It is better is
not enough you must tell how it is better. Every business claims to be high quality, better service. The
entrepreneur should convince his/her customers about the product/service.
d. Background of the entrepreneur(s)

The educational and occupational experience of the founder(s) can be included precisely and in concise
manner. What is your business background? What management experience do you have? In addition,
you have to describe personal data such as education, age, special abilities and interest.
e. Office equipments.
The office equipments to be available or which are already available should be indicated. Specify the
equipments to be purchased or leased and the equipments needed to run the business successfully.
2. Market Analysis
The market analysis section should convince the readers or investors that entrepreneur understands the
competitive environment and the macro-environment in detail. The purpose of this is demonstrate that:
The market of the product or service is substantial and growing, and:

The entrepreneur can achieve a defendable competitive position.
It involves the following major elements.
a. Overall market
Describe the overall market for the firms industry, its current conditions, and its projections for sale,
profits, rate of growth, and other trends. Where is the market located and what is its scope (international,
national, regional, or local)? Usually, potential investors prefer industries with the potential for large sales
volumes and high growth rates so they should be given the big picture.
b. Specific market
Narrow the focus on the specific targets market, segment, or niche in which your firm will operate. Under
this section, you have to describe your potential customers needs, wants, incomes and profits. How are
purchasing decision made, and by whom?
c. Competitor analysis
This is also an important part of this section. Each major competitor should be identified with appropriate
strengths and weakness, particularly as to how they might affect the potential success of the new venture.
You have to analyze the degree of substitutability of the products and services, the entry barriers, and the
nature of the current rivalry. Demonstrate the new products introduced in the industry. What are the
nearest competitors? For your most important competitors, evaluate their positions as well as their
potential capacity. Even when ever necessary, provide a summary statement of your firms competitive
position.

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d. Macro-environmental influences.
Demonstrate your knowledge and complete by evaluating the impact of macro environmental factors.
Analyze the political, economic, technological, social demographic and ecological factors that affect your
firms.
3. Development and Production

In this section, you describe the current state of the companys product or services and the plan for
completing the development. It emphasizes and describes the most important elements relating to the
research, development, and production of your firms basic products or services.
a. Production process
An investor will provide money for a business he/she understands well, so explaining the production from
the inception of the idea to when it can be sold is very important. With a service company, describe the
process of delivering the service. Manufacturing process and delivery methods also need to be detailed.
Develop a flow chart to illustrate how the core function is accomplished. Evaluate each state for its
subcontracting potential.
b. Resource requirements.
Analyze each type of resources employed in the production process. These resources may include
physical, human, technological and financial resources. You have to indicate the type of raw materials and
source of suppliers, if the venture is manufacturing. Again describe the technologies to be implemented
for production process and state the specific faction of the technology. This section also includes the labor
requirement to start up and run the business. You have to address how many people are required and
what skill they need to posses.
c. Cost of production and development.

Present and explain a design and development budget. This budget should include the cost of the design
of a prototype as well as the expense to take it into production. Testing and evaluation expenses should
be included. Be sure to include labor, materials, consulting fees and the cost of professionals such as
patent to attorneys. While the cost of production section may be more readily apparent to product
companies, it is also important for all business. Service businesses have expenses such as consulting,
services, training, and preparation of documentation materials among many other things.
d. Quality assurance.
Under this section, you discuss the quality dimensions. What is the firms perspective on quality
dimensions? What is the firms perspective on quality? Specify how quality will be defined and measured
for the firms production process. Will the new venture employee the techniques of total quality
management?
e. Marketing strategy.
Briefly restate a description of your primary products or services along with that of the firms major
competitors. Propose a correct marketing program. How does your marketing strategy support your
products strength? How will it exploit your competitors evidence of market research? Describe how the
products or services will be distributed, priced, and promoted. Your marketing strategy should take into
account the following major points.

21
Distribution. Explain how your products will be distributed. Describe the geographic scope of your
distribution effort. What are the channel of distributions and where is the power in these channels?
Who will do your selling? What are the costs of reaching your market by using various channels?
Pricing strategy. Describe what the charge for the product or services is and how one calculates the
price. What is your profit margin per unit under various schemes? Also, explain how the price will
affect getting the product or service accepted. Consider how price will affect the firms market share.
It is not necessary to assume that low pricing increases market share.
Promotion. Describe the image of the firm you wish to portray. Show how this image is consistent
with your product or service. How will you communicate this image? What advertising and other
promotional activities and campaigns will you initiate? If advertising materials (for example, copy,
story-board, photographs) are already available, present them in an appendix.
f. Sales forecasts.
In this section, you provide figurers to indicate how many buyers there are for the firms products where
they are located and how purchasing decisions are made. The sales forecast is the function of three
elements of market analysis:
i. The size of the market in units and Birr;

ii. The fraction of that market that your firm will be able to capture as the result of its
marketing effort and strategy and
iii. The pricing strategy
Present your sales forecast in a table or chart. Prepare the forecast in terms of units of products or
number of service delivered as well as in Birr. Multiply the product units by the predicted average price.
4. Organizational Plan
This section should include your firms organizational structure, details about the ownership of your
company, profiles of your management team and Human Resource management strategy.
a. Organizational Structure
A simple but effective way to layout the structure of your firm is to create an organizational chart along
with a narrative description of what the chart mean. This will prove that you are leaving nothing to
chance. You have thought out exactly who is doing what. Provide an organizational chart with the names
and titles of the key exclusives. Provide brief outlines of these individuals previous experience, education
and related qualification.
What are these individuals contribution to the firm? Specify who will do what and why they are choose
for that role (describe the authority and responsibility at each position). Describe the initial salary,
incentives, bonuses, pensions and fringe benefits of the top people.
b. Forms of Ownership.
In this section, the founders describe the legal form of the business and the contractual obligations of the
owners to the firm and to each other. Describe the legal form of the business-sole proprietorship,
partnership, or corporation and briefly explain why this is the best foam of your firm. Discuss any a special
aspects of the ownership. If the firm is organized as a partnership, list the essentials of the partnership
agreement and include the actual agreement as an appendix.
In short, the following basic information should be included under this section.
Name of the owners.

Percentage of ownership
Extent of involvement with the firm
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Forms of ownership (corporation, sole proprietor, partnership-general/limited)
Common stock (authorized and issued), if corporation.
c. Management profile.
The success of any business is highly related to the ability and track records of its owner/managers. So,
you have to indicate clearly your managers profile. Indicate the summary of the top managers resume.
The complete resume of top managers and key executives may be placed in an appendix. Highlights for
the reader how the people surrounding you complement your own skills. If you are just starting out, show
how each persons unique experience will contribute to the success of your venture.
d. Human Resource Management Strategy.

State the firms basic philosophy concerning human resource and management. Does it favor close
supervision or general supervision? What is the firms approach to collective bargaining? What are its
strategies for employee and management development training, for continuing education, and for hiring
and promoting from within? What factors dictate criteria for promotion? How will performance be
assessed? What equal opportunity employment regulations and other government requirements affect
the firm and its workforce?
5. Financial Plan
The sales forecast form the bridge between the marketing and the rest of the firms financial plans. The
sales forecasts mark the end of the marketing portion of the business plan and the beginning of the
financial analysis portion. The purpose of the financial analysis is to illustrate the bottom line. Bankers
and potential investors evaluate this section to see whether enough profiles will be generated to make the
venture an attractive investment. It will also serve as the financial plan for the executives in the firm.
Particularly, the section includes the following elements.
a. Financial projection
b. Financial resources
c. Financial strategy
a. Financial projection
Projected profit and lose statement (income statements) for five years. Prepare these monthly for
the first year, quarterly for the next two years and annually thereafter. The income statement is
where a planner makes a case for the business potential to generate cash. It includes the forecasted
sales, cost of good sold and the general administrative cost. Net profit after taxes can be projected by
estimating income taxes
Projected cash flow statement and analysis. Prepare these monthly for the first year and until the
firm has positive cash flow, quarterly for the next two years, and annually there after. Since bills have
to be paid at different times of the year, it is important to determine the demands on cash.
Remember that sales may be irregular and receipts from customers may also be spread out, thus
necessitating borrowing of short-term capital to meet fixed expenses such as salaries and utilities. A
cash flow statement shows readers of the business plan how much money will be needed, when it will
be needed and where the money will come from. In general, terms the cash flow statement looks at
cash and source of revenues minus expense and capital requirement to derive a net cash flow figure.
An income statement and a cash flow statement differ in that an income statement does not
include details of when revenue was collected or expenses paid.
Projected Balance Sheet. Balance sheet shows the financial condition of the business at a specific
time. It summarizes the assets of the business, its liabilities (what is owed), the investment of the
entrepreneur and any partner, and retained earnings.
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b. Financial Resources.
Discuss the start- up costs for the business. Prepare a detailed list of all the physical assets the firm needs
to purchase or lease and statement of organizational costs. State how much money the business will
need. If debt is being sought, what will you use for collateral? How will you pay the loan? If you have
established credit that you will not initial need, provide the details and the reference.
c. Financial strategy.
The firms financial strategy will consists of two components. The first comprise the source and use of
funds. State your preference for sources of new capital. Is it from continuing operation, new debt or new
equity? What combination is appropriate? On the use side, what are the firms priorities for using the
excess cash generated by operations and additional financing? Is expansion and growth the priority or are
dividends? The second component of financial strategy comprises the internal control and monitoring
system. What safeguards are being proposed to ensure the security of the cash generated by operations
and additional borrowings or equity offerings? Describe any systems or procedures that help you monitor
and control cash disbursement.
6. Assessment of Risk and Contingency

Every new venture will be faced with some potential hazards, given the particular industry and
competitive environment. This section typically includes the following categories of information and the
potential impact on the new venture:
Failure to produce the products/services promised

Failure to meet production deadlines or sales forecasts
Problems with suppliers and distributors.
Unforeseen industry trends.
Unforeseen events in the potential, economic, social, technological and ecological
environment.
Failure to survive relations with competitors with significantly more resources.
Difficulties in raising additional capital.
Hence, it is important for the entrepreneur to provide alternative strategies should any of the above risk
factors occur. These contingency plans and strategies illustrate to the potential investor that the
entrepreneur is sensitive to important risks and is prepared if any occur.
7. Appendixes
The appendix of the business plans generally includes any back up materials that are necessary in the
context of the document. References to any of the documents in the appendix should be made in the plan
itself. A partial list of possible appendix section is shown below.
A photograph or a drawing of your products

A photograph or drawing of your intended location and physical layout
Sales and profitability forecast in chart form
Market surveys and documentation of size and nature of market
Sample advertisement, brochures
Sample press release
Price lists, catalogues, and mailing lists
A detailed and footnoted financial statements
Fixed asset acquisition schedule
Resume of founders, board members, and key individuals
Letter of recommendation or charter references from notable people.
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Proposed assignment. Developing Business Plan
i. Choose the best idea you have generated

ii. Gather all the required information to implement your idea
iii. Analyze and categorize the information.
iv. Develop your business plan.

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Chapter Four
Products and Services concept
4.1 Defining Key Concepts: Products vs Services
Although products and services are services are different in distinct ways, there are a number of
similarities between the two. Products are generally physical items, such as cars, computers and
furniture. Services, on the other hand, are intangible bundles of value derived from action, such
as tax preparation services, car washes or guided tours. Both products and services get their
existence from an unmet need in the marketplace, and both rely on demand from target
customer groups. Both products and services attempt to provide value to individuals, families or
businesses, and both rely on marketing to stimulate demand.
Products and services are two closely aligned concepts, and, in fact, most products have an
element of service in them. For example, a car buyer now buys a comprehensive bundle of
service benefits, in addition to the tangible components of the car. However, there is a distinct
difference between them and it is important to establish some working definitions. One way to
think of them is from the clients point of view. When a client asks "what can you make for me?"
they are asking about products. When a client asks "what can you do for me?" they are asking
about services. While a product is something that can be measured and counted, a service is less
concrete and is the result of the application of skills and expertise towards an identified need. A
product is something you can point at; whereas a service is any activity "you can't drop on your
foot".
4.2 Differences between products and services
As a result of the following factors, the cost of structure, the asset mix, the methods of managing,
the metrics of performance, and mechanisms for acquiring and fulfilling customers- are very
different in products and services, however, one must note that there is nothing like pure
product or a pure service; most of the time they come bundled together. When you visit a
restaurant, you look forward to the food (product) as well as atmosphere and experience
(service).
1. Who comes to whom: Products come to customers whereas customers come to services.
Product benefits are embedded inside the product/package and can be transported to
their customers through distribution channels. Services are location based and the
customers need to travel to these service locations.
2. What do customers want- standardization or customization: Customers like their products
to be standardized but like their services to be customized.

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3. Quality delivery: the quality expected from a product is mostly embedded in the product
itself at the time of its manufacture and depends in turn on the quality of the materials
used and the setting of the machines. Both materials and machines, being inanimate, can
be standardized. On the other hand the quality that people expect from a service is quite
different: customization and variation is appreciated in service and this depends a lot on
the experience, skill and motivation of the service-giver on the spot.
4. Tangibility: the products are tangible and can be inspected /sampled before buying.
Service on the other hand is experiential and sometimes based on a belief.
5. Scalability: The product business is scaled up by expanding the manufacturing capacity,
market reach and access to more customers. The service business is not easy to scale up
because it needs supply of trained service providers. Attrition of trained man power is a
danger to service business.
6. Ownership: A product can be owned and can go into your balance sheet as an asset and is
re-salable and you can accumulate it to build your wealth. A service cannot be owned as is
always shown as an expense. It is not resalable and cannot be transferred to someone
else.
7. The source of value: The customer buys products for the value the find inside the box-
whether a soap or a TV. On the other hand the customers buy service for the value of
they find in the encounter with the service provider- whether doctor, waiter or a
consultant.
8. The role of standardization and mechanization: in the product business, a company
proactively anticipates what the customer wants and frequently makes stanadardizes its
products and makes them to stock off-line ( when the customer is absent) and brings
them through the supply chain to where the customers are. Mechanization is used
extensively in the processes. In the product business the role of the machines is primary
and the role of the workers operating those machines is secondary. On the other hand in
the service business, a company is managed in a reactive mode by asking customers on-
line what they desire and then the company tries to deliver it in an individualized manner
in real time at the front line. Since the value is created mainly through conversation,
individualization and customization, the role of employees is primary and the role of the
machines is to assist the employees.
4.3 Product development process
Introducing new products on a consistent basis is important to the future success of many
organizations, marketers in charge of product decisions often follow set procedures for bringing
products to market.
While some companies may not follow a deliberate step-by-step approach, the following steps
are useful in showing the information input and decision making that must be done in order to

27
successfully develop new products. The process also shows the importance market research plays
in developing products.
Step1. IDEA GENERATION
The first step of new product development requires gathering ideas to be evaluated as potential
product options. For many companies idea generation is an ongoing process with contributions
from inside and outside the organization. Many market research techniques are used to
encourage ideas including: running focus groups with consumers, channel members, and the
companys sales force; encouraging customer comments and suggestions via toll-free telephone
numbers and website forms; and gaining insight on competitive product developments through
secondary data sources. One important research technique used to generate ideas is
brainstorming where open-minded, creative thinkers from inside and outside the company
gather and share ideas. The dynamic nature of group members floating ideas, where one idea
often sparks another idea, can yield a wide range of possible products that can be further
pursued.
Step 2. SCREENING
In Step 2 the ideas generated in Step 1 are critically evaluated by company personnel to isolate
the most attractive options. Depending on the number of ideas, screening may be done in rounds
with the first round involving company executives judging the feasibility of ideas while successive
rounds may utilize more advanced research techniques. As the ideas are whittled down to a few
attractive options, rough estimates are made of an ideas potential in terms of sales, production
costs, profit potential, and competitors response if the product is introduced. Acceptable ideas
move on to the next step.
Step 3. CONCEPT DEVELOPMENT AND TESTING
With a few ideas in hand the marketer now attempts to obtain initial feedback from customers,
distributors and its own employees. Generally, focus groups are convened where the ideas are
presented to a group, often in the form of concept board presentations (i.e., storyboards) and
not in actual working form. For instance, customers may be shown a concept board displaying
drawings of a product idea or even an advertisement featuring the product. In some cases focus
groups are exposed to a mock-up of the ideas, which is a physical but generally non-functional
version of product idea. During focus groups with customers the marketer seeks information that
may include: likes and dislike of the concept; level of interest in purchasing the product;
frequency of purchase (used to help forecast demand); and price points to determine how much
customers are willing to spend to acquire the product.

28
Step 4. BUSINESS ANALYSIS
At this point in the new product development process the marketer has reduced a potentially
large number of ideas down to one or two options. Now in Step 4 the process becomes very
dependent on market research as efforts are made to analyze the viability of the product ideas.
(Note, in many cases the product has not been produced and still remains only an idea.) The key
objective at this stage is to obtain useful forecasts of market size (e.g., overall demand),
operational costs (e.g., production costs) and financial projections (e.g., sales and profits).
Step 5. PRODUCT AND MARKETING MIX DEVELOPMENT
Ideas passing through business analysis are given serious consideration for development.
Companies direct their research and development teams to construct an initial design or
prototype of the idea. Marketers also begin to construct a marketing plan for the product. Once
the prototype is ready the marketer seeks customer input. However, unlike the concept testing
stage where customers were only exposed to the idea, in this step the customer gets to
experience the real product as well as other aspects of the marketing mix, such as advertising,
pricing, and distribution options (e.g., retail store, direct from company, etc.).
Step 6. MARKET TESTING
Products surviving to Step 6 are ready to be tested as real products. In some cases the marketer
accepts what was learned from concept testing and skips over market testing to launch the idea
as a fully marketed product. But other companies may seek more input from a larger group
before moving to commercialization. The most common type of market testing makes the
product available to a selective small segment of the target market (e.g., one city), which is
exposed to the full marketing effort as they would be to any product they could purchase.
Step 7. COMMERCIALIZATION
If market testing displays promising results the product is ready to be introduced to a wider
market. Some firms introduce or roll-out the product in waves with parts of the market receiving
the product on different schedules. This allows the company to ramp up production in a more
controlled way and to fine tune the marketing mix as the product is distributed to new areas.
4.4 Product protection

4.4.1 Patent
A patent is a form of legalized monopoly, which the government gives to an inventor for a limited
period of time. In return, the inventor discloses publicly how the invention works. A patent
document is a dual purpose document, in that it contains the public disclosure of how the
29
invention works in the form of a description and drawings, and a definition of the scope of the
monopoly granted in the form of the claims.
A patent gives you a legal monopoly in the exploitation of your invention, which enables you to
prevent anyone else from exploiting the invention without your permission during the term of
the patent. As a piece of 'intellectual' property, a patent can sold, mortgaged and inherited, and
licenses can be granted which permit the licensees to exploit the invention with your permission.
Licenses can be a valuable source of revenue.
To get a patent, an application must be filed at an intellectual property office, which includes the
description, drawings, claims and details of the applicant and inventor. The application will
undergo a search and examination process which occurs in a number of stages over several
times.
To get a patent, your idea must fulfill two main criteria:
1. it must be new
2. it can't just be an obvious development of what is already known
You'll also hear patent attorneys and examiners talk about 'novelty' and 'inventive step'. These
are just fancy words for the same two things above - having novelty means the idea is new, and
inventive step means that it's not just an obvious development.
Excluded inventions
There are a number of inventions which are excluded from patentability, including:
aesthetic creations and works of art

scientific discoveries and theories
mathematical theories
methods of doing business
rules for playing games
methods of treatment of the body by surgery or therapy
methods of diagnosis practiced on the body
In each case, the exclusion relates to the invention 'as such', which leaves open the possibility
that the invention might be patentable if it comprises more than just the excluded aspect. For
example, if the invention includes hardware of some kind, then the invention might then cross
the line into patentability. As you might begin to appreciate, this is a complex and still developing
area of the law, in which the law also varies between jurisdictions. Hence, expert advice should be
sought for each individual case.

30
Generally, patents protect concepts, methods of manufacture, and the way a product works. One
advantage of patent protection is that a patent can protect a product irrespective of the
appearance of the product, thus giving broader protection than a design registration.
But, there are strict criteria which must be met before a patent is granted, including a search and
examination process. Also, certain inventions are excluded from being patented. So, while a
patent gives the broadest protection, getting a patent can be a relatively long, involved, uncertain
and expensive process.
4.4.2 COPYRIGHT
Copyright protects most works of what might be called "intellectual creation" against copying; for
written text, databases, images, photos, films, recordings, lyrics, music, and a whole lot more...
Copyright can exist in:
Original dramatic, musical or artistic works,

Sound recordings, films or broadcasts
The typographical arrangement of published editions.
"Original" means not copied, i.e. the work of the author.
A "dramatic work" includes a work of dance or mime.
A "musical work" includes a work consisting of music, exclusive of any words or action intended
to be sung, spoken or performed with the music.
A "database" is original if the selection or arrangement of the contents is the work of the author,
and consists of data or other materials, which are arranged in a systematic or methodical way,
and are individually accessible by electronic or other means.
An "artistic work" is a graphic work, photograph, sculpture or collage, irrespective of artistic

quality, or a work of architecture being a building or a model for a building, or a work of artistic
craftsmanship.
A building includes any fixed structure, and a part of a building or fixed structure.
A graphic work includes any painting, drawing, diagram, map, chart or plan.
A photograph includes a recording of light or other radiation on any medium on which an image
is produced or from which an image may be produced, and which is not part of a film.

31
How long does protection last?
For many works, copyright is very long lived, lasting for the life of the author plus 70 years.
However, there are a number of important exceptions to this, including copyright in sound
recordings, broadcasts and performances, which lasts for 50 years, and copyright in the
typographical arrangement of published editions, which lasts for 25 years.
What are the Disadvantages and Advantages of Copyright?
Disadvantages of copyright Advantages of copyright

Copyright only protects against copying it is not a monopoly
Copyright arises automatically
right, unlike registered trademarks registered designs and
no registration required
patents
Copyright cannot protect ideas, concepts, methods or processes Copyright is free
Copyright cannot protect trade names Copyright is long lasting
4.4.3 Trademark
If you want to stake a claim on your trademark through the use of the 'TM' (trademark),'SM'
(service mark) or the '(R)' federal registration symbol, youll need to follow these steps:
1. Determine whether your product is eligible for a trademark

2. Conduct a trademark search
3. Register for the trademark

32
Chapter Five
Marketing and New venture Development

5.1 Introduction
New organizations face substantial liabilities of newness. These liabilities lead to higher failure
rates of new firms compared to older ones. The new firms have to define new roles and tasks,
which is associated with high costs in time, temporary inefficiency, worry, and conflict.
They are also challenged to create exchange relationships, though they lack the reputation,
legitimacy, and experience of established firms, and must rely on interactions between strangers.
A marketing plan for a new venture is not the same as a plan for an existing business as it begins
with distinguishing business planning through the vision, strategy, tactics and standards, as well as
from a business plan including several sub-plans such as a financial plan, a marketing plan, and
other plans when relevant: human resources, logistics, legal, and others.
When starting a small business and in any business start-up, entrepreneurs have to rely more on
subjective assumptions and qualitative marketing research by interviewing potential customers,
relevant business partners and other stakeholders.
The following information can be collected to some extent and analyzed effectively by using
"realistic" assumptions - all in order to lower the level of uncertainty when launching a new
venture and perhaps increasing the self confidence of the entrepreneur:
-current macro environment: influential business trends as well as innovative trends.
- Basic competitive trends.
- Basic consumer behavior trends.
Marketing Information System (MIS):
People and procedures for assessing information needs, developing the needed information, and
helping decision makers to use the information, and helping decision makers to use the
information to generate and validate actionable customer and market insights.
5.2 Marketing Intelligence:

Assessing Marketing Information needs: A good MkIS balances what the information users
would like to have against what they really need and what is feasible to offer. The company
begins by interviewing managers to find out what information they would like. Some managers
will ask for whatever information they can get without thinking carefully about what they really
need.
Developing Marketing Information: Marketers can obtain the needed information from internal
data, and marketing intelligence.
A. Internal Data Base: Electronic Collections, consumer and market information obtained
from data sources within the company network.
33
B. Competitive Marketing Intelligence: The systematic collection and analysis of publicly
available information about consumers, competitors, and developments in the marketing
environment.
5.3 Marketing Research:
Marketing research is the systematic design, collection, analysis and reporting of data relevant to
a specific marketing situation facing an organization.
Types of Marketing Research:
1. Exploratory Research: Marketing research to gather preliminary information that will

help to define problems and suggest hypotheses.
2. Descriptive Research: Marketing research to better describe marketing problems,
situations, or markets, such as the market potential for a product or the demographics and
attitudes of consumers.
3. Causal Research: Marketing research to test propositions about cause-effect
relationships.
Types of Data Sources:
A. Primary Data: Information collected for the specific purpose at hand.

B. Secondary Data: Information that already exists somewhere, having been collected for
another purpose. Ex, Journals, Newspapers, statistics and Books.
5.4 Competitive Analysis:
To plan effective marketing strategies, the company needs to find out all it can about its
competitors. It must constantly compare its marketing strategies, products, prices, channels and
promotion with those of close competitors.
Identifying Competitors: Normally, identifying competitors would seem simple task. At the
narrowest level, a company can define its competitors as other companies offering similar
products and services to the same customers at similar prices.
Assessing Competitors: Having identified the main competitors, business person now ask; what
are competitors objectives, what does each seek in the market place? What is each competitors
strategy? What is various competitors strength and and weaknesses, and how each react to
actions the company might take?
5.5 Marketing Strategy:

The strategic plan defines the companys overall mission and objectives. Consumers stand in the
center. The goal is to build strong and profitable relationships. Marketing strategy- the marketing
logic by which the company hopes to achieve these profitable relationships.

34
Through market segmentation, targeting, and positioning, the company decides which customers
it will serve and how. It identifies the total market, then divides it into smaller segments, selects
the most promising segments and focuses on serving and satisfying customers in these segments.
Guided by marketing strategy, the company designs a marketing mix made up of factors under its
control product, price, place, and promotion. To find the best marketing strategy and mix, the
company engages in marketing analysis, planning, implementation and control. Through these
activities, the company watches and adapts to the actors and forces in the marketing
environment.
5.6 International Marketing:

In the 21st century, the world is shrinking rapidly with the advent of faster communication,
transportation, and financial flows.
International trade is booming, since 1960s, the number of multinational corporations in the
world has grown from 7,000 to more than 63,000. Some of these multinationals are true giants.
In fact, of the largest 100 economies in the world, only 47 are countries. The remaining 53 are
multinational corporations.
Imports of goods and services now account for 24% of gross domestic product worldwide, twice
the level of 40 years ago.
Many U.S.A companies have been successful at international marketing. For instance:
Coca-Cola
General Electric
IBM
Gillett
Colgate
Ford
Boeing
Today international competition is intensifying. Foreign firms are expanding aggressively into new
international markets, and home markets are no longer as rich in opportunity. Few industries are
now safe from foreign competition. If companies delay taking steps toward internationalizing,
they risk being shut out of growing markets.
The Major Decisions in International Marketing:
Looking at global marketing environment.

Deciding whether to go international
Deciding which markets to enter
Deciding how to enter the market
Deciding on international marketing programs
35
Deciding on the international marketing organization.
a. Looking the International Marketing Environment: Before deciding whether to
operate internationally, a company must understand the international marketing
environment. The environment has changed a great deal in the last two decades, creating
both new opportunities and problems.
b. Deciding whether to go international: Not all companies need to venture into
international markets to survive. Most business need to market well only in the local market
place. Operating domestically is easier and safer. Mangers dont need to learn another
countrys language and laws. They dont have to deal with unstable currencies, face political
and legal uncertainties, or redesign their products to suit different customer expectations.
c. Deciding which markets to enter: Before going abroad, the company should try to
define its international marketing objectives and policies. It should decide what volume of
foreign sales it wants. The company also needs to choose how many countries it wants to
market in. Companies must be careful not to spread themselves too thin or to expand
beyond their capabilities by operating in too many countries too soon.
d. Deciding how to enter the market: Once a company has decided to sell in a foreign
country, it must determine the best mode of entry. Its choices are exporting, joint venturing,
and direct investment.
e. Deciding on the international marketing program: Companies that operate in one
or more foreign markets must decide how much, if at all, to adopt their marketing mixes to
local conditions. At one extreme, are international companies that use a standardized
marketing mix, selling largely the same products and using extreme is an adopted marketing
mix elements to each target market, bearing more costs but hoping for a larger market share
and return.
f. Deciding on international marketing organization: Companies manage their
international marketing activities in at least three different ways. Most companies first
organize an export department, then create an international division, and finally become a
global organization.

36
Chapter 6
Managing growth and transaction
6.1 Introduction
Founders of new ventures have to be ready to deal with whatever challenge may arise,
mainly because of, no matter how well prepared the founder is, his or her company will
almost certainly take an unexpected turn.
Before launching your business, here are six steps to ensure a successful start.
1. Go beyond the business plan.

Planning carefully before launching a new business is not limited to preparing a business plan;
even though preparing a business plan is generally a valuable exercise.
While writing a business plan is certainly helpful, the real value is not in having the finished
product in hand, but rather in the process of researching and thinking about your business in a
systematic way, the act of planning helps to think things through thoroughly, study and research
if you are not sure of the facts and look at your ideas critically.
If you don't commit to in-depth preparation, launching a new business can be a very expensive
lesson in the value of planning.
2. Test your idea.

Studies show that 60% of new businesses fail within the first three years. Too often people rush
into business without carefully checking out their idea to see if it will work and hence research is
essential.
While the internet makes it possible to conduct research without leaving your desk, talk to real
people who are in the business you want to go into and talk to people who might be your
customers and get their views and opinions and this is how to test your ideas if possible.
3. Know the market.

Ask questions conduct research or gain experience to help you learn your market inside and out,
including the key suppliers, distributors, competitors and customers. You also have to really
understand the critical metrics of your market, whether it's as simple as sales per square foot and
inventory turnover, or a mysterious measure in a highly specialized niche market.
4. Understand your future customer.

In most business plans, a description of potential customers and how they make purchasing
37
decisions receives much less attention than operational details such as financing, sourcing and
technology. But in the end, it will be the customers who determine your success or failure.
Therefore, you need to know who they are going to be, what drives their purchase decisions,
what you can do that will differentiate your offering from that of competitors and how you can
convince them of the value of your offer.
5. Establish cash resources
Cash is king, so you must take steps to adequately capitalize the business and secure ready
sources of capital for growth. A good cash-forecasting tool is critical so that you can plan for the
sources and uses of cash on a continuing basis.
While some startups rely on owners' capital, others look to investors.
To determine how much cash you'll need, develop a cash-flow statement that estimates your
expenses and income. Be sure to include appropriate expense levels by researching actual
business costs rather than estimating based on your personal experience as a retail consumer.
Limit your need for cash by avoiding long-term commitments, like long-term leases, until
necessary. There will be a considerable amount of uncertainty during the first few years, so be
conservative in making commitments for resources that might not be yet needed.
6. Choose the right business structure.

From the beginning, it's crucial to select the appropriate corporate structure for your business,
which will have legal and tax implications. The structure you choose can also ensure the success
of future decisions, such as raising capital or exiting the business.
6.2 Managing early growth of venture
Once the venture is positioned, successful businesses will experience a stage of early growth. This is a
period of intense monitoring, and growth can occur at different rates along a long continuum, ranging
from slow growth through incrementally higher sales to explosive growth through quantum changes in
consumer demand.
Very slow Perceived comfort zone Very rapid
Sales increases slowly Incremental growth is Sales increases rapidly as new

products gain wide acceptance in
because of the nature of within a comfort zone of new markets.
the product or the limited the ventures resources
market and owners resources
and owners profit
objectives

38
At the low end of the continuum, entrepreneurs find that they compete in slow-growth markets. At the
end of the continuum; the entrepreneur finds high-growth sales. Between these extremes, a majority of
entrepreneurs find a comfort zone of expansion. Their ventures may have growth potential, but
founders restrain expansion to coincide with personal objectives. Interesting things can happen to a new
venture during this stage. If the entrepreneur has a unique product or lucrative patent, the business may
be actively courted by larger firms. Such courtships can result in very profitable buyouts or licensing
agreements. Mergers are also common, as companies with complementary strength combine to form a
new company positioned for more rapid growth. Many businesses also experience early growth but find
that the enterprise has severe limitations. In this case, an entrepreneur may simply recognize that the
future holds little growth potential and reposing the venture as a small business.
6.3 new venture expansion strategies
An entrepreneur may enter into business through different methods. Among the most popular are:
starting a new business, buying out an existing business, inheriting an existing family business, buying
business, buying a franchise, management buyout and joint venture.
6.3.1 Acquisition
Another way to start an entrepreneurial career is by acquiring an existing business. An acquisition is the
purchase of a company or a part of it so that the acquired company is completely absorbed and no longer
exists as a business entity. An acquisition can take many forms, depending on such factors as the goals and
position of the parties involved in the transaction, the amount of money involved and the type of money.
6.3.2 Franchise
A franchise is a business whose entrepreneur (the franchisee) provides a product or service under a legal
contract with the franchise owner (the franchiser). The franchiser provides the businesss distinctive
elements (eg. Name, signs, facility design). The franchisee pays the franchiser a fee or a share of the
earnings to operate the business. The franchisee is then able to operate using the franchisers trade name.
The Franchisee is part of a chain and uses the companys logo, layouts, equipment, standard product,
business system, and is supported with organizing, training, merchandising and management from the
franchiser. The franchise types of business offers the franchisee an established product, company
advertising, an image. This lowers the risk of failure. But the franchise can severally limit a persons
freedom and way of doing business. A franchiser can dictate minute details of the business: the color of
the store layout, the receipt, price and royalty rate.
There are three basic types of franchising
a) Trade name franchising:- It is related with a brand name. The franchisee purchases the right to
become identified with the franchisers trade name without distributing particular products
exclusively under the manufacturers name.
b) Product distribution franchising: - It involves licensing the franchisee to sell specific products
under the manufacturers brand name and trade mark through a selective; limited distribution
network.

39
c) Pure/Comprehensive/business format franchising:- It involves providing the franchisee with a
complete business format, including a license for a trade name, the products or services to be
sold, the physical plant, the methods of operation, a marketing strategy play, a quality control
process, a two way communications system and the necessary business services.
In some cases buying an already existing business is the proper course of action. An advantage of buying
out a business is that better forecasts can be made because there is a history to review. An infrastructure
is in place that includes policies, credit lines, human resources, reward systems, and objectives. These can
be reviewed, retained, modified and/or discarded. There is also the firms goodwill or reputation. This, of
course, can be assessed before deciding to buy. It is also possible to buy a business for less than it would
take to duplicate the business.
Good buy out candidates are hard to find. Locating the right candidate will require a thorough analysis of
the company (size, annual sales, expenses, profit), location, type of business and its market niche,
management team, financial condition, lawsuit history, asset values, cash flow values and good will. These
and other similar factors need to be thoroughly studied and all of the possible legal ramifications must be
considered.
6.3.3 Mergers
Is among the mechanisms by which companies can expand and is a corporate combination of two or
more independent business corporations into a single enterprise, usually the absorption of one or more
firms by a dominant one. A merger may be accomplished by one firm purchasing the others assets with
cash or its securities or by purchasing the others shares or stock or by issuing its stock to the other firms
stockholders in exchange for their shares in the acquired firm (thus acquiring the other companys assets
and liabilities).
6.2.4 Licensing
Licensing means renting or leasing of an intangible asset. It is a process of creating and managing
contracts between the owner of a brand and a company or individual who wants to use the brand
in association with a product, for an agreed period of time, within an agreed territory. Licensing is
used by brand owners to extend a trademark or character onto products of a completely
different nature.
Licensing is a common method of international market entry for companies with a distinctive and
legally protected asset, which is a key differentiating element in their marketing offer. This might
include a brand name, a technology or product design, or a manufacturing or service operating
process. Licensing is a practice not restricted to international markets. Is usual in licensing
agreements, the local licensee has considerable autonomy in designing the products into which it
incorporates the licensed characters. The other major advantage of licensing is that, despite the
low level of local involvement required of the international licensor, the business is essentially

40
local and is in the shape of the local business that holds the license. As a result, import barriers
such as regulation or tariffs do not apply.
Licensor and the licensee

Benefits:
Appealing to small companies that lack resources
Faster access to the market
Rapid penetration of the global markets
Disadvantages:
Other entry mode choices may be affected
Licensee may not be committed
Lack of enthusiasm on the part of a licensee
Biggest danger is the risk of opportunism
Licensee may become a future competitor

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Entrepreneurship and Small Business

1.1 Definition and Concept

Entrepreneurship and Small Business Management

1.2 Entrepreneurship and Society

Entrepreneurship and Small Business Management

1.4 Keys to success ( The 10 PECs)

Specific: - Dont be vague. Exactly what do you want?

Entrepreneurship and Small Business Management

Realistic: - It is got to be do-able, real and practical.

Entrepreneurship and Small Business Management

Four simple steps which will help your persistence in to a habit:

Behavioral indicators of commitment:-

Makes personal sacrifice or extends extraordinary effort to complete the job.

Entrepreneurship and Small Business Management

2.1.1 Definition of Small business

i) Micro enterpries. Those business activities that are:

2.1.2 Importance of Small business

2.2 Economic, Social and political aspects of small business enterprise

Entrepreneurship and Small Business Management

2.3 Small Business Failure factors

2.3.1 External Factors of Failure

Personal Factors of Failure

Entrepreneurship and Small Business Management

2.4 Problems in Ethiopia Small business (Assignment)

2.5 Setting Small Business Ownership

2.6 Project analysis and its important components

What would be the aggregate demand of the proposed product/service in future?

Entrepreneurship and Small Business Management

What is the likely damage caused by the project to the environment?

2.7 Step s in setting up Small Businesses

Entrepreneurship and Small Business Management

Entrepreneurship and Small Business Management

3.2 Scope of the Business Plan

Entrepreneurship and Small Business Management

3.3 Importance of a Business Plan

1. Arranging strategic alliance

2. Seeking investment funds

6. Completing mergers and acquisitions

7. Attracting key employees.

3.4 Essentials of a Sound Business Plan

Entrepreneurship and Small Business Management

4. The planning process/flexible

3.5 Elements of the Business Plan

Outline of a Business Plan

Entrepreneurship and Small Business Management

3.5.2 Major Sections of the a Business Plan

c. The ventures products/services

d. Background of the entrepreneur(s)

The market of the product or service is substantial and growing, and:

Entrepreneurship and Small Business Management

3. Development and Production

c. Cost of production and development.

Entrepreneurship and Small Business Management

i. The size of the market in units and Birr;

Name of the owners.

d. Human Resource Management Strategy.

Particularly, the section includes the following elements.

6. Assessment of Risk and Contingency

Failure to produce the products/services promised

A photograph or a drawing of your products

i. Choose the best idea you have generated

Entrepreneurship and Small Business Management

Products and Services concept

4.1 Defining Key Concepts: Products vs Services