PRACTI

CEANDDEVELOPMENTOFENTREPRENEURSHI
P

PREPAREDBY

C.A.ANAETO

THENATUREANDSCOPEOFENTREPRENEURSHI
P

I
ntr
oduct
ion:

Ent repreneurshiphol dst hekeyt oeconomi cwel lbei ngoft heci ti

zensofany
count ry,i tist he dr iver of any economy ,i ntroduct or y knowl edge about
ent repreneurshipasacour seofst udyi nuni ver
sitiesofl ear ni ngi nspirey outo
det ermine to pur sue a car eeri n Ent r
epreneur ship because t he subj ectis
attractingagl obalat tentionmor et hanev erbef or eandst udent sneedt obe
i
nf estedwi t
ht hespi ritandzealofEnt repreneurialski l
lent r epreneur shipisa
conceptt hatr el
atest oani ndividual ’sabili
tyt ot urnideai ntoact i
on,appl yi
ng
creat i
vityandinnov ationt ocr eate, planandmanageapr ojectandt akingther i
sk
ther eof.Thiskindofmi ndsetorat titudecanbeappl i
edt oanyspher eofl ifeand
those i n paidj ob can appl yt his pr i
nciple ofent repr eneur shi p within an
organi zati
on( i
ntrapreneur ship).Anot herkeyi ssuei nEnt repr eneur shipi screati
on
ofv al
ueoutofnot hi
ngoraddi tionofv al
uet oanexi stingt hingt hi simpl i
es,the
conceptofi nnovationwhi chist hehal lmarkofent repreneur shi p.

Ent
repr
eneur
shi
p

Phi
losophyofEnt repreneurshi
p:phi
losophyisasetofbelief
,att
it
udet
olif
ethat
i
sagui dingprinci
plef orbehavi
or.Phil
osophyofEntrepr
eneurshi
pist
hesetof
bel
i
eforat ti
tudet hatguidesthebehaviorofentr
epr
eneur.Thebehaviorofthe
ent
repreneurgivesimpr essi
onofapersonwill
ingtot
akerisk.

Thekeyphi l
osophyofEnt r
epr eneurisinnov ati
on.Innovati
oni st
heactofdoi ng
somethingnew oranol dthingi nanew andbet terway,havingthemindsetof
valueaddit
ion,thatis,turningapar ti
cul
art hingofv al
ueintosomethingofmor e
valueorsomet hingofnov alueatal li
ntosomet hi
ngofv al
ue.Entr
epreneurshi
pis
notjustrestr
ictedt osmal lbusi nessoper ationsnorpr i
vat
ebusinessoper at
ion
alonebutsuccessf ulpeoplei nwhat everareaofl i
fetheyarefoundarethosewho
areentrepreneuri
alint heirchosenf i
eld.Oneoft hekeyt r
act sofent r
epr eneuris
theapplicati
onofi ngenuityt othesolutionofhumanpr oblem t omeeti dentifi
ed
needs.Yahooandy ahoopl us,kidnapping,bandit
si sami sapplicationofsuch
i
ngenuity,yahooandy ahoopl usisnotabusi nessoranent repreneurialactivit
y,it
i
sacr imeandcr i
mecannotcont ri
buteany t
hingmeani ngfult oeconomi cgr owth
orsocialdev el
opmentandwel lbeingofanynat i
onbutdest ructi
onofeconomy
thephil
osophyofent repreneurshi
pi sallaboutabil
it
yandwi lli
ngnesst otaker i
sk
andacceptr esponsibili
tyf orone’
sownact ions.Ont hi
snot e,Entrepreneursar e
uniquepeoplewhoappl yuniqueefforttobecomeout standingi nwhatt heydo.

Ent
repr
eneur
shi
pMi
ndset

Ent repr
eneur ialmindseti ssel feffi
cacy ,locusofcont r
olandbel ief
saboutone’ s
capabi l
iti
eswhi chhel phi mt ogoi nt her ightdi r
ecti
on. Locusofcont r
oli .
e
i
nt ernallocusofcont rolmeanst hatEnt repreneurbel i
eveint hemselvesthatt heir
accompl i
shment sandset backsar ewi thintheirowncont rolandinfluence,and
thatt heycanaf fecttheout comeoft heiract i
ons.Theydonotbel i
ev ethatt he
successorf ai l
ureoft heirventurewi llbegov ernedbyf ate,luckorotherf actors.
Anent repreneurialmi ndsetisast ateofmi ndt hatanindividualpossesses,t he
wayt heyt hink,andt heiratti
tudet owar dsthepur sui
toft heirgoals,awayof
thinkingt hatmakest hem ov ercomechal l
enges.Ent repreneuri
almi ndseti sa
philosophybywhi chindi v
idualsengagei ncreativeactsregar dl
essoft het y
peof
wor kt heyar eengagedi n( entrep-mindset2009) . Anyman/ womanwi than
ent r
epreneur ialmi ndsethast hemeans,abi l
i
t yanddesi r
et o mat eri
ali
zehi s
vision.

HistoryofEnt r
epreneurshi
p
Nigeria as a dev elopi
ng nation is st i
llhopi ng to bui
ld a moder nized and
st
knowl edgebasedeconomy .The21 Cent uryNi geri
ansandot hernat ionsar e
sti
llexper ienci
ngeconomi cr ecessionchar acteri
zedwi thhi ghunempl oyment
ratesandanal ami ngincr
easei nindividualandsoci etalpov ert
y .Pov ertyisa
deadly di sease,i s a conditi
ons in whi ch income i si nsuff
icientt o meet s
subsistenceneedsasi t
uat
ioni nwhichaper sonhasl i
tt
leornoaccesst oi ncome
and weal th,pov ertyrestr
icts human dev el
opmentand secur ity – pov er
ty
mani festedi t
selfbyexal t
ationofcr ises,highcr imer ate,li
kei ncr easedchi ld
l
abour ,low lit
eracyandhi ghr ateofunempl oyment ,poorheal t
h,i nsecuritythat
resulttoki dnapping,bandit
,v oicel
essness,l ow levelofincome,f oodi nsecur i
ty
and socialexcl
usion madet hegov er
nmentand pol i
cymaker st oint
roduce
ent
repreneurshi
pinschoolcur ri
culum.Poli
cymaker swhonow seet heroleof
ent
repreneurshi
pasapossi blesoluti
ont other i
singproblem ofunempl oyment
andpov ert
y,andinter
estisfocusedonsmal lbusiness,speci
fi
cef for
tsarealso
madet opromoteinnovati
veact i
vi
ti
esandt oimpr oveinnovati
vecapabili
ti
es.Iti
s
now generall
ybelievethatfutureprosperi
tyhingesont hecr eat
ionofv ibr
ant
i
ndigenousbusinessthataredeeplyrootedi
nt helocaleconomy .

In17th cent ury,t

heent repreneurwast akent obeaper sonwhot akesr i
ski nt
he
th
19 cent ur yentrepr eneurwasseenasper sonwhoor ganizeandoper atesan
enterpr i
sef orpr ofi
tmaki ng.I nNi geri
a,thehi st
oryofEnt r
epreneurshipcanbe
tr
aced back t o agr o-preneur shi
p,Agr iculture was t he primary sect or of
product i
onr equi
ringl owcapi t
alforast ar
t.About80%ormor eofNigerianswer e
engagedi nagr i
culturef orper sonalandcommer ci
alpurposest r
adesandl ocal
crafts,blacksmi thingandl eatherproductionet c.wheresomeexampl eofthe
acti
v iti
esofNi gerians.Thi sgav eri
set ot heeconomi cboom oft hel at
e70s.
Agro- entrepreneurs hav e choi ce ofv entur i
ng into poul
tryf arm,f ood stuff
processi ng,f i
shfarmi ng, pastri
esetc.

Entr
epr eneur
scan aswel lv entur
ei nto engineer
ing acti
vit
iesli
kecut t
ing or
poli
shingcurshingengi
neer
ingact i
vi
ti
es,machi neandt oolfabri
cat
ion,
plansand
designser vi
ces,powergenerati
onconst r
uctionandmai ntenanceofpipeli
nes,
weldingandt r
adingi
nbuil
dingmat eri
alsandcinemat ographyetc.

The can ( Entr

epreneurs) engage i
nto services product
ion. Ther e are
opport
unit
iesincomput ersandGSM repair
s,fi
lm product
ionbanki
ng,i
nsurance,
stockt
radi
ngaccount i
ng, medi
calandlegalser
vices,wast
emanagement( r
efuse
coll
ect
ionanddisposal)

Ent
repreneuri
alvent
ur es(thesear chf ornewi dea)
1. Oppor tuni
tyident i
fi
cation:I thas been ar gued t hatunder standing the
opport
unit
yident i
fi
cati
onpr ocessi soneoft hepr i
mar ychallengeswi thi
n
thedomainofent repreneurshi presearch.Togi v eabet terperspect i
veof
thi
sthecreati
vepur suitofideasandt heinnov ationpr ocess,theset woare
keystounderstandingoppor tunit
yandi tsdev elopmentf orentrepreneurs.
Thefir
ststepf oranyent r
epr eneuristhei dentificat
ionofgoodi dea,and
thebestwaytoachi evet hi
si sourownknowl edge( Awar eness).
2. Thepr ocessofknowl edgeand l earni
ng:Entr
epreneurmustuset heir
exi
sti
ngknowl edgebaset oident
if
yanact ualopport
unity
.Thi swil
lhelp
himtoi nt
erprettheunusualsour
cesofi nnovat
ionideasintoapotential
oppor
tunityandent r
epreneur
smustl earnfr
om thei
rexperiencesaswel l
,
usi
ngittotransforminf
ormationi
ntorecogni
zabl
eoppor t
uniti
es.

3. Imaginat
ionandcr eati
vity:Entrepreneursblendimagi nati
veandcr eati
v e
thi
nkingwithasy stematic,logi
calpr ocessabil
it
yandt hiscombi nati
oni sa
keyt osuccessfulinnovation,pot enti
alEntrepr
eneursal way sl ookingf or
uniqueopportunit
iestof i
llneedsorwant ,theyachiev
et hesebyanal yzi
ng
theproblem,tof i
ndoutt hesour ceofpr oblem,how doesi taf fectthem,
whatcost sar
ei nvolv
ed?Cani tbesol ved?Woul dthemar ketpl acepayf or
asoluti
on?Thisbl endcreativethinkingwithsyst
emat i
canal ysis.

- Creativi
ty:Thi
sisthegener at
ionofi deasthatresult
sinthei mprov
ed
effi
ciencyoreff
ecti
venessofasy st
em.Cr eati
vi
tyexistasaprocessand
people.Theprocessisgoalori
ent
ed,itisdesi
gnedtoattai
nasoluti
ontoa
problem.

Thepeopl earether
esour
cesthatdet
erminethesol
uti
onunderst
andi
ng
thepr obl
em sol
vi
ngori
ent
ati
onofindi
vi
dualshel
psdevel
opthei
rcreat
ive
abil
i
ties.

Creative process: The cr eati

ve process i nvolvesseei ng relati
onships
amongt hingst hatot hershav enotseent hesecanbeexpl aininf our
phases.
i
) Accumul ationofknowl edge–cr eativ
ityar egenerat edbyi nvesti
gationand
i
nfor mationgat hering.Iti nvolv
esext ensiver eading,conv ersat i
onswi th
others wor ki
ng i nt he field,attendance atpr ofessi onalmeet i
ngs and
workshopsget t
ingi nformat i
onr elati
vet othepr oblem t r
avelt oanew
pl
aces.
2) Phase 2: I ncubat i
on pr ocess: i ncubation pr ocess occur s whi l
e
entrepreneursengagedi nact i
vi
tiestot all
youtsidet heproblem.At i
mesi t
happenwhent heyar esleeping.Stepst oi nduceincubat ionare
- Engagei nr outi
nemi ndl
essact ivi
ties
- Thinkaboutt heprojectbeforef all
ingasleep.
 - Hangoutwi
thf
ri
ends.

3. Theideaexper i
ence:Thiscreati
veprocessismostexciti
ngbecauseiti
s
whent heideaorsolutiontheentrepr
eneurisseekingisdiscov
ered.As
withtheincubat
ionprocess,newandi nnovat
ivei
deasoftenemergewhil
e
thepersonisbusydoingsomet hi
ngunrelat
edtotheenter
pri
se.

4. Eval
uation and implement at
ion:Ev al
uati
on and i mplementati
on isthe
mostdiffi
cultstepofacr eati
veendeav orbecausei trequi
resagr eatdeal
ofcourageselfdisci
pli
neandper sev
erance, successf
ulEntrepr
eneurscan
i
denti
fyideast hatar
ewor kableandt hattheyhav etheskill
stoimplement
i
tanddonotgi veupwheni tfai
ls.Theycanr ewor kontheidea.
Modifyt oachieveitsfinalshape.Theabov ef ourpointsmadeupt he
cr
eati
vet hi
nkingprocess.
I
ncubat
ion

Knowl
edge Cr
eati
ve
I
dea
Accumul
ati
on Pr
ocess

Eval
uat
ion
Cr
eat
ivet
hinki
ngpr
ocess. I
mplementat
ion

Acr eat
ivepersont endstov i
ew thi
ngsandpeopl eint er
msofhow t heycan
sati
sfyhisorherneedsandhel pcomplet
eapr ojecti
fyouwi shtobecomemor e
i
nnov at
ive and creati
ve,you need tov i
suali
ze yoursel
fi n complementar
y
rel
ati
onshipstothethingsandpeopleoft
hewor l
d.

Youthinkusi ngy ourBr ai

n:expert
soncreativit
y ,i
nnovat
ionandsel fdevel
opment
haveemphasi zedt hei mportanceofdev elopingt heskil
lassociatedwithboth
hemispher esofthebr ai
n.
Therightbr ainhemi spherehelpsapersonunder standanalogi
es,imaginethi
ngs
andsy nthesizeinformat i
on.Thel ef
tbr
ainhemi spherehel
pst heper sonanal
yze,
ver
balizeanduser ationalapproachest
opr oblem solvi
ng.

Thecreati
veprocessinv
olveslogicalandanal
yti
calt
hinki
ngi
ntheknowledge
accumulat
ion,
eval
uati
on,andimplementati
onst
ageswhichcal
l
sfori
maginati
on
i
ntui
ti
on,anal
ogyconcept
ual
i
zat
ion,andsy
nthesi
zi
ngi
nthei
ncubat
ionandi
dea
cr
eati
onstages.

- El i
mi natingmuddl ingmi nd-sets: peopl etendt omakequi ckjudgment
aboutnewt hi
ngs,peopl e,andi deast heypoi ntoutthenegat ivecomponent sof
new idea,becauseoft hepsy chologicaldi scomfortassociatedwithchange.
Somecommonment alhabi t
sthatinhibitcreati
vit
yandi nnovat
ionare.
Eit
herort hinking–peopl esli
fear efill
edwi t
hagr eatdealofuncer taint
yand
ambigui t
y.Butt hecr eativeper sonlear nst oacceptar easonableamount ,of
ambigui t
yinhi s/herwor kandl if
eandt hriveinanuncer t
ainenvir
onmentandf i
nd
i
texhilarati
ng.
- Secur i
tyhunt i
ng
Thecreat i
v eper sonlearnsf orm hismi stakesandmov esont ocreat
ebi ggerand
bett
ert hi
ngs.Li keThomasEdi sonf ai
l
ednumer ousti
meswhensear chi
ngf orthe
corr
ectmat erialtouseinl ightbulb.

- Peopl
er el
yonav erages,st
ereotype,andpr obabi
li
tytheorytomi ni
mize
thei
rri
sks,stereotypearef abri
cat
edabst racti
onsrely
ingont heseabst
racti
ons
canli
mitaper son’
sper cepti
onofthereal enti
ti
esandpossibi
li
tiesi
ntheworld.
Youcanincreasey ourcreati
vecapabil
it
iesbypr act
iceandtaki
ngr i
sk.

- Pr
acti
cetakingsmallri
cki nyourpersonall
if
eandatwor k.
- Whenani deaispresentedtoy ou,fi
rstthi
nkofallt
heposi t
iveaspect
sof
t
his idea.
- Whenli
steningt
opeopl e,suspendinit
ialj
udgmentofthem,theiri
dea,
i
nfor
mationandsimplyli
sten.

Innovati
onandt heEntr
epreneur
Innovati
oni sakeyf uncti
onint heent r
epreneur
ialpr
ocess.I
nnovat
ionist he
specifi
cfuncti
onofentrepr
eneurshi
p.Itisthemeansbywhi cht
heentr
epreneurs
eithercr
eatesnewwealthproducingresources.

I
nnovat
ionistheprocessbywhi chentrepr
eneurconv ertoppor
tuni
ti
es(idea)into
market
ablesolut
ions,ameanst hroughwhi chtheybecomecat al
ystsforchange
i
nnovat
ionprocessstart
swithgoodi dea.
- Innovati
oni sacombi nati
onoft hevisiont ocreateagoodi deaandt he
per
severance and dedication t o remain wi th the concept t hr
ough
 i
mpl ementati
on.
- Innovat
orsmustgooutandl ook,ask,
andli
stenandsati
sfyopport
uni
tyt
hey
gooutandl ookofpot
ent
ialproductuser
stostudythei
rexpect
ati
ons,
val
ves
andneeds.

Typesofi nnovation
1. Inv
ent i
ont hecreationofnewpr oduct(i
ndomi e)service.
2. Extension:t he expansi on ofa pr oduct,ser vi
ces,orpr ocess al
readyi n
exi
stence.
3. Duplicati
on:t hereplicati
onofanal readyexistingproductservi
ceorpr ocess
byaddi ngt heent r
epr eneursowncr eativet
oucht oenhanceofi mprov ethe
conceptandbeatt hecompet i
tion.
4. Synthesis–t hi
sinv olvestaki
nganumberofi deasori t
emsal r
eadyinvented
andf i
ndingawayt hatt heycanf or
m anewappl i
cat
ion.
Inv
ent i
on – eg Thomas Edi son – lightbul b AlexanderGraham – Bel l
tel
ephone

- Pr inci
plesofinnovat
ion
Innovationprinci
plecanbel ear
nedandwhencombi
nedwithopport
unit
ycan
enableindivi
dualstoinnovate.Thefol
l
owi
ngar
ethemajormot
ivat
ioni
nnovat
ion
princi
ples.

1. Beact i
onorient
ed–i
nnov
ator
sar
ever
yact
iveandsear
chi
ngal
way
snew
i
deasoppor
tuni
ti
es.

2. Howi nnov ati

onwor k: Makethepr oductpr ocessorservicessimpl eand
under
st andabl e.
3. Maket hepr oductcust omerbased:i nnov atorsalwayskeept hecust omers
i
nmi nd.Themor eani nnovatorhast heenduseri nmi nd,thegr eat
erthe
chancet heconceptwi ll
beaccept edandused.
4. St artsmal l
:innov atorsshouldstartsmal l
andt henbuil
danddev elop.
5. Ai m hi gh:innov atorsshoul dai
m hi ghf orsuccessbyseeki ngani cheinthe
mar ketpl ace.
6. t ry/ t
ast e/revi
se:i nnov ator
sshoul df ollow theruleofby ,test,andr ev
ise
thishel pswor koutanyf l
owsint hepr oduct,process,
orser vi
ces.
7. Lear nf rom f ail
uresi nnovati
ondoesnotguar anteesuccessf ail
ureoften
giv esr isetoi nnov ati
ons.
8. Foll
owami lestoneschedul e.I
tisi
mportanttohaveaschedul einorderto
planandev aluatethepr oj
ect
9. Rewar dheroicacti
v i
ty-
innovati
veacti
vi
tyshouldber ewardedandgiv
ent he
properamountofr espect.Thisalsomeanst ol
erati
ngand,t oalimited
degree,acceptingfail
ureasameansofaccompl i
shinginnovati
onsforthe
enterpr
ise.
10. Wor k,workandwor k:ittakeswor k–notgeni usormy ster
ytoinnovate
successful
ly.

HOW CANONEBECOMEANENTREPRENEUR

1. Sel
fdi
scov
ery
:Whoar
eyou?
- Whyar
eyouexi
sti
ng?
- Whatdoy
ouneedt
odi
scov
erabouty
our
sel
f.
- Howdoy
ouusey
ourdi
scov
eryt
ocr
eat
easmal
lbusi
nesst
obe
f
inanci
ali
ndependence
- Cr
eat
eanawar
enessoft
hei
rownski
l
landl
ear
nhowt
oengagei
na
smal
lbusi
ness(
pur
posedr
ivenl
i
fe)

2) Howdoy
oust
artl
ear
ningski
ll
?
1. Thi
nki
ng:
-Bei
ngcr
eat
ure,
- Sol
vi
ngpr
obl
ems
- Maki
ngdeci
sions
- Obser
vingmysur
roundi
ng
- Basi
ngy
ouract
ionsonneedsandoppor
tuni
ti
esoft
he
i
mmedi
atecont
ext
.

2. Conduct
ingmy
sel
f:hav
ingconf
idencei
nmy
sel
f,managi
ngmy
l
i
fe,
bei
ngr
esponsi
ble?
3. I
nter
act
ingwi
thpeopl
e:wor
kingwi
thot
her
s
- Accept
ingot
her
sir
respect
iveoft
hei
rcast
e,gender
,soci
al
 st
atus,
whet
hert
heyhav
eadi
sabi
l
ityornot
.
4. Mysaf
etyandsur
viv
al:
cov
id-
19pr
event
ion,
HIV/
AIDS
- Sel
fpr
eser
vat
ion,
fir
stai
d,
- dr
ugabusepr
event
ionet
c.
5. WhatcanIdo?Repai
ri
ngbi
cycl
e,cooki
ng,maki
ngcr
aft
s,
r
eadi
ng,
signi
nget
c.

Exer
cises:
- Descr
ibey
ourski
l
l,doy
ouhav
eone
- Howhav
eyoul
ear
ntt
heski
l
l
- Whatdoy
ouuset
heski
l
lfor
- Howcany
oui
mpr
ovei
nyourski
l
l

2. I
deagener
ati
onf
orsmal
lbusi
ness
Howt
ogener
atei
deaf
orsmal
lbusi
nessi
stoconsi
dery
ourcommuni
tyor
env
ironment
- I
dent
if
yit
sNeedsf
orpr
oduct
ionorser
vices.
- Fi
ndoutt
hedi
ff
icul
tyt
hecommuni
tyi
sexper
ienci
ngandt
hen
det
ermi
ningwhatpr
oductorser
vicescoul
dhel
pov
ercomet
hat
di
ff
icul
tyandhowy
oucanappl
yoneofy
ourski
l
lst
opr
ovi
desol
uti
on
t
otheneeds.
- Exampl
e,y
oucanpr
ovi
demodeoft
ranspor
twher
ethecommuni
ty
hav
etowal
kal
ongdi
stancet
ogett
othemar
ketornei
ghbor
ing
t
own.

Mymar
ket
I
fyoupr
oductorser
vicei
sneededbyagr
oupofpeopl
eor
demogr
aphi
cal
l
yneeded,
ther
eisademandf
ory
ourpr
oduct
.
 Andi
fpeopl
ewhoneedt
hepr
oductorser
vicear
ewi
l
li
ngt
opayf
ori
t,
t
heyar
eyourcust
omer
s.
  Thenumberofcust
omer
sint
hecommuni
tyr
epr
esenty
ourmar
ket
 Peopl
ewhopr
ovi
desi
mil
arpr
oductorser
vicesar
eyourcompet
it
ors
ent
repr
eneurcanest
imat
ethesi
zeofi
tsmar
ketbycar
ryi
ngout
f
easi
bil
i
tyst
udyoft
hat(
productorser
vice)ofcust
omerneeds,
pr
efer
encesandwi
l
li
ngnesst
opay
.
 Whoar
ethepeopl
e(communi
ty)t
hatneedy
ourori
nter
est
edi
nyour
pr
oduct(
mal
eorf
emal
e,i
ncomest
atus,
chi
l
drenorol
d).
 Fi
ndoutwhatat
tracty
ourpr
oduct
/ser
vicet
othem whydot
heyl
i
keor
di
sli
key
ourpr
oduct(
shape,
,si
ze,
col
ouret
c).

3. Ar
etheywi
ll
ingt
opayacommer
cialpr
icef
or:
 Fi
ndoutwhet
hert
heywi
l
lal
way
swantt
obuyt
hepr
oductr
egul
arl
yor
seasonal
l
yIsust
ainabl
e)?Orwi
l
ltheyst
opbuy
ingi
tcompl
etel
y
unsust
ainabl
e
 Howmanyofmypr
oduct
sorhour
sofmyser
vicewi
l
ltheyneed?
 Wher
eshoul
dthepr
oductbeav
ail
abl
e(l
ocat
ionofscal
espoi
nts)
?
4. Pr
ici
ngt
hepr
oduct
Nowst
udenthav
eanawar
enessoft
hei
rtal
entandski
l
ls,
andar
eideasf
or
possi
blesmal
lbusi
nesses,
pri
cingt
hepr
oduct
/ser
vicei
sthenextst
ep.
-Pr
oductorser
vicemaybeexchangedf
ormoneyorf
oranot
herpr
oductor
ser
vice.
-Fi
xi
ngt
hesel
l
ingpr
iceofapr
oductorser
vicemustt
akei
ntoconsi
der
ati
on,
costofpr
oduct
ionov
erheadcost
,pr
ofi
tandsel
l
ingpr
ice.

Sour
cingofmoneyt
ost
artbusi
ness
Manyi
ndi
vi
dual
swhowantt
ogoi
ntobusi
nessal
way
scompl
ainaboutl
ack
ofmoneyornothav
ingenoughmoney
,butt
hisi
snotal
way
str
ue.
-Tal
ent
,resour
cef
ulnessandhar
dwor
k,ski
l
lar
eal
lasi
mpor
tantasmoney
.
 Youcansour
cef
undt
hrough.
1. I
nter
nal
sour
cewhi
chcompr
ises(
equi
tyi
eper
sonal
sav
ings,
fami
l
yfunds,
mi
crof
inance,
andcooper
ati
veet
c.
2. Ext
ernal
ser
vice(
debt
,bank,
etc)l
oansobt
ainedf
rom bankswi
l
linv
olv
e
r
epay
mentwi
thi
nter
est
.

6. Banki
ng
Anent
repr
eneurneedt
oopenBankaccountf
orhi
sbusi
nessei
thersav
ings
orcur
rentaccountorbot
h.

7. Keepi
ngt
racksofy
ourmoney
I
tisgoodt
okeept
racksofal
lthemoneyear
nedandmoneyspent(
a
r
ecei
ptbook,
anexpensesbookandcashbookf
orr
ecor
ding)
Toensur
ethaty
ourdocument
sar
ekeptsaf
etyandmet
hodi
cal
l
y,each
t
ypeofdocumentshoul
dbekepti
nasepar
atef
il
e.

Communi
cat
ingwi
thmycust
omer
sandbusi
nesspar
tner
s
Communi
cat
ingcl
ear
lywi
thcust
omer
sandbusi
nesspar
tner
sisext
remel
y
i
mpor
tantf
ort
hesuccessofy
ourbusi
ness.
Asuccessf
ulent
repr
eneuri
sent
husi
ast
ic,
cheer
ful
pol
i
teandhel
pful
,ther
efor
e,
t
hemostconv
eyt
hef
oll
owi
ngt
oyourcust
omer
s:

- Ent
repr
eneurshoul
dbehonestbybei
ngf
rankabouty
ourpr
oductor
ser
vicecanhel
pbui
l
dcl
i
ent
str
ustandconf
idencei
nyou.i
eyoushoul
d
notgi
vey
ourcust
omeri
ncor
recti
mpr
essi
onofy
ourpr
oduct
.
- Ent
repr
eneurshoul
dhav
eat
idyappear
ancel
ooki
ngcl
eanandt
idywi
l
l
showt
haty
ouar
eacar
eful
per
son,
aboutt
het
hingsy
oumake.
- Heshoul
dbecour
teous,
alway
sbepol
i
teandf
ri
endl
yev
eni
facust
omer
seemsr
udeordoesnotbuyany
thi
ng.
9. Goodt
imeManagement
Ent
repr
eneurshoul
dmaket
hebestuseofhi
sti
me.Heneedt
oor
gani
ze
hi
sti
mecar
eful
l
y.
- Managi
ngt
imei
sanessent
ial
par
tofgoodbusi
nesspl
anni
ng,
because
t
imei
sar
esour
cest
hatcanhav
eamonet
aryv
alue.Poort
ime
managementcanl
eadt
opr
oductorser
vicenotbei
ngdel
i
ver
edi
nti
me.A
di
sappoi
ntedcust
omermayseekamor
erel
i
abl
ebusi
nesspr
ovi
der
.The
t
imet
akenf
ort
hev
ari
ousst
agesofpr
oduct
ionshoul
dber
ecor
ded,
sot
hat
cl
i
ent
scanbegi
venest
imat
esoft
imebef
oredel
i
ver
y.Theser
ecor
dswi
l
l
beusef
ulf
orpl
anni
ngf
utur
epr
oject
saswel
l
.

10. Obser
vingRul
esandr
egul
ati
ons
Theai
m her
e,i
stoi
nfor
mthest
udent
soft
hel
aws,
rul
esandpr
act
icest
hat
appl
ywhenst
art
ingabusi
nessi
nthecommuni
ty(
env
ironment
)
- Whi
char
eregi
ster
ingabusi
ness
- Lawst
hatgov
ernbusi
nesses
- Thet
axcodef
orsmal
lbusi
nesses
- Pr
ofessi
onal
codesofconductr
elev
antt
ospeci
fi
coccupat
ions
et
c.
Theaut
hor
it
iesmayof
fercer
tai
nfaci
l
iti
esandi
ncent
ivest
oent
repr
eneur
s
st
art
inganewbusi
ness.Thesemayt
aket
hef
orm of
 Gr
ant
stosetupasmal
lbusi
ness
 Mi
crof
inance
 Taxhol
i
day
s
 Legal
aid
 Recogni
ti
oni
nthecommuni
tyet
c.
 Abusi
nessper
sonf
rom t
hel
ocal
communi
tymaybei
nvi
tedt
odi
scusswi
th
par
ti
cipant
showanewbusi
nessi
sst
art
ed,
hecoul
dal
sodescr
ibet
he
unf
oreseenobst
acl
est
hatar
eencount
eredwhenst
art
ingabusi
ness.

11. Managi
ngy
ourwor
kpl
ace
Wor
kpl
acei
swher
egoodsandser
vicesar
epr
oducedorsol
d,suchas
ki
tchen,
fact
oryf
loororshopgoodwor
kpl
acemanagementhel
pssmal
l
busi
nesst
o:
- Cr
eat
ecomf
ort
abl
eandsaf
ewor
kingcondi
ti
onsgoodspace
- Reducemat
eri
aldamageandl
oss(
wast
age)
- Reducet
henumberofwor
krel
atedacci
dent
swor
kpl
acemustbe
keptcl
eanandsaf
eforwor
ker
sandcl
i
ent
s

Mi
cro,
Smal
landMedi
um Ent
erpr
ises
1. Mi
croEnt
erpr
ises–i
sani
ndust
rywi
thal
aboursi
zeofnotmor
ethan10
wor
ker
sor t
otal
costofnotmor
ethanN15mi
l
li
oni
ncl
udi
ngcostofl
and.

2. Smal
l
-scal
eindust
ry–ani
ndust
rywi
thal
aboursi
zeof11-
100wor
ker
sor
at
otal
costofnotmor
ethanN50mi
l
li
oni
ncl
udi
ngcapi
tal
butexcl
udi
ng
costofl
and.
3. Medi
um scal
eindust
ry–Ani
ndust
rywi
thal
aboursi
ze101–300wor
ker
s
orat
otal
costofov
erN50mi
l
li
onbutnotmor
ethanN200mi
l
li
oni
ncl
udi
ng
wor
kingcapi
tal
butexcl
udi
ngcostofl
and.
4. Lar
gescal
eindust
ry–Ani
ndust
rywi
thal
aboursi
zeofov
er300wor
ker
s
orat
otal
costofov
erN200mi
l
li
oni
ncl
udi
ngwor
kingcapi
tal
butexcl
udi
ng
costofl
and.

Gener
almanagementpr
act
icesi
nsmal
lmedi
um ent
erpr
ise
Busi
nessmanagementr
efer
stot
heef
fi
ciental
l
ocat
ionandut
il
izat
ionof
av
ail
abl
eresour
cest
oachi
evet
hepr
e-det
ermi
nedgoal
sofabusi
ness.
- Al
lbusi
nessor
gani
zat
ioni
rr
espect
iveoft
hei
rsi
zeandnat
ureappl
ythesame
gener
almanagementpr
act
ices.
-Manager
ial
pri
nci
plesandf
unct
ionsofl
argecor
por
ati
onsar
eal
soappl
i
cabl
e
t
osmal
lscal
ebusi
ness.
-Ef
fect
ivemanagementofanybusi
nessent
erpr
iseswi
l
lrequi
recar
eful
and
sy
stemat
icpl
anni
ng,
organi
zi
ngst
aff
ing,
dir
ect
ing,
coor
dinat
ingand
cont
rol
l
ingoft
heent
eract
ivi
ti
es.

1.
Planni
ngi
nsmal
lmedi
um ent
erpr
ises–i
tisadeci
sionmaki
ngpr
ocesst
hat
addr
essest
hespeci
fi
cfeat
urest
heent
repr
eneurdesi
ref
ori
tsbusi
ness.
2.
Organi
zi
ngi
nsmal
lEnt
erpr
ise–t
oor
gani
zei
stodi
ff
erent
iat
eandi
ntegr
ate
wor
kact
ivi
ti
es,
thr
ough
-Wor
kanal
ysi
s–t
otal
wor
kloadi
ntot
askl
ogi
cal
l
yper
for
medbygr
oupsor
i
ndi
vi
dual
s.
- Depar
tment
ions:
groupi
ngofempl
oyeesandt
asksi
nal
ogi
cal
andef
fi
cient
manner
.
3.
Coor
dinat
ing–coor
dinat
ionensur
est
hatt
hedi
ff
erentact
ivi
ti
esofabusi
ness
ar
esy
stemat
ical
l
yint
egr
ated.
-I
nachi
evi
ngef
fect
ivecoor
dinat
ion,
ther
eisneedf
oracl
ear
lydef
inedaut
hor
it
y
andr
esponsi
bil
i
tyr
elat
ionshi
p,r
ulesandr
egul
ati
onst
hatar
eunder
stoodand
st
ri
ctl
yfol
l
owed.
4.
Staf
fi
ng–t
hismanagementf
unct
ionwi
l
lcr
eat
eor
gani
zat
ional
posi
ti
onst
hat
mustbef
il
ledbyqual
i
fiedper
sonnel
.
5.
Dir
ect
ing–t
hisi
sthef
unct
ionofsuper
visi
ngact
ivi
ti
esofsubor
dinat
esand
i
ndi
vi
dual
s.
-I
tent
ail
sissuesi
nst
ruct
ionsusi
ngt
het
ool
sofl
eadi
ngmot
ivat
ingand
communi
cat
ing.
6.
Cont
rol
–thi
sist
hepr
ocessofmeasur
ingcompar
ingandcor
rect
ingact
ions
 ofsubor
dinat
est
oensur
ethatpl
ansf
ort
hebusi
nessar
eful
fi
ll
ed.
7.
Deci
sionmaki
ng–peopl
eofal
ll
evel
sinanor
gani
zat
ionmustconst
ant
ly
makedeci
sionsandsol
vepr
obl
em

Faci
li
tyStudy
- Innovati
on,ri
sktaki
ngandv enturecreati
onisthebackboneofev ery
busi
ness.
- Tost art
,nurt
ureandgrowabusi nessi snotaneasythi
ngitrequires–
resources,t
ime,energy
,material
sandmoney .
- Feasibil
it
ystudyisusual
lycarri
edoutbef or
estarti
ngbusi
nessent erpr
ise.
- Ithel
psy outoconductresearchandl ear
nmuchaboutt hebusinesst o
knowt hev i
abi
li
tyofthebusiness.
- Ithel
py outoknowt hepossiblepit
fal
lsandproblemsinthatarea.

Ther
ear
ethreebasicstepsi
nvol
vedi
nent
repr
eneur
shi
pvent
uri
ngt
heyi
ncl
udes.
a) Decisiontogointobusi
ness
b) Feasibil
i
tystudi
esand
c) Startup.

1. Thedeci si
ont ogoi nt
obusiness–becausey ouidentif
iedunsati
sfi
ed
needsandoppor tunit
yiebusinessidea.
* Abusinessi deameansament alpi
ctureofacour seofactiontotakea
givensit
uat i
onsoast ocomeupwi thaposi
tiveresultegitcoul
dbea
productorser vi
ce.
* opportunit
iesarechal l
enges,needs,wantst
hatpoi ntamar kett
o
customer swhowoul dbuytheinnovativ
esoluti
onst hatyoucreat
et omeet
theneedsandpr ovidesolut
ion.

2. Amar ketsurveyorfeasi
bil
it
yst udi
es
Goodbusi nessideai
sthefoundat i
onofbusinesssuccessDef.afeasi
bil
it
y
studyisaninvesti
gat
ionint
ot hepotenti
aloutcomeoft hebusi
ness.I
tis
theprocessofcheckingoutthewor kabi
li
tyandprofi
tabil
it
yofthe
proposedbusiness.

3. Star
tthebusiness
* Feasi
bil
i
tystudyeval
uat
est
het
echni
cal
andeconomi
cvi
abi
l
ityofav
ent
ure.
* Thet echni cal aspect saddr esst hequest ionwi llthebusi nessbe
oper ational whi l
et heeconomi caspect saddr esst hequest i
on‘wi llthe
busi nessbepr ofit
abl e?
* Hi ghr i
sking, techni cal andsensi t
ivebusi nessesr equi recompr ehensi ve
andt horoughf easibi l
ityst udyi .eHe/ shemustseekt hepr ofessional s
ser v i
cesofconsul t
ant sengi neer s,account ant s,mar ket ersandl awy ers.
* Whenconduct i
ngf easi bili
tyst udy ,ent repr eneurshoul df indoutwhet her
thebusi nessi spr opr ietary, i
.ecani tbe.
* Pat ent ed–i nv entor sr i
ght ,owner shipofapi eceofpr oper tyorl icenseor
for mal permi ssionofdoi ngt hebusi ness
* Copy ri
ght–Ri ghtat tachedt ot hewor k,whomaypubl i
sh, copy, distribut
ea
pieceofwr iting.
* trademar k–Awor d, symbol ,orphr aseuset oident ifyapar ti
cular
company ’
s, ahal lmar ks, theaspectf orwhi chsomeoneorsomet hingi s
known.
* Whet herthecostofi niti
al pr oduct i
oni sreal istictoav oidunexpect ed
expenses.
* Doesi thav ev eryhi ghmar gin, grossmar ginar eonet hingt hefinanci al
communi tyunder standswi thoutt hem f undi ngcanbedi ffi
cult.
* Toknowi ft hepot ent ial mar keti slar gei ndet ermi ningt hepot ent ialmar ket
.
* Ent repr eneur smustl ookt hreet of i
v ey ear si ntot hef ut ure, becausesome
mar ket staket histongt imet oemer gee. gt hecel lulart elephone.
* Doesani nitial customer sexi st?
* Whenanent repr eneurcanl istitsf i
rstt encust omer sbynamesi ti sadded
adv antageov ercompet it
or s.
* Ar eadt ogopr oductgi vest hev entur eabi gadv antageov ercompet itors
* Thesepoi ntspr ovidesameansofanal yzingt hei nter nal st r
engt hand
weaknessest hatexi sti nanewv ent urebyf ocusi ngont hemar ket i
ngand
i
ndust rypot ent i
alcr i
ter i
af orassessment .

3. Compr ehensivef easibil

itystudy,incorporatesexternalfactors
a) technical –feasibil
ityanaly si
sofpr oductorserviceslikedesign–
durabilit
yandpr ofi
tabili
ty,productsafetystandardizat
ion,engineer
ing–
machi nest ools.
b) Mar ket–Det erminationofmar ketopportuniti
esandr iskse.gident
ifi
cat
ion
ofpot entialcustomer sandt hei
rdomi nantcharacters,potenti
almarket
share, sal
esv olumeet c.
c) Financi al–Anal y
sisoff inancial f
easi bi
li
tyandr esour ces, i.
efi
xedand
currentasset s,necessar ywor kingcapi tal,r
equiredbor r owingcostof
borrowi ng, potenti
al sourcesf orf undsandoper atingcost .
d) Organi zational –Anal ysisofor ganizat i
onal capabili
tiesandper sonnel
requiremente. gper sonnel r
equi rementt hei
rskilll
ev el,andpersonal
charact eristi
csofpot entialempl oy ees,manager i
alrequi rementand
determi nat i
onofi ndividualresponsi bili
tyetc
e) Compet i
ti
v eAnalysis–Anal ysisoft hecompet i
torse. g
- Exi sti
ngcompet i
tors
- Si ze
- Fi nancialresources
- Mar ketentrenchment

- Pot
ent
ialreact
ionofcompeti
tor
stonewcomer
s,pr
icecut
ti
ng,
aggr
essi
ve
adv
ert
isi
ng.Int
roduct
ionofnewproduct
s.

Legali
ssuesinf easibili
tyst udy
a) Feasi bil
i
tyst udyhel pent repreneurtoascert
ainandav oidunprofit
able
busi
nessorpr oj ects.
i
. Toprovi
der eli
abl eandsaf epr oduct
sandservices.
i
i. Theneedt omaket hewor kplacesafeforemployees( secur
it
y )
i
ii
. Thenecessi tyf orpat ents,tr
ademar ks,
andcopyr ightstoprotectsone’
s
i
nventi
on.
i
v. Regi str
ationofbusi nessnamewi th(C.
A.C)corporateaffai
recommi ssion.

Impor
tanceoff easibil
itystudy
1. I thelpent repreneur s:Toascer tainandav oidunprofi
tabl
ebusi nessor
projects.
2. Toknowt hel evelofr i
ski nvolvedi napar t
icul
arbusinessandhowt o
mi ni
mi zesuchr isks.
3. I thelpt hem toi nvestinapr of i
tablebusiness
4. I thelpent repreneur stoassesshi sstrengthandweaknessandt o
5. Awel ldocument edf easibili
tyst udycanbeusedt osecureloansf r
om
banksandal soest ablishlinkswi thsuppli
ers,i
nsurer
sandi nvestors
6. I tisatool usedt omeasur ebusi nessperformanceshor t
lyaft
eri t
s
establi
shment .
7. I trevealst het ot
al costofest ablishi
ngabusi ness
8. Andal
sor
eveal
sthecal
i
berofper
sonnel
empl
oyed.

I
NTRODUCTI
ON
BOOKI
NGKEEPI
NG

Thisisthefir
stunitofthi
scourse-Int
roductiontoAccount i
ngand
thi
swi l
ltakeyouaboutonehourtostudy.Int hi
sunit,youwilllearn
aboutthedefi
nit
ionandobj
ecti
vesofbook-k eepi
ng,needf orkeeping
recor
dsandt y
pesofaccounts-Per
sonalaccounts,Realaccountsand
Nominalaccounts.

Def
ini
ti
onandObj
ect
ivesofBook-
Keepi
ng

Def
ini
ti
onofBook-
Keepi
ng

Book-Keepi
ng can be defined as "the Science ofrecording and
cl
assify
ing al
lthe t r
ansacti
ons ofa busi ness which i
nv olv
et he
tr
ansferofmoneyormoney '
swor th.Soast oshow,withoutundue
delay
,thefi
nancialposi
ti
onoft hebusi nessinr el
ati
on t
oi tself
,the
ownersorshareholder
s,andoutsidepersons"
.

TheObject
ivesofBook-Keeping
From theabovedef i
nit
ion;you shoul
d beablet o under
stand t
he
fol
lowi
ngobject
ivesofbook-keepi
ng.Theobjecti
vesofbook-keepi
ng
canbeconcisel
ystat
edinav ari
etyofways.Forexamples,i
tishel
pful
tosett
hem outasfol
lows:

1. Toshowatanypoi ntoft i
metheamountinvest
edinthebusi
ness
by each ownerorshar eholderand the amountowi ng by t
he
busi
nessto each outside person and to the busi
ness by
eachout
sideper
son.

2. Toshow atanypointort
imetheval
ueoft
hepr
oper
ti
esofal
l
ki
ndsbel
ongi
ngtothebusi
ness;
and

3. Toshowtheincomeandex pendi
tur
eandpr
ofi
torl
ossesoft
he
busi
nessf
oraperiodoft
ime.
NeedforBook-
Keeping

From t he abov
e defini
ti
on and obj ectiv
es ofbook -
keepi
ng,itis
necessaryforustostatetheneedf ork eepingrecords.Youwillagr
ee
withmet hatever
yi ndi
vidualper
sonal way skeepr ecordsf
ormany
reasons.Whatareyourownr easonsfork eepingrecords?
I
nev er
ybusi ness,
iti
shighl
ydesir
abl
eandoftenlegal
l
ynecessarythat
certainrecordsshouldbek ept.Letusnow lookatt hoseessenti
al
recordswhi chcanbeclassi
fi
edunderfi
veheadi
ngs:

Capi
tal

Everyproprietorofabusi nesshasi nvest

edmoneyi nhisbusiness.
Thismoneyi susedt obuygoodsandser vi
ceswhi chhei nt
endstosel l
atalaterdateand, ver
yof t
en,tobuyt hepremises, f
ixt
ures,machinery,
etc.r
equired t o carr
y on t he business.The amountof money
whichhei nv estsinhisbusi nessi sknownast he'CAPI TAL'
.Ev en
when abusi nessi sownedandper sonall
ymanagedbyonepr opriet
or
i
tisobv i
ouslydesirabl
et hat
,ar ecordshouldbek eptoft heCapitalhe
hasinvestedi nthebusiness,butwhenabusi nessi sownedbymor e
thanonepr opriet
orarecordoft heCapitali
nvestorbyeachi sessential
i
fjusti
ceandequi t
yaretopr evai
l.

Asyouunderst
andthat,nowadays,t
hegreaterpartofbusi
nessacti
vi
ty
i
scarri
edonbycor porat
ebodies,suchasCooper ati
veSociet
yand
Joi
ntStockCompanies.TheCapi t
aloftheseor gani
sati
onsisalways
cont
ri
butedbymoret hanoneperson.

Theseper sonsar
e call
ed member sofCooper ati
ve Societ
iesthose
ofJoi ntStockCompani es are Sharehol
ders and t
he Capi t
althey
contri
buteiscall
ed"ShareCapi t
al".Youshouldnotethatoneoft he
fi
rstessential
sinsuchanor ganisati
onisf oryoutok eepaccurate
records of the amount of shar e Capi
talcontri
buted by each
sharehol
ders.

Amount
sOwi
ngbyt
heBusi
ness(
Liabi
l
iti
es)

Apar
tfr
om theaboverecor
d,weshoul
dal
sok
eepr
ecor
dforamount
s
owedbythebusi
ness.

I
n mostbusi ness,goods and serv i
ces are boughton cr edit
.The
paymentt hathast obemadef ort
hisi smadeatsomef ut
uredat e.
Thisisanessent i
alfeatur
eofmoder nbusinessact i
vi
tyf or,i
nt he
absenceofar rangementsoft hiskind,businesscoul dnotber unso
smoot hl
y.Forexample,itwoul dbev eryinconvenientifacooper ati
ve
societ
yhadpaycashondel i
veryforallthe goodsi tpurchases.Iti s
ofthe ut mosti mpor
tancet hattheamountwhi chi sowingt oeach
personwhohassuppl i
ed goods and ser vi
ces t o the busi ness
should be accur
atel
yrecor
dedsothatonecanseeatagl
ancet
he
exactamountthathastobepai
dtoeachper
son.

Likewise,whenaper sonloansmoneyt oabusinessitisessent

ialto
keepar ecor
doftheamountl ent.Youshoul
dnotethattheseamount
owi ng bya businesson accountofgoodsorser vicesormoney
receivedarecal
l
ed" LI
ABILI
TIES":Thi
ster
m wil
lbemoref ul
lyexpl
ained
l
ater

Amount sOwi ngt oaBusi

ness( ASSETS)
As discussedabov e,you shouldalso notethat
,int he sameway
as businesses buy goods orser vi
ces on credi
t,because itis
convenientt
ot hem,theyfr
equent l
ysellgoodsorser
vicesoncredi
tto
sui
ttheconv enienceoft
heircustomers.

Andi nthesamewayexpl ai
nedabove,itisequal l
yessentialtokeepa
recordoftheamountowingt oabusinessbyeachper son(theDebt or
)
whom goodsorser v
iceshav ebeen suppl ied.Notet hatal lthese
amount sowingto abusi nessfor
med par toft he" Assets"oft he
business.Thi
sal
sowillbemor ef
ull
yexplainedl at
er.

Asyouunderst
andthat,
nowadays,t
hegreaterpartofbusi
nessacti
vi
ty
i
scarri
edonbycor por
atebodi
es,suchasCooper ati
veSociet
yand
Joi
ntStockCompanies.TheCapit
aloftheseor gani
sati
onsisalways
cont
ri
butedbymorethanoneperson.

Theseper sonsar
e call
ed member sofCooper ati
ve Societ
iesthose
ofJoi ntStockCompani es are Sharehol
ders and t
he Capi t
althey
contri
buteiscall
ed"ShareCapi t
al".Youshouldnotethatoneoft he
fi
rstessential
sinsuchanor ganisati
onisf oryoutok eepaccurate
records of the amount of shar e Capi
talcontri
buted by each
sharehol
ders.

Proper t
yofAl lkindsbel ongingtoaBusi ness
Apartfrom theamount sowi ngtoabusi nesswhi chf
ormedpar tofthe
Asset,ev er
y busi ness has pr oper
ti
es ofv ar
ious ki
nds,e.g.l and,
bui
ldings,machi nery,f
urnitur
e,stocksofgoodsf orsale,cashetc.Iti
s
ver
ydesi r
ablet hatrecordsshouldbek eptofthese.

Youshoul
dnotethatproper
ti
esofal
lki
ndsaswel
lasamount
sowi
ng
toabusi
ness,
arecal
led"ASSETS"
.

I
ncomeandEx
pendi
tur
e
Everybusi nesssell
sgoodsorser v i
ces.Thev alueofthesesalesi s
sai
dt obei ncome of t he business. The cost s i nvol
ved i n
purchasing,manufactur
ing,orprovidi
ngt hese goodsorser vi
ces,or
i
n pr epari
ngt hem f orsale and distr
ibuti
ngthem arek nown as
expenditure.Forreasonwhichwil
lbegi v
enl at
er,t
hesecostsareoften
ter
medr ev enueexpendit
ure.

The amountby whi ch the income ofa busi ness exceeds the
expendi
tureduring a given peri
od isthe "PROFI T"forthe peri
od.
Notet hatsomet i
mest heexpenditur
eexceedst hei ncomeduringa
peri
od,andt heexcessisa" Loss".I
tisessenti
althattheprofi
torloss
ofabusi nessf orat r
adingper i
od shoul
dbek nown,andf ort hi
s
purposerecordsofincomeandex pendi
tur
ear ekept.

Ty
pesofLedgerAccount
s

Ledgeraccountscanbecl
assi
fi
edi
ntot
hree-Per
sonal
,Realand
NominalAccounts.

I
tshouldbecleartoyounow whatobj ecti
vesofbook-keepi
ngare.I
f
yes,how arethe object
ives ofbook-keepi
ng achi
eved?A simple
answertothisquesti
onist hattheobjecti
vesareachievedthr
ough
keepi
ngappropr
iat
eledgeraccounts.

Thenwhatdoy ouunderstandbyledgeraccount?
Answer—Ledgeraccounti saledgerrecor
d( i
nasummarisedform)of
al
lbusinesst
ransact
ionsthathavetakenplacewithapar
ti
cular
personorthi
ngsspecif
ied.

Per
sonalAccount
s

Thesear etheaccountsofindiv
idualpersons,
shareholder
s,r
egister
edbusiness
organisat
ionsetc.Personalaccountshow atanypoi ntoftimet heamount
i
nv est
edi nthebusi
nessbyeachownerorshar eholdersandtheamountowi ng
by the business to an outsi
de person and tot hebusi
nessbyanout side
person.From theabov estatement,therearethreemai nclassesofpersonal
accounts:
1. Shar ehol
dersAccounts
2. Cr edit
orsAccountsand
3. Debt orsAccounts

RealAccount
s
Thesear
eaccountsoft
angi
blethi
ngs.Theyshowatanypointofti
met heval
ues
ofthepr
operti
esofal
lki
ndsbelongi
ngtot hebusi
ness—e.g.those thi
ngs we
cansee,touchandmov e— land,buil
ding,motorvehi
cl
e,machiner
y(Asset
s).

Nomi nalAccount s
Nomi nalaccountsareaccountsofi
ntangibl
ethingse.g.i
ncomeandexpenditur
e,
prof
itandl ossesofabusinessforaperi
odoft i
me.
Asexpl ainedearli
er,notethateachoft heabov et hr
eeobj ect
ivesofbook-
keepingisachievedbykeepingadiff
erentkindofledgeraccounts.

Accounti
ngisthear tofrecor
ding,classif
yingandsummar i
singinasigni
fi
cant
mannerandi ntermsofmoney ,transactions,aneventswhichare,i
npart,at
l
east,off
inanci
alcharact
erandinterpret
ingt her
esul
tsther
eof".

Anotherdefi
nit
ionwhi
chisl
essrest
ri
cti
veinter
pret
saccounti
ngas"thepr
ocess
ofidenti
fyi
ng,measur
ingandcommuni cat
ingeconomicinfor
mati
ont oper
mit
i
nformedjudgmentsanddeci
si
onsbytheuser sofi
nfor
mation"
.

Def
ini
ti
onofAccount
ancy

Oneof
tenhearst
hewor ds" Account
ancy"and"Accounti
ng"asiftheyar
eoneand
thesamething.Ofcoursether
ei ssomediff
erencebetweenthem,atleast
i
nt heUnitedKingdom t owhi chthepracti
ceofaccount ancyi
nNiger
ia
i
sclosel
yassociated.Account
ancyistheworkorpr of
essionofan
account
ant

BUSI
NESSI
DEASANDOPPORTUNI
TIES

Busi
nessv
ent
uredeal
swi
tht
hesat
isf
act
ionofunsat
isf
iedconsumerneeds,
ent
repr
eneur
shav
einnat
etal
enti
dent
if
icat
ionandsei
zi
ngoppor
tuni
ti
est
oinv
est
i
nandsat
isf
act
ion.Theyhav
eaney
eforchangespossi
bil
i
tiesofnew pr
oduct
,
unexpl
oit
edr
aw mat
eri
alssuppl
i
ersandunt
appedmar
ket
s.Theyhav
evi
sions,
dr
ive,
ini
ti
ati
veandwi
l
li
ngnesst
otakeconsi
der
abl
eri
sk.

Abusi
nessi
deameansament
alpi
ctur
eofacour
seofact
iont
otakeona
gi
vensi
tuat
ionsoast
ocomeupwi
thaposi
ti
ver
esul
t.Forexampl
eitcoul
dbea
pr
oductorser
vice,empl
oymentandapr
ofi
te.
t.
c.Toachi
vet
hist
hei
deamust
hav
eRealdemandmeani
ngt
hati
tmustr
espondposi
ti
vel
ytounf
ulf
il
ll
edmar
ket
needs,
thei
deamustbecompet
it
ivei
ethemar
ketof
fer
ingmustpr
ovi
deabet
ter
v
alue t
othe cust
omer
,the i
dea mustbe abl
eto pr
ovi
de l
ong l
ast
ing and
appr
opr
iat
eret
urnoni
nvest
ment
,Resour
cesandski
l
lst
oexpl
oitt
hei
deamustat
t
he di
sposaloft
heent
repr
eneur
.Ther
esour
cesmayasset
s,r
awmat
eri
alsand
l
abour
.fi
nal
l
y,agood busi
nessi
deamustmeett
hegoalandaspi
rat
ionsoft
he
ent
repr
eneur[
OBJECTI
VE]whi
ch may be t
o maxi
mize pr
ofi
tand gai
n of
compet
it
iveadv
ant
age.

Whati
soppor
tuni
ty:Li
ter
all
yoppor
tuni
tymeansachanceaf
avor
abl
eoccasi
on
f
ory
out
odosomet
hingpr
ofi
tabl
e.Oppor
tuni
ti
esar
echal
l
enges,needswant
s
t
hatpoi
ntamar
kett
ocust
omer
swhowoul
dbuyt
hei
nnov
ati
vesol
uti
onst
hat
y
oucr
eat
etomeett
heneedsandpr
ovi
desol
uti
on,sat
isf
ythewant
sandmeet
t
hechal
l
enges.Ent
repr
eneur
sspotcr
eat
eandexpl
oitoppor
tuni
ti
esi
nmanyway
s
whi
chi
ncl
udes:

1.Demand:Ent
repr
eneurhav
econst
antquestf
ori
nfor
mat
ionandknowl
edge
aboutt
hei
rmar
ket
s(New mar
ketOppor
tuni
ti
es)abi
l
ityt
oident
if
ythe
pr
esentandpot
ent
ialneedsoft
hei
rcust
omer
s,beabl
etoknow what
makesy
ourpr
oductandser
vicedi
ff
erentf
rom t
hoseofy
ourcompet
it
ors,
bei
ngabl
etoi
dent
if
ypr
obl
emsandpot
ent
ialpr
obl
emsi
nyourcur
rent
mar
ket
,hi
gh demand/changei
n consumerpr
efer
ence and t
ast
eand
unsat
isf
ied mar
ketneed cr
eat
es oppor
tuni
ti
es al
so means economi
c
di
slocat
ionssuchasboomsorf
ail
uret
hatal
socr
eat
eoppor
tuni
ti
es.

2.Moni
tor
ingofbusi
nessenv
ironment
:Busi
nessoppor
tuni
ti
esar
elodged
sol
i
dlyi
nal
llev
elsofenv
ironment
;int
ernalext
ernaloppor
tuni
ti
est
hat
emer
ge most
ly f
rom env
ironment
al changes cr
eat
es busi
ness
oppor
tuni
ti
esl
i
ke,asuddenbanoft
hei
mpor
tat
ionofsomecommodi
ti
es
cancr
eat
esoppor
tuni
tyf
orent
repr
eneurt
opr
oducesuchcommodi
ti
esf
or
t
hel
ocalmar
ket
sincr
easei
nwagesandsal
ari
esbyt
hegov
ernmentand
 t
hepr
ivat
esect
orsmaybr
ing aboutoppor
tuni
ti
esf
orent
repr
eneurt
o
expandi
nexpandi
ngmar
ket
sbymeansofcl
oseandconst
antmoni
tor
ing
changesi
nanenv
ironment
.Themoni
tor
ingcanbedonet
hroughmany
way
s such as r
eadi
ng ofnewspaper
s,magazi
nes,busi
ness j
our
nal
s,
di
scussi
onwi
thf
ri
ends,
col
l
eaguesanduseoft
hei
nter
net
.

3.I
mpor
tsubst
it
uti
on pol
i
cyofGov
ernment
:in a nar
row def
ini
ti
on.Thi
s
pol
i
cyi
sther
educt
ionott
heel
i
minat
ionoft
hei
mpor
tat
ionofspeci
fi
c
commodi
tyt
hatcanpr
oducel
ocal
l
yi.
e.t
hosedomest
icpr
oduct
s,mar
ket
andser
vicest
hatcanoper
atef
reel
yinadomest
icmar
ket
.Br
oadl
y,i
tcan
bedef
ineasast
ruct
uralchangef
rom f
orei
gndependencybyshut
ti
ngout
i
mpor
tst
oani
nvest
menti
ncent
ivecr
eat
ingi
deas.I
tper
mit
srepl
acement
ofi
mpor
tsbydomest
icpr
oduct
ionofcer
tai
ncommodi
ti
es.Thei
mpactof
t
he pol
i
cyi
sto cr
eat
e gaps i
nthe economyf
orobv
ious i
nvest
ment
oppor
tuni
ti
es.

4.Exper
tor
ient
edpr
oduct
s:mostf
ir
mst
hatengagedi
nexpor
tar
esmal
land
anumberofgoodsexpor
tedar
eunpr
ocessed.Thi
sty
peofact
ivi
tymay
cr
eat
enewmar
ket
sfori
nvest
ment
.Inal
lnat
ionsoft
hewor
ldgov
ernment
suppor
tsexpor
ti
ngact
ivi
ti
esast
heyhel
pthebal
anceofpay
ment
.Ify
our
pl
an i
sto expand y
ourbusi
ness i
nto expor
ti
ng,y
ou wi
l
lfi
rstofal
l
det
ermi
ney
ourpot
ent
ialpr
oductcapaci
ty.Thedi
ff
erencebet
weencur
rent
pr
oduct
ionandpl
antcapaci
tyi
sthepot
ent
ialpr
oduct
ionav
ail
abl
efor
expor
twhi
chmaypr
ovi
denewmar
ketf
orpr
oductorser
vice.

5.Choi
ceofl
ocat
ion:Locat
ionofbusi
nesspl
aysasi
gni
fi
cantr
olei
nthe
successandf
ail
ureofbusi
nessi
deas.Agoodl
ocat
ioncanf
aci
l
itat
emany
act
ivi
ti
es f
or a new v
ent
ure; whi
ch i
ncl
udes access t
o capi
tal
i
nfr
ast
ruct
uralf
aci
l
iti
esl
i
kegoodr
oad,hospi
tal
sandschool
s,cl
oset
o
sour
ceofr
awmat
eri
alsandact
ualcust
omerandabadl
ocat
ioncanmake
 t
heconductoft
hebusi
nessunf
rui
tf
ul,di
ff
icul
tandcost
ly.Abusi
nessi
n
st
ati
oner
ies shoul
d be l
ocat
ed i
nthe ur
ban ar
eas wher
ether
e ar
e
consumer
sofst
ati
oner
iesl
i
keschool
s,f
act
ori
es,
hospi
tal
swhoconsumes
suchpr
oduct
.

6.Av
ail
abi
l
ityofResour
ces:Busi
nessact
ivi
ti
esr
evol
vesr
oundr
esour
ceand
t
hemai
nresour
cear
efi
nance,mat
eri
alsandhumanr
esour
cest
hatar
e
usual
l
yinshor
tsuppl
y.Theav
ail
abi
l
ityoft
hesev
italr
esour
cescanease
t
hei
nit
iat
ionorexpansi
onofy
ourbusi
nessbyusi
ngacompr
ehensi
ve
busi
nesspl
an.

7.Pr
ivat
izat
ionofpubl
i
cEnt
erpr
ise:
Thi
sist
hepol
i
cymadebygov
ernmentby
changi
ng t
heowner
shi
p st
ruct
ureofgov
ernmentent
erpr
iset
o pr
ivat
e
owner
shi
pcr
eat
esgap f
ornew i
nvest
orswho becomesnow t
henew
ent
repr
eneur
.Ther
elev
antagencyofgov
ernmentpr
ovi
desoppor
tuni
ti
esof
f
inanci
ng t
heacqui
sit
ion oft
heshar
esoft
heseent
erpr
isesbywhi
ch
pr
ivat
einv
est
orscanav
ail
themsel
ves.

8.Demogr
aphi
cchange:Changesi
npopul
ati
onsst
ruct
urecr
eat
esaneedad
oppor
tuni
ti
es.Thei
ncr
easei
nthepopul
ati
onoft
hey
oungov
ert
heaged
coul
dcr
eat
emar
ketf
orbabypr
oduct
sandser
vices.Thei
ncr
easei
nthe
popul
ati
ons ofwomen ov
ermen equal
l
y can cr
eat
e oppor
tuni
ti
es i
n
womenpr
oduct
s.

9.Technol
ogi
calDi
scov
eri
es:Newdi
scov
eri
esi
ninf
ormat
iont
echnol
ogi
es
hav
ecr
eat
edandst
il
lcr
eat
eoppor
tuni
ti
esi
nthet
echnol
ogy–basedor
r
elat
edv
ent
uresl
i
kecaf
es,
e–busi
ness,
e–banki
ngandsoon.

Char
act
eri
sti
csofent
repr
eneur

1.Sel
f – conf
idence: ent
repr
eneur
s hav
e conf
idence i
n t
hemsel
ves
i
ndependence,i
ndi
vi
dualand opt
imi
zi
ng.Bei
ng a man ofi
dea,v
isi
on,
 l
eader
swhoi
sreadyt
owor
khar
dtopr
ovi
desol
uti
ont
opr
obl
ems.Set
goal
s,mot
ivat
edt
oachi
evet
hosegoal
sandsel
fdi
sci
pli
ne.

2.Task– r
esul
tor
ient
ed:Needf
orachi
evement
,per
sonal
i
tyt
rai
tpr
ofi
t–
or
ient
ed,per
sist
ence,per
sev
erance,Det
ermi
nat
ion,Har
d – wor
k,dr
ive,
ener
gy,
ini
ti
ati
ve.

3.Leader
shi
p:Leader
shi
pbehav
ior
,get
sal
ongwel
lwi
thot
her
s,r
esponsi
ve
t
osuggest
ionsandcr
it
ici
sms

4.Ri
sk– t
aki
ng:Theyhav
eri
sk–t
aki
ngabi
l
ity
,li
keschal
l
engeshet
akes
bot
hcal
cul
atedr
iskwhet
herf
ormal
ori
nfor
mal
risk.

5.Or
igi
nal
it
y:They ar
einnov
ati
ve peopl
e,cr
eat
ive,f
lexi
ble(
open mi
nd)
Resour
cef
ulness,
Ver
sat
il
eandknowl
edgeabl
e

6.Fut
ure–or
ient
ed:
for
esi
ght
,per
cept
ion

7.Aposi
ti
veat
ti
tude,det
ermi
nat
ion,exper
ience,per
sist
enceandpl
ainhar
d
wor
kwhi
chmaket
hem t
obesuccessf
ul

8.I
nter
nalLocusofcont
rol
:Needf
ori
ndependenceandaut
onomy
,ener
gy
andcommi
tmenti
nter
nall
ocusofcont
rol
,successf
ulent
erpr
isebel
i
evei
n
t
hemsel
vest
heydon’
tbel
i
evet
hatt
hesuccessorf
ail
ureoft
hei
rvent
ure
wi
l
lbegov
ernedbyf
ate,l
uckorsi
mil
arf
orces.Theybel
i
evet
hatt
hei
r
accompl
i
shment
sandset
backar
ewi
thi
nthei
rowncont
rolandi
nfl
uence
andt
hatt
heycanaf
fectt
heout
comeoft
hei
ract
ions.

Ty
pesofent
repr
eneur
s

1.Sel
fempl
oyedent
repr
eneur
:Thesear
eindi
vi
dualwhoper
for
m most
lyon
f
ullt
imebasi
sdoal
lthewor
kint
hei
rent
erpr
iseandenj
oyal
lthepr
ofi
t
ar
isi
ngf
rom t
hei
rsweat
.Sel
f–empl
oyedent
repr
eneur
scanbef
oundi
n
f
ami
l
y–henst
ores,
agent
s,l
awy
er,
account
ant
se.
t.
c.champi
onpr
omi
sing
 i
deasandcar
ryt
hem t
hrought
ocompet
it
ion

-I
nnov
ati
on: Or
igi
nat
ion shoul
d suppor
t ent
repr
eneur
s new i
deas,
exper
iment
ati
onandcr
eat
ivepr
ocesst
hatcanl
eadt
onew pr
oductor
pr
ocesses

- Ri
skt
aki
ng:Thi
siswhenanent
repr
eneuri
swi
l
li
ngt
ocommi
tsi
gni
fi
cant
r
esour
ces and bor
row heav
il
yin or
dert
ovent
urei
ntot
he unknown
busi
ness.

- Tobepr
oact
ive:t
obepr
oact
ivemeansact
ingi
nant
ici
pat
ionoff
utur
e
pr
obl
emsandoppor
tuni
ti
es,pr
oact
ivef
ir
msar
efor
war
dthi
nker
s,f
astt
o
actandar
eleader
srat
hert
hanf
oll
ower
s.Theyshapeandcr
eat
ethei
rown
env
ironment
.

- Compet
it
ive aggr
essi
veness:Thi
sist
he met
hod f
ir
ms di
rect
ly and
i
ntensel
ychal
l
engecompet
it
orsI
n or
der
stoachi
eveent
ryori
mpr
ovei
ts
posi
ti
ont
oout
smar
tone’
sri
val
sint
hemar
ketpl
acebyst
ri
ki
ngf
astt
o
beatcompet
it
orst
othepunch,
tot
ackl
ethem head–t
o–headt
oanal
yze
andt
argetcompet
it
ors’
weaknesses.

- Goodmanagement
:Manager
sshoul
ddel
egat
eresponsi
bil
i
ty,encour
age
peopl
etoexer
ciset
hei
rowni
nit
iat
iveandbet
oler
ateofmi
stakes.Dot
his
by
,

- Li
stent
oany
onewi
thanor
igi
nali
deanomat
terhow st
upi
ditsoundsat
f
ir
st.

- Encour
agepeopl
edon’
tni
tpi
ck

- Hi
regoodpeopl
eandl
eav
ethem al
one.

- Encour
ageexper
imentdoodl
i
ng.
Theseabov
epoi
ntsemphasi
zet
her
oleofi
nit
iat
ivesand ent
repr
eneur
ial
oppor
tuni
ti
est
hatexi
stev
enmi
stakeorf
ail
uremaki
ngcor
rectdeci
sioni
san
essent
ial
qual
i
tyofsuccessf
ulent
repr
eneur
s.Hav
econf
idencei
nyour
sel
fand
i
nyourempl
oyee’
sabi
l
ityaswel
lasi
nther
esul
tofy
ourdeci
sion.

2.Oppor
tuni
sti
cent
repr
eneur
s:t
hoseent
repr
eneur
swhost
artabusi
ness
andst
ri
vet
oexpandasf
astaspossi
blei
nor
dert
obeempl
oyot
her
s.

3. I
nvent
ors:I
ndi
vi
dual
swi
thspeci
ali
nvent
iveandcr
eat
iveabi
l
iti
es,who
i
nventanddesi
gnapr
oductandgoaheadt
ocr
eat
ecompani
est
odev
elop
t
hepr
oductpr
oducedandsel
lit
.Peopl
eli
keEl
iwi
neyandThomasEdi
son
whoi
nvent
edt
hei
nter
netandot
herhi
ght
echnol
ogypr
oduct
s

4.Pat
ter
nmul
ti
pli
ers:Thesear
eent
repr
eneur
swhoi
dent
if
yandt
akeon
ot
herpeopl
e’
sideasbaseont
hem cr
eat
ethei
rownbusi
ness.e.
gfr
anchi
se
oper
ator
sorchai
nst
ores.

5.Economi
esofscal
eexpl
oit
ati
on:t
hesear
eent
repr
eneur
swhooper
atei
na
hi
ghv
olumeofscal
eswhi
cht
heybenef
itf
rom byof
fer
ingdi
scountpr
ice
andoper
ati
ngwi
thev
eryl
owov
erhead.

6.Acqui
rer
s:Thesear
eindi
vi
dual
whot
akeov
erbusi
nessal
readyest
abl
i
shed
byanot
herper
sonanduset
hei
rowni
deast
omakei
tsuccessf
ul.Whena
f
ir
m suf
fer
sfi
nanci
alpr
obl
em bankr
upt
s.Fr
esh managementmaybe
r
equi
redt
oinj
ectf
reshi
deast
osav
ethebusi
ness.Takesov
eranex
ist
ing
busi
nessr
athert
hanst
art
inganewone.

7.Buy–sel
lar
ti
sts:Thesear
eent
repr
eneur
swhobuy
sacompanyf
ort
he
pur
poseofi
mpr
ovi
ngI
tandsubsequent
lysel
l
sitagai
ninor
der
stomake
pr
ofi
ti.
e.buy
sacompanywi
thpr
obl
ems,
butpot
ent
ial
sforpr
ofi
t.

8.Specul
ator
s:Thesear
eindi
vi
dualwhobuyapr
oper
tyorcommodi
tyand
 r
esel
litf
orapr
ofi
te.
g.f
arm pr
oduct
,realest
atepr
oper
ty,st
ock,f
orei
gn
exchangee.
t.
c.

9.I
nter
nalEnt
repr
eneur
s(I
ntr
apr
eneur
s):Thesear
eindi
vi
dual
swor
kingi
nan
exi
sti
ngbusi
nessmi
ghtbr
ingoutnew i
deasofwhi
chi
fsuppor
tedbyt
he
ent
erpr
isemanagementt
urnssuchi
deasi
ntosomesuccessf
ulpr
oject
wi
thi
nanexi
sti
ngbusi
ness,butdoesnothav
ethepr
ofi
toft
hebusi
ness
norbear
sthef
inanci
alr
iskofsuchapr
ojectwi
thi
nanexi
sti
ngbusi
ness.

10. Fr
anchi
se:Thi
siswhenacompanyi
nanot
hercount
ryl
egal
l
yper
mit
ti
ng
anot
hercount
ryt
ooper
ateabusi
nessusi
ngt
hesmal
lbusi
ness’
smet
hod,
pr
ocedur
es,pr
oduct
s,t
rademar
ksandmar
ket
ingst
rat
egi
est
odobusi
nessi
n
anot
herl
ocat
ione.
gMr
.Bi
ggs.Thef
ranchi
seownst
hebusi
nessandassumes
al
lnecessar
yoper
ati
ngr
esponsi
bil
i
tiesandr
isksbutsubj
ectt
ospeci
fi
cat
ion
setoutt
hef
ranchi
sor
.

11. Necessi
tyEnt
repr
eneur
s:Thi
sisanunempl
oyedper
sonwhoneedst
o
est
abl
i
sh a busi
ness ofhi
s/herown i
n or
dert
o sur
viv
efori
nst
ance,a
gr
aduat
ewhocoul
dnotf
indpai
dempl
oymentanddeci
dest
obecomesa
r
echar
gecar
dvendor
,orest
abl
i
shabar
bingsal
on,
oranyser
viceoper
ati
onor
mi
crot
radi
ngt
hatmi
ghtnotr
equi
rer
easonabl
eseedcapi
tal
,al
thoughsome
school
oft
houghtdonotbel
i
evet
hatt
hisi
snotanent
repr
eneur
.

12. Soci
alent
repr
eneur
:These ar
eindi
vi
dual
s who appl
y ent
repr
eneur
ial
appr
oacht
opr
ovi
dingsol
uti
onst
opr
essi
ngsoci
etal
probl
ems.

Funct
ionsofEnt
repr
eneur

1.I
nnov
ati
oni
sakeyf
unct
ioni
ntheent
repr
eneur
ialpr
ocessi
tist
hespeci
fi
c
f
unct
ionofent
repr
eneur
shi
p,i
tist
hrough i
nnov
ati
on t
heent
repr
eneur
ei
thercr
eat
esnew weal
thpr
oduci
ngr
esour
ces.I
tisapr
ocessbywhi
ch
ent
repr
eneurconv
ertoppor
tuni
ti
es(
idea)i
ntomar
ket
abl
esol
uti
ons.
2.Cr
eat
eoppor
tuni
ty:I
tist
heent
repr
eneur
sthatper
for
m ent
repr
eneur
shi
p
act
ivi
ti
est
hataf
fectbusi
ness.Theyar
ethepr
ime,mov
ersofbusi
ness
act
ivi
ti
es.

3.Ent
repr
eneur
sini
ti
atet
hebusi
ness:Theyconcei
vei
deasandi
mpl
ementi
t
whi
ch gi
ves bi
rt
hto busi
ness concer
n.Theyi
dent
if
yoppor
tuni
tyand
unf
ulf
il
ledneedi
nanenv
ironmentormar
ketandi
nvestt
hei
rresour
ceson
i
tpr
operpl
anni
ng,coor
dinat
ionandor
gani
zat
ion,cl
ear
ancef
rom v
ari
ous
agenci
es(
C.A.
C)e.
t.
c.

4.Fi
nanci
ngFunct
ionent
repr
eneurcr
eat
iveabi
l
iti
eshel
phi
mtoseeksoutt
he
f
undsr
equi
redt
ost
artandoper
atet
hebusi
nessi
dea.Hi
sabi
l
ityt
ofi
nance
t
hebusi
nessdependsont
hesef
act
ors.Hi
sabi
l
ityt
osav
eov
ert
ime,and
sour
ces f
orf
unds out
side hi
s sav
ing,hi
s abi
l
ityt
o package a good
busi
nesspl
anont
hebasi
sofwhi
chabankorv
ent
urecapi
tal
i
stwoul
d
deci
det
ofi
nancehi
spr
oject
.

5.ManagementFunct
ion:Good managementofa v
ent
urei
ncl
udes t
he
v
ari
ousact
ivi
ti
est
hatensur
ethe st
abi
l
ity
,vi
abi
l
ityand gr
owt
h oft
he
ent
erpr
ise.Theyi
nvol
vet
hemanager
ialf
unct
ionsofpl
anni
ng,or
gani
zi
ng,
di
rect
ing and cont
rol
l
ing,whi
ch hel
pfort
he ef
fect
ive and ef
fi
cient
oper
ati
onoft
hebusi
ness,i
ncl
udi
ngpr
oduct
ion,per
sonnel
,mar
ket
ingand
f
inanci
ng.Ent
repr
eneurpr
ovi
des l
eader
shi
pandgui
danceneededf
ort
he
or
gani
zat
iont
oensur
epr
oduct
ionofqual
i
tyandsuppl
yofgoodsand
ser
vicesensur
ingr
etur
noni
nvest
mentmanagi
ngf
inanci
ngandf
avor
abl
e
compet
it
ion

6.Ri
skbear
ing:Ri
skbear
ingi
sconceptbehi
ndanyf
orm ofv
ent
ureandt
his
i
sthe maj
orf
unct
ions t
hatent
repr
eneurener
gy,mat
eri
als and t
ime
i
nvest
edi
nthepr
oject
.Ther
esul
tofwhi
chi
slar
gel
yuncer
tai
n.

7.Encour
agi
ng compet
it
ions: Thr
ough t
he act
ivi
ti
es of ent
repr
eneur
s
 pr
ovi
desgoodsandser
vicesf
ort
hei
mmedi
atecommuni
ty.Asar
esul
tof
doi
ngt
hiscr
eat
esj
obj
ustaswehav
epoi
ntedoutear
li
er,pr
ovi
dei
ncome
f
orhi
sempl
oyees,t
hecommuni
tyandt
hesoci
etyi
ngener
al.Thepr
ocess
ofdoi
ngt
heseef
fi
cient
lyef
fect
ivel
yandpr
ofi
tabl
yat
tract
sot
her
sint
erest
t
odosamesoast
oreapsi
mil
arr
ewar
dfori
nst
ancepr
ofi
tandgr
owt
h.
Thi
sencour
agescompet
it
ionwhi
chsust
ainst
hef
reeent
erpr
isesy
stem.

8.Conv
ert
ing i
dea i
nto Real
it
y:An ent
repr
eneuri
s an i
nvent
ors who
ant
ici
pat
eschange,hepur
suehi
sdr
eamst
omaket
hem r
eal
i
tybybei
ng
i
nnov
ati
ve ofnew i
dea,pr
oduct
,pr
act
ices and ser
vices t
o meett
he
per
cei
ved oppor
tuni
ty col
l
ect
ing r
elev
ant i
nfor
mat
ion r
elat
ed t
othe
oppor
tuni
tyst
udy
ingt
heneedsoft
hemar
ketandt
heconsumer
.Acqui
ri
ng
t
henecessar
yski
l
ltohandl
ethei
deaandst
udy
ingt
hesoci
o–economi
c
env
ironmentwher
ethei
dea,
productorser
vicesi
smar
ket
ed.

9.Dev
elopi
ngBusi
nesspl
an:Busi
nesspl
anofanent
repr
eneuri
sther
oad
mapf
ort
hesuccessoft
heent
erpr
ise,pr
operv
isual
i
zat
iondesi
gni
ngand
mar
ket
ing.Toachi
evet
heseent
repr
eneur
shast
odr
awabusi
nesspl
anf
or
hi
sent
erpr
isebyunder
standi
ngdet
ailmar
ketst
udi
esf
easi
bil
i
tyr
epor
tand
gr
owt
hpr
ofi
l
eofscheme.

10.I
nnov
ati
vemi
nd:Ent
repr
eneur
shav
einnov
ati
vemi
ndt
otakei
nit
iat
ives
whenpr
obl
emsar
isei
nthecour
seofhi
sunder
taki
ng.Het
akesdeci
sion
oni
ssuesaf
fect
inghi
sli
feandbusi
nesshet
akesdeci
sionsaf
fect
inghi
s
l
i
feandbusi
nessheaccept
scar
eonanyunf
avour
abl
edeci
sionandpl
an
hi
sti
met
abl
etosui
thi
m.Hebear
sri
ski
nti
meofl
ossandaswel
lenj
oys
pr
ofi
ts.

Theconcept
sofi
nnov
ati
onandent
repr
eneur
shi
ppr
ocess

I
nnov
ati
on,r
isk t
aki
ng and v
ent
ure cr
eat
ion ar
ethe backbone oft
he f
ree
ent
erpr
isesy
stem,f
rom t
hissy
stem emer
get
hequal
i
tiesofi
ndi
vi
dual
i
sm and
compet
it
ion,whi
chhav
epr
oducedaneconomi
csy
stem t
hatcr
eat
ejobsand
r
educepov
ert
yandeconomi
csy
stem t
hatcr
eat
ejobsandr
educepov
ert
ygr
owt
h.

I
nnov
ati
onast
hesuccessf
uli
mpl
ement
ati
onofcr
eat
ivei
deas,
creat
ivi
tyi
s
t
hepoi
ntofor
igi
nat
ionf
ori
nnov
ati
on.Cr
eat
ivi
tyi
sthepr
ocesst
hroughwhi
ch
i
nvent
ionoccur
saswel
lasbr
ainst
ormi
ngi
deas,i
nfor
mat
iongener
ati
onf
ornew
oppor
tuni
ty.

Cr
eat
ivi
tyi
sani
ntegr
alpar
toft
hei
nnov
ati
vepr
ocess.I
tist
heabi
l
ityt
o
pr
ocessi
nfor
mat
ioni
nsuchawayt
hatt
her
esul
tisnew,
ori
ginal
andmeani
ngf
ul.

Theest
abl
i
shmentofanybusi
nessi
sthepr
oductofani
deaandabusi
nessi
dea
comes as a r
esul
tofcar
efulmedi
tat
ion and sear
ch oft
he env
ironment
,
i
dent
if
icat
ionofoppor
tuni
tyandt
aki
ngbol
dst
epst
owar
dsact
ual
i
zingi
t.I
nyour
t
hinki
ngt
ost
artbusi
ness,y
oumustst
artwi
thagr
eati
dea,agr
eatpr
oductan
unt
appedmar
ketandgoodt
imi
ngar
eindeedi
mpor
tanti
ngr
edi
ent
sinanyr
eci
pe
f
orsuccess.Per
sonali
nspi
rat
ioni
sagr
eatsour
ceofi
deaandgoodi
ngr
edi
entt
o
addt
other
eci
pe.Foranent
repr
eneurt
ocomeupwi
thawi
nni
ngi
dea,he/
she
det
ermi
ningwhatt
hemar
ketneeds.Thi
sist
het
hreest
epst
hatwi
l
lgety
ou
st
art
ed.

Fact
orst
obeconsi
der
edi
ngener
ati
ngbusi
nessi
dea:

1.Di
scov
ert
hoseneed,
yourski
l
l/ser
vice/pr
oduct
s

2.Locat
ewher
ethemar
ketar
e,t
heenv
ironment
,thei
rdo’
sanddon’
ts.

3.Pr
ovi
de t
hei
rneeds bydet
ermi
ning whatpr
oductorser
vice y
ou can
pr
oducet
omeett
hei
rneeds.

4.Usemar
ketsur
veyormar
ketpenet
rat
iont
otestanddet
ermi
nemar
ket
accept
ancef
ory
ourpr
oductandser
vice.

5.Cr
eat
eawar
eness,
adv
ert
isement
,andpr
omot
ionf
ort
hepr
oductorser
vice
 y
ouwantt
oof
fer
.

6.Det
ermi
ney
oursel
li
ngt
echni
ques:manuf
act
uri
ng,whol
esal
edi
str
ibut
ion
orr
etai
l
.

7.Det
ermi
ney
ourpr
ici
ngsy
stem l
ike:

- Di
rectcost
sofi
nput
ssuchasr
awmat
eri
als,
labour

-I
ndi
rectcost
ssuchassal
ari
es,
rent
sandut
il
it
ies

- Sal
escost(
adv
ert
isement
,post
erf
orsal
espr
omot
ion)andpr
ofi
tmar
gin
t
hatwi
l
lhel
pthebusi
nesst
ost
and.

Sour
cesofi
nnov
ati
vei
deas

Successf
ulent
repr
eneurar
eal
way
satal
ertt
otheoppor
tuni
ti
est
hatl
i
eint
he
ext
ernalandi
nter
nalenv
ironmenti
nwhi
cht
heyl
i
vewhi
chal
l
ow hi
m orhert
o
cr
eat
eani
deaf
rom whatot
her
ssi
mpl
ycannotr
ecogni
ze.Theef
fect
ivesour
ces
ofent
repr
eneur
ial
oppor
tuni
ti
esar
e:

1.Tr
ends:Si
gnalshi
fti
nthecur
rentpar
adi
gm ort
hinki
ng oft
hemaj
or
popul
ati
on,abi
l
ityt
orecogni
ze a pot
ent
ialoppor
tuni
ty,needs t
o be
obser
vedi
nsoci
ety
,technol
ogyt
rend,economy
,andgov
ernment
.Soci
etal
t
rendsl
i
kedemogr
aphi
cchange,heal
thandf
it
nessgr
owt
h,t
echnol
ogy
t
rendsl
i
kemobi
l
e(cel
lphone)t
echnol
ogye-commer
ce,i
nter
netadv
ance.
Gov
ernmentt
rendsi
ncr
easer
egul
ati
ons,pet
rol
eum pr
ices,andt
err
ori
sm.
Economi
ctr
ends:
higherdi
sposabl
eincome,
per
for
mancepr
essur
ee.
t.
c.

2.Unexpect
ed occur
rence:Unant
ici
pat
edorunpl
anned,happeni
ngsof
ten
pr
ovet
obeamaj
ori
nnov
ati
vesur
pri
set
oev
ery
one.Thei
nfamoust
err
ori
st
at
tackont
heUni
tedSt
ates,Ni
ger
iaandcov
id19pandemi
cisagood
exampl
eofanunexpect
edoccur
rence.I
tpr
oducedani
nfl
uxofi
nnov
ati
ve
sol
uti
ont
othenewl
ychal
l
engesofhomel
andsecur
it
y.
3.I
ncongr
uit
ies:Thi
s occur
s when a gap ordi
ff
erence exi
sts bet
ween
expect
ati
onandr
eal
i
ty.E.
gov
erni
ghtpackagedel
i
ver
yFedEx.

4.Pr
ocessNeeds:Thi
soccur
swhen an answert
o apar
ti
cul
arneed i
s
r
equi
red.Pai
nthatexi
sti
nthe mar
ket
place t
he ent
repr
eneurmust
r
ecogni
zeani
nnov
ati
vesol
uti
one.
g.sugar–f
reepr
oduct
smi
crowav
es
ov
ens.

5.Demogr
aphi
c changes:Thi
s ar
ises f
rom changes i
n popul
ati
on age,
educat
ion,
occupat
ions,
geogr
aphi
clocat
ionsandsi
mil
arf
act
ors.

6. Per
cept
ualchanges:Thi
soccur
sinpeopl
es’i
nter
pret
ati
onoff
act
sand
concept
s.Per
cept
ualchangesar
eint
angi
blebutmeani
ngf
ul.Per
cept
ion
cancausemaj
orshi
ft
sini
deast
otakepl
ace.

7.Knowl
edge– Based Concept
s:Thi
sist
hebasi
sfort
hecr
eat
ionsor
dev
elopmentofsomet
hingbr
andnew.I
nvent
ionar
eknowl
edgebased,
t
heyar
ethepr
oductofnew t
hinki
ng,new met
hodandnew knowl
edge.
Suchi
nnov
ati
onsmostat
imesr
equi
ret
hel
ongestt
imeper
iodbet
ween
i
nit
iat
ionandmar
keti
mpl
ement
ati
onbecauseoft
heneedf
ort
est
ingand
modi
fi
cat
ion.E.
g.cel
lphonet
echnol
ogyhasadv
ancedt
oincl
udenotj
ust
phoneser
vicebutcamer
al,i
nter
netaccess,andmusi
c.Massmedi
aisa
gr
eatsour
ce ofi
nfor
mat
ion i
deasand of
ten oppor
tuni
ty,newspaper
s,
magazi
ne,t
elev
isi
onandt
heseday
sthei
nter
netar
eal
lexampl
eofmass
medi
a wi
tht
hisy
ou can wel
lfi
nd busi
ness f
orsal
e and become
ent
repr
eneur
.

8.Exhi
bit
ions:Thi
sisanot
herway
stof
indi
deasf
orabusi
nessi
stoat
tend
exhi
bit
ionsandt
radef
air
sbyv
isi
ti
ngsuchev
ent
sregul
arl
y.Youwi
l
lnot
onl
ydi
scov
ernew pr
oduct
sandser
vicesbuty
ouwi
l
lal
someetsal
es
r
epr
esent
ati
ves,manuf
act
urer
s,whol
esal
ers’di
str
ibut
orsandf
ranchi
ser
s.
Thesear
eof
tenexcel
l
entsour
cesofbusi
nessi
deas,i
nfor
mat
ionandhel
p
 i
nget
ti
ngst
art
ed.

Thepr
ocessofent
repr
eneur
shi
pst
art
sfr
om t
hegener
ati
onofbusi
nessi
dea
t
hroughi
mpl
ement
ati
ont
other
eal
i
zat
ionofout
putandpr
ofi
ts.

A.Busi
nessi
deas:

Accor
dingt
oHi
sri
chandPet
ers(
2002)busi
nessi
deasandoppor
tuni
ti
es
comef
rom av
ari
etyofway
s.

1.Consumer
:Get
ti
ngi
nfor
mat
ionaboutwhatt
heconsumerneedandwhat
t
heywant
.Thi
scanbeachi
evedopi
nionsoft
hecust
omerorconsumer
,
soci
o – cul
tur
albackgr
ound,bi
ologi
caland weal
th st
atus of t
he
consumer
s’e.
c.tt
heent
repr
eneurcanmapoutcr
it
icalar
eaofconsumer
need,
def
ici
encyandi
nef
fi
ciencyandexpl
oiti
t.

2. Exi
sti
ng busi
ness:Ent
repr
eneur
s as wel
las i
ntr
apr
eneur
s can get
busi
ness cl
ues by const
ant
ly moni
tor
ing and ev
aluat
ing mar
ket
per
for
manceofpr
oduct
sandser
vicesofexi
sti
ngbusi
ness.

3.Resear
chandDev
elopment
: Theent
repr
eneurasanagentofchange
shoul
d al
way
s expl
ore and geti
nvol
ved i
nresear
ch t
o dev
elop new
pr
oduct
s,i
mpr
ovi
ngonexi
sti
ngonesorest
abl
i
sh,
newway
sofpr
oduct
ion.

4.Di
str
ibut
ingchannel
s:Di
str
ibut
iont
radebot
hatl
ocalandi
nter
nat
ional
l
evel
spr
ovi
deoppor
tuni
ti
esf
orauxi
l
iar
yindust
ri
est
ospr
ingup.

5.Gov
ernmentAct
ivi
ti
es:Act
ivi
ti
esofgov
ernmentsuchasr
egi
str
ati
onof
busi
ness,
pat
entr
ightandgov
ernment
alagenci
espr
ovi
desoppor
tuni
tyf
or
busi
ness,gov
ernmentpr
ogr
ams ofeconomi
c,soci
aland communi
ty
dev
elopmentpr
ovi
desoppor
tuni
ti
esf
orbusi
nessandent
repr
eneur
.

6.Adv
ert
isement
:Adv
ert
sinnewpr
int
,radi
o,t
elev
isi
on,
bil
lboar
dsar
eav
ery
sour
ceofnewl
i
neofbusi
nesst
otheent
repr
eneur
.
 7.Sundr
yact
ivi
ti
es:Anent
repr
eneurcanl
ear
naboutt
hingsneededbyt
he
consumer
s whi
ch ar
e notsuppl
i
ed f
rom act
ivi
ti
es such asmar
ket
ing
semi
nar
sand sy
mposi
um,mar
ri
ages,pi
cni
ccent
re,t
rav
ell
i
ng,spor
ti
ng
act
ivi
ti
esandcat
aloguesandsoon.

FLOW OFBUSI
NESSPROCESS

THI
NKBUSI
NESSI
DEAS

RECORDBUSI
NESSI
DEA

ASSESSFEASI
BILI
TYSTUDI
ES,
BUSI
NESSPLAN

I
MPLEMENTI
DEABYSTARTI
NGTHE
BUSI
NESS

OUTPUTOFGOODSANDSERVI
CES

SALESANDREVENUEMAXI
MIZATI
ON

PLANNI
NGANDEXPANSI
ON
Sour
ces:Esi
omo,S.
S(2010)
.Ent
repr
eneur
shi
pini
nnov
ati
on phenomenon
Gr
owt
hofent
erpr
iseandi
ndust
ri
alor
gani
zat
ioni
nNi
ger
ia.

Dev
elopi
ngaBusi
nessi
dea

Dev
elopi
ngbusi
nessi
deai
ntobusi
nessv
ent
uret
akest
hef
oll
owi
ngpr
ocess:

- Whent
hei
deai
sconcer
ned,t
hef
ir
stt
hingt
odoi
stowr
it
epl
anmustbe
sy
stemat
ical
l
ycar
ri
edoutandi
ntegr
atesmar
ket
,fi
nance,pr
oduct
ionand
humanr
esour
ces.i
tshoul
dhav
ethef
oll
owi
ngpr
ocess:

a.Acl
earmi
ssi
onst
atementoft
hebusi
nessl
i
net
obei
nvol
ved.Ami
ssi
on
st
atementi
sthe r
olet
hatan or
gani
zat
ion pl
aysi
nthe soci
ety
,the
par
ti
cul
arneedsoft
hesoci
etywher
eitexi
stst
hebasi
creasonf
ort
he
exi
stenceoft
hef
ir
m.

b.A desi
gnofpr
oduct
ion,apr
ocessandoper
ati
onadmi
nist
rat
iveact
ivi
ty
pl
anofcompl
etebusi
nessci
rcl
e

c.A det
ailmar
ket
ing and sal
e pl
an.For
ecast
ing sal
es and i
dent
if
ying
consumer
’spr
obl
em wi
thexi
sti
ngpr
oduct
s.

d.An or
gani
zat
ion pl
an ofadmi
nist
rat
iver
elat
ions,l
egalr
elat
ions,dut
y
schedul
e,cust
omerser
vice.

e.Acl
earf
inanci
alr
ecor
dpl
anpr
oject
edf
orat
hreey
earper
iodexpl
aini
ng
i
ncomeexpensesandpr
ofi
t.

f
.Ev
aluat
ionofbusi
nessoper
ati
onandobj
ect
ives

Provi
sionforr
iskmi
nimi
zati
onanduncert
aint
y,li
kestar
ti
ngabusinessthatt
he
entr
epreneuri
sfami
li
arwit
horthathasbeentestedi
nthatenv
ironmentof
operat
ion.

ENTREPRENEURSHI P ANDFORMSOFBUSI NESS

Object
ives:
Att heendofthi
stopi
c,st
udentshoul
dbeablet
odiscusst
hev
ari
ous
for
msofbusi nessownershi
pthatent
repr
eneursshoul
dembar
kon.
FORMSOFBUSI NESSOWNERSHI P
Businessisalloftheacti
vit
iesofanindi
vidualsinpr
oducinganddist
ri
buti
ng
goodsandser vicestocustomers.
Businesswantst oknowt heneeds,wants,goalsandvaluesofpr
ospecti
veand
potenti
alconsumerbef or
et heycansell
theirgoodstothem.

Businessinvol
ves:
theproduct
ionofgoodsandser
vicesunder
take,
organi
zi
ng,
managi ngandmarketi
ng.
Ther esour
cesusedbythebusinessesi
ncl
udeshuman,materi
alandfi
nanci
al
resources.

Obj
ecti
vesofabusi nesst oincludes
i
. Pr
ofi
tmaxi mizati
on
i
i. Sur viv
al andcont i
nuity
i
ii
. Gr owth
i
v. Cont rolofaf airshareoft hemar
ket
v. I mprovementi npr oductivi
ty
vi
. Soci alresponsibil
it
yt othecommunit
ythathost
stheent
erpr
ise.

For
msofbusi nessownershi
p
1.Soletrade
2.Partnershi
p
3.Joi
nst ockcompany/Li
mitedl
i
abi
l
itycompany(
pri
vat
eli
mit
edcompanyora
publicli
mitedcompany.

TheSol eTrade
Asoletradei saform ofbusinessenter
priseinwhichonemanownsand
managest hebusiness( onemanbusiness, sol
epropriet
ororret
ail
ingbusiness.
* Hest artshi
sownbusi nesswithhisowncapi talorborr
owmoneyf r
iends
* Hei sacapitali
stbecausehealoneownst hebusinessandrecei
vest he
prof
it.
* heisal abourerbecauseheperfor
msmostoft heworkinthebusiness
* Hei salsoamanagerbecausehet akesdecisionsandcontrolst
he
operat
ionoft he busi ness.

Feat
uresofasol
etr
ade
1. Owner ship
2. theliabilit
yofonemanbusi nessi sunl
imited.
3. Iftheowneri si ndebt edboth,thebusiness, assetandhispersonal
asset
canbesol dtoof fsett hedebt.
.
* Sour cesofcapi talfinance:thecapitaloutlagi sprov
idedbytheowner
(eit
herbyper sonal sav i
ngs)
* Bor r
owi ngf rom r el
at i
vesandbankscr editpur chase
* legal entit
y: i
tisnotal egalenti
ty.Thebusinessandownerar enot
separat ed
* Mot ive:thismot i
v eist omakepr ofi
t
* met hodofwi thdrawi ngcapit
al:ownercanwi thdrawhiscapit
alany
time
from the busi nesswi t
houtconsul ti
ngwi t
hany body
* Itsnat ure:iti
ssi mpl estandcommonestt y peofbusi nessuni
tyoucan
thinkof

Adv
ant
agesOfASol
eTr
ade

* I
trequiressmal lcapit
al
* Easytoest abl
ishitrequiresnoformationandl egal processesatt
achedt o
est
abli
sh t hebusiness
* Ownershipofal lprofi
t:hedoesnotshar et hepr ofitofthebusinesswi t
h
anyone
* Quickdecisionmaki ng: hetakesacti
onassoonasheconcei vesani dea
* Formulatesallpolici
es:Hedet ermi
nest hef irms, plociesandgoal st
hat
gui
dest hebusi nessint
er nal
lyandext
er nall
yandwor kst owar
dst hem.
* Heisfreeandhi sownboss, per
sonalsatisfaction.
* Theprof i
tsofthesol etraderarenott
axed, l
ikecompani es.

Di
sadv
ant
age

* Bearall
lossesandr i
sksalone.
* Limi
tedfinancialresour
ces–i nabi
li
tyt
oor aisemor ecapit
alli
mitsi
tsplan
ofexpansion.
* Lackofcont i
nuit
y-whent hesolepropri
etorsret
ir
esordi es,t
hebusiness
mayend.
* Absenceofspeci ali
zati
on,jackofal
ltr
ade.
* Limi
tati
ononexpansi on–becauseofl i
mi t
edcapitalt
hesol epropr
iet
or
 maynotbeabl
etoi
ncr
easet
hesi
zeofhi
sbusi
nessnomat
terhow
i
ngénuehei
s.

Partner
shi
p
Partner
shi
pcanalsobedefineastherel
ati
onshi
pthatexi
stwhentwoormor e
personswhocontri
butesmallmoneyormoneywor thinor
dertoestabl
ish
businesspart
ner
shipisanassociat
ionof2-
20personsor2-10personsasin
caseofabankt ocarr
yonasco- ownersofbusi
nessforpr
ofi
t.

Featur
esofpar t
nership
1.Owner ship–i tisformedbybet ween2- 20peopleandbet ween2-10peopl
e
i
ncaseofbanks
2.Capit al:
Thei niti
alcapitali
scont ri
butedbypartners.
3.Liabilit
y–t heirli
abili
tyisunli
mi tedexceptforl
imitedpar t
ner.
4.Format i
onmot i
ves–t heyarefor medforprofi
treasons.
5.Sour cesofcapi t
al–cont ri
butionf r
om thepart
nerspl oughingbackpr
ofi
t,
l
oansf rom banks.
6.Met hodofwi thdrawingcapital mustbeappr ovedbyot herpart
nersasl
aid
downi ntheirpar t
nershipdeed.
7.Ithasnosepar atelegalenti
ty,ithasnoboar dofdi r
ectors

Typesofpartnershi
p
1. Or di
narypartnership–Allpartnerstakeact
ivepar
tinthemanagementof
t
hebusi nessandar egenerall
yliabl
etoanylossorri
sk.
2. Li mitedpar t
nership–Allmember sinthi
sgrouphisdebtsar
erest
ri
ctedt
o
t
heamountofmoneycont ributedinrunni
ngthebusi
ness.

Ki
ndsofpart
ners
1. Act i
vepartner–Theytakeact i
vepar tintheformation,f
inancingand
managementoft hebusiness.Ther eceiv
esalaryforther ole.
2. Dor mant/sl
eepingpart
ner–t hi
spar tnercontri
butesonlyt hemoney
neededforformati
onoft hebusiness.Hei snotinvolvei
nmanagi ngoft
he
busi
nessanddoesn’ tr
eceivesalary.

- Heisonlyent
it
ledt
opr ofi
tshari
ngandlosses.
3. Normal/
Passi
vepartner:
anor malpar
tneri
sonewhoi snotact
ual
l
ya
par
tnerbutwhoall
owshi snamet obeusedinthepar
tner
ship.
4. Si
lentpar tners:Asilentpart
nerisanindi
vi
dual whoisknowntothepubl
ic
asapar t
nerbutwhodoesnott akeacti
vepartinthemanagementofthe
fi
rm.
5. Secr etpar tner–asecr etepart
neristhatwhoisactiv
eintheaff
air
softhe
busi
nessbutnotknownt ot
hepubli
casapar tner
Sour
cesoff undsf orpar t
nership
1. Cont ributionfrom member s
2. Pl oughingbackpr ofi
ts
3. Bor rowi ngf r
om thebank
4. Enj oyi
ngcr editf
acil
it
ies