Junior Entrepreneur Scheme Study and Activity Booklet
Contents
Introduction
4
Part 1 - A business idea
5
Activity 1.1. Look around
6
Activity 1.2. Ambition
7
Activity 1.3. Learn
8
Activity 1.4. Ask Questions
9
Activity 1.5. Innovate
10
Activity 1.6. Be charismatic, bold and dream big!
11
Part 2 – Creating a Product: Bake a cake
12
Activity 2.1 Baking A Cake
13
Part 3 – Your strategy
19
Part 4 – Marketing and Promotion
32
Price
33
Product
34
Place
36
Promotion
37
Market Research
42
Part 5 - Operations, supplies and running your business
43
Raw Materials
44
Quality Control
45
Shop design
46
Customer satisfaction
51
Part 6 - Money
53
Starting your business
54
Running your business
57
Budgeting
60
Congratulations
62
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Introduction Welcome to the Junior Entrepreneur Programme! For you, as a participant and a promising entrepreneur, the purpose of this course is to show you some principles. These are not principles that will be very strange or alien to you. They are the principles of business, of how to start, run and manage a business. The idea is very simple – if everyone knows how to do business, then everyone will be more prosperous. The basic principles of business are the same everywhere and in every business. The principles are the same for a CEO in the capital city and the tradesman in his community. Every business in every country in the world is concered with money, marketing, sales and profit. Most importantly, your mind should be openend to the possibility of starting your own business. A business that will grow into a company, with you working sucessfully alongside your colleagues. You will become enterprising individuals. You must not be afraid of failure, and you must not be scared to try something no one else has tried before. It is so important to be persistent in your attempts. Be creative, be original and don’t forget to have fun!
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Part 1 - A business idea The aim of this section is to discuss how to come up with a new business idea. We will discuss how to look around for a business idea, where to find new ideas and also how to test and idea to see if it works. At the end of Part 1, you will be able to: 1. 2.
Look around your community and identify areas where improvement is needed. Come up with a business idea that could be profitable and which improves the life of your community
3. Test the business idea to see if it works!
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PART 1 - A BUSINESS IDEA
Activity 1.1. Look around The first step is to look around for business opportunities. These can be found within your household, your neighbourhood, your village, your town and your country. Make a note of some of the businesses you see people running. Here are some examples: bakery, tailor, farmer, academic, carpenter, food seller, shopkeeper, ship builder, electrician, trader, farmer, fisherman, plumber, artist, actor, jeweller, writer.
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Activity 1.2. Ambition Be ambitious. Pick an idea you think you might like to start a business in. You can pick one from the list of ideas in Question 1 if you are struggling to find a new one. What do you think will sell well? What do you think people will buy? It can be anything! Talk with your friends in the group about the idea, and discuss if your products will sell in your local community.
Write some of your ambitions here. What do you enjoy doing and can you make a career out of it? For example, If you love taking pictures, you can aspire to become a photographer.
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PART 1 - A BUSINESS IDEA
Activity 1.3. Learn Learn about your idea. What do you have to do to make your idea work? Do you need to find a supplier of resources? Do you need money? Do you need a place to run your business? Do you need a computer? Or perhaps do you need to learn a new skill, such as learning how to use a computer or learning how electricity works?
Write some of the things you will need to learn here:
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Activity 1.4. Ask Questions Be curious - Always ask questions. Ask yourself whether your business idea will work. Ask your friends and parents whether they think your business idea would work. Think of five questions you can ask people to find out if your business will work, then go out to the town and ask five different people your five questions. Role-play these conversations in your group to practice. Be confident! Examples of questions are: “Would you buy my product?” or “What do you think about how you currently purchase new goods?” Write your questions here:
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PART 1 - A BUSINESS IDEA
Activity 1.5. Innovate Look for reasons why things are the way they are. Why are the same methods used again and again? Is there a better way? Some methods are often supremely old fashioned, annoying and with a little change can improve the lives of many. Look for ways in which you can change the old ways to something new in your business. This is called innovation.
Write your innovative ideas here: Innovation is being creative to think up of a new, clever idea to make a task easier.
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Activity 1.6. Be charismatic, bold and dream big! Develop the ability to communicate, charm, attract friends, partners, investors and loyal employees. Be good at forming relationships and trust, and always be friendly and pleasant. Be bold and dream big. If you want to do something new, dream about it, consult about it, draw plans with your friends and family and aim to find a plan to achieve your goals.
If nothing could stop me, what do I wish I could do?
Write down some of your dreams here:
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Part 2 – Creating a Product: Bake a cake A product is something you sell to your customers. It can be a physical product, like selling a car. It can also be a service, like fixing someone’s broken car (a mechanic provides a service). The principles are very similar for products and services – you need to design your product or service to sell well. In this section we will see how baking a cake can be turned into a product for your business. If you can, you are encouraged to bake a fresh cake for your group! Before we begin, choose a Director of Brainstorming and a Director of Baking. It is the job of the Director of Brainstorming to make sure that everyone contributes new ideas to the group. The Director of Baking’s job is to make sure that the sessions are kept interesting by organising the baking of the cake!
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PART 2 - CREATING A PRODUCT: BAKE A CAKE
Activity 2.1. Baking A Cake 1. Think about the ingredients available in your local area. To bake a cake, you need flour, eggs, milk, butter, and sugar. To make a walnut cake, add walnuts to the recipe. To make a cherry cake, add cherries to the recipe. You can choose whatever you want.
Market research will help you answer these questions. Go back to question 1.
You need to do market research to find out if a cake business would succeed in your market. Here are some questions you need to ask yourself: ● Which ingredients are available to my community? ● How much do people usually pay for products? ● Would making a special type of cake make the quality of life better in my area? Would more cakes make people happier? ● How does access to fresh water assist my ability to make this cake? If my business was cake making, does fresh water in a pipe to your kitchen make life easier? ● Does my local shop have enough variety of products? Can I increase the variety of the goods in the local shop? ● Can I increase the variety of fresh foods available by planting different fruit trees and vegetables in my area? ● Can I identify ways to preserve the fruits and vegetables to be available during the out of season period?
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PART 2 - CREATING A PRODUCT: BAKE A CAKE
Write down all the ideas from your research and consult with friends and family about the answers to these questions. Would your friends and family be happy to buy your cakes?
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2. Ingredients people liked Gather all the ingredients required by the recipe.
Be innovative in your ideas of new cake flavours – perhaps a mango and chocolate cake?
Here are more questions for your market research: ● What is the best way the final product looks and tastes? ● What type of cake do people like the most? ● Will you sell more of a special cake than a normal cake?
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PART 2 - CREATING A PRODUCT: BAKE A CAKE
3. Start measuring The size of the cake you bake will depend on how many people are going to buy your cake. Remember, you must not bake too much otherwise it will go stale and you will waste it. And you must not bake too little, otherwise there wont be enough for your customers. Measure out the appropriate amounts for each ingredient.
Think about the cost: ● How much does it cost to make my cake? ● How many slices of cake can I sell in one day? ● How much can you sell your product for? ● How many cakes do you expect to sell? Here is an example how to do this:
Market research will help you answer these questions. Go back to question 1.
1 whole chocolate cake costs me $1 to bake. If the cake can be cut into five slices, each slice costs me $0.20 and I will sell each slice for $1 so each cake will give me $5. I predict I can sell 10 slices of cake every day, so I need $2 to bake two cakes. At the end of the day, I will have made $10, and spent $2. This means I have $8 profit.
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If my business was a service, what would my product look like? What would my costs be?
The biggest cost of a service provider is staff time – remember you have to pay yourself an hourly salary.
Think about this question for: ● A mechanic ● A carpenter ● A writer ● An artist
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PART 2 - CREATING A PRODUCT: BAKE A CAKE
4. Final steps ● Bake at the right temperature for a specific length of time. ● Let the cake cool at room temperature before you eat it. Don’t rush into anything: think about things with a cool mind. Think about the presentation of the cake. Remember, a nice looking cake sells better. Do you have clean tissues or plates to give to the customer? Now ... Put the icing on the cake! Decorate it to look attractive. Review a few times and look from every angle to ensure you have a smooth and faultless product. Did you calculate your quantities correctly?
Good presentation is: Clean, attractive, and colourful, of high quality, of a nice shape and pleasing to the eye.
● What did you learn about designing a good product? ● Do you think your cake will sell better because of the research you did? ● If you like, you can set up a stall in your neighbourhood after school and try to sell your cake.
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Part 3 – Your strategy A good business strategy is very important. Your strategy is the method and ideas you use to sell your product. Having a good strategy means you can understand your product and your market very well. If your market is your community, this is great, because you know the most about what will sell in that market already. In your group, work through the questions, and think about what you learned in Part 2 about designing a product.
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PART 3 - YOUR STRATEGY
In your group, write your answers to the following questions. Take time to think about your responses, and consult with your friends, teachers and parents about the answer. Q1. In your community, how many new products or services can you imagine selling well, such as food, gardening, fixing bicycles, clothing or games?
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Q2. Which of the above products or services is MOST on demand?
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PART 3 - YOUR STRATEGY
Q3. What makes this product or service special or unique? This is part of your competitive advantage.
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Competitive advantage: How your product is better than your competition’s product
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Q4. How does this product or service benefit people? What is unique about your product that makes it different from the competition? This is part of your competitive advantage
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Products that have the most value and use in a community sell the best.
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PART 3 - YOUR STRATEGY
Q5. How can you make your product or service reliable, good value and good quality?
A high quality product means “high quality” is part of your strategy. A cheap product means “low prices” is part of your strategy
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Q6. How will you sell your product or service? How much business do you expect to do per day, week, month and year? Is your product or service seasonal? Create a weekly and monthly sales forecast below. An example has been given for you. Month
Mango cake
Chocolate cake Ice cream cake
January
20kg
10kg
1kg
February
10kg
20kg
2kg
March
10kg
10kg
5kg
April
5kg
10kg
10kg
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PART 3 - YOUR STRATEGY
Q7. How much does it cost you to make or buy your product or service? And how much will you sell it for? The difference in the cost of your product and the price you sell it is your profit margin. For example, if ingredients for making one cake cost $3, and you sell your cake for $10, your profit margin is $10 – $3 = $7.
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Profit: The money left over after you take away the money you spent from the money you made.
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Q8. What will you name your business and product? Hints: ● Different name from other similar products; look for a crazy name! A funny name sells well. ● Think of a business name that people can remember. ● Experience shows that two-part names are easier to remember. If people forget one, they might remember the second!
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PART 3 - YOUR STRATEGY
Q9. Location of your business ● Look at various locations ● You need a busy location with lots of people passing by. Consider an area that people regularly get together. ● It needs to be a safe spot. If your location ● Will it cost you any rent to locate there?
is busy, more people will see your product.
● How far is this location from competitors?
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Q10. Do you need people working for you? If so – how many do you need? What will each person do? Remember, you have to pay them, so make sure you can afford to! List their job titles and responsibilities here:
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PART 3 - YOUR STRATEGY
Q11. Where do you want to make your product or service? You need to have access to the right equipment, so if you are baking cakes, you need to have access to an oven. â—? What equipment do you need to make your product?
Some places will charge you rent to work there.
â—? What do you need to sell your product?
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Q12. Talk about your product or service with your family and friends. Ask them for constructive criticism, or feedback. What are their suggestions for improvement? Make a note of them here. Listening to feedback is what gives you a competitive advantage
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Part 4 – Marketing and Promotion There are four P’s to marketing your business well: Price, Product, Place and Promotion. This is called the marketing mix. In this section, we will go through how marketing can really SELL your products and make sure your business is successful.
Price
Product
Place
Promotion 32 Junior Entrepreneur Scheme
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Price
Q. How you decide on pricing? ● What is a fair price? ● How often will you review pricing? ● Your profit margin will depend on the price you set. What is your profit margin? ● How much do people usually pay for your type of product? Go back to your market research you did in Part 1 Tip: High prices for cheap products don’t usually sell very well.
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PART 4 - MARKETING AND PROMOTION
Product 1. Think about what age group will be attracted to your product? How do you know they will like it?
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2. How do you make your packaging attractive? Discuss presentation. Think about different colour papers, shapes and sizes. You may wish to design a packaging for your cake or idea below. A good packaging will tell someone: ● The name of your product ● What the product is ● How much it costs ●
Look colourful and attractive, so makes people want to pick it up and have a look. This is part of the Presentation of the product.
The Coca Cola packaging is very famous, but it is very simple. Think about why it is so simple, and see if you can design your packaging in a simple but effective way.
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PART 4 - MARKETING AND PROMOTION
Place ● Where is it best to sell your product or service? ● Can your product be sold to shops near you that are already established? ● Could you approach a shopkeeper and ask them if they will sell your product?
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Promotion 1. Find a memorable catchphrase for your product. Some good examples of catchphrases of already famous products: 7-Up – “Freshen-up with 7-Up” Apple – “Think different.” Nescafe – “Coffee at its best”
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PART 4 - MARKETING AND PROMOTION
2. Do you want to use samples (giving free tasters of the product)? How often do you want to give free samples? Where can you give out free samples? E.g. in movie theatre? On the street?
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3. Will you use posters to advertise your product or service? Can you advertise online by creating a website? THINK BIG! Where can you put those posters? On a piece of paper, sketch one of your posters with your product packaging, your slogan and company name.
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PART 4 - MARKETING AND PROMOTION
4. How important is a good reputation? Is it important your reputation is good for business? Why is word of mouth important? What image do you want your clients have of you?
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5. How will you treat your customer with dignity and respect? Hint: it should include your staff, customers and suppliers. Dignity and Respect At Work = DRAW. REMEMBER, DRAW.
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PART 4 - MARKETING AND PROMOTION
Market Research It is important to understand your market. Look over the market research you did in Part 1 and Part 2, and note what you discovered about your customers in your local area. Are they old? Young? Do they have kids? What are their interests? Do they play sports? Write your observations down.
You should always think about your market and how you can achive satisfied customers.
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Part 5 - Operations, supplies and running your business In this section we will cover how to organise running the practical elements of your business. Making sure you run your business properly means more profit for you, because you are not wasting and are efficient. Efficiency is creating the maximum amount of work with the minimum amount of cost, time and effort. This means a higher profit margin because you spend less on creating your product. You will need to think about being efficient in all parts of your business.
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PART 5 - OPERATIONS, SUPPLIES AND RUNNING YOUR BUSINESS
Raw Materials How will you make sure you have regular supply of your basic supplies, such as flour and butter for cakes? Where are you going to store these supplies so they remain fresh and ready to use? Do you have a back-up supplier? What are some of the supplies the following people may need? Where can they get them from? ● A bicycle repair man ● A mechanic ● A web designer ● A locksmith ● A clothing maker
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Quality Control What procedures can you create to ensure cleanliness, taste and appearance of your product? E.g. Create a rule that everyone must wash their hands with soap and water before every cooking session.
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PART 5 - OPERATIONS, SUPPLIES AND RUNNING YOUR BUSINESS
Shop design 1. If you have a shop or a stall, how do you want to design it? Draw a design of the layout of your store. Think about what your customer will see first when they walk in, and think about what your customer will want to see in order for them to buy something. If you don’t have a store, think about how you will sell to your customers. Will you have a stall at market? Go from door to door offering your products? Set up a website and sell online?
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2. What do your customers experience? Do you have sitting space for your customers? Do you need some? What will the opening hours of your shop be? Will you deliver to customers’ houses?
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PART 5 - OPERATIONS, SUPPLIES AND RUNNING YOUR BUSINESS
3. Security Do you need security guards to protect your shop or stall? How will you protect yourself against theft?
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4. How will you use technology ● Can you use telephones and computers to run your business? E.g. to contact staff, suppliers etc. ● Can you use mobile phones and social networking to promote your business? ● Do you have the resources to build a website?
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PART 5 - OPERATIONS, SUPPLIES AND RUNNING YOUR BUSINESS
5. Daily timetable of the business Example: Baking: 8am to 9am Serving: 9.30am to 3.00pm Clean Up 3.00pm to 4.00pm 4.00pm – 5.00pmWork on business marketing/strategy/finance.
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Customer satisfaction 1. Putting it all together, what is the service that you can offer to your customers? Look at this diagram. It shows how different parts of a business should all work together to offer a better service for your customer.
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PART 5 - OPERATIONS, SUPPLIES AND RUNNING YOUR BUSINESS
2. Using the picture below, discuss with a friend how your relationship with customers might be able to grow.
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Part 6 - Money This is perhaps the most important aspect of your business! You have to make money, but it is also important to manage your money well so your business runs smoothly. In this section, we will think about how to finance your business.
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PART 6 - MONEY
Starting your business How much money you need to start? ● You can calculate this by thinking about how much your product costs so you can create your first products to sell. ● How much money do you need to spend on supplies to make your product? ● How much do you need to spend on equipment? Record your amounts below, but keep equipment and supplies separate. An example is here to help you:
Supplies
Equipment
10kg Flour: $5
Rent kitchen space: $20.
5kg Sugar: $10
Mixing bowl: $0.50
5kg Apples: $10
Spoon: $0.50
500g Yeast: $2
Baking tray: $2.
Total for three month’s supplies: $27
Total equipment (last at least one year: $8
So to start your business, and have enough money to run for three months, I need $35.
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PART 6 - MONEY
Where are you going to get money from? Here are some ideas: ● Borrow from parents, a friend or a bank. ● Find an investor, who will get a share of your profits. ● Find a business partner, who may have money but needs your skills.
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Running your business How can you prepare a daily and monthly account of money coming in and going out? Your business is concerned with profit: a balance between money received and money spent.
Record your daily intake like this, then at the end of the month, check to see you are bring in more money than you are spending. Day Chocolate cake (slices sold) Monday 3 Tuesday 6 Wednesday 6 Thursday 9 Friday 6 Saturday 2 Total slices 32 Income (if one slice cost $2) $64 TOTAL : (64+52+40) =
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Walnut cake (slices sold) 3 5 2 5 8 3 26
Mango Cake (slices sold) 4 4 4 2 4 2 20
$52 $156.00
$40
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PART 6 - MONEY
Keep a list of your weekly spending like this:
Day Supplies Monday $5 Tuesday $5 Wednesday $5 Thursday $5 Friday $5 Saturday $5 Total spent $30
Equipment 0 0 $2 (new spoon) 0 0 0 $2
TOTAL
$52
30+2+60=
Wages $10 $10 $10 $10 $10 $10 $60
Now calculate if you are in profit by taking your income minus your spending:
Income – expenses = profit $156 - $92 = $64 profit for Week 1. Do this every week, and every month and you will keep a good record!
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PART 6 - MONEY
Budgeting What can you do with profit? Here are some ideas: ● Spend on more equipment to make more products ● Design a new product ● Pay higher wages ● Move to a different location to increase sales ● Start another business – now you are an entrepreneur!
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Money Management ● How much money do you expect to come in? Make product forecasts. Will this vary according to the season? Go back to your market research in Part 1 and Part 2, and make forecasts according to your market. ● Where will you keep the money? ● How will you make sure you pay your creditors and your salaries?
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Congratulations Well done on working through the course. Keep this book. It will be a useful reference guide for you when you come to starting your business. You can use it to create a Business Plan which is a written document detailing the strategy, product, marketing, operations and financial information of your company. Above all, good luck with your new business. Don’t be afraid of failure, and if you keep trying, you will succeed!
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Copyright Junior Entrepreneur Scheme 2012. All rights reserved. This is a pre-release trial version. You must not copy, replicate or distribute any part or all of this booklet. If you require the latest version, would like to submit suggestions or feedback, or have any questions, please email ramez.krishnan@gmail.com.