OBJECTIVES• Explain how to assess your own potential as a small business owner;• Identify opportunities for small business development;• Evaluate whether the opportunity is likely to be successful;• Understand the concept of a feasibility study;• Prepare a plan for each aspect such as marketing, production, finance and staffing of the business;• Explain the advantages and disadvantages of starting your own business;• Identify the managerial skills you will need to start your own business;• Understand how to obtain start-up cost savings.
PERSONALITY TRAITS• The ability to recognise • Leadership skills; and exploit opportunities; • A desire to achieve;• Resourcefulness; • hard workers;• Creativity; • Nurturing quality;• Vision; • Accepting responsibility;• Independent thought; • Reward-oriented;• Energy; • Optimistic;• Optimism; • Excellence-oriented;• Innovativeness; • Good organisers;• Calculated risk taking; • Money-oriented.
CHARACTERISTICS• Commitment • Effective time management• Energy • Ability to identify• Need to Achieve opportunities• Tolerance for stress • Make informed• Decisiveness decisions• Ability to deal with • Ability to manage risk failure
HARD AND SOFT SKILLSA “hard” skill is a technical oradministrative skill related to the corebusiness of the operation – not onethat is interpersonal.). These skills arespecific to a given context andtypically produce an immediate visibleresult.
HARD AND SOFT SKILLS“Soft” skills are a cluster ofpersonal attributes, whichenhance interactions with others,and are learned over time; oftenreferred to as your emotionalintelligence (EQ).
EMOTIONAL INTELLIGENCE FOR SMALL BUSINESS OWNERS• The ability to perceive, • The ability to listen to recognise, understand and others, to have empathy react to the feelings of with them and to yourself and those of communicate effectively in others (emotional terms of emotions and awareness). thoughts.• The ability to distinguish • To use the information in between various feelings directing your thoughts and to name them and actions so that you (emotional literacy). live effectively, are• The ability to express and motivated and have a goal control your feelings in mind (relation between appropriately (emotional thoughts, feelings and control). behaviour).
IDENTIFYING OPPORTUNITIESThree aspects:-Attractiveness of the opportunityDurability – inherent ability tocontinueTimeliness – enter the market atan appropriate or opportunistictime
GENERATION OF IDEAS• From skills, expertise and attitude• From common needs• From existing problems• From everyday problems• From other sources
EVALUATING OPPORTUNITIES• A good opportunity will be:-• Attractive• Durable• Timely• Anchored in a product or serviceUSE INTERNAL & EXTERNALEVALUATION OF OPPORTUNITIES
INTERNALWill only be successful if owner hasinternal capabilities to take opportunityfrom idea to businessNeed to assess:-• Resources and capabilities• Core competencies
EXTERNALNeed to evaluate the general andindustry environment
GENERAL5 SUB ENVIRONMENTS• Political & legal environment• Social cultural environment• Macroeconomic environment• Global environment• Technological environmentCHALLENGE TO BUSINESS OWNERBUT ARE UNCONTROLLABLE
INDUSTRYDirect effect to the start up businessPorter 5 competitive forces• Threat of new competitors• Threat of substitute products or services• Intensity of rivalry among existing competitors• Bargaining power of suppliers• Bargaining power of buyersP52/53 module manual
FEASIBILITY ANALYSISFeasibility:-.. The extent to which an idea isviable and realistic and the extentto which the small business owneris aware of internal and externalforces that could affect his/herbusiness
FEASIBILITY STUDYInvolves meticulous investigation of 5primary areas:-• The overall business idea• The product/service• The industry and market• Financial projections (profitability)• The plan for future action
FEASIBITY CHECKLISTMust take into consideration the following importantfactors:-• Size of market• Growth potential of market• Products and services the market needs• Why the market wants these products and services• How often these customers buy these products and services• What the geographic distribution of the market is• What price the market is willing to pay• What market share can be expected• How to communicate effectively with the market
INDIVIDUAL ACTIVITYICE TASK 3Prepare a feasibility plan as per the templateon page 54/55/56/57 for your proposedbusiness. You will need to do some in depthresearch in order to specifically answer thefeasibility checklist questions on p57 of themodule manual. This will enable you toprepare a more accurate and detailed study.Plan must be typewritten. Hand in date: 4thSeptember 2012
ASSESSMENT OF OPPORTUNITYGoal of feasibility study is to systematically assess theopportunity to determine if it can be brought to marketprofitablyKEY POINTS• The idea cannot be economically made into a product or service• The product and/or service works but does not appeal to a large enough market to be viable• The product and/or service works, there is a viable market, but resources are not sufficient or obtainable to make the idea into a business
BUSINESS PLANSARE NECESSARY!!!!!!!• To raise finance as and when necessary (to start, buy or expand)• To encourage assistance, to get a lease, to open an account etc.• To improve performance (and likelihood of success) through increased knowledge and understanding – use to assess performance against plan, evaluate strengths and weaknesses etc.
SCOPE OF BUSINESS PLAN• Contents• Exec Summary• Vision & Mission• Company Overview• Product or Service• Marketing Plan• Management Plan• Operating Plan• Financial Plan
GROUP EXERCISEGet into groups of 2Take the section headings from previous slideand write bullet points on each section on whatshould be included in it . DO NOT REFER TOYOUR MODULE MANUAL!
ADVANTAGES OF STARTING YOUROWN BUSINESS• Opportunity to start fresh• Start with latest technology• Be able to provide products or services not currently available in the market place• Owner can determine size of business
DISADVANTAGES OF STARTINGYOUR OWN BUSINESS• No known name in market place• Time needed to establish a positive cashflow• May be difficult to obtain initial funding – no assets or reputation• Recruitment of experienced staff may be difficult
MANAGERIAL SKILLSThree key areas:-• Conceptual• Technical• Interpersonal or human skills
CONCEPTUALAbility to see small business as a whole• Recognise how functions are interdependent• Visualise relationship of the small business to the industry and community it is operating in• Understand the effects of political, economic and social forces of the nation on the small business
TECHNICAL• Implies an understanding and proficiency in a specific kind of activity• Involves methods, processes, procedures or techniques• Specialist knowledge, analytical ability and knowledge of use of specialist tools
INTERPERSONAL SKILLSAbility to manage peopleAbility to networkAbility to communicate at all levels etc.
START UP COST SAVINGS5 AREAS IN THE START UP PROCESSWHERE SAVINGS ARE POSSIBLE:-• Franchise company fees• Turnkey packages• Construction costs• Equipment signs and fixtures• Lease terms
INDIVIDUAL EXERCISERevision questions p 63 Module Manual
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