Download - Starting a Small Enterprise
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ENTREPRENEURSHIP AND
SMALL BUSINESS
MANAGEMENT
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ESTABLISHING A SMALL
ENTERPRISE
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INTRODUCTION
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What is a small scale
enterprise?A small business is one which is
independently owned and operated and notdominant in its field of operation
(Amienghomwan, 2004)
What is most important therefore is their What is most important therefore is their What is most important therefore is their What is most important therefore is their
annexation of resources and overall annexation of resources and overall annexation of resources and overall annexation of resources and overall
contribution to the economic well beingcontribution to the economic well beingcontribution to the economic well beingcontribution to the economic well being
of developing nations across the globeof developing nations across the globeof developing nations across the globeof developing nations across the globe.
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ROLE OF A SMALL
ENTERPRISE
Small scale enterprises have significantsignificantsignificantsignificant rolesrolesrolesroles in developing
countries.
All available resources in any given situation in the
economiceconomiceconomiceconomic wellwellwellwell----beingbeingbeingbeing of a nation must be developeddevelopeddevelopeddeveloped forforforfor
industrializationindustrializationindustrializationindustrialization andandandand ultimatelyultimatelyultimatelyultimately consumptionconsumptionconsumptionconsumption through the
small and medium scale businesses.
The impact and potential contribution of small and
medium scale business and the accelerated effect in
achieving macro economic objectives pertaining to fullfullfullfull
employment,employment,employment,employment, incomeincomeincomeincome distributiondistributiondistributiondistribution and the developmentdevelopmentdevelopmentdevelopment ofofofof
locallocallocallocal technologytechnologytechnologytechnology, makes its existence mostmostmostmost inevitableinevitableinevitableinevitable....
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The following factors may make an
individual decide to establish his/her own
enterprise:
Job dissatisfaction: When an individual feels his skills,experience and other attributes are not being properlyutilized, he/she may become dissatisfied with the job.
Lack of challenges
Pay dissatisfaction
Unemployment
The desire to be independent
Security
Encouragement by friends and government policies
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HOW TO START?
The first thing to consider in starting a business is to have a desire to do so.
This is a commitment that only on individual can decide on. One this decision is made, the next steps are
Know oneself Look for opportunities Consider available resource Plan to use these resources to take on these opportunities.
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Keeping cost as low as possible Doing most of the work, which is free to you Making available a detailed cost breakdown before executing a task.
The best time for any business to start is nowsince there is no time like the present. This isbecause hesitation in business start up may leadto losing out
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STEPS TO START STEPS TO START STEPS TO START STEPS TO START
A BUSINESSA BUSINESSA BUSINESSA BUSINESS
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Personal EvaluationPersonal EvaluationPersonal EvaluationPersonal Evaluation
In order to start a successful business, passion alone
isnt enough. We need to plan, set goals and above
all, know about oneself.
What are your strengths?
What are your weaknesses?
How will these affect day-to-day
operations?
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Business Plan
Once you decide on a business that fits your goals
and lifestyle, you need to evaluate your idea.
Who will buy your product or service?
Who would be your competitors?
You also need to figure out at this stage how much
money you will need to get started.
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An important first step is preparingpreparingpreparingpreparing aaaa businessbusinessbusinessbusiness planplanplanplan to define
your business, products and services, and outline your goals,
operating procedures and competition. If your company needs
funding from a traditional loan or venture capitalists, a business
plan will be required.
1.Make sure your plan includes a marketing approach, so
people are aware of what you're selling and how to find you.
2. CreateCreateCreateCreate aaaa businessbusinessbusinessbusiness logo,logo,logo,logo, cardscardscardscards andandandand stationerystationerystationerystationery.... These items
establish your companys identity and help potential customers
to find you.
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Many small business owners seek advice from accountants and
attorneys. As you search for an accountant and attorney, get
referrals from friends or family, and look for professionals who
have worked with other small business owners or companies in
your specific industry.
Get necessary tax identification numbers, licenses and Get necessary tax identification numbers, licenses and Get necessary tax identification numbers, licenses and Get necessary tax identification numbers, licenses and
permits.permits.permits.permits. A federal taxation number, or employer identification
number (EIN), acts like a social security number and is required
for corporations and LLCs that will have employees. Also keep
in mind that most businesses need licenses and/or permits to
operatein your city, municipality, country.
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Insure your business and investigate other requirements.Insure your business and investigate other requirements.Insure your business and investigate other requirements.Insure your business and investigate other requirements. Some
industries have specific insurance requirements. Discuss your
needs with your insurance agent to get the right type and
amount of insurance
Evaluating your marketEvaluating your marketEvaluating your marketEvaluating your market
In order to identify how attractive your
prospective MARKETMARKETMARKETMARKET really is (your own desires aside for the
moment), there are a few things you should consider:
How urgently do people need the thing youre selling/offering
right now?
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Generation and screening the Generation and screening the Generation and screening the Generation and screening the
project ideas project ideas project ideas project ideas ---- Market analysisMarket analysisMarket analysisMarket analysis
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1.Idea generation
2.Idea screening
3.Business analysis
4.Product development
5.Test marketing
6.Commercialization
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Project ideas are generatedgeneratedgeneratedgenerated through different sources like
customers,customers,customers,customers, competitors,competitors,competitors,competitors, andandandand employeesemployeesemployeesemployees.
Sometimes they are discovereddiscovereddiscovereddiscovered throughthroughthroughthrough accidentaccidentaccidentaccident. Project
manager should try to enhanceenhanceenhanceenhance people'speople'speople'speople's creativitycreativitycreativitycreativity, scanscanscanscan thethethethe entireentireentireentire
businessbusinessbusinessbusiness environmentenvironmentenvironmentenvironment and appraiseappraiseappraiseappraise thethethethe companyscompanyscompanyscompanys strengthsstrengthsstrengthsstrengths and
weaknessesweaknessesweaknessesweaknesses totototo generategenerategenerategenerate aaaa largelargelargelarge numbernumbernumbernumber ofofofof ideasideasideasideas.
Techniques like attribute listing, brainstorming, and delphi
technique are useful for improving the creativity at individual and
group level
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Methods of generating ideas Focus groups
Brainstorming
Brain writing
Reverse brainstorming
Problem inventory analysis
Gordon method
Checklist method
Free association
Forced relationships
Parameter analysis
Delphi/nominal group technique
Collective notebook method
Attribute listing method
Big dream approach etc.
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FOCUSFOCUSFOCUSFOCUS GROUPSGROUPSGROUPSGROUPS: a moderator leads a group of people through
an open, in depth discussion rather than simply asking questions to
solicit participant response.
BRAINSTORMINGBRAINSTORMINGBRAINSTORMINGBRAINSTORMING: the brainstorming method allows people to
be stimulated to greater creativity by meeting with others and
participating in organised group experiences.
BRAINWRITINGBRAINWRITINGBRAINWRITINGBRAINWRITING: written brainstorming. It is a silent, written
generation of ideas by a group of people.
PROBLEMPROBLEMPROBLEMPROBLEM INVENTORYINVENTORYINVENTORYINVENTORY ANALYSISANALYSISANALYSISANALYSIS: it uses individuals in a
manner that is analogous to focus groups to generate new product
ideas.
REVERSEREVERSEREVERSEREVERSE BRAINSTORMINGBRAINSTORMINGBRAINSTORMINGBRAINSTORMING: this is similar to brainstorming,
except that criticism is allowed.
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GORDONGORDONGORDONGORDON METHODMETHODMETHODMETHOD: The GORDON method, unlike many
other creative problem-solving techniques, begins with group
members not knowing the exact nature of the problem.
CHECKLISTCHECKLISTCHECKLISTCHECKLIST METHODMETHODMETHODMETHOD: in this method, a new idea is
developed through a list of related issues or suggestions.
FREEFREEFREEFREE ASSOCIATIONASSOCIATIONASSOCIATIONASSOCIATION: one of the simplest but most effective
methods that entrepreneurs use to generate new ideas. This
technique creates a chain of ideas ending with a new product
idea emerging.
FORCEDFORCEDFORCEDFORCED RELATIONSHIPSRELATIONSHIPSRELATIONSHIPSRELATIONSHIPS: it is a process of forcing
relationships among some product combinations. It is a
technique that asks questions about objects or ideas in an effort
to develop a new idea.
COLLECTIVECOLLECTIVECOLLECTIVECOLLECTIVE NOTEBOOKNOTEBOOKNOTEBOOKNOTEBOOK METHODMETHODMETHODMETHOD: a small notebook
that easily fits into a pocket-containing a statement or any
pertinent background data is distributed
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ATTRIBUTEATTRIBUTEATTRIBUTEATTRIBUTE LISTINGLISTINGLISTINGLISTING: it is an idea- finding technique that
requires the entrepreneur to list the attributes of an item or
problem and then look at each from a variety of view points.
BIGBIGBIGBIG DREAMDREAMDREAMDREAM APPROACHAPPROACHAPPROACHAPPROACH: this approach to coming up with
a new idea requires that the entrepreneur dream about the
problem and its solution in other words, think big.
PARAMETERPARAMETERPARAMETERPARAMETER ANALYSISANALYSISANALYSISANALYSIS: it involves their relative
importance and through an evaluation of the parameters and
relationships, one or more solutions are developed.
DELPHI/DELPHI/DELPHI/DELPHI/ NOMINALNOMINALNOMINALNOMINAL GROUPGROUPGROUPGROUP TECNIQUETECNIQUETECNIQUETECNIQUE:::: this technique
of generating creative solutions to unstructured problems is an
expert- group based problem solving technique that relies on
the convergence of intuitive ideas from several experts who are
contacted independently with a brief description of the problem
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The project managers should analyze the
business environment that consists of the
economic sector, the governmental sector, the
technological sector, the socio-demographic
sector, the competition sector and the supplier
sector. Once a pool of ideas has been
generated, the project manager should carefully
screen them.
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MARKETING ANALYSIS
Product Strategy DevelopmentOnly a few ideas are good enough to reach commercialization.Ideas can be generated by chance, or by systematic approach.Need a purposeful, focused effort to identify new ways to serve amarket. New opportunities appear from the changes in theenvironment.
Idea Generation
Continuous systematic search for new product opportunities. MarketingMarketingMarketingMarketing orientedorientedorientedoriented sourcessourcessourcessources--identify opportunities based on
consumer needs
LaboratoryLaboratoryLaboratoryLaboratory orientedorientedorientedoriented sourcessourcessourcessources-----identify opportunities based onpure research or applied research.
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Product Screening and Evaluation
New product check list; list new product attributes considered most important and compare each with these attributes. Check list is standardized and allows ideas to be compared.
Ideas with the greatest potential are selected for further research.Do they match organization goalsLook at company's ability to produce and market the product.Need to look at the nature and wants of the buyers and possible environmental changes.
Concept testingSample of potential buyers is presented with the product idea through a written or oral description to determine the attitudes and initial buying intentions.This is done before investing considerable sums of money and resources in Research and Development.Can better understand product attributes and the benefits customers feel are most important.Would you buy the product?Would you replace your current brand with the new product?Would this product meet real meet
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Business AnalysisAnalyze potential contribution to sales, costs and profits.Does the product fit into the current product mix?What kind of environmental and competitive changes can be anticipated?How will these changes effect sales etc.?Are the internal resources adequate?Cost and time line of new facilities etc.?Is financing available?Synergies with distribution channel etc.MIS to determine the market potential sales etc.Patentability should be determined, last 17 years, 14 years for a pharmaceutical product.Find out if it is technically feasible to produce the new product.If you can produce the new product at a low enough cost so as to be able to make a profit.
Product DevelopmentDevelop a prototype, working model, lab test etc.Attributes that consumers have identified that they want must be communicated through the design of the product.
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Test Marketing
Can observe actual consumer behavior.Limited introduction in geographical areas chosen to represent intended market.Aim is to determine the reaction of probable buyers.It is the sample launch of the marketing mix.Determine to go ahead, modify product, modify marketing plan or drop the product.PROS are:
1.Lessens the risk of product failure.2.Reduces the risk of loss of credibility or undercutting a profitable product.3.Can determine the weaknesses in the MM and make adjustments.4.Can also vary parts of the MM during the test market.5.Need to select the appropriate MM and check the validity.CONS are:1.Test market is expensive.2.Firm's competitors may interfere.3.Competitors may copy the product and rush it out. IE Clorox detergent with bleach P&G. "In a live test you've tipped your hand, and believe me, the competition is going to come after you. Unless you have patented chemistry, they can rip you off and beat you to a national launch" -Director of Marketing at Gillette's Personnel division..
Alternatively can use a simulated test market. Free samples offered in the mall, taken home and interviewed over the telephone later.
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Commercialization
Plans for full-scale marketing and manufacturing must be refined and settled.Need to analyze the results of the test market to determine any changes in the marketing mix.Need to make decisions regarding warranties etc (reduces consumers risk). Warranties can offer a competitive advantage.Spend a lot of money on advertising, personnel etc. Combined with capital expenditure makes commercialization very expensive.All stages above are identified in this article except market testing.Need to consider:the speed of acceptance among consumers and channel members;intensity of distribution,production capabilities,promotional capabilities prices,competition,time period to profitability and commercialization costs.