Module 3/SMALL BUSINESS MANAGEMENT Flashcards
What is an Entrepreneur
An entrepreneur is an individual who employs and
organises the factors of production to create a business
venture with the aim of making profits.
What is Corporate entrepreneurship
(‘intrapreneurship’)
Corporate entrepreneurship involves teams within an established company developing, launching, managing, and nurturing a new business.
What is Social entrepreneurship
‘Social entrepreneurship’
refers to the initiation of a combination of innovations
to address a problem in society.
Characteristics of Entrepreneurs
Goal and opportunity oriented
High level of commitment and determination
Success oriented
Self-confidence and reliance
Willingness to take moderate risks
What are some Benefits of entrepreneurship
Self-fulfilment or actualisation
Opportunity to make a difference
What are some Drawbacks of Entrepreneurship
Possibility of very long working hours
The risk of losing all of one’s assets
Operating a business can be very stressful
What is Opportunity Costs
A choice will have to be made on how resources should be allocated to meet the needs of each party. When one option is chosen, it means that other options have to be forgone. This concept is known as ‘opportunity cost’ which is the highest valued alternative that had to be sacrificed for the option that was chosen.
Entrepreneurship vs Intrapreneurship
Entrepreneurship is the process of starting a new business, while intrapreneurship is the practice of promoting innovation within an existing company
What questions are often asked when considering Opportunity Costs?
What to produce?
How should goods be produced?
For whom to produce?
What are the criteria for measuring size and growth of
businesses??
Volume of output- This method is generally used to measure the size of businesses in the same industry. The amount of output of each firm is compared in order to ascertain the firm with the highest volume of output
The labour force (Size of it)
Market share
This measures the amount of control that each firm in an
industry has.
Capital employed
Capital employed refers to the value of the assets used to
generate the revenue of the firm. The amount of money
invested in the business can give an indication of its size
What are some Strategies for Growth?
Internal growth
This is where a firm expands its existing operations without
the involvement of other businesses
External growth
This is a quicker method of growth and takes place by merger,
takeover or joint venture. A merger is where two or more . companies agree to join together to form a new company. A
takeover is where one company buys out or takes control of
another. A joint venture is a business arrangement between
two or more parties to pool their funds or resources in order
to carry out a specific task or purpose.
Small firm vs Large Firm
Size and financial requirements
Some people opt to start small businesses since they require
less capital outlay. The advantage of doing this is that, over
time, the business can expand if it is successful. If the business
fails, then the resources that will be lost would be far less
than for a very large firm
Management and Control
A manager in a smaller firm may also find it easier to communicate the vision of the firm to all of the employees while Larger firms may then become harder to manage because of the larger span of
control that each manager has, meaning that the manager
has to supervise a greater number of employees
Lack of Record Keeping
These small businesses are
often very cash oriented and with no proper record keeping
will be more susceptible to theft and misappropriation of
funds. Larger firms tend to have proper record keeping. Large
firms are able to hire qualified people to deal with its finances.
These firms usually have an entire finance or accounting
department which ensure that proper records are kept.
What is record keeping?
Record keeping is the process of organizing and storing documents, files, and invoices related to a business’s activities. It can be done manually or digitally.
What is Working Capital Deficiencies?, why is it bad?
A working capital deficiency, also known as a working capital deficit or negative working capital, occurs when a company’s current assets are less than its current liabilities.Cash is one of the
most valuable resources for the small business. The lack of cash can cause a total shutdown of the business.
Working Capital Deficiencies can be caused by?
Having too much inventory – this will mean that the
firm’s cash is tied up in stock which may take some time
to be sold
Debtors’ payment period – the firm may be giving
debtors too much time to make payments
Liability to creditors is too high – having too much
liability can also result in working capital deficiency
What can poor management skills lead to?
Poor management skills can also result in the staff not
being motivated to work to their full potential
What is Regulation and legislations?
Regulations affect both large and small firms. A person wanting to start a business must be aware of the legalities of doing so and the impact that the existing laws and regulations will have on the business.
How does one go about Identifying successful business opportunities
Sourcing capital (finance)- Getting the money needed to start a business
Selection of business types- These include
sole proprietorship, partnership, cooperative, franchise, private and public limited company
Determining a location
Location can be integral to the success of a business venture.
Globalisation and trade liberalisation- Globalisation is seen as the increased connectivity and
interdependence of the world economy, while trade
liberalisation involves the removal of trade barriers that
would prevent trade among countries.
E-commerce
What is Intellectual property
Intellectual property is defined as
‘creations of the mind: inventions,
literary and artistic works, and
symbols, names, images, and designs
used in commerce’. It is generally
broken down into industrial property
and copyright.
What are some assistance available to small businesses?
Government agencies
Non-government agencies
Financial institutions
4 Government agencies
Jamaica Business Development Corporation (JBDC)
Development Bank of Jamaica (DBJ)
Rural Agricultural Development Authority (RADA)
3 NON GOVERNMENT Agencies
Small Business Association of Jamaica
Private Sector Organisation of Jamaica
Barbados Small Business Association (BSBA)
What are some Financial Institutions?
National Commercial Bank (NCB)
Jamaica Nation Building Society (JNBS)
What does MSMEs mean?
Micro, small, and medium-sized enterprises (MSMEs)
What are some Types of assistance offered to small
businesses?
Financial:
Auto loans
Start-up capital financing
Energy conservation loans
Technical
It is quite evident that the entrepreneur will not possess all
the requisite technical skills that are needed to be successful
in business
Education and training
In addition to technical training and support, entrepreneurs
can also receive other forms of education and training. In
recent times, a number of educational institutions, including
universities, have been developing special programmes to
certify entrepreneurs and provide the requisite skills that are
needed to run a business successfully.
Incubation
‘Business incubation’ is defined by businessdictionary.com
as a ‘facility established to nurture young (start-up) firms
during their early months or years. It usually provides
affordable space, shared offices and services, hands-on management training, marketing support and access to
some form of financing’
The Technology Innovation Centre (TIC) is one
What is a Feasibility Study and a BUISNESS PLAN
A feasibility study is an
in-depth analysis of the firm’s ability to complete a project
or create a successful business venture
A business plan is:
A document describing the nature of a business, its
sales and marketing strategy, and financial background, and including a projected profit and loss
statement
What is the Executive Summary
An executive summary is a brief overview of a business plan or proposal that is typically the first section of the document.
What is the Business Description
This section gives a clear and comprehensive description
of the business. There should be a clear description of the
following:
The name and location of the business
The nature of the business and product
Objectives and mission statement
Information regarding the legal establishment
What is the Business environment analysis
A business environment analysis involves examining the various internal and external factors that can impact a company’s performance. It helps businesses understand their surroundings, anticipate changes, and make informed decisions.
An environment analysis will include
a clear and in-depth analysis of the following environmental
factors: political/legal, socio-cultural, economical, demographic
and technological.
It should include:
Target market
Consumer needs
Location
What is the Competitor Analysis
The competitor analysis segment assesses the level of
competition in the market and identifies who these
competitors are
What is the Market analysis AND Marketing plan
Market analysis is a section of a business plan that provides information about the market a business will be operating in. It helps the business understand the market’s attractiveness, strengths, weaknesses, opportunities, and threats.
A marketing plan outlines the actions that
will be taken to spark the interest of prospective consumers
and outlines how the firm will achieve its projections for sales
and revenues. This includes the three of the 4 Ps (NO PRODUCT)
What is the Operations Plan?
Operations plan
The operations plan is also known as the ‘production plan’.
It outlines the day-to-day operation of the firm and describes
such matters as the plant location, facilities required,
machinery and equipment needs, space required and labour
needs.
What is the Managerial Summary?
Managerial summary
This section describes how the business will be managed and
the various positions that will make up the management
team. The size of the management team or structure of
management is often dependent on the size of the business
and the type of business.
What is the Financial Plan?
Financial plan
Investors and lenders will be very interested in this section
of the business plan and so it should be done as accurately as
possible. This section describes the current financial position
of the firm (that is, if it is already established) and gives
projections for the future earnings, profit and loss and cash
flow.
These
financial statements include:
Profit and loss (income statement)
Balance sheets
Cash flow statements.
Breakeven analysis
Source of funds
Whats the benefits of writing a business plan?
It gives exposure to the possible risks or opportunities in
starting a business
Can be used as an internal planning tool for the
business
It can be used to determine whether the product has the
level of market support needed for success
