Learning outcomesAfter studying this chapter, learners should be able to: Different routes to business ownership Identify a business ideas and opportunities Evaluate business ideas and opportunities Describe the process of starting up a business Develop a business plan Be able to do a viability study Determine the feasibility of an identified business opportunity
IntroductionThis lesson will be focusing on how to start up abusiness. First of all, if someone wants to start up abusiness it is important to know a background routes tobusiness ownership of starting up a new business.Secondly it will be focusing on starting up a businessprocess.
Different routes to businessownership There are many ways in which business ownership can be achieved. There are common methods that a person can use to establish a business. Other methods include: Buying an existing business, Taking over a family business or Buying a franchise. The following slide will discuss more about the routes to business ownership:
Starting a new businessThere are different options a person must consider whenstarting a new business: First option: to start very small business and remain small Second option: it might be small due to limited start- up funds but a business can grow up through the investment of the business profit. Third option: a person must decide to start a business at an advance level with sufficient funds.
Buying or taking over an existingbusiness.A person can run a business from taking over fromhis/her family business or bought from another owner.The business continue to exist as it was when it wasowned by the previous owner.For example if a son or a daughter is owning maybe afamily company that was owned by his or her fatherbefore.
Buying a franchiseFranchise is the guidelines that are set down by afranchisor (person who controls the right to thefranchisee to sell organizations product or service).Thus franchising is granting of certain rights by afranchisor to other parties, franchisee.
Starting-up a business processStep 1: Identifying a business opportunity or ideas. The entrepreneurs must identify ideas by considering their skills and expertise. Must know what their personal strengths, knowledge and experience are. Business ideas are also generated through the problem identification.
Step 2: Evaluate feasibility of thebusiness opportunity and idea You must identify a possible business idea and determine whether there would be a need for what he or she is thinking(for instance, who their market will be) Must identify whether he or she has necessary skills, knowledge and resources to do what is implied by the business idea. The feasibility study include evaluation of the business idea and identification of the market.
Step3: Viability studyThe most important thing about viability study is todetermine the size of the potential market Establish the market and the need of the market. Develop the mission statement of your business. Formulate goals and objective of your business. Determine the market share of the market Estimate the income of the organization (by considering the fixed and variable cost) Calculate the break-even point (point where there is no profit and loss)
Step 4: Developing a business planBusiness plan assist the business to focus in all itsactivities on reaching the objectives in an organizedmanner.When developing a business plan there are keyelements of a business plan that you need toconsider, here are as follows: Cover letter: addresses a person whom the business plan is addressed, it a very brief summary (one page) must attract the attention of a reader to read the rest of the business plan.
Key elements continues… Table of content: it includes the headings and sub- headings of a business plan. Executive summary: it includes two or three pages of management summary of a business plan. Description of the business: it explain exactly what type of business is planned
Key elements continues… The vision, mission, goals, objectives and strategy of the business: it provides a clear indication of the business intention. Product or service plan: the product and services must be explained
Key elements continues… Marketing plan: it explain how the product and services will be brought to the attention of the consumers. Financial plan: it explain how much money is needed to start and operate the business.
ConclusionStarting up a business is a complicated process whichrequire an extensive analyses of business ideas,evaluation of opportunities and planning.
ReferencesNieuwenhuizen, C. & Oosthuizen, TFJ. (2012). BusinessManagement: a contemporary compilation. Roodepoort:Future Vision Business Consultants (FVBC).Nieman, G. (1998). The Franchise option: How toFranchise your Business. Cape Town: Juta.