EDP Entrepreneurship Development Programme Adapted
Common Life Pattern: Life Time School/College (25 Years) Employee (40+Years)
Businessman
(5 Years=too old) Self Employed
Investor
Adapted from : Cash Flow Quadrant
Common Life Pattern: Life Time 1) 2) 3) 4) 5) -
School/College Employment Retirement Self Employment Total Years
= 25 Years = 40+ Years = 65 + Years = 5 + = 70 + Years
Most people are too old to run meaningful business - In fact we get stuck on the left side of the Quadrant
The Ideal Road: Wealth School/College (25 + Years) Employee +20 Years concurrently
Businessman (+20 years)
(+20 years)
Adapted from : Cash Flow Quadrant
The Right Side: Wealth • • • •
You become stuck on the right side You learn all principles as a businessman You invest for + 40 Years There is room to retire in style
We can be everything and Nothing! Are all your eggs in one basket? Employee Businessman >80% 0%
Self Employed 0%
Investor <30%
Master of Fear? Income Sources? Are all your eggs in one basket? Employee Businessman 35% 25%
Self Employed 10%
Investor 30%
Dealing with THREE enemies..? 1) INDECISION 2) DOUBT 3) FEAR
Six categories of FEAR... 1) 2) 3) 4) 5) 6) -
Poverty Criticism Ill Health Loss of Love Old Age Death Self analysis will show your FEAR!
Symptoms of fear of POVERTY 1. 2. 3. 4. 5.
Indifference Doubt Worry Over caution Procrastination
* Only women can conceal despair!
Symptoms of fear of CRITICISM 1) 2) 3) 4)
Self consciousness Lack of poise Personality Inferiority Complex or 1) Extravagance 2) Lack of ambition (fate mentality) 3) Lack of Initiative
Symptoms of fear of ILL HEALTH 1) 2) 3) 4) 5) 6)
Autosuggestion- negative thoughts Hypochondria – talking to illness Exercise – lack of leading to opposite Susceptibility Intemperance Self Coddling – seeking sympathy through feigning ill health
Symptoms of fear of loss of LOVE 1) Jealousy 2) Fault Finding 3) Gambling
Symptoms of fear of OLD AGE Main reasons have been forwarded why some people fear OLD MAN â&#x20AC;&#x201C; Old Age 1) Distrust from fellow man, and uncertainty of the world beyond 2) Diminished sex attraction 3) Loss of economic and physical freedom
Symptoms of fear of Old Age..2 1) Killing off initiative 2) Self sympathy-being apologetic 3) Developing inferiority complex around +40 years
Symptoms of fear of DEATH 1) 2) 3) 4)
Thinking about dying instead of LIVING Disappointment Lack of LOVE Inappropriate occupation â&#x20AC;&#x201C; be busy
* Focus on achievement now, here, today..
Self Analysis â&#x20AC;&#x201C; Your FEARS Please complete the questions on self analysis as truthfully as possible. This will help you to know more about you MIRROR- MIRROR!
THE BICYCLE MODEL • The model explains how motion of a bicycle is related to a business venture • We highlight how a well functional bicycle is related to a well functional business • Highlight how the challenges faced on the life span of a business are related to challenges of running a small and medium enterprise
FUNCTIONS OF THE BACK WHEEL OF A BICYCLE • The back wheel provides power and drive • Represents the Technical Skills needed to get started or expand a business
TECHNICAL SKILLS REQUIRED FOR BUSINESS SUCCESS • Conducting a market Survey • Determining market, operational, and financial feasibility. • Prepare proforma financial statements, e.g. Cash flow Statement, Profit and Loss Statements, Balance Sheets
FRONT WHEEL OF A BICYCLE • Provides steering and direction • Represents personal skills to get started and run a business • The skills provide direction to the operations of the business.
PERSONAL SKILLS • Personal skills are in two parts namely, • Relationship skills • Self management skills
RELATIONSHIP SKILLS • This means relating with people who have interests in your business. • Examples include: – Financiers – Bankers – Accountants – Lawyers – Spouse – Partners – Friends.
SELF MANAGEMENT SKILLS • This means staying at your best and being task oriented regardless of challenges and setbacks in business. • Self Management Skills include: – Time management – Stress Management – Conflict Resolution Skills/Negotiation – Influencing Skills.
Time Management Out of 24 hours how do you spent your time?
Stress Management When the pressure is on, play the game!
What are the causes of stress in Business? 1. Discuss the causes of business stress? 2. How can you manage stress?
EDP AGENDA • Do you really want to be in business? – Advantages and disadvantages of being in business
• Do you have what it takes to be a successful entrepreneur? – Characteristics of entrepreneurs
• Which business idea is for you? – Project identification methods – Selecting a business idea
• How do I get started? – Business plan – Feasibility study
ADVANTAGES AND DISADVANTAGES OF BEING AN ENTREPRENEUR â&#x20AC;˘
Discussion 1. In your groups discuss and list the personal benefits that are derived from starting Income Generating Projects. 2. Discuss and list the personal disadvantages that a person participating in an Income Generating Project faces when successful or unsuccessful
ADVANTAGES • Being your own boss – Forget SOS • Financial wealth - RICH • Security for owners,families and community • Self Employment • Gain prestige • Increased standard of living
DISADVANTAGES • Financial risk • Too much expectation from friends and relatives • Stress • Attraction to thieves, burglars, etc. • Risk of losing private assets • Limited time for personal problems and family.
CHARACTERISTICS OF ENTREPRENEURS • List 25 entrepreneurial characteristics • Of the 25 characteristics select 5 key characteristics and elaborate why you think that they are the most important ones for a business to succeed.
WORKING DEFINITION OF AN ENTREPRENEUR â&#x20AC;˘ An entrepreneur is someone who identifies needs and satisfies them by taking calculated risks through creation of profitable ventures.
There are 25 basic entrepreneurial characteristics 1. Drive and energy 2. Self confidence 3. Long term involvement in business idea 4. Business idea is beyond making money 5. Persistent problem solver 6. Goal setter 7. Moderate risk taker 8. Ability to deal with failure 9. Use of feedback 10.Taking initiative and personal responsibility 11.Use of own resources 12.Competing against self imposed standards 13.Masters of their own fate
14.Tolerance of ambiguity and uncertainty 15.Independence and individuality 16.Optimistic 17.Innovative and creative 18.Gets well with others 19.Flexible 20.High achiever 21.Profit oriented 22.Persistent, perseverant, determined 23.Integrity 24.Foresight, perceptive 25.Likes challenges
ENTREPRENEURIAL CHARACTERISTICS SUMMARISED • Entrepreneurs have a passionate belief in vision. • They have drive and energy to make the vision work (real) • A sharpness of focus • A continuous effort to instill in others their own passion • A total commitment to achievement.
CONDITIONS FOR ENTREPRENEURSHIP • Opportunity orientation in an environment of scarce resources • Risk taking • Competence • Instability • Ownership • Leadership qualities • Need to succeed
CREATIVE THINKING • Creative thinking is critical in entrepreneurship • Creative thinking means solving problems in an innovative way • It helps entrepreneurs to create unique business ideas. • Creativity helps entrepreneur to face challenges head on.
PRINCIPLES OF CREATIVE THINKING • This basically involves the concepts of divergent and convergent thinking • Divergent thinking means approaching a problem from many view points before opting for a solution • Convergent thinking is the process of narrowing down on possible solutions.
PRINCIPLES OF CREATIVE THINKING...2 • Evaluation – Constantly monitoring and assessing your thinking
• Fluency – Quantity of ideas generated in a given time
• Flexibility – Diversity of ideas generated
• Originality – Unique ideas
• Knowledge – Technical knowhow
Exercise: Join the 9 Dots with four straight lines without lifting your pen or pencil
PROBLEM SOLVING • Secret behind problem solving is to remove conceptual blocks, e.g., – Cultural – Emotional – Perceptual – Religious – Conceptual
BRAINSTORMING • This is a problem solving technique involving a group of people. • The process involves cross-fertilization of ideas • Brainstorming rules include: – – – –
Suspension of judgment Thinking wild Maximizing on quantity Elaborating and modifying others contributions
Ever heard of S+C+A+M+P+E+R = Creative Idea S _________________________________ C__________________________________ A__________________________________ M__________________________________ P__________________________________ E__________________________________ R__________________________________
BUSINESS OPPORTUNITIES IDENTIFICATION Approaches to take in project identification – Identifying new opportunities • These are completely new ides developed in the market area. • Product/service is not on the market – Modifying existing opportunities • Existing project ideas can be modified to become unique. – Process to identify a project depends on the needs of the market and/or industrial set up.
Pictorial Approach When you see a picture of a person what Income Generating Activities come to mind? 1_____________________________ 2_____________________________ 3_____________________________
How to Identify Business Opportunities.
Demand/Need of product/services • Identify needs and the most effective way that makes business sense to solve the problem. Explore basic needs. • Sectorial problem/challenges can be converted into business opportunities. E.g Long dry seasons can lead to manufacturing of irrigation systems • Shortage of irrigation systems can lead to irrigation services project.
Resource Utilization • Resources include – Natural resources, – Human resources, – Technical Resources
• Resources can be abundant, eg, labour, water, timber, rock, solar energy, finances. • Resources can be underutilized, eg, Human skill, Infrastructure. • Value Addition of resources. Eg timber, fruits and vegetables, poultry products, packaging of dried fish, rice etc
Industrial Development • Explore the scope for reputation of projects in a better way • Provision of support services in a sector • New or improved product generation. • Waste collection and utilization
Tapping on Government/Local Authority plans for local areas. • New residential areas lead to new business opportunities • Physical planning and provision of social services • Construction projects
Social and Economic Trends • Changes in tastes and preferences lead to business opportunities • Change in disposable incomes lead to product development and rebranding • Imports flooding local markets leads to relocation of businesses to untapped markets • Outbreak of cholera or malaria
Exercises on Business Idea Generation Exercise 1 Imagine there is a poultry farming industry or project that in performing well. Write as many project ideas as you can that are related to or can do business with (or in) the poultry industry. Exercise 2 Take any picture in a newspaper. Identify business opportunities related to farming and agro processing industries. Which parts of Zimbabwe can the projects be implemented?
THE BUSINESS PLAN Definition • It is a written document prepared by the individual entrepreneur or partners, that describes the goals and objectives of the business along with the necessary steps to achieve those goals and objectives over a specific period of time. Main functions • Forces the entrepreneurs to reorganize their thinking about the feasibility of business • idea. • It leads to the preparation of a written document and replaces oral statements with written facts
Business Plan...2 Benefits • It gives direction • It warns the entrepreneur about the possibility of failure. • It gives credibility and authority to an idea. • It is a unique opportunity to think through an idea. Uses of the business Helps to seek for financial assistance • Used as a guide to operations • Used to test for motivation.
RECOMMENDED FORMAT OF A BUSINESS PLAN • Summary • Introduction • Data collection section (industry and market analysis) • Strategy Formulation (Operational Strategies) • Financial Forecasts
1. SUMMARY â&#x20AC;˘ An overview of the plan highlighting the most important points within the business plan. It is written last but should appear first when compiling the document.
2. INTRODUCTION •
•
•
To introduce yourselves and your business idea eg. – Name of Directors and Business – Nature of Operations – Business Location – Size of Business – How the business idea was conceived Purpose of the business plan. eg – Provide a guide for operations – For financial assistance Business goals (expected achievements in broad terms) – Externally oriented goals i.e how is the project going to benefit the community/society. – Internally oriented goals i.e operational targets such as expansion/growth plans etc.
3. DATA COLLECTION SECTION • The section describes and provides facts about the environment in which the business operates from and includes the following elements: – Industry description (Sector analysis, development and trends in the industry. Statistical data is necessary)
• Nature of the Firm/Business. – – – –
Name of the firm (consistent with nature of operations) Legal Status Nature of operations Licensing requirements including location and zoning
• Product – Specific product/service range that will be offered – The quality expected – Proprietary position
DATA COLLECTION SECTION...2 • Customers – Customer profile addressed by research on target customer buying decision behavior
• Market Area Size and Trends – Demand estimation through research on population and other factors. – Market Trends
• Competition – Identification of competitors’ strengths and weaknesses – Focus on competition as a source to improve your business – Competitive advantage
4. STRATEGY FORMULATION • The section describes how the business will operate within an environment as discussed in the Data Collection Section and includes the following: – Marketing Strategies – Production/Operational Strategies – Organization and Staffing
MARKETING STRATEGY Options • Overall Marketing Strategy (Image to be portrayed by a business) • Location and location advantage • Pricing and pricing policy • Advertising and Promotion • Extra service such as warranties • Product quality, branding and packaging
PRODUCTION/OPERATIONS ISSUES • Machinery, equipment, requirements, cost and sources of supply • Plant layout, fittings and fixtures cost and operational plan • Materials and Inputs requirements • Working Capital Requirements • Preliminary costs requirements
5. FINANCIAL ESTIMATES This is proof that if the project is funded then i) Enough money will return to project owners ii) The community will benefit directly and indirectly as shown by figures iii) The project will recover money initially used to fund the project in the shortest possible time.
3 Key Financial Estimates 1) The Profit & Loss Gain or loss from operations â&#x20AC;&#x201C; buying & selling 2) The Cash flow Money coming into and out of the project 3) Balance sheet Assets & Liabilities
Profit & Loss Estimate layout Profit and Loss Estimate â&#x20AC;&#x201C; Wayerera Tuck-shop for monthend 31 March 2009 Sales Less Expenses Net Profit/ (loss)
$100 $80 $20
Notes 1. Expenses include material, labour and other indirect expenses estimated basing on experience
Cash flow estimate layout
Cash flow estimate of Wayerera Tuck shop for March 2008 CASH IN $ Cash from sales 100 Contributions (owners) 5 Donation SOS 10 Total cash IN (a) 115 CASH OUT Buying stock 50 Transport & others 30 Total cash OUT (b) 80 Net Cash flow at end of month (a-b) 35 Cumulative Cash Flow 35
Action Planningâ&#x20AC;Ś 1. 2. 3. 4. 5. 6. 7.
What is to be done? Who is involved? Where? How? Why? What is required? When?