SMMEs Lecturer 2009

ENTREPRENEURSHIP
&
SMME’S
Facilitator Guide
(SAQA USID 115857, 115827, 110507, 115816, 117244, 10006)
NEMISA © 2009
This module has been written and compiled by
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Antoinette C Young
Franschoek IT Centre
© NEMISA
First Edition 2009
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SOUTH AFRICAN QUALIFICATIONS AUTHORITY
REGISTERED UNIT STANDARD:
Demonstrate an understanding of entrepreneurship and develop entrepreneurial qualities

SAQA US ID UNIT STANDARD TITLE
10006 Demonstrate an understanding of entrepreneurship and develop entrepreneurial qualities
ORIGINATOR REGISTERING PROVIDER
Interim SGB for Business, Commerce, Mgmnt Studies
FIELD SUBFIELD
Field 03 - Business, Commerce and Management Studies Generic Management
ABET BAND UNIT STANDARD TYPE NQF LEVEL CREDITS
ABET Level 4 Regular Level 1 2
REGISTRATION STATUS REGISTRATION START DATE REGISTRATION END DATE SAQA DECISION NUMBER
Reregistered 2007-01-23 2010-01-23 SAQA 0160/05
LAST DATE FOR ENROLMENT LAST DATE FOR ACHIEVEMENT
2011-01-23 2014-01-23
This unit standard does not replace any other unit standard and is not replaced by any other unit standard.
PURPOSE OF THE UNIT STANDARD

A candidate credited with this general competence will be able to: discuss entrepreneurship; identify and describe the
characteristics of a successful entrepreneur; identify, assess and improve learners? individual entrepreneurial characteristics and
discuss business ethics and social responsibility.
LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING

None.
Specific Outcomes and Assessment Criteria:
SPECIFIC OUTCOME 1
Discuss entrepreneurship.
ASSESSMENT CRITERIA
ASSESSMENT CRITERION 1
1. Entrepreneurship is described and discussed.
2. Different types of business are identified, described and discussed.
ASSESSMENT CRITERION RANGE
Service providers; manufacturing, trade and retail industries; Sole Traders ; Partnership ; Close Corporations ; Co-operatives and
Companies

3. Advantages and disadvantages of entrepreneurship are discussed.
At least 3 of each

4. The role of entrepreneurship in social development is explained and discussed.
Job Creation; Local Wealth Creation; Negation of the Migrant Labour, Urbanisation; Empowerment

5. Enabling programs for the entrepreneur are identified.
e.g. Ntsika; Khula; local business service centres and providers

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SPECIFIC OUTCOME 2
Identify and describe the characteristics of a successful entrepreneur.
ASSESSMENT CRITERIA
1. Characteristics of a successful entrepreneur are identified.
Ability to identify opportunities; ability to make informed decisions; Ability to manage risk, time management

2. Characteristics of a successful entrepreneur are listed and described.
Case studies should be used to analyse successful entrepreneurs.

3. The importance of each characteristic is analysed.
Ability to identify opportunities; ability to make informed decisions; Ability to manage risk, time management.

SPECIFIC OUTCOME 3
Identify, assess and improve individual entrepreneurial characteristics.
ASSESSMENT CRITERIA
1. Individual/personal entrepreneurial characteristics are identified and listed.
Questionnaires should be developed for personal entrepreneurial characteristics

2. Individual/personal characteristics are assessed against the general entrepreneurial characteristics.
Assessment should be followed by confidential counselling by the facilitator

3. Ways to address shortcomings is developed.
Could include e.g. skills training, assertiveness training.

4. Strategies to address shortcomings are implemented.
SPECIFIC OUTCOME 4
Discuss business ethics and social responsibility.
ASSESSMENT CRITERIA
1. The importance of business ethics is discussed.
Honesty; Justice; Fairness; Honouring of contracts

2. The need for social responsibility in business is discussed.
Social responsibility is used to redress imbalances. Inter-relationship between ethics and a code of conduct will be discussed

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3. The inter-relationship between business ethics and a code of conduct is discussed.
UNIT STANDARD DEVELOPMENTAL OUTCOME

1. Reflecting on and exploring a variety of strategies to learn more effectively;
2. Participating as responsible citizens in the life of local, national and global communities;
3. Being culturally and aesthetically sensitive across a range of social contexts;
4. Exploring education and career opportunities; and
5. Developing entrepreneurial opportunities.
Critical Cross-field Outcomes (CCFO):
UNIT STANDARD CCFO IDENTIFYING

Identify and solve problems in which responses display that responsible decisions using critical and creative thinking have been
made.
UNIT STANDARD CCFO WORKING

Work effectively with others as a member of a team, group, organisation and community.
UNIT STANDARD CCFO ORGANISING

Organise and manage oneself and one?s activities responsibly and effectively.
UNIT STANDARD CCFO COLLECTING

Collect, analyse, organise and critically evaluate information.
UNIT STANDARD CCFO COMMUNICATING

Communicate effectively using visual, mathematical and/or language skills in the modes of oral and/or written presentation.
UNIT STANDARD CCFO SCIENCE

Use science and technology effectively and critically, showing responsibility towards the environments and health of others.
UNIT STANDARD CCFO DEMONSTRATING

Demonstrate an understanding of the world as a set of related systems by recognising that problem-solving contexts do not exist in
isolation.
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SECTION A
ENTREPRENEURSHIP
SAQA US ID 10006
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MODULE 1 – What is Entrepreneurship?
(SO1) Discuss Entrepreneurship
MODULE OUTCOMES (Assessment Criteria)

1. Entrepreneurship is described and discussed
WHAT IS ENTREPRENEURSHIP?
Entrepreneurship; according to the Oxford Dictionary is “a person in control of a commercial

undertaking; one who undertakes a business or an enterprise.”
So, in lay terms it is someone who starts and runs his/her own business, in an effort to make a
profit.
According to Bowler (1996:5) in order to be considered an entrepreneur, you need to have

done or be doing one of the following things:
 Developed a new or improved product or service

 Develop a new type of business
 Introduced an existing product to a new group of people
 Find a different source of raw materials from the usual
It is important to understand that there is a distinct difference between being an entrepreneur

and being a manager. An entrepreneur innovates – that means he/she comes up with something
new, a manager manages an existing business for someone else.
One of an entrepreneur’s main aims would be to make a profit.
What is a profit? Profit is the price charged for a product that is over and above the cost of goods
that the entrepreneur can use to sustain his personal life. (We will discuss this further on in the
course)
Why do we need Entrepreneurs?

Why can’t everyone just work for a company?
Well, how did companies come into being? Let’s look at Pick ‘n Pay. It is one of South Africa’s
largest supermarket chains, but how did it get there?
+/- 40 years ago a young man called Raymond Ackerman began a grocery store in Bellville.
Through good management and wise investment Pick ‘n Pay has become what it is today.
Does that mean that all enterprises will/must achieve the same things? No.
All entrepreneurs play a role in the economy of the country, be they street vendors or huge
conglomerates.
As with all things, entrepreneurship has its good side and its bad side. So let’s have a look.
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Advantages Disadvantages
Independence: Since you are the boss you Administration: All the decisions regarding the
decide on all the rules and regulations and you business are up to the entrepreneur. All risk
could make quick decisions because you don’t and mistakes are yours to make alone.
have to get company approval.
Flexibility: Entrepreneurs can decide on their Incompetent Staff: If there are staffing issues
work hours. The entrepreneur can take time off you may be forced to work exceedingly long
if needed. hours to ensure the work is done by deadline.
Salary potential: The entrepreneur can make Salary: There is a possibility that should there
all the decisions regarding salaries, and be a shortage of cash, the entrepreneur may
provided the company can afford it, the have to for go his/her salary, and with that
entrepreneur can draw a comfortable salary. security.
ACTIVITY 1
Look around you; I want you to make a list of ideas for a new business. Do you see any needs in
your community that you think need filling? It needn’t be something that you think you could do
just any need that could or should be filled. Put them into the space provided below, we will
discuss them further in the course.
________________________________________________________________________________
________________________________________________________________________________
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FACILITATOR NOTES:
 The notes are fairly theoretical but the lecturer will need to go through this section
carefully and explain each step of the process.
 The learners need to understand the process of entrepreneurship in order to be able to put
it into practice.
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MODULE 2 – Role of an Entrepreneur
MODULE OUTCOMES
1. Entrepreneurship is described and discussed
2. The role of entrepreneurship in social development is explained and discussed...
(Job creation; Local Wealth Creation; Negation of Migrant Labour; Urbanisation;
Empowerment)
THE ROLE OF AN ENTREPRENEUR
What is the role of an entrepreneur in the economy?

Economic growth and development relies on entrepreneurship. One of the most important roles
of an entrepreneur is job creation. Entrepreneurs contribute as much as 80% of all jobs across the
sectors. (Small business, informal sector, etc)
Entrepreneurs encourage production. Not only do they design and develop new and innovative
products, they also render necessary services like babysitting, gardening etc.
As in the example of Raymond Ackerman, entrepreneurs generate wealth, which in turn helps to
increase the basic standard of living.
What does that mean?
Well an entrepreneur starts a business and is then able to earn money he could otherwise not
earn. We all know there is a huge job shortage in South Africa; many people have no way to make
money. An entrepreneur sees a need in the market and tries to fill it. People who sell wire goods
on the side of the road are entrepreneurs. They sell their products and create an income for
themselves and families. These are people who would otherwise not have an income.
Most mining in S.A. is privately owned. Therefore it required an entrepreneur to begin and
develop the mining industry.
Mining contributes billions to the economy annually. With the driving force of an entrepreneur
these natural resources would remain undeveloped.
For that reason an entrepreneur is someone who:
 Can see an opportunity

 Grasp an opportunity
 And responsibly manage the opportunity
It is important that an entrepreneur follow a moral code i.e.
Migrant Workers
Migrant/Seasonal workers are workers who travel, usually from rural areas to urban areas to seek
employment. These people are not employed on a full time basis but usually for a specified time
period. They sign contracts with their prospective employees and when the job is done, they
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often return to their homelands. More and more in South Africa we see that seasonal workers are
not only South African Citizens but also refugees and people coming from outside our borders to
try to find work.
One of the major problems with Migrant labour is that it causes friction in the local communities.
Workers are coming in from other areas and rural labourers are usually willing to work for less, so
they get jobs that would otherwise go the locals. This means the local people are now out of a job
because rural residents are taking them, but rural labourers are not the only problem, more and
more immigrants, often illegal immigrants are also vying for these positions and they are in turn
willing to work for less than the rural workers. This puts a huge strain on the economy of an area
from a number of points.
1. The local labour force is out of work.

2. The rural workers who come in are now no longer employed either and can often not
afford to return, so they stay and further tax the area
3. The immigrant workers flood an area, putting strain on the housing, (building of huge
informal settlements) clinics, policing, schooling systems and thus forcing the locals to
suffer further.
4. The resentment that builds up leads to violence and xenophobia, the likes of which we
experienced in 2008.
Migrant labour is more prominent amongst women than men. More men are hired on a full time
basis than women. In a country that is supposed to be democratic, women are still being
marginalised, it is the job of the woman of this country to ensure that we and our children work
hard to attain the necessary skills to make us self sufficient. Women can no longer rely on men to
support them, it is time we took responsibility for our own lives. This is called empowerment. By
getting involved in home industry aimed at tourism or getting a thriving industry going women and
men will be able to empower themselves and their families.
This chart shows the ratio of migrant women to migrant men. The information is from the 1996
census.
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This gives us an outlook on migrant worker in the lower rungs, but there are further issues that
also should be given credence. Migrant workers do not only count in the unskilled labour market.
South African youth are not taking their education seriously, either due to lack of interest or in
some instances in lack of facilities and opportunities. South Africa currently faces a shortage of
skilled labour, due to many factors skilled workers are leaving the country at an alarming rate,
(brain drain). The workers left are not qualified to take up the open positions and so we are faced
with having to import skilled labour from other countries. These are jobs that should be going to
South Africans of all colours and instead are going to foreigners. A successful entrepreneur has
the responsibility to help our children and youth get an education so that we might be able to take
up the shortfall in the skilled labour department
What is a moral code?
A code of ethics – They need to be honest and upfront with their customers and employees if they
have any.
ACTIVITY 2
Make a list of ethics that you would require from someone you did business with, or someone you
worked for. In the days of slavery workers were not paid but instead beaten severely for not
working. Today there are laws governed by the government to ensure equality. Apart from these
laws there are other qualities that a good boss/business owner should follow. Make a list of
these.
The Moral Code I think an entrepreneur should follow:

____________________________________________________________________________
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____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
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____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
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____________________________________________________________________________
____________________________________________________________________________
ACTIVITY 3
Using google run a search on urbanisation.
What is urbanisation?
Write a short paragraph explaining what urbanisation is and how it impacts on people, natural
resources, human resources and infrastructure.
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FACILITATOR NOTES
 Learners need to be encouraged to think about the type of service they expect when
dealing with a business and as such, how they think they should conduct business.
 Basic codes of ethics have to be taken into consideration for any business to survive.
 If an entrepreneur cheats others or takes a short cut, calamity will follow!
 What is urbanisation? It is important for students to have an understanding of
urbanisation in the effects it has on society as a whole.
 Students may work in groups of 2 or 3. This paragraph will be discussed in detail once the
students have some understanding.
 Open debate and discussion allows for free thinking and innovation.
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MODULE 3 – Types of Business
(SO1) Discuss entrepreneurship
MODULE OUTCOMES (Assessment criteria)

(Service providers; manufacturing, trade and retail industries, Sole Traders, Partnership, Close
Corporations, Co-operatives and Companies)
2. Advantages of entrepreneurship are discussed
(At least 3 of each)
TYPES OF BUSINESSESS
1. Sole Proprietor:
This is a single individual who operates a business. Financially the sole proprietor is held
responsible for all debts incurred by the business.
Advantages:
 Easy to set up as there are not a lot of legal requirements.

 Easy to adapt as only one person has to make decisions.
 The owner gets all the profit.
Disadvantages:
 Owner is fully liable, and his personal belongings can be attached should the
business run into financial difficulty.
 If the owner is sick the business may not have anyone else to run it.
 Limited financial resources may limit expansion.
3. Partnership:
A partnership is an agreement/contract between a minimum of 2 people or a maximum of
20. Each person contributes something to the business, either a financial contribution
and/or a skill. A partnership is not a legal entity so therefore the Partners are held jointly
liable.
Advantages:
 It is easy and cheap to start.

 People who have various skills can work together.
 Banks are more likely to lend money to a group of partners than a single person.
Disadvantages:
 If one of the partners leaves or dies, the partnership must be dissolved and
reformed.
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 Partners are liable in a personal capacity; therefore a dishonest partner may get the
rest of the group into trouble.
4. Company:
Companies fall under the Companies Act 61 of 1973. A company consists of a group of
individuals who together are called a company. A company is a legal Entity which means
that the individual members cannot be held liable. The name usually ends with “Limited”
or “(PTY) LTD”.
Advantages:
 Easier to get financing.

 More continuity.
 Not individually liable.
Disadvantages:
 Many members could cause a delay in decisions.
5. Close Corporations (CC):

A CC consists of a group of between 1 and 10 members. A CC is a legal entity which means
members do not carry liability. A CC falls under the Close Corporation Act of 1984.
Advantages:
 Members are personally interested in the CC as it affects their profit margins.

 It is not difficult to set up.
 Members are not personally liable.
Disadvantages:
 If a member is negligent or incompetent the other members can hold him liable.
 Banks may be less inclined to lend money as the members have limited liability.
6. Franchising:
When you come to a legal agreement to sell or market a specific product according to
stringent guide lines. You can make a profit, but a certain amount must be paid to the
franchisee – i.e. Spur. All Spur’s look the same and sell the same food for the same
price.
Advantages:
 Your brand is already established.

 If your franchise is well known, the credit institutions are more likely to lend you
money.
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Disadvantages:
 Limited ownership is usually given.

 Management restrictions may become pedantic.
 If one franchise gives bad service, all franchises are stereotyped.
7. Informal Sector:
The informal sector is governed by local government and is usually only owned by one
person. The person is solely responsible for debts incurred.
Advantages:
 Easy to start.
 Set up is cheap, usually at flea markets, street corners.
 Sole traders are usually creative and show initiative.
Disadvantages:
 Usually sell cheap products which are of a poor quality.

 Unlawful products are sometimes sold; like stolen goods or knock offs.
 Don’t usually have a high turnover.
ACTIVITY 4
What is a Co-Operative?
Fill in the details below for a Co-Op.
8. Co-Operative
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
________________________________________________________
Advantages
 ___________________________________________________________
 ___________________________________________________________
 ___________________________________________________________
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Disadvantages
 ___________________________________________________________
 ___________________________________________________________
 ___________________________________________________________
ACTIVITY 5
List 1 company for each type of business.
1. ________________________________
2. ________________________________
3. ________________________________
4. ________________________________
5. ________________________________
6. ________________________________
7. ________________________________
8. ________________________________
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Assessment 1
Name: _____________________________ Date:___________________
Student #: ______________ Total [40]
Using the internet run a Google search and find out about local (South African) entrepreneurs who
have started enterprises that have benefited local communities. (Community Projects) You may
also visit the local library or community upliftment organisations to find the information.
Prepare a two minute oral discussing on the company you found, and why you think they were
successful.
Preparation/ Research 2
Presentation: 2
Boring/compelling
Validity of information 2
Confidence 2
Total 8
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FACILITATOR NOTES
 Each type of business needs to be discussed and understood. Learners need to be able to
identify various businesses in the community.
 Each type of business has a specific ‘use’, attorney’s and doctors usually set up
partnerships. Large companies are normally companies.
 Learners need to understand that they cannot just open a restaurant and call it a SPUR as
there are franchising laws.
 Lecturer needs to make a list of businesses that represent the various types of business.
 This module may have to broken into two lessons as there may be too much information
for learners to assimilate in one hour.
 Independent research allows for initiative and exploration, both of which will hopefully
lead to inspiration!
Sole Proprietor: General Dealer, Café, Restaurant.

Franchise: SPUR, STEERS, SPAR.
Company: Anglo American Farms (Boschendal, Rhodes Fruit Farms).
CC: Developers, smaller companies like pool companies, window framers.
Partnership: Doctors, Lawyers.
Informal Trader: Street vendors.
Co-Op: Fruit packers, Wineries.
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MODULE 4 – Business Sectors

www.docs,paperless-school.com (retrieved 11 July 2008)
BUSINESS SECTORS
In the previous module we discussed the different types of businesses, sole traders, partnerships
etc. Each of these businesses operates on a different level. There are no hard and fast rules that
determine what type of business operates on which level but we will find out later.
PRIMARY SECTOR
In this sector we have all the businesses that have to do with the collecting of the raw materials
from which all things are made:
What types of industry are in this sector?
Fishing: large and small scale fishing from dams, rivers, lakes and seas
Mining: government and privately owned mining of minerals and metals. (gold, silver, coal, oil)
Farming: crops and livestock. Food production
Forestry: production of wood, which includes growing and managing of forestry. Wood is used to
produce furniture and housing as well as wood by products, i.e. paper.
These primary industries have traditionally been very labour intensive, which means that most of
the work was done by people, with little or no technological help. Nowadays we make use of
technology in the form of machinery to minimize the labour requirement i.e. combine harvesters,
global positioning systems to find large shoals of fish etc.
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SECONDARY SECTOR
In this sector raw materials collected in the primary sector are processed. That means they are
changed from their raw form into finished products i.e. pasta does not grow on a tree.
Building: builders build buildings, roads, dams, infrastructure.

Manufacturing: cars,
Food and beverage: changing water and sugar into coke, wheat into flour; flour into bread.
This sector has had large development on the technological front. The industrial revolution
changed the way that almost all production took place. Nowadays most manufacturing takes
place with the use of computers and large machinery that works at a most fantastic pace.
Appletiser has a bottling plant in Springs that runs so quickly it cannot be followed by the human
eye.
TERTIARY SECTOR
The tertiary sector involves mainly service industries. A service industry is an industry that
provides a service to its customers. It does not really make/manufacture goods.
Education: Schools, colleges, universities

Health Services: Hospitals, clinics, doctors, psychologists
Police Service: South African National Police Service
Banking: Standard Bank, ABSA, Nedbank
Insurance: Outsurance, Santam
Delivery Services: TV repairman, plumbers, couriers
These industries also make use of technology to help them, teachers use Computers to design
lessons, search for information on the internet etc. Banking, insurance and health services make
use of computers to keep records and to replace calculators and old adding machines.
When we look at the Tertiary industry we see that they are mainly responsible for service delivery.
In South Africa the Government is one of our major service providers. According to the
Constitution of the Republic of South Africa (1993) the government has a responsibility to provide
basic services to all communities. These services have to be provided within a secure and healthy
environment.
What are basic services and who should have access to them? As previously stated, the
Government is responsible for ensuring that the basic services are available for all South African’s,
however, the government has the right to expect that the people who receive these services make
use of them in a responsible manner.
It is my right to receive water and electricity at home but my responsibility to pay the bill for the
water and electricity I consume. It is my right to have medical and educational benefits for myself
and my children but also my responsibility to pay my taxes which go towards the funding of these
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organizations. It is also my responsibility NOT to defraud the government/public of funds or
services, by stealing electricity or falsifying records to get social grants or pension. This money
ultimately is compensated for by increased taxes, and people who truly need it do not receive it.
Basic services:
Water
Electricity
Education
Healthcare
Housing
Children who receive free or paid for education have the right to this education but also the
responsibility to work hard at school and ensure that the tax payers’/parents money is not
wasted!
People who have the right to medical facilities also have the responsibility to ensure that they
don’t travel to the Doctor every time they have a minor cut or bruise. This wastes resources, in
time and money.
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ASSESSMENT 2
ENTREPRENEURSHIP
Total Marks (25)
Name: _____________________________________ Date: ____________________
Before we move on in this module, let’s see how much you have learnt.
Answer the following questions as completely as possible, if you are not sure about the answers
try to work it out. Do not ask fellow students for help. I need to assess you.
QUESTION 1
Companies
1. What is a sole trader?
_________________________________________________________________________ (1)
2. Why is it safer to open a CC or Company (Pty) LTD which has its own liability?
____________________________________________________________________________
__________________________________________________________________________(2)
3. Can you list two advantages and two disadvantages of a Partnership.
____________________________________________________________________________
__________________________________________________________________________(4)
4. What is a Co-Operative?
____________________________________________________________________________
__________________________________________________________________________(2)
5. What type of businesses usually has partnerships?
__________________________________________________________________________(1)
6. Is it necessary for all businesses to register for tax regardless of their turn over?
__________________________________________________________________________(1)
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QUESTION 2
Business Sectors
1. What type of business would you be likely to find in the Primary Sector? List at least three.
a) _________________________________________________________
b) _________________________________________________________
c) _________________________________________________________ (3)
2. In which sector would you expect to find services like Telkom, Education or Health?
________________________________________________________________________ (1)
3. Who is the main service provider in South Africa?
_________________________________________________________________________ (1)
4. How does the Government pay for the services it provides?
__________________________________________________________________________(1)
5. Volkswagen is a car manufacturer, they have a factory based in Port Elizabeth where they
manufacture cars, to which sector does Volkswagen belong?
__________________________________________________________________________(1)
6. The Coke a Cola factory produces beverages (cool drinks) and Simba produces snack foods
(chips). To which sector would you say they belong?
__________________________________________________________________________(1)
QUESTION 3
1. List four good business ethics/morals. Think of things that you would expect from a good
businessman/businesswoman.
a) ___________________________ b) ______________________________________
c) ___________________________ d) ___________________________________ (4)
2. How is an entrepreneur different from a manager?
____________________________________________________________________________
_________________________________________________________________________ (2)
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QUESTION 4
Make a list of the services that all South Africans should have access to and say whether that
service is available in your area or not:
Service Provided Yes No
Think of ways to alleviate poverty and improve service delivery in your area. Big or small ideas,
but not impossible ideas. They must be within the scope of reality.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________
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MODULE 5 South Africa and the Government

(Job Creation; Local Wealth Creation; Negation of the Migrant Labour; Urbanisation;
Empowerment).
South Africa and the Government
It is important to have an understanding of the markets and how government works in terms of
the economy, to successfully run a business.
South Africa is what we call a Mixed Market, which means we have a market mechanism as well as
a command mechanism that determines out economic structure. A market mechanism means
that we have freedom to invest and spend out money as we see fit. We may own property, and
trade freely with each other. The government has no control over price. A command mechanism
means that the government determines how and when things are produced, the price we pay for
them, and how it is divided between the citizens. As previously stated, we have a mixed market
which means that we have a bit of both of these mechanisms. For the large part our economy is
free, a market mechanism, but the government maintains control of certain state owned facilities
like ESKOM (Electricity supplier), ISCOR (Iron and metal production), TELKOM (telecommunications
supplier). Up until this year (2008) TELKOM was the only provider of telecommunications in the
country and is partially state owned. This year saw the introduction of the second service provider
NEOTEL, a privately owned communications company.
In a market oriented mixed market, people endeavour to make money for themselves and their
families. The point of starting and running a business is to make a profit, therefore businesses
compete against each other to make money. Competition is of the utmost importance in a market
economy because; in trying to boost your sales you improve your product and lower your cost
thus providing the consumer with a better deal. Let’s put it in simple terms.
Let’s say I decide I want to make and sell cakes. I am the only supplier of cake in the area, so I
make the cakes at a cost of R 5.00 a slice but I charge my customers R 20.00 per slice of cake.
People come to buy from me because there is nowhere else to go. Then along comes Simple
Simon he decides that he also wants to sell cakes, so he starts making them, they are the same
quality and size as mine but he sells his cake for R 15.00 a slice, where are you going to buy from?
The only way for me to then compete is to lower my price. In that way the customer gets a good
product for less. Some stores however will decrease the quality of the product in order to cut the
cost, in that instance the consumer must decided whether he wants quality or a cheaper price.
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MODULE 6 Entrepreneurship in Social Development

(Job Creation; Local Wealth Creation; Negation of the Migrant Labour; Urbanisation;
Empowerment).
ENTREPRENEURSHIP IN SOCIAL DEVELOPMENT
How does entrepreneurship play a role in social development? Isn’t the government responsible
for social development?
As we saw in the last module, the government is one of South Africa’s largest service providers.
They are responsible for making sure we have access to our basic needs like education, health and
safety. So how or why should business take a role in social development? Well as much as we
may not like it, the government, for various reasons, is unable to provide for all our needs. While
we expect certain things (and we have the right to) some responsibility must fall on our shoulders.
How can we help?
The government has made a pledge to cut down the unemployment rate. One very effective way
to do this is to empower/educate people so that they might help themselves. Like this course. By
offering you the opportunity to do this course they are providing you with a foundation on which
to build a better life for yourself and your family. You are however at the same time taking on the
responsibility to give back to the community. If you use the information you have learnt on this
course and go out and start a business no matter how small, you are potentially putting yourself in
a position to eventually be able to employ someone else to help you. Each job created by the
entrepreneur including employing him/her self decreases the unemployment levels of our society.
This decrease in unemployment has a knock on effect.
Let’s say we live in a community where there is not a lot of money as most of the people in this
area are unemployed. One person starts selling cultural art along the side of the road. People who
stop along the road buy from the vender. He goes back to the community and now has money to
buy food from the Spaza shop. The Spaza shop owner now has more money than he did before
because he has a new customer. He in turn can perhaps hire an extra person to work for him
because he has more business. That then makes 2 members of the community who are now
earning. If you follow this chain of thought you will see that this is an escalating chain. Eventually
the whole community is employed and the local area’s wealth is improved.
This circle of job creation often leads to urbanization. With more money the community can
develop a better infrastructure that improves the lives of all who live in it. If parents have more
money they can afford to pay more school fees, which, in turn helps the school to improve its
facilities and thereby improve its level of education. With an improved education local children
can study further and thereby improve their wealth and in turn the communities. This local
community is then empowered to make decisions regarding themselves and are not at the mercy
of people who have little or no understanding of the communities needs.
If local communities have an educated labour force the need for migrant labour can be negated.
What does that mean? At the moment we have a large amount of workers that come from other
28
countries or areas to work in our area. These people take jobs that could otherwise go to local
people. However, if the local community lacks the skills to do these jobs, there is no choice other
than to employ outsiders.
Homeless but not helpless: (taken from My Clever Economic and Management Sciences through
Issues: p 39)
‘For the woman of the Victoria Mxenge Savings Scheme, development started with coins in a jam
jar under the bed. On Saturday, the group of 200 homeless women from Khayelitsha, celebrated
the first stage of their plan to build a neighbourhood from scratch: they had levelled the land on a
site donated by the Catholic Church at Philippi and built a life-size wood and canvas prototype
house on it. They were still a long way from having homes to move into, but the presence of a site
and R 19 000.00 in the bank were tributes to the tenacity of women who weren’t prepared to wait
around to be rescued by the reconstruction and development programme.
Many of the woman were unemployed, contributing to the project physically, if not financially.
The women themselves cleared the bush and levelled the land on the site. Four women
volunteered to learn how to cast blocks and tiles from concrete, with the help of low-tech
equipment supplied by a foreign donor.
Sustainable development
Khula's green entrepreneurs
15 July 2005
DaimlerChrysler South Africa has awarded a group of young KwaZulu-Natal entrepreneurs R100
000 for their environment-friendly business.
The Khula Village Environmental Group - locally known as the "Green Team" - are based in a small
rural settlement next to the Dukuduku Forest on the fringes of the Greater St Lucia Wetland Park
in Zululand. Their example may be just the thing for unemployed youngsters looking for gaps in
the job market.
Not long ago the group's five men and women, aged between 22 and 28, had no jobs and little
chance of finding work.
But Siphiwe Mjadu, Sizakele Mngomezulu, Balindile Ndlovu, Bongumusa Dube and Sibusiso
Bukhosini have one thing in common: they realise the environment has economic value.
So they set up a small business to plant trees, recycle refuse and clear alien vegetation. Their client
list soon grew to include landscaping contracts.
"Someone, somewhere made an impression on them, that the environment is important," says
Charmaine Veldman, project manager of the Wildlands Conservation Trust, an organisation that
promotes conservation-based community development in KwaZulu-Natal.
"Entirely of their own volition they started an environmental group. With little knowledge of
conservation but much enthusiasm, they approached me and offered their services."
29
The group wrote a constitution and formalised their setup.
"We taught them about alien plants and the damage they do to the ecology, and they began
removing the aliens and replanting indigenous vegetation," Veldman says.
"The remarkable thing about this group is that they are not only doing this to make money. They
are really passionate about the environment. Everything they have achieved has been from their
own efforts."
ACTIVITY 6
The information above shows two groups of people who decided to make a difference in their own
and other people’s lives, enabling their communities.
1. Find out if there are any such projects in your area.
2. Read the discussion below. Do you think there is a way that all three people can solve their
immediate dilemma? Write a short paragraph stating how you think these problems could
be solved.
Sipho: Where am I going to get wood for my fire? (Sipho is a young man with a small
family. They live in an informal settlement near Cape Town)
Bongile: We are so poor. There are no jobs. (Bongile is an elderly gentleman living in the
same informal settlement near Cape Town)
Gladys: We need to get rid of all these alien trees near Cape Town. (Gladys is a ranger with
the department of nature conservation)
30
MODULE 7 – Enabling Programs
(SO 1) Discuss Entrepreneurship

5. Enabling programs for the entrepreneur are identified
(Ntsika; Khula; local business service centres and providers)
ENABLING PROGRAMS
Using the internet, visit the following sites.
These are companies and initiatives that have been established mainly by government and big
businesses to promote and sustain Small and Medium business development. Particularly with
regard to previously disadvantaged communities. These initiatives are promoted and in some
cases funded by the DTI (Department of Trade and Industry)
In other words if you were to have a good sustainable business plant, you could approach one of
these companies for financing and advice.
The Small Enterprise Development Agency (seda) is the Department of Trade and Industry's agency for
supporting small business in South Africa.
In your journey through our website, you will find information to start and run your own business. The
list of topics to the left should give you a good starting point.

If there is a particular task you want to accomplish, you may find a fact sheet on this topic by clicking on
the Factsheets button at the top of the page.
(www.seda.org.za retrieved 7 July 008)
Website: www.seda.org.za
E-mail: info@seda.org.za
Mail: PO Box 56714, ARCADIA, 0007

Street: The DTI Campus, Block G, 77 Mentjies Street, Sunnyside, PRETORIA
Tel: (012) 441 1000 / 0860 103 703
Fax: (012) 441 2053
E-mail: info@seda.org.za
31
Khula Enterprise Finance Ltd (Khula) was established in 1996 as an independent agency of the
Department of Trade and Industry. As the flagship development finance institution focusing on
small businesses, Khula has for more than 10 years operated as a financial facilitator for the
development of the rapidly growing Small and Medium Enterprise (SME) sector of the South
African economy. (www.khula.org.za retrieved 7 July 2008)
‘The Small Enterprise Foundation
– Envisioning a world free from poverty
The goal of the Small Enterprise Foundation, SEF, is to work towards the elimination of poverty
and unemployment in a sustainable manner by providing credit for self-employment, combined
with savings mobilisation and a methodology that substantially increases the chances of successful
self-employment amongst the poor. The organisation follows a solidarity group lending
methodology very similar to that pioneered by the Grameen Bank of Bangladesh. SEF has gained
considerable international recognition for its poverty-targeting methodology and its success in
reaching and ensuring positive impact on the very poor. The organisation’s poverty targeting tool,
Participatory Wealth Ranking, was one of the first such tools officially recognised and promoted by
the Microcredit Summit Campaign.’( www.sef.co.za retrieved 7 July 2008)
BRAIN
The DTI has launched a comprehensive online initiative known as BRAIN (Business Referral and
Information Network), offering basic information and essential service links to entrepreneurs. The
BRAIN website includes information about the government’s incentives and SMME support
agencies, as well as links to business centres throughout the country.
FRAIN
The Franchise Advice and Information Network (FRAIN) strives to supply high quality information
and support services to individuals and small business (SMMEs) to ensure growth and
improvement of new and existing franchise businesses in South Africa.
32
 FRAIN is a support project of the DTI. It is implemented by Namac (National Coordinating
Office for Manufacturing Advisory Centres), with assistance from the Council for Scientific
and Industrial
Namac Trust
The National coordinating Office for Manufacturing Advisory Centres (Namac) is an SMME support
agency within the DTI. It is widely recognised as one of the most successful SMME development
and support agencies in South Africa.
 Namac has developed an extensive delivery structure across South Africa that serves as a
channel for the application of new tools, information, products and projects, thus enabling
the effective delivery of solutions aimed at SMMEs. The emphasis is on Historically
Disadvantaged Individuals'
Tourism Enterprise Programme

The Tourism Enterprise Programme (TEP) falls within the policy-vehicle of the government's
Tourism Action Plan (TAP). As such, it represents a component of a larger and longer-term strategy
to both attract and effectively cater for the expected growth in domestic and international
tourism.
The TEP is funded by the Business Trust and implemented by ECI Africa.
The main objectives of the programme are to encourage and facilitate the growth and expansion
of small and medium enterprises in the tourism economy, resulting in job creation and revenue
generating opportunities.
 Primary emphasis is placed on historically disadvantaged entrepreneurs and enterprises.

For example, at the World Parks Congress the TEP was instrumental in facilitated deals
which provided
(www.SouthAfrica,info , retrieved 7 July 2008)
ACTIVITY 7
Independent research, go onto the internet and do some research. Find a list of requirements for
applying to one of the above-mentioned organizations.
Time will be allowed during class for internet access to find this information. Save the information
onto a disk/memory stick for future use.
33
FACILITATOR NOTES
 Learners will need help to access the sites and navigate them, but it is a good exercise as it
empowers students to think in terms of the possibilities that await them.
 Students will have to use some initiative in searching. There are a number of other sites
that offer similar help.
 Unit Standard CCFO – Collecting Collect, analyse, organize and critically evaluate
information
34
MODULE 8 – Characteristics of Success
(SO 2) Identify and describe the characteristics of a successful entrepreneur.

1. Characteristics of a successful entrepreneur are identified
(Ability to identify opportunities, ability to make informed decisions, ability to manage risk,
time management)
CHARACTERISTICS OF SUCCESS
One of the main reasons businesses fail is due to mismanagement and neglect of a viability study!
What is a viability study?

Let’s look at the business ideas you came up with in the last module. Go through the ideas that
you had for starting a business and using the following questions determine if your ideas are
viable.
Are they viable/sustainable can they support you and your family and will they generate enough
income to sustain the business itself?
What questions do we ask?
1. How much start up capital do I need to start the business?

What is capital? (The amount of money required to either buy the stuff I’m going to sell /
buy the equipment I’m going to need to provide a service / set up a shop or factory or
office from which I will work)
2. Do I know anything about the industry I am trying to enter? (I’m a gardener, I now want
be a hairdresser, do I know anything about hair?)
3. Am I skilled in the industry?
4. Do I need a formal qualification? (To become an electrician I need to know about

electricity, plus I need a wireman’s license)
5. Where will I run my business from? Is the area accessible, safe, big enough, suitable?
6. If I need staff, how much will it cost me and are there suitable prospective employees in
the area?
7. If you a producing something; is the raw material readily available? Can you transport it
to where it is needed?
8. How long will it take before I generate an income? How will I survive in the interim? How
much working capital will I need?
9. Am I actually interested in this line or work or will I become easily bored by it?
10. Is your area legal? Does it infringe on the rights of others?
35
ACTIVITY 8
Look at the list of business ideas you had in the beginning of this module. Check each idea against
the above questions.
Using the attached worksheet, draw up a viability study for the business you think is the most
likely to succeed.
WORKSHEET
1. Do I need start-up Capital Yes/No
If yes how much? ______________________________________________________
How will I get it?_______________________________________________________
2. Is it an industry you know anything about? Yes/No
If yes do you know enough? ______________________________________________
Am I skilled to do the work myself/ _________________________________________
3. Do I need a formal qualification? Yes/No
If yes, what qualification do you have? _______________________________________
Is it a formal qualification? ________________________________________________
Is the industry regulated by any qualification board? ____________________________
4. Do you have premises from where you can run the business? ____________________
Are these premises suitable? _______________________________________________
5. Will you need help in the form of staff? Yes/No
Is there available labour to hire if you need? ____________________________________
6. If you a producing something; is the raw material readily available? Yes/No
Can you transport it to where it is needed? Yes/No
How? ___________________________________________________________________
7. How long will it take before you generate an income? ______________________________
How will you pay your bills in the mean time? ____________________________________
8. Am I actually interested in this line or work or will I become easily bored by it? Yes/No
9. Is your area legal? Does it infringe on the rights of others? Yes/No

Do you need to get permission from the municipality or neighbours? Yes/No
Keep this worksheet with your portfolio for future use.
36
FACILITATOR NOTES
 Worksheet should be kept and used at a later date.

 The idea behind this whole course is that should there be students who are interested in
starting a business, by keeping all the information gathered during this course, they could
use it as part of their business plan that can submitted to the DTI for funding.
 Discuss all the points in detail to ensure that students fully understand the implications for
each of these points.
 Most small businesses fail due to mismanagement and lack of a viability study.
37
MODULE 9 – Characteristics of a good Entrepreneur
1. Characteristics of a successful entrepreneur are identified

(Ability to identify opportunities, ability to make informed decisions, ability to manage risk,
time management)
(Case studies should be used to analyse successful entrepreneurs)
CHARACTERISTICS OF A GOOD ENTREPRENEUR
What are the characteristics of a good entrepreneur?
There are no hard and fast rules, but I will attempt to give you some insight into the life and world
of a good entrepreneur.
1. An entrepreneur should be good at identifying and grabbing new ideas and opportunities to
improve existing products and/or services.
2. As an entrepreneur you should believe in yourself. You need to have the confidence that you
can make a success of your venture and you need to have the courage to go out and try.
3. The world is very diverse and it can change very quickly, an entrepreneur must be able to adjust
his/her thinking quickly and tackle all the new challenges with enthusiasm and gusto. You can’t
afford to be stuck in a rut, or like things best the old way. New and innovative ideas must
be a part of your life.
4. An entrepreneur must have tenacity! You can’t be put off by the first obstacle that comes your
way. When life hands you lemons a good entrepreneur will make lemonade!
5. There is a distinct difference between, rushing in where angels fear to tread and taking
calculated risks. What’s the difference? Well a calculated risk is one in which the odds have
been weighed up. Make a list of pro’s and con’s, do a viability study and then once this is
analysed proceed with caution. Making decisions without thinking it through first is like
gambling. You first need to edge your bets.
6. Once you have made your decision, you are responsible for it. A good entrepreneur will not try
to blame others for mistakes that have been made. ‘If John hadn’t told me it was a good idea, I
would not be in trouble now’. Why didn’t you make sure?
7. Entrepreneurs need to be motivated and be able to motivate others in their work. Therefore
you need to be a people person. You need to be able to choose the right people to work for
you and ensure that they are dedicated and hardworking.
8. A lazy entrepreneur is a bankrupt entrepreneur. Opening a new business is not easy; it requires
long hours of hard work and dedication.
Below are a list of international entrepreneurs who have made a huge success through dedication
and hard work.
Richard Branson, Virgin Empire
38
Richard Branson, started the Virgin Records label in his garage. Through innovation, calculated
risk taking and loads of hard work he now owns his own Island among other things.
Virgin Active; Virgin Records; Virgin Mobile; Virgin Airlines to name a few.
Bill Gates, Microsoft

Bill Gates is the founder of Microsoft Corporation and one of the richest men in the world.
Steve Jobs, Apple and Pixar

Steve Jobs, also began Apple in his garage, they had a good idea and the courage to go after it. He
now owns Apple Macintosh, the only competition for Microsoft, and Pixar animations. Ever
watched Monsters Inc. Incredibles etc it is an international animation studio.
Oprah Winfrey, Harpo, Inc.

Oprah was born to an unmarried couple, her father was in the military and her mother was a
maid. At the age of 3 she was sent to live with her grandmother. Her grandmother lived in such
abject poverty that when Oprah was young she used to wear dresses made out of sack cloth. The
local children used to tease her about her clothes. At the age of 9 she moved to the inner city
ghettos and at age 13 ran away from home. She was then sent to live with her father who was
strict and insited on her education taking priority. Once she started concentrating on her
education she won scholarships to study further and today is listed on the Forbes list as the
Wealthiest Woman in the world. She has however not forgotten her roots and has established the
Angle Network, a charity organisation that helps people all over the world. One of her many
projects is the school for girls that she runs in Johannesburg. Apart from this she has also invested
in the Seven Fountains school, built in a rural area of Kwa-Zulu Natal, a school in Limpopo and a
school in Vryheid.
Thomas Edison, General Electric

The 17th and last son of Samuel ‘ The Iron shovel’ Edison Jnr. In total Edison attended 3 months of
school, before being home schooled by his mother, because his teacher was of the opinion that
young Thomas could not be taught because him mind wondered. As a child he began selling
sweets, newspapers and vegetables to supplement his family’s income. In doing this he
discovered that he had a gift for business. His first invention was the phonograph (an early version
of a vinyl record). He also later invented the first electric light bulb. Edison went on to found 13
companies including the General Electric company, one of the largest publicly traded companies in
the world.
Henry Ford; Created the Ford Motor Company and was the first person to mass produce motor
vehicles. Not only did he produce motor vehicles he also began mass production in factories using
new technological break troughs. Ford introduced the Franchise system, putting a ford dealership
in every town in America. He broke convention when it came to business ideas and innovated a
large and powerful company.
Walt Disney one of the worlds most loved cartoon creators. The man behind Disney World,
Mickey Mouse, Donald Duck, Goofy and all the rest. In 1920 Disney began working on animated
cartoons. Disney’s first company ‘Newman Laugh-O-Grams’ went bankrupt due to high
overheads. Fortunately for the world Disney did not give up but moved to Hollywood to try again.
It was not until 1932 that Disney won an Academy award for Mickey Mouse.
39
ASSESSMENT 3
Name: _____________________________ Date:___________________
Student #: ______________ Total [40]
Find information on any successful South African Entrepreneur. Working in groups of 3, prepare a
Power Point presentation to display the information. Prepare an oral to accompany this
presentation. It must not be longer than 2 minutes. You will get time in class to work on this
project.
Group Work, did students work well together? 3
Presentation: Language use, confidence 2
Research/Quality of information 3
Power Point Presentation – eye catching & informative? 2
Bibliography 2
Total 12
40
FACILITATOR NOTES
 Lecturer needs to go through this section very carefully and discuss entrepreneurs that
have made a success of their businesses.
 While students need to be encouraged with these stories they need to understand that
success does not come easily.
 Students have to make the Power Point presentation on 1 successful South African
Entrepreneur, there are many like Cyril Ramaphosa, Thokyo Sexwale, etc.
 This integrates with Computer studies and Communication, and ties in with Unit Standard
CCFO Communicating.
 This module will probably take at least 2 – 3 lesson hours to complete.
41
MODULE 10 – Developing Entrepreneurial characteristics
(SO 3) Identify assess and improves individual entrepreneurial characteristics.
(SO 4) Discuss business ethics and social responsibility
MODULE OUTCOMES (Assessment criteria)

1. Individual/personal entrepreneurial characteristics are identified and listed.
2. Individual/personal characteristics are assessed against the general entrepreneurial
characteristics.
3. Ways to address shortcomings is developed
4. Strategies to address shortcomings are implemented.
5. The importance of business ethics is discusses.
(Honesty; Justice; Fairness; Honouring of contracts)
DEVELOPING ENTREPRENEURIAL CHARACTERISTICS
In the last module we had a look at famous entrepreneurs and the characteristics of a good
entrepreneur now let’s do some introspection. What’s that, well we are going to look at ourselves
and see if we have what it takes to be good entrepreneurs.
Answer the following activity sheet as honestly as possible, this is not a test and the information
you fill in will be kept in the strictest of confidence.
ACTIVITY 9
What does it take to be a good entrepreneur?
Answer the following questions
1) Are you a go-getter? Do you like to take on projects and tasks as soon as you get them, or do
you need someone to help you and tell you what you need to do?
____________________________________________________________________________
____________________________________________________________________________
2) Are you responsible? Cake you make decisions with confidence, and accept responsibility for
them whether they turn out to be good or bad?
____________________________________________________________________________
____________________________________________________________________________
3) Are you self-motivated? Do you have lots of energy and drive to keep working until the job is
done or do you prefer to work from 9 – 5?
____________________________________________________________________________
42
____________________________________________________________________________
4) Can you manage your time? If you have a job to do, can you get it done on time or does
someone have to chivvy you on?
____________________________________________________________________________
____________________________________________________________________________
5) Are you honest and up-front, or will you rather keep quiet and let others find the problems on
their own?
____________________________________________________________________________
____________________________________________________________________________
6) Are you tenacious? Do you give up when things get tough or can you work through the hard
times and keep yourself motivated?
____________________________________________________________________________
____________________________________________________________________________
7) Can you make quick decisions, or do you agonize in indecision before you make a choice?
____________________________________________________________________________
____________________________________________________________________________
8) Do you get along well with people or do they generally irritate you? Would you rather work on
your own?
____________________________________________________________________________
____________________________________________________________________________
9) Are you up for a change? Do you like to change things or would you rather they stay the way
they were?
____________________________________________________________________________
43
____________________________________________________________________________
10) Are you healthy and energetic would you rather exercise and be active or are you always tired?
Are you a couch potato?
____________________________________________________________________________
____________________________________________________________________________
ACTIVITY 10
There are also moral traits that play a part in entrepreneurship. A successful entrepreneur needs
to be morally aware. When you conduct business you need to decide on a value system that you
will adopt. Your business value system will probably derive from your moral values. Having a
strong sense of morals will make certain decisions easier to make.
Below is a list of morals/values, tick off which ones you aspire to exercise in your business.
This list is taken from www.prairiepublic.org (Retrieved 7 July 2008).
Choose 3 values you feel the strongest about and write a short paragraph stating how you will
ensure that this value is highlighted in your business.
___ Honesty
___ Service
___ Quality
___ Customer Service
___ Neatness
___ Winning
___ Innovation
___ Commitment
___ Professionalism
___ Teamwork
___ Independence
___ Being on time
___ Growth
___ Power
44
___ Justice
___ Fairness
___ Honouring of contracts
45
ENTREPRENEURIAL TRAITS
Not Somewhat Very Quality or Charecteristic

Important Important Important
1 2 3
1 2 3 A high level of energy
1 2 3 Good physical health
1 2 3 A strong need to achieve
1 2 3 A willingness to take risks
1 2 3 A desire to create
1 2 3 A need to closely associate with others
1 2 3 A strong desire for money
1 2 3 A willingness to tolerate uncertainty
1 2 3 An ability to get along with employees
1 2 3 Being well organised
1 2 3 Self-reliance
1 2 3 A need for power
1 2 3 Patience
1 2 3 Competiveness
1 2 3 Desire and willingness to take the initiative
1 2 3 Self-confidence
1 2 3 Versatility (ability to do many things)
1 2 3 Perseverance (sticking at something difficult)
1 2 3 Innovativeness (willingness and ability to do something
untried)
1 2 3 Ability to lead effectively
Source: Adapted from Entrepreneurship by William B Jennings, Canadian Foundation for

Economic Education. 1985 in Master Curriculum Guide: Economics and Entrepreneurship.
46
RATING OF TRAITS BY ENTREPRENEURS
A. Most important for success

 Perseverance (18)
 Desire and willingness to take the initiative (15)
 Competitiveness (14)
 Self-reliance (11)
 A strong need to achieve (3)
 Self-confidence (16)
 Good physical health (2)
B. Important for success
 A willingness to take risks (4)
 A high level of energy (1)
 An ability to get along with employees (9)
 Versatility (17)
 A desire to create (5)
 Innovativeness (19)
C. Least important for success
 Ability to lead effectively (20)
 A willingness to tolerate uncertainty (8)
 A strong desire for money (7)
 Patience (13)
 Being well organised (10)
 A need for power (12)
 A need to closely associate with others (6)
Source: Based on testing reported in “That Urge to Achieve,” by D.C. McClelland in
Entrepreneurship and Venture Capital, Prentice-Hall, 1975. (The numbers in parenthesis
correspond with the numerical listing shown for Activity 2)
47
MODULE 11 – Drawing up a Budget
MODULE OUTCOMES (Assessment Criterion)

By the end of this lesson the student should be able to:
 Correctly set up and run a budget.

 Understand the importance of budgeting, especially with regard to running an enterprise.
Let’s look at some business terms and documents you will need to use to run your business.
1. Budget
What is a budget?
A budget tells you how much money comes into your business and how much money you
have to spend. We usually use a budget to run a business but a budget should also be used
to run your personal financial details.
A business budget may look like this
Debit (DR) (The money you Credit (CR) (The money you
spend/expenses) earn/Income)
Income
Sales R5 000.00
Expenses
Water R 170.00
Electricity 300.00
Telephone 87.00
Refreshments 100.00
Stationery 50.00
Stock 1 780.00
48
ACTIVITY 11
Use the template below to fill in your personal budget. The money you earn/your salary goes in
the credit column and the money you spend in the debit column. Make sure you remember things
like groceries, entertainment money, and services.
Debit (DR) (The money you Credit (CR) (The money you
spend/expenses) earn/Income)
Income
Expenses
Total
1. Draw up a budget for Ubuntu General Dealers.
The income for the month amounts to R 10 000.00

Their expenses are; Electricity R 1200.00, Telephone R 450.00, Water R 300.00, Wages
R 2500.00, Stationery R 200.00, Staff refreshments R 350.00, Stock R 5000.00.
Make sure you put the amounts in the correct columns.
2. Using the information you collected for your own business draw a preliminary budget for
your company.
49
FACILITATOR NOTES
 Being able to draw up and use a budget can be a very useful tool for learners to
have. It is difficult to make sure that you do not over extend your finances if you
don’t have any idea of what need to pay.
 This module runs in conjunction with the Budget module in the Excell section of
Basic IT.
 The format is the same, this is just page 1.
50
MODULE 12 – TAX
MODULE OUTCOMES (Assessment Criterion)

TAX
What is tax? Why do we have to pay tax? What does the government do with the tax it collects?
The government collects tax from all its citizens to finance all the services it provides. Tax is
compulsory, which means everyone HAS to pay tax. There are two main ways in which the
government collects tax, either as direct tax which would be personal tax, the tax you pay on your
salary every month, or as indirect tax VAT.
If you have a job and you earn more than R 45 000.00 per year your company will deduct tax from
your salary before you get paid. The company is then responsible for paying this tax over to the
government on a monthly basis, companies also pay tax on the profit they make on a biannual
basis. Over and above that all citizens pay tax in the form of VAT. VAT or value added tax, is the
tax the government charges on the sale of most goods in the country. Some goods such as bread,
beans, maize etc are VAT free. Before the change of government in 1994 if you went to buy a
product, you would have to add 10% to the price on the shelf in order to determine what the price
is. With VAT the price gets added before the sale price is stipulated. So when you see a price on a
product that is what you will actually be paying, however the VAT at 14% has already been
calculated. The company charges this extra 14% but they then have to pay it over to the
government on a bimonthly basis. VAT is one of the most important forms of revenue for the
government.
Now that we know the government is receiving all this money, what do they do with it? The
government is responsible for the entire infrastructure in the country. They use the money to
finance RDP housing, Education, Medical Care in the form of clinics and State hospitals, roads, old
age pensions, disability and child grants to name a few.
It is the role of government to try to ensure that all its citizens are happy, educated, housed and
healthy. They don’t always achieve this goal but they do try.
So while it’s our right to expect that government do their job correctly it is also our responsibility
to attempt to gain employment and look after ourselves and our families.
51
MODULE 13 – Relationship between ethics and conduct
(SO 4) Discuss business ethics and social responsibility.

3. The inter-relationship between business ethics and a code of conduct is discussed.
By the end of the lesson the student should be able to:
 Understand the importance of ethics and social responsibility, with regard to running an
enterprise.
In previous lessons we discussed social responsibility with regards to ethics like honesty, justice,
fairness and honouring of contracts. In this lesson we take it one step further. While the above-
mentioned ethics are important to consider when you are running a business, there are other
issues that must also be taken into account.
Social responsibility goes one step further, as we need to take the environment into consideration
when planning and running our business. When we did the viability study the last question we
asked was does my business impact on the environment or others negatively? What exactly does
that mean?
The world is made up of a large number of ecosystems that support various life forms. An
entrepreneur cannot develop an area without making sure that such development does not have a
negative impact on the surrounding areas. Plans need to be made to ensure that factory run off or
waste products are safely disposed of and not dumped into local water sources or land fills. We
also need to make sure that other people are not negatively impacted by your business.
A couple of years ago, there was a night club that opened in Somerset West’s industrial area
without doing a viability study. The loud noise which went on into the small hours of the night
affected the local residents to such a degree that they formed an action group and got a petition
going. Eventually the authorities closed the club. This business had a negative impact on the
community and therefore the authorities closed the club causing a loss of business capital and loss
of income for the club’s owner.
Social responsibility is also a responsibility to our communities. Successful entrepreneurs have a

responsibility to give back to the community. Not exclusively in the form of money or donations,
but also by proving employment opportunities in their community, or running bursaries or
education programmes that can help with the upliftment of these communities.
Oprah Winfrey runs a school in Gauteng for previously disadvantaged girls, it is boarding school
where the children stay and get a good education. She also runs what she calls the Angle Network
which provides resources for people in need all over the world. Nelson Mandela runs the Nelson
Mandela Children’s Fund which helps to feed and educate thousands of children in South Africa
annually.
So we see that social responsibility encompasses a range of different aspects. It is the

responsibility of the entrepreneur and/or business owner to ensure that all legal, social, political
and environmental obligations are met.
52
53
DAILY RECORD
SPECIFIC ASSESSMENT
SECTION TITLE MODULE ACTIVITIES ASSESSMENT DATE COMPLETED
OUTCOME CRITERIA
Entrepreneurship 1.What is Entrepreneurship? SO1 AC 1 - 3 Activity 1
2. Role of Entrepreneur Activity 2
SO1 AC 1 &4
Activity 3
3. Types of Businesses Activity 4 Assessment 1
SO1 AC 2 &3
Activity 5 Research Project
4. Enabling programs Assessment 2
SO1 AC 5
Exam
5. South African Government SO1 AC 4
6. Entrepreneurship in Social
SO1 AC 4 Activity 6
Development
7. Enabling Programs Activity 7
SO1 AC 5
8. Characteristics of Success SO2 AC 1 Activity 8
9. Characteristics of a good Assessment 3
SO2 AC 1+2
Entrepreneur Research Project
10. Entrepreneurial Activity 9
SO3/SO4 AC1-5
Characteristics Activity 10
11. Drawing up a Budget SO2 AC1 Activity 11
12. TAX SO2 AC1
13. Relationship between Assessment 4
SO4 AC3
ethics and conduct Exam
SECTION B
STARTING AND
RUNNING AN SMME
(Small and Medium Enterprise)
All qualifications and unit standards registered on the National Qualifications Framework are public
property. Thus the only payment that can be made for them is for service and reproduction. It is illegal to
sell this material for profit. If the material is reproduced or quoted, the South African Qualifications
Authority (SAQA) should be acknowledged as the source.

Investigate the possibilities of establishing and running a small business enterprise (SMME)
117244 Investigate the possibilities of establishing and running a small business enterprise (SMME)
SGB Insurance and Investment
FIELD SUBFIELD
Field 03 - Business, Commerce and Management Studies Finance, Economics and Accounting
Undefined Regular Level 4 (Grade 12) 3
2011-11-20 2014-11-20
This unit standard replaces:

NQF Replacement
US ID Unit Standard Title Credits
Level Status
Investigate the possibilities of establishing and running a small business enterprise
10386 Level 4 3 Complete
(SMME)

Learners who achieve this unit standard know their own strengths and weaknesses and can use their self-knowledge to make a
decision on a possible business option for self-employment.
The qualifying learner is capable of:

 Identifying and researching the potential for a SMME as an own business.
 Identifying the risk associated with a SMME.
 Explaining the financial aspects involved in running a SMME.
 Making and supporting a decision as to whether to establish a SMME.

There is open access to this unit standard. Learners should be competent in Communication, Mathematical Literacy and Financial
Literacy at NQF Level 3.
UNIT STANDARD RANGE

The typical scope of this unit standard is:
1. SMMEs include vendors, franchises, brokerages, spaza shops, IT services, cleaning services, underwriting agents, etc.
2. Poor financial management includes poor cash flow planning, lack of understanding of overdraft requirements, poor management
of debtors and creditors, bad debts, unplanned growth, poor screening of debtors, inadequate financial controls.
3. Short term insurance needs include building, fire, theft, stock, vehicle, movable assets.
4. Long term insurance needs include key-man insurance, temporary disablement, buy and sell agreements with partners, death
cover, cover to repay business loans, computer insurance, etc.
SPECIFIC OUTCOME 1
Identify and research the potential for a SMME as an own business.
ASSESSMENT CRITERIA
Personal strengths, weaknesses, abilities and passions are analysed and a personal profile is compiled in order to match personal
traits and abilities to a business opportunity.
A personal profile is matched to type of work, product or service that has potential as an SMME.
Training required to ensure the success of a SMME is identified and a decision is made on when and where to access training.
The need for the identified product or service and possible competition is researched in a selected area and a decision is made about
possible distribution channels.
A decision is made and supported on a suitable location for a selected SMME.
Municipal by laws and other constraints on trade are investigated for a selected SMME in a specific location.
The importance of networking for a SMME is explained with examples.
SPECIFIC OUTCOME 2
Identify the risk associated with a SMME.
ASSESSMENT CRITERIA
The financial risks encountered by SMMEs are described with examples.
Risks associated with being an employer are explained for a SMME.
The need for advertising and marketing by a SMME is explained and an indication is given of the associated risks.
Risks associated with growth are discussed for three different scenarios.
The insurance needs of a SMME are investigated for a specific enterprise.
The risks associated with stock and other business assets are described and an indication is given of possible measures to reduce the
risk.
SPECIFIC OUTCOME 3
Explain the financial aspects involved in running a SMME.
ASSESSMENT CRITERIA
The concepts of start up and working capital are explained with reference to a specific SMME.
The relationship between cash flow and profit is explained for three case studies.
Financial controls required to ensure that a business is viable are explained with examples.
The implications of poor financial management are explained with examples.
The types of contract that a SMME could enter into are named and a contract wording is interpreted and explained in plain
language.
The tax responsibilities of a SMME are explained and an indication is given of when a business is liable for each form of tax.
SPECIFIC OUTCOME 4
Make and support a decision on whether to establish an SMME.
ASSESSMENT CRITERIA
The concept of an entrepreneur is explained with reference to risk.
Three selected SMMEs are surveyed to establish the service levels required for success.
A decision is made to establish or not establish a SMME supported by the findings of an investigation.
Three selected SMMEs are surveyed to establish quality of produce and potential productivity required for success.
UNIT STANDARD ACCREDITATION AND MODERATION OPTIONS

This Unit Standard will be internally assessed by the provider and moderated by a moderator registered by a relevant accredited
ETQA or an ETQA that has a Memorandum of Understanding with the relevant accredited ETQA.
UNIT STANDARD ESSENTIAL EMBEDDED KNOWLEDGE

N/A

This Unit Standard supports in particular, the following critical cross field outcomes at Unit Standard level:
 The learner can reflect on and explore a variety of strategies to learn more effectively in knowing his/her own strengths and
weaknesses and deciding how to access appropriate training.
 The learner can participate as a responsible citizen in the life of the local and national community by investigating possibilities for
self-employment.
 The learner can be culturally and aesthetically sensitive across a range of social contexts in deciding on the need for and location
of a SMME.
 The learner can explore education and career opportunities by investigating the possibilities of running a small business.
UNIT STANDARD LINKAGES

N/A

The learner can identify and solve problems in which responses show that responsible decisions using critical and creative thinking
have been made in deciding whether establish an enterprise and where it should be located.

The learner can work effectively with others as a member of a community in surveying the need for a business and the service levels
necessary for success.

The learner can organise and manage him/herself and his/her activities responsibly and effectively in matching his/her personal
profile to a possible business enterprise and planning for self-employment.

The learner can collect, organise and evaluate information researching the need for a service and possible competition, selecting a
location for an enterprise and investigating municipal by laws and constraints on trade.

The learner can communicate effectively using visual, mathematical and language skills in oral and written presentation when
supporting a decision to establish a business enterprise and interpreting a contract wording.

The learner can demonstrate an understanding of the world as a set of related systems by relating own personality traits and
strengths to selecting a business opportunity and the risk associated with SMMEs.
QUALIFICATIONS UTILISING THIS UNIT STANDARD:
ID QUALIFICATION TITLE LEVEL STATUS END DATE
2010-11-
Elective 49089 National Certificate: Financial Services Level 3 Reregistered
20
2009-06-
Elective 50285 National Certificate: Professional Driving Level 3 Registered
29
Further Education and Training Certificate: Community Water, Health 2011-06-
Elective 61669 Level 4 Registered
and Sanitation Facilitation 11
2011-11-
Elective 49649 Further Education and Training Certificate: Long-term Insurance Level 4 Reregistered
18
Further Education and Training Certificate: Perishable Produce 2010-11-
Exportation 28
2009-02-
Elective 49929 Further Education and Training Certificate: Short Term Insurance Level 4 Registered
09
Further Education and Training Certificate: Short-Term Risk 2009-11-
Management 16
2010-02-
Elective 57917 Further Education and Training Certificate: Wealth Management Level 4 Registered
08
2010-10-
Elective 58978 National Certificate: Journalism Level 5 Registered
18
Passed the End Date
- 2007-10-
Elective 49123 National Certificate: Journalism Level 5
Status was 18
"Registered"
2011-01-
Elective 49023 National Diploma: Liaison Interpreting Level 5 Reregistered
22
All qualifications and unit standards registered on the National Qualifications Framework are public property. Thus the only payment that
can be made for them is for service and reproduction. It is illegal to sell this material for profit. If the material is reproduced or quoted, the
South African Qualifications Authority (SAQA) should be acknowledged as the source.
MODULE 14 –Potential for an SMME
(SO 1) Identify and research the potential for an SMME as an own business
MODULE OUTCOMES
1. Personal strengths, weaknesses, abilities and passions are analysed and a person profile is
compiled in order to match personal traits and abilities to a business opportunity.
2. A personal profile is matched to type of work, product or service that has potential as an
SMME.
SMME POTENTIAL
In Section A of this book we discussed Entrepreneurial qualities and which qualities are best suited
to being an Entrepreneur. Turn back to that section and let’s have another look at your answers.
In this section we are going to take the ‘self-knowledge’ we acquired in the first section, add to it
and try to determine a personal profile – basically an idea of what type of industry you will be best
suited to work in, and from there we will begin compiling a plan for your own business.
Let’s try a simple Test:
ACTIVITY 1
Read through the table below and mark off the personality type that you think best describes you.
We will start with Holland’s model: personalities and career possibilities
Holland distinguishes between six types of personalities, and then matches the different
personalities to possible career options:
Personality Type Description Career Possibility
Veterinarian
Realistic type This type of person has a
Engineer
preference for working with
Mechanic
hand tools, machinery, animals
Carpenter
and/or plants
Entrepreneur
Geologist
Inquisitive type This type of person shows a
Weatherman
preference for activities which
Mathematician
involve problem solving, and
Entrepreneur
intellectual and analytical
thinking.
Artistic and creative type This person shows a Freelance writer
preference for creating Musician
something, through Language
and literature, fine arts and
performing arts or music.
Teacher
Social and serving type This type of person prefers
Minister
communicating with other
Nurse
people and likes to render
Hairdresser
services to others.
Fireman
Paramedic
Enterprising type This person prefers to take the Manager
lead, to manage and to Sales manager
persuade others in order to
reach certain goals. Entrepreneur
Conventional type This type of person prefers Bank clerk
activities where clerical skills Typist
and clear procedures are to be
followed.
Right so now you have an idea of what type of person you are, why is this important, well , it’s
important because it will help you to get an idea of what type of business you could run. One of
the most important rules when running your own business is that you must like what you are
doing. If you do a job purely because it is a job that brings in money you will be less likely to be
successful working for someone else but especially as an entrepreneur.
ACTIVITY 1.2
Below is a copy of Nelson’s test for interest: field or pattern (Nelson 1993:28-34 in Gouws
2003:166-168)
INTEREST EXERCISE 1 2 3 4 5 6 7
Do you like to help friends with their
homework?
Do you enjoy solving mathematical problems?
Have you taken a leading part in a play or

concert?
Do you plan your savings and expenses well?
Are you good at selling things?
Can you remove the lid from a jar or bottle

more easily than your friends?
Do you hate to spend time indoors after school
hours?
Do you frequently help people by babysitting, or
by visiting the sick or the old?
1 2 3 4 5 6 7
Would you rather study science than play
sport?
Do you like to spend time on activities such as
music, dancing, painting for drawing?
Do you think that one should plan carefully and
in detail before starting a project?
Would you like to work for a newspaper or TV
newsroom as a reporter?
Are your fingers nimble, flexible and sensitive?
Do you like to be alone for long periods?
Do you sometimes help to organize a group of

people for a sports activity?
Do you like to find out what makes things work?
Do you make special efforts to attend plays,

concerts or films?
Do you normally use facts and figures to prove
an argument?
Have you been involved in debating or public
speaking?
Do you have some tools or materials with which
you practice your skills?
Are you tough, can you stay outdoors in bad
weather?
Do you try to help the sick or comfort those
who have lost a friend?
Have you spent much time doing scientific or
mechanical experiments on your own?
Do you spend a lot of time drawing?
Would you dislike working with a problem

without knowing all the facts?
In your career do you want to express yourself
and communicate ideas?
Do you enjoy working on cars or broken
appliances?
1 2 3 4 5 6 7
Are you a very active, lively person?
Have you ever been in charge of a group of

people, (debating society, church group, etc)?
Do you like watching films about space
adventures/ science fiction?
Has anybody who is already employed as an
artist said that you should make a career of art?
Do you like solving problems and puzzles?
Have you read more than five books not

required for your studies in the past 12
months?
Do you want to make a career out of your
practical abilities?
Do you think that formers have a good life?
Would you like to work in an open plan office?
Do you enjoy fixing electrical appliances?

Do you want to obtain further training in music,
dancing, painting or drawing?
Would you like to keep the financial records for
a business/
Do you speak more than two languages/
Have you ever made a dress or piece of

furniture?
Do you like to see things grow and watch
animals and birds outdoors?
Do you make friends with people of all age
groups, including your own?
Are you interested in discussing medical
problems?
Do you think you would enjoy creating
advertisements for TV, magazines and radio?
1 2 3 4 5 6 7
Do you know how much your parents pay for
your school fees and books?
Do you enjoy participating in an organised,
open debate?
Have you ever made a model car, house or
aeroplane?
Would you like to be a game ranger?
So how do you work out what your answers mean?
Add up the number of ticks you have put in each column and enter the number in the relevant
square. The highest score indicates the interest category which applied to you.
Column 1 Dealing with People
Column 2 Science and technology?
Column 3 Artistic and creative activities?
Column 4 Facts and figures?
Column 5 Communicating, words and ideas?
Column 6 Making/fixing things with your hands?
Column 7 Working out of doors?
These tests will give you an idea of what type of personality you have and what your interests are.
They are not meant to be hard and fast rules that determine what type of business you must run,
they are included to give you an idea, or indication as to what interests you most.
The idea is to look a these tests in conjunction with the tests we did in the first section, when we
were trying to determine whether you had a business aptitude, together they will give us an idea
of whether you are suited to being an entrepreneur, a worker or a business manager and your
strongest field of interest.
FACILITATOR NOTES
 Please ensure that students understand that the tests above are designed as a help
technique to find direction, NOT has the bottom line for their careers.
 This should be broached as a journey of discovery in self-knowledge.
There is NO stipulation that students HAVE to complete the tests but they need to understand that
they are there as a ‘help’ mechanism.
MODULE 15 –Training Schedule
MODULE OUTCOMES
3. Training required to ensure the success of a SMME is identified and a decision is made o
when and where to access training.
Now that you know what type of person you are, and where your interest lies, we need to
determine if you need any extra training to achieve your goals.
Look over the list of possible business ideas we collected in the first section of this course. Try to
decide exactly which business you want to begin.
Do you require any further training for your chosen business?
ACTIVITY 2
 Using the internet, search for more information about your chosen industry.
 Make a list of the qualifications/abilities you will need to run this industry
If you require further training find at least 2 institutions that offer the necessary course/s.
 Make a list of the courses you need or would like to do
o include in this list the price
o the type of qualification you will get
o how long it will take
o Any other information that may be pertinent to your chosen course.
FACILITATOR NOTES:
 Allow students enough time to look for options – regarding studying
 Make sure students understand the time and cost implications of studying but don’t put
them off.
 Offer part time solutions, where the student could study and work a the same time UNISA,
INTEC etc.
 Make sure students are aware of the fact that there are bursaries available in most
courses.
MODULE 16 –Needs Assessment for your product
MODULE OUTCOMES
4. The need for the identified product or service and possible competition is researched in a
selected area and a decision is made about possible distribution channels.
5. A decision is made and supported on a suitable location for a selected SMME.
6. Municipal by laws and other constraints on trade are investigated for a selected SMME in a
specific location.
Product Assessment.
We have now discussed our ideas, researched any training that may be needed or my be beneficial
to your chosen business, so lets move on and assess our product/service.
ACTIVITY 3
This is practical activity:
Think about the type of business you think you want to open, make a detailed list of all the
products/services you want to offer in your business, e.g. if you want to run a day care centre:
 What age of children will you take?
 What will your hours of operation be?
 Will you run your centre throughout the year or will you close for school holidays?
 Will you only take small children or will you offer an aftercare/homework centre for
children in Primary school?
 Will you include a meal in your service or must the children bring their own lunch?
 How many children will you take?
 How many staff will you need? (this will depend on the previous question.)
 Where do you plan to run the business from?
Once you have written down all your details for your business, I want you to think about the
area/location, where you will be operating from.
Are there any businesses that operate in this area that currently offer the same products/services
you intend to offer?
 If yes, is there enough trade in the area to be able to support both of you?
 Are there any municipal by laws that you will have to conform to in order to run your
enterprise?
 e.g. If you plan to run a shebeen, do you have a liquor licence?
 Do you need to change the zoning on the property?
Contact your local municipality and get all the information you need including cost and time
frames. Bring all your paperwork and information to class by ______________________ we
will then discuss your information and make a decision as to what needs to be done. Is it good
to proceed or do you need to rethink and re-evaluate your idea?
You may visit the following web sites to find information; they have quite a lot of information:
 http://www.capetown.gov.za
 www.drakenstein.gov.za
FACILITATOR NOTES:
Business Licenses
Why do you need to Apply?
If you open a business that requires a license, you may not, unless otherwise indicated, begin trading before a
license has been issued. Trading without a valid license is a punishable offense. Licensing is governed by the
Business Act No. 71 of 1991, which is national law. Schedule 1 of the Business Act No 71 of 1991 lists the
businesses which need a license.
Which businesses need to apply for a License?
 Food Provision needs a license to sell or supply meals, take-aways or perishable food.
 Health and Entertainment Facilities need a license for:
o Turkish baths, saunas and health baths;
o Massage or infra-red treatments;
o Male and Female escorts;
o Three or more slot machines and electronic games;
o Three or more snooker or billiard tables;
o Nightclubs and discotheques, where live or loud music is played;
o Adult premises.
 Hawkers: If you are a hawker selling food and meals, which you take from place to place or sell from a
vehicle, you need a license
 Other types of Licensing Bodies for Licenses (Registrar of Companies - Contact CIPRO for registration of
the following type of companies - Address: Block F, DTI Campus, Entfutkweni, 77 Meintjies Street,
Sunnyside, Pretoria):
o Close Corporation
o Company
o Copyright
o Designs
o Patents
 Liquor Licenses: To apply for a liquor license, contact the Liquor Officer at your nearest Police Station or
the Liquor Board.
Address : The Liquor Board, 6th Floor, Waldorf Building, 80 St George's Mall, PO Box 979, Cape Town.
Tel. 021 - 483 3091 & Fax 021 - 483 5066
 Music Rights : You also have to apply to the South African Music Rights Organisation (SAMRO) to play any
kind of music.
Address : 73 Juta Street, cnr. De Beer, Braamfontein
Tel. 011 - 489 5000 & Fax 011 - 403 1934
Steps on how to Apply for a Business License
Step 1: You need to complete a business license application forms (L1) which is available from the Civic Centre,
Bergriver Boulevard, Paarl, as well at the Municipal Offices, 1st Floor, Wellington.
For enquiries contact:
Licence Officer
Mr. Zolile Charles Quwe Tel: 021 873 1121 ext. 2267 or Fax: 021 864 2412
021 807 4593 or
082 375 2447
Administrative Officer
Wendy Philander Tel: 021 873 1121 ext. 2206 or Fax: 021 864 2412
021 807 4557
Office Hours Monday - Thursday Friday
07g45 - 17h00 07h45 - 15h45
Step 2: The application must be completed and submitted to the License Officer.
 The Town Planning Department will assist you to establish whether there are business rights on the
property and whether the zoning rights comply with the Scheme Regulations.
 If your application complies with the aforementioned requirements, the application process can proceed.
Step 3: Payment of Fee

 An application fee (annually increased as per Council's tariff structure) is payable at the cashiers for the
application of a business license
 A receipt will be issued for the fees paid.
Step 4: Circulation for Comments
 The application is then sent to the relevant Departments for comments and recommendations, which may
include : Environmental Health, Planning, Fire Services and Electricity
Step 5: Issuing of License
 Once the comments of all relevant departments have been received, the Department Community Services,
Licensing, will issue the license
Other Requirements which may need to be met

If reports received from the relevant departments indicate that other requirements need to be met, the
Department of Community Services will send a notice to the applicant. The applicant must comply with the
requirements and then arrange a re-inspection with the officer concerned.
License Issued
The license will be issued only once ALL relevant departments have returned a recommendation of approval.
Does the business licence have to be renewed?
Traders do not have to apply for a new licence every year.

They do have to apply for a new licence:
 if they move their business to other premises

 if they sell the business, the new owner will have to apply for a licence
What happens if a person sells food and does not get a business licence?
It is a criminal offence to operate without a licence, when the business has anything to do with:
 making or selling food which can go off

 certain types of health or entertainment activities
The owner could be fined up to R1000 or be given a prison sentence of up to 3 years. It is also a criminal offence
to sell alcohol without a liquor licence
Note: A business license or application can not be transferred with a change of ownership. A business license can
be withdrawn or suspended if there is a failure to comply with an endorsement.
Working together to create a place of opportunity

Contact us | Privacy policy | Sitemap | Terms of use
http://www.drakenstein.gov.za/Business/Pages/BusinessHome.aspx
MODULE 17 –Networking
MODULE OUTCOMES
7. The importance of networking for an SMME is explained with examples.
8. Identify the risk associated with an SMME.
NETWORKING
What is networking and why is it important in business?
There is an old saying that goes ‘It’s not what you know, but who you know.’ This is especially true
when it comes to business; people do business with people they like. If you go into a store and the
clerk is rude and abrupt with you, will you go back there again?
By building up a network of friends, colleagues, and acquaintances you broaden your business
base. If I need a plumber and I know someone who is a plumber I will rather call the person I
know than look in the yellow pages and find a plumber I don’t know, even if the guy I know is a bit
more expensive I will rather use him because I know what type of work he does, I know he is a
trustworthy person, and I know I will be happy with the end result.
A more diverse network of acquaintances will ensure that you have access to various groups
across cultural, class and geographical boundaries.
How do you go about meeting people? You can’t just walk up to strangers and introduce yourself,
this is called cold calling and people especially in South Africa are not very receptive to it. Image
you are walking down a road and a complete stranger approaches you and wants to chat, what do
you think your initial reaction would be? There are various organisations and meetings that are
set up where entrepreneurs can go and socialise and network.
The chamber of commerce is one such group, they organise meetings or breakfast talks where
business people from the area can get together and discuss business, get to know each other,
exchange business cards and socialise.
In most towns there are forums and groups that meet in different industries, there you will meet
people who are in similar industries to you, you can share information, and exchange business
cards.
Remember that people who attend these meetings are also networking, so while you are making
contacts and broadening your business base, they are doing the same thing.
First impressions are lasting so try to attend these gatherings looking the part, if you arrive after
having worked in the kitchen the whole day, you are not likely to get a very warm welcome. When
you are networking you are not only meeting people who may become customers you are also
getting your name in the market place.
Let’s say I meet a guy at one of the meetings who is looking for a plumber, I can then tell him
about my friend who is a plumber and recommend he contact my plumber, and so the plumber’s
name and market spread this is known as word of mouth.
Once you have contact, you could occasionally do favours for your contacts this gives you
credibility and goodwill. If you can help someone out without incurring a major loss on your part,
it could prove to be very beneficial for your business.
Networking also allows you the opportunity to gather new ideas that can improve your business,
or diversify (include new lines). You can also listen to the general consensus on various issues and
perhaps come up with ideas to fulfil gaps in the market e.g.
John goes to a business forum meeting and a few of the people are complaining that their workers
are always late back from lunch because they have to walk 4 blocks to the nearest shop to get
lunch, there is also always a long queue at the shop, by the time the staff manage to get lunch
they are late. John runs a take away store in a different area but he is thinking about opening a
second store in the factory area the other men are talking about. He hears the discussion and
approaches the group, introduces himself and presents an offer.
With prior arrangement from the owners of the factories he sends one of his staff down to the
factories just before lunch time and sells pre-packed meals to the workers, they no longer have to
walk so far to get to the shop or stand in the long queue, the managers are happy because the
staff are no longer late, and John is happy because he has just increased his market share. Within
a few month John has increased the number of customers he has in the new area sufficiently to
warrant opening his second store.
At a business forum……
…’you have the opportunity to market yourself and your business in a relaxed, social situation.’
(http://www.foxnews.com/story/0,2933,362704,00.html)
Here are some guidelines you could follow to make the most of your networking opportunities:
 Arrive early, that way you get to chat to people while there is still not too much melee
 Set a goal before you go, decide before hand what you plan to achieve from the meeting,
don’t be listless and ‘pap’, be driven and dynamic!
 Make sure you arrived armed with business cards and/or brochures, and writing
implements should you need to jot down some information.
 Make sure you have a briefcase/purse handy to deposit all the information you may
acquire.
 Don’t sit in an exclusive group with colleagues or people you know, be open and
approachable, mingle.
 Don’t be afraid to introduce yourself, be confident without being loud and obnoxious.
Make eye contact when you talk to people and speak clearly, shake hands on meeting.
 While you are trying to market your business don’t actively punt, this is supposed to be a
social event, answer questions openly and truthfully without going over board.
 Pay attention to your personal appearance before you go:
o Make sure you have a good haircut/ hair do
o Make sure you are appropriately dressed, not over dressed or sloppy
o Pay attention to small details, make sure your nails are clean, your stockings don’t
have holes, and your clothes don’t have stains.
Networking may cost a bit in the form of luncheons or fees but if you use it as a marketing
strategy, it will pay for itself.
ACTIVITY 4
 Research Activity: Using what ever means you want, find out about networking
opportunities that may exist in your area/field of work, make a list of these and keep them
in your portfolio for later use.
 http://www.thebigidea.co.za/sbw/capetown.htm visit this web site, it promotes the Small

business week in Cape Town
 Find more information regarding the small business week in Cape Town.
"Effective business networking is the bringing together of like minded individuals who, through
relationship building, become walking, talking advertisements for one another."
(www.articlealley.com by Lauren Neilson.)
MODULE 18 –Risks associated with SMMEs
(SO 2) Identify the risk associated with an SMME
MODULE OUTCOMES
1. The financial risks encountered by SMMEs are described with examples.
2. Risk associated with being an employer are explained for and SMME.
4. Risks associated with growth are discussed for three different scenarios.
5. The insurance needs for an SMME are investigated for a specific enterprise.
6. The risks associated with stock and other business assets are described and an indication is
given of possible measures to reduce the risk.
We discussed certain risk factors with regards to the type of business you decide to open, in this
section we will go into a little more detail.
This section is not geared towards putting you off running a business but merely to inform you of
the potential pitfalls as a means of avoiding them.
Everyone has what is called a risk tolerance level. What is this? Well it’s similar to a pain
tolerance level or threshold; some people don’t feel pain to the same degree as others. I might
find a blister unbearably sore, you might not even notice it! A risk tolerance threshold is similar, I
might consider climbing to the top of a ladder a great risk, and my 12 year old daughter thinks
nothing of jumping off a 65m high bridge attached to a bungy rope!
Now that is physical risk, in business is goes about taking business risks, with great risk comes
great reward, however continual reckless risks could mean bankruptcy. Seeing a potential money
spinner, one person may be willing to go out on a limb and invest money into a project that may
or may not succeed, while someone else may not be willing to invest in the same project because
he/she is afraid that it might not work. No risk at all could lead to a mediocre performance. A
balance needs to be found between the two, calculated risk is the best way to go.
As the owner of a business you will bear all the risk and responsibility for decisions made, be they
losing money invested, squandering good will, business failure as well as success.
There are steps that can be taken to limit your potential risk; by carefully choosing an appropriate
form of business you can avoid personal sureties or guarantees.
One of the greatest risks as a business owner is that you are now responsible for your self and
your family. There is no longer a boss who pays you a salary at the end of each month. All this
responsibility now falls squarely on your shoulders. This can sometimes create a huge amount of
stress. It is advisable to make sure your business will earn enough money to support you before
you give up your paying job.
Another very serious risk to running your own business is, depending on the type of business you
decide to run, you could find yourself personally liable for any debt the business incurs. What
does this mean exactly? Well it means that all your personal possessions become jeopardised by
bad business decisions. Should your company become insolvent creditors may come after you
personally and you could loose your house, car, and or furniture or any other investments you
may have. If you are running a small business the chances of facing major losses are a lot less
than if you were running a major organisation with a high monthly turn over. If your business
deals in thousands of rands a month you only stand to loose thousands of Rands. If your business
however deal in hundreds of thousands of Rands per month, the risk is exponentially greater.
Some business risks are seen as avoidable risk, these are problems that can be avoided if you pay
attention to them and put plans in place to prevent the eventuality of these risks. Avoidable risks
in business would be running into legal trouble, like failure to pay Tax or fraud. Both of these risks
are easily avoidable provided you take note of and educate yourself regarding all the rules and
regulations (legal requirements) to running a business
The final risk is the risk of loss of income due to accidental injury or illness. There are insurance
policies that you can take out to cover yourself should you become incapacitated and unable to
work, HOWEVER make sure you check your policy very carefully since most of these policies have
exclusion clauses and when it comes time to pay and your claim may not be valid.
Below is a list of risks that may cause a business to fail:
 Non compliance with legal and licensing requirements and regulations

 Lax or sloppy accounting procedures and standards leading to
 Late payment of bills and late/non collection of accounts payable
 Failure to comply with conditions of employment and/or labour issues such as
discriminations claims, BEE non-compliance, and sexual harassment claims.
 Failure to comply with tax requirements resulting in failure of payments
 Incompatibility between partners
 Criminal liability due to failure to comply with laws and regulations in regard to your
business.
Personal liability risks include:
 Personal surety for bank loans or other forms of credit the business may incur.
 Late or unpaid taxes incurred by the business
 Long term leases or other obligations the business may enter into.
 Lawsuits against the company for any number of reasons.
In order to manage risk you need to:
 Make sure you know what the risks are

 Predict when a risk might occur
 Identify factors influencing the risk
 Evaluate the identified risk
 Constantly reassess the risk cycle
Risks associated with growth?
How can there be risk associated with the growth of your business? If your business is growing
doesn’t it stand to reason that you are doing well and should go with the flow?
Well yes and NO!

As businesses grow, they usually take on a more formal nature; become more ‘corporate’
suddenly that little ‘family’ atmosphere is gone.
Let’s take a little child for example, when we first have children we have a cute little baby that
needs our constant undivided attention, it needs nurturing and pampering and we give all our
attention to it constantly. As the baby grows its needs change, we usually also end up having
more children, and they also need our attention; growing your business is a similar concept, in a
small ‘family’ business you can and usually do, do everything. Your finger is on the pulse of the
business and you are involved with and supervise every aspect of the business. As the business
grows you will soon discover there are not enough hours in the day to do everything. Not only are
there not enough hours you may also discover that the books are now getting a little more
complicated, or the production now needs a specialist to handle all the aspects, your little business
is outgrowing your mental capacities as well as your physical time frames, you then need to hire
specialist staff to handle specialist functions. Your role as the business owner now changes from
‘chief cook and bottle wash’ to Manager……. You now take on the role of managing and overseeing
all aspects of the business instead of actually doing all the work. No, this doesn’t mean that there
is less work, it means there is more.
With hiring new staff comes a whole lot of new risks, increased salaries that you will have to pay,
you will probably need bigger premises, hence increase rent or a bigger bond, your turn over will
increase but so will your expenses.
There are also legal implications regarding registrations etc that will have to be taken into account.
Some risks may not be things that you would necessarily call avoidable risks but should none the
less be kept in mind:
 Competition
 Product substitution
 Product life cycles
 Barriers to entry
 Narrow customer base
 Lack of consistency
 Supplier base may be limited
 Price Wars with competitors
 Sales fluctuations
 Problems with cash flow
 Money lenders and Banks
 Poor productivity
 Costing and pricing issues
 Insufficient provisions
 Over-reliance on staff members
 High staff turnover
 Confidentiality Breach
 Ownership continuity
 Poor management
 Excessive spending
 Expiring lease/difficult landlord
 Rising rental costs
 Need to upgrade/fix assets
 Bad Debt
 Act of God
 Incentives and Taxes
 Strikes, labour unrest
 Crime
 Environmental awareness.
ACTIVITY 5
Working in groups of 3; choose six of the above headings and find more information about the
type of risk and possible ways you could avoid or minimise your risk.
Type your information into an informative detailed document, we will then discuss the results and
add the information to our course notes.
MODULE 19 –Insurance for SMMEs
(SO 2) Identify the risk associated with an SMME
MODULE OUTCOMES
5. The insurance needs for an SMME are investigated for a specific enterprise.
6. The risks associated with stock and other business assets are described and an indication is
given of possible measures to reduce the risk.
INSURANCE FOR SMMES

What is insurance? According to the Oxford English Dictionary insurance is
….. a thing providing protection against a possible eventuality. (www.askoxford.com)
It is like hedging your bets. You have insurance in case, best case scenario you won’t need it.
Does this mean it is an unnecessary expense? NO, my father-in-law always says if you can’t afford
insurance then that is when you need it the most!
In a perfect world insurance would not be necessary but since we do not live in Utopia we have to
accept insurance as a necessary evil.
Lets take a look at a few types of insurance that may be necessary when you start your business,
you may not need to have all of these types of insurance, it depends largely on the type, size and
location of your business.
1. Business Owner’s Policy
A business owner’s policy provides coverage for fire, wind, theft etc on you property, injury
of someone in your business or injury of someone by your product (liability) and the
interruption of business (this means you will lose money while your business is
interrupted)
2. Professional Liability (Errors & Omissions) Insurance

This type of insurance is recommended for but not limited to computer technicians,
systems analysts, accountants, hairdressers, lawyers and consultants. It is an insurance
that covers you should your work incur injury or financial loss to someone who does
business with you. It is also a good idea that restaurants and fast food outlets have this
type of insurance.
3. Commercial automobile Insurance

Cars, vans or trucks used mainly for business will need a separate business auto policy.
Auto policies cover physical damage to the vehicle but not its contents. You will also have
to register the drivers of your vehicles with your insurance company. Some insurance
policies stipulate that the driver of a commercial vehicle have a PDP, Public Driving Permit,
which certifies that they person is responsible and can then transport goods and people. It
is also essential that all staff driving company vehicles have a valid drivers licence relevant
to the type of vehicle they are driving. Should a driver be involved in an accident and not
be in possession of a licence the insurance may be able to refute the claim.
4. Business Income/Extra Expense Insurance

This type of coverage is called an add-on, which means that it can be added to your BOP
insurance and the coverage will reimburse your business for income lost during downtime
caused by damage or loss of property. If there is a fire in your business the business
income policy will pay for the income you loose while the building is being repaired, the
Extra expense insurance will pay for you to rent a temporary office while you wait for the
repairs to be completed on your burnt building.
5. Product liability Insurance

Product liability insurance protects you in the event that your product harms or injures the
user of the product or his property. This type of insurance is imperative for companies that
manufacture something. Food, toys etc. If you run a fast food business and someone gets
food poisoning from eating something from your store you can be sued, the product
liability insurance will then cover the costs.
6. Specialised Equipment Coverage

This coverage is available for equipment you use to do your job but that doesn’t fit into
standard coverage or is used in unusual ways. Professional camera, computers etc that
you take with you to do your business, plumbers or electricians carry expensive drills and
ladders when they go to do a job, should their equipment get damaged in anyway they
may not be able to continue working.
ACTIVITY 6
Decide on the type of insurance you will require for your chosen industry. Search insurance web
sites and get more information about the type of coverage, you need information from at least 2
different companies.
What they offer, what type of cover etc.
MODULE 20– Financial Function of an Entrepreneur
(SO 3) Explain the financial aspects involved in running an SMME
MODULE OUTCOMES
1. The concepts of start up and working capital are explained with reference to a
specific SMME
2. The relationship between cash flow and profit is explained for three case studies.
3. Financial controls required to ensure that a business is viable are explained with
examples
4. The implications of poor financial management are explained with examples.
THE FINANCIAL FUNCTION OF AN ENTREPRENEUR

What is the financial function of an entrepreneur and is it really important? YES, this is one of the
major obstacles to businesses becoming a success, both in getting off the ground and long term.
We talk about mismanagement, nine times out of ten mismanagement means misappropriation of
funds not necessarily criminal fraud but simply over spending or overextending credit or cash flow
problems.
Don’t get over stressed we will go through this section slowly, once we have finished you will be
able to differentiate between profit, cash flow and capital.
Small Business entrepreneurs do not have to hire chartered accountants or specialists in money
markets to help them with the day to day running of their business, as long as you know the
fundamentals of the finance function you can run the financial aspect of your business yourself.
Your first order of duty on the financial front will be to secure start up capital. Start up capital is
the money that you will need to start your business. There are always costs involved in starting a
business wether you are starting it from your home or renting or purchasing premises.
The major types of capital are:
Equity (Owners’ Capital) – This is the capital supplied by the owner/partners of the business. This
is your own personal money that you will be putting into the business to start it. (If you are going
to start a close corporation this type of capital is called members’ interest.
Outside Capital (bank loans, foreign investments) - This is all the capital (money) made available
by your bank, or a development company, (Khula, SEDA etc.)
 Capital is not isolated to money it can come in the form of cash, equipment, buildings or
other assets.
 Capital supplied for a period of 12 months or less is called short term capital.
 Capital supplied for a period of 12 months or more is called long term capital.
 Trade credit is also classified under outside capital since it involves suppliers supplying you
with stock/raw materials on credit or a bank overdraft.
 Current capital/liability – is capital that is used on a short-term basis and should be used to
finance part of the current assets. It is also a form of outside capital.
 Working capital – this refers to current assets,
 Net working capital – this refers to current assets minus current liabilities.
Lets say you are running a fast food business, you go to your fresh produce wholesaler and
organise to buy 10 pockets of potatoes on credit, you start your shop and sell 5 of pockets of
potatoes, your working capital will be the 5 pockets left plus the monies you made during the sale
of the first 5 pockest, your net working capital will be the money you have made from the 5
pockets you sold minus the amount of money you will need to pay for the 10 pockets you bought.
PROFIT
Profit is the most widely used measure to determine the success or failure of a business.
The owner of a small business expects to earn a profit.
Gross profit is the profit left after you have deducted the cost price of your good from the selling
price.
 You buy a box of 10 chocolate slabs for R100.00 (cost price)

 You sell the chocolates for R 15.00 each i.e. you make R 150.00 for the box (selling price)
 You minus your cost price from your selling price (Selling Price = R150.00 -Cost = R 100.00)
 Your gross profit is thus R 50.00
Gross profit is NOT the money you can now spend! Gross profit is used to pay for overheads. Your
overheads include things like rent, wages, insurance, electricity, water.
Gross profit percentage is the gross profit divided by the selling price and then represented as a
percentage:
R150.00 – R 100.00 = R50.00 = 50%
If Gross profit is not the money you can spend then why is it important?
Gross profit is the MOST IMPORTANT aspect of your business, generally the more gross profit a
business makes, the easier it is to pay overheads. Small changes in gross profit have large effect
on profitability in a business. Analysis of profit helps you to identify products and activities that
may require attention. A good businessman will look at gross profits on a regular basis, and revise
the amount and cost of work that goes into supporting and selling that product. Often this
analysis will determine that the products selling the highest volume are those that create the most
work and offer the lowest gross profit.
OVERHEADS
Overheads are the typically recurring expenses that your business will incur on a day to day, week
to week, monthly or annual basis.
Over heads exclude stock purchases these are taken into account when calculating the gross
profit.
ACTIVITY 7
Make a list of all the overheads that you think your business may incur.
OVERHEAD ESTIMATED COST

Compare your list with mine and see if there is anything that you may have left out.
Accounting Costs: VAT and TAX returns

Marketing & Promotions
Bad Debts
Credit card commission: If you offer a credit card facility to your customers, the bank charges
a percentage of the income.
Bank Charges: withdrawals, monthly service fees etc
Postage
Depreciation: Certain assets deteriorate while you se them, for tax purposes
formulas are used to determine the value of the item on a yearly
basis. If you buy a car for R100 000.00 each year you drive it, it
becomes worth less.
Entertainment & Staff Entertaining customers, tea and coffee for staff
Refreshments
Municipal Bills: Water and Electricity
Insurance See section on insurance
Internet & Subscriptions: Monthly subscription fees to a service provider or trade magazines
Licences: Liquor licences, PDP or other licences a business may require
Legal Fees: This should not be a monthly expense for a small business, but may
be required from time to time.
Maintenance: Equipment and premises maintenance
Motor Vehicle Costs: Petrol and Oil
Servicing and maintenance
Tyres
Printing and Stationery: No matter how small your business you will need stationery
Rent/Bond: For your premises
For equipment such as photocopy machines etc.
Staff Costs: Salaries and Wages
Overtime, transport, staff functions, bonuses
Security
Levies: Workmen’s’ compensation, UIF, SDL
Communication: Telephone, Fax, Cell Phone
Travel: Any travel expenses that may be incurred by yourself or staff
Contingency: Savings for ‘in case’
Owners Salary: This is usually the last salary that gets paid
Loan Repayments: Borrowed capital or cash flow, credit cards etc.
Update your list if you have left anything out.

This makes up your OVERHEADS!
BREAK-EVEN POINT
Ever heard of a Break-even Point? A businesses break-even point is the amount of money the
business needs to generate from sales in order to pay for all its overhead expenses. At the break-
even point the business is neither making a profit nor a loss, it is simply covering costs.
Why is it important to know what your breakeven point is? Well it allows you to know exactly how
much money you NEED to make each month to keep the ‘wolf’ from the door.
It is a vital piece of information and should be seen as confidential information. In other words it
is not something you should need to inform everyone about.
How do you calculate the break-even point in a business?
Add all your overheads together

Divide your overheads by the Gross profit – your costs price.
This will give you your break-even point.
Vuyelwa wants to make pancakes and sell them at the local craft market,
Her overheads would be:
Rental for the stall R 60.00 (for the day)

Gas for her stove R 150.00
Taxi Fair to the market R 30.00
Rental for a pergola tent R 100.00
________
R 340.00 Overhead Expenses
Cost to make Pancakes:
Flour R 35.00
Eggs R 25.00
Sugar R 15.00
Cinnamon R 8.00
Lemon Juice R 12.00
Wax Wrap R 10.00
Oil R 16.00
_______
R 121.00 Cost for 200 pancakes
Cost per unit: R 121.00 / 200 = 0.60c per pancake
Selling Price for the Pancakes: R 3.00 per pancake
340___ ___340___
3.00 -0.60 = 2.4 = 141.666 (142)
So Vuyelwa’s break-even point is 142 pancakes
In other words she needs to sell 142 pancakes to cover her cost.
Now depending on the number of people that visit the craft market, this may or may not be a
good way to make money.
Perhaps she should think about other types of food, and try a new cost analysis.
ACTIVITY 8
Working in groups of 4, do some research, decide on a product you think you could sell. Go to the
shops and cost the ingredients you will need to make your product.
Decide on a selling price for your product and using the overhead analysis above; find your break
even point.
Once you have done that analyse your break-even point and make a decision on whether you
think your idea is viable or not. If not, then go back to the beginning of this Activity and try again
until you have a viable product.
You have to be reasonable when you determine your selling price, remember people will not pay
outrageous prices for goods.
CASH FLOW
Cash flow is the money (cash) that moves in and out of your business. Cash flow is NOT profit, it
would include profit but it is not entirely profit, it will include the monies needed to pay overheads
as well as monies used to purchase new stock, if there was not any money coming into the
business there would not be any funds available to pay for expenses.
It is important to keep a close eye on the cash flow of your business.
Lets have a look at an example:
When you are employed, you can usually work out exactly how much money you will be bringing
in each month, wether you be paid weekly or monthly is irrelevant, you still know that on X date
you will be paid X amount of money. With this information you can plan your month’s finances
accordingly.
Example:
Vusi earns R 5 000 a month. He knows that on the 25th of each month his employer is going to put
R 5 000.00 into his bank account. So Vusi works out his budget, he knows what he can spend
Rent: R 1 500.00
Telephone: R 100.00
Electricity & Water: R 400.00
School Fees R 200.00
Taxi Fares R 250.00
Groceries R 2 000.00
R 4 450 .00
At the end of the month Vusi knows he has R 650.00 left for emergencies, so if he needs money
during the month he knows he has money he can use.
When you are an entrepreneur running your own business you have no guarantees as to the
money you will or won’t be getting so how do you budget?
Well you would still list all your expenses and at the end of the month you will see how much
money you will get in. If your business does well you will have enough money to pay all your
expenses including your salary and there will be money left in your account, your business is then
solvent and running at a profit. In the beginning few businesses are able to run so smoothly. So
you get to the end of the month, pay your expenses and staff salaries. When it comes to paying
the expenses you realise that you have no money left in the bank. You are not bankrupt because
you have your stock and your expenses have been paid but you have no cash for emergencies.
There are times in all businesses when there is just not enough money at pay all the accounts
wether you may want to or not. The first thing to keep in mind is that not all expenses are the
same, certain expenses are vital, they simply have to be paid, electricity, water, rent, if those
expenses are not settled timeously you may not be in a position to continue your business, so
those are the expenses you settle first. For the rest of your bills there are a few tips on how to
proceed.
1. Communicate with the company or individual you need to pay. Ignoring their calls
or pretending you are not in if they come see you will only exacerbate the problem.
Be honest telling them that you are having a cash flow problem but that they will be
paid as soon as you are able.
2. Ask for payment terms, if you owe a lump sum ask if you could pay it of over a
period of time, in smaller payments.
3. Try to find common ground, find out if there is a need that they might have that
you could help with (barter system).
4. DO NOT make promises you can’t keep. Don’t promise the cheque will be there on
Friday when you are not 100% certain that you will be able to pay on Friday, rather
be honest and say you are not sure but you will try, should this not work out, call
them timeously and let them know that there is a complication.
5. Don’t overextend your self, don’t agree to pay or actually pay more than you can
realistically afford, overextending will only jeopardize your cash flow even further.
6. Credit cards are NOT the answer!
The temptation to use your credit cards to alleviate financial stress is huge, just pull out the card
and pay the bill. The problem is that it is a short term solution, you still have to pay the money
back to the bank. You are not removing the problem just transferring it. Your supplier is waiting
for money which you pay back with (normally) between 5 – 10% interest on late monies. Credit
card companies usually charge in the vicinity of 25% interest.
Credit cards look attractive because they are:
 simple to use,
 the money is available immediately,
 the monthly payments look low
The reality of the situation however is:
 Interest rates are really high
 Debt is not paid just transferred to another account
 Next months cash flow is now hampered by having to service extra debt
 Gives you a false sense of security
Constant use of a credit card for business can lower your credit rating thus making it more
difficult for you to get access to credit or lower interest rates.
MODULE 21– TAX
(SO 3) Explain the financial aspects involved in running an SMME
MODULE OUTCOMES
5. The types of contract that an SMME could enter into are named and a contract
wording is interpreted and explained in plain language.
6. The tax responsibilities of an SMME are explained and an indication is given of
when a business is liable for each form of tax
All businesses who have any employees what so ever are required to register for UIF, SDL and
Workman’s Compensation.
1. UIF: If you employ any person on a full time/permanent basis you are required to
register your business and that person for UIF. All employees pay a contribution of 1%
of their annual salary to the UIF (Unemployment Insurance Fund), the company is
required to pay an addition 1% on behalf of the employee. This fund is run by the
government and should the employee become unemployed due to maternity,
retrenchment or being fired, they can apply to the fund, and they will receive 45% of
their monthly salary for a period of no longer than 6 months, until they are able to find
new employment. Persons who willing give up their employment are not eligible to
claim from the UIF. It is not a social grant!
2. SDL: All businesses are required to pay a monthly contribution to the
SDL(Standard Development Levy). This is also a fund run by the government for the
upliftment and education of employees. If a company offers educational incentives for
it’s employees like sending them on courses to further their education the company
may claim from the SDL.
3. WORKMAN’S COMPENSATION: The workman’s compensation fund is paid on a
monthly basis by the business. This is also a fund run by the government and protects
the employer while providing much needed support to employees. Should an
employee by injured during working hours, (in the line of work), and need medical
attention, the employee can claim from workman’s compensation. The fund will cover
all medical expenses incurred by the employee. It thus protects the employer from
having to cover the bills and helps the employee who may not have medical aid to
afford medical attention.
SATISFYING SARS – SOUTH AFRICAN REVENUE SERVICES
American President – Benjamin Franklin’s quote ‘…in this world nothing is certain but death and
taxes’ is as true today as it was then. Almost since the beginning of time or at least the beginning
of civilisation, taxes have been an undeniable fact. Nothing has changed except maybe the tax
scales.
All South African citizens from the poorest of the poor, to the richest of the rich, are required to
pay tax in one form or another. Tax is the governments number one source of income. The
income tax act of 1962 lays out a sliding scale for tax. This means that the more you earn the
higher the percentage of personal tax you pay. Over the years Trevor Manual (Minister of
Finance) has increased the taxable ceiling thus increasing the tax burden on the wealthy but
providing much needed tax alleviation for the poor. Companies and close corporations pay a flat
rate of 35% of their total profit in tax.
Income tax is assessed on all taxable income in any one tax year. The tax year usually runs from 1
March to 28 February of each year. The income tax payments for businesses and provisional tax
payers are usually split up over two payments per year (every six months).
What is taxable income?
Taxable income is all income (cash) that the business makes in profit, in other words the extra
money it makes, over and above running costs. Below is a list of expenses that may be deducted
from the taxable income of individuals, and businesses. (This is a brief list for further details please
see the 2008 tax laws.)
 Depreciation which is wear and tear on vehicles, machinery and articles used in the
business.
 If you run your business from home you may deduct part of your home expenses, e.g.
rental, telephone, rates, and cleaning costs. These deductions however can only be a
portion of the total bill.
 Any expenditure on scientific research done with the express purpose of development of
the business
 Travelling expenses incurred while on business trips (petrol or airfares, hotel
accommodation etc)
 Development and/or registration of a patent, trademark, copyright or design.
 Any rental of land, buildings, machinery, trademarks, designs or royalties that form an
integral part of your business.
 Interest paid on business loans.
 Pest control and maintenance on buildings from which the business operates.
 Expenditure on improvements or renovation of the buildings leases as business premises.
 Bad debts, money that is owed to you by debtors who are unable to make the payments.
 Subscriptions to trade/professional associations associated with your line of work.
 The cost price of your trading stock.
Certain expenses cannot be deducted from your annual taxable income. Below is a brief list of
these non-deductible expenses:
 Capital expenditure (the purchase of new machinery and or buildings)

 Personal domestic expenditure (new furniture for your house, groceries, personal vehicle
etc)
 Expenses you plan to claim back from your insurance or other third parties.
VAT – VALUE ADDED TAX
All businesses with an annual turnover that exceeds ____________________ are required to
register for and pay VAT. VAT is the tax on the value added to a product. The value added would
be the value of the product plus the profit. In other words you would only pay tax on the profit
you make from any item. Lets look at the table below as an indication of how VAT is paid.
(taken from: Entrepreneurship and New Management ventures, Van Aardt et al 2000:pg 239)
Selling price Value added VAT payable

Manufacturer
manufactures and sells R 1 000.00 R 1 000.00 R 140.00
the product
Wholesaler resells its R 1 400.00 R 400.00 R 56.00
Retailer resells it R 2 000.00 R 600.00 R 84.00
TOTAL R 2 000.00 R 280.00
The receiver of revenue will supply you with a VAT return form on a bi-monthly basis. This form
has to be filled in and returned with the relevant payments before the 8th of the month.
When you purchase stock or raw materials for your business you are entitled to deduct the VAT
you paid on the item. This is called input VAT; it is the VAT that you paid. You then resell the item
including VAT. Your customer pays the VAT to you; you are then required to pay this amount on
to the receiver of revenue.
For example:
You purchase bread from Sasko to sell in your shop.

Sasko sells you the bread at R 5.00 per loaf. (this five rand includes 14% VAT)
You then want to make a profit of R 1.00 on each loaf you sell.
Now we have to take the VAT into account.
We said that the R 5.00 you pay per loaf includes the VAT so we have to minus the 14% because
we can claim this back from the tax man.
R 5.00 / 1.14% = R4.38 a difference of R 0.62c.
Therefore you can claim 70c back for each loaf of bread you buy. (Sasko will pay that to the tax
man)
Now you want to make R 1.00 profit on each loaf you sell, so you add R1.00 to your cost price of R
4.30.
R 4.38 + R 1.00 = R 5.38, then you still need to add the VAT you will have to pay:
R 5.38 + 14% = R 6.14
You now sell the bread at R 6.14 per loaf.
You buy the bread at R 5.00 per loaf

You sell the bread at R 6.14 per loaf
The bread costs you R 4.30 per loaf
You make a profit of R 1.00 per loaf
The tax man gets R 0.84c per loaf.
The 70c you pay in VAT goes into your input VAT.
The 84c you charge in VAT goes into your output VAT: If you buy 10 loaves:
Input vat = 10 x 70c = R 7.00

Output VAT = 10 x 84c = R8.40
Total VAT owing by you = R1.14 that is the amount you pay the tax man.
PAYE – PAY AS YOU EARN
Essentially PAYE is the personal tax payable by your staff to the receiver of revenue on a monthly
basis. However the burden of actually paying the tax falls on the employer. The employer needs
to deduct the correct amount of money (as stipulated by the income tax tables, available from
SARS) from the employees monthly salary and transfer this money to the Receiver of revenue.
Employees who earn less than R __________ per month are not required to pay personal tax.
There are 3 forms that employers are required to fill in with regard to income tax.
1. IRP -2 – this form must be completed by all employees, giving their full personal
particulars
2. IRP-4 – this form is used to fill in the monthly return of tax as deducted from the
employee as stipulated by the tax scales.
3. IRP-5 – this form reflects the annual earnings, pension, PAYE UIF, and any other perks
or benefits from each employee. The IRP5 is done annually at the end of February.
All employers are required to have a copy of the IRP10 forms, these are commonly refered to as
the tax tables or tax scales. They give you a list of income and the relevant taxable amount for
each level of income.
For example if you were to earn R 10 000.00 per month you would pay 13% of your salary to tax
i.e.
R 1 300.00. As stated earlier this is a sliding scale so while someone earning R 10.000.00 may pay
13%, a person earning R 5 000.00 would be exempt from tax and a person earning R 50 000.00 per
month would pay 35% tax ( R 17 500.00 in tax).
Other legal requirements to consider would be the Basic Conditions of employment, these can be
downloaded from the Department of Labour or collected from your nearest Labour office.
The Basic Conditions of Employment stipulates all the laws that govern employees and employers
and endeavours to protect the rights or both. Minimum wage, working hours, overtime rate,
leave, sick leave, disciplinary actions and termination of employment.
A business needs to appoint a public officer to represent it for tax purposes. Companies and
corporations require the services of an auditor in addition to the public officer because their books
need to be audited for tax purposes.
ADDITIONAL REQUIREMENTS
Insurance:
Although insurance is not actually a legal requirement for owning a business it is definitely
necessary.
One of the rules for insurance would be ‘if you can’t afford it, you really need it”. Insurance may
seem like a waste of money that you may or may not get back. Insurance is there for the
eventuality that something does go wrong, and in South Africa the crime rate is high so it is
definitely advisable to have some form of insurance. Shop around, contact a number of insurance
companies, you will be surprised at the differences between the cost of their policies. Check the
policies carefully because some may seem cheaper but the benefits are substantially less.
There are various forms of insurance:

 Personal accident and life insurance
 Fire and general property insurance
 Burglary insurance
 Plate-glass insurance
 Goods in transit
 Money in transit
 Vehicle insurance
Your insurance broker can advise you.
Contracts:
All businesses will at some point be involved in a contract, be it an employee contract or a contract
between yourself and a supplier or customer.
It is advisable to draw up employment contract with all employees, contracts cannot stipulate
conditions that are in contravention of the employment act but they can protect both the
employer and employee.
Contracts between your business and other businesses to either purchase or supply stock are also
there to protect both sides of the deal. It is advisable to contact an attorney should you require a
contract drawn up or advice before you enter a contract.
ACTIVITY 9
1. Find out what the minimum amount of income is before you have to register for tax.
Privately & Business.
2. Decide on the type of business you would like to form for running your business. Keep in
mind what the business is selling and what the different requirements are.
3. Make a list of the legal requirements and how you plan to satisfy them.
4. Write an analysis on what type of equipment you will need
5. Decide on where the business will be located.
6. Are there any similar businesses in the area? Are there enough customers to satisfy both
businesses?
DAILY RECORD
SPECIFIC ASSESSMENT
SECTION TITLE MODULE ACTIVITIES ASSESSMENT DATE COMPLETED
OUTCOME CRITERIA
1. Potential for an SMME, 1.1
SMME’s SO1 AC 1&2
Personal Assessments 1.2
2. Training Schedules SO1 AC 3 2
3. Needs Assessments SO1 AC 4,5 & 6 3
4. Networking SO1 AC 7 & 8 4
5. Risks associated with
SO2 AC 1,2,4,5 & 6 5
running an SMME
6. Insurance for SMME’s SO2 AC 5 & 6 6
7. Financial Function 7
SO3 AC 1,2,3 & 4
8
8. TAX SO3 AC 5 & 6 9
SUCCESS FACTORS
(SAQA US ID 110507)

Identify and explain the typical success factors for SMME promotion and a range of other local economic development strategies
and tools
110507 Identify and explain the typical success factors for SMME promotion and a range of other local economic
development strategies and tools
SGB Economics
FIELD SUBFIELD
Field 03 - Business, Commerce and Management Studies Finance, Economics and Accounting
Undefined Regular Level 5 12
REGISTRATION REGISTRATION START DATE REGISTRATION END DATE SAQA DECISION NUMBER
STATUS
2011-01-23 2014-01-23

This Unit Standard is intended for people who are, or seek to be, active in the local economic development context in South Africa. It
introduces the learner to measures of success for typical local economic development strategies and tools. It provides an
understanding of their application through studying SMMEs.
People credited with this Unit Standard are able to:
 Define the concept of success in the local economic development environment and identify and discuss a range of factors that
contribute to success
 Identify the success factors relevant to a specified SMME promotion project and present them in a report
 Apply a success factor analysis process to some other local economic development strategies and tools.
It is assumed that learners are competent in Communication at NQF Level 4.
UNIT STANDARD RANGE

 Success factors include: available resources, skills in place, key stakeholder involvement, political will, sustainability
 Strategies and tools include (the categories of) industrial recruitment and place marketing; investment promotion (domestic and
foreign); export promotion; local and regional trade; human capital development and capacity building; direct interventions;
community development; advisory and development centres.
SPECIFIC OUTCOME 1
Define the concept of success in the local economic development environment.
OUTCOME NOTES
Define the concept of success in the local economic development environment and identify and discuss a range of factors that
contribute to success.
ASSESSMENT CRITERIA
1. The concept of success is defined in the local economic development environment.
2. Factors that contribute to success are identified in terms of the local economic development environment.
3. The link between these factors and a successful outcome is discussed by using an example of a local economic development
project or programme.
SPECIFIC OUTCOME 2
Identify the success factors relevant to a specified SMME promotion project.
ASSESSMENT CRITERIA
1. Information on what constitutes success in the case of a specified SMME promotion project is gathered from a variety of sources,
stakeholders and role players.
2. A list of relevant success factors is compiled and how each will be measured is agreed with reference to quantitative and
qualitative assessment criteria.
3. A development plan for taking corrective action to achieve a greater level of success is compiled and presented in the form of a
report with recommendations to encourage future success.
SPECIFIC OUTCOME 3
Apply a success factor analysis process to some other local economic development strategies.
OUTCOME NOTES
Apply a success factor analysis process to some other local economic development strategies and tools.
ASSESSMENT CRITERIA
1. A success factor analysis process is defined by drawing an annotated diagram.
2. The selected local economic development strategies and tools are described in terms of the specific local economic development
goal(s) they are expected to achieve.
3. The success factor analysis process is applied to the selected local economic development strategies and tools and the findings are
compiled and presented in the form of a report with recommendations to encourage future success.
1. Anyone assessing a learner against this Unit Standard must be registered as an assessor with the relevant ETQA, or with an ETQA
that has a Memorandum of Understanding with the relevant ETQA.
2. Any institution offering learning that will enable achievement of this Unit Standard or will assess this Unit Standard must be
accredited as a provider with the relevant ETQ, or with an ETQA that has a Memorandum of Understanding with the relevant ETQA
3. Moderation of assessment will be overseen by the relevant ETQA according to the moderation guidelines in the relevant
qualification and the agreed ETQA procedures or with an ETQA that has a Memorandum of Understanding with the relevant ETQA
4. Therefore, anyone wishing to be assessed against this Unit Standard may apply to be assessed by any assessment agency, assessor
or provider institution that is accredited by the relevant ETQA or with an ETQA that has a Memorandum of Understanding with the
relevant ETQA.

 Budgeting and/or financial analysis
 Measures of performance, impact etc. and the time value of money
 Nature of own work context in terms of the various success factors i.e. contextual awareness
 Details of local economic development projects and programmes and their histories
 The assessment process and rules of evidence
 Benchmarking and best practice and its application to local economic development.

N/A

N/A

Identify and solve problems in which responses display that responsible decisions using critical and creative thinking have been
made by, e.g.
 Identifying and explaining the typical success factors for SMME promotion and a range of other local economic development
strategies and tool according to the assessment criteria for specific outcome:

Work effectively with others as a member of a team, group, organization and community by, e.g.
 Compiling a list of relevant success factors and how each will be agreed according to assessment criterion:
A list of relevant success factors is compiled and how each will be measured is agreed with reference to quantitative and qualitative
assessment criteria.
 Compiling and presenting a development plan for corrective action according to assessment criterion:
A development plan for taking corrective action to achieve a greater level of success is compiled and presented in the form of a

Collect, analyse, organize and critically evaluate information by, e.g.
 Identifying and explaining the typical success factors for SMME promotion and a range of other local economic development
strategies and tools according to the assessment criteria for specific outcome:

Communicate effectively using visual, mathematical and/ or language skills in the modes of oral and/ or written presentation by, e.g.
 Discussing the link between these factors and a successful outcome by using an example of a local economic development project
or programme according to assessment criterion:
The link between these factors and a successful outcome is discussed by using an example of a local economic development project
or programme
 Compiling and presenting a development plan for taking corrective action to achieve a greater level of success in the form of a
report with recommendations to encourage future success according to assessment criterion:
A development plan for taking corrective action to achieve a greater level of success is compiled and presented in the form of a
 Defining a success factor analysis process according to assessment criterion:

A success factor analysis process is defined by drawing an annotated diagram.
 Describing the selected local economic development strategies and tools in terms of the specific local economic development
goal(s) they are expected to achieve according to assessment criterion:
The success factor analysis process is applied to the selected local economic development strategies and tools and the findings are
compiled and presented in the form of a report with recommendations to encourage future success.

Core 36438 National Certificate: Local Economic Development Level 5 Reregistered 2010-01-23
MODULE 22 –Success
SO1 Define the concept of success in the local economic development environment.
MODULE OUTCOMES
1. The concept of success is defined in the local economic development environment.
2. Factors that contribute to success are identified in terms of the local economic
development environment
3. The link between these factors and a successful outcome is discussed by using an
example of a local economic development project or programme.
What is success? How do we define success? To different people success means different things,
is it having a good education, a happy life, someone to love or is it being financially rich? Well in
the grand scheme of life we are lead to believe that success is to be wealthy! So, if your business
is not making you rich is it a failure? Do we measure success against that bar that is Donald
Trump? NO. In a small business venture success is when you are able to be self sufficient. When
your company makes enough money to pay its bills and support you in a comfortable fashion. You
don’t have to have the keys to Grace Land to be successful.
What does every businessman/woman need to succeed?
Guts: Guts refers to instinct, an irresistible desire to have your own business, a dedicated
commitment to attain a goal that you have set. One of the main factors that can
help you to achieve this goal is to enjoy what you are doing. Don’t start a business
just because it’s something to do and because it provides an income; if you want to
start your own business make sure it’s something you are passionate about.
Brains: An education is always worthwhile, if you have any way to study, grab it with both
hands and don’t let go, however being ‘book’ smart does not necessarily mean you
have the brains to run a company. In flying they call it flying by the seat of your
pants, an innate instinct, combined with knowledge of the business you are trying
to run. Use common sense, experience and brainpower to make the right
decisions.
Capital: Without capital you have no where to go. It is best if you have your own money to
invest but short of that a loan with a good interest rate and enough running capital
to keep your business running in the positive is a MUST!
According to an article in the Gauteng Business 21 June – 5 July 2005, another important key to
success in business is ensuring that your business ‘books’ are in order. That your tax us up to day
and everything balances. Having your books in order allows you to apply for government tenders,
as well as ensuring that you have a handle on the pulse of the company. There are NO nasty
shocks awaiting you. If there is a down turn in business you will immediately be aware of it and
pre-emptive steps can be taken to secure the finances.
A business owner must also be aware of his/her limitations, because a small business usually has
limited staff the owner must do everything him/herself. As the owner you are responsible for all
the functions of the business from Accounting, stock control, HR, marketing, technical know how,
production manager, procurement manager, wage clerk!
A survey conducted in 2007 reveals that a range of resources give small businesses a competitive
edge. One of the greatest of these being technology, availing yourself of the latest technology and
technological advances can give your business the competitive edge it needs to survive.
In the survey it was discovered that the use of computers directly linked to the enhanced
competitiveness of the business. Access to high speed internet links such as ADSL, HSDPA, 3G or
wireless also played a key factor, businesses that have access to the internet are more able to seek
advice and keep abreast of new developments. Having your business listed on the internet is also
highly advisable since many people nowadays search on line.
Using software packages such as Accounting software can streamline the accounting process in
your company and save you a huge amount of time.
Back to knowing your strengths and weaknesses, according the Melt van der Spuy, director of
business banking at Standard Bank, businesses that make use of professional and mentoring
services have a more strategic focus on the business as opposed to and operation focus.
….”he is working on the business, as opposed to working in the business.”
(www.sabusinessplans.co.za)
One of the greatest concerns for small business is not however planning but usually ‘cash-flow’
and/or Crime.
While the above factors play a role and influence your business the key factor for success
according the numerous sources is what is called the ‘X-Factor’ they dynamic leadership ability of
the entrepreneur, his prowess in the business area, the taking of calculated risks and charm and
charisma. Owning a business is NOT for sissies!
MODULE 23 – Success factors for a fast food takeaway.
SO2 Identify the success factors relevant to a specified SMME promotion project.
MODULE OUTCOMES
1. Information on what constitutes success in the case of a specified SMME promotion
project is gathered from a variety of sources, stakeholders and role players.
2. A list of relevant success factors is complied and how each will be measured is
agreed with reference to quantitative and qualitative assessment criteria.
3. A development plan for taking corrective action to achieve a greater level of success
is compiled and presented in the form of a report with recommendations to
encourage future success.
MODULE 24 – Success factors
SO3 Apply a success factor analysis process to some other local economic development
strategies.
MODULE OUTCOMES
1. A success factor analysis process is defined by drawing an annoted diagram
2. The selected local economic development strategies and tools are described in terms of
the specific local economic development goal(s) they are expected to achieve
3. The success factor analysis process is applied to the selected local economic development
strategies and tools and the findings are compiled and presented in the form of a report
with recommendations to encourage future success.
Critical Success Factors
Critical success factors are activities that are needed to ensure that your business is a success. It is
basically a list of things that you need and need to plan and think about in order for your business
to succeed, below is a list of things that could be on your list. Critical success factors are not the
same for all businesses; some businesses may have more critical factors than others. Keep in mind
the critical factors are items that are imperative to the running of your business. Each of these
factors should be measurable, if you measure an area it becomes a focus. E.g. you run your fast
food outlet and you sell your goods everyday but you never stop to work out how many
hamburgers you sell, how many toasted sandwiches you sell and how many salad rolls you sell. If
you knew that you sold 20 burgers, 35 toasted sandwiches and 10 salad rolls how would this help
you? Well you should have done your cost analysis so you will know how much each product costs
to make so you will be able to determine which of your sales are the most profitable and which
one makes the most money. Secondly you could then focus on the sales of the salad rolls, you
could decide that for the next month you are going to do a promotion on salad rolls, you increase
your advertising and encourage your staff to encourage customers to buy salad rolls. At the end of
the month you can go and tally your sales and see if your marketing worked, if your sales
increased. With this information you could also determine whether you got new customers with
your salad rolls or if the burger sales were down significantly you could determine that burger
customers were now buying rolls. If your sales don’t improve then perhaps it’s time to ditch the
salad rolls and try something else?
Money: Income, profit and a positive cash flow.

Your future: Securing new customers and distributors
Customer satisfaction: Ensuring your customers are happy.
Quality: Setting and maintaining a high level of service.
Product/service development: Keeping up to date with new trends and implementing new
ideas to increase your customer base and keep old customers
happy.
Intellectual capital: Increasing profitable products.
Strategic relationships: New business sources, products and income.
Employee attraction & retention: Attracting qualified employees and keeping them happy.
Sustainability: Your ability to keep business running smoothly
Success factor analysis? Let’s try that again in ENGLISH!!!! Simply put a success factor analysis is a
way of analysing (studying) various aspects of your business and trying to find the best way to
correct any problems you may be encountering, or simply streamline processes ensuring that your
business operates as effectively as possible thereby generating enough money to support itself.
One of the most well known success factor analysis methods is called the balanced scorecard
method.
This method of analysis was developed by Professor Robert S. Kaplan, David P. Norton, it is a
system used to bring business activities in line with the vision and strategy of the organisation. In
doing this you will improve internal and external communications and keep an eye on the
company’s performance against a given set of goals.
When we make use of this method of analysis we look at 4 critical areas of business.
Learning and growth: here we look at any businesses key keepers of knowledge; the staff. In all
businesses this is a key area, but for some small businesses more so. Let’s say you run your fast
food takeaway and you are a good businessman but a lousy chef. You employ someone to do the
cooking for you. You need and rely on this person to make sure that the food he/she prepares is
of the highest quality and it is what your customers want. If the chef becomes unhappy and his
food becomes dissatisfactory, your customers will complain and stop coming to buy from you. So
you need to keep control of the situation, ensure that your staff and happy and well trained. If
your company can afford it, send your chef for courses, make sure he knows all the latest trends
and he/she makes use of them, another key issue would be if your chef becomes unhappy and
leaves you will then have wasted the money you invested in training him/her and you will lose a
good employee.
Business process: Internal management processes must be monitored and tested to ensure
that the product/service your business offers is functional and suites the needs of your customers
and shareholders.
Customer: Is the customer happy with the product/service that you offer? Many businesses
nowadays have toll free call centres, web pages or customer complaint boxes or files. They use
the information gathered from these sources to determine wether the customer is happy/satisfied
with the service deliver of your business. Should the customer not be happy, what are you going
to do to rectify the problem?
Financial: Your companies financial details need to be available all the time, the information
in the books must be up to date and accurate. Often in small businesses where the owner is also
the accountant the workload becomes too heavy and one of the first things to be neglected is the
financial side of the business. This backlog causes delays in payments and reconciliations and can
ultimately leave you in some hot water.
This process of analysis should be an ongoing process whereby your business is continually
improving. It is not a once of plan you come up with and then file. It is a work in progress, once a
week or as often as is necessary you should look over the plan and refine areas that are not
working.
Below is a schematic diagram that depicts a basic balanced scorecard, as your business grows you
can add levels to the scheme and add more detail.
ACTIVITY
Working in groups of 3, find out about SWOT analysis. What is it and how can it be used in your
business?
Prepare a presentation on SWOT analysis to be presented to the class.
Guidelines:
 You may make a poster or design a Power Point Presentation to accompany your
presentation.
 PLEASE keep in mind this is a BUSINESS presentation, make sure you are WELL prepared
and use business manner and language.
 Any information you use must be credited in a bibliography.
ACTIVITY
John runs a fast food take away in Paarl. He employs a short order chef, an assistant chef, 2
cashiers and a janitor. He’s business has been going for 3 years now but he doesn’t seem to be
making enough money to grow his business. Recently a fast food outlet opened down the road
from John, he thinks they may be taking some of his customers but he is not sure how to get them
back. His staff are getting tired of working for him because he is always in a bad mood because
the money is tight. John works very hard and often gets home late at night, for the last 3 months
he has not been able to keep up to date with his company’s accounts so some of his creditors have
not been paid. Some of the customers say that they don’t come to John’s shop anymore because
it takes too long to get the food, John has thought about using a computer in the shop but his staff
don’t know how to use computers so they write down all the orders and put them in the kitchen.
Sometimes the orders get put on top of each other so the customer at the bottom has to wait the
longest although their order was placed first. John also often runs out of things that he needs like
rolls for burgers, he then has to run to the spar and buy rolls there.
Make a list of Critical success factors that would play a role in John’s business.
Using either SWOT or Balanced Scorecard analysis, analyse John’s business and give ideas on ways
he could improve the business.
Present your ideas in the form of a presentation, use the same guidelines as you did in the
previous activity.
Marketing
For
SMME’s

Identify business success issues for SMMEs

115816 Identify business success issues for SMMEs
SGB Generic Management
FIELD SUBFIELD
Undefined Regular-Fundamental Level 5 (National Diploma) 6
2011-10-30 2014-10-30

This Unit Standard is designed for persons who are responsible for evaluating the factors that contribute to the success of a business
and who have to give advice to businesses on how to make them more successful.
 Identifying the success factors of a business.

 Assessing the performance of a business in meeting its objectives.
 Identifying potential improvements that a business can make to be more successful.

It is assumed that learners accessing this Unit Standard are competent in:
 Computer Literacy at NQF Level 3.

 Mathematical Literacy at NQF Level 4.
 Accountancy and Communications at NQF level 4 or its equivalent.
UNIT STANDARD RANGE

N/A
SPECIFIC OUTCOME 1
Identify the success factors of a business.
ASSESSMENT CRITERIA
The factors that are contributing to the success of a business are identified and an explanation given of the role each plays in that
success.
The factors that are hindering the performance of a business are identified and an explanation given of how they are impeding the
success of the business.
The strengths, weaknesses, opportunities and threats of the business are analysed based on the real situation and a written report
made indicating how strengths and opportunities can be maximized and threats and weaknesses minimized.
SPECIFIC OUTCOME 2
Assess the performance of the business in meeting its objectives.
ASSESSMENT CRITERIA
The objectives of a business are identified using its mission and vision statements and its business plan.
The performance of the business is evaluated against its stated objectives and a written report made of the findings.
The financial status of the business is evaluated using the profit and loss account, the balance sheet, the cash flow statements and
any other financial reports and reported on in a format understandable to the client.
Performance data is communicated and discussed with client using language and formats that are appropriate for the business and
the client.
SPECIFIC OUTCOME 3
Identify potential improvements.
ASSESSMENT CRITERIA
Potential improvements are identified and their intended effects on the business are explained to the client.
An action plan to implement the improvements is drawn up giving sequences of actions and timelines for implementation.
Ways to monitor the implementation of the improvements are written into a manual so as to aid the early identification of problems
and any amendments that need to be made.

 An individual wishing to be assessed (including through RPL) against this Unit Standard may apply to an assessment agency,
assessor or provider institution accredited by the relevant ETQA.
 Anyone assessing a learner against this Unit Standard must be registered as an assessor with the relevant ETQA.
 Any institution offering learning that will enable achievement of this Unit Standard or assessing this Unit Standard must be
accredited as a provider with the relevant ETQA.
 Moderation of assessment will be conducted by the relevant ETQA at its discretion.

 Sources of information to determine operational success.
 Basic business principles.
 Business evaluation techniques.
 Political, social and economic factors affecting the business community.
 Technological and scientific innovations affecting the business community.

N/A

N/A

Identifying & solving problems in which responses display that responsible decisions using critical and creative thinking have been
made when identifying how a business can improve its effectiveness and profitability.

Working effectively with others as a member of a team, group, organization when looking at the way the business functions and
eliciting information from staff members.

Organising and managing oneself and one`s activities responsibly and effectively to collect data correctly and to write reports and
recommendations.

Collecting, analysing, organising and critically evaluating information when demonstrating competence in all aspects of this Unit
Standard.

Communicating effectively using visual, mathematical and/or language skills in the modes of oral and/or written persuasion when
writing reports.

Using science and technology effectively when writing reports and making recommendations using the computer.

Demonstrating an understanding of the world as a set of related systems by recognising that problem-solving contexts do not exist
in isolation when seeing that poor performance in one area of the business effects the profitability and viability of the business as a
whole.

Elective 48886 National Certificate: Business Advising Level 5 Reregistered 2010-10-30
Elective 59550 National Certificate: Agricultural Extension Level 6 Registered 2011-02-06
MODULE 25
SO 1 Identify the success factors of a business
MODULE OUTCOMES
1. The factors that are contributing to the success of a business are identified and an
explanation given of the role each plays in the success.
2. The factors that are hindering the performance of a business are identified and an
explanation given of how they are impeding the success of the business.
3. The strengths, weaknesses, opportunities and threats of the business are analysed based
on the real situation and a written report made indicating how strengths and opportunities
can be maximized and threats and weaknesses minimized.
This SO is covered in the previous three modules.
Financial Assessment of a business.

SO2 Assess the performance of the business in meting its objectives.
MODULE OUTCOMES
1. The objectives of a business are identified using its mission and vision statements and its
business plan.
2. The performance of the business is evaluated against its stated objectives and a written
report made of the findings.
3. The financial status of the business is evaluated using the profit and loss account, the
balance sheet, the cash flow statements and any other financial reports and reported on in
a format understandable to the client.
4. Performance data is communicated and discussed with client using language and formats
that are appropriate for the business and the client.
Mission and Vision Statements:
A mission statement is a short description of a company or organisation’s purpose. It should

provide the answer to the question, ‘Why do we exist?”
It defines the company’s purpose, for people who are part of the company and outsiders.
A vision statement focuses on the company’s future, it gives an outlook and what the company
hopes to achieve, its goals.
There is no hard and fast rule regarding what your mission or vision statements should be, they
vary greatly from company to company there are however a few guidelines that should be
followed when writing a mission statement for your company.
The following are guidelines, they don’t have to be put in the same order, keep in mind the
difference between a mission and vision statement, a vision statement should be in the present.
You should include the values of your company, your primary target audience, what you offer in
terms of products or service. The company’s pledge towards its customers and the objectives is
employs to ensure it accomplishes its mission.
 What needs or opportunities to we address?

 How are we going about addressing these needs? What do we do?
 What values and principles do we employ to guide our efforts?
ACTIVITY
Look through the mission statements provided, write a short report on what you think the
company does what its policy towards customers is and if you think it sounds plausible. Does the
mission statement answer the necessary questions?
UNDERSTANDING FINANCIAL STATEMENTS
Understanding the financial statement of a company is not as difficult as you might think. During
the financial year of a company, a comprehensive record of all financial transactions is kept. This
can be done by the company owner, an accounting clerk or you could out source it to an
accountant. The financial year usually runs from 1 March to 28 February of the following year.
Over the last couple of years accounting has been made simpler due to the advent of accounting
software packages. Very few companies still keep manual books. (Please note that depending on
the type of business you run will determine wether you need to have your books audited or not.
For a regular partnership, CC or sole proprietor you will not need audited books.)
At the end of the financial year, the information gathered is used to prepare the businesses
financial statements. A financial statement usually comprises of a balance sheet, income
statement (this shows income and expenses), owners equity and a cash flow statement. Let’s
have a closer look:
Balance Sheet: The balance sheet shows everything the company owns (assets), everything
the company owes (liabilities) and the value of the owners equity or capital.
The balance sheet is like a photo of the financial position of a company or
organisation.
Income Statement: The income statement is a breakdown of all the expenses occurred during
the year as well as all the income generated throughout the year. It shows
the difference between the income and expenses and shows wether the
company is making a profit or running at a loss.
Statement of This statement shows the amount of earnings that has been accumulated
Retained Earnings: since the company opened. The amount of profit the company has made
since it’s inception, the previous years earnings is shown as the opening
balance for this year and this years earnings is then added to it and totalled.
This total will then be the opening balance for the following year.
Statement of The statement of cash flow shows where all the cash the company received
Cash Flow for the year comes from as well as all the expenses paid for the year.
ACTIVITY
Look at the attachments; let’s go through the financial statements of the various companies.
Choose one of the companies and write a short report and what you think the financial position of
the company is, are they running well, are they making a profit? Do they seem to be paying their
bills comfortably or do you think there are cash flow problems? If you have concerns give one or
two ideas of how you think these problems could be solved.
Prepare a written report giving your ideas, use appropriate language, including the correct
terminology and make sure you have checked your document for spelling errors and typo’s.
MODULE 26 – Business Action Plan
SO3 Identify potential improvements
MODULE OUTCOMES
1. Potential improvements are identified and their intended effects on the business are
explained to the client.
2. An action plan to implement the improvements is drawn up giving sequences of actions
and timelines for implementation.
3. Ways to monitor the implementation of the improvements are written into a manual so as
to aid the early identification of problems and any amendments that need to be made.
ACTIVITY
Using the information from the last 3 activities build a report and proposal for John’s company,
attached is a copy of John’s financial statements, use these in conjunction with your previous
assessment of John’s company and write a report proposing changes that John can make to
improve his company’s image and viability while keeping his staff happy and making a profit.
This report must be in Word format so that John can use it as a day to day business guide.
Problems must be listed and solutions provided under each problem. Where possible provide
time frames for each change.
For this activity you can work in groups of 3, each member of the group MUST contribute to the
end product.
Prepare a written report giving your ideas, use appropriate language, including the correct
terminology and make sure you have checked your document for spelling errors and typo’s.
You will then give this report to the class in the form of a presentation.

Explain marketing for SMMEs

115857 Explain marketing for SMMEs
SGB Generic Management
FIELD SUBFIELD
Undefined Regular-Fundamental Level 5 6
2011-10-30 2014-10-30

The person credited with this Unit Standard is able to define marketing pertaining to SMMEs and how market segmentation,
positioning and the competitive environment impacts of the SMME. They will also be able to seek or resolve customer service
problems in SMMEs
This will also help the learner to be able to provide a better quality service to the SMMEs they serve

 Identifying and defining marketing within the SMME environment
 Describing market segmentation and marketing segmentation processes for SMMEs
 Explaining positioning strategies for chosen segments
 Explaining the nature and the extent of the competitive environment for SMMEs

It is assumed that learners are competent in:
 Computer Literacy at NQF Level 3
 Mathematical Literacy at NQF Level 4
 Accountancy and Communications at NQF level 4 or its equivalent
UNIT STANDARD RANGE

 Marketing including all forms of marketing communications, direct marketing and relationship marketing, sponsorship, event
marketing, sales promotions, public relations and alternative strategies
 Marketing principles including marketing definition, marketing concepts, marketing planning, macro marketing, micro marketing,
economic development, marketing mix, marketing promotion, selling, storing and buying
 Stakeholders will include customers, suppliers, the public, employees, management, consumer councils, local government,
shareholders, trade unions and financial institutions.
SPECIFIC OUTCOME 1
Identify and define marketing within the SMME environment.
ASSESSMENT CRITERIA
Marketing for SMMEs is explained and all the elements of marketing are defined in line with industry norms.
The marketing function for SMMEs is put into context with other organisational/business functions.
The principles of marketing for SMMEs are explained in line with industry norms.
Practical marketing processes for SMMEs are identified and explained in line with industry standards and processes.
SPECIFIC OUTCOME 2
Describe market segmentation and market segmentation processes for SMMEs.
ASSESSMENT CRITERIA
The purpose and types of market segmentation in SMMEs are listed and explained according to standard practice.
Market segmentation implications for SMMEs are identified and described in line with industry practices.
The potential for segmentation is assessed and explained in line with company and industry standards.
The segmentation basis for the SMME in question is identified and explained and includes geographic, demographic, psycho graphic
and behaviouristic, end use and operational basis.
Profiles for market segmentation are explained and identified in line with existing profile types.
SPECIFIC OUTCOME 3
Explain positioning strategies for chosen segments.
ASSESSMENT CRITERIA
Target market segments for SMMEs are identified and explained as per industry norms.
Position variables in SMMEs are identified and explained for each target market.
Product positioning strategies to be communicated to the SMME target market are identified in line with strategic positioning
methodologies.
SPECIFIC OUTCOME 4
Explain the nature and the extent of the competitive environment for SMMEs.
ASSESSMENT CRITERIA
Issues surrounding the competitive environment for SMMEs are identified and explained according to historical data.
Strengths, weaknesses, opportunities and threats of the competitive environment for SMMEs are identified and explained based on
factual data.
Organisational tactics for SMMEs to match competitive strategies are explained and identified in line with industry trends.
Roles and responsibilities of team members within the competitive environment are identified and explained in line with
organizations organogram.
SPECIFIC OUTCOME 5
Maintain customer satisfaction and relationships.
ASSESSMENT CRITERIA
Processes that establish communication with customers are implemented according to organisation requirements.
Product and service support is provided that is consistent with identified customer needs and the resources of the organisation.
Opportunities for the recognition of feedback from all stakeholders are implemented in relation to maintaining and improving
customer satisfaction and relationships.
Methods and techniques that provide for the ongoing identification of customer satisfaction are followed in accordance with
established requirements.

 An individual wishing to be assessed (including through RPL) against this Unit Standard may apply to an assessment agency,
assessor or provider institution accredited by the relevant ETQA.
 Anyone assessing a learner against this Unit Standard must be registered as an assessor with the relevant ETQA.
 Any institution offering learning that will enable achievement of this Unit Standard or assessing this Unit Standard must be
accredited as a provider with the relevant ETQA.
 Moderation of assessment will be conducted by the relevant ETQA at its discretion.

 Methods and techniques for maintaining a competitive environment
 Methods and techniques for obtaining competitive information, yet remaining ethical and within legal boundaries
 Marketing principles, methods and techniques
 Positioning and repositioning including needs, wants, features, advantages, benefits, usage, users and competition
 Methods and techniques for responding to customer needs and requests
 Methods and techniques for measuring and evaluating customer satisfaction levels
 Methods and techniques for improving customer satisfaction levels

N/A

N/A

Identify and solve problems pertaining to maintaining a competitive environment for the SMME and thus enhancing customer
satisfaction.

Organise oneself and one`s activities so that own knowledge of marketing for SMMEs is kept up to date at all times in order to
maximise marketing advice to clients.

Collect, analyse, organise and critically evaluate information pertaining to marketing issues and to the level of customer satisfaction.

Communicate effectively when dealing with clients regarding marketing issues and the provision of superior customer satisfaction.

Use science and technology in the orientation and persuasion of computers in a marketing culture in SMMEs.

Understand the world as a set of related systems where accurate marketing information impacts on both the success of the SMME
and customer satisfaction.
UNIT STANDARD CCFO CONTRIBUTING
Contribute to the full personal development of each learner and the social and economic development of the society at large, by
making it the underlying intention of any programme of learning to make an individual aware of the importance of being culturally
and aesthetically sensitive across a range of social contexts in marketing SMMEs.

Core 48886 National Certificate: Business Advising Level 5 Reregistered 2010-10-30
MODULE 27 – Marketing
SO1 Identify and define marketing within the SMME environment
MODULE OUTCOMES
1. Marketing for SMMEs is explained and all the elements of marketing are defined in line
with industry norms.
2. The marketing function for SMMEs is put into context with other organisational/business
functions.
3. The principles of marketing for SMMEs are explained in line with industry norms.
4. Practical marketing processes for SMMEs are identified and explained in line with industry
standards and processes.
Let’s start by defining marketing; according to the Oxford English dictionary marketing can be
defined as:
‘noun: the promotion and selling of products or services.’ (www.askoxford.com)
According to Wikipedia, the American Marketing Association define it as
‘….the activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and society at large’
(http://en.wikipedia.org/wiki/Marketing)
In lay terms it is promoting your goods in an effort to entice others to buy them. I think the reason
marketing is important to any business is pretty self explanatory, if you don’t sell any of your
products you will not make any money and as we said before the main reason for starting a
business or working is to generate and income.
In our modern world marketing has come to play a vital role, we are so bombarded by marketing,
we don’t know where to look or what to buy. Billions of Rands are spent annually on marketing
campaigns; we see it on TV in magazines on trucks, busses, bill boards, newspapers, pamphlets,
posters. Marketing is seen as a creative process and can be a lot of fun.
Marketing budgets can run into the millions, think of companies like Pick ’n Pay, or the banks, they
have advertisements on TV all the time, open any magazine and you are almost guaranteed to find
a bank advertisement. Some companies sponsor large sporting events like the Pick ‘n Pay, Cape
Argus cycle tour or the Standard Bank Pro 20 Cricket. As an SMME it is unreasonable to think you
could or would need to afford such expensive marketing. We will have a look at the basic
principles of marketing and then decide what is possible and necessary for a small business.
A marketing plan is usually part of a business plan and includes all the details necessary to achieve
the marketing objectives for your product, service, brand or product line.
THE MARKETING PLANNING PROCESS
1. Market and environment analysis
2. Fixing marketing targets
3. Setting marketing strategy

4. Marketing mix
5. Marketing control.
(http://en.wikipedia.org/wiki/Marketing_plan)
The marketing process model above is based on the work of Phillip Kotler. He breaks the
marketing process into 5 steps. The first step is to make an analysis of the market and
environment, to determine what is needed in the market, and how best to fulfill that need.
Secondly you need to decide on your target market, who needs the product you will be offering,
who is most likely to want to buy your product or use your service. We will then go about setting
goals to achieve the marketing mix.
In the 1960’s a Harvard Business School professor, Neil Borden identified a number of actions that
could have an influence on the decisions that customers make when deciding to purchase goods
or services. He called these actions the ‘Marketing Mix’. Professor E Jerome McCarthy suggested
that this so called ‘Marketing Mix’ was made up of 4 elements: product, price, place and
promotion.
The first of the four Ps, the product, refers to the actual item/s you want to sell, the specifications
of the product and how it relates to the customers needs. Pricing refers to the process of
determining what the product will cost. We spoke earlier in the course about setting prices
according to their cost price. Marketing deals with that aspect as well as taking the customer into
account, it would be unreasonable to produce a product like a chocolate and then to set the cost
at R 50.00 a bar. Who would buy it at that price? Placement is next on the list, placement refers
to the way in which the product will get to the customer. Where will it be sold, which stores will
carry it and where will it be placed in the store? The final P is promotion, how will you make sure
the product catches the customers attention, how to get the product known, this includes
advertising, sales promotion, person selling, publicity and branding.
The last part of the plan concerns the

control of the marketing. There is little
point in setting out on a market
strategy and then not checking on the
efficiency of the plan. Is it working is
your product selling, are you
establishing a good name for the
product?
The best way to set out on your marketing plan is to write it down, make it a formal plan that can
be referred to, and amended if necessary.
At the heart of any marketing plan is the company’s mission. The mission statements we
discussed in the previous section of the course. We need to plan our company’s marketing
strategy to be in line with the company’s mission statement and vision statement. Marketing can
be a useful tool to help the company achieve its envisioned goals as set out in the vision
statement.
As with all business strategies, market objectives should be ‘quantifiable’. They should be
objectives that can be measured. SMART objectives should be employed.
S specific goals should be set
M measureable, you must be able to see and measure the impact the objectives are having
on the business.
A attainable, there is no point setting goals that are impossible to achieve. (To sell 1 000 000
burgers in the next 3 months when you don’t have the capacity do manufacture that many
burgers)
R relevant, your goals should be relevant to your business.
T time bound, the goal should have a specific time limit in place. (I want to reach 20 new
customers in the next month.)
What should be included in a marketing plan:

1. A description of the product or service that you plan to offer
2. An advertising and promotional plan including the marketing budget
3. A description of the location of the business and the advantages and disadvantages of the
location on marketing.
4. Strategy for pricing
5. Target audience.
 Who they are,
 their age group,
 population group,
 likes and dislikes,
 socio-economic group
6. Competition
Other aspects to keep in mind would be:

 Is the demand for your product/s likely to grow in the future, if you think it will why, and by
how much?
 Do you think your competition will get stronger, and how you plan to counter this
 Do you have any plans to increase the range of products you offer or diversify?
The market analysis section of your business plan can take quite a long time to compile, and could
become quite complicated, because, how are you going to get the information you require? A
good action plan is needed and perhaps the help of a few friends to do some market research.
Once you have got the information good idea is to include charts and graphs in your document.
Charts and graphs are eye catching and if properly labelled and well constructed easy to read. The
graphic representation makes it easy to see and understand what you are trying to say. You can
make use of Excel to draw up your charts and graphs.
You can also include the sales strategy in this section of your business plan, do you intend selling
via the internet, telemarketing, direct sales.
Below is a more comprehensive list you may use to build your marketing section of the business
plan.
1. Title page
2. Current Situation
o market size
o Porter 5 forces analysis
o competitors' strengths and weaknesses
3. Current Situation - Internal
o company resources
 financial
 people
 time
 skills
o objectives
 mission statement and vision statement
 financial objective
 marketing objectives
 long term objectives
4. Situation Analysis
o external threats
o external opportunities
o internal strengths
o internal weaknesses
o Critical success factors in the industry
5. Marketing research
o research methodology
o research results
6. Marketing Strategy - Product
o product mix
o product strengths and weaknesses
7. Marketing Strategy
o Promotional mix – looking at the four main aspect of the promotional mix:
 Advertising: any promotion you have paid for: television, radio, brochures,
catalogues, posters, web pages, displays
 Personal selling: telemarketing, going face to face with customers, sales
meetings
 Promotions: specials, sales, competitions
 Public relations: getting media coverage because you supported a local
charity, gave a seminar, newspaper or magazine articles or reports.
o advertising reach, frequency, flights, theme, and media
o sales force requirements, techniques, and management
8. Implementation
o personnel requirements
 assign responsibilities
 give incentives
 training on selling methods
o financial requirements
9. Appendix
o pictures and specifications of the new product
o results from research already completed
In the list above we mentioned Porter 5 force analysis: This is a model designed by Michael E
Porter in 1979. It may seem complicated but it is relatively easy to follow. It’s a short list of things
that one should keep in mind when working out a marketing strategy for your business. This
framework should also be used when analysing competition in the market place. (see module on
competition)
o The first thing he mentions is the threat of substitute products: going back to John’s
fast food business, we already discussed that a second fast food business opened
down the road from John and that John thought they were taking his customers, why
would John’s customers leave him, well his competitor is selling a similar product and
one can only assume that the product is either better or cheaper. When working out
your marketing proposal you need to keep in mind that this may happen, and you
should list the likely hood of it happening. If you choose to price your product out of
the market (too expensive) people
may purchase it from you as long as
they have no alternative but should
another shop open near you that is
cheaper, you can rest assured you
may lose quite a few customers.
o Next we look at the threat of the
entry of new competitors, if as in
John’s case he saw a good market and
took action, opened his shop and over
priced his items, the likely hood of
other people thinking they could sell
better food at lower prices is very
great and competition is sure to
follow. The only way to prevent competition would be if there were barriers to
someone starting a similar business. With food this is difficult but if you start a
business that sells a new or novel product you could look at patents or copyrights to
prevent companies from copying your ideas and then starting their own businesses.
Remember however that copyright and patent licenses can be quite expensive and this
expense must be taken into account.
 The intensity of competitive rivalry has to do with how competitive the
market is likely to get, and whether the competition is likely to be purely cost
driven or competition in a non-price dimension, i.e. innovation or marketing.
o The bargaining power of customers. Do your customers have the potential to force
you out of business, are they sensitive to price changes, this would be especially true
when working with low income groups, to change the price of a product by a few rand
may not seem much to some but customers who are counting pennies will feel the
increase. If the majority of your customers are in the low income bracket you need to
keep their needs in mind, when looking at your pricing structure.
o The bargaining power of suppliers, relates to the people you buy your raw materials
from. Can you bargain with your suppliers to get a better price on your raw materials,
is your supplier maybe giving your competition a better price? Are there alternative
suppliers that you could use?
The second factor on our SMART objectives was Measurable, once your company has been
running for a few months it would be important to look at the original set of objectives you set out
to achieve, going over them with your Marketing plan and reviewing what has been achieved. We
said that objectives need to be measurable, now it’s time to measure. Building sales statistics,
what did we sell the most of, why did this product sell well, what did we sell the least of, is it a
good product to keep, is there a way we can improve sales? Did we run any promotions or
advertising, did we see a return from this advertising or promotions? Quantifying your outcomes
to streamline and refocus your business efforts. There may be changes that have taken place in
your work environment, a new factory could have opened where you could sell your lunches,
there could be more competition, even a change of season. Hotdogs and sandwiches are great for
summer but maybe some soup and hot chocolate for winter? It is important to stay abreast of
changes and be sensitive to the needs and wants of your customers. Yes it’s your business but
without customers you would not have a business.
ACTIVITY
Going back to the last module, use the information you have about John’s business and develop a
marketing strategy for John’s take away. Keep in mind the new competition that has opened.
Draw up a good marketing plan. You can include diagrams and charts, make sure you have
checked for spelling and grammar errors and that you have used the above format.
MODULE 28 – Market Segmentation
SO2 Describe market segmentation and market segmentation processes for SMMEs
MODULE OUTCOMES
1. The purpose and types of market segmentation in SMMEs are listed and explained
according to standard practice
2. Market segmentation implications for SMMEs are identified and described in line with
industry practices
3. The potential for segmentation is assessed and explained in line with company and
industry standards
4. The segmentation basis for the SMME in question is identified and explained and includes
geographic, demographic, psychographic and behaviouristic, end use and operational
basis.
5. Profiles for market segmentation are explained and identified in line with existing profile
types.
When we discussed target markets earlier in this course we were basically talking about targeting
a group of people who we though would be interested in our business. Market segmentation is
the same thing. When we talk about market segmentation we are talking about breaking the
population down into groups. In a way these groups would be stereotypical and we would head
for the stereotype when choosing your marketing strategy.
The reason we would do this is to target a specific audience. Let’s think of it in simpler terms. If
we John’s take away store in the industrial area what sort of food do you think would sell best?
Sushi, caviar, crust less cucumber sandwiches and tea? How would we determine what will sell
best? We would have to look at the people that work in that area and determine from that what
would sell, we would break the market down into segments. There are normally between four
and five different dividers that we would use to divide our market.
1. Geographic
The area in which we will operate, in John’s case he is working in the industrial area
therefore his geographic area would be the industrial area surrounding his shop, and the
people that work there.
2. Demographic
The average age, occupation, religion, socio-economic, culture, gender etc. In John’s case;
of the people who work in the industrial area will determine who will potentially buy from
John. If the majority of the people in the area are middle age Muslims and John does not
cater halal food do you think the food will sell?
3. Behaviouristic
Usage rate, price sensitivity, brand loyalty would all play a part in this factor.
4. Psychographic
The personalities of the potential customers, the lifestyles, their values, attitudes.
Large corporate companies spend a large amount of cash and resources trying to identify different
market segments, think in terms of companies like Woolworths who direct their brand at a very
specific market, they don’t sell cheap products, their stores are always neat and clean, the stores
project an atmosphere of refinement. The music usually plays quietly in the background and the
assistants are well dressed. If you look at their advertisement campaigns, the people on the
brochure are well dressed, wealthy people, so that is their market segment, the group they are
trying to target.
SMMEs can make use of the following ways to collect information on their segment of the market.
Use informal cluster analysis to glean information: Watch your competitors and try to copy them,
talk to your suppliers and get information about what they think is selling well, chat to your
customers and determine what they would like to see in the shop.
Or use secondary resources and qualitative research: contact or subscribe to trade publications.
How does market segmentation help a business? Well it enables the business to streamline its
marketing efforts, by targeting a specific market you can develop promotions and advertising
material that appeals to your specific market. This obviously saves on marketing costs. If your
business is a local business and you decide to run a radio advertisement, there is no point
advertising on national radio since people in Gauteng cannot purchase from your store because it
is too far away. In that instance it would make more sense to run your advertisement on the local
community radio where people who can get to your shop can hear the advertisement.
There are three main types of segmentation:

Mass Marketing; in mass marketing you would try to reach the whole market with one product,
you would try to focus on the similarities in the market as opposed to the differences.
Differentiated marketing; a lot of banks make use of this form of marketing, they have different
products that target different segments of the market, they have different advertising campaign
for different target segments – Standard Bank has an ‘e-plan’ account for the mass market, (low in
come groups), the ‘student achiever’ for your people who are studying towards a degree, the
‘premium account’ for the business executive who earns in excess of R 20 000.00 per month.
Target marketing; this is the best way to go for SMMEs, where you choose your market and target
one specific area. It is more cost effective since you only run a single marketing campaign, that is
aimed as a very specific audience.
ACTIVITY
Store Geographic Demographic Psychographic Behaviouristic
Shoprite
BMW
Legit
Billabong
KFC
Gucci
MODULE 29 – Positioning Strategies
SO3 Describe Explain positioning strategies for chosen segments.
MODULE OUTCOMES
1. Target market segments for SMMEs are identified and explained as per industry norms.
2. Position variables in SMMEs are identified and explained for each target market.
3. Product positioning strategies to be communicated to the SMME target market are
identified in line with strategic positioning methodologies.
Product positioning involves taking a marketing program and building it to specifically meet the
needs of the consumers in a specific market segment. Everything about the product and its
marketing revolves around the specific needs, wants and desires of your target market segment.
The important factor for positioning your product means; understanding the criteria your
customers use to evaluate your business in relation to others offering a similar product and what
induces the customer to purchase a specific product. Once you understand what the customer
wants you need to select the best position for your product and design a marketing program that
helps you best achieve this goal particularly with regard to quality, reliability, benefits and specific
features.
In their book Advanced Marketing Strategy Glen L Urban and Steven H Star wrote that ‘Product
positioning takes place within a target market segment and tells us how we can compete most
effectively in that market segment.
ACTIVITY
Making use of the positioning map below, plot the following retail outlets according to how you
think they fit in the market.
HIGH PRICE
HIGH QUALITY LOW QUALITY

LOW PRICE
Woolworths
Pick ‘n Pay
Spar
Shoprite
Seven Eleven
Savers Lane
The next step would be to plot a map for your own envisaged company, plot a map of your
competition that offer the same or a similar products in your area.
Once you understand where your competitors are you can begin the process of deciding where
you want to be. Do you want to set your company close to your competitors, or would you rather
be far away, so if we go back to John’s fast food store where would we plot him? Think about his
clientele, who did we decided made the most use of his services? Do you think that if we tried to
position John in the high price, high quality range he would make money? Why?
________________________________________________________________________________
________________________________________________________________________________
The idea with positioning yourself in the market is to try to maximise the amount of customers
you have by allowing them the maximum benefit from your company. You could decide to go for
a Quality emphasis in your business, where you only offer the best quality products, outstanding
service and a type of exclusivity, another option would be to offer a unique business with benefits
that consumers would not easily find else where in the market. While it seems on the outset
better to go for a high quality market, there has been a trend in developing countries to target the
‘mass market’ this up till recently has been a hugely untapped market and in countries like South
Africa the mass market is a huge untapped resource. The ‘Mass market’ is essentially the low
income earners, why is this such a huge market, because it is a large market. In recent years
companies have began zoning in on the mass market, stores like Shoprite Checkers who target low
income groups with low prices, their quality is not always good but for the people of the low
income groups it is an entry level.
One of the tactics that companies use to maintain a greater share of the market is to develop
different brands. A similar product is produced in the same factory but given a different name so
as not to confuse the customer, for example Skip, Surf and Omo, all three washing powders have
different target audience, different marketing strategies and are situated in different market
positions, all three brands belong to Unilever.
ACTIVITY
Make a list of as many companies as you can that address the ‘mass market’ in their marketing
strategies. Think of advertising campaigns, TV, radio, press.
List the company and the advertisement/product that you think attracts the mass market.
ACTIVITY
Below is another positioning map, using the advertising provided, plot the different products
manufactured by SAB Miller into their relevant market segments.
HIGH PRICE

LOW PRICE
Sarita
Brutal Fruit
Castle Light
Castle Lager
Black Label
Castle Milk Stout
Reds
Pilsner Urquelll
NICHE MARKETS
Having looked at various market strategies for defining your target market segment and discussing
companies that market different brands to different markets to gain greater share, one thing
becomes clear; this looks like a very costly affair, and something that an emerging small business
may not be able to finance. Is there a cheaper option? The answer is to carve out a niche market.
A niche market is a market within a market, small segment of a segment of a market. The benefit
of working within such a small market segment is that you will require fewer resources to market
to a small group, plus your product line may be smaller because you are appealing to a very
specific group. It has been proven that entrepreneurs who manage to carve out a successful niche
market are more likely to succeed and thrive in the market.
A niche market product may target young women; a niche within a niche may target black young
women. The idea is that by filling the niche you will be able to gain a greater percentage of that
market segment resulting in less competition and higher profits. Niche markets are often
customers who are less price sensitive. This type strategy flies in the face of what we ordinary
would think when starting a new business. A new entrepreneur’s instinct is to go for as many
customers as possible but this is not always the answer. Think of small exclusive boutique shops,
you often walk past them in the mall and wonder how they survive; they are selling high cost good
to high end purchasers who would rather pay for what they want than settle for something else.
1 …..’So why aren't more entrepreneurs adopting a niche strategy? "Many are afraid that it
will limit their opportunities, when the opposite is really true," says Terri Franklin, an
entrepreneur from Atlanta who started her own hosiery business. At the outset, many
small business owners are concerned with attracting as much business as they can and
have trouble accepting that narrowing their customer focus may be more profitable.
Franklin looked to her own experiences and recognized the potential for success in niche-
marketing. Having once worn pantyhose with names like Red Fox, Cinnamon, Gentle
Brown, and Mahogany, most of which didn't match her skin tone, Franklin, 48, understood
first-hand the plight of women of color looking for flesh-matching hoisery. When she found
a color that accentuated her legs, Franklin would buy several pairs. Sometimes, she would
buy everything in stock so that she wouldn't have to hunt for them again.
Franklin, a sales specialist at AT&T, recognized a hole in the hosiery marketplace and came
up with an idea for hosiery for women of color. "We've all worn some hideous colors,"
Franklin admits, summarizing the experience of many women who have been frustrated by
the sparse selection of hosiery in pleasing deeper brown tones. Franklin's solution was to
buy pantyhose in black, navy, or a color that complemented a particular outfit,
sidestepping the challenge of locating a pair that wasn't a match.
Her brainchild, Atlanta-based Accents of Color Hosiery, was launched in October 2002 and
boasts seven shades of brown and five other hues -- jet black, off black, white, navy, and
cream. The company has been growing at a rate of about 20% annually. Franklin expects
2006 sales to total $200,000, but they could go much higher if pending deals with
Nordstrom and Macy's come through. Those retailers, plus five other outlets she has
targeted for 2006, have hundreds of locations that could sell her hosiery.
Using a list of hosiery manufacturers provided by The Hosiery Association, Franklin began
contacting potential manufacturers in search of one willing to take a chance on a startup.
She also spent months studying major hosiery marketers and learning about her market.
The research reported that, on average, African American women purchase 24 pair of hose
annually and make up 24% of the pantyhose market. Rather than target the niche.’
2. MARRYING EXPERIENCE AND OPPORTUNITY

When it comes to planning a wedding, attention to detail is important. Rena Puebla knew
this when she bought her wedding cake toppers -- the little bride and groom that have
traditionally adorned wedding cakes. After an exhaustive search, she had no luck finding
figurines that suited her and her fiancé. She had to settle for two doves on top of her
wedding cake instead of an attractive cake topper featuring an African American bride and
an Asian groom. But instead of accepting that there were few options for interracial
couples, Puebla, whose husband is Japanese, decided that she had found a business
opportunity worth exploring.
PUEBLA SERVES HER NICHE CUSTOMERS BY SELLING INTERRACIAL WEDDING-CAKE

TOPPERS
Having worked in the wedding industry for years as an event planner, Puebla knew that the
wedding market was strong. In fact, the amount of money spent on weddings has been
increasing for years, with an average wedding costing more than $26,000 -- $655 is often
spent on the cake alone. In total, the 2006 wedding market is valued at $58.5 billion,
according to theweddingreport.com.
Puebla, of Costa Mesa, California, also knew that interracial marriages had become more
common. Therefore, in January 2005 she and one of her former gift-basket suppliers, Ellie
Genuardi, established Renelli International to fill a niche market need. "We zeroed in on
interracial wedding-cake toppers right away," says Puebla, for several reasons, the first
being the dearth of competition. The second was that the number of interracial marriages
has increased more than tenfold in the last few decades, according to the Washington-
based Population Reference Bureau. In 1970, 300,000 interracial couples made up 7% of all
marriages, increasing to 1.5 million in 1990, and more than 3 million by 2000, or 5.4% of
the married population.
Puebla and Genuardi also believed that by pursuing a well-defined niche, it would be easier
to identify their market and sell to them. By staking out a niche within a niche -- a specific
type of cake topper within the wedding accessories category -- they've successfully carved
out their own space. Sales are up 400% over last year's sales of $100,000, with 2006 sales
projected to be $500,000.
Another way the owners have differentiated the company is by positioning it as a

wholesaler, not a retailer, marketing its products to salons, bakeries, florists, and wedding
boutiques. Although it was initially challenging to land accounts, "we had to be persistent"
says Puebla. Attendance at bridal shows and appearing in an issue of Cosmopolitan during
the summer of 2005 has boosted their visibility and their business considerably. Renelli
invests in marketing through major wedding channels, such as TheKnot.com, to target
brides, and then refers them to local retailers who carry Renelli toppers.
Couples can choose from among 98 possible combinations of Renelli brides and grooms,
which are interchangeable, including dark hair with African American features, dark hair
with Latino features, and dark or blond hair with Caucasian features. The durable polyresin
stone figures have delicate facial features and sophisticated tuxedos and gowns commonly
found on more expensive toppers; Renelli's retail for $69.99.
CROSSOVER TO HIGHER PROFITS

One of the benefits of establishing a niche business, say the Sanders, is that "Once you've
built one successful niche business and understand the thought process behind it, what is
to stop you from using that same knowledge to build a similar business that serves a
slightly different niche, or add products and services to more profitably serve the existing
niche?" Through a phenomenon called "cross-over niching," Franklin saw an opportunity to
increase sales by selling other products to her customer base. There was also a strong
indication of a void in the market, she says, which she knew she could fill.
Although Accents of Color Hosiery initially specialized in ultrasheer pantyhose for women
of color, Franklin has since recognized the potential to expand her niche -- to crossover. To
broaden her product line beyond plain pantyhose, she is in the process of adding a number
of new products that her customers have been asking for. They will soon be able to buy
Lycra support hose, knee-highs, thigh-highs, shimmers, and personalized or designer
pantyhose from Accents of Color. In addition, Franklin is adjusting her marketing to reflect
the broader appeal of her products, which she didn't expect. The slogan of her company is
now, "Accent your legs colorfully," so as not to exclude lighter-skinned women who have
also embraced her line. "I thought my target market was darker-toned women of color, but
I've found that all women of color have trouble finding the right shade," she explains.
She also discovered that this challenge was not limited to women in the U.S., where she
has focused her marketing efforts. "To my surprise, ladies all over the world are finding
me," says Franklin, thanks to her Website. "It's a global issue," she says, and sales to
women in countries such as Romania, Saudi Arabia, Germany, Canada, England, and Africa
are proof. "Women go to great lengths to get the right pantyhose."
Crossover expansion is also underway at Renelli, where the company's target market has
broadened to include same-sex couples, who frequently have the same problems that
interracial couples do when looking for wedding accessories. The response has been
enthusiastic, with sales of same-sex toppers now accounting for 50% of the company's
sales, especially from couples in Canada, reports Puebla. The company is also pursuing
private-label opportunities, manufacturing wedding cake toppers for other retailers under
their brand name.
Although starting any business has its risks, Peter Sander says niche businesses almost
always have a better chance for success. "If you start broad-focused, you may not be able
to survive," he says, while the opportunities for niche businesses seem limitless.
HOW TO FIND YOUR NICHE
If you think that creating a niche market sound like a good idea, there are a few ways you can
attempt to find the right niche for you.
1. Instead of trying to come up with a new idea, try think of someway to put a spin on an
existing product. Take the croc story for example. We all know what crocs are, well have
you seen the little trinkets you can get to put in the holes of your crocs, they are called
Jibbitz.
Jibbitz originated in 2005 when Sheri Schmelzer a stay at home mom, and her three
children decided to ‘decorate’ their croc shoes. Using clay and rhinestones they developed
unique little charms that fit in the holes of the crocs. Rich Schmelzer, Sheri’s husband saw
a potential niche market business and they decided to create a unique accessory brand of
colourful snap-on trinkets specifically suited for Crocs shoes.
Working from home with a small loan and small assembly line in their basement they
launched Jibbitz, a name that came from Sheri’s nick name ‘Flibberty-Jibbit’. The started
with a few designs and launched a website to sell the goods, within 1 year Jibbitz were sold
in thousands of stores around the world, they were an instant hit. In December 2006 Crocs
Inc offered to buy Jibbitz for a sizable amount and the Schmelzers were offered positions as
President and Chief Design Officer of the Company.
They did not come up with a whole new design they came up with a twist to an existing
idea.
2. Try to find an idea that has worked somewhere else. Business ideas that have worked in
other markets, maybe overseas or in a different town and try the same idea where you are.
Find something that has worked somewhere else. Look for business concepts that have
succeeded in other markets that haven't yet appeared in yours, or try to identify types of
businesses that are missing in particular geographic areas. For example, remember when
Starbucks was a Seattle phenomenon? Think about the products and services you use
regularly, or would use, and where you go to get them. Are there any missing in your
locale?
3. Refocus a big idea but change it to suite a specialised market. Break off a small piece of a
big market and target it at a different market.
Once you think you have found a potential niche opportunity you need to do some market
research to ensure that there is a large enough market to support your new business. From there
you can start compiling your business ideas and formal business plan,
FACILITATORS NOTES:
HIGH PRICE
WOOLWORTHS SEVEN ELEVEN
SPAR
PICK’N PAY

SHOPRITE
SAVERS LANE
LOW PRICE
MODULE 30 – Competition for SMMEs
SO4 Explain the nature and extent of the competitive environment for SMMEs
MODULE OUTCOMES
1. Issues surrounding the competitive environment for SMMEs are identified and explained
according to historical data.
2. Strengths, weaknesses, opportunities and threats of the competitive environment for
SMMEs are identified and explained based on factual data.
20 years ago the world was quite a different place; we had TV and Radio but not much on the
internet scope. Over the last 20 years the market place has grown, technology improved at a
drastic rate and we now talk about living in a global village. I can purchase products from
anywhere in the world without leaving my chair. There are a plethora of companies that offer
similar or the same products and marketing strategies are fierce.
In South Africa we have certain marketing restrictions, we cannot directly slate a brand so when
we advertise we have to push the upside of our business where as in Countries like the USA open
competition is allowed.
Big business makes up a large sector of the economy and by making use of economies of scale
(purchasing large quantities of stock or manufacturing large quantities of stock can reduce the cost
price per item) they are able to supply products at cheaper costs than most SMMEs are able to do.
So how are small companies supposed to compete with large multinationals?
It has become nigh impossible to compete by superior design or function and it is difficult to
manufacture goods while maintaining a large profit margin; it is unlikely that cost alone with give
you a sustainable competitive advantage. A company cannot sell products at cost price for any
long term period without impacting on the quality of its products. We have also seen in recent
years how the cost of certain products like electronic good have come down, when products
become cheaper the small variation that you could offer the customer becomes negligible.
So how to improve your market share if costing is not the only alternative. Particularly in South
Africa, service has been an issue for years. We as South Africans are much more likely to accept
bad service but this is changing, companies like Telkom who have ALWAYS offered headaches now
have competition. This forces them to improve their service or lose our business, although Telkom
is probably not the best example since they still do not have enough competition.
Service delivery is the new buzz word in industry. People no longer look to the cheapest price but
the company that can deliver a quality product in the shortest space of time with good service
backup. In the restaurant industry you can have the most wonderful restaurant but if your
customers have to wait an hour for poor service your business will go down hill fast. In our
stressful lives we need to see happy smiling faces, good staff training ensuring friendly efficient
service is the a key issue to grabbing customers.
For businesses that plan to serve other businesses, flexibility and just in time delivery (just in time
production works on the basis that a company does not carry stock for production, the required
stock is purchased just in time for it to be manufactured, thereby alleviating huge amounts of
capital that would otherwise be tied up in stock) are important tools for competitiveness.
Companies that can deliver high levels of customer service efficiently will take the lion’s share of
the market.
There is a verse in the Bible that says ‘my people perish for a lack of knowledge’ this is true in
business also, arm your self with knowledge about your competitors, don’t assume you don’t have
any. Have a look at your product and its market, don’t assume because it’s a new or innovative
product there will be no competition, look at products that your customers can buy as alternatives
to what you are offering. You may not be able to spot competitors immediately, you may not
have direct competition, you could be selling a specialised type of chilli sauce, but also be
competing against tomato sauce or hot mustard.
Lean Operation
A lot of small business are turning to a new way of running called ‘lean operation’ lean operation
has staff members fulfilling multiple work roles in a number of company locations. Manufacturing
companies also make use of just in time production models. You may wonder how it is possible to
offer a high quality of service while running a lean operation; the key is to make your service
personal. People like to feel like individuals, they like to talk to people and build relationships with
their suppliers. If you know your customers you can offer a more personalised service by
anticipating their needs. By building customer relations you build interdependence between them
and you thus reducing customer ‘churn’. If your employees have good relationships with their
customers you are also likely to build a certain amount of loyalty amongst your staff, turnover of
trained staff can negatively affect your ability to provide a professional service and it becomes
costly to be continually training new staff.
A good competition analysis will help to determine where and when you are likely to have strong
competition and allow you time to define a strategy for dealing with this competition. (refer to
Porters 5 Factors [page 126]).
Developing a marketing plan
Below is a sequence of steps that indicate the procedure to developing a marketing plan:
Advantages of planning:
 Encourages methodical thinking about the future.
 Improves communication and co-ordination between different departments
and level of management
 Results can be measured against established performance standards
 Decision making can be based on a logic
 In a rapidly changing business environment the ability to cope with change
is increased.
 Marketing opportunities are more easily identified.
Executive Summary:
A short summary of the main objectives, decisions and recommendations
that appear in the marketing plan. It describes the plan, the product or
service, target markets, competitors and expected sales levels. Executive
summary is written after the marketing plan is written.
Current Marketing Situation:

o Market description – major market segments and targets
o Productive review –product mix
o Competitive analysis – identifying competitors, their size, goals,
market share, product quality and past behaviour.
o Distribution review – identifies changes and developments in the
distribution channels.
o Broad business environment – trends in the macro environment,
economic variables, political or legal variables, socio-cultural
variables
Marketing analysis:
SWOT S – Strengths
W– Weaknesses
O- Opportunities
T- Threats
Setting objectives:
For each marketing instrument and target market, SMART objectives.
Action programme:
At this point a timeline for your strategic plan should be drawn up, including
exactly what will happen, when and who will be responsible.
Set the budget for marketing plan:

This is a planning and control mechanism; objectives need to be met within
the constraints of the budget.
Establish control Methods:

Set performance standards, sales quotas, marketing communication budget.
All standards must be realistic
Evaluation of performance by the marketing manager, ensuring standards
have been met and comparing actual performance with performance
standards. (SMART objectives)
Corrective action when the deviation between objectives and achievements
is too great.
MODULE 31 – Communication and Organisation (Roles and responsibilities)
SO4 Explain the nature and extent of the competitive environment for SMMEs
MODULE OUTCOMES
3. Organisational tactics for SMMEs match competitive strategies are explained and identified
in line with industry trends.
4. Roles and responsibilities of team members within the competitive environment are
identified and explained inline with organisations Organo grams.
There is not one right way to organise the flow of information or roles and responsibilities in a
company. The company’s organisation chart will depend on the positions that the company
makes available, what and how many staff are employed, the line of work; manufacturing or
service delivery etc. A large corporate company will look significantly different from a smaller
SMME or a little Sole Trader. The Organo gram below is a typical organogram for a large corporate
company.
A smaller SME may not have managers for each product line and may in fact only carry one
product line. However there will still always be some forms of organisation structure. A
company’s organisation structure needs to be determined to fit in with the company’s strategic
plan. Members of staff need to ensure good communication, upward, downward and horizontally.
Certain positions will be created or removed in accordance with the strategic plan the company is
following. In the above model each product has a specific manager. That manager is responsible
for the sales and marketing of that product and or as we saw in the module on brand management
he/she could be given the title of brand manager.
In the chart above we see what are called Account Executives, each account Executive is
responsible for a single customer, this is usually a useful means of organisation if your company
provides multiple products to a few large companies. Each AE is responsible for one company
only. Some of the less senior AE’s may be given two or more small companies.
MODULE 32 – Customer Satisfaction
SO5 Maintain customer satisfaction and relationships
MODULE OUTCOMES
1. Processes that establish communication with customers are implemented according to the
organisation requirements.
2. Product and service support is provided that is consistent with identified customer needs
and resources of the organisation
3. Opportunities for the recognition of feedback from all stakeholders are implemented in
relation to maintaining and improving customer satisfaction and relationships.
4. Methods and techniques that provide for the ongoing identification of customer
satisfaction are followed in accordance with established requirements.
In your business to this point we have learnt about management strategies, legal requirements to
business, both with regard to government legislation and tax, we can find our target market and
aim a strategic marketing plan at the customer. How do we know if this is enough to run a
successful company? We have discussed financial and marketing control measures o measure our
success or failure. Now to the crux of the entire discussion proceeding, customer satisfaction; I
think we can all agree that; if the customer is not happy neither will we be, an unhappy customer
will not return to our business. When we put the marketing strategy in place we need to
remember to incorporate Customer controls under marketing control, as with all other business
functions we can have either a reactive of a proactive approach to customer satisfaction.
What this means is we can anticipate problem areas and implement strategic plans to avoid the
problem developing by staying abreast of customers trends and comments or we can wait till a
problem occurs and then try to fix it (crisis management).
If you are not sure which one is best to use, read through the advantages of planning in the
previous module again.
Proactive or pre-emptive strategies have the benefit of avoiding pitfalls before you end in them.
Below are a few customer satisfaction measuring ideas.
Complaint and suggestion systems: A book or a box where customers can enter complaints,
suggestions or compliments regarding your company’s products, service or staff, these should be
read through on a regular basis and acted on to ensure optimal use of the system.
Customer satisfaction index (CSI) : this is a survey that measures the experience of your customers
over a period of time. Detailed questionnaires are sent out to current customers asking about
their purchase or experience of your service.
Mystery shopping: you can have people who have been hired to shop in your store and they can
then give you a genuine critical view of shopping in your store. This type of measuring is often
done in hotels and restaurants where critics will go incognito and then give the establishment a
rating.
Focus groups: A panel of people are selected and they then have a recorded discussion on your
product or service, this is often done before the launch of a new product to test the market, a sort
of market analysis.
Customer value analysis: A database is compiled and maintained on current and potential
customers, the database contains identification and personal data on the customer, product
purchases, product usage and consumption patterns, how often they come back for more and if
it’s always the same product. This information can be used to determine future purchases and
purchase trends, if a customer who has always bought the same product at more or less similar
intervals and then stops, you can contact the customer to ascertain why and try to remedy the
situation.
MBWA: Management by wandering around, the manager or owner of a company wanders around
observing the behaviours of staff and customers.
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Communications (retrieved 6 March 2009)
BOOKS
De Klerk, J W et al. 2004. My clever Economic and Management Sciences through Issues. Learners book. Grade 6.Clever
Books. Pretoria.
Gouws, E. 2006. Economic Literacy and entrepreneurship. UNISA. Pretoria
Clitheroe, F, Dilley, L. 2005. Oxford Successful Economic and Management Sciences, Grade 5. Oxford University Press.
Cape Town.
Niewenhuizen, C. 2004. Basics of Entrepreneurship. JUTA Academic. Cape Town
Juul, Ian. 2002. The Small Business Survival Handbook. David Phillip. Cape Town
Walters, JS. 2002. Big Vision, Small Business, 4 Keys to success without Growing Big. Berrett-Koehler. San Francisco.
Strydom, JW (ed).1998. Introduction to Marketing. Juta. Kenwyn
Dear Ms. Young
Your request to use the Drakenstein Web-page on Business Licencing refers.
The Drakenstein Municipality supports SMME & skills development initiatives.
We therefore do not have any objection to the use of the Business Licencing Webpage as part of
your course material.
Yours Sincerely
Girshwin Fouldien
Manager: Local Economic Development
Directorate: Strategic Services
Drakenstein Municipality
P.O. Box 1
Paarl
7622
Tel 021 807 4737
Fax 021 871 1037
Cell 082 497 9304
E-mail: girshwinf@drakenstein.gov.za

SMMEs Lecturer 2009

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ENTREPRENEURSHIP

(SAQA USID 115857, 115827, 110507, 115816, 117244, 10006)

First Edition 2009

Demonstrate an understanding of entrepreneurship and develop entrepreneurial qualities

PURPOSE OF THE UNIT STANDARD

LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING

Specific Outcomes and Assessment Criteria:

UNIT STANDARD DEVELOPMENTAL OUTCOME

Critical Cross-field Outcomes (CCFO):

UNIT STANDARD CCFO IDENTIFYING

UNIT STANDARD CCFO WORKING

UNIT STANDARD CCFO ORGANISING

UNIT STANDARD CCFO COLLECTING

UNIT STANDARD CCFO COMMUNICATING

UNIT STANDARD CCFO SCIENCE

UNIT STANDARD CCFO DEMONSTRATING

MODULE OUTCOMES (Assessment Criteria)

Entrepreneurship; according to the Oxford Dictionary is “a person in control of a commercial

According to Bowler (1996:5) in order to be considered an entrepreneur, you need to have

 Developed a new or improved product or service

It is important to understand that there is a distinct difference between being an entrepreneur

One of an entrepreneur’s main aims would be to make a profit.

Why do we need Entrepreneurs?

What is the role of an entrepreneur in the economy?

What does that mean?

For that reason an entrepreneur is someone who:

 Can see an opportunity

It is important that an entrepreneur follow a moral code i.e.

1. The local labour force is out of work.

What is a moral code?

The Moral Code I think an entrepreneur should follow:

Using google run a search on urbanisation.

MODULE OUTCOMES (Assessment criteria)

 Easy to set up as there are not a lot of legal requirements.

 It is easy and cheap to start.

 Easier to get financing.

 Many members could cause a delay in decisions.

5. Close Corporations (CC):

 Members are personally interested in the CC as it affects their profit margins.

 Your brand is already established.

 Limited ownership is usually given.

 Usually sell cheap products which are of a poor quality.

Student #: ______________ Total [40]

Sole Proprietor: General Dealer, Café, Restaurant.

MODULE OUTCOMES (Assessment Criteria)

www.docs,paperless-school.com (retrieved 11 July 2008)

What types of industry are in this sector?

What types of industry are in this sector?

Building: builders build buildings, roads, dams, infrastructure.

What types of industry are in this sector?

Education: Schools, colleges, universities

Total Marks (25)

Name: _____________________________________ Date: ____________________

1. What is a sole trader?

3. Can you list two advantages and two disadvantages of a Partnership.

5. What type of businesses usually has partnerships?

3. Who is the main service provider in South Africa?

4. How does the Government pay for the services it provides?

c) ___________________________ d) ___________________________________ (4)

2. How is an entrepreneur different from a manager?

Service Provided Yes No

MODULE OUTCOMES (Assessment Criteria)

South Africa and the Government

MODULE OUTCOMES (Assessment Criteria)

Name: _________________ Date:

c) _ d) _________ (4)