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Local Business Opportunities
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2
Introduction
• Expectations
• About the topic and its importance
• How will we work
• Rules
3
Objectives 1. To induce right acceptance and
understanding of entrepreneurship as perspective way of employment
2. Encourage participants for entrepreneurship actions
3. Prepare participants for understanding and interpretation of business opportunities in the local surrounding
4
Acceptance and absorption of knowledge and skills needed
• What is entrepreneurship • Entrepreneur’s profile • How to assess own strengths and weaknesses –
see yourself as a potential entrepreneur • Development needs and trends in business
surrounding – research and surrounding analysis • How to evaluate business opportunities • How to recognize and/or develop potentially good
business ideas • How to evaluate business idea • How to turn an idea into real business
5
Topics by days Day I Be an entrepreneur Day II Evaluate the opportunity Day III Measuring success Day IV Research in live Day V From idea to business
6
Your trainer Branka Bukvić • Education and training:
– Faculty of Agriculture – International business management – 2 courses per year
• Over 20 years of training and consulting experience with different groups of trainees
• First employment in Institute for small grains in Kragujevac • Now working for
– AgroQuality o.d. (co owner, director) – YU Build d.o.o. (employee) – Free-lancer
7
Work plan
Day I Be an entrepreneur
9:00 – 11:00
16:00 – 18:00 Where am I in
this story?
Self assessment of
entrepreneurship abilities
11:20 – 13:00
18:20 – 20:00 Is there any
place for me? SWOT
13:00 – 13:30
20:00 – 21:00Individual consulting upon
request
8
Task:
Define the meaning of the words:
ENTREPRENEURSHIP and ENTREPRENEUR
Write down your definitions on moderation cards and put them on the flipchart
9
ENTREPRENEURSHIP is assuming the
risks and responsibilities in creating and
implementing business strategy or
starting-up a business.
ENTREPRENEUR is a person who
organizes and manages, taking into
consideration the risk of any business
action. An individual who starts own
business and knows to assess the risk.
10
Entrepreneurship
One more definition:
Entrepreneurship is a complex group of activities implemented to transfer an idea from state of imagination into a state of reality, or something real from existing state or shape into the shape or state wanted
11
And what about business? Business is a group of activities
satisfying the needs of
the owner,
capital invested,
employees…
What’s missing here?
12
Task:
Why do you want to become entrepreneur?
Write down your answers
and we will discuss
13
About entrepreneurship • Focused on inovations and changes, action
oriented way of thinking – do something new (product, service, new methods, new organization)
• Entrepreneur spirit, art or group of learnable skills – born vs. trained?
• Developmental, limited, very rare – expensive, the most dynamic resource
• Entrepreneurship in small businesses and in big companies, in new and in already existing entities
• Lever for economy restructuring ( OECD 1998).
14
Businessman – entrepreneur
• Strong personality and persistency • Operative, • Creative, • Critical approach, • Analytical mind, • Management abilities, • Technical abilities, • Motivated, • Communicative…
15
Do you have a business character?
... You just try to minimize the risks No one will take you seriously!
... You were born to achieve more There is nothing more in democracy, only more successful!
... You wish to change the world to the better Donate the money for the charity, you will save your nerves and your money!
... You have always been a good accountant You look for every penny and loose customer from the view!
... You don’t want to depend on any bureaucracy You must be crazy!
... You just copy and save these advices Forget them!
No, if
16
Task: Am I an entrepreneur?
• Fill in the questionnaire and
• Check your entrepreneurship profile
17
What do you need to be a good entrepreneur?
Psiho stability Persistency
Courage for what you do
Acceptance of conflict management
Decision making ability
Self-confidence
Acceptance of no clear distinct of working and private
hoursSelf-management abilities
Wish to learn
18
Task: where are you and where are you going to be?
• Draw a picture of yourself as you are now!• Draw a picture of yourself as an entrepreneur!• What is missing between these two pictures?
• Define important obstacles which you are facing, preventing you to become entrepreneur
19
Factors contributing to the success
Feelings
Good relationships with people
Taking responsibility
Sales
Patience
Health
Learning
Family support Risk Risk
20
Let’s divide into the groups
21
Advantages and dissadvantages
S
Strenghts
W
Weaknesses
O
Opportunities
T
Treaths
22
Task:
Do the SWOT analysis for your team
So we can see if we are adequate for business
23
24
Key elements of entrepreneurship process
1. Entrepreneur and management team
25
2. Business opportunity
Every problem
= chance
26
3. Resources
27
Local business opportunities
Evaluate the opportunity
Branka Bukvić
28
Preconditions for entrepreneurship/entrepreneur
• idea – dream, goal, unused market opportunity
• entrepreneur - experience, passion, persistency, hard work
• knowledge of the - market, customers, needs, technology, the field of work
29
Objectives for the day To learn how to • Collect data needed from available sources,
information about trends in the world, region, local community
• Recognize, assess and choose the opportunities
• Get the skills which an entrepreneur should develop
30
Work plan
Monday Tuesday Wednesday Thursday
Friday
Be an entrepreneur
Evaluate the
opportunity
Measuring success
Meeting on the field
From the idea to the
business
9:00 – 11:00
16:00 – 18:00 Where am I in this story?
Crazy ideas everywhere
How can I know...
Looking, listening, learning
Learning by discussing
11:20 – 13:00
18:20 – 20:00 Is there a place for me?
Learning by doing: RESEARCH!
...that I am a business genious!
Who ask do not wonder
Entrepreneurship?
YES
31
• Few examples Nekoliko primera From the “developed” world
32
Choosing and assessing Choosing and assessing business idea business idea
How to gain a successful ideaHow to gain a successful idea??
32
33
Funnel model
100 – 500 ideasBRAINSTORMING
Macro selection (validation)
Micro selection
(validation)
5 ideas
1 idea
34
Task: in teams • Look for and recognize potential
opportunities • Collect and group ideas about
profitable “promising” businesses in your surrounding
• Define opportunities and present them to us
How did you recognize the potential?
3535
• Advantage over existing products or services
• Following attitude and beliefs of customers
• Not too complex
• Easy to show benefits to the customers
• Customers can try innovation with no risk (sample or trial use)
• Product/service available immediately
• Customer believe that product or innovation satisfies his/her personal needs as it gives real benefit
Characteristics of a successful business idea
3636
• Good business idea has to satisfy customers’ needs and/or demands
• If your business idea is not original or do not satisfy customers’ needs, it needs improvements to be better than the competition
• Entrepreneur should ask himself: • Why should somebody buy from me instead of
my competition? • Which is the value I add to the business or
product/service?
Do you have feasible business idea?
37
Business idea
research
Business idea
research
NEEDS
Where does the research lead?
Customer needs best sattisfying idea
Match product with customers’ wishes; gain new customers, keep existing customers
Useful and properly identified products; fair competition, environmental protection, etc.
38
Task: in teams
• Recognize development trends and potential business opportunities using internet search
Expected result:
• The list of business ideas
39
Research your business idea!!!Customers’
profile
Product’s characteristics/b
enefits
Target market
Market/industry trend
Competition
Price
Promotion
Distribution
Production capacity
Production process
Purchasers
Sales
Resources needed
Financial strengths – weaknesses
Cash flow
Licenses/approvals
Business idea
40
Make the profile of the paying customer!
• Write down as many as possible characteristics of the customers for whom you believe that they will buy your product (age, sex, marital status, income) and try to describe their life style.
• If you expect to sell to other company or organization, assess:
• Which industry they belong to,
• What kind of enterprise it is,
• How long they exist in that business,
• How many employees they have,
• What is their yearly sales level,
• Which department might be interested in your offer,
• Who are their customers,
• And anything else you can identify
41
List and describe characteristics of your product/service
• Define properties/characteristics of your product/service
• Find how will your customers benefit from those properties
• List selling characteristics to use for advertising, making brochures and in sale presentations
This will help you to define why should your customer buy from you and not from competition
42
What is the growth potential on the market?
• Is the industrial branch or the market in which you
wish to do the business growing or slowing?
• Are the trends of new customers’ demands at the top
or declining?
See business and industry/trade papers!
43
Define main geographical areas where you intend to sell in the first year
Defining place where you will sell during the first year automatically focuses you!
• Assess how many potential customers are located in the chosen area
• Important for sale in a larger area are also adequate financial management, marketing and resource management
• Defining areas eases recognition of your needs as well
44
What does competition sell in this area?
When you define who and where are your customers,
you have to define who are you sharing them with
Research
• Are there any similar products in retail and
• How do similar companies advertise their products
(yellow pages, industrial phonebooks etc.)
45
Estimate the price you can ask and still remain competitive!
Estimating how competitive you might be can be a great step to determining the feasibility of your idea
• If your product is superior to the competition and market is not too price sensible, you can think about raising the prices over the competition
• If you are selling to retailers or wholesalers you should leave space for them to incorporate their profit
46
How are you going to inform customers that you exist?
• Advertising
• Personal sale
• Establishing good public relations
• Promotional actions
47
Task:
• Define missing parts in the existing information and obstacles to transfer the idea into business
48
Homework:
• Collect brochures and other materials available
• Use data from the Chamber of Commerce, branch associations, statistical data and data from other relevant organizations and institutions…
4949
• Review your own advantages and abilities and assess what are you good in
• Be informed what’s going on and ready to use business opportunities whenever they show up
• Design new product or service • Enrich existing product with added value • Explore other markets (chance to visit other
country/region)• Improve existing product or service • Be informed - which products have high demand at
the moment?
Choose good business idea
50
Task:
• Choose your business ideas
Expected result:
• List of feasible business ideas
• One idea chosen for further work
51
52
53
Few examples from local area
www.shockart.org
54
Local business opportunities
Measuring success Branka Bukvić
55
Objectives
To reach basic understanding of:
• Business idea assessment elements
• Ways to assess own or recognized business idea
• Success factors
56
Work plan
Monday Tuesday Wednesday Thursday
Friday
Be an entrepreneur
Evaluate the opportunity
Measuring success
Meeting on the field
From the idea to the
business
9:00 – 11:00
16:00 – 18:00 Where am I in this story?
Crazy ideas everywhere
How can I know...
Looking, listening, learning
Learning by discussing
11:20 – 13:00
18:20 – 20:00 Is there a place for me?
Learning by doing: RESEARCH!
...that I am a business genious!
Who ask do not wonder
Entrepreneurship?
YES
57
What is failure?
“Failure is just the possibility to start from the beginning much more
intelligent"
Henri Ford (30. July 1863 - 7. April 1947)
58
Causes of failure
• Managers’ incompetence or inexperience
• Indifference
• Weak control systems
• Lack of capital
59
Causes of success
• Hard work and commitment
• Assurance of market demand for products and services
• Managers’ competence
• Luck
60
Factors contributing to the success
Feelings
Good relationship with people
Taking responsibility
Sales
Patience
Health
Learning
Family support Risk Risk
61
Task: in teams
• Define measurement of success for your business idea
62
Analysis of all influencing business aspects
Development of business strategy
Business planning
Implementation – Registering the business
Assessment process
63
Steps of business option analysis • Notice the problem on the market • Find adequate business opportunities
- technique of market saturation - technique of market segmentation
• Setting the resources needed for realization of the business idea
• Financial analysis of the business opportunity • Analysis of personal preferences and risk
assessment • Choice of the business idea and its further analysis
in the business plan
64
Defining and choosing the business idea
1. Basic criteria in business options analysis
2. Relevant factors in business options analysis
3. Steps of business options analysis
4. Possible alternatives for creating business options
5. Forms of ownership
6. Ways to obtain financial resources needed
65
Basic criteria in business options analysis
Business should:
a) Reflect person and interests of the entrepreneur (scope of work entrepreneur enjoys and has knowledge and experience about)
b) Have market and profit potentials – “offer what customers love” – listening to the market
66
Relevant factors in business options analysis
• TIME: commitment to the business, balancing obligations to the business and to the family, time needed till business starts to produce profit and till market position is established
• FINANCIAL RESOURCES - limiting factor
• POTENTIAL FINANCIAL RESULTS
67
Relevant factors in business options analysis
• EXPERTISE LEVEL AND BUSINESS EXPERIENCE: the risk level is higher if there is no experience; partnership; franchising arrangements
• RISK LEVEL: conceptual risk, production risk, marketing risk, financial risk, growth and development risk
68
Possible alternatives for creating business options
• Buying existing business (company) Kupovina postojećeg posla (firme)
• New business Novi posao
• Franchising Franšizing
69
Buying an existing business
PRO • Approved business,
lower risk, financial sources
• Sales and purchasing channels worked out
• Trained workforce • Existing production
facilities
CONTRA • Companies with
problems are for sale • Poor image • Untrained workforce • Poor location • Inadequate office
space • Old equipment
70
What should be investigated when buying existing business?
• Why is the owner selling the business
• What is the condition of business facilities
• Market situation
• Financial position of the business
• Legislation and legal aspects of buying the business
71
New business
PRO • Starts at chosen
location • Facilities installed in
accordance with pre-established objectives
• More possibilities for innovations
• Creating own image • Higher profit with lower
investments
CONTRA • High risk • Long way to
customers’ trust • Fund raising problem • Process of working out
selling and purchasing channels
72
What should be investigated when starting a new business
• Needs for new product or service
• Location
• Market
• Physical capacities
• Human resources resurse
• Projection of financial results
73
Franchising
PRO • Business experience
not needed • Consulting and training • Start-up expenses
payment in installments • Centralized raw
materials purchasing • Free promotion • Well known products
and services
CONTRA • No freedom in decision
making• Contracts strictly
defined • Franchising rent • No transfer
possibilities • Centralized raw
materials purchasing • Activity of one user
affects all
74
Forms of ownership
• Solo business – Business owned by one owner
• Partnership – Business owned by partners
• Corporate model - Company…
75
Ways to provide financial resources needed
• Personal resources
• Family and friends
• Business partners
• Bank credits
• Small business development funds
• Purchasers credits
• Venture capital
76
Task: • Evaluate recognized business
opportunity/idea
Consider:
– Business options
– Providing workforce needed
– Operational costs
– Additional financial sources
77
Small business development support
• Small business development support in our country is conducted through the efforts of Agency for SME development, established by the Serbian Government
• Who else?
78
Preparation for the meeting • What do you expect from tomorrow`s
meeting? (Define your goals and objectives)
• Which are important questions for successful business?
79
80
Local business opportunities
From idea to business Branka Bukvić
81
Objective
• Get familiar with basic legislation dealing with commercial business in order to ease decision on starting up a business
82
Work plan
Monday Tuesday Wednesday Thursday
Friday
Be an entrepreneur
Evaluate the opportunity
Measuring success
Meeting on the field
From idea to business
9:00 – 11:00
16:00 – 18:00 Where am I in this story?
Crazy ideas everywhere
How can I know...
Looking, listening, learning
Learning by discussion
11:20 – 13:00
18:20 – 20:00 Is there a place for me?
Learning by doing: RESEARCH!
...that I am a business genius!
Who asks does not stray
Entrepreneurship?
YES
83
Shop or Company?
• Autonomous – entrepreneuring shop
• Enterprise – commercial company
84
Shop – advantages
• Most frequent form for the start • Simple, easy to establish and manage • Does not require large investments • Recommended for businesses with no
intention of large growth and spreading • Can employ the whole family, no additional
staff cost (taxes and fees)
85
Shop – disadvantages • Owner’s responsibility not limited –
obligations guarantied by whole personal property
• No clear criteria to distinguish personal and enterprise's property
• Limited development – Reorganization problem in case of spreading – No credits or international investments – partner
is not interested to invest or even to do business because of mixed property
• Simple bookkeeping giving almost no information
86
Company – disadvantages
• More complex organization, complicated for beginners
• Registration procedure more complicated than for the shop
• Initial capital needed for the start
87
Company – advantages (1) • Owners are accountable for liabilities only
within the company’s property, not by his/their personal assets
• Legal entity • Organisational advantages – development
of several sectors easier to manage • Double-entry bookkeeping • Growth potential is not limited
cont…
88
Company – advantages (2) • Easier to finance the activities • Accepted more seriously by other
commercial entities, public institutions, financial institutions, business partners and even themselves
• No ambiguity between personal earning, commercial entity property, salaries, profit
• Higher credit capability of the director and/or employees
89
Tax treatment
• Shop owner pays one tax on income • Company owner pays personal income tax and
company pays tax on profit – Double tax for company
• Shop always pays tax, even if it doesn’t work or suffers losses
• Company, if no turnover, hands over tax applications showing the loss and in that case it does not pay taxes
90
Who to ask? • Bookkeeper? – Bookkeeping is easier for shops – Penal policy for commercial offense – higher penalties for
companies
• Economist? – Financing business activities
• Lawyer? – Legal advice is needed and you ask it from the lawyer, not from
the bookkeeper, in the same way as nobody asks the lawyer to keep company books
91
Recommendation 1
For
simple small business with limited growth and development opportunities
chose
the legal form of
autonomous – enterpreneuring shop
92
Recommendation 2
For serious intentions, for
long lasting, growing and developing business
choose the legal form of
commercial company – enterprise
93
Establishing a shop A shop means: • Store, workshop, office, bureau, service, agency, studio,
pansion, pharmacy, practice … • Most often used abbreviations:
– STR – independent trading shop; – SZR – independent crafts shop; – SUR – independent catering shop
• Registration in the municipality unit authorized for commercial issues
94
Registration of the shop • From 01-01-2006 registration of entrepreneurs is
conducted by the Agency for Commercial Registers.
• The founder can be one person and in that case it is the Autonomous Shop or it can be several persons (10 max) in which case it is Partnership Shop
• Documentation: – Registration application form – Personal ID or passport of the founder/all partners – Evidence on paid fee– Decision of an authorized body, if needed
95
Establishing the enterprise
• Ortačko društvo (OD) - Partnership Company
• Komanditno društvo (KD) – Limited Partnership Company
• Akcionarsko društvo (AD)- Joint Stock Company
• Društvo sa ograničenom odgovornošću (d.o.o.) – Limited Liability Company
96
Found PC or PLC? Consider: • Manner of fund raising for business activities • Level of personal risk that the founder is willing to take
– Partnership Company – whole property – Limited Liability Company – only property entered into the
company
• Level of control over business operations • Usual form for beginners is PLC.
97
Registration of a company (1)Application in the Commercial Court • Documentation:
– Deed on Foundation – Statute – Lease Agreement on the business premises or proprietary document – Decision on Appointment of the Director – Photocopy of the Director`s Personal Identity Card – Form (OP) with the verified signature of the Director – Photocopy of the Founder`s Personal Identity Card– Founder`s Residence Certificate (not older than one month) – Bank report on received founder`s deposit – Filled application forms for the registration in the Commercial Court
• Fees – for verification of the OP form (4 copies) by the municipality – for verification of the Deed of Foundation in the court – for receipt of the application in the Commercial Court
98
Registration of a Company (2)• Making the round stamp or the protocol journal stamp • Application to the Republic Institute of Statistics – personal number
– The area of activity should be carefully described as it implies payment of all municipal fees
• Application to the Tax Department for income tax, municipal fees and obtaining of the PIB (Tax Identification Number)
• Opening of the transfer or current account with a business bank – which can not be done without the PIB
• Written instruction to the business bank to transfer the deposited part of the founder`s deposit to the newly opened account
• Entry into the customs taxes payers register – only in case of the foreign trading
• Registration in the Pension & Social Insurance Fund • Registration of the employees at the Labor Market, Pension and
Social Insurance Fund and the Health Insurance Fund
99
Commitments upon establishment of the shop/company
• Keeping business books
• Recording of business changes
• Payment of taxes and fees
100
Bookkeeping • Single-entry bookkeeping principle
• Double-entry book-keeping principle
• Business books are kept by an authorized person or agency
101
Recording business changes
• Issuing of bills • Payment of daily receipts • Collecting of bank account statements • Keeping records about receipt and delivery of
goods • Keeping records about commodities on stock • Payment of liabilities• Documentation must be kept in the
shop/company
102
Payment of taxes and fees• Value Added Tax (VAT)• Company Profit Tax • Taxes and fees on revenues from
independent business activities • Fees for compulsory social insurance on
earnings and remunerations • Excises
103
Documentation
• Business letter • Envelope • Invoice • Transfer order • Logo – company sign • Markings and marketing material • Business cards
104
Seven business advices 1. Plan!2. Get organized before you start!3. Find right people!4. Manage smartly! 5. Monitor and check!6. Measure results!7. Have your staff constantly informed!
105
And 7 most frequent mistakes 1. Follow the idea without a plan
2. Sell goods too cheap
3. Starting the business for fun only
4. Marketing without an idea
5. More a pal than a manager
6. Overspending
7. Neglecting your loved ones
106