Develop and Use a Savings Plan

BUF BAW2 09 0812

This unit describes the performance outcomes, skills and knowledge required to develop
and implement a savings plan to achieve identified goals, including identifying savings goals,
understanding the role of the savings plan, the risk/return relationship and how to determine
appropriate savings vehicles to maximize savings.
1. Discussing the Place of Saving and Investing Today
1.1 Discussing the Impact of Increasingly High Cost of Living in Society
use examples from the domestic environment
1.2 Discussing Increasing Levels of Consumer Debt in Ethiopia
with reference to relevant current issues
Consumer debt may refer to:

 credit card debt

 mobile telephone debt
 mortgages on residential and investment properties
 personal loans to purchase:

 motor vehicles
 travel
 domestic white goods

 store credit
 student loans including the Higher Education Contribution Scheme.

1.3 Analyzing and Discussing the Importance of Setting Financial Goals and Developing a

Saving and Investment Plan at Different stages of an Individual's Life

Financial goals may include:

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accumulating a set amount of money by a specified date in the future for the purposes of:

 purchasing assets
 financing holidays, educational expenses, home renovations and other known future
expenses
 establishing a deposit for an investment such as a home or investment property

 aiming to repay existing debts and be debt free

 establishing a regular savings plan
 handling income and expenditure responsibly and avoiding financial difficulties.

You may be asking yourself why is there so much pressure to save money. If you have enough to
pay for everything you need, why should you worry about putting any aside each month? There
are a variety of reasons to begin saving money. Different people save for different reasons. Here
are seven reasons that you may consider saving your money.

1. Save for Emergency Funds

It is important to have an emergency fund set aside to cover unexpected expenses. This could
cover an unexpected car repair, your emergency appendectomy or a sudden job loss. Ideally your
emergency fund should be about three to six months of your expenses. If you are just starting out
you should put aside at least br.1000.00 for this. In addition to your emergency fund you need to
make sure you have a plan and good insurance in place to help you survive the unexpected
financial events in your life.

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2. Save for Retirement

Another important reason to save money is your retirement. The sooner you start saving for
retirement, the less you will have to save in the future. You can put your money to work for you.
As you continue to contribute overtime you will be earning more interest on the money you
have, then you put in each month. You should at least be contributing up to your employer's
match and eventually you will want to contribute ten to fifteen percent of your gross income.

3. Save for a Down Payment for a House

A third reason to save money is for a down payment on a house. Your negotiating power goes a
lot farther when you have a significant down payment towards your home. You will receive
better interest rates, and be able to afford a bigger home. You can determine how much you save
towards this each month depending on your circumstances.

4. Save for Vacations and Other Luxury Items

A fourth reason to save money is to have fun. You can save up for your tour of Gonder or that
Tana Monarchy cruise. Your negotiating power is stronger if you have cash in hand on bigger
purchases. Even if you save up for your vacation, you should try save on your vacation expenses.

5. Save for a New Car

A fifth reason is to purchase a car with cash. You will be amazed at how much money you can
free up in your budget if you do not always have a car payment. You can also negotiate the price
of the car much lower if you are willing to pay cash at the dealership.

6. Save for Sinking Funds

A sixth reason is to set up your sinking funds. A sinking fund is money you set aside for future
repairs or improvements on your car, home or other possessions. This planning can help you to
stop dipping into your emergency fund every time you need to fix your car.

7. Your Education

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A seventh reason to begin saving money is for your future education. Each year more people
return to school to earn their masters or doctorate degrees. You may also consider saving for
your child's education when the time comes

1.3 Analyzing and Discussing Different Attitudes to Savings and Investment and
Exploring the Individual's Own Spending Habits

Attitudes to savings and investment differ and may encompass those who:

 believe it is essential in order to manage their money and achieve future financial
goals
 lack interest in or the discipline to save and therefore live from one pay packet to the
next
 occasionally think about saving but who do not take active steps to save.

Talking About Money

Money is a common problem regardless of your income, age or education. Sometimes a lack of
income causes money hassles and arguments. More often inadequate discussion about money
and our feelings about money is the root of financial problems.

When household members have different attitudes about spending and saving money, or when
unrealistic goals are attempted, there is a potential for conflict. Preventing and overcoming
money problems takes honest and open communication. It also takes time and effort.

Be willing to arrange a specific time when all household members can talk about money. Choose
a location where you won’t be interrupted. Meet on a regular basis instead of waiting until
problems

When talking about money:

✓ Clearly identify the issue at hand.

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✓ Recognize that whoever earns the money doesn’t also earn the right to dictate how it should
be spent.

✓ Let each household member freely state wants, needs and personal feelings.

✓ Listen carefully.

Communication about money is critical for a spending/savings plan to work for the entire
household. When people don’t talk about money, even the most workable spending/savings plan
may face ruin.

2. Understanding Risk as It Relates to Saving and Investing

Risk refers to:
the level of uncertainty associated with a particular savings or investment product.
2.1 Explaining and Demonstrated the Concept of Risk and Risk Versus Return

The concept of risk versus return refers to the general truth that:

 the higher the risk of the investment, the higher the expected return
 the lower the risk of the investment, the lower the expected return.

2.2 Determining an Individual's Risk Profile Based on Current and Future Requirements
and the Individual's Level of Risk Aversion

Risk profile refers to:

the level of risk an individual is comfortable with when investing the money.

2.3 Identifying, Assessing and Discussing the Impact of Inflation on the Earnings Power of
Money
Inflation refers to:

 the cost of living, indicated by the inflation rate

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  the percentage change in the Consumer Price Index which is a quarterly survey of the
retail price of a basket of goods and services consumed by the general population.

3. Developing Your Own Savings Plan

3.1 Identifying and Quantifying Personal Savings Goals into Birr Amounts and
Arranging in Order of Priority

The first step of developing a spending/savings plan is to identify your goals. If your goals are
identified first, all your money won't be spent with little or none saved. By identifying goals first,
you will realize what you want to save toward and it will get you in the habit of saving. Goals
may include saving for emergencies, buying school clothes, paying off the balance on a credit
card, buying a new or used car, or saving for a child’s education.

Encourage each member in your household to think of goals, including short-term (less than 1
year), intermediate (1-5 years) and long-term (more than 5 years). List all the goals from each
person in the household in the "Identifying Goals Chart" below.

Identifying Goals Chart

Short-term Goals- Less than 1 year

1. 6.
2. 7.
3. 8.
4. 9.
5. 10.
Intermediate Goals- From 1 to 5 years
1. 6.
2. 7.
3. 8.
4. 9.
5. 10.

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 Long-term Goals- More than 5 years
1. 6.
2. 7.
3. 8.
4. 9.
5. 10.

During Step 2 of developing a spending/savings plan you'll be deciding on the goals you want to
save toward. Discuss the short-term, intermediate, and long-term financial goals listed on the
"Identifying Goals Chart”, on the above chart, with the members of your household. If all
household members agree on the financial goals, they will be more willing to work toward
reaching each goal. Ask them to state their most important short- term, intermediate and long
term goal. Agree on the goal(s) all of you will try to achieve. Be willing to listen and as a group
settle differences.

List the agreed upon priority goal(s) on the "Personal Budget plan" (UC 08). Set a date when
each goal will be reached (example: down payment for a car September 20 or build an
emergency fund). Determine the total birr amount for each goal. To get the approximate monthly
savings, count the number of months from now to the target date and then divide the total birr
amount by that number of months. You now know the approximate amount of money that is
needed to be saved each month in order to reach each goal.

Eventually you’ll be incorporating the priority goal(s), including building or maintaining an

emergency fund, into your spending/savings plan. An emergency fund is so important because
we never know when we’ll need money to pay an unexpected bill, buy tires for the car, etc. From
time to time, re-evaluate your goals to determine if they are still important and realistic. This will
renew your commitment to reaching them. Should you need more room, copy the Monthly
Savings Chart onto a separate piece of paper and be sure to include these amounts in the Total
Monthly Savings below.

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 Goals need to be:

 specific
 measurable
 achievable
 realistic
 timely.

3.2 Developing a Personal Budget to Reveal Funds Available to Contribute Towards

Savings Goals

Teaching material for calculating the amount needed to achieve identified financial goals
is prepared on a separate sheet of paper

Exercise 01
Exercise 02
Exercise 03
3.3 Investigating the Range of Financial Product Options Available to Maximize Earnings
on Savings
The range of financial product options available to maximize earnings on savings are
investigated and the most appropriate is selected according to own requirements

Product options may include:

 basic savings account

 cash management trusts
 fixed term deposits
 investments in debentures and secured and unsecured stock
 online bank accounts offering higher rates of return.

Requirements to consider when selecting a financial product for savings or investment may
include:

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  account keeping fees, ongoing fees and charges and other non-government
fees and charges
 additional services offered
 ease of access to funds
 level of risk involved
 locality of the institution
 minimum opening balance required
 potential tax implications
 rate of interest earned
 reputation of the financial institution
 term to maturity.

Types of Savings Accounts

Financial Institutions and Savings Accounts

The amount of interest your money earns in a savings account often depends on the type of
financial institution you have selected and the type of account. Banks and credit unions are
different animals. While banks are commercial businesses, credit unions are typically non-profit
cooperative organizations that are organized for specific groups of people. For example, state
employees usually have access to a State Employees Credit Union. Typically, loans are less
expensive at credit unions, but interest rates may not always be as high as what you can get at a
bank. This isn't always the case, though. Currently, some credit union interest rates are higher
than what you will find at some banks. Sometimes credit unions also pay interest on accounts
that banks usually don't pay interest on, like checking accounts. But, you have to be a member in
order to open an account.

Banks usually offer two types of savings accounts: a basic savings account, and a money market
account.

 The basic savings account (sometimes called a passbook savings account) will usually
have either no minimum balance requirement or a low one, but will offer a very low

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 interest rate (meaning your money won't earn that much). In previous year, the average
interest rate at banks for basic savings accounts was three percent. A typical basic savings
account lets you withdraw your money whenever you want.
 Money Market accounts usually pay more money in interest, but will typically require
you to have more money in the account. You also may be limited to how many
withdrawals you can make in a month. Sometimes, in addition to the withdrawals, you
can also write up to the three checks on a money market account each month.

Costs Involved

Sometimes, but not always, banks charge fees for having a savings account. The fee may be low
-- like a birr a month -- or it may be higher or it could even be based on your balance. For this
reason, you should always shop around and compare what different banks are offering. Things
you should look at include:

 Fees and services charges on the account

 Minimum balance requirements (Some banks charge a fee only if you don't keep a certain
amount of money in your account at all times.)
 Interest rate paid on your balance

Types of Bank Accounts

Depository institutions may offer a great variety of accounts, but they generally fall within one of
these five types of bank accounts:

Checking Accounts

A checking account is a type of bank account from which you use checks to withdraw your
money. You may use checks to pay your bills, purchase products and services (at businesses that
accept personal checks), send money to friends and family, and many other common uses. You
can also use checks to transfer money into accounts at other banks and financial institutions. You
have quick, convenient, and, if needed, frequent-access to your money. Typically, you can make
deposits into the checking account as often as you choose. Many banking institutions will enable

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you to withdraw or deposit funds at an automated teller machine (ATM) or to pay for purchases
at stores with your ATM card.

Some checking accounts pay interest; others do not. A regular checking account - frequently
called a demand deposit account - does not pay interest, while a negotiable order of withdrawal
(NOW) checking account does.

Banks and financial institutions may impose fees on checking accounts, besides a charge for the
checks you order. Fees vary among banks. Some institutions charge a bank account maintenance
or flat monthly fee regardless of the balance in your checking account. Other institutions charge
a monthly fee if the minimum balance in your checking account drops below a certain amount
any day during the month or if the average balance for the month drops below the specified
amount. Some banks charge a fee for every transaction in your bank account, such as for each
check you write or for each withdrawal you make at an ATM. Many institutions impose a
combination of these banking fees.

Although a checking account that pays interest may appear more attractive than one that does
not, it is important to look at fees for both types of checking accounts. Often checking accounts
that pay interest charge higher bank fees than do regular checking accounts, so you could end up
paying more in fees than you earn in interest.

Money Market Accounts

Most banks and financial institutions offer a type of interest-bearing account that allows you to
write checks called a money market account. This type of bank account usually pays a higher
rate of interest than a checking or savings account does. Money market accounts often require a
higher minimum balance to start earning interest, but they frequently pay higher rates for higher
balances. Withdrawing funds from a money market account may not be as convenient as doing
so from a checking account. With a money market account, each month, you are limited to some
transfers to another account or to other people, and only three of these transfers can be by check.
As they do with checking accounts, most banks and financial institutions impose fees on money

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market accounts.
Savings Accounts
Another type of bank account, a savings account, allows you to make withdrawals, but without
the flexibility of using checks to do so. As with a money market account, the number of
withdrawals or transfers you can make on the savings account each month is limited.

Many banking institutions offer more than one type of savings account -- for example, passbook
savings and statement savings. With a passbook savings account you receive a record book in
which your deposits and withdrawals are entered to keep track of transactions in your savings
account; this record book must be presented when you make deposits and withdrawals. With a
statement savings account, the bank regularly mails you a statement that shows your withdrawals
and deposits for the savings account.

As with other types of bank accounts, a bank may assess various fees on savings accounts, such
as minimum balance fees.

Certificate of Deposit, CD, Time Deposits

Time deposits, often called certificates of deposits or CDs, are also among the various types of
bank accounts commonly offered. They usually provide a guaranteed rate of interest for a
specified term, such as one year. Banks and financial institutions offer certificates of deposit that
allow you to choose the length of time, or term, that your money is on deposit. CD terms can
range from several days to several years. Once you have chosen the term you want, the bank will
generally require that you keep your money in the certificate of deposit account until the term
ends, that is, until "maturity". Some banks will allow you to withdraw the interest you earn even
though you may not be permitted to take out any of your initial deposit (the principal).

Because you agree to leave your funds for a specified period, the bank may pay you a higher rate
of interest than it would for a savings or other type of bank account. Typically, the longer the
term, the higher the annual percentage yield.
Sometimes a bank allows you to withdraw your principal funds before maturity, but a penalty is
frequently charged. Penalties vary among banks, and they can be hefty. The penalty could be

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greater than the amount of interest earned, so you could lose some of your principal deposit.
A bank will notify you before the maturity date for most certificate of deposit accounts. Often
certificates of deposit renew automatically. Therefore, if you do not notify the bank at maturity
that you wish to take out your money, the certificate of deposit will roll over, or continue, for
another term.

Basic or No Frill Banking Accounts

Many institutions offer a type of bank account that provides you with a limited set of services for
a low price (often referred to as "basic" or "no frill" accounts). Basic accounts give you a
convenient way to pay bills and cash checks for less than you might pay without an account.
They are usually checking accounts, but they may limit the number of checks you can write and
the number of deposits and withdrawals you can make. Interest generally is not paid on basic
accounts. Compare basic and regular checking accounts for the best deal in low fees or low
minimum balance requirements.

Credit Union Accounts

Credit unions offer accounts that are similar to accounts at other depository institutions, but have
different names. Credit union members have "share draft" accounts (rather than checking),
"share" accounts (rather than savings), and "share certificate" accounts (rather than certificate of
deposit).

Name:__________________________

Date:___________________________

Criteria for Choosing a Bank or Credit Union

When shopping for someplace to keep your money, it’s important to look for the one that fits
your needs the best. You’ve already located one bank and one credit union near where you live
or go to school, and you’ve accessed their websites. Use information from those websites to
answer the following questions. These will help guide you to choose the best option.

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Step 1:

Find information to match all six criteria

Criteria: Account Options your ranking: _____

What types of accounts are available? What other services do they offer that you would be
interested in?

Bank:_______________________________________________________________________

________________________________________________________________________

Credit Union:__________________________________________________________________

________________________________________________________________________

Criteria: Requirements to Open an Account your ranking:______

You have to be a member to open an account at a credit union – what are the requirements for
membership at the credit union you’ve chosen? What is the minimum birr amount you can open
a checking/share account with at both the bank and credit union? What else is necessary to open
an account?

Bank:______________________________________________________________________

________________________________________________________________________

Credit Union:_________________________________________________________________

________________________________________________________________________

Criteria: Interest Rates your ranking: _____

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Choose three types of accounts to compare. Write what type of account it is and what the interest
rate is for each.

Name Bank Credit Union Rate

Account 1:_______________________ _________________ __________

Account 2:_______________________ _________________ __________

Account 3:_______________________ _________________ __________

Criteria: Customer Service your ranking: ____

What are your impressions, based on the website, of the customer service provided by the
depository institution? ____

Bank:_______________________________________________________________________

________________________________________________________________________

Credit Union:__________________________________________________________________

________________________________________________________________________

Criteria: Safety your ranking: _____

Are the bank and credit union you’ve chosen insured by state or federal laws? ____

Bank:_________________________________________________________________

Credit Union:___________________________________________________________

Criteria: Convenience your ranking: _____

How close is the savings institution?

Does it offer its customers on-line access to their accounts?

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Does it have ATM’s in the area? ____

Bank:_______________________________________________________________________

________________________________________________________________________

Credit Union:__________________________________________________________________

________________________________________________________________________

4. Implementing Your Own Savings Plan

4.1 Researching the Requirements to Open an Account and Provide Evidence of Personal
Identity
The Requirements to open an account and provide evidence of personal identity are researched
and steps taken to gather the necessary documentation
The requirements to open an account include providing personal identification from a range of
sources which may comprise but not limited to:

 Kebele/woreda ID cards;
 Farmers associations’ ID cards;
 Employment and pension ID cards;
 School, college and university ID cards;
 Driver’s/operator’s licenses;
 Tax identification ID card;
 Passports;
 Work or residence permits; and
 Foreign-nationals-of-Ethiopian-origin ID card, together with a valid passport.
 Ethiopian Community ID.

4.1 Opening Relevant Savings Accounts or Other Investigated Financial Products

Relevant savings accounts or other investigated financial products are opened and the savings
plan implemented and monitored for a short period of time
Saving Account Opening Procedure

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A. For Literate Customer
 Interview and identifying customer interview
 Customer fills in opening application form
 Customer must sign three identical signature on application form and on two specimen
cards
 Customer must present two recently taken picture of himself/herself and write the name ,
A/c number of the customer on the back of the photos
 Register name of customer on register book and assign an account number
 Telling customer to fill in deposit voucher by indicating account number
 Pass book is prepared in the name of the customer, address like kilil, zone, kebele, house
number should be filled,
 Accept telephone fixed or mobile, neighbor or relatives,
 If ID of customer is not kebele type put the name of the organization/company in place of
occupation rather than specific jobs.
 Pass the document after finalizing to supervisors for checking and approval
 Upon approval, the documents are passed to PC operator for posting
 Distinguish on pass book if AND account, AND/OR account, For accounts and non-
interest bearing
 If non-interest bearing register on mandate file
 If the account is a joint fill our joint account declaration form
 After posting pass to internal auditors for checking
 After pass the pass book, ID’s and deposit voucher to receiving teller
 Application forms and specimen cards will be filed under supervision of auditor
B. For Illiterate Customers
 Same procedures can be applied for illiterate customer in addition to the following
 Illiterate person puts his right hand thumb on two signature cards, application should be
attested by rubber stamp bearing “signed before me”
 Attach one photograph on one specimen signature card and the other on the passbook
bearing seal of the branch usually crossing stamps
 Pass all documents to the supervisor for approval

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  Pass to PC operator for posting
 After verifying initialing, the document are passed to the auditor
 Then pass the pass book, ID’s and deposit voucher to receiving tellers
 One specimen signature card is forwarded to the auditors and the remaining will be kept
with signature verifier
C. For Blind Customer
 Same procedures used for opening an account for literate person also applied
 But, when a blind customer withdraw, two witness must be present, one from customer
side and other from bank side who must be senior staff
 The two witness should be witness the transaction and sign to the effect on the voucher
Withdrawals
a) For literate customer (no comment)
b) For illiterate customers
 Bank staff should fill the voucher and let him/her put his/her right hand thumb print
on the voucher
 Identify the customer against his/her photograph on the pass book and verify by
stamping on the voucher near his/her finger print “signed before me” stamp
 Forward the pass book and voucher to PC
 Then to auditors and paying tellers.
Loss of Pass Book
 Fill the declaration form
 Verify the customer against signature on specimen signature card
 Open a new saving account
 Transfer the outstanding balance of old account to the newly opened one
Show trainees application form of CBE and other foreign bank’s
4.2 Making Adjustments to the Savings Goal
Adjustments to the Savings Goal are made where it is realized that the goal is unattainable

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 Critical aspects of Competence
Assessment requires evidence that the candidate:

 understand risk and return in relation to savings and investment

 set specific, measurable, realistic, and timely financial goals
 calculate amount needed to achieve identified financial goals
 develop a basic savings plan based on surplus income
 explain the differences between basic financial products used to
maximise savings

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Develop and Use a Personal Budget

1. Analyzing and Discussing Budgeting as a Financial Tool

1.1 Analyzing and Discussing the Role of Budgeting in the Lives of Different Groups and
the Importance of Budgeting Appropriately to Meet Expense and relating to Different
Stages of Life

The different groups who may budget may include:

 families
 governments
 individuals:

 single
 married
 elderly
 students
 tourists, travelers.
Different stages of life may include:

 approaching and during retirement

 buying your first home
 moving out of home
 starting a family
 studying

Budgeting is the most basic and  the most effective tool for managing your money.  Yet, most
people avoid doing it because it is additional work, much like cutting your lawn or fixing the
roof.  Budgeting also connotes that you have to give up and stop yourself from enjoying stuff.

What budgeting actually does is clearly show you how you allocate your money and present you
the choices on what stuff to enjoy – based on your financial limitations.  It will save you the grief

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of overspending and being too much in debt. Budgeting does not stop you from enjoying stuff, it
ensures that you enjoy stuff when you want it.

Although budgeting is indeed more work, it pays off with many life-enhancing benefits:

Benefits of Budgeting

1.   Gives you control over your money – A budget is a way of being intentional about the way
you spend and save your money.    It is said that with budgeting, you control your money and not
your money controls you.  Budgeting saves you the stress of suddenly having to adjust to lack of
funds because you did not initially plan how to spend them.  It also helps you decide if you want
to sacrifice short term spending like buying coffee everyday in exchange for a long term benefit
like a cruise vacation

2.  Keeps you focused on your money goals –  You avoid spending unnecessarily on items and
services that do not contribute to attaining your financial goals.  If you are working with limited
resources, budgeting makes it easier to make ends meet.

3.  Makes you aware what is going on with your money – With budgeting, you are clear on
what money is coming in, how fast it goes out, and where it is going to. Budgeting saves you
from wondering every end of the month where your money went.  A budget enables you to know
what you can afford, take advantage of buying and investing opportunities, and plan how to
lower your debt. It also tells you what is important to you based on how you allocate your funds,
how your money is working for you, and how far you are towards reaching your financial goals.

4  Helps you organize your spending and savings – By dividing your money into categories of
expenditures and savings, a budget makes you aware which category of expenditure takes which
portion of your money.  That way, it is easy for you to make adjustments.  Budget also serves as
a reference for organizing your bills, receipts, and financial statements.  When all of your
financial transactions are organized for tax time or creditor questions, you save time and effort.

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5.  Makes you decide in advance how your money will work for you.

6.  Enables you to save for expected and unexpected costs – Budgeting allows you to plan to
set aside money for emergency costs.

7  Enables you to communicate with your significant others about money – If you share your
money with your spouse, family, or anyone, a budget can communicate how you use money as a
group.  This promotes teamwork on working for common financial goals and prevents conflict
on how money is used.  Creating a budget in tandem with your spouse will avoid conflicts and
resolve personal differences on how your money is spent.   Budgeting teaches family members
spending responsibility and accountability.

8.  Provides you with an early warning for potential problems – When you budget and take a
“big picture” view, you will see potential money problems in advance, and be able to make
adjustments before the problem appears.

9.  Helps you determine if you can take debt and how much – Taking debt is not necessarily a
bad thing if the debt is necessary or you can afford it.  Budgeting shows you how much a debt
load you can realistically take without being stressed or if taking the debt load is worth it.

10.  Enables you to produce extra money – In budgeting, you get to identify and eliminate
unnecessary spending like late fees, penalties and interests.  These seemingly small saving can
add up over time.

1.2 Analyzing and Discussing the Importance of Setting Financial Goals

Financial goals may include:

 accumulating a set amount of money by a specified date in the future for the purposes of:

 purchasing assets
 financing holidays, educational expenses, home renovations and other known future
expenses
 establishing a deposit for an investment such as a home or investment property

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 aiming to repay existing debts and be debt free
 establishing a regular savings plan
 handling income and expenditure responsibly and avoiding financial difficulties.

1.3 Analyzing and Discussing Obstacles that Might Prevent Financial Goals and
Exploring Type of Behaviors and Skills Required for Successful Budgeting
Obstacles that might prevent financial goals being achieved may include:

 being unemployed, particularly long term unemployed

 insufficient income to afford items that are beyond the individual's means
 unexpected circumstances such as:

 losing a job
 falling ill
 not being able to work.
Behaviours and skills required for successful budgeting may include:

 controlled spending
 disciplined approach to money
 organisational skills
 record keeping skills.

2. Developing a personal budget

Budget refers to:

 a calculation of all projected income and expenditure for period of time (e.g. on a weekly or
monthly basis)
 showing all projections versus actual income and expenses for the period and monitoring
variances.

2.1 Recording All income and Expenses for a Six Month Period to Assist in Estimating
Expenditure Requirements

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2.2 Developing and Establishing a Spreadsheet for Recording All Budget Information to
Record Income and Expenditure for a Relevant Period of Time
A spreadsheet may:

 be simple or complex depending upon the extent of the individual's finances

 have one section for recording all money received as income and another section for
expenses both variable and fixed

 have a section to record the difference between income and expenses for the period,
this being the surplus or deficit financial situation for the period.
2.3 Identifying All Sources of Income and Regular Fixed Expenses and Variable
Expenses for the Specified Period and Listing in a Personal Budget Using the Budget
Spreadsheet
Sources of income may include

 interest on investments, dividends

 proceeds from sale of assets
 social security benefits, pensions, allowances, child assistance
 wages, commission, bonuses, tips.

Fixed expenses may include:

 fees:

 school and university fees

 bank fees

 insurance
 loan repayments (if loan is based upon fixed interest rates) such as:

 personal loans
 car loans
 credit card debts

24
  Higher Education Contribution Scheme

 public transport
 rent
 subscriptions to:

 magazines
 newspapers
 clubs
 travel including public transport, petrol
Variable expenses may include:

 car maintenance
 living expenses such as:

 food
 clothing
 medical

 loan repayments if loan is based upon variable interest rates

 miscellaneous expenses such as:

 gifts
 recreation
 entertainment
 fines

 mobile telephone
 mortgage repayments
 utilities such as:

 water
 gas

25
  electricity
 telephone.

2.4 Subtracting Total Expenses Recorded from the Total Income to Determine a Surplus
or Deficit Budget for the Specified Period
2.5 Exploring Reasons for a Deficit Budget are Explored and Investigating ways to
Reduce Expenses or Increase Income
Ways to reduce expenses may include:

 comparing prices for essential items

 monitoring use of utilities such as electricity, gas and water
 moving back home
 reducing expenditure on discretionary items such as expensive clothing, magazines,
eating out
 share accommodation
 using cheaper modes of transport.

Ways to increase income may include:

 combining part-time work with studying

 investigating eligibility for student allowances or other relevant government benefits
 taking on a part-time job or holiday work.

2.6 Exploring Allocation of Surplus Funds Towards Saving and Meeting identified
Financial Goals

Tips to Develop a Budget

1. Gather every financial statement you can. This includes bank statements, investment
accounts, recent utility bills and any information regarding a source of income or
expense. The key for this process is to create a monthly average so the more information
you can dig up the better.

26
 2. Record all of your sources of income. If you are self-employed or have any outside
sources of income be sure to record these as well. If your income is in the form of a
regular paycheck where taxes are automatically deducted then using the net income, or
take home pay, amount is fine. Record this total income as a monthly amount.
3. Create a list of monthly expenses. Write down a list of all the expected expenses you
plan on incurring over the course of a month. This includes a mortgage payment, car
payments, auto insurance, groceries, utilities, entertainment, dry cleaning, auto insurance,
retirement or college savings and essentially everything you spend money on.
4. Break expenses into two categories: fixed and variable. Fixed expenses are those that
stay relatively the same each month and are required parts of your way of living. They
included expenses such as your mortgage or rent, car payments, cable and/or internet
service, trash pickup, credit card payments and so on. These expenses for the most part
are essential yet not likely to change in the budget.

Variable expenses are the type that will change from month to month and include items
such as groceries, gasoline, entertainment, eating out and gifts to name a few. This
category will be important when making adjustments.
5. Total your monthly income and monthly expenses. If your end result shows more
income than expenses you are off to a good start. This means you can prioritize this
excess to areas of your budget such as retirement savings or paying more on credit cards
to eliminate that debt faster. If you are showing a higher expense column than income it
means some changes will have to be made.
6. Make adjustments to expenses. If you have accurately identified and listed all of your
expenses the ultimate goal would be to have your income and expense columns to be
equal. This means all of your income is accounted for and budgeted for a specific
expense.

If you are in a situation where expenses are higher than income you should look at your
variable expenses to find areas to cut. Since these expenses are typically essential it
should be easy to shave a few dollars in a few areas to bring you closer to your income.

27
 7. Review your budget monthly. It is important to review your budget on a regular basis to
make sure you are staying on track. After the first month take a minute to sit down and
compare the actual expenses versus what you had created in the budget. This will show
you where you did well and where you may need to improve.

Sample List of Expenses

Category Possible Expenses

- Rent or mortgage

- Servant Wage

Home - Homeowner’s or renter’s insurance

- Home maintenance/repairs

- Property taxes
- Car payment

- Fuel

Auto/Car - Auto insurance

- Tires and maintenance

- Renewal of licence
Utilities - Electric bill

- Water bill

- Gas bill

- Phone bill/ Mobile card

28
 - Internet service

- Cable or satellite service

- Food Items (Tef, shiro, berbere, etc)

Food - Groceries

- Dining out
- Clothing

Personal - Hair care

- Medical expenses
- College/ university fee

- School bus service

Education - Book service

- Cost sharing
- Gym membership

- Vacation

- Charitable giving

Activities/others - Entertainment

- Gifts

- Family deduction

- Others

29
Sample Low Income Budget

Monthly Income: Br. 2,000

Expenses Amount Total

Home  

 Rent         Br. 600 Br. 650

 Servant wage                
 Br. 50
 
Car

Br. 40
 Insurance        
Br. 205
 Gas
 Br. 80
 Maintenance        
 Br. 50
Utilities Br. 30

 Electric bill Br. 15

 Water bill Br. 150
 Cell phone bill Br. 45

 Cable/internet
Br. 60

Food
Br. 300
 Dinning out Br. 350
 Groceries Br. 50

Personal Br. 60 Br. 140

 Clothes Br. 30
 Hair Care

30
  Medical        
Br. 50
Other
Br. 50
 Gifts Br. 100
 Entertainment         Br. 50

Total Br. 1,560

Income         Br. 2,000

- Expenses         Br. 1,560

 = Br. 440 Unbudgeted income

 - Br. 200 contigent money (10% of Br. 2,000 monthly income)

 - Br. 200 Savings (10% of Br. 2,000 monthly income)

 = Br. 40 Surplus to spend as you wish

Downloaded from http://www.wikihow.com

Sample High Income Budget

Monthly Income: Br. 9,000

Expenses Amount Total

Home
Br. 1800

1. Mortgage
 Br. 100 Br. 1950
2. Maintenance        
3. Property taxes         Br. 50

Br. 400 Br. 725

Car

31
 1. Payment Br. 75

2. Insurance        
Br. 150
3. Gas
4. Maintenance          Br. 100

Utilities Br. 150

1. Electric bill Br. 50

2. Water bill Br. 420
3. Cell phone bill Br. 100

4. Cable/internet
Br. 120

Food
Br. 600
1. Dinning out Br. 950
2. Groceries Br. 350

Personal
Br. 200

1. Clothes
Br. 150 Br. 450
2. Grooming
3. Medical         Br. 100

Other Br. 150

1. Gifts Br. 200

2. Entertainment         Br. 1050
3. Vacation Br. 200

4. Charity                
Br. 500

Total Br. 5,545

Income         Br. 9,000

- Expenses         Br. 5,545

32
= Br. 3,455 Unbudgeted income

- Br. 1,350 Contingent money (15% of Br. 9,000 monthly income)

- Br. 1,800 Savings (20% of Br. 9,000 monthly income)

= Br. 305 Surplus to spend as you wish

Exercise 01
Exercise 02
Exercise 03

3. Implementing and Monitoring the Personal Budget

3.1 Following the Budget According to Plan for a Period of Time

3.2 Recording Implemented Actual Expense and Income
Actual expenses and income for the period during which the budget is implemented are recorded
and compared to budgeted expenses and income with any differences in budgeted and actual
amounts looked at and the budget modified where necessary
Sample of monitoring personal budget.

Deductions Budget Actual Difference

0.00 0.00
Savings (to set aside) Br. 0.00
Br. Br.
0.00 0.00
Child Support, Alimony, etc. Br. 0.00
Br. Br.
0.00 0.00
Family Deduction Br. 0.00
Br. Br.
0.00 0.00
Total Br. 0.00
Br. Br.

33
 Housing Budget Actual Difference
0.00 0.00
Rent or Mortgage Payment Br. 0.00
Br. Br.
0.00 0.00
Utilities Br. 0.00
Br. Br.
0.00 0.00
Home Insurance & Taxes Br. 0.00
Br. Br.
0.00 0.00
Home Repairs (to set aside) Br. 0.00
Br. Br.
0.00 0.00
Other Br. 0.00
Br. Br.
0.00 0.00
Total Br. 0.00
Br. Br.

Differenc
Food Budget Actual
e
0.00 0.00
Groceries Br. 0.00
Br. Br.
0.00 0.00
Eating Out Br. 0.00
Br. Br.
0.00 0.00
Coffee & Bar Br. 0.00
Br. Br.
0.00 0.00
Other Br. 0.00
Br. Br.
0.00 0.00
Total Br. 0.00
Br. Br.

34
 Education Budget Actual Difference
0.00 0.00
Tuition Br. 0.00
Br. Br.
0.00 0.00
Books & Fees Br. 0.00
Br. Br.
0.00 0.00
Supplies Br. 0.00
Br. Br.
0.00 0.00
Other Br. 0.00
Br. Br.
0.00 0.00
Total Br. 0.00
Br. Br.

Exercise 04
Sample
Sample on spread sheet
Exercise 05 ( Again by trainees)
Exercise 06
Exercise 07

3.3 Discussing Handy Hints for Managing the Personal Budget

Handy hints may include discussing:

 how to avoid getting into financial difficulties

 how to minimise fees and charges imposed by financial institutions
 how to use credit card debt effectively
 the problems of impulsive buying, particularly when under peer pressure
 ways to cut back on spending or change negative spending habits.

35
Tip to cut expense

1. Cut out coupons for the things you usually buy at the store, and not for the things
you do not need.
2. Double up on coupons. You could use a store coupon and manufacturers coupon
together.
3. Write a grocery list, so you do not forget anything and it helps you stay on target
and not get sidetracked.
4. Buy non-name brand items or store brand items. These items are usually the same
quality as top brand names. You can save an average on thirty percent.
5. When on the highway use cruise control. You save fourteen percent on gas with an
average saving of seven percent. This would come out to about twenty cents discount on
each gallon.
6. Limit the amount of driving. You could carpool or catch a bus.
7. Combine trips, you could do several short trips in one longer trip. For example,
designate Thursday for errand day. Get everything done that day, than you will not have
to make wasted trips continuously throughout the week.
8. Stop wasting your money on lottery tickets. Lottery is just a tax on the poor and on
people who cannot do math. If everyone decided to save their two birr ( sometimes a lot
more than this amount is spent) every week, they would be saving one hundred and four
birr per year and one thousand and forty over ten years.
9. Do not dine out. A family of four eating at a fast food restaurant would cost somewhere
around twenty-five birr. If you take two trips per week, it would total to fifty birr. Over
the course of the year, you would spend about two thousand six hundred birr. If you were
to dine out at let’s say “Tibs” it would cost you around forty birr, overall the course of the
year it would be four thousand birr. Instead, prepare meals at home to save money.
10. Don’t buy alcohol. You could save twenty percent on your bill.
11. Use coupons. Many restaurants offer coupons.
12. Know about breaks for kids. Kids eat free on some nights at certain restaurants. Check
with the restaurant before traveling, to ensure this is part of their policy.
13. Order takeout. You can drink pop at home and you don’t have to leave a tip.

36
 14. Instead of entrees, buy appetizers. Meals have become so super-sized that one meal can
feed at least two or three people.
15. Turn off the lights when you are not in the room. Being conservative with the
thermostat and air-drying clothes and dishes. Instead of regular lights, put in compact
florescent bulbs.
16. Keep your car well maintained. A well-tuned engine burns less gas. Get all the junk out
of the trunk. For every two hundred and fifty pounds your engine hauls, the car loses
about one mile per gallon.
17. Pay with cash. Sometimes the store may charge you more money, if you use a credit
card. Check the specific store before your visit, to ensure whether they charge or not is
true.
18. Buy a fuel-efficient car.
19. Water
20. Install aerating, low- flow faucets and shower heads.
21. Take a shower, instead of taking a bath. It uses less water, and thereby decreases the
amount of water that is used. And since water runs through a pump(that is powered by
electric), this will increase your electric bill.

3.4 Conducting Ongoing Review of the Budget

Ongoing review of the budget is conducted to ensure it remains relevant and to ensure updates
are incorporated if necessary

Method of Revise a Budget

Sometimes it will be necessary to revise your budget because of unforeseen events. You may
lose your job, take a pay cut, or have an emergency where you need to spend more money that
you usually would for a given month. When this happens you will need to revise your budget to
meet your new income, even if it is just for a short period of time.

Discussion

1. Fout how much you have for income for the given month
2. Subtrac
Critical aspects of Competence

37 Assessment requires evidence that the candidate:

 explain the benefits and purposes of budgeting

 prepare a budget spreadsheet
 3. t your NECESSARY expenses (such as lights and gas, rent, food,ct the unforeseen
expense came up for the month
4. This will then give you your new budget amount
o You can now see how much you have to spend on miscellaneous things

Develop Business Practice

BUF BAW2 13 0812

This unit specifies the outcomes required to establish a business operation from a planned
concept. It includes researching the feasibility of establishing a business operation, planning the
setting up of the business, implementing the plan and reviewing operations once commenced.

1. Identifying Business Opportunity

1.1 Investigating and Identifying Business Opportunities

Business opportunities maybe influenced by:

 expected financial viability

 skills of operator
 amount and types of finance available
 returns expected or required by owners
 likely return on investment

38
  finance required
 lifestyle issues

Opportunities are positive or favourable factors in the environment which the entrepreneur
should make use of or which make his project idea potentially viable.

They are, however, mostly beyond the control of the entrepreneur. They are different from
strengths in the sense that strengths are positive internal factors of the business.

 few and weak competitors

 no such products in the market
 rising income of target market
 scarcity of product in the locality
 growing demand
 favourable government policy
 similar products making profit
 favourable government programs
 technical assistance available
 low interest on loans
 access to cheap raw material
 adequate training opportunities

1.2 Undertaking Feasibility Study to Determine Likely Business Viability

Business viability may include:

 opportunities available
 market competition
 timing/ cyclical considerations
 skills available
 resources available
 location and/ or premises available

39
  risk related to a particular business opportunity, especially
 in regard to Occupational Health and Safety and
 environmental considerations

1.3 Undertaking Market Research on Product or Service

Marketing Research Guide questions

1. What is the product?

2. How is quality and price as compared to competitive products?

3. Where will the business be located?

4. What geographical areas will be covered by the project?

5. Within the market area, to whom will the business sell its products?

6. Is it possible to estimate how much of the product is currently being sold?

7. What share or percent of this market can be captured by the business?

8. What is the selling price of the product?

9. How much of the product will be sold?

10. What promotional measures will be used to sell the product?

11. What marketing strategy is needed to ensure that sales forecasts are achieved?

12. What do you need to promote and distribute your product?

Market Research Stages

I – Planning Stage

40
A – Questionnaire Elaboration

1. Research objective definition

2. Research universe definition

3. Sample definition

4. Areas to be covered by research (indispensable or dispensable ones)

5. Question contents

6. Question configuration (open questions, close questions, speech fitness for target
group)

7. Question sequence

8. Trial research

9. Final elaboration

Suggestions:

· It is important to avoid questions which shall lead the responding person's answer, or those
which are less likely to be negatively answered;

· You should select only those questions which are really important to reach research objectives;

· It is advisable to place more delicate questions in the final part of the questionnaire;

· You should use colloquial and clear speech, proper for the target group;

· Avoid words which express some other meaning;

· Keep track of a logical sequence in your questionnaire;

41
· Place some initial questions to establish contact with the person you interview (“break the
ice”);

· It is important to insert some questions to check if given answers are coherent.

B – Field Work Preparation

Field researchers should be allocated, and work should be distributed according to:

- functions;

- geographic criteria;

- contents.

II – Market Research Execution Stage

A – Introduction and research application

1. Introduction

2. Research objective explanation

B – Research Execution

Recommendations to fieldwork researcher

· Keep track of objectives at all times (do not waste time)

· Keep an adequate distance from whom you are interviewing

42
 · Try to adapt the speech to the target group

· Clearly explain the purpose of the research

· Value every effort which a responding person makes

III – Research Result Tabulation Stage

Basic Approaches to Market Research

WHO The universe to be investigated

WHAT What will be investigated:- market, consumer, consumer habits channels of

distribution/selling

WHY The purpose of the research

HOW Resources: equipment, human resources, financial resources, time required

Information: needed, indispensable

Content analysis

Balance between cost of information and its additional value for decision

making

WHERE Geographic area of research.

TECHNIQUES

1. Secondary Information

1.1. Environment information

1.2. Documents: public or private documents, historical registers, census

43
 1.3. Check: representativity of document, reliability of document

1.4. Data type: data on education, lifestyle, economic and professional data etc.

1.5. Problems: defective information, different interpretation criteria, alteration of

registry criteria, definition comprehension

2. Content Analysis

2.1. Definition of sample criteria

2.2. Definition of measuring instrument

3. Observation

3.1. Behaviours selection

3.2. Conditions of observation

3.3. Score counting possibility

3.4. Reliability of observed subject

3.5. Level of influence of observed subject

4. Interviews (qualified informers)

4.1. This technique allows a more accurate contact with behaviours, opinions and
perceptions

4.2. Basic Steps: a) explain purpose and objectives of interview

b) describe the interviewees’ selection criteria

c) ensure the anonymity and confidentiality of any given information

4.3. An interview is established when:

44
 d) there is empathy between interviewer and interviewee

e) the interviewee understands the objectives

f) there are no communication obstacles

g) Interviewee notices an opportunity of benefit for himself or his business

4.4. A guideline for the interview allows:

a) ask the same questions in every interview

b) stimulate answers

c) obtain some additional information

d) clarify obtained information

e) record the given information

5. Questionnaires:

Households Self-administrated

Telephone Panel

5.1. Sample:- random, systemic, stratified, not-random: casual, proportional

5.2. Types: open or closed questions

5.3. Criteria: - avoid suggestive questions;

- select questions which are important for inquiry objectives;

- leave delicate questions to the end of questionnaire;

- choose questions which motivate an answer;

45
 - use clear, simple and adequate language;

- avoid technical language;

- present only one idea in each question;

- keep track of a sequence;

- establish some “warm-up questions”;

- elaborate some questions to check on the reliability of responding person;

- try to previously test the questionnaire;

- keep an adequate distance from responding person.
5.4. Encoding
5.5. Information analysis (statistics)

Will Continue in Level III

Sample Marketing Questionnaire

Name of Interviewee: _________________________Category: _______________

Show a prototype of the product, or describe the selected product, to the possible persons
responding to this survey and note down their answers to the following questions:

1. PERSONAL INFORMATION

1.1. Age of the responding person:

(a) 15 to 20 (d) 41 to 50

(b) 21 to 30 (e) Over 50

(c) 31 to 40

46
1.2. Sex:

(a) Male (b) Female

1.3. Marital Status:

(a) Single (c) Divorced/Separated

(b) Married (d) Widow

1.4. Education (Highest)

(a) Grade School (e) University (Bachelor's degree)

(b) High School (f) Master's degree

(c) Vocational/Technical School (g) Doctoral degree

(d) College

1.5. Residence:

(a) House (owned) (c) Apartment

(b) House (rented) (d) Boarding House

2. MARKET INFORMATION

2.1. Have you seen this product before?

(a) Yes (b) No

2.2. If yes, where?

(a) In a store (b) On television

47
 (c) At a friend's house (d) Others, specify:

_____________________________________________________________
_____________________________________________________________
2.3. Do you own a similar product?

(a) Yes (b) No

2.4. If yes, for how long?

(a) Less than 1 year (c) Over 2 to 5 years

(b) 1 to 2 years (d) Over 5 years

2.5. If available, would you buy the product?

(a) Yes (b) No

2.6. If yes, for how much?

(a) Br. 0.50 to 1.00 (d) Br. 3.01 to 4.00

(b) Br. 1.01 to 2.00 (e) Br. 4.01 to 5.00

(c) Br. 2.01 to 3.00 Specify exactly :

________________________________________________________________

3. PRODUCT INFORMATION

3.1 What colour would you like the product to be?

(a) Lighter (c) Specify:

(b) Darker ____________________________________

3.2 What size would you like the product to be?

48
 (a) Larger (c) Specify:

(b) Smaller ______________________________

3.3 What changes would you like incorporated in the product design?

_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________

4. COMPETITORS’ INFORMATION

4.1 How many competitors exist?

(a) None

(b) 1 to 2

(c) 3 to 4

(d) 5 to 6 (e) Over 6

49
4.2 Competitors and Addresses:

Competitors Business Address

_______________________ ______________________
_______________________ ______________________
_______________________ ______________________
_______________________ ______________________

4.3. Describe the features of the competitors' products

Competitors Special Features Price Remarks

1. Benefits
2. Durability
3. Taste
4. Multiple Use
5. Quality
6. Brand
7. Design
ETC

Other Information:

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_________________________ _____________
(Name of Interviewer) Date
Note: This is only a sample questionnaire. The trainees are encouraged to design their own
questionnaires that suit their specific products and target markets.

50
Dadimos Technology College Institute of Distance Education Accounting Level II Module
Will continued in Level III

1.4 Seeking Assistance With Feasibility Study of Specialist and Relevant Parties

Specialist and relevant parties

 Chamber of commerce
 Financial planners and financial institution representatives, business planning
specialists and marketing specialists
 accountants
 lawyers and providers of legal advice
 government agencies
 industry/trade associations
 online gateways
 business brokers/business consultants

1.5 Evaluating Impact of Emerging or Changing Technology Including E-commerce, on

Business Operations
1.6 Practicability of business opportunity assessed in line with perceived risks, returns
sought and resources available
1.7 Completing Business Plan for Operation

2. Identifying Personal Business Skills

2.1 Identifying and Taking into Account Financial and Business Skills Available when
Researching Business Opportunities
2.2 Assessing and Matching Personal skills/attributes Against those Perceived as
Necessary for a Particular Business Opportunity

Personal skills/attributes may include:

 technical and/ or specialist skills

 business knowledge and skills

51
  entrepreneurship
 willingness to take risks

2.3 Identifying and Assessing Business risks According to Resources Available and
Personal Preferences

Business risks may be affected by and may include but are not restricted to:

 occupational health and safety and environmental

 considerations
 relevant legislative requirements
 security of investment
 market competition
 security of premises/ location
 supply and demand
 resources available

3. Planning for Establishment of Business Operation

3.1 Determining and Documenting Business structure and operations

3.2 Developing and Documenting Procedures to Guide Operations
3.3 Securing Financial Backing for Business Operation
3.4 Identifying and Complying Business Legal and Regulatory Requirements
3.5 Determining Human and Physical Resources Required to Commence Business
Operation

Human and physical resources may include:

 software and hardware

 office premises
 communications equipment
 specialist services through outsourcing, contracting and

52
  consultancy
 staff
 vehicles

3.6 Developing and Implementing Recruitment Strategies

4. Implementing Establishment Plan

4.1 Undertaking Marketing of Business Operation

4.2 Obtaining Physical and Human Resources to Implement Business Operation

Resources may include:

 staff
 money
 time
 equipment
 space

4.3 Establishing Operational Unit to Support and Coordinate Business Operation

Operational unit refers to:

 office location staffed with required personnel and equipped to service and
support business
 home-based site or other location such as leased or owned property

4.4 Developing and Implementing Monitoring Process for Managing Operation

4.5 Maintaining Legal documents Carefully and Keeping and Updating relevant
records to Ensure Validity and Accessibility

Legal documents may include:

53
  partnership agreements, constitution documents, statutory books for
companies (Register of Members, Register of Directors and Minute Books),
Certificate of Incorporation, Franchise Agreements and financial
documentation, appropriate software for financial records
 recordkeeping including personnel, financial, taxation, OHS and
environmental

4.6 Contractual procurement rights for goods and services including contracts with
relevant people, negotiated and secured as required in accordance with the business
plan

Contracts with relevant people may include:

 owners, suppliers, employees, landlords, agents, distributors, customers or any

person with whom the business has, or seeks to have, a performance-based
relationship

4.7 Options for leasing/ownership of business premises identified and contractual

arrangements completed in accordance with the business plan

5. Reviewing Implementation Process

5.1 Developing and Implementing Reviewing Process for Implementation of Business

Operation
5.2 Identifying Improvements in Business Operation and Associated Management
Process

5.3 Implementing and Monitoring Identified Improvements for Effectiveness

Critical Aspects of Competence

A person must be able to provide evidence:
 that a business operation has been planned and implemented from initial
research into feasibility of the business and completion of the plan,
through to implementing the plan and commencing operations
54
 the ability to evaluate the results of research and assess the likely viability
and practicability of a business opportunity, taking into account the
55