Cape Coast Technical University

Department of Fashion

Program: Higher National Diploma (HND)

Course: ETP 210 Entrepreneurship (First Semester)
Lecturer: Dr Moses Ahomka Yeboah (PhD Management)
Email: [email protected]

Aim of course unit

Small to medium-sized enterprises (SMEs) are the backbone of the economies of both
developed and developing countries (including Ghana). According to the Ghana statistical
service, SMEs represent about 80% of businesses and contribute about 70% of Ghana’s gross
domestic product (GDP). As a consequence, the management of SMEs is an important topic
and is a vibrant area of growing interest. SMEs are inherently different from larger enterprises,
in that they are largely owner managed; have limited resources in terms of staffing and hence
expertise is concentrated on a few employees; and face financial challenges, for instance,
access to affordable credit over a reasonable period.

This is a two-semester course unit. The content for the first semester is designed to expose
students to a progressively more relevant entrepreneurial personality traits/characteristics and
activities; experiences that will enable them to develop the insight needed to discover and
create entrepreneurial opportunities. While the second semester’s content will equip students
with the expertise to successfully start and manage their own growth-oriented business
enterprises.

By means of case studies, student research/interviews and guest speakers, the unit considers
questions of business start-ups, sources of financing, product / pricing / promotion decisions,
building customer relationships, human resource, supply chain, risk management and
internationalization.

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Unit outcomes

On successful completion of this course unit, the student should be able to:

1. Demonstrate a critical appreciation of the environment and role of SMEs in today's

economy, and particularly so within the Ghanaian context.

2. Understand and apply the entrepreneurial process

3. Develop the ability to identify business opportunities

4. Analyse the feasibility of a new venture business concept and to develop a business
plan

5. Develop the practical understanding and skills involved in starting and owning a
growth-oriented business venture.

6. Identify and solve initial problems in starting and owning a growth-oriented business
venture.

Unit content for first semester Page

1. Nature and development of entrepreneurship 6

• The evolution of entrepreneurship
• Theories of entrepreneurship
• The entrepreneurial process
• Factors influencing entrepreneurship
• Factors inhibiting entrepreneurship
• Types entrepreneurs
• Personality traits of successful entrepreneurs
• Characteristics of successful entrepreneurs
• Reasons why people become entrepreneur

2. The business environment and entrepreneurship 22

• Meaning of business environment

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 • Components of business environment
• Business environment scanning
• Modes of business environment scanning
• Scope of business environmental scanning
• Business environment analysis
• SWOT analysis application
• Methods of environmental scanning
• When do you use SWOT
• Importance of environmental scanning
• Influence of the external environmental factors on
entrepreneurship

3. Recognizing business opportunities and generating ideas 25

• Meaning of business opportunities
• Essential qualities of an opportunity
• How to identify entrepreneurial opportunities
• Techniques for generating business ideas
• Encouraging and protecting new ideas

4. Forms of business ownership 32

• Forms of business ownership
• Factors to consider in choosing the form of business ownership
• Changing the form of a business

5. The organisational plan 39

• Choosing an organisational form
• Building a management team and the role directors
• Characteristics and value of a strong management team
• Form strategic alliances
• The marketing plan
• Marketing in an SME context
• Formal marketing plan

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 • Marketing Research, Market Potential and Target Market in
SMEs
• The location plan
• Locating the brick-and-mortar enterprise
• Home-based businesses
• E-commerce and the internet
• The potential benefits of locating a start-up on the internet

6. Feasibility analysis 44

• Meaning of feasibility analysis

• Importance of feasibility studies
• Components of feasibility analysis
• Market analysis
• Competitive advantage analysis
• Financial feasibility analysis
• Review and analyse all data
• Make “Go/No GO” decision
• Source of help
• Sources of information

7. Business plan 48

• Meaning of a business plan

• Importance of the business plan
• Types of business plans
• Business plan outline/content

• Putting your plan together

• Keeping your business plan up-to-date

• Making a business plan presentation

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 8. Time management for entrepreneurs 57
• Meaning of time management
• Principles of time management
• Time management strategies

9. Intellectual property for business 62

• Meaning of intellectual property
• Importance of intellectual property
• Types of intellectual

Prescribed reading text

• Longenecker, J.G., Petty, J.W., Palich, L.E. & Hoy, F. 2017, Small Business
Management: Launching & Growing Entrepreneurial Ventures, (18th ed.), Cengage
Learning Australia, Melbourne.

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 CHAPTER ONE

NATURE AND DEVELOPMENT OF ENTREPRENEURSHIP

Introduction

Entrepreneurship is a popular subject among students of business as well as among

management scholars and researchers. Academic courses, books and academic journals on
entrepreneurship abound. Many governments around the world, believing that
entrepreneurship is the key to economic development, offer Entrepreneurship Development
Programs (EDPs). Amidst all this frenzy of activity stands a fundamental question: who is an
entrepreneur?

History of entrepreneurship

To better understand entrepreneurship, it is useful to look back to the early development of

capitalism. Capitalism depends on harnessing private motives to produce the goods and
services that the public wants as efficiently as possible. Capitalism sharply contrasts with other
economic systems, like feudalism and socialism. In capitalism, entrepreneurs are responsible
for such economic decisions as what to produce, how much to produce, and what method of
production to adopt. The concept of entrepreneur is borrowed from the French words
entreprendre, “one who undertakes”—that is, a “manager.” In fact, the word entrepreneur was
shaped probably from celui qui entreprend, which is loosely translated as “those who get things
done.”

In the early eighteenth century, a group of thinkers called the Physiocrats surfaced in France
around a school of new economic theory. They were the first proponents of laissez-faire and
opposed all government intervention in industry, especially taxation. Their doctrine was that
the economic affairs of society are best guided by the decisions of individuals. One of the most
famous among them was Richard Cantillon. In a paper he worked on between 1730 and 1734

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and that was later published in 1775 as Essai sur la Nature du Commerce en General, he
introduced the concept of entrepreneur. He developed these early theories of the entrepreneur
after observing the merchants, farmers, and craftsmen of his time. Jean-Baptiste Say, a French
businessman turned economist, followed Cantillon with his Trait d’economie politique in 1803.
His work commented on the theory of markets and how the entrepreneur is involved in this
transaction of goods for money. The economic system based on the capitalism concept was
completed by the Scottish economist Adam Smith. Leveraging the work performed earlier by
the Physiocrats, and in particular Francois Quesnay, Smith completed his famous book, The
Wealth of Nations, in 1776 at the beginning of the Industrial Revolution in Britain. Some
believe that his main contribution to economics is cantered on free enterprise. Introducing the
concepts of liberal capitalism and entrepreneurial capitalism, Smith is “known as an architect
of our present system of society.” Smith concentrated on the growing manufacturing and trade
industries.

In particular he studied the division of labour in the manufacturing of pins, which was
beginning to incorporate new machines. His central argument in The Wealth of Nations is
based on the concept of what he called the “invisible hand.” He believed that human self-
interest is the basic psychological driver behind economics, and that a natural order in the
universe makes all individual, self-interested endeavours add up to the social good. He also
studied the competitiveness of nations and multinational trade. His major theoretical
achievement was to take the first steps toward a theory of the optimal efficient allocation of
resources under conditions of free competition. Joseph Alois Schumpeter, an Austrian-
American economist, was one of the first to study entrepreneurs and the impact of
entrepreneurial capitalism on society.

As he wrote in The Theory of Economic Development, he believed that innovation and

creativeness distinguished entrepreneurs from other businesspeople. He observed that
innovation and entrepreneurship are closely interwoven. He argued that the entrepreneur was
at the very centre of all business activity. He observed that entrepreneurs create “clusters of
innovations” that are the causes of business cycles because their actions create disruptive
dislocations and arrive in huge waves. In fact, Schumpeter believed that entrepreneurs deserve
the credit for the industrial revolution. Schumpeter introduced the phrase “creative
destruction,” stating that the entrepreneur does not just invent things, but also exploits in novel
ways what has already been invented.

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Theories of Entrepreneurship

There are three theories of entrepreneurship namely; economic theory, psychological theory
and sociological theory.

Economic Theory

Adam Smith developed classical capitalism as an economic system in his book The Wealth of
Nations in 1776. Smith perceived capitalists as owner-managers who combined the basic
resources of land, labour, and capital into successful enterprises. The classical capitalistic
economic system, based on the concept of private ownership of property, assumed the creation
and distribution of wealth through the exchange of goods and services through open,
uncontrolled markets open to all buyers and sellers. Cantillon (1755) was known for his
demand theory of entrepreneurship in which he said production depends on the demand of land
owners who contract out their work. Those who undertake the work demanded are
entrepreneurs and they are responsible for resource allocation within a society and bring prices
into line with demand.

Cantillon described the entrepreneur as one who assumes the risk of buying goods, or parts of
goods, at one price and attempts to sell them for profit, either in their original states or as new
products. Neoclassical theory was designed to show that capitalism characterised by perfect
markets and unfettered by outside interference - distributes wealth among buyers and sellers
and creates wealth in the process. One of the central concepts of neoclassical theory is
economics of scale, which assumes that as the size of the firm increases, the cost of production
per unit decreases. Thus, neoclassical theory suggests that large firms are more profitable than
small firms.

In the early part of the 20th century, some economist began to question neoclassical theory
because it eliminated entrepreneurship from the economic process. According to Schumpeter
(1934), an entrepreneur was a person who destroyed existing economic order by introducing

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new products and services, by creating new forms of organization, or by exploiting new raw
materials. Bolton (1971) gives several economic functions of entrepreneurs in society including
market innovation, product and service variety and providing seedbeds from which large
companies will grow. Kirzner (1973) believes that the relationship between entrepreneurship
and economic growth is a function of alertness to identification and exploitation of market
opportunities. Casson (1982) asserted that entrepreneur is one who can co-ordinate resources
without perfect knowledge. In that same light, Drucker (1985) opined entrepreneurship is about
taking risk. The behaviour of the entrepreneur reflects a kind of person willing to put his or her
career and financial security on the line and take risks in the name of an idea, spending much
time as well as capital on an uncertain venture.

Baumol (1993) concludes by arguing that entrepreneurship is a vital component of productivity

and growth. Baumol defines the entrepreneur as “any member of the economy whose activities
are in some manner novel, and entail the use of imagination, boldness, ingenuity, leadership,
persistence, and determination in the pursuit of wealth, power, and position, though not
necessarily in that order of priority.

Psychological Theory

The psychological theory is based on the myth that some people are genetically predisposed to
be entrepreneurs. The consensus of many hundreds of studies on the psychological and
sociological makeup of entrepreneurs is that the entrepreneurs are not genetically different
from other people. This evidence can be interpreted as meaning no one is born to be an
entrepreneur and that everyone has a potential to become one. Whether someone does or does
not is a function of environment, life experiences, and personal choice.

According to Rotter’s (1966) work on locus of control, individuals who are ‘internal’ or believe
that they control their own destiny are more likely to be entrepreneurs. McClelland (1976)
suggests that the motivation of the entrepreneur is crucial. Regardless of variations in economic
development, social structure and opportunity, entrepreneurs with high achievement needs will
almost always find ways to maximise economic achievement. Hornaday and Bunker (1970)
suggest that there are certain personality characteristics that are typical of entrepreneurs.

In addition, Burch (1986) listed the following traits as typical of entrepreneurs;

• Desire to achieve,

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 • Desire to work hard for themselves rather than working for an organization or any other
individual. They may work for someone to gain knowledge of the product or service
that they may want to produce.
• Entrepreneurs are morally, legally, and mentally accountable for their ventures. Some
• Entrepreneurs may be driven more by altruism than by self-interest.
• Entrepreneurs often desire to achieve something outstanding that they can be proud of
as well as are good at bringing together the components (including people) of a venture.

Sociological Theory

Reynolds (1991) states that the inability of trait theories to predict entrepreneurship could result
from the ignorance of social context and choices confronting the individual when the decision
is made. Thus describing situations where seizing the opportunity to be an entrepreneur takes
place will be useful. In addition to sociological entrepreneurship theories opportunity
recognition could be described by anthropological theories. Anthropological entrepreneurship
studies concentrate on social and cultural processes. The outcome and the degree of
entrepreneurial activity depend on opportunity structure. Opportunity structure consists of both
objective structure of economic opportunity and a structure of differential advantage in the
capacity of the system’s participants to perceive and act upon such opportunities.

The main focus of sociological enterprise is to identify its social context in relation to
entrepreneurial opportunity; (1) social networks, (2) life course stage, (3) ethnic identification
and (4) population ecology stage. For the entrepreneur, involvement in casual informal
networks may produce a major advantage. In contrast to the transaction cost approach, social
network theories emphasise trust, not opportunism, as an integral part of the relationship
(Ronstadt, 1988). Social control and economic exchange factors interact closely in long term
relationships. Sociological theories that start from ethnic identification try to explain
entrepreneurship as a process where the individual’s sociological disadvantageous background
is one of the decisive push factors to become an entrepreneur.

The entrepreneurial process

According to Barringer and Ireland (2006), entrepreneurship is the process by which

individuals pursue opportunities without regard to the resources that they currently control.
Thus entrepreneurship can be referred to as the creation of a new organization or new business

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and answers the question of “what business should we enter? Barringer and Ireland posited the
entrepreneurial process is triggered by an individual’s decision to become an entrepreneur,
motivates him/her to develop a business model and later move from the business idea to set-up
an entrepreneurial firm and subsequently, managing and growing the entrepreneurial firm
(Figure 1).

Deciding to Developing Moving from an Managing and

become an successful idea to an growing the
entrepreneur business entrepreneurial entrepreneurial
idea firm firm

Figure 1: The entrepreneurial process

Source: Barringer and Ireland, 2006

The implication of the model (Figure 1) particularly the double – headed arrow between the
decision to become an entrepreneur and the development of successful business ideas indicates
that sometimes the opportunity to develop an idea prompts a person to become an entrepreneur.

Factors influencing entrepreneurship

What forces are driving this entrepreneurial trend in the world? Which factors have led to this
age of entrepreneurship? Some of the most significant drivers are discussed below;

Entrepreneurs as heroes
An intangible but very important factor is the attitude that people have toward entrepreneurs.
Entrepreneurs are raised to hero status and have held out their accomplishments as model to
follow. Business founders such as Michael Dell (Dell Inc.) and Kwame Despite (Peace fm) are
recognised as role models in their respective societies.

Entrepreneurial education
People with more education are more likely to start businesses than those with less education,
and entrepreneurship, in particular, is an extremely popular course of study among students at
all levels. A rapidly growing number of college students see owing a business as an attractive

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career option, and in addition to signing up for entrepreneurship courses, many of them are
launching companies while in school.

Shift to a service economy

The cost of establishing a service company is relatively low compared to manufacturing.
Service businesses have been very popular with entrepreneurs. The booming service sector has
provided entrepreneurs with many business opportunities, from hostel and health care to
computer maintenance.

Technology advancement
Almost all businesses are dependent on technology on all levels from research and
development, production and all the way to delivery. Small to large scale enterprises depend
on computers to help them with their business needs ranging from Point of Sales systems,
information management systems capable of handling all kinds of information such as
employee profile, client profile, accounting and tracking, automation systems for use in large
scale production of commodities, package sorting, assembly lines, all the way to marketing and
communications.

Factors inhibiting Entrepreneurship

Anyone planning to enter the world of entrepreneurship should be aware of its potential
drawbacks as discussed below

Uncertainty of income
Opening and running a business provides no guarantees that an entrepreneur will earn enough
money to survive. Some small businesses barely earn enough to provide the owner-manager
with adequate income. In the early days of a start-up, a business often cannot provide an
attractive salary for its owner and meet its entire financial obligation, which means that the
entrepreneur may have to live on saving for a time.

Risk of losing your entire invested capital

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The small business failure rate is relatively high. A failed business can be financially and
emotionally devastating. Before launching their businesses, entrepreneurs should ask
themselves whether they can cope financially and psychologically with the consequences of
failure. They should consider the risk/reward trade-off before putting their personal assets and
their mental well-being at risk.

Long hours, hard work and health risk

Most business owners do everything themselves, owners experience intense, draining
workdays. People who work an average of 11 or more hours per day have a 67 percent higher
risk of suffering a heart attack or dying from heart disease than people who work a standard
seven- to eight-hour day, according to a new study in the Annals of Internal Medicine.

Discouragement
Launching a business requires much dedication, discipline and tenacity. Along the way to
building a successful business, entrepreneurs will run headlong into many obstacles, some of
which may appear to be insurmountable. Discouragement and disillusionment can set in but
successful entrepreneurs know that every business encourage rough spots and that perseverance
is required to get through them.

Types entrepreneurs
Entrepreneurs can be classified on the basis of:

• Type of business
• Use of Technology
• Motivation
• Growth
• Stages in Development
• Others

Type of business
• Business entrepreneur: Convert ideas into reality; deal with both manufacturing and
trading aspect of business (Small trading and manufacturing business)

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 • Trading entrepreneur: Undertakes trading activities; concerned with marketing
(Domestic and international level)
• Industrial entrepreneur: Undertakes manufacturing activities only; new product
development etc (textile, electronics, etc)
• Corporate entrepreneur: Interested in management part of organisation; exceptional
organising, coordinating skills to manage a corporate undertaking
• Agricultural entrepreneur: Production and marketing of agricultural inputs and outputs.

Use of technology
• Technical entrepreneur: Production oriented, possesses innovative skills in
manufacturing, quality control etc.
• Non-technical entrepreneur: Develops marketing, distribution facilities and strategies
• Professional entrepreneur: Uses the proceeds from sale of one business to start another
one. Brimming with ideas to start new ventures

Motivation
• Pure entrepreneur: Psychological and economic rewards motivate him
• Induced entrepreneur: Incentives, concessions, benefits offered by government for
entrepreneurs motivates him
• Motivated entrepreneur: Sense of achievement and fulfillment motivate him
• Spontaneous entrepreneur: Born entrepreneurs with inborn traits of confidence, vision,
initiative

Growth
• Growth entrepreneur: One who enters a sector with a high growth rate; is a positive
thinker
• Super growth entrepreneur: One who enters a business and shows a quick, steep and
upward growth curve

Stages in development
• First generation entrepreneur: Innovator, risk taker, among the firsts in family to enter
business
• Modern entrepreneur: Who considers feasibility of business, which can adapt to change
and dynamic market
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 • Classical entrepreneur: One who gives more importance to consistent returns than to
growth; concerned about customer and marketing needs

Others

Skeptical entrepreneur
This entrepreneur sees the success of others and immediately starts to question it. They examine
that person's business and looks for the “lucky” breaks, or inheritance they think that successful
entrepreneur received. Maybe it’s the news, or previous life experiences, but they are skeptical
of success and don’t believe it’s possible without all the stars falling into place.

Copycat entrepreneur
This entrepreneur sees the success of others and tries to copy them exactly. Their website is
the same, their business cards are the same, and the way they present themselves is the carbon
copy of a leader in their industry. There is nothing wrong with modeling success—it’s actually
very smart. There is a fine line, however, between modeling and copying. Modeling success
means you see what works and figure out how to make it relevant to your business, and who
you are as a person. If you have been copying, get honest and switch from copying to modeling.

Research entrepreneur
This entrepreneur loves to learn. They research every possible scenario and outcome for
strategies to start or grow a business. There is nothing wrong with learning, but when that’s all
you do, it becomes a problem. The research ends up becoming an excuse for not taking action.
While you should always strive to learn what works, and what could help your business, you
have to implement. Most entrepreneurs know more than they think; too many entrepreneurs
fall victim to information overload. The key to success is learning and then implementing. The
implementing has to happen.

Determined entrepreneur
This entrepreneur hasn’t “made it” but they will, no matter what. They see the value in
entrepreneurship, they see that success is possible without copying, and they do everything
they can to start or grow their business. Starting and growing a business is hard, and it takes
time, but there is proof that it’s possible to thrive. To get there, you need change your mindset

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from focusing on what too many people consider “reality” to what you know your reality can
be. Successful entrepreneurs have determination as their back story.

Accomplished entrepreneur
This entrepreneur has gone through all the stages of entrepreneurship and building a business,
and has reached success. They are now focused on scaling their business and leaving a legacy
that extends beyond their lifetime. The accomplished entrepreneur has figured out the things
that will help you reach success. They have figured out how to connect with their customer and
how to solve their biggest struggles. They will never “make it” but they are experiencing true
freedom. They understand their time is their most valuable resource so they use it wisely.
Success takes time. Growing a business could take a lot of your life, but the freedom
entrepreneurship provides is worth the wait. It all starts with deciding what your goals are.
Decide what you want from your business and how that fits into your life.

World changer.
You are keenly aware of your environment, both on a local and global scale. Maybe you were
an activist or environmentalist in a past career, and it is very likely you have green leanings
when doing business. You likely created your company in order to make a positive impact in
the world, believe that success is measured by impact and when it comes to social media you
almost certainly have a Twitter account. You know the world is changed one person and one
company at a time, and you are committed to living by Gandhi’s words.

Innovator
You are all about creating a product or service. As an idea-man (or woman), innovation is more
important to you than actually owning a company, and that is OK. You have a knack for coming
up with new ideas or making old ones better. However, that also means you may need to excel
at delegating, and hire a CEO to take care of the tasks you don’t enjoy. While you trust your
instincts, you also do a lot of research.

Opportunist
You have a “gift” of intuitive timing and are able to choose the right locations. Some people
may call you impulsive, but that’s just another way of saying opportunist, especially when so
many of your right-time/right-place moves have paid off. Like the innovator, you also trust

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your gut while conducting solid research. However, you could be a little better at planning
ahead if you want to build an empire.

Jack of all trades

Diversification is your middle name. You aren’t afraid to explore trends or to step in when
needed. This makes you think risk can be scary and exciting, all at the same time — you truly
believe there are no great rewards without great risk. However, you’re also a bit of a follower,
which means you need to find the right investors, stakeholders and partners to be successful.
You likely became an entrepreneur to take advantage of the self-starter lifestyle or simply
because you didn’t want to work for anyone else.
Serial entrepreneur
An entrepreneur who continuously comes up with new business ideas and starts new
businesses. A serial entrepreneur will start a business venture but, then give the responsibility
of running the business to another person and move on to a new idea and a new venture. You’re
flexible and always looking to the future for the next big thing. The ‘Thomas Edison’ of
entrepreneurs, you can take a lot of stress and brush off past negative experiences with ease. A
total leader, you might struggle with actually learning from your past failures (it’s not
automatic). You measure success in being better than the competition and in how much money
you make. You might jot down your ideas on Twitter — or even on a napkin.

Wantrepreneur
You’re not an entrepreneur yet, and you may never be. You’re rich with ideas, but the
groundwork still needs to be done. It’s up.. in the air: should you win the lottery, you would
start a business, take a vacation or invest in a business you’ve kind of started already. You want
to enjoy the self-starter lifestyle and consider yourself an idea person, but you need more
motivation to become one of the other

Personality traits of successful entrepreneurs

Within every entrepreneur's personality there exist the following underlisted traits.

Autonomy

Entrepreneurs see a job as a form of economic slavery and prefer to have personal autonomy
to economic security. The worst part about being your own boss is that the expectations for

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your job function are set higher than for everyone else. The best part about being your own
boss is that if you don’t like your orders, you can change them anytime you please.

An intense drive to succeed.

A powerful drive to create success, wealth, legacy or fame is the primary motivator for most
entrepreneurs. They are intensely passionate about what they do, almost to the point of
fanaticism. Their goals are set high and when attained, are reset even higher. Money is not
usually sought for its own sake, but as way of keeping score.

Decisiveness.
The ability to make decisions, sometimes quickly, is a key component of the entrepreneurial
personality. This willingness to make, and hold to, a decision is a necessary leadership skill.
The awareness that there may be better decisions at any choice point
does not result in the indecisiveness that other people often demonstrate.

Adaptable to changing circumstances.

Rather than resisting or resenting change, entrepreneurs have the ability to easily adapt to
changing circumstances and conditions. In fact, many entrepreneurs thrive on change. On the
negative side, some are so thrilled by change that they will force it, even when things are going
perfectly.

Energy.
Entrepreneurs are energetic. They put in more work hours than most people. They also often
play hard and competitively. They are usually too busy working or playing to be spectators.
This high personal energy level translates as constant enthusiasm and personal charisma.

A sense of personal destiny.

Most entrepreneurs have more than just a strong desire to mold their personal destiny; they
have a strong belief in their ability to create their own destiny by their own choices and actions.
If they are among the few who believe in a set fate or predetermined destiny, they believe that
they are fated or destined to be successful.

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A desire for personal growth.

Entrepreneurs are learners and self-improvers. They are always on the lookout for ways to get
the competitive edge, to become better at doing what they do, to develop new skill sets or
understandings. They understand that what you have depends upon what you do and what you
are able to do depends upon who you are. They work constantly to become more.

A highly developed intuition.

Most entrepreneurs rely more on gut feelings to make decisions than they do on conscious
analysis of a situation. Even though they may be highly analytical and like to accumulate lots
of data, their actual decisions are usually based on what feels right.

Opportunity seeking.
The true entrepreneur is always on the lookout for yet another new opportunity. It is often
just a matter of perspective. There is the famous story (usually attributed to Joseph Bata)
about the shoe company who sends an employee to a country in Africa to ascertain if there is
a market for their shoes. The representative reports back, “There is no shoe market here.
These people don’t even wear shoes.” The boss, on hearing this news, exclaims, “This is
wonderful. No one has any shoes yet. What a huge opportunity!”

Perseverance and determination.

The obstacles that cause many people to quit are minor setbacks for the true entrepreneur.
Winners persist. Losers desist. It is often that simple personality difference that separates the
happy successful person from the frustrated failure

Problem solving.

When others focus on existing problems, entrepreneurs focus on possible solutions. There is
always a solution. There is always a problem. For most people, a problem is an impediment.
For the entrepreneur, a problem is an opportunity to discover or create a better solution.

Characteristics of Successful Entrepreneurs

The following characteristics are common among successful entrepreneurs

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Have a unique perspective on risk.
Successful entrepreneurs don’t take no for an answer and they don’t fear failure. They don’t
view risk the same way ordinary people do, which allows these entrepreneurs the psychological
freedom to explore opportunities that would scare most conventional business thinkers.

Communicate vision and instil passion.

Great entrepreneurs must be able to move an idea to reality in order to be successful.
Accomplishing this requires working through others; entrepreneurs must create and
communicate their vision in a way that generates enthusiasm and inspires action.

Demonstrate resilience and rapid recovery.

Entrepreneurs who thrive accept the potential for failure and embrace failure when it happens.
The root of their strength is that they don’t necessarily see themselves or their partners as
failures; their focus is on learning and adjusting as opposed to wallowing in self-pity or seeking
out scapegoats. They always find a way to get back on track quickly, which means they have
little time for playing the blame game.

Do what they do best.

Top entrepreneurs stick to their core competencies and outsource the rest. The ability to identify
and then let go that which is outside the scope of their expertise is what enables these
entrepreneurs to rapidly grow their organizations. Scalability has always been fundamental to
taking a start-up and building it into a successful enterprise. Creating scalability starts with
selecting and hiring the right people.

Preserve what they build.

For many entrepreneurs founding a business is like creating a child. It’s a labor of love that
they have a strong personal investment in. Personal attachment is often why founders like Steve
Jobs and Howard Schultz return to the businesses they started during turbulent times.

Reasons why people become entrepreneur

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Successful entrepreneurs have reasons for going into their entrepreneurial career. Here are
some reasons for becoming an entrepreneur:

Satisfaction
Helping other people and improving other people’s lives is quite satisfying. In fact,
entrepreneurs experience much personal satisfaction through helping other people. Often, their
new venture is beneficial to others, and it meets other people’s needs through services and
products offered.

Independence
Getting to work on your own is one of the best reasons to become an entrepreneur. Being the
boss, you get to call the shots. An entrepreneur can set his own schedule; can work regular
hours, or whenever he or she feels is most necessary at a given period of time. An entrepreneur
can manage their own business independently and can have quality time with their family
anytime they want.

Feeling of Pride
An entrepreneur’s job always accompanies sacrifices. An entrepreneur is rewarded with a
feeling of pride when they give everything to succeed.

Building relationships
You can have the opportunity of meeting new people and build new relationships by becoming
an entrepreneur. You will have a greater chance of meeting other people who have been in
similar situations and struggling with some of the same issues, if you engage in
entrepreneurship. Your circle of friends and acquaintances will grow by sharing tips and asking
for advice as well as partnering with other business owners.

Job security
One of the reasons to become an entrepreneur is job security. If you own your business, you
are the boss and you won’t get fired. Being the boss, you are responsible for the lives of many
people and it motivates you to be at your best at all times.

Income potential

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One of the very reasons of becoming an entrepreneur is that you won’t be tied down to a certain
yearly salary. You can generate your own income level when you own a business. You can
reward yourself with more money if you work hard, work smart and work longer hours. A
potential income can keep you motivated to do your best.

CHAPTER TWO
THE BUSINESS ENVIRONMENT AND ENTREPRENEURSHIP

Introduction
There is close and continuous interaction between the business and its environment. This
interaction helps in strengthening the business firm and using its resources more effectively.
The business environment is multifaceted, complex and dynamic in nature and has a far-
reaching impact on the survival and growth of the business.

Meaning of the Business Environment

Business environment refers to different forces or surroundings that affect business operations.
Such forces include customers, competitors, suppliers, distributors, industry trends, substitutes,
regulations, government activities, the economy, demographics, and social and cultural factors.
Others are innovations and technological developments.

Components of the Business Environment

The Business environment comprise of the internal environment and external environment.

Internal environment
These are factors within an organization that influence its activities and choices, particularly
the behaviour of the employees. Factors that are frequently considered part of the
internal environment include the organization's mission statement, leadership styles, and
its organizational culture.
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External environment
These factors outside an organisation that have immense impact on the business
activities. Various external factors can impact the ability of a business
or investment to achieve its strategic goals and objectives. These external factors might
include; socio-cultural, legal, economic, political, technological changes, economic,
political and competitive environments. The next section will discuss briefly each of the
external factors.

Socio-cultural environment
These are beliefs, customs, practices and behavior that exist within a population international
companies often include an examination of the socio-cultural environment prior to entering
their target markets.

Legal environment
These are rules and regulations governing business activities. Business owners and/or
managers are bound by law to comply with the legal system in each country, failure do so will
adversely affect the business enterprise which might involve criminal prosecution of defaulting
officers.

Economic environment
These are economic factors, such as employment, income, inflation, interest
rates, productivity, and wealth, that influence the buying
behaviour of consumers and institutions.

Political environment
These are government actions which affect the operation of a company or business. These
actions may be local, regional, national or international level. Business owners and managers
pay close attention to the political environment to gauge how government actions will affect
their company.

Technological environment
This means the development in the field of technology which affects business by new
inventions of productions and other improvement in techniques to perform the business work.
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Competitive environments.
This refers to the level of competition in the industry in which the firm operates. Michael Porter
(1980) propounded five forces namely; risk of entry by potential competitors, rivalry among
current competitors, and bargaining power of buyers. Others are bargaining power of suppliers
and threat of Substitute products.

Business environment scanning

Business environment scanning is a careful monitoring of an organization's internal
and external environments for detecting early signs of opportunities and threats that may
influence its current and future plans.

Business environment analysis

Environmental Analysis is an evaluation of the possible or probable effects of external
forces and conditions on an organisation’s survival and growth strategies. Both external and
internal data are significant in conducting the environmental scan. Once the data is gathered
from both internal and external environments, the next step is the actual Strengths, Weaknesses,
Opportunities, and Threats (SWOT) analysis. The SWOT analysis entails thinking in terms of
Strengths and Weaknesses as internal to the organisation, while Opportunities and Threats are
usually considered external to the organisation.

When do you use SWOT?

A SWOT analysis can offer helpful perspectives at any stage of an effort. You might use it to:

• Explore possibilities for new efforts or solutions to problems.

• Make decisions about the best path for your initiative. Identifying your opportunities
for success in context of threats to success can clarify directions and choices.

• Determine where change is possible. If you are at a juncture or turning point, an

inventory of your strengths and weaknesses can reveal priorities as well as possibilities.

• Adjust and refine plans mid-course. A new opportunity might open wider avenues,
while a new threat could close a path that once existed.

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SWOT also offers a simple way of communicating about your initiative or program and an
excellent way to organize information you've gathered from studies or surveys.

CHAPTER THREE
RECOGNIZING BUSINESS OPPORTUNITIES AND GENERATING IDEAS

Introduction
Opportunities don't knock your door every day. Wisdom is in making the most of every
opportunity you get. Essentially, entrepreneurs recognize an opportunity and turn it into a
successful business. An entrepreneur recognizes a problem or an opportunity gap and creates
a business to fill it.

Recognizing business opportunities and generating ideas

Business opportunities are difficult to define because the term means different things to
different people. A business opportunity is any situation that arises for you to make money
with.

Elements of business opportunity

Business opportunity consists of four integrated elements that should be considered at the same
timeframe and within the same domain or geographical location. These four elements are:
• A need
• The means to fulfill the need
• A method to be applied to the means to fulfill the need
• A method to benefit from it.
If any one of the elements is missing, a business opportunity could be developed by finding the
missing element. The more unique the combination of the elements is, the more unique the
business opportunity.

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Essential qualities of business opportunity
An opportunity is a favourable set of circumstances that creates a need for a new product,
service, or business. An opportunity has four essential qualities namely;
• Attractiveness
• Durable
• Timely
• Anchored in a product, service, or business that creates value to the end user.
For an entrepreneur to capitalize on an opportunity, its window opportunity, must be open. The
term “window of opportunity” is a metaphor describing the time period in which a firm can
realistically enter a new market. Once the market for a new product is established, its window
of opportunity opens, and new entrants flow in. At some point, the market matures, and the
window of opportunity (for new entrants) closes.

Difference between a business opportunity and an idea

Business Opportunity entails the following
• Both an attraction and the possibility of being sustainable
• It corresponds to a need and it reaches the market in propitious moment
• It also covers a product or service
• Represents an additional value for the consumer
• It fits into the market reality.

Idea consists of the following

• An idea is a thought, impression, or notion which may or may not meet the
criteria of an opportunity.
• It can be either a particular product or a new and innovative processing method
• Idea changes several times as you develop your business plan
• An idea offers you the possibility of discovering new business opportunities
• And also, the possibility of sharing information with others to help you start
your business.
Many businesses fail not because the entrepreneurs that started them didn’t work hard, but
because there was no real opportunity to begin with.

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How to identify entrepreneurial opportunities
There are three ways to identify an opportunity are:
1. Observing trends
2. Solving a problem
3. Finding gaps in the marketplace (Prentice-Hall, 2008)

Observing trends
The first approach to identifying opportunities is to observe trends and study how they create
opportunities for entrepreneurs to pursue. This approach entails observing how economic
forces affect consumers’ level of disposable income. Individual sectors of the economy have a
direct impact on consumer buying patterns. An understanding of the impact of social forces on
trends and how they affect new product, service, and business ideas is a fundamental piece of
the opportunity recognition puzzle. For example, the Sony Walkman was developed not
because consumers wanted smaller radios but because people wanted to listen to music while
on the go. Given the rapid pace of technological change, it is vital for entrepreneurs to remain
on top of how new technologies affect current and future opportunities. Finally, political action
and regulatory changes also provide the basis for opportunities. For example, new laws create
opportunities for entrepreneurs to start firms to help companies comply with these laws

Solving a problem
Sometimes identifying opportunities simply involves noticing a problem and finding a way to
solve it. These problems can be pinpointed through observing trends and through more simple
means, such as intuition, serendipity, or chance. Some business ideas are clearly gleaned from
the recognition of problems in emerging trends. At still other times, someone may simply
notice a problem that others are having and think that the solution might represent an
opportunity.

Finding gaps in the marketplace

The third approach to identifying opportunities is to recognize a need that consumers have that
is not being satisfied by either large, established firms or entrepreneurial ventures. These gaps
can be hard to identify but can be potentially very rewarding.

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Techniques for Generating Ideas
Here are some great methods of generating business ideas for the new entrepreneur.

Market research
Market research is testing your product or service in your market area to determine which types
of people or companies it will attract. It also reveals age group, gender, and income levels of
people interested in your product. Through comparisons, market research also helps the
business owner learn what has worked in the past and what may work in the future
Brainstorming
Brainstorming is used to generate a number of ideas quickly. It is not used for analysis or
decision making. Brainstorming session is targeted to a specific topic about which a group of
people are instructed to come up with ideas. The number one rule of brainstorming is that no
criticism is allowed, including chuckles, raised eyebrows, or facial expressions that express
scepticism or doubt. Criticism stymies creativity and inhibits the free flow of ideas.

Focus groups
A focus group is a gathering of 5 to 10 people who are selected because of their relationship to
the discussed issue being discussed. Focus groups are used to help generate new business ideas.
The strength of focus groups is that they help companies uncover what’s on their customers’
minds through the give‐and‐take nature of a group discussion. The weakness is that because
the participants do not represent a random sample, the results cannot be generalized to larger
groups.

Surveys
A survey is a method of gathering information from a sample of people. The sample is usually
just a fraction of the population being studied. The most effective surveys sample a “random”
portion of the population, meaning that the sample is not selected haphazardly or only from
people who volunteer to participate. The quality of survey data is determined largely by the
purpose of the survey and how it is conducted. Surveys generate new product, service, and
business ideas because they ask specific questions and get specific answers.

Encouraging and Protecting New Ideas

Entrepreneurial ventures can take certain concrete steps to build an organisation that encourage
and protect new ideas. Here are the steps
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Establishing a focal point for ideas
Some firms meet the challenge of encouraging, collecting, and evaluating ideas by designating
a specific person to screen and track them. Another approach is to establish an idea bank, which
is a physical or digital repository for storing ideas. An example of an idea bank would be a
password‐protected location on a firm’s intranet that is available only to qualified employees.
It may have a file for ideas that are being actively contemplated and a file for inactive ideas.

Encouraging creativity at the firm level

An employee may exhibit creativity in a number of ways, including solving a problem or taking
an opportunity and using it to develop a new product or service idea. Although creativity is
typically thought of as an individual attribute, it can be encouraged or discouraged at the firm
level.

Protecting ideas from being lost and stolen

Intellectual property is any product of human intellect that is intangible but has value in the
marketplace. It can be protected through tools such as patents, trademarks, copyrights, and
trade secrets. As a rule, a mere idea or concept does not qualify for intellectual property
protection; that protection comes later when the idea is translated into more concrete form.

Developing and Generating Business Ideas

• Starting a business begins with a promising business idea. By recognizing the nature and
origin of start-up ideas, an entrepreneur can broaden the range of new business ideas
available for his or her consideration.

• There are three basic types of ideas from which most start-ups are launched:

1. An idea to enter new markets- providing customers with a product or service that
does not exist in a particular target market but does exist somewhere else.

2. Ideas based on new technologies- involves new or relatively new knowledge

breakthroughs/invention. This type of business entails high risk because there is
usually no definitive model of success to follow, but it can also offer huge profits.

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 3. Ideas that offer new benefits- offering customers benefits from new or improved
products or services or better ways of performing old functions.

External/Internal Analyses and Feasibility

• Two general approaches can used to identify business ideas—outside-in and inside-out
analyses. Entrepreneurs can look for needs in the marketplace and then determine how
to use their capabilities to pursue those opportunities (outside-in), or they can first
evaluate their capabilities and then identify new products or services they might be able
to offer to the market (inside-out)

• Internal analyses (Inside-Out Analysis) - This details the start-up’s sources of potential
strengths (including those that can reasonably be obtained or created) and the unique
competencies that can be formed from them. Entrepreneurs who prefer to start a business
based on inside-out analysis will first need to have a good understanding of the resources
and capabilities that are available to them, and how to utilise them.

• External analyses (Outside-In Analysis) - Entrepreneurs are usually more successful

when they study a business context in order to identify potential start-up opportunities
and determine which are most likely to accomplish their goals. This outside-in analysis
involves considering the general environment and the industrial setting in which the firm
might do business. The general environment is made up of very broad factors that
influence most businesses in society, while the industry environment is defined more
narrowly as the context for factors that directly affect a firm and all of its competitors.
The competitive environment is even more specific, focusing on the strength, position,
and likely moves and countermoves of competitors in an industry.

• Integrating Internal and External Analyses- A solid ground for competitive advantage
requires a reasonable match between the strengths and weaknesses of a given firm and
the opportunities and threats in the environments. This integration is best assessed
through a SWOT analysis (standing for Strengths, Weaknesses, Opportunities, Threats),
which gives a simple overview of a venture's strategic situation

• The Entrepreneur’s Opportunity “Sweet Spot”

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 The area that typically offers the greatest potential for superior business results. This is
where business opportunities fit entrepreneurs’ background and skills, as well as their
interests and passions.

Strategies that Capture Opportunities.

A strategy is a set of actions that coordinates the resources and commitments of a business to
boost its business performance. Companies can choose to build their strategy on either low cost
or differentiation as they consider how to position themselves relative to their competitors.

1. Cost-based strategy- a firm must reduce its production costs so that it can
compete by selling at low prices for its products or services and still make a
profit. The sources of cost benefits are varied, ranging from low-cost labour to
efficiency in operations.

2. Differentiation-based strategy- emphasizes the uniqueness of a firm’s product or

service (in terms of some feature other than cost). Different operational and
marketing tactics, ranging from design to promotion, can lead to product or
service differentiation.

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 3. A focus strategy may involve restricting focus to a single subset of customers,
emphasizing a unique product or service, concentrating the market to a single
geographical area, or concentrating on product or service superiority.

Integrity, Ethics and Social Responsibility

• Integrity refers to a general sense of reliability and honesty that is demonstrated
in a strong commitment to doing the right thing, irrespective of the
circumstances. A successful entrepreneur seeks financially rewarding
opportunities while creating value, first and foremost, for prospective customers
and the firm's owners. This implies that relationships are critical and integrity is
an essential ingredient to succeed. Acting with integrity means that an individual
first consider the welfare of others.

• Building a Business with Integrity- in SMEs, the influence of owner-managers is

more important than it is in a large firm where leadership can become diffused.
A leader's behaviour has a much greater impact on employees than her or his
stated philosophy does. Everyone watches how the leader behaves, and this
conduct establishes the culture of the company, underscoring what is allowed or
encouraged and what is prohibited.

• Challenges and Benefits of Acting with Integrity

• Small firms’ limited resources and desire to succeed make them

especially vulnerable to allowing or engaging in unethical practices.

• Start-ups and small companies sometimes resort to telling legitimacy lies.

They can win customers and attract other relevant stakeholders by
attending to the PRO factors (those factors related to the firm's products,
its representatives, and the organization itself).

• Use of the Internet has highlighted ethical issues such as the invasion of
privacy and threats to intellectual property rights.

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 • Cultural differences may complicate ethical decision making for SMEs
operating abroad. The concept of ethical relativism is problematic
because it implies that ethical standards are subject to local interpretation.

• Research supports the notion that ethical business practices are good for
business. When customers and employees trust a small company to act
with integrity, their support can help keep the company going.

An ethical culture requires an environment in which employees at every level are confident that
the firm is fully committed to honourable conduct. As a small business grows; however, personal
interactions between the owner and employees occur less often, creating the need to articulate
and reinforce principles of integrity in ways that supplement the personal example of the
entrepreneur. A good place to start is to establish an ethics policy for the company. Kenneth
Blanchard and Norman Vincent Peale (2013) suggest that the ethical policy be based on the
following five fundamental principles:

• Purpose- the vision for the company and your core values will guide
business conduct.

• Pride- when employees take pride in their work and their company, they
are much more likely to be ethical in their dealings.

• Patience- if you push too hard for short-term goals, sooner or later acting
unethically will seem to be the only way to attain the outcomes you seek.

• Persistence- Stand by your word, which is the foundation of trust. If you

are not committed to an ethical framework, your integrity is at risk, as is
the reputation of the company.

• Perspective- stop from time to time to reflect on where your business is

going, why it is going that way, and how you plan to get there. This will
allow you to be more confident that you are on the right track now.

Harvard researchers suggest that social entrepreneurship refers to “entrepreneurial activity with
an embedded social purpose. It has been described more poetically as “[having] a vision of a
greater good and working to make it real”. In other words, a social entrepreneur is one who
comes up with innovative solutions to society’s most pressing needs, problems, and
opportunities and then makes them happen.

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Social responsibility is a company’s ethical obligations to the community. Entrepreneurs should
consider carefully about their community commitments and activities, because building a
business on a foundation of "doing good" may add to a small company's financial burden. This
is often more than offset by increased loyalty from customers and employees who buy into the
mission, which leads to improved productivity and morale. Entrepreneurs must reconcile their
social obligations with the need to earn profits. Earning a profit is absolutely essential, and
meeting the expectations of society can be expensive.

CHAPTER FOUR
FORMS OF BUSINESS OWNERSHIP
Introduction
When forming a new business, selecting the business structure is one of the most important
decisions you will have to make. Business structures, including the sole proprietorship,
partnership (general or limited), corporation and limited liability company (LLC) each have
distinct advantages and disadvantages.

Forms of business ownership

When a business is launched, a form of legal entity must be chosen. The most common legal
entities are sole proprietorship, partnership and corporation.

Sole proprietorship
A proprietorship is a form of business organization involving one sole person, and the person
and the business are essentially the same. A sole proprietorship is not a separate legal entity.
For tax purposes, the profits or loss of the business flow through to the owner’s personal tax
return.
Creating a sole proprietorship is easy and inexpensive. The owner maintains complete control
power over the business and retains all of the profits. However, Liability on the owner’s part
is unlimited. The business relies on the skills and abilities of a single owner to be successful
(of course, the owner can hire employees who have additional skills and abilities).

Advantages
• Ease of formation and dissolution. Establishing a sole proprietorship can be as simple
as printing up business cards or hanging a sign announcing the business. Likewise, a
sole proprietorship is equally easy to dissolve.

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 • Typically, there are low start-up costs and low operational overhead.
• Ownership of all profits.
• Sole Proprietorships are typically subject to fewer regulations.
• No corporate income taxes. Any income realized by a sole proprietorship is declared
on the owner's individual income tax return.

Disadvantages
• Unlimited liability. Owners who organize their business as a sole proprietorship are
personally responsible for the obligations of the business, including actions of any
employee representing the business.
• Limited life. In most cases, if a business owner dies, the business dies as well.
• It may be difficult for an individual to raise capital. It's common for funding to be in the
form of personal savings or personal loans.

Partnership
A type of unincorporated business organization in which multiple individuals, called general
partners, manage the business and are equally liable for its debts; other individuals called
limited partners may invest but not be directly involved in management and are liable only to
the extent of their investments. Each partner shares equal responsibility for the company's
profits and losses, and its debts and liabilities. The partnership itself does not pay income taxes,
but each partner has to report their share of business profits or losses on their individual tax
return

Advantages
• Synergy. There is clear potential for the enhancement of value resulting from two or
more individuals combining strengths.
• Partnerships are relatively easy to form; however, considerable thought should be put
into developing a partnership agreement at the point of formation.
• Partnerships may be subject to fewer regulations than corporations.
• There is stronger potential of access to greater amounts of capital.
• No corporate income taxes. Partnerships declare income by filing a partnership income
tax return. Yet the partnership pays no taxes when this partnership tax return is filed.
35
 Rather, the individual partners declare their pro-rata share of the net income of the
partnership on their individual income tax returns and pay taxes at the individual income
tax rate.

Disadvantages
• Unlimited liability. General partners are individually responsible for the obligations
of the business, creating personal risk.
• Limited life. A partnership may end upon the withdrawal or death of a partner.
• There is a real possibility of disputes or conflicts between partners which could lead
to dissolving the partnership. This scenario enforces the need of a partnership
agreement.

Corporation
Corporate is a business or entity which has separate legal personality, with limited liability or
unlimited liability for its members or shareholders, who buy and sell their shares/stocks
depending on the performance of the corporation. It is chartered by a state and given many
legal rights as an entity separate from its owners. The process of becoming a corporation, called
incorporation, gives the company separate legal standing from its owners and protects those
owners from being personally liable in the event that the company is sued (a condition known
as limited liability.
Advantages
• Unlimited commercial life. The corporation is an entity of its own and does not dissolve
when ownership changes.
• Greater flexibility in raising capital through the sale of stock.
• Ease of transferring ownership by selling stock.
• Limited liability. This limited liability is probably the biggest advantage to organizing
as a corporation. Individual owners in corporations have limits on their personal liability.
Even if a corporation is sued for billions of dollars, individual shareholder's liability is
generally limited to the value of their own stock in the corporation.

Disadvantages

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 • Regulatory restrictions. Corporations are typically more closely monitored by
governmental agencies, including federal, state, and local. Complying with regulations
can be costly.
• Higher organizational and operational costs. Corporations have to file articles of
incorporation with the appropriate state authorities. These legal and clerical expenses,
along with other recurring operational expenses, can contribute to budgetary challenges.
• Double taxation. The possibility of double taxation arises when companies declare and
pay taxes on the net income of the corporation, which they pay through their corporate
income tax returns. If the corporation also pays out dividends to individual shareholders,
those shareholders must declare that dividend income as personal income and pay taxes
at the individual income tax rates. Thus, the possibility of double taxation.

Factors to consider in choosing the form of business ownership

Determining which form of business ownership which will best suit the needs of your business
and the owner(s) can depend on several different factors. When deciding on which business
organization to use, an attorney can provide you with information about the different structures
and help evaluate your goals and objectives. The ensuing factors must be considered in
choosing the form of your business ownership.

Liability considerations
The first factor to consider is how important liability will be to your business. If there is the
possibility that it could be sued or accrue debt, then it is probably best to avoid being a sole
proprietor or a general partner. Both forms do not provide any personal liability protection from
business creditors. In addition, if you have personal debt or are at risk of having personal
creditors, then these two business structures will not protect your business assets from your
personal creditors. If personal liability is not a major concern, you can avoid the double taxation
of a corporation and formalities of many of the business structures, and opt for a sole
proprietorship or general partnership. Legally, they are simplest business structures to form
and operate. Keep in mind that even though an owner is only responsible for his or her own
personal income tax, it is still best to keep the business finances separate from one's own
personal assets.

Tax consequences

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The next major factor in choosing a business type is how the business will be taxed. A drawback
of the traditional corporation is that it is taxed at both the corporate level and when distributions
are made to the owners. This is known as "double taxation." Sometimes this is desirable
because it keeps the owners out of a higher tax bracket, but generally, if a company wishes to
minimize taxes, a "pass through" business type is usually the model of choice. This means that
the business itself is not taxed. All business profits or losses are passed through to the owners
to report on their own personal tax returns. Partnerships also enjoy pass through taxation so
that the partnership itself is not taxed.

Changing the form of a business

If the nature of your business has fundamentally changed from the time you initially selected a
business form or if the owners' needs have substantially altered, it may be necessary to consider
changing the structure of the business. For example, a growing sole proprietorship may wish
to switch to a partnership to allow for additional owners. General or limited partnerships may
opt to become corporations to take advantage of the limited liability available to all members.
Another scenario in which a conversion to a different business organizational structure is
advisable is if the tax laws and other regulations to which the business is subject have
substantially changed.

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 CHAPTER FIVE

THE ORGANISATIONAL PLAN

Choosing an Organisational Form

The organisational plan is shaped by an entrepreneur’s decision to organize as a sole

proprietorship, a partnership, a corporation, or one of the other available forms. The
organizational form should match the needs of the business, but getting it right can be a
challenge. Also included in the organizational plan are strategic alliances, which are becoming
increasingly popular among small businesses and can be vitally important to their performance.

Building a Management Team and the Role of Directors

• The management team compose of individuals with supervisory responsibilities, as well

as nonsupervisory personnel who play vital roles in the business.

• The team arrangement does not have to be permanent as sometimes the entrepreneur
have to respectfully and appropriately let individuals go when they cannot or will not
adequately support the business. New members can be added to the team as the need
arises.

Characteristics and value of a Strong Management Team.

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 1. A strong management team nurtures a good business idea and helps provide the
necessary resources to make it succeed.

2. The skills of management team members should complement each other, forming an
optimal combination of education and experience.

3. SMEs can improve its management by drawing on the expertise of competent

insiders and outside specialists.

4. Social media tools can be beneficial in attracting customers, connecting with peers,
and sharing advice about everyday problems.

5. Building social capital through networking and goodwill is extremely helpful in

developing a small business.

Forming Strategic Alliances

• Strategic alliances may be established by two or more independent firms to

achieve a common purpose. For instance, a large corporation and a small
business or two or more small businesses may collaborate on a joint project.

• Strategic alliances allow firms to combine their resources without compromising

their independent legal status

• Entrepreneurs can enhance their chances of creating and maintaining a successful

partnership by making productive associations, identifying the right person to
contact, being prepared to confirm the long-term benefits of the alliance, learning
to speak the partner's "language," ensuring a win-win arrangement, and
monitoring the progress of the alliance and making any necessary changes

The Marketing Plan

• A marketing plan details a firm's overall marketing activities. It is a blueprint that shows
how a firm will pursue its marketing strategy, and a combination of capabilities and
resources to achieve business objectives, including sales targets or customer acquisition.

Marketing in an SME context

• Small business marketing consists of business activities that direct the creation,
development, and delivery of a bundle of satisfaction from the creator to the targeted
user.

40
 • The product or service as a bundle of satisfaction has three levels: (1) core
product/service, (2) actual product/ service, and (3) augmented product/service.

• Three distinct marketing philosophies are the production-, sales-, and consumer-oriented
views.

• A small business should adopt a consumer orientation to marketing, as that philosophy

is most consistent with long-term success.

• Small business marketing activities include analysing the market and determining the
marketing mix.

Formal Marketing Plan

• A marketing plan describes the specific actions needed to persuade customers to buy the
product and/or services on offer.

• Certain subjects such as market analysis, the competition, and marketing strategy must
be covered in designing a marketing plan.

• Market analysis- The process of locating and describing potential customers.

• Competition- A brief discussion of competitors’ overall strengths and

weaknesses should be a part of the competition section of the plan. Also, related
products currently being marketed or tested by competitors should be noted.

• Marketing strategy- Marketing strategy plots the course of the marketing actions
that will make or break the owner’s vision. The marketing mix of the "4 Ps"
shows the areas that a firm's marketing strategy should address: (1) product
decisions that will convert the basic product or service idea into a bundle of
satisfaction, (2) place (distribution) activities that will determine the delivery of
the product to clients, (3) pricing decisions that will set an acceptable exchange
value on the total product or service and (4) promotional activities that will
convey the necessary information to target markets.

Marketing Research, Market Potential and Target Market in SMEs

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 • Marketing research involves the collecting, processing, interpreting, and reporting of
marketing information.

• The cost of marketing research should be evaluated against its benefits to the firm.

• The steps in the marketing research process are identifying the informational need,
searching for secondary data, collecting primary data, and interpreting the data gathered.

The Location Plan

Location decision is an important strategic decision that must be considered by a firm. It is

important because the location strategy could affect the ability of the firm to reach its consumer,
to produce in economic scale, or even to get access to the resource they need.

Locating the Brick-and-Mortar Enterprise.

The five key factors in locating a brick-and-mortar start-up are:

• Customer accessibility is a key location factor in industries with high

transportation costs, as well as those that must provide handy access for
targeted customers to avoid losing those customers to more conveniently
located competitors.

• Business environment factors affecting the location decision are climate,

competition, legal requirements, and the tax structure.

• Availability of resources such as raw materials, suitable labour, crucial

suppliers, and transportation can be important to location decisions.

• Though it can interfere with sound decision making, the entrepreneur's

personal choice is a practical consideration in selecting a location.

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 • An appropriate site must be available and priced within the entrepreneur’s
budget.

Home-based businesses

A home-based business is any business where the primary office is located in the owner's home.
They don't have to own the property, but they do need to be operating a business out of the same
premises they live in for the business to be considered a home business. The advantages and the
challenges of creating a home-based start-up.

• Home-based businesses are started both for financial reasons and to

accommodate family lifestyle reasons.

• Operating a business at home can pose challenges beyond family and

business conflict, particularly in the areas of professional image and legal
considerations.

• Technology, especially the Web, has made it possible to operate many types
of businesses from almost any location.

E-commerce and the Internet

E-Commerce or Electronic Commerce is buying and selling of products, or services over the
internet. E-commerce is also known as electronic commerce or internet commerce. These
services provided online over the internet network. Transaction of money, funds, and data are
also considered as E-commerce.

The potential benefits of locating a start-up on the Internet.

• E-commerce allows small firms the opportunity to compete with more

prominent companies on a more level playing field.

• Internet operations can help small firms with early cash flow problems by
compressing the sales cycle.

• Business-to-business (B2B) companies generate far more sales than ventures

following alternative models.

• The three main advantages of online business-to-consumer (B2C) firms are

convenient to use, immediate transactions, and continuous access to products
and services.

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 • Internet auction sites, like eBay, are based on the consumer-to-consumer
(C2C) model and can help even the smallest of businesses access a worldwide
market with great convenience.

• The role of a website can range from merely offering information and content
to allowing the buying and selling of products and services online.

• Emerging platforms for online ventures include blogging, podcasting, and

creating a following on YouTube or Pinterest to generate revenue from ads
and sponsorships, donations, subscription charges, or fees for access to live
events.

• Internet-based businesses can be started on a part-time basis, which reduces

the personal risk of the entrepreneur if the venture should fail.

CHAPTER SIX
FEASIBILITY ANALYSIS
Introduction
As an entrepreneur, you can greatly increase your chances for success by analysing your idea,
your marketplace and your management team before beginning.

Meaning of feasibility analysis

An analysis and evaluation of a proposed project determine if it; technically feasible, feasible
within the estimated cost and will be profitable. As an entrepreneur, you can greatly increase
your chances of success by analysing your business concept, your market place, your industry
and competition, and your financial and organizational structures.

Importance of feasibility studies

A Feasibility study is very important for a business in that it serves the following purposes
• It makes an analysis of all the aspects of a business, the external factors influencing it
and also the internal factors.
• It also analyses all the costs associated with the project and how the material would be
sourced.
• It will also make an estimate of how much sales are to be expected and what profits
would the project make. If the results of the feasibility study are favourable, it is logical

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 to proceed with it. Whereas on the other hand, if the results are not favourable, no
businessman will take a risk on it

Components of feasibility analysis

Feasibility analysis comprises of four key components:
Business idea analysis:
This involves an objective assessment of your idea to determine its feasibility. It includes an
overview of:

• The market size, target market and competitors

• The competitive advantage of your idea
• Benefits and drawbacks of your idea, and any possible alternatives
• Your personal circumstances; including your current financial position, your skills,
knowledge and experience in the area/industry, your commitment to the idea and
venture
• Capital requirements and financial feasibility

Market analysis
If you have determined that there is market potential for your idea, you then need to conduct
further research relating to:

• The demand of the product/service that you will offer

• Your ability to supply the product/service: meeting the demand of customers
• Existing competitors within the market
• The life of your idea: whether there is a threat of new competition, new technologies
or substitutes that will render your product/service unfeasible.

Competitive advantage analysis

You need to determine:
• What differentiates your product/service from those of your competitors.
• Essentially, what features make your product/service stand out
• Why customers will choose to conduct transactions with your business over
alternatives.

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Financial feasibility analysis
The financial feasibility analysis requires you to:
• Project sales forecasts
• Determine capital requirements and financing options
• Estimate profitability and return on investment
• Conduct cash-flow forecasting

Review and analyse all data

This review is crucial. The planner should determine if any data or analysis performed should
change any of the preceding analyses. Basically, taking this step means "Step back and reflect
one more time."

• Re-examine the Projected Income Statement and compare with the list of desired assets
and the Opening Day Balance Sheet. Given all expenses and liabilities, does the Income
Statement reflect realistic expectations?

• Analyze risk and contingencies. Consider the likelihood of significant changes in the
current market that could alter projections.

Make "Go/No Go" decision

All the preceding steps have been aimed at providing data and analysis for the "go/no go"
decision. If the analysis indicates that the business should yield at least the desired minimum
income and has growth potential, a "go" decision is appropriate. Anything less mandates a "no
go" decision. Additional considerations include:
• Is there a commitment to make the necessary sacrifices in time, effort and money?

• Will the activity satisfy long-term aspirations?

Sources of help
To write your Feasibility Study, you need to go to others for help and information. Don't try
to do it all yourself when there are so many sources of assistance available.
• Small Business Advisory Centres information, business counselling, training
workshops, research facilities, back up and support facilities, networking, and
publications.

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 • Accountant: advise on all financial issues; assist in feasibility study, legal
structure suggestions, assistance in funding estimates, sourcing and applications,
check books if buying an existing business.
• Solicitor: Contracts, leases, legal representation.
• Bank: finance, information and support, leasing, advice on contracts and specialist
services.
• Business Advisers/Consultants: Someone to talk to specialist advice, mentoring,
negotiations, training, back-up.
• Trade Associations: Membership and support, group deals, training, advice,
research, industrial relations expertise, and networking.
• Potential Suppliers: information, back-up, promotional support, training, etc.

Sources of information
• Own Research: Small Business Advisory Centres, librarian, libraries, publications,
directories, Chambers of Commerce, other business people.

• Competitors: Check out your competition, their location, layout, advertising and
service. This can be a great source for ideas - what are they doing right or wrong?

• Government Departments: Information and publications available from many

Departments

• Local Council: Demographic reports, publications, studies, future plans for

development

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 CHAPTER SEVEN
BUSINESS PLAN

Introduction
Developing a business plan is the first step to a successful business. This guide will provide an
outline in organizing your effort to gather and evaluate information about your business. As
you gather information, you can begin the process of writing your business plan. By planning
your business needs, you will develop an essential part of the business and its strategy.
Effectively completed, your business plan must identify the strengths, weaknesses,
opportunities, and threats that may affect your business and the strategy you will use to succeed.

Meaning of business plan

Business plan is a formal statement of a set of business goals, the reasons they believe
attainable, and plan for reaching those goals. It lays out a written plan from a marketing,
financial and operational viewpoint. It contains background information about the organisation
or team attempting to reach a goal.

Importance of business plan.

Business plan serves the following importance:
• Your business plan will serve as your guide during the lifetime of your operation.

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 • It is the blueprint of your business and will provide you with the tools to analyze your
operation and implement changes that will increase your sales and, ultimately, your
profitability.
• A business plan is a requirement if you are planning to seek financing. It will provide
potential lenders or investors with detailed information on all aspects of your company's
past and current operations and provide future projections.
• If you do business internationally, a business plan provides a standard means of
evaluating your products' business potential in a foreign marketplace.

Types of business plans

There are two types namely; formal and informal business plans.
• Formal business plan are detailed documents, usually prepared for the primary purpose
of securing outside funding for the business.
• Informal business plans are road maps of the business that may only consist of
handwritten notes that act as a guide to the owners of a business in day-to-day
operations and in planning expansions. Whether formal or informal, when properly
written and maintained, business plans provide a means to help you stay focused.

Business plan outline

The following provide a suggested outline of the material to be included in your business plan.

I. Table of Contents
• Quick reference to major topics covered in your plan

II. Executive Summary

• Write this section last.
• Explain the fundamentals of the proposed business: What will your product be? Who
will your customers be? Who are the owners? What do you think the future holds for
your business and your industry?

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• Make it enthusiastic, professional, complete, and concise.

• If applying for a loan, state clearly how much you want, precisely how you are going
to use it, and how the money will make your business more profitable, thereby ensuring
repayment.

III. General Company Description

• What business will you be in? What will you do?
• Mission Statement: Many companies have a brief mission statement, usually in 30
words or fewer, explaining their reason for being and their guiding principles. If you
want to draft a mission statement, this is a good place to put it in the plan, followed by:

• Company Goals and Objectives: Goals are destinations—where you want your business
to be. Objectives are progress markers along the way to goal achievement. For example,
a goal might be to have a healthy, successful company that is a leader in customer
service and that has a loyal customer following. Objectives might be annual sales
targets and some specific measures of customer satisfaction.

• Business Philosophy: What is important to you in business?

• To whom will you market your products? (State it briefly here—you will do a more
thorough explanation in the Marketing Plan section).

• Describe your industry. Is it a growth industry? What changes do you foresee in the
industry, short term and long term? How will your company be poised to take advantage
of them?

• Describe your most important company strengths and core competencies. What factors
will make the company succeed? What do you think your major competitive strengths
will be? What background experience, skills, and strengths do you personally bring to
this new venture?

• Legal form of ownership: Sole proprietor, Partnership, Corporation, Limited liability

corporation (LLC)? Why have you selected this form

IV. Products and Services

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 • Describe in depth your products or services (technical specifications, drawings, photos,
sales brochures, and other bulky items belong in Appendices).
• What factors will give you competitive advantages or disadvantages? Examples include
level of quality or unique or proprietary features.

• What are the pricing, fee, or leasing structures of your products or services?

V. Marketing Plan
Market research - Why?
• No matter how good your product and your service, the venture cannot succeed without
effective marketing. And this begins with careful, systematic research. It is very
dangerous to assume that you already know about your intended market. You need to
do market research to make sure you’re on track. Use the business planning process as
your opportunity to uncover data and to question your marketing efforts. Your time will
be well spent.

Market research - How?

• There are two kinds of market research: primary and secondary.
• Secondary research means using published information such as industry profiles, trade
journals, newspapers, magazines, census data, and demographic profiles. This type of
information is available in public libraries, industry associations, chambers of
commerce, from vendors who sell to your industry, and from government agencies.

• Start with your local library. Most librarians are pleased to guide you through their
business data collection. You will be amazed at what is there. There are more online
sources than you could possibly use. Your chamber of commerce has good information
on the local area. Trade associations and trade publications often have excellent
industry-specific data.

• Primary research means gathering your own data. For example, you could do your own
traffic count at a proposed location, use the yellow pages to identify competitors, and
do surveys or focus-group interviews to learn about consumer preferences. Professional
market research can be very costly, but there are many books that show small business
owners how to do effective research themselves.

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 • In your marketing plan, be as specific as possible; give statistics, numbers, and sources.
The marketing plan will be the basis, later on, of the all-important sales projection.

Economics
• Facts about your industry:
• What is the total size of your market?
• What percent share of the market will you have? (This is important only if you think
you will be a major factor in the market.)
• Current demand in target market.
• Trends in target market—growth trends, trends in consumer preferences, and trends in
product development.
• Growth potential and opportunity for a business of your size.
• What barriers to entry do you face in entering this market with your new company?
Some typical barriers are: High capital costs, High production costs and High marketing
costs
Product
In the Products and Services section, you described your products and services as you see them.
Now describe them from your customers’ point of view.

Features and benefits

List all of your major products or services.

For each product or service:
• Describe the most important features. What is special about it?
• Describe the benefits. That is, what will the product do for the customer?
• What after-sale services will you give? Some examples are delivery, warranty, service
contracts, support, follow-up, and refund policy.

Customer
Identify your targeted customers, their characteristics, and their geographic locations,
otherwise known as their demographics. You may have more than one customer group. Identify
the most important groups. Then, for each customer group, construct what is called a
demographic profile: Age, Gender, Location, Income level, Social class and occupation and
Education.

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For business customers, the demographic factors might be: Industry, Location, Size of firm and
Quality, technology, and price preferences

Competition
What products and companies will compete with you?
• List your major competitors: (Names and addresses)
• Will they compete with you across the board, or just for certain products, certain
customers, or in certain locations?
• Will you have important indirect competitors? (For example, video rental stores
compete with theaters, although they are different types of businesses.)
• How will your products or services compare with the competition?

Niche
In one short paragraph, define your niche, your unique corner of the market.
Strategy
Now outline a marketing strategy that is consistent with your niche.
Promotion

• How will you get the word out to customers?

• Advertising: What media, why, and how often? Why this mix and not some other?
• What image do you want to project? How do you want customers to see you?
Pricing
• Explain your method or methods of setting prices.
• For most small businesses, you will do better to have average prices and compete on
quality and service.
• Does your pricing strategy fit with what was revealed in your competitive analysis?
• What will be your customer service and credit policies?

Proposed location
Probably you do not have a precise location picked out yet. This is the time to think about what
you want and need in a location. Many start-ups run successfully from home for a while.
• Is your location important to your customers? If yes, how?

• Is it convenient? Parking? Interior spaces? Not out of the way?

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 • Where is the competition located? Is it better for you to be near them (like car dealers
or fast-food restaurants) or distant (like convenience food stores)?

Distribution channels

How do you sell your products or services?

• Retail
• Direct (mail order, Web, catalogue)
• Wholesale

VI. Operational Plan

Explain the daily operation of the business, its location, equipment, people, processes, and
surrounding environment.

VII. Management and Organization

Who will manage the business on a day-to-day basis? What experience does that person bring
to the business? What special or distinctive competencies? Is there a plan for continuation of
the business if this person is lost or incapacitated? Create an organizational chart showing the
management hierarchy and who is responsible for key functions. Include position descriptions
for key employees. If you are seeking loans or investors, include resumes of owners and key
employees.

VIII. Personal Financial Statement

Include personal financial statements for each owner and major stockholder, showing assets
and liabilities held outside the business and personal net worth. Owners will often have to draw
on personal assets to finance the business, and these statements will show what is available.
Bankers and investors usually want this information as well.

IX. Start-up Expenses and Capitalization

You will have many startup expenses before you even begin operating your business. It’s
important to estimate these expenses accurately and then to plan where you will get sufficient

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capital. This is a research project, and the more thorough your research efforts, the less chance
that you will leave out important expenses or underestimate them.

X. Financial Plan
The financial plan consists of a 12-month profit and loss projection, a four-year profit and loss
projection (optional), a cash-flow projection, a projected balance sheet, and a break-even
calculation. Together they constitute a reasonable estimate of your company's financial future.
More important, the process of thinking through the financial plan will improve your insight
into the inner financial workings of your company.

XI. Appendices
Include details and studies used in your business plan; for example: Brochures and advertising
materials, Industry studies, Magazine or other articles. Other are detailed lists of equipment
owned or to be purchased and Maps and photos of location

XII. Refining the Plan

The generic business plan presented above should be modified to suit your specific type of
business and the audience for which the plan is written.

Putting your plan together

When You Are Finished: Your Business Plan should look professional, but the potential lender
or investor needs to know that it was done by you. A business plan will be the best indicator
that can be used to judge your potential for success. It should be no more than 30 to 40 pages
in length, excluding supporting documents.

If you are seeking a lender or investor: Include only the supporting documents that
will be of immediate interest to the person examining your plan. Keep the others
with your own copy where they will be available on short notice. Make copies for
each lender or investor you wish to approach. Keep track of each copy that you give
out. If you are turned down for financing, be sure to retrieve your business plan.

Keep your business plan up-to-date

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 Your business plan will be beneficial only if you update it frequently to reflect what
is happening within your business. Measure your projections against what actually
happens in your company. Use the results to analyze the effectiveness of your
operation. You can then implement changes that will give you a competitive edge
and make your business more profitable.

How to Present your Business Plan

You have to convince complete strangers to invest millions of money in a business that does
not exist yet. Your business is a black box to them. They won’t know who you are. They will
doubt everything you say. They will demand answers to tough questions about you, your
business and plan. Some will be rude, impatient, imperious and impossible. No matter how
much you prepare, it won’t be easy. So what should you do? The next section offers some
guideline to assist newcomers in presenting their business plan to a group of people.
Presentation Structure of a Business Plan
Introduction
• Greet the audience
• Introduce yourself
• Give overview of need proposed solution and benefits of investing

Industry
• Describe the problem/opportunity
• Describe the benefits of your solution
• Describe your business model sales and pricing logic, estimated revenue

Management
• Introduce members of the team
• Indicate qualification, experience and strength of members
• Track record in relevant achievements

Financing
• Indicate total project cost, what you are investing, what you need and how you will
spend

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 • Provide the projected gross margins, break even and cash flow source and use of
funds
• Indicate return on investment for its investors
• Explain details of your requirement
• Indicate availability of full business plan

Conclusion
• Recap need/opportunity
• Recap solution and benefits
• Recap your requirement from investors and the promises return on investment.

CHAPTER EIGHT
TIME MANAGEMENT FOR ENTREPRENEURS
Introduction
It seems that there is never enough time in the day. But, since we all get the same 24 hours,
why is it that some people achieve so much more with their time than others? The answer lies
in good time management. The highest performing entrepreneurs manage their time
exceptionally well. By using the time-management techniques, entrepreneurs can improve their
ability to function more effectively – even when time is tight and pressures are high.

Meaning of Time Management

Time management” refers to the way that you organize and plan how long you spend on
specific activities. Good time management lets you work smarter – not harder – so you get
more done in less time.

Principle of Time Management

Here are ten principles that entrepreneurs can use to improve their time management skills and
increase productivity.

Start Early

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Most of the successful men and women have one thing in common. They start their day early
as it gives them time to sit, think, and plan their day. When you get up early, you are more
calm, creative, and clear-headed. As the day progresses, your energy levels start going down
which affects your productivity and you don’t perform as well.

Prioritize Work
Before the start of the day, make a list of tasks that need your immediate attention as
unimportant tasks can consume much of your precious time. Some tasks need to be completed
on that day only while other unimportant tasks could be carried forward to next day. In short,
prioritize your tasks to focus on those that are more important.

Schedule Tasks
Carry a planner or notebook with you and list all the tasks that come to your mind. Make a
simple ‘To Do’ list before the start of the day, prioritize the tasks, and make sure that they are
attainable. To better manage your time management skills, you may think of making 3 lists:
work, home, and personal.

Set up Deadlines
When you have a task at hand, set a realistic deadline and stick to it. Try to set a deadline few
days before the task so that you can complete all those tasks that may get in the way. Challenge
yourself and meet the deadline. Reward yourself for meeting a difficult challenge.

Avoid Procrastination
Procrastination is one of the things that badly affect the productivity. It can result is wasting
essential time and energy. It should be avoided at all costs. It could be a major problem in both
your career and your personal life.

Avoid Multitasking
Most of us feel that multitasking is an efficient way of getting things done but the truth is that
we do better when we focus and concentrate on one thing. Multitasking hampers productivity
and should be avoided to improve time management skills.

Avoid Stress
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Stress often occurs when we accept more work than our ability. The result is that our body
starts feeling tired which can affect our productivity. Instead, delegate tasks to your juniors and
make sure to leave some time for relaxation.

Take Some Breaks

Whenever you find yourself for 10-15 minutes, take a break. Too much stress can take toll on
your body and affect your productivity. Take a walk, listen to some music or do some quick
stretches. The best idea is to take off from work and spend time with your friends and family.

Learn to say No
Politely refuse to accept additional tasks if you think that you’re already overloaded with work.
Take a look at your ‘To Do’ list before agreeing to take on extra work.

Delegate Tasks
It is common for all of us to take more tasks than our desired potential. This can often result in
stress and burnout. Delegation is not running away from your responsibilities but is an
important function of management. Learn the art of delegating work to your subordinates as
per their skills and abilities.

Time Management strategies

The following are time management strategies to help entrepreneurs

Live by lists
Get all of those tasks out of your head and onto paper… A tried-and-true staple for successful
entrepreneurs is maintaining a daily to-do list. By simply jotting down all your thoughts and
things that need to be done and prioritizing them, you can make sure that you are on top of
everything. Creating a list helps to avoid distractions and less relevant tasks. At the beginning
of your day, spend at least thirty minutes making a clear plan of action including how much
time you want to spend on each task.

Schedule everything

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It sounds like a no-brainer, but many neglect to plan the week with a diary or a calendar. After
making your list, you should set out when each task will take place, to ensure you don’t miss
out on anything important. Schedules help to avoid wasting time and keep a balanced life.
Digital calendars such as a Google Calendar or BusyCal are a painless way to guide your days.

Tackle new technology

On the topic of digital calendars, thanks to continuing innovations in internet and mobile
technology, entrepreneurs can organize their fast-paced lives whether travelling or working
from home. The savvy entrepreneur can utilize technology to reduce tasks that can absorb all
the hours of the day. You can automatically trace how you spend your time, eliminate all those
distractions, and keep your eye on the prize.

Delegate work
If you’re lucky enough to have a team around you that you trust and understand the business,
then make use of them. It’s much easier to manage your own time and be a great leader when
you have the ability to delegate.
Draw the line
Meetings are so very important, but so very time-consuming. While they are essential,
scheduling too many or spending too much time in them can throw you off track. Try to not
make back-to-back meetings, as it leaves too little time to fully absorb what’s been said. Time
is valuable, so whether you’re sitting with a client or on a phone call, set clear limits and
deadlines to call a close when it’s due.

Lessen distractions
Distractions come in the form of social media, emails and phone calls, even if these tools
generate business. Plan a set amount of time each day to focus on these things, so that you’re
not tempted to check them throughout the day.
Techniques to become the master of your own time:

• Carry a schedule and record all your thoughts, conversations and activities for a week.
This will help you understand how much you can get done during the course of a day
and where your precious moments are going. You'll see how much time is actually spent
producing results and how much time is wasted on unproductive thoughts,
conversations and actions.

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• Any activity or conversation that's important to your success should have a time
assigned to it. To-do lists get longer and longer to the point where they're unworkable.
Appointment books work. Schedule appointments with yourself and create time blocks
for high-priority thoughts, conversations, and actions. Schedule when they will begin
and end. Have the discipline to keep these appointments.
• Plan to spend at least 50 percent of your time engaged in the thoughts, activities and
conversations that produce most of your results.
• Schedule time for interruptions. Plan time to be pulled away from what you're doing.
Take, for instance, the concept of having "office hours." Isn't "office hours" another
way of saying "planned interruptions?"
• Take the first 30 minutes of every day to plan your day. Don't start your day until you
complete your time plan. The most important time of your day is the time you schedule
to schedule time.
• Take five minutes before every call and task to decide what result you want to attain.
This will help you know what success looks like before you start. And it will also slow
time down. Take five minutes after each call and activity to determine whether your
desired result was achieved. If not, what was missing? How do you put what's missing
in your next call or activity?
• Put up a "Do not disturb" sign when you absolutely have to get work done.
• Practice not answering the phone just because it's ringing and e-mails just because they
show up. Disconnect instant messaging. Don't instantly give people your attention
unless it's absolutely crucial in your business to offer an immediate human response.
Instead, schedule a time to answer email and return phone calls.
• Block out other distractions like Facebook and other forms of social media unless you
use these tools to generate business.
• Remember that it's impossible to get everything done. Also remember that odds are
good that 20 percent of your thoughts, conversations and activities produce 80 percent
of your results.

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 CHAPTER NINE
INTELLECTUAL PROPERTY FOR BUSINESS

Introduction
Intellectual property represents valuable assets to your business, helping to give you a
competitive edge and distinguish your business from your competition. Intellectual property,
when done right and used in a comprehensive and thoughtful manner, makes your business
much more competitive, valuable and interesting to customers.
Meaning of intellectual property
Intellectual property (IP) is a legal concept which refers to creations of the mind for
which exclusive rights are recognized. Under intellectual property law, owners are granted
certain exclusive rights to a variety of intangible assets, such as musical, literary, and artistic
works; discoveries and inventions; and words, phrases, symbols, and designs.

Importance of Intellectual Property

• Distinguish your business from the competition
• Make it more difficult for competitors to compete unfairly or trade off your goodwill

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 • Make it easier for your customers to find, identify and distinguish your business from
others
• Add significant value to your business for potential acquirers
• Looking for funding? Investors view intellectual property as critical to the success of
their investments.

Types of Intellectual Property

There are five types of intellectual property namely; trademarks, trade dress, trade secrets
copyrights and patents Each type of intellectual property has its purposes, and each can help
provide tremendous value, depending on your business.

Trademarks
A trademark is a distinctive sign or indicator used to uniquely identify a source of goods or
services in the marketplace. Trademarks are absolutely critical in protecting your business, and
making it easy for customers to identify your business against the competition and other
businesses that would otherwise take advantage of your goodwill.
Trade Dress
Trade dress is a form of trademark, in that it refers to the visual appearance of a product or its
packaging (or even the design of a building), and is design to protect customer confusion in the
marketplace. If you have distinctive packaging, seating, bagging, or other distinctive features
you use as a form of identification for your business to your customers, trade dress protection
is a means to protect your goodwill against all imitators.

Trade Secret
Trade secret represents confidential or classified information, not generally known or
reasonably ascertainable in the marketplace, and the knowledge of such provides a competitive
or economic advantage. To obtain trade secret protection, you must take reasonable precautions
to prevent disclosure. Trade secret protection enables you to prevent certain important
information (i.e. customer lists, formulas, processes, etc) from being placed in the wrong hands,
and if it does end up in the wrong hands, such protection gives you options against the parties
violating your trade secrets.

Copyrights

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Copyrights protect unique works or expressions, and prevent others from utilizing your work
without your permission. Taking the right copyright precautions and actions, can help protect
your business investments. For example, if you’re a restaurant, you can copyright your menu.
If you are a construction company, you can copyright your signs or unique work-product.

Patents
A patent gives the holder a monopoly on a specific discovery for up to 20 years. Patents are
useful to protect “any new and useful process, machine, article of manufacture, or composition
of matter, or any new and useful improvement thereof.” They are great tools to provide a
competitive edge, and they become valuable in of themselves.

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