MODULE TITLE: DEVELOPING BUSINESS PRACTICE

LEARNING OUTCOMES
At the end of the module the trainee will be able to:
LO1: Identify business opportunity
LO2: Identify personal business skills
LO3: Plan for establishment of business operation
LO4: Implement establishment plan
LO5: Review implementation process
LO6: Develop one’s own business plan
 Lo1:-Identify business opportunity

1.1. Identifying business ideas and opportunities

 Meaning of Business Idea
 A business idea is the response of a person or persons, or an organization to solve
an identified problem or to meet perceived needs in the environment (markets,
community, etc.).
 A good business idea is essential for starting a successful venture and to stay ahead
of competition.
 A business opportunity may be defined simply as an attractive investment idea or
proposition that provides the possibility of a monetary return for the person taking the
risk.
 A good idea is not necessarily a good business opportunity
 1.2 Preparing feasibility study
 A feasibility study looks at the viability of an idea with an emphasis on identifying
potential problems and attempts to answer one main question: Will the idea work and
should you proceed with it?
Why Are Feasibility Studies so Important? The information you gather and present in
your feasibility study will help you:
• List in detail all the things you need to make the business work;
• Identify logistical and other business-related problems and solutions;
• Develop marketing strategies to convince a bank or investor that your business is worth
considering as an investment; and
• Serve as a solid foundation for developing your business plan.
 Con,,,
A feasibility study contains five major components namely:
 Marketing study,
 Technical study,
 Organizational and production study
 Management and personality study,
 Financial study
Advantages of Technology to Business:
 Customer Relations - Research Opportunities
 Business Operations - Corporate Reports
 Corporate Culture - Business mobility
 Security - Employee Training
 Flexible Work Environments
 Con….

The appropriateness of technology for use in a small business is determined by a number

of characteristics. These are:
 SIMPLE: For technology to be considered appropriate, it must be simple to operate.
 EFFECTIVENESS: Effectiveness of technology is judged by how well it fits in with the
objectives of the user.
 AVAILABILITY: Some technology may be appropriate for certain purposes but not
available locally.
 FLEXIBILITY: As time changes so do the requirements of technology. Appropriate
technology must be flexible enough to adapt to changing times in the future.
 DURABLE: Technology that is durable requires less maintenance and repairs.
 EFFICIENT: Technology should be efficient in its utilization of local resources.
 Lo2:-Identify personal business skills

2.1 Identifying available financial & business skills

 A written report which quantitatively describes the financial health of a company.
 Help to determine the financial performance/ financial health of a particular business.
 Quantify the financial strength, performance and liquidity of a company.
 Help to compare current performance with performance in previous years.
 reflect the financial effects of business transactions
 How well did the business do in terms of total sales? What were its expenses?
 LO3. Plan for establishment of business operation
3.1. Determining business structure and operations
Organizational Structure
◦ An organization is a collection of people working together in a coordinated and structured
fashion to achieve one or more goals.
◦ Organizations exist to allow accomplishment of work that could not be achieved by
people alone.
Organizing
◦ It is a process of establishing work relation, flow of work and information and grouping of
activities, identification of authority and responsibility of employees in the organization.
 Organization Chart
A chart that shows the structure of the organization including the title of each
manager’s position and, by means of connecting lines, who is accountable to whom
and who has authority for each area.
Departmentalization
 The process of grouping the activities known as departmentalization
 Departmentalization means the process by which similar activities of the business are
grouped into units for the purpose of facilitating smooth administration at all levels
Types of Departmentalization /ways to structure the business
functional Departmentalization
Product Departmentalization
Customer Departmentalization
Geographic Departmentalization
Process Departmentalization
 LO4: Implement establishment plan

Concept of marketing and marketing management

 Description of the market (Geographical area, town, type of customers, size of total market,
description of competitors, market share for the new business, etc.)
Marketing Plan Product
 Detailed description of the product or product range or service 4.2 Carrying out marketing
of business operation
 Location of the business (description of the planned location of the business)
 Reason for choosing the location the business
 How to distribute the product to customers? Directly to customers Through retailers or
wholesalers’
 Reason for choosing this way of distribution
 Marketing Plan Promotion Advertisement Personal selling, etc.
 Con….

4.3 Obtaining physical and human resources to implement business Operation

Physical resources Production costs of each item to be produced - Raw materials per month -
Direct labor per month - Factory overhead expenses per month 4.4 Establishing operational
unit Forms of business Organizational structure 4.5 Developing and implementing monitoring
process
What is Monitoring?
 Monitoring is the systematic collection and analysis of information as a project progresses.
 LO6: Develop one’s own business plan

6.1 Process of preparing/ writing a business plan

 Why Generate Business Ideas
 There are many reasons why entrepreneurs or would-be entrepreneurs need to
generate business ideas. Here are just a few:
 You need a great idea to start a new business
 Business ideas need to respond to market needs
 Business ideas need to respond to changing consumer wants and needs
6.2 Standard structure and format of a business plan
Features of good organization structure
 Clear line of authority.
 Adequate delegation of authority.
 Application of ultimate responsibility.
 Minimum managerial levels.
 Unity of direction.
 Proper emphasis on staff activities.
 Simplicity.
 Flexibility.
 6.3 Interpreting, assessing and analyzing findings of the business plan
Findings of the business plan are interpreted, assessed and analyzed Feasibility of the
business idea is made clear and understandable 6.4 Arising problems when starting a
business Evaluating Factors in Starting an Enterprise
Minimizing Problems of Starting a Business
 The following questions will help to determine whether you are in a position to start a
business.
A.Personal Qualifications
1. Why do you think you are the type of person who can start and operate a business
successfully?
2. Will your family support your plans to start a business? If not, what can you do to gain its
support?
3. Have you worked in a business similar to the one you want to start?
4. Do you have supervisory or managerial experience necessary to be self-employed?
5. Have you had business training in the type of business you want to start?
B. Customers and Market
2. Have you prepared a marketing plan?
2. How will customers distinguish your business from that of your competitors?
3. Will you have a credit policy for customers?
4. What advertising techniques will be used to attract customers?
5. How will you determine what the customer wants?
 Con,,,
C. Business Operators
7 How will you identify, select and train employees for the business?
8 How will you determine employee salary and benefits?
9 Is your business location accessible for customers (bus stops, parking, etc.)?
10 Does the business location have space for expansion?
11 Have you considered the positive and negative aspects of being a proprietor or
forming a partnership, limited company or cooperative?
12 Do you know what equipment, supplies and materials you will need and how much
they will cost?
D. Keeping Records
1. Do you have a record keeping system to keep track of income, expenses, credit sales
and credit purchases?
2. Are you able to prepare and analyze financial statements?
3. Do you know how good inventory control can lower business expenses?
4. Do you know how to keep payroll records and make tax reports and payments?
5. Will you need assistance in keeping the financial records for your business?
E. Using Outside Assistance Con,,
1. Have you discussed the bookkeeping and other financial procedures with an accountant?
2. Have you discussed the legal requirements and regulations of your business with a lawyer?
3. Have you discussed the financial aspects of your business with a banker?

4. Has a consultant helped you to develop your business plan?

5. Have you discussed the challenges and opportunities of your business with other business
owners in the community?
. Finances
2. Do you have enough money to start and operate the business for at least the first six
months?
2. Over the next four years, could you make more money working for someone else rather
than starting your own business?
 Con,,,

3. Do you know which suppliers will give the best service, lowest prices and best credit
arrangements?
4. Based on accurate financial data, have you compared the cost of buying an existing
business with the cost of starting a new business?
5. Have you explored all possible sources of funding?
G. Choosing the Right Legal Form
1. What are the legal costs involved in starting a business?
2. How does the owner’s liability depend on the legal form?
3. How does the legal form influence the acquisition of capital?
4. What implications does the legal form have on taxation?
5. How does the continuation of the business depend on the legal form?
6.5 Identifying sources of information and assistance
 Techniques and procedures in obtaining and sourcing information are discussed and
understood