SETTING UP A BUSINESS

Business start-up process involves planning, making key financial decisions and completing a
series of legal activities.
1. Generating a business idea, this involves developing of an idea to start up a given
business e.g a clinic, pharmacy, supermarket, salon, restaurant etc
2. Conducting market research about the idea. This requires one to carryout research
about the selected business idea in relation to the market or customers’ needs.
3. Selecting the form of business. For example; sole proprietorship, partnership, or a
company.
4. Writing a business plan. This involves preparing of a business plan which acts a
roadmap showing all the activities to be done and how to achieve them.
5. Sourcing for business funds. Here, the entrepreneur identifies the sources of capital for
the business e.g personal savings, sale of property, loans etc
6. Selecting the business location. The entrepreneur identifies the site or place where the
business is to be set up.
7. Choosing the business name. This involves selecting the business name which must be
unique and different other business the same sector.
8. Registering and licensing of the business i.e Applying for licenses and permits
9. Commencing business operations. After registering the business and fulfilling all the
legal requirements, the entrepreneur then starts operating business.
For example, for one to set up a pharmacy in Uganda, he/she has to go through the
following steps;
a) Developing the business idea
b) Conducting market research about the business idea
c) Writing a business plan
d) Sourcing for business funds
e) Selecting the business location
f) Registering and applying for license to operate a pharmaceutical business
g) Paying for inspection
h) Inspection of the business premises
i) Obtaining of certificate and license to operate business

FORMS OF SMALL BUSINESS OWNERSHIP

(BUSINESS UNITS AND THEIR OWNERSHIP)
A business unit is term used to mean an enterprise, a firm or a business organization.
Business units are classified broadly into two groups or sector i.e private sector and public
sector. The private sector consists of businesses owned by private individuals, singly or in groups
while the public sector is made up of business establishments owned by government.

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Types/Forms of business units (ownership)
 Sole proprietorship / sole trader
 Partnership
 Joint stock companies
 Cooperatives

1. Sole proprietorship
This is a form of business that is owned and controlled by one person.
It is a business organization owned and operated by one person who raises capital either from his
own resources or borrowing.
A sole proprietorship business can also be referred to as sole trader, sole trade or a one-man
owned business.
Features / characteristics of sole proprietorship
 The business is owned, controlled and managed by one person or the owner with the help
of family members though some paid staff may be employed.
 The owner of the business has unlimited liability i.e the business has no separate legal
entity from the owner. E.g there’s no distinction between the business and the owner’s
personal property.
 The owner is responsible for the success or failure of the business.
 All the necessary capital is provided by the owner either from personal resources or
borrowing.
 The owner has total authority to make decisions on matters of his business
Advantages of sole proprietorship
 It is easy and cheaper to start since it requires little capital & can be set up by low income
earners.
 All profits are enjoyed by the owner. This enables him to expand on the business &
improving on standards of living.
 Easy decision making. The business decisions can be taken and implemented quickly by
the owner.
 It is flexible since the owner can easily change from one line of business to another that is
seen to be more profitable for example from selling charcoal to dealing in agro produce.
This form of business is not limited only to urban areas; therefore, it can be set up
anywhere.
 Enables the sole trader to have direct contact with his/her customers thereby finding out
their likes or needs inform of goods & services.
 It promotes secrecy. In this form of business, all information such as cost of goods,
profits earned and other business matters are kept as a secret or confidential to the owner
alone.

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  Source of employment opportunities especially when the sole traders hire some family
members and outsiders to assist him.
 Sole proprietorship business is easy to manage since it is owned by one person who
closely monitors and supervises all business activities.

Disadvantages of sole proprietorship business

Discuss the disadvantages of being a sole trader.
 Leads to improper or wrong decision making. This is because the owner takes decisions
without consulting any one.
 The business owner suffers unlimited liability. In case the business fails to pay of its
debts, the owner’s assets/property such as land, houses or cars can be sold off to meet
such debt obligations of the business
 All the losses and risks of the business are suffered by the owner alone.
 Makes the sole trader to work for long hours without resting thus becoming tiresome.
 Limited capital since it’s only the owner who solely contributes all the necessary capital
which too little to enable the use of better technology and provide quality products.
 Lack of collateral security. A sole trader cannot easily get a loan from banks or other
financial institutions due to lack of collateral security such as land, houses etc.
 Limited skills. Most sole traders have limited essential skills such as budgeting,
communication, and proper record keeping to help them in managing business.
 The sole trader may sometimes be inefficient as he may not be always available for his
customers.

2. Partnerships
A partnership is a relationship that exists between 2 and 20 people carrying on a business in
common with a view of making profits.
It is a form of business where two to twenty (2-20) people share ownership and responsibility for
managing the business with an aim of making profits.
The members in this form of business are known as Partners and the relationship between them
is referred to as ‘partnership.’ A partnership is always set using a partnership deed.
Partnership deed
This is a document that contains the rules and regulations made between partners to govern them
in carrying out their partnership business.
It is a written agreement prepared by members who wish/intend to start a partnership business. It
is also known as a partnership agreement or article of partnership.
Contents of a partnership deed
- A partnership deed states the name of the firm or business.

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 - It states the name, address and occupation of each partner.
- It states the purpose for which the partnership business was formed.
- It indicates the duration of the partnership i.e whether it is temporary or permanent.
- It states the procedure or ways of electing the management committee of the business e.g
through voting or according to capital contributed.
- It shows the status or type of each partner for example; active, dormant, general, minor,
limited and quasi partner.
- It states the rights of each partner for example; a right to inspect the books of accounts,
right to earn salary if any, right to sign documents on behalf of the business etc.
- It also shows the duties allocated to each partner in the business.
- It indicates the capital to be contributed by each partner.
- It states the ratio in which profits and losses would be shared among the partners.
- It states the manner in which the books of accounts are to be kept.
- It shows the procedure to be followed in admission of a new partner.
- It states the procedure or steps to be followed when settling disputes or
misunderstandings among partners e.g should the matter be solved internally or through
the courts of law?
- It states the interest rate to be paid on capital, drawings, and loans allowed to the
member.
- It shows the procedure to be followed in case a partner decides or intends to retire.
- It shows the procedure to be followed when dissolving a partnership.
Assignment;
Research about the;
a. Duties of partners
b. Rights of partners
c. Types of partners
d. Types of partnership businesses
Dissolution of a partnership
This refers to the process of bringing the partnership business to an end.
Circumstances/conditions under which a partnership business can be dissolved;
- When the duration (period of time) stated in the partnership deed has expired.
- When the purpose for which the business was formed has been achieved.
- In case the business has limited funds to pay off its outstanding debts i.e if the business
becomes bankrupt.
- When the business is operating against the government policy such as dealing in drug
substances, trading in firearms, financing rebels etc.
- In case government passes a law banning the activities carried out by the partnership
business.

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 - If the partner becomes insane, bankrupt or dies especially the active partners.
- If the partner informs/notifies other partners in writing of his intention to dissolve the
partnership.
- In case of court action i.e the courts of law may dissolve a partnership on application
from the interested party for instance; when the business is making losses or when one of
the partners is acting contrary to provisions of the partnership deed.
Advantages of a partnership business
- A partnership business can raise more capital than the sole trader.
- It is easy to expand the business due resources contributed by the many partners.
- It promotes specialization. Different partners have different skills therefore, each one
does a job in which he/she has a skill thus producing high quality products.
- Business losses and liabilities are shared amongst the partners. This reduces the burden to
be met by each partner in case paying debts.
- It leads to better decision making since all members are consulted before any decision is
made.
- A partnership business can easily borrow or obtain a loan from financial institutions like
banks. This because it operates on a large scale and has assets to act as collateral security.
- It is also flexible. This means that partners can change from one line of business to
another where they hope to get more profits.
- High possibility of business continuity. A partnership business stands high chances of
having permanent existence unless it is a temporal one. E.g the death of one partner may
not necessarily lead to the closure of business.
- It is also easy and simple to start. The formation of a partnership does not require a long
procedure. It is a matter of partners showing willingness to contribute the required capital
and start business.
- Access to books of accounts. All partners have equal rights to inspect the books of
accounts & carry out business transactions on behalf of the business.

Disadvantages of a partnership business

- Delayed decision making. This is because all partners have to be consulted before any
decision is taken.
- Actions of one partner may bind others. For instance; if one partner makes a mistake for
example striking a poor deal or misconduct, all the partners suffer the consequences.
- Limited continuity. This happens especially when an active partner dies or retires and all
business decisions have been dependent on him.
- It is not highly flexible. A partnership is not purely flexible since no individual partner
has powers to change the nature of business without the consent of others.
- Unlimited liability. The general and ordinary partners are personally liable for the
business debts and the creditors may take the personal belongs in case the business assets
are not enough to clear the debts.

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 - Formation of a partnership business is sometimes a longer process than a sole trader
business. Some documents are required during formation and before starting business e.g
a partnership deed.
- Sharing of profits amongst the many partners reduces the amount received by each
partner as compared to sole trade where profits are enjoyed by one person.
- Disagreements among partners over important issues of the business may lead to the
collapse of the business.
Differences between sole proprietorship and partnership business.
Sole proprietorship business Partnership business
- The business is owned and managed - The business consists of 2-20 partners
by one person. who own and manage it.
- The owner enjoys all the profits alone - Profits are shared amongst the partners
and as well suffers all the losses. and as well the liability of all
debts/losses of the business
- No business continuity in case the - There are high chances of business
owner dies or becomes insane. continuity because there are many
partners to keep the business running.
- It difficult to obtain a loan from a - It easier to obtain a loan because there
financial institution due limited or is a large capital base and assets to act
lack of collateral security. as collateral security.
- The owner has to do all the work in - The workload is shared among the
his/her business though sometimes partners since they all have different
assisted by friends & relatives. skills.
- It is easy to make decisions since only - Decision making is difficult and takes
one person is involved. longer since all partners have to be
consulted first.
- It is difficult to expand the business - It is easy to expand the business
due to limited capital. because a reasonable amount of
capital is raised by partners.

BUSINESS IDEAS AND OPPORTUNITIES

BUSINESS IDEAS
A business idea refers a response of a person or an organization towards solving an identified
problem (meeting perceived needs) in the environment.
It is a concept that can be used for financial or commercial purpose.
Sources of business ideas to entrepreneurs
- Mass media e.g newspapers, magazines, televisions, radios etc
- Internet/surfing. Business ideas can be obtained through surfing on the various websites
and internet platforms like google.

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 - Hobbies/interests. These are activities performed for leisure and relations. So, some
people
- Vocational training and experience. An idea can be developed from someone’s area of
training e.g a nurse starting a clinic, a pharmacist setting up a pharmacy etc
- Marketing research/survey.
- Customers’ complaints
- Friends and relatives through brainstorming
- Franchising i.e a company is allowed to distribute or use the name of an already
established company.
- Trade shows and exhibitions
- Critical thinking
- Consulting successful entrepreneurs and role models

Reasons why entrepreneurs need to generate business ideas

- To start a business. A business is developed from a business opportunity which
developed from a business idea.
- To respond to the customers’ needs. Entrepreneurs generate new ideas in order to satisfy
customers e.g producing quality goods and services.
- To stay ahead of competition. Generating business ideas enables entrepreneurs to be
competitive for example; coming with new products that are better than those of the
competitors.
- To respond to the changing fashions and requirements. Customers normally demand for
different fashions & designs of products which requires entrepreneurs to develop such
ideas.
- To exploit the available technology through doing new things. For example; many
hospitals have adopted the use better technology in testing, scanning & treatment of
patients.
- To increase profits of the business
- To increase sales of the business especially through using good marketing ideas to attract
customers.
- To create a good image for the business.
- To create a positive impact on society.
- To bring new goods and services on market e.g new and firster ways of testing malaria
and HIV/aids.
- To cater for the specific groups of people.
- To spread risks in business e.g trying the idea of selling many products in order to spread
the risks.
- To respond to the natural threats and scarcities. E.g farmers have used irrigation schemes
to address natural threat of dry seasons.

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TURNING A BUSINESS IDEA INTO A BUSINESS OPPORTUNITY
 Documenting the idea (invention). This involves writing everything
you can think of that relates to your invention.
 Researching your invention. This involves researching your idea
from a legal and a business stand point.
 Marketing prototype. A prototype is a model of your invention that
puts into practice all of the things you have written in your
invention model.
 Filing a patent. After having all the required information worked
out and arranged you can finally file patent.
 Marketing your invention. This involves figuring out how you are
going to put your product to market.
HOW TO RESEARCH A BUSINESS IDEA.
 Somewhere between writing your idea in your note book and
actually starting business, there is process you need to carry out
that essentially determines either your success or failure in
business.
 The idea stage. This involves getting the idea and imagining the
possibilities. Marketing research is very vital in determining your
idea potential.
 Idea analysis by looking at idea from its perspective that is
accompany, customer competitor and collaborator.
 Checking out the competition. Assuming your research has helped
you and cover your competitors, you need to find out what they are
up to.
 When your idea look like a flop. After the first three steps above,
you might find that your idea is one with holes. Does it mean that
you need to scrub the whole thing? Sometimes it just needs to be
reworked on.
 When the idea is ready to go. The market research you have
conducted that for should be a good indicator of where you need to
go next with your idea.
EVALUATION OF DIFFERENT BUSINESS IDEAS.
Factors considered when evaluating business ideas
Each business idea should be evaluated in terms of;
 Present market
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  Market growth
 Costs
 Business risks
 Personal considerations
 Business considerations.

BUSINESS OPPORTUNITY
A business opportunity is an attractive idea that provides the possibility
of the monitory returns to the person taking risk.
 It is an attractive project idea which an entrepreneur accepts for
investment on the basis of well-known ideas about the possible
success of the business.
 A feasible business. It refers to the business that can possibly be
done or implemented using the available resources.

A viable business refers to the business that is profitable.

INDICATORS OF A GOOD BUSINESS OPPORTUNITY.

 Availability of market. Market means peoples institutions willing
and able to buy goods and services of the business.
 Availability of required resources, include. Capital, raw materials,
labour, land etc.
 Reasonable level of return on investment. The profits realized from
the business should be reasonable depending on the level of
investment by the entrepreneur.
 Availability of required technical skills. This refers to machinery
available and the skilled power needed for the production of goods
and services
 Acceptability in the community. For the business to be acceptable,
it must be in line with societal requirement.
 Favorable government policy. In terms of low tax rates, tax holidays
etc.
 Availability of good infrastructures. E.g transport means,
communication, insurance.
 Presence of political stability.

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QUALITIES OF AN ATTRACTIVE BUSINESS OPPORTUNITY.
 Good income potential
 Sizable market gap
 Low moderate startup capital
 Good growth potential
 Reasonable case of entry into the market
 Related to ones skills and experience.
 Properly timed.
 Government policies being favorable.

TYPES OF BUSINESS OPPORTUNITY.
 Retail/whole sale type of business
 Products/service type of business
 Industry type of business
 Independent type of business.
BUSINESS IN UGANDA.
Business is an economic activity that is driven by the desire to make
profits. Doing a business involves exchanging goods and services for
money or at times for other goods and services with a view to make
profits.
There are different types of business which include; agro business,
manufacturing, trading, and service business.
Business can be grouped under different sizes which include.
 Micro business
 Small business
 Medium business
 Large business.
BUSINESS OPPORTUNITIES IN THE HEALTH AND MEDICAL
These are business openings that may be prevailing within a given
environmental or situation and they might be in form of demand or
market for a product or service and these situations are for business
investment with high profitability. The health and medical industry is
extremely a large one with abundant business opportunities.
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If you have ever wondered how people make money from health care
industry without owning hospitals or manufacturing drugs, here are
some of the health care and medical ideas and opportunities that can be
ventured into by any medical practitioner in any place of the world
Uganda inclusive.
1. Childcare centers. These are pre-schools that care for and
supervise children usually between the age 1 to 13; whether
disabled or not. These centers can be run by anyone that has
experience in caring for kids and not restricted to health
professionals only.
2. Drug resting center. Drug testing centers analyze biological
specimens like stool, hair, urine, saliva, blood, and more, to test for
the presence of or absence of some specific drugs in a person’s
body system. These centers carry out drug tests for universities on
new students, sports bodies on the athletes and even the police
force on suspects.
3. Non- emergency medical transport services.
4. Egg and sperm bank.
5. Medical waste disposal.
6. Skin care centers. skin care canters carry out services that help
maintain the integrity of our skins through practices in nutrition,
sin protection, cosmetics, skin relief treatments and a lot more.
7. Scanning centers by patterning with other certified individuals
that can provide the service.
8. Pharmaceutical distribution. This is the wholesale distribution of
drugs to retail pharmacies.
9. Dietician
10.Fitness Centre
11.Homecare center
12.Weight loss clinics
TYPES OF BUSINESS ENTERPRISES.
These are various type of business from which one can choose. However,
these businesses vary from one to another due to various factors which
include.
 The goods that the business sell
 The services provided by the business
 The raw materials used by different businesses

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  The location of the business
 The time the business operates
 The power/energy used.

In line with the above factors businesses in Uganda can be categorized

into;
 Agribusiness
 Trading business
 Manufacturing business
 Service provision business
AGRI BUSINESS
These are businesses that engage in production and selling of
agricultural products for profits. For any agricultural activity to be called
agribusiness, it must be producing with the aim of selling.
TYPES OF AGRIBUSINESS.
 Crop production
 Livestock production
 Poultry keeping
 Agricultural support business
 Horticulture fish farming.
Requirements for agribusiness
 Land
 Capital
 Human resource
 Importance of agribusiness
 They produce food
 They provide employment.
 They pay taxes to the government
 They provide market to products for other businesses
 They make use of home wastes, animal droppings, coffee husks.
 They contribute towards community development program.
Challenges faced by agribusiness.
 Natural hazards like unreliable rainfall
 Pests and diseases

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  Limited market for their products
 Low and unprofitable prices for the products.
 Competition from other producers.
 Inadequate support series eg transport.
 Seasonality of the business which makes entrepreneurs stay
reluctant for some month.
How to overcome challenges faced by agribusiness.
 Conducting market survey.
 Employing modern techniques of production
 Practicing irrigation.
 Formation of trade union
 Development of transport and communication program
MANUFACTURING BUSINESS
These are businesses which transform or process raw materials into
finished products. Such products are significantly different from inputs.
They include.
 Beverage manufacturing business
 Agro processing business
 Metal fabricating
 Plastic manufacturing business
 Chemical manufacturing business textile manufacturing business.
Importance of manufacturing business.
 They are source of income to their owners
 They provide employment
 They produce products which are required by people
 They add value to local raw materials
 They pay taxes to the government.
 Improved infrastructure e.g hospitals, schools
 They provide market for local products e.g cotton
 They contribute towards community development program.
Challenges of manufacturing business
 Insufficient funds to buy the required technologies
 Inadequate credit series like roads
 Inadequate skilled ma power
 Competition from imported products

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  Unreliable source of products
 Insecurity in some parts of the country.

SERVICE BUSINESSES
These are businesses that provide small and intangible products which
satisfy customer needs.
They include pharmacies, clinics, nursing homes, hospitals etc.

BENEFITS OF SERVICE BUSINESSES.

 They support the operation of others business e.g ICT assisting in
health sector.
 They keep the people healthy e.g fitness centres
 Security services provide stability of other businesses e.g securiko
 Education service imparts knowledge and skills into people for
survival.
 Financial services provide help to other businesses such as loans
from banks.
Challenges faced by service business
 High costs of input
 Bad debts
 Challenge of retaining staff

TRADING BUSINESS
These are businesses which deal in buying and selling of products for
profit. for example; pharmacies, supermarket, retail shops, wholesale,
and bookshops.
BUSINESS ETHICS
Ethics refer to a set of moral principles which are recognized in respect to
a particular class of people or particular groups of people e.g medical
ethics, teaching ethics and legal ethics that bring together people of the
same profession.
Business ethics are expected standards of behavior practiced by
entrepreneurs in their business activities.

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They are acceptable behaviors in which businesses should conduct
themselves towards their customers, employees, property, government
and other competing business.
PRINCIPLES OF GOOD BUSINESS ETHICS
 Honesty
 Promise keeping
 Fairness
 Respect for others
 Compassion
 Integrity
PARTIES OF BUSINESS ETHICS
 The client/customers who deal with the business
 Employees who are employed by the business
 Government of the country
 Competitors i.e Businesses which compete with the entrepreneur’s
business
 The society with in which the entrepreneur’s business is allocated
and operating.
 The suppliers of the business inputs.
Research about; advantages of practicing good business ethics
BUSINESS ASSOCIATIONS
These are formed by businessmen which voluntary come together and
agree to work together to achieve their common objectives.
Examples include;
1. Uganda Manufacturers Association (UMA)
2. Uganda Medical Doctors Association
3. Uganda National Farmer’s Association (UNFA)
4. Uganda National Chamber Of Commerce (UNCC)
5. Uganda Cooperative Alliance (UCA)
6. Uganda Small Scale Industries Association (USSIA)
OBJECTIVES OF BUSINESS ASSOCIATIONS
The objectives of business associations vary from one association to
another as seen below;
1. Security and accessing local and foreign markets for their members
produce.
2. Sourcing and accessing raw materials for their members business

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 3. Accessing and providing training facilities program for their
members
4. Accessing financial technical support, bank and other business
support institutions and supporting individual members in time of
needs
5. Developing and discriminating improved and better production
management systems among members.
6. Advocating on behalf of their members to the government for better
environment or …for the business cooperation.
SERVICES RENDERED BY THE BUSINESS ASSOCIATIONS
 Providing information on market opportunities & trends
 Negotiating and securing local and foreign market to the members
products.
 Sourcing and accessing raw materials for their members
(businesses).
 Identifying appropriate and better production for their businesses.
 Developing and providing training for the member staff.
 Providing material and moral support to members.
 Developing better production technologies and management system
for members.
 Carrying out advocacy campaigns on behalf of members with
government for business investment incentives, tax policies,
monetary and general economics.

BUSINESS PLANNING
A business plan is a written document prepared by entrepreneur that
describes all the relevant external and internal elements involved in
starting new business ventures.

Planning is an act of deciding what to do, how to do it, when to do it who

and where to do it from. It is a well prepared document which is intended
to serve a particular period of time. It may refer to the management tool
which focuses on the nature of the business in a logical and organized

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manner. The value of the business plan is not so much of written
document or the plan itself but the planning process.

Importance of business planning.

1. It helps financiers such as banks, micro finance institutions,
insurance companies and even individuals to decide whether to
finance a business or not.
2. It shows how the business will be managed and gives workers a
sense of job security.
3. It consists of an action plan which at as a time table for
implementation and various business activities in a logical manner
and this helps ents to ensure that different activities are
implemented at the right time.
4. It encourages the ent to think about what he wants and how he
wants to do it.
5. It helps employees to achieve their expected targets
6. It helps the ent to define specific goals which serve as a yard stick
to measure the progress of the business during the course of
implement.

STEPS TAKEN IN PREPARING A BUSINESS PLAN.

1. Selecting the type of business to be engaged in e.g manufacturing,
agro processing, and service business and trading business.
2. Concluding a market research for the selected type of business.
3. Collecting environment protection regulations, raw materials and
their availability
4. Drafting a proposed business plan.

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5. Discussion of the draft business plan with knowledgeable or
experienced people in similar.
6. Finalizing the business plan preparing an action plan for
implementation.

PARTS/COMPONENTS /ELEMENTS OF A BUSINESS PLAN.

1. General description
2. Executive summary
3. Marketing plan
4. Production plan
5. Financial plan
6. Organizational plan
7. Action plan
8. Appendix
9. Cover page
1. General description of the business. This shows a brief
overview about the business. It is basically a summary
statement concerning the following issues.
 The type of business being planned.
 The needs of the market that it will seek to solve.
 The name, address and location of the business
 What makes the business different from other businesses?

2. Statement of the mission, goals and objectives.

(i) Mission statement. This a brief statement that shows the
purpose of the business. It tries to answer the following
question.
What business are you in? and;

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 Indicates the need you’re satisfying.
Indicate the type of work environment you want to provide for
your employees.
(ii) Goals. Is the medium set target of a business.
Examples of goals include;
- To realize a 10% increase in profits after a period of 1 year.
- To open up four more branches in different parts/areas in 4
months.
(iii) Objectives. These are results/target that a business aims
to achieve. When formulating goals & objectives, they are
supposed to be SMART i.e specific, measurable,
achievable, realistic, and time bound.
3. Marketing plan. This is analysis of the possible position of the
business being planned in the present market situation. In
marketing plan, one needs to explain the following components;
 Target market; who are your customers, where are they located?
 Products/services offered
 Competition; who are your nearest direct competitors?
 Pricing; what are your prices
 Projected marketing expenses
 Distribution strategies.

MARKETING MANAGEMENT SKILLS

Marketing is the process of identifying, anticipating and satisfying
customers’ needs effectively and profitably.
It also refers to a series of activities an entrepreneur does to find out his
customers and their needs.

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It consists of activities that involve the flow of goods and services from
the producer to the customer. It results into customer-satisfaction and
realization of profits by the entrepreneurs.

In other words, marketing is that part of business that is concerned with

both informing the customer about the products on sale and persuading
them to buy products.
Steps/activities involved in marketing;
1) Conducting market research. This is done to find out the
customers’ needs e.g quality, design, fashion, tastes & preferences.
2) Developing of a product. This involves developing the idea and
producing the product depending on needs of customers.
3) Packaging. This involves wrapping of products in special
containers to protect them from contamination & make them
portable to carry.
4) Pricing. This is involves attaching prices on the products produced
and packaged.
5) Distribution e.g selling products directly to customers, using
wholesalers, retailers or agents.
6) Promotion. At this stage the entrepreneur uses various strategies
to inform & attract customers which increases sales of his goods &
service. This will ensure that the business has customers and
therefore survive for long. Satisfied customers will always come
back and buy more of your products. In addition, they will even tell
other people to buy from your business hence leading to large sales
and more profits.

A MARKET

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This is a situation where buyers and sellers come into contact to
exchange goods & services using a given medium of exchange.

TARGET MARKET POPULATION.

This refers to the customers to whom an entrepreneur intends to sell his
products. OR
A target market population is where the likely buyers of the
entrepreneur’s products are to be sourced from or got from.
FACTORS THAT AFFECT MARKET POPULATION
 Income level of people
 Range of competition
 Age and sex
 Consumption of customers
 Market share of the business.
MARKET RESEARCH
Is the systematic process of collecting and analyzing information relating
to market and opinion of the public about the products of the business
to enable present and future decision making.
OBJECTIVES OF CARRYING OUT MARKET RESEARCH.
 To find out type of products customers do prefer or need.
 To find out the quality of products customers desire to buy.
 To find out the customers reaction on the prevailing/current prices.
 To increase sales by business i.e stock of goods sold by the
business.
 To determine the channel of distribution to be used in delivering &
selling the goods to customers.
 To find out and make a market flow up on the effectiveness of
advertising.
 To identify the competitors of your business and their strength.

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IMPORTANCE OF MARKET RESEARCH (pick them from the above
objectives) E.g;
It enables an entrepreneur to find out type and nature of products
preferred by customers.
It helps an ent in finding out the quality of products customers need.
METHODS OF COLLECTING DATA FOR MARKET RESEARCH
1. Interviewing method. This is a method used to get
information from customers involving face to face
discussions between the researcher and respondent about
the problems at hand.
2. Questionnaire methods. This involves asking respondents
similar structured questions that are written down and
required to fill in their responses.
3. Observation method. This involves watching certain
factors in a given market in order reach a general
conclusion.
4. Surfing or use of internet. This is where the information
is gathered through surfing from different websites from
the internet.
5. Sampling methods. This is where the researcher selects
the area which is reasonably represented by the entire
market to carry out a test using sample products.
6. SWOT analysis. This method involves collection data by an
entrepreneur through gathering information about the
strength, weakness, opportunities and threats of his
business.
SOURCES OF DATA FOR CONDUCTING RESEARCH.
1. Company employees/workers

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 2. Competitors
3. Consumers/customers
4. Company records and files.
5. Internet
CHALLENGES FACED WHEN CONDUCTING MARKET RESEARCH
1. Language differences
2. Inadequate funds
3. Inadequate skills to handled data collection
4. limited communication skills
5. limited cooperation from consumers or public
6. Competitors who sabotage effective data collection
7. Insecurity in some areas.

MARKETING TECHNIQUES
These refer to the tools that may be employed by an entrepreneur so as
to carry out his/her marketing effectively. They include.
1. Effective communication
2. Display/attractive display
3. Promotion and advertising
4. Offering discounts/price reduction
5. Negotiations
6. Quality improvement
7. Favorable/attractive pricing policies.
Strategies for successful small business marketing.
1. Profile your best customers. Identify your most valuable
customer. How much do they spend with you annually? It’s
important to understand what value your business brings to your
customers so you can continue fulfiling their needs.

23
2. Talk with your clients. Schedule quarterly face –to –face meetings
to ask your clients feedback or just to catch up. You must stay on
top of their needs and understand any …factors that influence their
decision-making processes.

3. Watch Your competitors (Competition). I identify you top three

competitors. Compare your branding, value, proposition and
pricing, based on your assessment, develop at least three strategies
that you will use to position yourself effectively against them.
4. Update Your Marketing Plan. Even if you are a one-person army
in your business handling the marketing and service delivery, you
must have a marketing plan. To develop a marketing plan, you
need to define your target customer, conduct a competitive
analysis, defined your secret sauce and your core message and
determine your key marketing tactics.

5. Focus on 30-Day Sales Goals. Annual sales are a waste of time so

focus on how much you need to make each months. Your sales and
marketing efforts need to work together in your small business.
You a marketing activities should be based on the amount of sales
you need to generate in your business each month.

6. Building strategic Alliances. A strong strategic alliance with

another small business offers many benefits, including reducing
risk, sharing costs and the opportunity for co-branded marketing
efforts. It’s best to find a partner who is not a direct competitor and
always go into the relationship understanding your partner’s “must
have” list.

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 7. Use a Vision Board. Running a small business is challenging. How
you get through the tough days in your business makes a big
difference in your productivity. One of the best ways to stay
motivated is to develop a vision board of your big picture goal. What
are the top 5 things you want out of life and your business.

IMPORTANCE OF MARKETING.
1. It provides new varieties of useful and quality products to
customers
2. It provides wide employment opportunities to those who work as
marketers
3. It leads the increase in national income because the nations
income in composed of goods and services.
4. Helps the entrepreneur’s business to create a good name.
5. Enables the entrepreneur to increase his/her business sales.

PRICING OF GOODS AND SERVICES

This refers to the activity that involves attaching of monetary value on
the products to be offered.
A price is the monetary exchange value of a product or service.
FACTORS CONSIDERED WHEN DETERMINING PRICE FOR THE
PRODUCT
1. Cost of production,
2. Prices of competitors
3. Nature of the service to be rendered
4. Marketing objectives of the entrepreneurs

25
 5. Quantity particular customers are able and willing to buy.
6. Demand and supply force
7.
Common methods of pricing products.
1. Cost oriented pricing. This is where the price is largely set basing
on the cost of production ie the higher the cost of production the
higher the price of the product.
2. Competition oriented pricing. This is the method of fixing prices
which is determined basing on the price of competitors for the
similar products.
3. Demand oriented pricing. This is the pricing of the product basing
on its degree of demand.
4. Supply oriented pricing. This is the pricing on how much is
supplied and the number of suppliers competing to supply a
similar product.
5. Bargaining or haggling. Here the prices are determined by the
discussions of prices between the buyer and the seller with the aim
of reaching an agreement.
6. Auctioning. This is where the seller offers products for sell on
market and it is taken by the highest bidder.
7. Fashion oriented. This is where the prices are determined based on
different fashions, designs and others.
8. Value oriented pricing. This is where prices are determined basing
on the value of product.
9. Government policy pricing. This is where the government dictates
for prices for a particular product.
10. Forces of demand and supply. This is where prices are
determined basing on forces of demand and supply.
MARKETING MIX
This refers to the combination of various marketing elements or inputs
used to achieve the organizations marketing objectives and satisfy the
target market. Marketing mix elements are commonly known as 5Ps.
1. Product. This is a good or service offered by business to the market
to satisfy customer needs for example medical services, education
services, banking services.
2. Price. This refers to monitory value of good or service.

26
 3. Place. This involves making the product available to the consumer
at the right place and at the right time.
4. Positioning. This means targeting a small segment of customers
for whom the entrepreneur target is to sell the product.
5. Promotion. This means informing and attracting customers to buy
products either for the first time or to buy more of it.
PROMOTION MIX
This refers to the combination of various activities under taken by
entrepreneur to promote his or her products.
Objectives of product promotion/importance of carrying out sales
promotion.
1. To increase sales
2. To increase market share
3. To increase profits
4. To inform the public about the availability of the products
5. To constantly remind consumers about the availability of the
products.
6. To retain the existing markets
7. To out compete other businesses
8. To introduce new products on market.
9. To increase customer awareness.
METHODS USED BY ENTREPRENEUR TO PROMOTE SALES/SALES
PROMOTION METHODS.
1. Giving free samples and gifts. This where the clients are given
samples freely before the product is sold to them. This is meant to
provide information to the business men about the nature of the
product before he introduces it to the market.
2. Display of products outside the shop
3. Renovation of premises
4. Politeness. This refers to being polite to customer’s i.e caring for
customer’s needs. This would be done by the sales person and
would attract more customers.

27
 5. Branding. This involves giving a product a distinctive name, a good
name should be selected which is apprising and that can easily
become a house hold name e.g coca cola, pepsicola, kazire etc.
6. Proper management. This involves making proper of arrangements
with the products in the shop. This is done in order to help
customers easily identifying the products that they need hence
increasing sales.
7. Nonproductive value methods e.g providing free and convenient
parking space, sells guides to customers.
8. Sponsorship. Some entrepreneurs sponsor different activities where
most people are involved so as to get their attention for example
football matches, charity walks, health campaigns and others.
9. Improving on the quality of goods and services.
10. Sharing knowledge of the products i.e its benefits and uses.
11. Advertising. This refers to the spreading of information about
ones products to the customers. Advertising can be through
different methods/channels/media which include; the press
(newspapers), magazines, radios, televisions, cinemas, bill
boards, posters, leaflets/brochures, music, banners, sign posts,
display of products etc.
12. Price reduction
13. Proper packing/packaging of products.

ADVERTISING
This refers to the spreading of information about ones product to the
customers.
TYPES OF ADVERTISING

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INFORMATIVE. This gives factual information to the general public
about the available goods or services.

PERSUASIVE. This is advertising intended to induce/convince the

general public to buy a good or service.

GUIDELINES FOR PREPARING ADVERTISING MESSAGE.

1. The space provided should be used carefully one should not cluster
of whole space in words or pictures.
2. The message should be easy to understand and should stand out
i.e should be easily recognized.
3. The headlines should emphasize benefits to customers and should
easily be identified e.g friendly prices, door to door delivery.
4. The advert should include important information about the
business e.g location, address, telephone contact etc. the
advertisement should be attractive, neat and persuasive
5. Be honesty in your advertising i.e try to deliver what you promise.
6. The message should be specific and show items or services on offer.
7. If there is any unique design to be used it should be accompanied
by business logo.

FACTORS CONSIDERED WHEN SELECTING AN ADVERTISING MEDIA

The following/should be considered.
1. Cost of the media. This involves looking at how much will be spent
on running such an advert. The cost effective and yet efficient
media should be chosen to minimize the cost on the side of the
business.
2. Geographical area that the media covers. when advertising an item
needed by many people, a media with the large coverage should be
used.

29
 3. Speed and urgency of the information. It’s always better to use a
very fast media in order to cover a wide area for better results in
the market.
4. Language to be used. Should be made in language in which target
customers communicate can easily understand.
5. The target customers. This involves looking at who is likely to buy
the product and whether he will have access to that medium of
advertising.
6. The nature of the product. Some commodities do not need to be
openly advertised e.g drugs i.e medical services and legal services.
7. Lead time. This is the period required by the medium for pressing
an advert. It is shortest for newspapers, radios, and longest for
magazines. A long lead time means a firm must press its
advertising at least 6 months before or more.
8. Frequency. This is how often a medium can be used. It’s greatest
for newspapers, radios, and televisions where adverts many appear
daily and advertising strategy may be easily changed.
9. The age group. Videos, Tvs, Magazines appeal most to teenagers
and and youth while the radio and newspapers do well for the adult
and aging people.
10. Availability of the media.
11. The media which is used by competitors. Ents are expected to use
the best media than his fellow competitors.

IMPORTANCE/AIMS OF ADVERTISING
1. It leads to increased sales through facilitating speedy movements of
the products.

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 2. It helps in facilitation competition among the different products
which helps on improving the quality of products in an attempt to
outcompete each other in the market.
3. It enables intelligent buying and thus it has an educative value.
4. It provides qualitative information about a product to the
customers and this helps them in making right choices.
5. It creates loyalty i.e friendly relationship with customers and
acceptance of the product
6. Advertisements accumulates, demand and create more need for the
products in the market.
7. Advertising helps to minimize the cost of marketing because
consumers are already aware of the products from the adverts
every person will keep up to date on the value and quality of the
product.

DISADVANTAGES OF ADVERTISING

1. Some are persuasive and misleading e.g FACO sure deal

2. It increases the operational costs of the business.
3. Some products being advertised turn out to inferior to which
consumers had expected
4. Some adverts introduce irrelevant facts eg. Over praising the
products
5. Un successful adverts are wastage of money to the entrepreneur.

CUSTOMER CARE AND CUSTOMER RELATIONS

Care and relations for the customers are very important in expanding
business enterprise.

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Ways of ensuring good customer and relations.

1. Being honest to customers

2. Handing customer complaints well
3. Offering prompt an excellent services to customers
4. Being pleasant i.e doing job with happiness
5. Having knowledge of product you are dealing with
6. Offering technical and aftersales services e.g packaging,transport
etc
7. Offering occasional price reduction to customers
8. Being clear when communicating to customers
9. Extending credit facilities to trust worth customers.
10. Being efficient and available to customers from time to time.

BUSINESS COMPETITION
1. Competition is the battle between businesses to win consumer
acceptance and loyalty in the market.
2. Competition is all about value i.e creating it, capturing it and
retaining.
3. To be successful today your company must be competitive oriented.

TYPES OF COMPETITION IN BUSINESS

1. Pure/perfect competition

This exists in a market in which no single buyer or seller has

influence over the product sold in the market.

Characteristics/features.
 Large number of firms. There are many firms or business involved
in this completion

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  Large number of buyers. These are very many buyers of the
products in the market
 The product is homogeneous. Products produced by all firms in
this industry looks the same in the eyes of the customer.
 No barriers to entry. There is a freedom of entry and exit in the
industry without any restriction.
 Complete information. The consumers and producers in this
market possess perfect knowledge/information of the existing
prices of the products in the market
 Profit maximization. The major aim of firms is to maximize
products.

2. Monopolistic/imperfect competition

This describes a market where multiple firms offer variations of the same
product or multiple products are offered each with a variation. A
variation might be different, durability, price and utility.

Characteristics/features
 Large number of sellers
 Product differentiation
 Freedom of entry and exit
 Existence of selling costs
 There is concept of group
 Falling demand curve
 Absence of interdependence.

3. Oligopoly

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This is a market dominated by a small number of participants who are
able to collectively exert control over supply and marketing prices.

Characteristics
 Interdependence
 Existence of advertising and selling costs
 Group behavior
 Price rigidity
 Elements of oligopoly
4. Monopoly
Is an enterprise that is the only seller of the product. Monopolies are
defined by a single business operating without competition in the
market.
Characteristics/features.
 One seller and a large number of buyers
 No close substitutes
 Strong barriers of entry into the industry exits
 Down ward sloping demand curve.
Ways of competition in business/how to do business competition
5. Pricing
6. Packaging
7. Treating customers with respect
8. Offering convenient services
9. Improving quality

Factors considered in analyzing competition.

 Description of competition. This involves trying to determine how
profitable the business.

34
  Operating method. This involves trying of to determine the
operating methods for each of the major competition e.g product
pricing, quality of products and methods of selling.
 Size of competition. This involves finding out the various indicators
of size of your competitors e.g analyzing assets and sales volume,
number of employees, number of branches of major competition.
 Profitability level of competition. This involves trying to determine
how profitable the business is among those enterprises already in
the field.

Factors affecting competition

 Profit overlap. This involves selling of the products by different

finds of establishment that are similar to identical to each other.
 Level of substitution. Fast foods business compete against each
other but they can also compete for a share of the public who eat it.
 Public awareness. Because there are so many products on market
so may new developments and so many businesses on screen today
potential customers have to be made aware of and reminded of the
usefulness of a particular product.
 Product priority. Usually people have limited supply of money to
spend and every one competes for a share of that spending money
i.e the business community, government and relatives.
 Motility and accessibility overlap, freedom to travel, open up a
much wider geographical…. Of competition. This is because
customers can do their shopping near the home, near the place of
work or elsewhere.

COMPETITIVE ADVANTAGE

35
This is an advantage that a business has over its competitors following it
to generate greater sense or retain more customers than its competitors.

WAYS OF MAINTAINING COMPETITIVE ADVANTAGE IN THE

BUSINESS.
1. Advertisement
2. Competitive pricing
3. Easy day low prices
4. Ensuring customer convenience and services
5. Promoting sales prices

EFFECTS OF COMPETITION
It has both positive and negative effects
Positive
1. It results into better customer satisfaction
2. It leads to better employee remuneration
3. It leads to product quality improvement
4. Competition encourages ents to work harder and excel
Negative
1. It results into small market share due to limited numbers of
customers that business are competing.
2. It creates scarcity of resources e.g raw material that become
expensive due to high competition
3. It hurts the ent’s self- esteem if they always lose.
4. It makes ent believe that winning is more important than playing
well or having fan.
5. It forces the ent to focus at winning at any cost which results into
cheating and hurting others at times.

HUMAN RESOURCE MANAGEMENT FOR SMALL BUSINESS

Human resource management (HRM) is the process of employing people,
training them, compensating them, developing policies relating to them,
and developing strategies to retain them.

36
What are the benefits of Human Resource management?
There are so many ways that HR management can benefit your small
business, but there is five reasons why it’s going to make your work life a
lot easier.
1. Find the right staff
HR managers can find the right staff at the right time for small
businesses. If you don’t have an HR manager or HR staff, it may be
worth your while to consult with an expert, or work with your staff to
make a hiring plan. Be clear about the role you are offering and the
responsibilities of your deal hire.
2. Give new staff the best start possible
Taking the time to put together a detailed on boarding package for new
employees ensures everyone starts off on the right foot. Defining a
straight forward process for new hires that’s packed full of information
about your business processes can save your time and money down the
track.
3. People management
Its not all about new hires. Understanding your employees and their
motivations for working with you is hugely important to their success
and the overall culture of your small business. HR management can give
you’re the tools to get the most out of your staff and gain valuable skills
that are transferable to a number of different roles and situations.
4. Improve job satisfaction
One of the best gifts you can give your employees is job satisfaction. Part
of the daily duties of HR managers and HR staff is to support, nurture
and coach people in their roles. These efforts can make or break a
person’s work life and in the context of a small business; it’s important
that every staff member is supported and encouraged to reach their full
potential. Your business will thrive and your employees will stick around.

5. Provide opportunities to up skill staff

Negotiating the various legal, ethical, environmental, social and economic
challenges that face small business is so easy task. Laws and regulations
often chance, so it’s important to stay up-to date with all the relevant
37
information. If you can’t hire an HR manager, up skill current staff with
further HR training and qualifications. This will boost your ROI because
investing in staff education improves employee retention reates and adds
value to your team.

INCOME
This refers to what a person/one earns from engaging in economic
activity or understanding. We earn income as a result of applying skills
and resources to a productive purpose with an aim of being paid for all.
Income is usually measured in monetary units e.g shs, US dollars.

TYPES OF INCOME
1. Wage. This is a payment received for work according to number of
hours, days or weeks devoted to work. It is usually paid to labour
that uses physical energy to do work e.g casual labours.
2. Salaries. This is a fixed of regular for work done usually by skilled
or knowledge workers.
3. Profits. This is income which is earned by business persons like
entrepreneurs for undertaking business risks.
MONITORING BUSINESS OPERATIONS
It is not enough for an ent to plan and set up a business. It must be
managed well and to manage it properly means that the business should
attain the desired objectives which is possible through proper monitoring
and control.
The ultimate purpose of a business is to earn sufficient profits. It is there
important that the ent closely monitors or inspects his business
operations to ensure that they meet the set target and of course the
profit targets.
MONITORING TOOLS IN BUSINESS
These are the established techniques that enterprise can use to monitor
and control the performance of his business.
Monitoring tools vary from one type of the business to another for
example manufacturing business, service business. They include.
1. Work order form. Those are monitoring tools purposely prepared
to keep accurate records of customer orders and allocate the

38
 workers. They help the entrepreneur to maintain control on the
work to be done.
2. Work schedule. These are particularly made for proper
management of time by workers. They must be carried out on a
daily basis and they should be flexible to adjust the different forms
of changes.
Importance of work schedules.
It helps workers to complete assignments on time.
It helps the entrepreneur to coordinate the time work in his or her
business with those of the competitors.
It facilitates sieving f time as certain jobs need to be complete before
others
It helps an entrepreneur to meet the demand of customers in time.
3. Sales targets. These are targets set in relation to sales for a
specific period of time for example weekly, monthly or yearly.
4. Departmental reports. This involves making of written information
by departmental loads about the performance of each department
in relation to the set goals.
5. Stock records. This involves keeping update records regarding
stock
6. Cash flow statements. This is a monitory tool which shows the
entrepreneur how much and from where the business will get cash
and how it will be used over a given period of time.
7. Balance sheet. This is a financial statement drawn to show the
financial position of the business has at a particular period of time
usually at the end of the trading year
8. Books of accounts.
9. Production targets.
10.Operational budget.

39
 This provides a summary of income and expenditure projection
budgets which can range from a few lines to several pages and can be
made for different periods.

STEPS IN PREPARING AN OPERATIONAL BUDGET.

In order to prepare any periodic budget, an ent should.

1. Set the business goals for the periods budgeted for

2. Set the activities to be performed and time table
3. Set the objectives
4. Estimate sales to be made
5. Estimate cost of goals/services to be sold.
6. Calculate gross profit
7. Estimate selling and general administrative expenses
8. If profits are taxable apply the tax rate to the difference between
gross profit and estimated expenses to get tax payable.
9. Subtract the tax payable from the difference between the gross
profit and estimated expenses to get the estimated net profits.

RESOURCES AVAILABLE IN THE LOCAL AREAS.

Resources refer to the endowments that may exist in the area or locality.
And they can be categorized as follows.

1. Human resource. These refer to the people looking at their levels of

skills, knowledge and experience which help to determine this
resource.
2. Material resource. These are physical resources such as minerals,
trees, water, animals etc.
3. Time resources. This is having the ability to do a particular
opportunity e.g to be able to plant during the required period.

40
 4. Technology. This refers to machines used to increase productivity
and quality of products.
5. Information. This is the possession of adequate knowledge on
various aspects of life which is necessarily for development by
means of a community e.g having knowledge on methods of
farming.
6. Financial. These include the money used to acquire in puts,
capital, and assets etc that are required to start a business or any
other development program.

MONEY AS A RESOURCE.
Money is a medium of exchange which allows goods and services to be
valued in terms of legal tender. In Uganda money is in form of bank
notes and coins that are issued by bank of Uganda.
USES OF MONEY
1. Investment
2. Consumption
3. Savings
4. Transfer of movable as sets
5. Collateral security
SOURCES OF BUSINESS FUNDS
1. Personal savings
2. Family contribution
3. Borrowing money
4. Advances from customers
5. Trade credit. Ths is where the suppliers offer the trade goods and
do not demand cash/down payment for them. Payments can be
done later after the goods have been sold
6. From friends
7. Fundraising/grants donors
8. Selling shares. A share is a unit of capital
9. Inheritance
10. Selling personal property
11. Participating in promotions
41
Own sources: this include money like personal sales of one’s property
etc.
Advantages
1. It allows an ent to make his or her own decision, planning and use
of money at any time he wishes.
2. The ents bears to direct extra costs e.g interest others charges,
negotiations, delays and other inconveniences.
3. The ent has complete control over the benefits arising from her
business enterprise
4. It is very easy to change the business
5. There is personal contact between the customer and the owner of
the business
6. It provides financial discipline on the part of the ent since the
saving are hard to get.
Disadvantages
1. The ent may lose his personal resources in the event of failure
2. Personal sources of funds may be too small to start available
business
3. The existence of the business entirely depends of the life of the
extent
4. The ent bears all the risks alone.
SAVINGS
1. This is part of person’s income that is not consumed.
2. Importance of savings.
3. The savings help to meet investment demands e.g starting a
business, replace equipment and for investment purposes.
4. Savings are used as appreciation for further needs peoples save
income due to the desire for unforeseen problems that may arise in
future.
5. Savings are used inform of collateral security i.e the savings shall
help one to manage a given loan, people lend you money when they
look at your savings.
6. Savings also help people to meet legal requirement for the business
e.g NSSF contributions where an employee must save 5% of his
income.
7. Savings are made in order to provide for old age

42
 8. Savings can be used to store current value or surplus so that it can
be used to create self-employment.
9. It can be used to facilitate the exploitations of idle resources.
FACTORS AFFECTING/DETERMINING SAVINGS.
1. Culture of the society
2. Desire/commitment to meet future investment target
3. The individual confidence about the further
4. The growth in value of savings a level of interest rate
5. Level of political stability
6. The level of people’s income
7. The stability in the value of money (rate of inflammation).
Inflammation refers to the persistent increase in prices of goods
and services. This results into the loss of value of money
8. Level of liquidity preference. Liquidity preference refers to the desire
by people to have their wealth in cash that investing.
9. The government policy

Forms of saving
1. Cash and deposits
2. Near cash investments but bearing interest e.g treasury bills, fixed
deposits etc.
3. The assets e.g land, houses, animals etc.
4. Paying shares in companies in expectation of earning profits.
5. Buying currencies
6. Expecting to benefit from against in the rise of other currency value
e.g dollar.
7. Borrowing for investment. This is commonly known as post saving.
This is because one has to save in order to pay loan acquired in the
1st place.
8. Insurance company e.g life insurance.
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