Entrepreneurship and Business Development

7/23/2019 Entrepreneurship and Business Development

http://slidepdf.com/reader/full/entrepreneurship-and-business-development 1/42

http://www.sigmakenya.com/dairy-feeds/



ENTREPRENEURSHIP AND BUSINESS MANAGEMENT IN THE DAIRY

VALUE CHAIN

By

DAIRY TRAINING INSTITUTE

A Module for trainin Co!!unity Re"our#e Per"on" under t$e S!all Holder Dairy

Co!!er#iali%ation Prora!!e

By

Dairy Trainin In"titute &DTI'

ii



(unded )y

International (und (or Ari#ultural De*elo+!ent &I(AD'

T$rou$

S!all Holder Dairy Co!!er#iali%ation Prora!!e &SDCP'

No*e!)er ,-./

C0NTACTS

Dairy Trainin In"titute

P1 01 Bo2 334 5 ,-..6

Nai*a"$a7 8enya1

Tel9 :,/3 /- /-.6;

E<!ail9 dtinai*a"$a=ya$oo1#o!

iii

mailto:[email protected]




Mini"try of Ari#ulture7 Li*e"to#> and (i"$erie"7

8ili!o Hou"e ?rd floor7

P1 01 Bo2 ?--,@7 --.--7

Nairo)i7 8enya1

Tel9 :,/3 ,- ,6.@6@6@@6-4,-@;;;/7E!ail9 dire#tor1e2ten"ion=ya$oo1#o!1

S!all Holder Dairy Co!!er#iali%ation Prora!!e &SDCP'

P101 Bo2 .,,;.<,-.--

Na>uru7 8enya1

Tel9 :,/3 /. ,,.-@/.

E<!ail9 +#u1"d#+=!ail1#o!

ACKNOWLEDGEMENT

The production of this module has been made possible through funding from International

Fund for Agricultural Development (IFAD) through Smallholder Dairy Commercialization

rogramme (SDC)!

Special than"s go to #r! #oses $embe%SDC Coordinator for providing an enabling

condition for successful collaboration bet&een Dairy Training Institute and SDC!

iv





C0PYRIGHT

All rights reserved! arts of this training module may be reproduced for non%commercial use

&ithout e'press permission from the authors provided that ac"no&ledgement is given to

Small older Dairy Commercialization rogramme and Dairy Training Institute!

!

A*T+,S- Samuel .agura rimrose /thenge 0eorge $imani 1oseph #&irigi and 0eorge

#achua of Dairy Training Institute /aivasha $enya

v



vi



TABLE 0( C0NTENTS

ACKNOWLEDGEMENT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!iv

TA234 +F C+/T4/TS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!vi3IST +F FI0*,4S!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!viii

AC,+/5#S A/D A22,46IATI+/S!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!i'

7!8 I/T,+D*CTI+/ T+ 4/T,4,4/4*,SI!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7

7!7 Definition of Terms9!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7

7!: ;ualities of 4ntrepreneurs!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7

7!< Functions of an 4ntrepreneur!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!:

7!= The role of 4ntrepreneurship in9!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!=

7!=!7 4conomic development!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!=

7!> Incentives to entrepreneurs!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>

:!8 2*SI/4SS D4643+#4/T A/D #A/A04#4/T!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!?

:!7 2usiness Development!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!?

:!7!7 Starting a 2usiness!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!?

:!: +b@ectives of 2usiness!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!?

:!< 2usiness +pportunity!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!?

:!= ;ualities of good business opportunity!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!?

:!=!7 0eneration of 2usiness Ideas!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

:!=!: Sources of business ideas!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!B

:!=!< rocedure in starting a business!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!B

:!> 2usiness #anagement!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

:!>!7 Functions of #anagement!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

<!8 2*SI/4SS 4/6I,+/#4/T!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!=

<!7 .hat is 2usiness 4nvironment!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!=

<!: Types of 2usiness 4nvironment!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!=

<!:!7 Internal 4nvironment9!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!=

<!:!: 4'ternal 4nvironment!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!=

B!8 4/T,4,4/4*,IA3 C+#4T4/CI4S!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

=!7 ,is" ta"ing behavior9!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!B

=!< Change and Competition!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!78

vii



>!8 2*SI/4SS FI/A/C4!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!77

>!7 +verdrafts!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!77

>!: 3easing and asset finance!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!77

>!< Investment finance!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!77

>!= Invoice financing!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!77

>!> Invoice discounting!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7:

>!? 0rants!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7:

>! 3oans!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7:

>!!7 Types of loans!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7:

?!8 2*SI/4SS 4TICS A/D C*ST+#4, CA,4!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7<

?!7 Importance of 2usiness 4thics!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7<4'amples of most important business ethics!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7<

?!: Customer Care!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7=

?!< 0reat Customer Service!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7>

!8 2*SI/4SS 3A/!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7

!7 Importance of a business plan!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7

!: Components of a business plan!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7

!<Tips for &riting a good business plan!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7

!= Developing a business plan!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7

!> Common 2usiness lan #ista"es!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!:8

B!8 2*SI/4SS ,4C+,DS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!::

B!7 ,ecords!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!::

B!: Importance of ,ecords!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!:=

B!< *ses of ,ecords!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!:=

B!= Criteria for ,ecord $eeping!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!:=

viii



LIST 0( (IGURES

Figure 7- Introduction to entrepreneurship!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7

Figure :- Functions of an 4ntrepreneur!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!=

Figure <- 4ntrepreneurship process!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Figure =- #anagement Functions!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!<

Figure >- 2usiness 4nvironment!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!=

Figure ?- Components of business environment!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!?

Figure - 4ntrepreneurship vie&s!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Figure B- 4ntrepreneurship vie&s!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Figure - ,is"s in business!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!B

Figure 78- Changes and competition!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!78

Figure 77- 2usiness Finance Illustration!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!77

Figure 7:- 4thical #essage!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7<

Figure 7<- Customer Care!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7>

Figure 7=- Customer Service Components!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7?

Figure 7>- 2usiness lan 2oo"let!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7

Figure 7?- ,ecord $eeping!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!::

Figure 7- ,ecord $eeping Illustration!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!::

ix



ACR0NYMS AND ABBREVIATI0NS

DTI Dairy Training Institute

SDC Smallholder Dairy Commercialization ro@ect

S.+T Strengths .ea"ness +pportunities and Threats4ST43 olitical 4conomical Social Technological 4nvironmental

x



.1- INTR0DUCTI0N T0 ENTREPRENEURSHIP

(iure .9 Introdu#tion to entre+reneur"$i+

.1. Definition of Ter!"

i Entre+reneur"$i+ is the process of scanning the environment and identifying

business opportunities and then pulling all the available resources in order to e'ploit

these opportunities! It involves ta"ing calculated ris"s!

ii Entre+reneur9 An 4ntrepreneur is an individual &ho has the ability to identify and

evaluate business opportunities9 to gather the necessary resources and to initiate

appropriate action to ensure business success! e needs not posses any technical s"ills

in the field of venture! e is @ust an opportunistic gro&th%oriented innovative and

creative person!

iii Self<e!+loy!ent This is a situation in &hich an individual &or"s for himself or

herself instead of being employed for a salary or &age! /ot all self employed people

are entrepreneurs!

.1, ualitie" of Entre+reneur"

i Inno*ati*e % Innovativeness is the tendency to introduce ne& ideas or methods that

are different from or better than the previous ones!

ii 0++ortuni"ti# % They see business opportunities &here other people do not see and

do not allo& an opportunity to pass by!iii Need to a#$ie*e % 4ntrepreneurs are people &ith a strong desire to achieve their goals

&ithin a certain set standard of e'cellence

iv Ri"> ta>er" % 4ntrepreneurs do not fear failure! o&ever they do not ta"e e'cessive

ris"s but rather calculated ones!

v Self<#onfident % 4ntrepreneurs believe in themselves and in &hat they are doing

vi I!ainati*e E 4ntrepreneurs al&ays come up &ith ne& ideas plans and suggestions

for a possible course of action!

vii Per"i"tent % 4ntrepreneurs are people &ho do not give up easily and they ta"e failure

as a lesson and build on it to better the future!

viii Netor>in E develop business contacts and uses influential people to reach o&nob@ectives

1



i' Hardor>inProa#ti*e % 4ntrepreneurs are pro%active people &ho do not @ust &or"

hard but smartly!

' Ti!e #on"#iou" % 4ntrepreneurs put a time aspect in their activities and strive to

accomplish their duties &ithin schedule!

.1? (un#tion" of an Entre+reneur

An entrepreneur performs a series of functions necessary right from the genesis of an idea up

to the establishment and effective operation of an enterprise! e carries out the &hole set of

activities of the business for its success! e recognizes the commercial potential of a product

or a service formulates operating policies for production product design mar"eting and

organizational structure! e is thus a nucleus of high gro&th of the enterprise!

The functions of an entrepreneur are classified into five broad categories-

• ,is"%bearing function

• +rganizational function

• Innovative function• #anagerial function and

• Decision ma"ing function!

i1 Ri"><)earin fun#tion9

The entrepreneur assumes all possible ris"s of business &hich emerges due to the possibility

of changes in the tastes of consumers modern techniues of production and ne& inventions!

Such ris"s are not insurable and incalculable! In simple terms such ris"s are "no&n as

uncertainty concerning a loss! Thus ris" bearing or uncertainty bearing still remains the most

important function of an entrepreneur &hich he tries to minimize by his initiative s"ill and

good @udgment!

ii1 0rani%ational (un#tion9

This is the function &hereby the entrepreneur brings together various factors of production

ensures continuing management and renders ris"%bearing functions as &ell! This function

associates an entrepreneur &ith the functions of coordination organization and supervision!

This implies an entrepreneur is one &ho combines the land of one the labour of another and

the capital of yet another and thus produces a product! 2y selling the product in the mar"et

he pays interest on capital rent on land and &ages to labourers and &hat remains is hisGher

profit!

iii! Inno*ati*e (un#tion9

The basic function an entrepreneur performs is to innovate ne& products services ideas and

information for the enterprise! As an innovator the entrepreneur foresees the potentially

profitable opportunity and tries to e'ploit it! e is al&ays involved in the process of doing

ne& things! Innovation is the means by &hich the entrepreneur either creates ne& &ealth

producing resources or endo&s e'isting resources &ith enhanced potential for creating

&ealth! .henever a ne& idea occurs entrepreneurial efforts are essential to convert the idea

into practical application!

2



iii1 Manaerial (un#tion9

4ntrepreneur also performs a variety of managerial function li"e determination of business

ob@ectives formulation of production plans product analysis and mar"et research

organization of sales procuring machine and material recruitment of men and underta"ing of

business operations! e also underta"es the basic managerial functions of planning

organizing co%coordinating staffing directing motivating and controlling in the enterprise!

e provides a logical and scientific basis to the above functions for the smooth operation of

the enterprise thereby avoids chaos in the field of production mar"eting purchasing

recruiting and selection! In large establishments these managerial functions of the

entrepreneur are delegated to the paid managers for more effective and efficient e'ecution!

i*1 De#i"ion Ma>in (un#tion9

The most vital function an entrepreneur discharges refers to decision ma"ing in various fieldsof the business enterprise! e is the decision ma"er of all activities of the enterprise! The

entrepreneur is a decision ma"er and the follo&ing functions are attributed to them9

• e determines the business ob@ectives suitable for the enterprise!

• e develops an organization and creates an atmosphere for maintaining a cordial

relationship &ith subordinates and all employees of the organization!

• e decides in securing adeuate financial resources for the organization and maintains

good relations &ith the e'isting and potential investors and financiers!

• e decides in introducing advanced modern technology in the enterprise to cope up

&ith changing scenario of manufacturing process!• e decides the development of a mar"et for his product develops ne& product or

modify the e'isting product in accordance &ith the changing consumerHs fashion taste

and preference!

• e also decides to maintain good relations &ith the public authorities as &ell as &ith

the society at large for improving the firms image before others!

3



.13 T$e role of Entre+reneur"$i+ in

.131. E#ono!i# de*elo+!ent

i! o) #reation % ,educes unemployment as it creates employment for a

population that &ould be other&ise unemployed

ii! Utili%ation of re"our#e" % 4ntrepreneurship combines the availableresources E (land labour capital and management) profitably thus

improving their living standards!

iii! Ca+ital for!ation % 4ntrepreneurs create &ealth for themselves and

for those employed!

iv! Earn" t$e o*ern!ent re*enue and forein e2#$ane % Through

ta'ation licenses and registration charges that are made on all

businesses

v! Pro*i"ion of ood" and "er*i#e" % 4ntrepreneurship generates goods

and services through the functions of production and mar"eting

vi! Inno*ation" and $u!an #a+a#ity de*elo+!ent % 4ntrepreneurs

provide a ne& pool of ideas and innovations inventions and ne&

solutions to problems facing the people and hence contribute to the

industrialization process!

.131, Bu"ine"" de*elo+!ent

i! The entrepreneur is the initiator promoter and the manager of the

business and hence should bear the responsibility of running it

successfully

ii! e is the decision maker and bears all the ris"s and profits in the

business!

4

(iure ,9 (un#tion" of an Entre+reneur



iii! as the role of setting objectives and ta"ing charge in order to achieve

them!!

iv! as the role of loo"ing out for new ventures for development and

gro&th as &ell as e'pansion

.1/ In#enti*e" to entre+reneur"

In $enya today there are specific incentives to aspiring entrepreneurs-

The introduction of national funds to cater for specific groups e!g! 5outh and

the .omen Development Funds &hich have lo& interest rates

Introduction of tailor made pac"ages to meet the different clientele needs by

the ban"ing institutions! 4!g! farm development loans asset finance

4ntrepreneurship and business s"ills Training as is being sponsored by State

department of devolution and youth affairs /0+s Church based+rganizations and Community 2ased organization (C2+s)!

rovision of subcontracting services from larger businesses

rovision of stalls and mar"ets e!g! #uthur&a mar"et in /airobi and the other

counties!

5



,1- BUSINESS DEVEL0PMENT AND MANAGEMENT

,1. Bu"ine"" De*elo+!ent

,1.1. Startin a Bu"ine""

F$at i" Bu"ine"" It is a continuous production and distribution of goods and services &iththe aim of earning profits under uncertain mar"et conditions!

(eature"C$ara#teri"ti#" of Bu"ine""

i! rofit is the main +b@ective

ii! 4'change of goods and services

iii! Connected &ith production

iv! To Satisfy human &ants

v! Deals in numerous transactions

vi! #ar"eting and Distribution of good

vii! Deals in goods and services

viii! 2usiness s"ills for economic success Consumer goodsi'! ,is"s and *ncertainties roducer goods

'! It involves the buyer and seller

'i! ave a social obligation

,1, 0)e#ti*e" of Bu"ine""

i! rofit

ii! 0ro&th

iii! Customer Satisfaction

iv! 4mployee Satisfaction

v! ;uality products and services

vi! #ar"et 3eadership

vii! 4mployment creation

viii! Service to Society

,1? Bu"ine"" 0++ortunity

A business opportunity can be defined as an idea that can be converted into a profitable

business through the application of the factors of production! It is an attractive investment

idea that has been evaluated and found to have high chances of success! The ability to notice

a business opportunity in the environment &here others have failed to see is &hat defines an

entrepreneur! Those &ho go ahead and gather the necessary resources and e'ploit the

opportunity practice entrepreneurship!

,13 ualitie" of ood )u"ine"" o++ortunity

i! Mar>et a*aila)ility % 2y ans&ering the uestion Is there an effective demand for

my productsGservicesJ one &ould be finding out &hether an opportunity is good for

business! A good mar"et is one &ith large enough numbers and adeuate purchasing

po&er i!e! people &ith demand and ability to pay!

ii! Re"our#e reuire!ent" % An opportunity &hich cannot be e'ploited because of lac"

of resources &ill only remain a pipe dream! An entrepreneur should find out &hat arethe resource reuirement for the business e!g! 3and capital time i!e! #aterials

6



(capital) #en (labour) #oney (&or"ing capital) #achinery (tools)! Are the

resources adeuate to e'ploit the opportunityJ

iii! Su"taina)ility % The ability to gro& and develop and continue &ay into the future is

another feature of a good business opportunity! The uestions an entrepreneur should

as" himself in evaluating a business opportunity include- Are there future prospects

for the business

Can the business &ithstand the challenges of time Are there prospects of gro&th and

e'pansion

iv! Te#$noloy % A good business opportunity must "eep up &ith changes in technology!

It should be dynamic and fle'ible9 other&ise it &ill be &iped out by changes in

technology

v! (ea"i)ility and Via)ility % A good business opportunity should be both feasible and

viable! Feasibility refers to practicability and achievability! It refers to &hether it can

be done in practice! 6iability refers to &hether it can survive to maturity!

(iure ?9 Entre+reneur"$i+ +ro#e""

,131. Generation of Bu"ine"" Idea"

2usiness ideas are generated based on four "ey variables- %

i T$e S>ill" one +o""e""e"9 Through performing tas"s that they are s"illed in one gets

paid! e!g! doctors carpenters etc! Such people become craft entrepreneurs

ii T$e Re"our#e" one $a"- 2y putting idle resources to use one can start a business e!g!

land computers cameras plots old clothes etc!

iii T$e Need" of t$e +eo+le in $i" en*iron!ent9 This involves loo"ing at &hat people

need or reuire and starting a business that provides their needs! 4!g! food &ater

transport clothes education

iv T$e Pro)le!" +eo+le fa#e in t$eir daily li*e": roblems are not necessarily needs!

roblems refer to daily struggles and troubles e!g! diseases droughts etc! So by

starting a hospital one may solve the problem of disease or sic"nesses!

7



,131, Sour#e" of )u"ine"" idea"

i #edia E Television ne&spapers magazines radio (business &ee"ly) internet

ii ,esearch E active data collection analysis and interpretation to ma"e conclusions

iii rior employment E gives one e'perience suppliers relevant "no&ledgeiv obbies E gives one en@oyment

v Customers E they give feedbac" &hether complaints or compliments

vi Suppliers E they may give better ideas about a product or service

vii Colleagues E provided they are open and &ell meaning

viii 2rainstorming % This involves discussing and considering many ideas from different

people such as customers suppliers and colleagues! In a brainstorming session ideas

are brought to the table from different people &ithout criticizing them! The purpose of

brainstorming is to get as many ideas as possible before they are critically analyzed!

i' +bservation % involves the use of the five senses e!g! the use of sight hearing taste

touch and smell! It is the most reliable method of data collection as it gives first handinformation!

' Travelling &ide E one is able to see &hat is being done in other areas and copy for his

area

,131? Pro#edure in "tartin a )u"ine""

i Idea generation (identification of a business opportunity) E is the first stage &here

one conceives an idea either from media hobbies e'hibitions (sho&s) brainstorming

o&n idea mar"et survey (involves mar"et research and gathering information from

the environment about the possible businesses in the area! A &ell done mar"et survey&ill yield a business opportunity (a gap that has not been filled)!

ii Personal evaluation E involves self%evaluation in terms of character time s"ills

social relations capacity to do the business religion gender beliefs! As" yourself

do I have &hat it ta"esJ

iii Feasibility and viability analysis % involves e'amining the idea in various aspects to

see &hether it is practically possible and &hether it can survive! It includes chec"ing

all the factors that may negatively affect its implementation! The opportunity is

evaluated in terms of personal s"ills value of the opportunity mar"et (size gro&th

potential =s of price promotion product place) resources reuired (land labor

capital time management) technology premises economy politics social factors

(behavior beliefs culture habits) legal reuirements etc!

iv Develop a business plan E describe the business idea industry mar"eting financial

production operation management plans etc! 2y putting it do&n on paper it can be

presented to financiers for funding! A business plan is also used as a guide to the

business as it acts as a yardstic" for measuring business success or failure! A business

plan clearly sho&s the feasibility and viability of a business idea! It also helps in

mobilizing the necessary resources meeting all the legal reuirements registrations

and licences (registration brings a business into e'istence &hereas licensing allo&s

the business to operate) getting premises and all other preparations necessary beforestart of business!

8



v Start te business (Implementation) E if all the above are &ell covered then start and

manage all the aspects of the business!

,1/ Bu"ine"" Manae!ent

,1/1. (un#tion" of Manae!ent

The &ord managementJ designates all activities carried out in the course of running a

business venture! #anagement is supported by four basic pillars &ithout &hich success

&ould be difficult to achieve!

These pillars include

% planning

% organizing

% Coordinating

% Controlling

• Plannin

lanning can be defined as the thin"ing that ta"es place before the actionJ! This is the

anticipation of future business environmental trends predeterminingG forecasting future

activities and resource use to meet the challenges and opportunities therein!

lanning happens in t&o phases

i1 Pre<+roe#t +lannin

% involves development of the business idea

% gives a guide to future development and e'pansion

% elps identify any potential bottlenec"sGchallenges in a business process and

improve productivity!

ii1 Day<to<day +lannin

Involves planning on a daily basis to ensure production ta"es place correctly!

The planning process involves

% Determining the ob@ectives to be attained in the future! This calls for comple'

processes of perception anticipation and forecasting future circumstances and

reuirements!

% Assessing the present limitations to the achievements of the set goals and

determining ho& these could be overcome! At this point the entrepreneur shoulddo a Strength .ea"ness +pportunities and Threats analysis (S.+T ) and &eigh

the possible options

• 0rani%in

+rganizing involves the assignment of tas"s authority and allocation of resources across the

organization! This entails the design of systems to ensure effective coordination of resources

(human capital and natural) across the organizational divide!

/o& that you have a plan you have to make it happen! Is everything ready ahead of your

implementation so that the right stuff &ill be channeled to the proper position at the righttime Are your subordinates (family) prepared to do their part of the plan Is the do&nstream

9



organization (your customer) ready for &hat your institution &ill deliver and &ill the outputs

being on time

• Coordinatin

+nce plans are in place and resources have been organized then the pro@ect &ill be ready for

implementation! Implementation is not ad%hoc! It should have a leader &ho defines and

coordinates the processes! Coordination is therefore the ability to initiate action guide

directly and supervise others in pursuit of a common goal!

• Controllin

Controlling is the measurement and correction of performance in order to ma"e sure those

business ob@ectives and the plans laid do&n to achieve them are accomplished! Controlling

consists of seeing that everything is being carried out in accordance &ith9 the plan &hich has been adopted

the orders &hich have been given

the rules &hich have been laid do&n

10



(iure 39 Manae!ent (un#tion"

11



?1- BUSINESS ENVIR0NMENT

(iure /9 Bu"ine"" En*iron!ent

<!7 F$at i" Bu"ine"" En*iron!ent

Definition! A set of conditions (Social 3egal 4conomical olitical or Institutional)

that have bearing on the business and are uncontrollable in nature and affect the

functioning of the organization!

?1, Ty+e" of Bu"ine"" En*iron!ent

#ainly 2usiness 4nvironment is divided into t&o types! These are-

?1,1. Internal En*iron!ent

These are factors &hich can be controlled by company or rimary factors &hich directly

affects the gro&th of organization e!g! man material money machinery and management

• Ty+e" of Internal En*iron!ent

i 6alue System

ii #ission K +b@ectivesiii #anagement Structure and /ature

iv Internal o&er relationship

v uman ,esources

vi Company Image K 2rand 4uity

?1,1, E2ternal En*iron!ent

Those factors &hich are beyond the control of business enterprise

• Ty+e" of e2ternal En*iron!ent

i #icro 4nvironment e!g!

–

Suppliers

12



– Customers (.holesalers E ,etailers E Industries E 0overnment and +ther

Institutions E Foreigners)

– #ar"et Intermediaries( #iddleman #ar"eting Agencies Financial

Intermediaries E hysical Intermediaries)

– Competitors

– ublicii #acro 4nvironment (4ST43)

– olitical- olitics determine peace and &ar! Issues of security affect

investment! An insecure environment scares a&ay investors and ma"es

business operation impossible!

– 4conomic- They are situations that influence a consumerLs &illingness and

ability to buy goods and services! 4conomic factors are the single most

influential on business performance and success! This is because business

activities are economic in nature!

– Social- 2usinesses operate &ithin a social set%up &hich sets limits to its

operations! Any business should not endeavor to ma"e profits at the

e'pense of the society e!g! pollution9 e'ploitation should not be

perpetrated under the disguise of business! 4ntrepreneurs have a social

responsibility to ta"e care of their &or"ers &elfare as &ell as providing

healthy &or"ing conditions!

– Technological- Technology is very dynamic and a business should be able

to adapt to ne& changes in technology fast enough to be able to benefit

from it! Any ne& technology may create ne& competitors ne&

opportunities or ne& products !4ntrepreneurs need to be al&ays alert

before the ne& technologies ma"e their businesses obsolete! *se of outdated technologies may lead to inefficient production poor products

and finally loss of customers!

– 3egal- The government regulates business operations through la&s and

regulations! /e& la&s concerning business operations are passed from

time to time and one should be a&are of these la&s and ho& they can

affect ones business

13



Co!+onent" of Bu"ine"" En*iron!ent

(iure ;9 Co!+onent" of )u"ine"" en*iron!ent

14



@1- ENTREPRENEURIAL C0MPETENCIES

(iure 69 Entre+reneur"$i+ *ie"

(iure @9 Entre+reneur"$i+ *ie"

The success or failure of a business depends largely on the management competence of the

entrepreneur! This is demonstrated in oneLs ability to manage ris"s cope &ith change and

competition as &ell as in time management

15



31. Ri"> ta>in )e$a*ior9

,is" is defined as the chance that an investmentHs actual return &ill be different than

e'pected! This includes the possibility of losing some or all of the original investment!

Agricultural ris"s can be categorized into t&o-

• Internal ri">"9 those &hich can be influenced by farmers

• E2ternal ri">"9 those outside the reach of farmerLs influence

The sources of internal ris"s li"e production euipment and financial ris"s are located

primarily &ithin the farm and therefore can often be managed through internal measures

such as improved hygiene or financial management!

4'ternal ris"s &hich include mar"et and political ris"s are rooted in a farmLs environment so

that the management has little if any control over the incident rates of these ris"s!

,is" management strategies are implemented to identify ris"s in an organization and to

respond to those ris"s in an appropriate &ay!

(iure 49 Ri">" in )u"ine""

The ris" management process consists of-

i Ri"> identifi#ation

The identification and assessment of ris"s are also called ris" analysis and provide the basis

for the subseuent implementation of ris" management measures! ,is" identification see"s

mainly to describe the potential ris"s a farm faces!ii1 Ri"> analy"i"

16



,is" analysis focuses on the uantification of the incident rates of ris"s and possible damage!

+ften a constant flo& of information is considered to be one of the most important

instruments of agricultural ris" analysis particularly &hen farms are being confronted &ith

increasing e'ternal ris"s li"e political and mar"et ris"s!

iii1 Ri"> !anae!entThe aim of implementing ris" management instruments is not to minimize the ris"s a farm

faces but to optimize its opportunity%ris" profile &hile ta"ing into account farm ob@ectives

and strategies! The available instruments can be clustered into four groups9 their combination

represents a farmLs individual ris" management strategy mi'-

i*1 Ri"> a*oidan#e "tratey

This includes measures that reduce a farmLs e'posure to internal or e'ternal ris"s! Avoidance

of a ris" often reuires stopping certain entrepreneurial activities! Therefore ris" avoidance is

a ris" management strategy that can only be applied selectively!

*1 T$e ri"> redu#tion "tratey

This consists of measures that reduce incident rates or potential damages or losses! This

category includes such diverse measures as the use of technical aids such as fire alarm

systems and the diversification of farm activities in order to improve the mi'ture of ris"s a

farm is e'posed to!

Since ris" reduction does not imply a complete stoppage of any economic activities this

strategy can be used in a much more fle'ible &ay than the ris" avoidance strategy!

#easures that reduce the incident rates of ris"s cope primarily &ith internal ris"s and thus

are usually part of the daily management activities!

*i1 Ri"> "+readin "trateyThis consists of measures that spread the ris" of incident rates through diversification! This

guaranteeing the organization strategic fle'ibility &ith regard to ris" reduction

This strategy can be implemented by such means as-

a) iring sub%contractors instead of investing in oneLs o&n machinery!

b) orizontal cooperation bet&een farmers is also being discussed as a potential means

of reducing ris"!

c) 4ntering niche mar"ets &ith higher price stability can also help to reduce a farmLs

ris"s!

*ii1 Ri"> tran"fer "tratey

,is" incidences are transferred to otherMin many cases professionalMris"%ta"ing

institutions! Typical instruments are fire insurance crop insurance &eather derivatives and

the use of commodity futures e'changes ,is"s can also be transferred to buyers by such

methods as long%term contracts &ith price guarantees

17



31? C$ane and Co!+etition

(iure .-9 C$ane" and #o!+etition

2oth change and competition act as threats to business gro&th and development! All

businesses face competition and fe& businesses can continue to operate as monopolies!

2usiness environment is dynamic and not all changes bring opportunities9 some! bring great

challenges

.ays of dealing &ith change and competition9

i! Plannin in ad*an#e and anti#i+atin t$e"e #$ane" E needs staying informed and

being able to thin" ahead! 4ntrepreneurs should be strategic in their thin"ing

ii! Differential ad*antae E involves providing a uniue customer satisfying superior

product or service such that customers &ould prefer you to the other competitors! This

involves learning &hat the other player are providing or not providing as &ell as

doing a lot of mar"eting!

iii! Di*er"ifi#ation E entails broadening ones businesses and venturing into less

competitive areas or into many areas so that should competition increase in one sector then one &ould move to another!

iv! Pri#e #o!+etition E involves lo&ering prices so as to attract more customers! The

problem &ith this approach is that it may lead to price &ars and reduced profits! The

best alternative is to pursue non%price competition &hich focuses on other elements of

the mar"eting mi' E promotion place and product!

v! Coo+eration it$ t$e #o!+etitor &!erer' E may involve pulling your resources

together for a bigger pro@ect or fi'ing prices together!

18



/1- BUSINESS (INANCE

(iure ..9 Bu"ine"" (inan#e Illu"tration

.hen it comes to beginning a ne& business finding &ays to create start up business finance

is one of the first things to do and definitely the most important! As financing is an integral

part to getting your business off the ground and gro&ing it over time!

There are many hurdles to overcome for entrepreneurs these days and the lac" of financing

can cause a possible business venture to go sour! aving a concrete business plan dra&n up

ahead of time &ill help you get financing once you "no& &here to loo" for funds!

Start up business finance comes in a variety of forms for businesses!

/1. 0*erdraft"

An overdraft is a credit facility given by a ban"! It allo&s temporarily spending more than is

available in the individualLs account to cover short%term financing needs!

It should not be used as a long%term source of finance

/1, Lea"in and a""et finan#e

3easing or renting assets (e!g machinery or office euipment) can save the initial costs of

buying them outright!

/1? In*e"t!ent finan#e

Investment finance (also "no&n as euity finance) involves selling part of business (NsharesL)

to an investor! The investor &ill ta"e a share of any profits or losses that the company ma"es!

/13 In*oi#e finan#in

Invoice financing is &here a third party agrees to buy your unpaid invoices for a fee! Invoice

financiers can be independent or part of a ban" or financial institution!

19



/1/ In*oi#e di"#ountin

This is lending money against unpaid invoices % this is usually an agreed percentage of their

total value! They attract a fee on them!

As customers pay their invoices the money goes to the invoice financier! This reduces the

amount o&ed &hich means one can borro& more money on invoices from ne& sales up tothe percentage originally agreed!

/1; Grant"

A grant is an amount of money given to an individual or business for a specific pro@ect or

purpose! 0rants can be applied from the government the 4uropean *nion local councils and

charities! A grant is never paid bac" ho&ever thereLs a lot of competition and they are almost

al&ays a&arded for a specific purpose or pro@ect!

/16 Loan"

/161. Ty+e" of loan"

There are t&o main "inds of small business loan-

Fle'ible loans are tailored to your business needs and may allo& a capped or variable

interest rate and a choice of monthly or uarterly repayments

Fi'ed loans have a pre%determined rate of interest and a more rigid repayment

structure

The interest rate offered on your loan &ill vary depending on fluctuations of the base rate on

the duration of your loan and on the ris" involved! *nsecured loans usually have higher rates

of interest and tend to provide smaller sums of money over a short period of time

For larger loans a ban" &ill &ant to secure the loan against an asset such as a business

property or it &ill reuire personal guarantees % on personal homes!

2eyond this loans are differentiated by size and term-

%Short term loans are usually smaller and repaid &ithin one year

%3onger term loans are those &hich ta"e longer than one year to settle % and can ta"e as

long as :8 years to mature li"e mortgages!

20



;1- BUSINESS ETHICS AND CUST0MER CARE

(iure .,9 Et$i#al Me""ae

Bu"ine"" Et$i#"

2usiness ethics means or principles that define right and &rong conduct in a business setting!

It relates to the social rules and cardinal values that motivate people to be honest in dealing

&ith others!

;1. I!+ortan#e of Bu"ine"" Et$i#"

2usiness ethics is important because it "eeps business people to operate &ithin a

moral and legal platform that not only leaves them satisfied internally but also

increases sales because most people li"e dealing or doing business &ith honest

businessmen! Also if the public or your potential customers recognize you to be

engaging in improper business deals they &ill turn a&ay from you!

2usiness ethics are the codes of values and principles that govern the actions of an

individual or a group! A business cannot be more or less ethical than the people &horun it! Therefore for a business to maintain good customer relations and conseuently

profitable success it needs to be run by individuals &ith strong ethical values!

4'amples of most important business ethics

Charge the customer a fair price! DonLt be greedy!

Treat the customer &ith respect as though he is better than you!

Do not purposely sell the customer defective items or advice or anything that is

harmful or unsafe!

Al&ays tell the customer the truth!

Treat your staffs li"e you treat yourself or better! 2e "ind and generous to your

staff! ay your suppliers promptly!

21



;1, Cu"to!er Care

Customer care is a service for customers to access if they are having difficulties in using a

product or service or9 Attending to your customers needs and ensuring you retain them!

Almost every business &ill have three different types of customers-

% ne& customers

% e'isting customers

% e'iting customers

5ou need to "no& ho& to handle all three correctly if you &ant to succeed in business!

Creating ne& customers is an ongoing process and it is one of the most en@oyable aspects of

business!

#any entrepreneurs en@oy spending their time figuring out &ays to bring customers in ne&

business! .here many business people fail ho&ever is after the initial sale! appy &ithsuccess a ne& entrepreneur often neglects the ne& customer after that sale un"no&ingly

failing to realize that that ne& customer may become one of the valued :8 percent if treated

properly! 5ou turn that ne #u"to!er into a returning customer by treating him or her &ell

from the start! If you donLt you &ill soon be out of business!

E2i"tin #u"to!er" are one of your most valuable business assets and cannot be ta"en for

granted! They usually ma"e up the bul" of your business so it is no& upon you to loo" after

that relationship and let those customers "no& ho& important they are! 4'isting customers

should be given special services and discounts &hen appropriate and should al&ays be

sho&n appreciation for their patronage!

2usiness &ill al&ays have customers &ho are ending their relationship &e2itin #u"to!er"'

for one reason or another and even this customer needs special treatment! The ending may

@ust be the natural course of the relationship9 for e'ample a customer &ho is moving a&ay!

2ecause you never "no& &ho they tal" to or &ho they may referGdirect to you this customer

needs to be cared for @ust as &ell as the others!

22



(iure .?9 Cu"to!er Care

;1? Great Cu"to!er Ser*i#e

Fe& businesses actually incorporate great customer service into their business operation! It

may be because they have never given it much thought or because it is simply not a priority

or that the culture of the company may be so hectic that employees feel stressed! *nless you

&ant to be on a never%ending search for ne& customers because you have no returning loyal

ones you had better ma"e customer service a priority!

Furthermore serving your customers &ell is also a great &ay to distinguish your business

from the competitorsL!

5ou have to give people a basis to freuent your business e!g9• 2etter prices

• 2etter location

• 2etter products

• 2etter service

The heart of e'cellent customer service is that ‘service’ becomes one of the guiding rules of

your business! For employees to realize ho& important you ta"e customer service it must be

stressed every day in many &ays!

23



(iure .39 Cu"to!er Ser*i#e Co!+onent"

24



61- BUSINESS PLAN

(iure ./9 Bu"ine"" Plan Boo>let

A business plan covers all important aspects to be considered before starting a business! It is a

guide follo&ed to avoid overloo"ing important aspects &hen preparing for a ne& business!

61. I!+ortan#e of a )u"ine"" +lan

% get ideas about the business

% facilitate in getting financial support

% To reduce ris" of loss

% To develop self%confidence% To help solve problems

% To help run the business smoothly

% To help select an appropriate business

61, Co!+onent" of a )u"ine"" +lan

i! T$e #o*er +ae alternatively "no&n as the title page! This is the first page of the

business plan! Items that should be included on this page are9 the businesses name

the period of the plan details of the founding directors and the date!

ii! Ta)le of Content"1 The table of contents lists the topics covered by the plan! As a

road map it allo&s the reader to @ump immediately to those sections that are of mostinterest!

iii! T$e e2e#uti*e "u!!ary this gives an overvie& of the business plan in its entirety!

Although this summary is at the beginning of the plan it should be &ritten last! The

e'ecutive summary should be &ritten clearly and concisely and give a round%up of

the proposed venture! This can be decisive for attracting the attention of the one%

minute investor therefore it should create a sense of intrigue and e'citement in

regards to the ventures prospects!

iv! T$e Ba#>round &!ain )ody' of the business plan begins &ith a brief description of

the company! This area of the plan notifies the reader as to &hat type of enterprise is

being proposed the ob@ectives location and &hether it is a local or international business! It may also be necessary for this section to contain legal issues related to

25



the enterprise! The main body of the plan should also present the current status of the

company9 employee count sales and profits productsGservices facilities and so forth!

To summarize this section should portray the businesses strategy and detail the &ay

in &hich it should run to reach its goals!

v! Produ#t" and Ser*i#e" outline the products andGor services that &ill be offered to the

businessLs customer! If a ne& or uniue physical product is to be offered and a

&or"ing e'ample is available there should be photograph included in the section!

Comparisons made bet&een the serviceGproduct provided and those of competitors

should be included in this section! The productGserviceLs position in the mar"etplace

and its uniue selling points (*S) should be capitalized!

vi! T$e !ar>et +lan section consists of !ar>et analy"i" and !ar>etin +lan! #ar"et

analysis is based on mar"et research data! This area of the plan should establish the

size of the mar"et mar"et trends and describe the target customer! It is very

important to identify the businesses state of e'istence in the mar"et and to provide

evidence to sho& that potential customer groups are &illing to purchase thecompanies offerings!

vii! T$e !ar>etin +lan consists of a brea"do&n of detailed strategies relating to pricing

policy advertising and other forms of promotion sales and distribution and product

launch and development!

viii! Manae!ent Stru#ture and 0rani%ation section describes ho& the company &ill

be formed the organizational structure and the duties of individual roles &ithin the

company! The founderLs bac"ground and summary of their resume should be stated!

The companyLs history and reasons for its creation should be mentioned to build a

relationship &ith the readerGinvestor and to help them relate to the enterprise!

i'! Bu"ine"" o+eration" T$e o+eratin +lan can vary from business to business! It

details ho& the product &ill be produced or the service supplied! Information on the

location production facilities techniues and capital euipment are present in this

section of the plan! +utsourcing uality control and inventory are areas that should

be included &ithin the operating plan!

'! T$e finan#ial +lan includes9 balance sheets income statements cash flo& statements

and cash budgets to determine ho& the enterprise &ill afford to achieve its goals and

ob@ectives! Depending on the business type if it is an e'isting or a start%up business

information &ill vary ho&ever all information present should be @ustified

'i! Ri"> analy"i" describes the things that could happen that can harm the business e!g!ne& technologies! It also details the contingencies plans to handle the ris"s! 5ou

evaluate the &ea"nesses of the business by anticipating the ris"s ahead of time

describing ho& you are prepared &ith handling strategies!

2ii1 A++endi#e"

Any bac"up material that is important information for the support of the business

idea such as 3etters of Contracts Accreditations 3eases Agreements Certificates of

Competencies Testimonials Cash flo& analysis 4'pected income calculations

2rea"%even Calculations ro@ected rofit and 3oss Account and ro@ected 2alance

Sheet should be attached as anne'es!

61?Ti+" for ritin a ood )u"ine"" +lan

26



• $eep it simple and focused

• #a"e it easy to read

• *se understandable language a layout that is pleasing to the eye and charts or graphs

to e'plain difficult concepts!

•

2e ob@ective• ,evie& the plan &ith the critical eye of an outsider &ho doesnLt "no& your business

and isnLt committed to the business!

• 2e honest

• Ac"no&ledge your &ea"nesses as &ell as your strengths!

• ,evie& and revise the document regularly

613 De*elo+in a )u"ine"" +lan

The follo&ing are the steps follo&ed in developing a business plan-

i! De"#ri)e your )u"ine"" idea All business plans are based on one single businessidea! It is about &hich needs the products or services &ill satisfy &hat product you

are going to produce &hat service you are going to provide or &hat goods you are

going to sell &ho you are going to sell it to and ho& you are going to sell it to them!

ii! Pre+are your !ar>etin +lan After you have described your business idea you

should thin" in detail about ho& you are going to mar"et your products or services!

#ar"eting is everything you do to find out &ho your customers are &hat they need

and &ant and ho& much they are &illing to pay! #ar"eting is about "no&ing ho& to

reach and satisfy your customer &hile ma"ing a profit &ith your business!

iii! E"ti!ate your "ale" As soon as you "no& your customers and products or services

better and you "no& ho& to get these to your customer you &ill be able to estimate

your monthly sales (in volume and value)! These sales estimates form the basis for all

further calculations about costs and the profit the business &ill ma"e!

iv! 8no $o !u#$ to )uy and to +rodu#e .hen you "no& your sales plan you

should be able to &or" out your production plan and subseuently be able to

calculate &hat materials and services you need ho& much you need and &hen you

need it!

v! De#ide $at and $o !any "taff you need 2ased on your business idea and your

sales plan you &ill no& need to thin" about the staff you need for this business! .hat

s"ills and e'perience are needed o& many &or"ers do you need +f course you&ill then also need to find out ho& much you need to pay for salaries and salary costs

(including your o&n)!

vi! Identify t$e fi2ed a""et" you need to a#uire #ost businesses need certain land

buildings and euipment to be able to produce or to provide the intended services

effectively! Fi'ed assets are those items that &ill last longer than one year and their

value is reduced over the lifetime of the asset! This reduction in the value of fi'ed

assets is called depreciation!

vii! 8no your #o"t" and +lan for +rofit The previous steps have provided you &ith

most information about the costs you &ill incur by running your business! 5ou &ill

no& need to complete and summarize the costs in order to plan for profit! 2y ma"ing

27



a cash%flo& plan you ma"e sure that any shortfalls in finance &ill be avoided as these

&ill negatively affect your business performance and the planned profit!

viii! Cal#ulate your +rodu#t #o"t" and "et your +ri#e" To be able to set your prices

correctly to plan for the best possible profit margin and not @ust passively respond to

prices set by your competitors you need to estimate the cost of your products or

services as accurately as possible!

i'! E"ti!ate your "tart<u+ #a+ital and your loan reuire!ent Start%up capital is the

financial resources you need to start your business! 5ou need money for fi'ed assets

but you also need money to cover your e'penses during the first t&o or three months

after the business has started as very little money is coming in yet! .hen you "no&

ho& much start%up capital you need you ma"e sure that the full amount is available!

If your financial resources are insufficient you decide about ho& much of the

reuired start%up capital should be obtained through loans!

'! C$oo"e t$e leal for! and >no your re"+on"i)ilitie" There are different legal

forms to choose for your business! They all have advantages and disadvantages and&hich form you choose depends on the characteristics of your o&n business the

o&nership structure you &ish to pursue and the amount of capital you &ish to invest

in the beginning! .hen you run a business you also have additional legal

responsibilities! The module &ill help you to understand the legal reuirements and

obligations that apply to the form of business you choose!

'i! T$e e2e#uti*e "u!!ary The e'ecutive summary is the first page of your business

plan and gives an outline of your future business! It contains some of the most

important information from the 2usiness lan! 5ou &ill therefore need to complete

all other parts of the 2usiness lan before you fill in the e'ecutive summary! It is

important that the e'ecutive summary is clearly &or"ed out and loo"s tidy because it

is the first impression one gets &hen opening your business plan!

61/ Co!!on Bu"ine"" Plan Mi"ta>e"

There are many elements that ma"e a good business plan! It often ta"es time patience and

many revisions before you get it right! *nfortunately &hen rushing to get your funding in

place and launch your business your plan can get neglected! 2elo& &e have highlighted a

fe& of the very common mista"es made &hen &riting a business plan-

i! Unreali"ti# (inan#ial Proe#tion"9 3enders and investors e'pect to be sho&n arealistic picture of &here your business is no& and &here it hopes to be therefore if

the plan is overly optimistic &ith no e'planation of the pro@ections it &ill ring

&arning bells and cause the plan to be re@ected!

ii! Not Definin t$e Taret Audien#e /o business &ill appeal to everyone! 5ou must

define your specific target mar"et present ho& you have made these assumptions and

outline ho& you &ill specifically target this mar"et!

iii! 0*er<Hy+e +ver%hyping your business idea and littering your plan &ith superlatives

li"e hottest and greatest does not substantiate your product or service! .o& them

&ith you business idea research and financial plan not &ith the &ords you thin" they

&ant to hear!

28



iv! Bad Re"ear#$ All research must be double chec"ed and substantiated! 2y using

incorrect or out of date information you &ill discredit your business idea and the

remainder of the plan!

v! No (o#u" on your Co!+etition 4ven if you thin" you have a NuniueL business idea

and are sure that no other business li"e yours e'ists chec" and double chec"! There is

no such thing as no competition! 4ven if your business is one of "ind it comes do&n

to the shilling9 if your business didnLt e'ist but the customersL need still e'isted

&here &ould they spend their money 4ually if you highlight your competition too

much the investor &ill &orry that the business &ill not survive! Focus on your niche

&hat differentiates you from the competition ho& you plan to compete in the

mar"etplace and paint accurate picture of &hat the industry is li"e no& and &here you

see it going in the future!

vi! Hidin Your Fea>ne""e" Do not hide your &ea"nesses but do not highlight them

too much! 4very business has its &ea"nesses but by hiding them or highlighting them

too much you &ill put off the investor! The only &ay to address these &ea"nesses isto include a detailed strategy of ho& you plan address these problems!

vii! Not >noin your Di"tri)ution C$annel" ave a secure plan ho& to provide your

service or distribute your product! Including all possible channels in your plan

&ithout substantiating &hy these are the correct channels and ho& they &ill reach

your target mar"et &ill ma"e the investor assume that you have @ust thought of the list

off the top of your head! The ability to articulate your strategy about ho& your

product or service &ill reach your client is vital!

viii! In#ludin Too Mu#$ Infor!ation If you &ere an investor &ould you &ant to read a

:88 page business plan #ost investors have a mental chec"list of 78 to 7: points

that they are loo"ing for in the plan everything else @ust gets in the &ay! The purpose

of your plan is not to demonstrate the depth of your "no&ledge but to focus on the

"ey elements of your business! Clear and concise &riting is al&ays appreciated and if

you have additional information &hich you &ould li"e to include in the document

create an appendi'!

i'! Bein In#on"i"tent ighlighting different target mar"ets uoting conflicting

statistics or having competing strategies &ithin a plan &ill ma"e an investor challenge

&hether you "no& your business and its mar"et &ell enough! Sections of plans are

often &ritten on different days or by different people and then pasted together into one

document resulting in inconsistency! Ta"e time to revie& each section of your business plan!

'! 0ne Friter7 0ne Reader #a"e sure you as" several people to revie& your plan

before submitting it! It is easy for you to glaze over spelling mista"es and

grammatical errors because you "no& the information inside and out! Another set of

eyes &ill help your plan to loo" more professional and ensure that it reads correctly!

29



@1- BUSINESS REC0RDS

(iure .;9 Re#ord 8ee+in

@1. Re#ord"

A ,ecord is defined as information that has been systematically and carefully collected and

appropriately stored for intended use!

2usiness planning depends on analyzing past performance identifying the strengths and

&ea"nesses of the business and accurate information and this can be obtained only from good

records! Although a great number of records can be "ept the farmer must decide &hat

information heGshe reuires for his planning!

Note: Records that are never used are a waste of time and resources.

(iure .69 Re#ord 8ee+in Illu"tration

30



@1, I!+ortan#e of Re#ord"

• They give the firm history

• enable farmers to run dairy enterprise successfully E by having carefully thought out

properly collected and "ept records

• for "eeping trac" of performance and decision ma"ing % comprehensive and &ell "ept

records

• Aids in efficient management of the herd

• Improves bargaining po&er on products

• 4valuation of livestoc" for selection

• Adding value to livestoc"

• Control of inbreeding and aid in breeding planning

• Aid in culling lo& performers

• To assess profitabilityGlosses

• Aid in gross margin analysis

• CreditGloan access

• To rationalize labour

• Aids in disease management

• Aids in feed planning and management

@1? U"e" of Re#ord"

• Chec" and control the performance of the farm

• #a"e comparisons bet&een enterprises yields seasons

• reparation of budgets

• *sed to borro& loans

• ayment of ta'es

• For planning and scheduling of activities in the farm

• To determine profitability of various techniues of production or systems

• For comparing the efficiency of use of inputs such as land labour and capital &ith

that of alternative production activities

@13 Criteria for Re#ord 8ee+in

They must be useful% data recorded should be used in future in ma"ing decisions

,ecords must be converted to information &hich can later be analyzed and

interpreted!

,ecord "eeping must be simple easy and uic" to understand

Duplication must be avoided as much as possible

,ecords must lead to actions being ta"en!

31



@1/ Ty+e" of Re#ord"

• P$y"i#al < (farm9 herd sizes identification e!g! of branding tags-

Dairy unit9 mil" ,eception payment purchases)

• Breedin% date of insemination &hen to dry co&s calving dates

Important data to "eep include- edigreeG parentage (Dam name grand dam sire name grandsire)- 0ro&th (Date of birth birth &eight date of &eaning &eaning &eight sale

&eight sale date)- Fertility (Age at first service age at first calving date of calving

number of services per conception)

• Produ#tion % measure performance of the herd

The important records are- daily mil" yield lactation length mil" fed to calves consumed at

home sold and spoilt!

• (eedin E indicate amount of feed given and is used the most for day%to%day

management evaluating pasture management practices and for planning of activities in

the future (e!g! to decide &hich co&s need concentrates and ho& much co&s to be

culled and &hy)

The important records are- Available fodder on farm9 ;uantity fed Concentrate

supplemented9 #inerals9 Spoilage (per batch)

• Healt$ E needed to do the reuired vaccinations at the right time and to prevent

disasters li"e foot and mouth epidemic! They also provide information about the health

status of each individual animal and the &hole heard!

They include- 6accination DippingGspraying Treatment9 De%&orming ostmortem

• (inan#ial re#ord" % records of the e'penditure and revenue should be "ept for cash

analysis and enterprise assessment! They provide information on profitability of his

firm and help in decision ma"ing at the right time (e!g! is it profitable to feedconcentrates is it advisable to apply for a loan or credit to invest in a machinery or

technology is it more economical to raise the calves &ith &hole or s"immed mil")

Documents

Entrepreneurship and Business Development