branka bukvic- local business opportunities

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LBO

Local Business Opportunities

Branka Bukvić [email protected]

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Introduction

• Expectations

• About the topic and its importance

• How will we work

• Rules

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Objectives 1. To induce right acceptance and

understanding of entrepreneurship as perspective way of employment

2. Encourage participants for entrepreneurship actions

3. Prepare participants for understanding and interpretation of business opportunities in the local surrounding

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Acceptance and absorption of knowledge and skills needed

• What is entrepreneurship • Entrepreneur’s profile • How to assess own strengths and weaknesses –

see yourself as a potential entrepreneur • Development needs and trends in business

surrounding – research and surrounding analysis • How to evaluate business opportunities • How to recognize and/or develop potentially good

business ideas • How to evaluate business idea • How to turn an idea into real business

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Topics by days Day I Be an entrepreneur Day II Evaluate the opportunity Day III Measuring success Day IV Research in live Day V From idea to business

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Your trainer Branka Bukvić • Education and training:

– Faculty of Agriculture – International business management – 2 courses per year

• Over 20 years of training and consulting experience with different groups of trainees

• First employment in Institute for small grains in Kragujevac • Now working for

– AgroQuality o.d. (co owner, director) – YU Build d.o.o. (employee) – Free-lancer

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Work plan

Day I Be an entrepreneur

9:00 – 11:00

16:00 – 18:00 Where am I in

this story?

Self assessment of

entrepreneurship abilities

11:20 – 13:00

18:20 – 20:00 Is there any

place for me? SWOT

13:00 – 13:30

20:00 – 21:00Individual consulting upon

request

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Task:

Define the meaning of the words:

ENTREPRENEURSHIP and ENTREPRENEUR

Write down your definitions on moderation cards and put them on the flipchart

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ENTREPRENEURSHIP is assuming the

risks and responsibilities in creating and

implementing business strategy or

starting-up a business.

ENTREPRENEUR is a person who

organizes and manages, taking into

consideration the risk of any business

action. An individual who starts own

business and knows to assess the risk.

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Entrepreneurship

One more definition:

Entrepreneurship is a complex group of activities implemented to transfer an idea from state of imagination into a state of reality, or something real from existing state or shape into the shape or state wanted

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And what about business? Business is a group of activities

satisfying the needs of

the owner,

capital invested,

employees…

What’s missing here?

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Task:

Why do you want to become entrepreneur?

Write down your answers

and we will discuss

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About entrepreneurship • Focused on inovations and changes, action

oriented way of thinking – do something new (product, service, new methods, new organization)

• Entrepreneur spirit, art or group of learnable skills – born vs. trained?

• Developmental, limited, very rare – expensive, the most dynamic resource

• Entrepreneurship in small businesses and in big companies, in new and in already existing entities

• Lever for economy restructuring ( OECD 1998).

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Businessman – entrepreneur

• Strong personality and persistency • Operative, • Creative, • Critical approach, • Analytical mind, • Management abilities, • Technical abilities, • Motivated, • Communicative…

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Do you have a business character?

... You just try to minimize the risks No one will take you seriously!

... You were born to achieve more There is nothing more in democracy, only more successful!

... You wish to change the world to the better Donate the money for the charity, you will save your nerves and your money!

... You have always been a good accountant You look for every penny and loose customer from the view!

... You don’t want to depend on any bureaucracy You must be crazy!

... You just copy and save these advices Forget them!

No, if

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Task: Am I an entrepreneur?

• Fill in the questionnaire and

• Check your entrepreneurship profile

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What do you need to be a good entrepreneur?

Psiho stability Persistency

Courage for what you do

Acceptance of conflict management

Decision making ability

Self-confidence

Acceptance of no clear distinct of working and private

hoursSelf-management abilities

Wish to learn

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Task: where are you and where are you going to be?

• Draw a picture of yourself as you are now!• Draw a picture of yourself as an entrepreneur!• What is missing between these two pictures?

• Define important obstacles which you are facing, preventing you to become entrepreneur

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Factors contributing to the success

Feelings

Good relationships with people

Taking responsibility

Sales

Patience

Health

Learning

Family support Risk Risk

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Let’s divide into the groups

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Advantages and dissadvantages

S

Strenghts

W

Weaknesses

O

Opportunities

T

Treaths

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Task:

Do the SWOT analysis for your team

So we can see if we are adequate for business

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Key elements of entrepreneurship process

1. Entrepreneur and management team

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2. Business opportunity

Every problem

= chance

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3. Resources

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Local business opportunities

Evaluate the opportunity

Branka Bukvić

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Preconditions for entrepreneurship/entrepreneur

• idea – dream, goal, unused market opportunity

• entrepreneur - experience, passion, persistency, hard work

• knowledge of the - market, customers, needs, technology, the field of work

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Objectives for the day To learn how to • Collect data needed from available sources,

information about trends in the world, region, local community

• Recognize, assess and choose the opportunities

• Get the skills which an entrepreneur should develop

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Work plan

Monday Tuesday Wednesday Thursday

Friday

Be an entrepreneur

Evaluate the

opportunity

Measuring success

Meeting on the field

From the idea to the

business

9:00 – 11:00

16:00 – 18:00 Where am I in this story?

Crazy ideas everywhere

How can I know...

Looking, listening, learning

Learning by discussing

11:20 – 13:00

18:20 – 20:00 Is there a place for me?

Learning by doing: RESEARCH!

...that I am a business genious!

Who ask do not wonder

Entrepreneurship?

YES

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• Few examples Nekoliko primera From the “developed” world

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Choosing and assessing Choosing and assessing business idea business idea

How to gain a successful ideaHow to gain a successful idea??

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Funnel model

100 – 500 ideasBRAINSTORMING

Macro selection (validation)

Micro selection

(validation)

5 ideas

1 idea

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Task: in teams • Look for and recognize potential

opportunities • Collect and group ideas about

profitable “promising” businesses in your surrounding

• Define opportunities and present them to us

How did you recognize the potential?

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• Advantage over existing products or services

• Following attitude and beliefs of customers

• Not too complex

• Easy to show benefits to the customers

• Customers can try innovation with no risk (sample or trial use)

• Product/service available immediately

• Customer believe that product or innovation satisfies his/her personal needs as it gives real benefit

Characteristics of a successful business idea

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• Good business idea has to satisfy customers’ needs and/or demands

• If your business idea is not original or do not satisfy customers’ needs, it needs improvements to be better than the competition

• Entrepreneur should ask himself: • Why should somebody buy from me instead of

my competition? • Which is the value I add to the business or

product/service?

Do you have feasible business idea?

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Business idea

research

Business idea

research

NEEDS

Where does the research lead?

Customer needs best sattisfying idea

Match product with customers’ wishes; gain new customers, keep existing customers

Useful and properly identified products; fair competition, environmental protection, etc.

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Task: in teams

• Recognize development trends and potential business opportunities using internet search

Expected result:

• The list of business ideas

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Research your business idea!!!Customers’

profile

Product’s characteristics/b

enefits

Target market

Market/industry trend

Competition

Price

Promotion

Distribution

Production capacity

Production process

Purchasers

Sales

Resources needed

Financial strengths – weaknesses

Cash flow

Licenses/approvals

Business idea

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Make the profile of the paying customer!

• Write down as many as possible characteristics of the customers for whom you believe that they will buy your product (age, sex, marital status, income) and try to describe their life style.

• If you expect to sell to other company or organization, assess:

• Which industry they belong to,

• What kind of enterprise it is,

• How long they exist in that business,

• How many employees they have,

• What is their yearly sales level,

• Which department might be interested in your offer,

• Who are their customers,

• And anything else you can identify

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List and describe characteristics of your product/service

• Define properties/characteristics of your product/service

• Find how will your customers benefit from those properties

• List selling characteristics to use for advertising, making brochures and in sale presentations

This will help you to define why should your customer buy from you and not from competition

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What is the growth potential on the market?

• Is the industrial branch or the market in which you

wish to do the business growing or slowing?

• Are the trends of new customers’ demands at the top

or declining?

See business and industry/trade papers!

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Define main geographical areas where you intend to sell in the first year

Defining place where you will sell during the first year automatically focuses you!

• Assess how many potential customers are located in the chosen area

• Important for sale in a larger area are also adequate financial management, marketing and resource management

• Defining areas eases recognition of your needs as well

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What does competition sell in this area?

When you define who and where are your customers,

you have to define who are you sharing them with

Research

• Are there any similar products in retail and

• How do similar companies advertise their products

(yellow pages, industrial phonebooks etc.)

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Estimate the price you can ask and still remain competitive!

Estimating how competitive you might be can be a great step to determining the feasibility of your idea

• If your product is superior to the competition and market is not too price sensible, you can think about raising the prices over the competition

• If you are selling to retailers or wholesalers you should leave space for them to incorporate their profit

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How are you going to inform customers that you exist?

• Advertising

• Personal sale

• Establishing good public relations

• Promotional actions

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Task:

• Define missing parts in the existing information and obstacles to transfer the idea into business

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Homework:

• Collect brochures and other materials available

• Use data from the Chamber of Commerce, branch associations, statistical data and data from other relevant organizations and institutions…

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• Review your own advantages and abilities and assess what are you good in

• Be informed what’s going on and ready to use business opportunities whenever they show up

• Design new product or service • Enrich existing product with added value • Explore other markets (chance to visit other

country/region)• Improve existing product or service • Be informed - which products have high demand at

the moment?

Choose good business idea

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Task:

• Choose your business ideas

Expected result:

• List of feasible business ideas

• One idea chosen for further work

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Few examples from local area

www.shockart.org

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Measuring success Branka Bukvić

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Objectives

To reach basic understanding of:

• Business idea assessment elements

• Ways to assess own or recognized business idea

• Success factors

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Work plan


Friday

Be an entrepreneur


Measuring success


From the idea to the

business

9:00 – 11:00



How can I know...


Learning by discussing

11:20 – 13:00



...that I am a business genious!

Who ask do not wonder

Entrepreneurship?

YES

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What is failure?

“Failure is just the possibility to start from the beginning much more

intelligent"

Henri Ford (30. July 1863 - 7. April 1947)

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Causes of failure

• Managers’ incompetence or inexperience

• Indifference

• Weak control systems

• Lack of capital

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Causes of success

• Hard work and commitment

• Assurance of market demand for products and services

• Managers’ competence

• Luck

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Factors contributing to the success

Feelings

Good relationship with people

Taking responsibility

Sales

Patience

Health

Learning

Family support Risk Risk

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Task: in teams

• Define measurement of success for your business idea

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Analysis of all influencing business aspects

Development of business strategy

Business planning

Implementation – Registering the business

Assessment process

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Steps of business option analysis • Notice the problem on the market • Find adequate business opportunities

- technique of market saturation - technique of market segmentation

• Setting the resources needed for realization of the business idea

• Financial analysis of the business opportunity • Analysis of personal preferences and risk

assessment • Choice of the business idea and its further analysis

in the business plan

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Defining and choosing the business idea

1. Basic criteria in business options analysis

2. Relevant factors in business options analysis

3. Steps of business options analysis

4. Possible alternatives for creating business options

5. Forms of ownership

6. Ways to obtain financial resources needed

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Basic criteria in business options analysis

Business should:

a) Reflect person and interests of the entrepreneur (scope of work entrepreneur enjoys and has knowledge and experience about)

b) Have market and profit potentials – “offer what customers love” – listening to the market

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Relevant factors in business options analysis

• TIME: commitment to the business, balancing obligations to the business and to the family, time needed till business starts to produce profit and till market position is established

• FINANCIAL RESOURCES - limiting factor

• POTENTIAL FINANCIAL RESULTS

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Relevant factors in business options analysis

• EXPERTISE LEVEL AND BUSINESS EXPERIENCE: the risk level is higher if there is no experience; partnership; franchising arrangements

• RISK LEVEL: conceptual risk, production risk, marketing risk, financial risk, growth and development risk

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Possible alternatives for creating business options

• Buying existing business (company) Kupovina postojećeg posla (firme)

• New business Novi posao

• Franchising Franšizing

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Buying an existing business

PRO • Approved business,

lower risk, financial sources

• Sales and purchasing channels worked out

• Trained workforce • Existing production

facilities

CONTRA • Companies with

problems are for sale • Poor image • Untrained workforce • Poor location • Inadequate office

space • Old equipment

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What should be investigated when buying existing business?

• Why is the owner selling the business

• What is the condition of business facilities

• Market situation

• Financial position of the business

• Legislation and legal aspects of buying the business

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New business

PRO • Starts at chosen

location • Facilities installed in

accordance with pre-established objectives

• More possibilities for innovations

• Creating own image • Higher profit with lower

investments

CONTRA • High risk • Long way to

customers’ trust • Fund raising problem • Process of working out

selling and purchasing channels

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What should be investigated when starting a new business

• Needs for new product or service

• Location

• Market

• Physical capacities

• Human resources resurse

• Projection of financial results

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Franchising

PRO • Business experience

not needed • Consulting and training • Start-up expenses

payment in installments • Centralized raw

materials purchasing • Free promotion • Well known products

and services

CONTRA • No freedom in decision

making• Contracts strictly

defined • Franchising rent • No transfer

possibilities • Centralized raw

materials purchasing • Activity of one user

affects all

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Forms of ownership

• Solo business – Business owned by one owner

• Partnership – Business owned by partners

• Corporate model - Company…

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Ways to provide financial resources needed

• Personal resources

• Family and friends

• Business partners

• Bank credits

• Small business development funds

• Purchasers credits

• Venture capital

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Task: • Evaluate recognized business

opportunity/idea

Consider:

– Business options

– Providing workforce needed

– Operational costs

– Additional financial sources

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Small business development support

• Small business development support in our country is conducted through the efforts of Agency for SME development, established by the Serbian Government

• Who else?

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Preparation for the meeting • What do you expect from tomorrow`s

meeting? (Define your goals and objectives)

• Which are important questions for successful business?

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From idea to business Branka Bukvić

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Objective

• Get familiar with basic legislation dealing with commercial business in order to ease decision on starting up a business

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Work plan


Friday

Be an entrepreneur


Measuring success


From idea to business

9:00 – 11:00



How can I know...


Learning by discussion

11:20 – 13:00



...that I am a business genius!

Who asks does not stray

Entrepreneurship?

YES

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Shop or Company?

• Autonomous – entrepreneuring shop

• Enterprise – commercial company

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Shop – advantages

• Most frequent form for the start • Simple, easy to establish and manage • Does not require large investments • Recommended for businesses with no

intention of large growth and spreading • Can employ the whole family, no additional

staff cost (taxes and fees)

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Shop – disadvantages • Owner’s responsibility not limited –

obligations guarantied by whole personal property

• No clear criteria to distinguish personal and enterprise's property

• Limited development – Reorganization problem in case of spreading – No credits or international investments – partner

is not interested to invest or even to do business because of mixed property

• Simple bookkeeping giving almost no information

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Company – disadvantages

• More complex organization, complicated for beginners

• Registration procedure more complicated than for the shop

• Initial capital needed for the start

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Company – advantages (1) • Owners are accountable for liabilities only

within the company’s property, not by his/their personal assets

• Legal entity • Organisational advantages – development

of several sectors easier to manage • Double-entry bookkeeping • Growth potential is not limited

cont…

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Company – advantages (2) • Easier to finance the activities • Accepted more seriously by other

commercial entities, public institutions, financial institutions, business partners and even themselves

• No ambiguity between personal earning, commercial entity property, salaries, profit

• Higher credit capability of the director and/or employees

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Tax treatment

• Shop owner pays one tax on income • Company owner pays personal income tax and

company pays tax on profit – Double tax for company

• Shop always pays tax, even if it doesn’t work or suffers losses

• Company, if no turnover, hands over tax applications showing the loss and in that case it does not pay taxes

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Who to ask? • Bookkeeper? – Bookkeeping is easier for shops – Penal policy for commercial offense – higher penalties for

companies

• Economist? – Financing business activities

• Lawyer? – Legal advice is needed and you ask it from the lawyer, not from

the bookkeeper, in the same way as nobody asks the lawyer to keep company books

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Recommendation 1

For

simple small business with limited growth and development opportunities

chose

the legal form of

autonomous – enterpreneuring shop

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Recommendation 2

For serious intentions, for

long lasting, growing and developing business

choose the legal form of

commercial company – enterprise

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Establishing a shop A shop means: • Store, workshop, office, bureau, service, agency, studio,

pansion, pharmacy, practice … • Most often used abbreviations:

– STR – independent trading shop; – SZR – independent crafts shop; – SUR – independent catering shop

• Registration in the municipality unit authorized for commercial issues

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Registration of the shop • From 01-01-2006 registration of entrepreneurs is

conducted by the Agency for Commercial Registers.

• The founder can be one person and in that case it is the Autonomous Shop or it can be several persons (10 max) in which case it is Partnership Shop

• Documentation: – Registration application form – Personal ID or passport of the founder/all partners – Evidence on paid fee– Decision of an authorized body, if needed

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Establishing the enterprise

• Ortačko društvo (OD) - Partnership Company

• Komanditno društvo (KD) – Limited Partnership Company

• Akcionarsko društvo (AD)- Joint Stock Company

• Društvo sa ograničenom odgovornošću (d.o.o.) – Limited Liability Company

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Found PC or PLC? Consider: • Manner of fund raising for business activities • Level of personal risk that the founder is willing to take

– Partnership Company – whole property – Limited Liability Company – only property entered into the

company

• Level of control over business operations • Usual form for beginners is PLC.

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Registration of a company (1)Application in the Commercial Court • Documentation:

– Deed on Foundation – Statute – Lease Agreement on the business premises or proprietary document – Decision on Appointment of the Director – Photocopy of the Director`s Personal Identity Card – Form (OP) with the verified signature of the Director – Photocopy of the Founder`s Personal Identity Card– Founder`s Residence Certificate (not older than one month) – Bank report on received founder`s deposit – Filled application forms for the registration in the Commercial Court

• Fees – for verification of the OP form (4 copies) by the municipality – for verification of the Deed of Foundation in the court – for receipt of the application in the Commercial Court

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Registration of a Company (2)• Making the round stamp or the protocol journal stamp • Application to the Republic Institute of Statistics – personal number

– The area of activity should be carefully described as it implies payment of all municipal fees

• Application to the Tax Department for income tax, municipal fees and obtaining of the PIB (Tax Identification Number)

• Opening of the transfer or current account with a business bank – which can not be done without the PIB

• Written instruction to the business bank to transfer the deposited part of the founder`s deposit to the newly opened account

• Entry into the customs taxes payers register – only in case of the foreign trading

• Registration in the Pension & Social Insurance Fund • Registration of the employees at the Labor Market, Pension and

Social Insurance Fund and the Health Insurance Fund

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Commitments upon establishment of the shop/company

• Keeping business books

• Recording of business changes

• Payment of taxes and fees

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Bookkeeping • Single-entry bookkeeping principle

• Double-entry book-keeping principle

• Business books are kept by an authorized person or agency

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Recording business changes

• Issuing of bills • Payment of daily receipts • Collecting of bank account statements • Keeping records about receipt and delivery of

goods • Keeping records about commodities on stock • Payment of liabilities• Documentation must be kept in the

shop/company

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Payment of taxes and fees• Value Added Tax (VAT)• Company Profit Tax • Taxes and fees on revenues from

independent business activities • Fees for compulsory social insurance on

earnings and remunerations • Excises

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Documentation

• Business letter • Envelope • Invoice • Transfer order • Logo – company sign • Markings and marketing material • Business cards

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Seven business advices 1. Plan!2. Get organized before you start!3. Find right people!4. Manage smartly! 5. Monitor and check!6. Measure results!7. Have your staff constantly informed!

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And 7 most frequent mistakes 1. Follow the idea without a plan

2. Sell goods too cheap

3. Starting the business for fun only

4. Marketing without an idea

5. More a pal than a manager

6. Overspending

7. Neglecting your loved ones