2. QUOTE OF THE DAY
“Those who are going to be in
business tomorrow are those who
understand that the future, as
always, belongs to the brave.”
(William Bernbach (1911-1982)
U.S. advertising executive.
3. • Entrepreneurship is an ability some
people have to accept risks and combine
factors of production in order to produce
goods and services. Such people are
called Entrepreneurs.
• Intrapreneurship is entrepreneurship
within an existing business structure. The
employee who leads this is called
Intrapreneur.
4. Characteristics of an Entrepreneur
E -ENERGETIC
N -NOVELITY-ORIENTED
T -TOLERANT
R -RESULT -ORIENTED
E -ENTERPRISING
P -PROFIT-ORIENTED
R -RESOURCEFUL
E -EFFICIENT
N -NETWORKERS
E -ENVISAGERS
U -UNSTOPPABLE
R -RISK-LOVING
S -SELF -CONFIDENT
5. Sources of business Ideas
1. Examine your own skill set for business ideas.
2. Invent a new product or service.
3. Add value to an existing product
4. Improve an existing product or service.
5. Investigate other markets.
6. Keep up with current events and be ready to take
advantage of business opportunities.
The choice of business should be informed by the
entrepreneurs:
• Financial strengths
• Commitment
• Expertise and interests
• Personal qualities
• Prior experience
• External contacts, resources etc.
6. BUSINESS LIFE CYCLE
IDEA START
GROWTH
PROFITS-MILK
COW
REBRAND
DECLINE –GOING TO THE
DOG
DEATH-DOG
STAGE
BREAK-EVEN
POINT
MATURITY
A business is like a person, it is first conceived,
developed and born. It then grows and matures and it
can die.
7. Why Businesses Fail And How This Can Be
Minimized
Factors that contribute to business failure are rooted in
the following areas:
1.Management and organization skills
2.Record keeping
3.Working capital management
4.Inventory management
5.Debtors management
6.Creditors management
UNCONTROLLABLE FACTORS
•Political factors
•Economic influences
•Sociological trends
•Technological innovations
•Ecological –Natural/manmade
factors
•Legislative requirements
•Industry analysis
8. • Lack of or inadequate survey to ascertain the
customer, the market and the competitors.
• Failure to have a business plan or existence of
poorly planned one.
• Lack of adequate cash flow
• Lack proper marketing
• Lack of proper management and organization
Skills
• Lack of prudent financial management Skills
(See Strategic drift at the end)
9. 1.Management And Organization Skills
Management is about planning, organizing,
implementing, monitoring and evaluating. (Supervise,
monitor and coordinate).
We advise:
-Seek business management information as
you’re doing today, as it is available:
-from individual consultants (mentorship and
coaching);
-Institutions like KIM (seminars and short
courses);
-both print and electronic media;
-information communication technology (ICT) –
internet.
10. CONT’D
Among important things you will learn is how to:
• interface with all the necessary entities, such as
banks, suppliers, customers, venture capitalists,
distributors, and advertising agencies.
• In addition, you will learn how to produce
products and services that are realistic, requiring
little or no modification to be marketable.
• See other areas of learning that you will require,
here below!
11. 2. Failure to keep business records
• Business records MUST be kept accurate and
up-to-date, as they show:
-the amount of money invested in the business.
-how business funds have been used.
-how much money is coming into the business.
-how much money is going out of the business.
-how much money the business owes outsiders
-how much the business is owed by others
-how to control your cash.
-others how the business is doing (Tax agents/banks)
12. CONT’D
• Helps you to budget and plan for the future.
• Enables you to keep records of prices,
suppliers and other valuable information in
one place.
• Allows a data base of all transactions.
• Helps to reduce chances of fraud.
14. Working capital management
Each component of the working capital: payables,
Inventory and receivables has two dimensions to it
Time and Money.
• Collect monies from debtors quickly, reduce
money tied up by inventory relative to sales,
generate more cash and borrow less.
• This will reduce the cost of bank interest or have
additional free money for investment.
• Negotiate with suppliers longer credit or
increased credit limit. Once this is done, free
finance to help fund future sales is assured. And
this is the way to go!
15. 4. Inventory mismanagement
• Managing inventory is a juggling act. Excessive
stocks can place a heavy burden on the cash
resources of a business.
• Insufficient stocks on the other hand can
result in lost sales, delays for customers etc.
• The key is to know how quickly your overall
stock is moving, which will be influenced by
the nature of the business.
16. 5.Debtors’ Mismanagement
• Establish clear policy on credit practices.
• Make sure that these practices are clearly
understood.
• Be professional when accepting new accounts.
• Check out each customer thoroughly before you
offer credit.
• Establish credit limits for each customer... stick to
them and review Continuously.
• Keep very close to your larger customers.
• Invoice promptly and clearly.
• Consider charging penalties on overdue accounts.
• Monitor your debtor balances and ageing
schedules. It may become bad debt!
17. 6. Creditors’ Mismanagement
• Creditors should be managed carefully to enhance
the cash position.
• Avoid liquidity problem by seeking answers to the
questions below:
• Do you know the cost to the company of carrying
stock?
• Do you have alternative sources of supply?
• How many of your suppliers have a returns policy?
• Are you in a position to pass on cost increases
quickly through price increases to your customers?
• If a supplier lets you down can you charge back the
cost of the delay?
• Can you arrange (with confidence!) to have delivery
of supplies staggered or on a just-in-time basis?
18. Cont’d
NOTE:
• In business, if you can buy well then you can
sell well.
• Management of your creditors and suppliers
is just as important as the management of
your debtors.
• It is important to look after your creditors –
pay on time. TRUST is key in this relationship!
• A good supplier is someone who will work
with you to enhance the future viability and
profitability of your company!
19. Strategic Drift Gone Awry
Phase I Phase II
2 2
4
3
Demise
Transformation
Environment
condition
Drift due to
Company’s strength
& capability
5
Level of
change
Flux/
Instability
20. Finally, be aware of the following five competitive
forces that can contribute to your business failure
Threat of potential
new entrants
Competition among
existing companies
Threat of
Substitute
products
Bargaining power
of suppliers
Bargaining
power of
buyers
