TOPIC 1: ENTREPRENEURSHIP

Definition of an entrepreneur, Characteristics

and Skills and Entrepreneurial actions

Entrepreneur
An entrepreneur is a person who starts and owns and
runs a business. He or she takes the risks and rewards
for the business venture. Being an entrepreneur
requires a lot of work and sacrifice, there's a lot of
money, time and planning going into being an
entrepreneur and managing a business successfully.

An entrepreneur takes a calculated risk by investing

money in a business opportunity in order to make a
profit.

Entrepreneurs provide important services and produce

goods that grow the economy. They also create many
jobs, and this helps fight poverty.

It's important to be innovative when you're an entrepreneur. You need to

constantly think about innovative ideas, improve your product or service, and ask
for help from others.

You as an entrepreneur are going to have to put in

a lot of extra hours to achieve your goal and you're
going to have to have a lot of confidence in your
ideas, your business, and your workers. It takes a
lot of hard work and you're going to have to have
good problem solutions. Would you like to be an
entrepreneur one day?

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Characteristics of an Entrepreneur
Entrepreneurs have characteristics to achieve success and often share the following personal
traits and characteristics:

 Ambition to achieve – A strong desire to achieve something.

 Discipline – If they want to build a business from an idea they need to be

disciplined. They are very committed to their work contract.

They sometimes have to do something that they do not enjoy like managing
finances.

 Optimistic, confident and remain calm – In an emergency they remain calm

and positive. They believe in themselves, and their team and they are confident
in what they do.

 Risk taker – They must be able to take risks. They need to look at the risk first
and determine if it is worth it.

 Persistent – They never give up, no matter how tough a task is.

 Sense of responsibility – They take ownership of their decisions.

 Passionate about learning and flexible – They are willing to learn from people
who are more experienced.

 Display leadership qualities – They tend to take the lead and are willing to lead
others to achieve goals.

 Socially outgoing – They continuously build contacts and networks (work with
people to exchange business or social ideas and information.) with other people
by being sociable.
 Reliable – if you're a reliable person, you'll attract more loyal customers to your
business. If people trust you then they will tend to make more use of your
business
 Energetic – it's good to be motivated and always have an energetic environment
around you.
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Skills of an Entrepreneur
Skills are things that can be learned. There is many skills entrepreneurs have or

they can develop these skills. Some skills:

 Leadership skills - The entrepreneur must take the lead – there is no waiting
around for instructions. Be a leader – there must be control of situations and
advice given if necessary.
 Organization and management skills – planning is very important, if you plan
then you are organized and when someone is organized, they become more
professional.
 Decision-making skills – decisions will have to be made under pressure and
thorough research should be done before making decisions.
 Self-Motivation Skills – They should be willing to use their energy positively to
build their business.
 Communication and negotiating skills – They need to be able to communicate
well and to make sure their message is clear and consistent. Negotiate (find a
way to reach agreement.)
 Team building – They need to know when to be a leader and when to trust other
people. It is important to trust people, and when to delegate.
 Research and planning skills – The need to be able to research and find things
out. They need to know about their markets, competitors (rival in business –
another business trying to win the same customers for their business.),
employees and suppliers (other businesses providing goods and services.)
They should also be able to focus on detail and to see the bigger picture.
 Creative thinking skills – They are creative thinkers. They look for
opportunities. They find clever solutions for problems.

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 Entrepreneurial actions
Entrepreneurs have to do the following four things: buy, sell, produce and make a profit.

Buying and selling for profit is what most entrepreneurs and trading businesses do. Skillful buying
is just as important as selling when wanting a profit. The entrepreneurs make a conscious effort to
satisfy the wants and needs of customers with products of the right type, quality, brand, colour
and style that will sell best.

Buy

It's important for retailers to remember to buy goods at a low price so

they can resell them for a higher price. A good stock control system will
help to decide what to buy, who to buy from, when to buy and how much
to pay.

For example: I'm the owner of the school tuck shop, I buy my products at a certain price, and I sell
them at a high price.

Producing

Producing is the action of making a product. Producing involves taking raw materials and turning them
into something useful that can be sold to customers. Also known as manufacturing or production.

Sell

There should be a market for your product or service, in other words you
should be able to spot a need. Companies and businesses sell their
services or products to their target market.

For example: At school, colored pens are very popular among the learners, I see
a market and I decided I'm going to buy some and then resell them.

Make a profit
The goal of owning a business is to make a profit. Profit is defined as the difference between the
price that you pay for something and the costs that you had to pay to bring that something to the
market, called the cost price. Profit depends on how products are priced. If the selling price is
too low the expenses will not be covered whereas if the price is too high, you may lose sales.

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Mark up is the amount of money added to the cost price of an item or service to get the selling
price.
You make a profit when your income is more than your expenses. Expenses make our
profit less; it is important to keep expenses in mind.

For example:

I buy notebooks for R100, I sell them for R150. Is my total profit then R50?

No, there are other expenses too, packaging that costs R5 and petrol money that cost
R10. So, my total win is: R150 – R100 – R10 – R5 = R35
TOPIC 2: STARTING A BUSINESS
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1. Needs and wants of consumers

Needs are the things we cannot live without, we need them for survival, for

example: food, shelter, clothes and water.

Wants are what we like, but we can live without them, for example: designer clothes,
take aways, the latest technology etc.

Needs and wants are satisfied by the use of different goods and services. The
choices that consumers make are determined by things such as:
 The amount of money that they have
 What is important to them
 What they believe in
 What they are allowed to do by law

If businesses want to be successful, they need to keep in mind the needs as well as
the wants of their target market. A variety and balance must be maintained between
the two.
2. S-W-O-T analysis
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It is important for an entrepreneur to do an analysis about their business, it creates a
bigger picture of the business, and it can highlight various components and
characteristics. Here are the steps to follow for your business analysis:

Strengths – done internally, it highlights for us what the owner or staff are good
at, which contributes to the business that makes it successful.

Example: Service is excellent.

Weaknesses – done internally, it will show us what the owner or staff are not so good at.

Example: Employees are not well trained.

Opportunities – externally, these are positive factors that count in the business's
benefit and improve it.

Example: The business is located in the business area which

means there will be a lot of customers.

Threats – externally, it hinders our business and is harmful to the

business.

Example: There is a business that sells products that are more similar
than what our business manufactures and it is cheaper.

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3. Goals
A goal is requirements that you set for yourself or your business, which you would
like to achieve in the future. Setting goals is an important process for
entrepreneurs as it helps them to set out both short-term and long-term goals.

Goals should always be set up according to the S-M-A-R-T-E-R method:

 Specifically – the more information you provide the better, describe your goal in full.

 Measurable– you should be able to measure your goals against

something, for example in % or Rand. I want to improve 10% with EMS.

 Achievable – this should be achievable so that you do not disappoint yourself, if

your business has improved 5% each month with profit, you cannot now expect
it to make 50% more profit than the previous month. The business should have
the ability to reach the goal.

 Realistic - It's important to always think realistically about your goals, if I want
to run a marathon of 20km at the end of the year and I'm very unfit then I
shouldn't expect to tackle 20km to the fullest from the start, start at 5km and
work yourself up.

 Time – you need to set a timeframe within which you want to achieve your
goal, I want to save R150 after 3 months.

 Ethical – the goal should be achieved in an ethical manner. It should not, for
instance, break the law, damage the environment, or mislead customers.

 Recordable – the goal must be recorded, so that it can be reviewed.

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4. Advertising
Businesses use advertising to get the public’s attention to their products or services.

Advertising of a product is important.

Advertising helps you to sell your product or service.

Advertising makes people aware of your business

or your product. You can also use advertising as

an opportunity to provide your customers or potential customers with information about

your product or service. Advertising makes people want to buy your product or service

by highlighting the good features of your product. Through advertising you encourage

people to choose your product or service over a competitor’s. This motivates you to

keep improving on your product, so that your product or service stands out. By

ensuring that your product is of the absolute best quality, you can win customers over

from your competitors. Through advertising you are able to increase your sales, which

brings about a bigger profit for the business. This means that you will have more money

to spend on expanding your market so that you can reach even more customers.

Media used in advertising

Advertising uses different forms of media including

print form, broadcast form or electronic form. It is

important for the entrepreneur to select the correct

media. These include:

 Print media advertisements

 Magazines usually have national coverage

 Pamphlets are distributed in post boxes and on street corners.

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  Broadcast media

 Television advertising is a national form of media

 Social and digital media

 Outdoor media

Keep the following always in mind:

 target market
 cost
 reach

Requirements of a good advertisement

Principles of advertising:

 Only high-quality products and services should be advertised.

 Avoid incorrect or false information.
 Get a striking slogan.
 There should be no bad talk of other products.
 Advertising improves the image of the business.
 Research should be conducted regarding the products or services advertised.

Advertisements should send a message that the target audience will understand. A good
advertisement will follow the AIDA principle, where:

Attention – you need to get the attention of your target market.

Interest – the audience should grow interest about the product.

Desire – a desire must be created so that the audience wants the service or product.

Action – the audience must move into action and go and buy the product or service.

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5. Budgeting (Preparing) for Entrepreneurs Day.

Entrepreneurs use a budget to plan their finances. A budget is

an estimate of the expected income and expected expenses of
the business during a specific period. There are tow kinds of
business budgets: capital budgets and cash budgets.
The cash budget is drawn up to plan the working capital requirements of the business.
This is important because if the cash runs out, the business will have to stop operating.

Planning for Entrepreneurs Day:

1. Do market research – Ask people if they will buy your

product or service, and at what price they are willing to pay.
2. Presentation – People buy with their eyes, make the presentation nice and
tidy, make sure your product's packaging is for the benefit of the product.
3. Admin – Make sure your table or space is large enough for your products, pay
the fee for the space, make sure your products are ready and packaged
correctly.
4. Income and expenses – Set up a statement of income and expenses, on it
you will have to indicate what all your income and expenses were for the day.
You will then be able to determine whether you have made a profit or loss.

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6. Calculations: terms
Cost price – the amount required to produce a product.

Variable costs – are directly related to the manufacturing process, if the number
of products produced then changes the variable costs as well, for example:
materials and raw materials for making products.

Fixed costs – this does not change, it will remain the same no matter how many
products are manufactured, for example, renting the building each month will remain
the same amount, even if your business had no sales.

Selling price – this is the amount asked for the customers to pay, the more profit
the business will make.

 add a profit margin % to the costs

 it should not be too low
 keep an eye on the market to see how much
they are willing to spend on your product
 keep an eye on competitors' prices, try not to be
higher than them

Total cost = variable cost + fixed costs

Unit price = total cost / number of products mad

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