ENTREPRENEURSHIP AND

SMALL BUSINESS

MANAGEMENT

ESTABLISHING A SMALL

ENTERPRISE

INTRODUCTION

What is a small scale

enterprise?A small business is one which is

independently owned and operated and notdominant in its field of operation

(Amienghomwan, 2004)

What is most important therefore is their What is most important therefore is their What is most important therefore is their What is most important therefore is their

annexation of resources and overall annexation of resources and overall annexation of resources and overall annexation of resources and overall

contribution to the economic well beingcontribution to the economic well beingcontribution to the economic well beingcontribution to the economic well being

of developing nations across the globeof developing nations across the globeof developing nations across the globeof developing nations across the globe.

ROLE OF A SMALL

ENTERPRISE

Small scale enterprises have significantsignificantsignificantsignificant rolesrolesrolesroles in developing

countries.

All available resources in any given situation in the

economiceconomiceconomiceconomic wellwellwellwell----beingbeingbeingbeing of a nation must be developeddevelopeddevelopeddeveloped forforforfor

industrializationindustrializationindustrializationindustrialization andandandand ultimatelyultimatelyultimatelyultimately consumptionconsumptionconsumptionconsumption through the

small and medium scale businesses.

The impact and potential contribution of small and

medium scale business and the accelerated effect in

achieving macro economic objectives pertaining to fullfullfullfull

employment,employment,employment,employment, incomeincomeincomeincome distributiondistributiondistributiondistribution and the developmentdevelopmentdevelopmentdevelopment ofofofof

locallocallocallocal technologytechnologytechnologytechnology, makes its existence mostmostmostmost inevitableinevitableinevitableinevitable....

The following factors may make an

individual decide to establish his/her own

enterprise:

Job dissatisfaction: When an individual feels his skills,experience and other attributes are not being properlyutilized, he/she may become dissatisfied with the job.

Lack of challenges

Pay dissatisfaction

Unemployment

The desire to be independent

Security

Encouragement by friends and government policies

HOW TO START?

The first thing to consider in starting a business is to have a desire to do so.

This is a commitment that only on individual can decide on. One this decision is made, the next steps are

Know oneself Look for opportunities Consider available resource Plan to use these resources to take on these opportunities.

Keeping cost as low as possible Doing most of the work, which is free to you Making available a detailed cost breakdown before executing a task.

The best time for any business to start is nowsince there is no time like the present. This isbecause hesitation in business start up may leadto losing out

STEPS TO START STEPS TO START STEPS TO START STEPS TO START

A BUSINESSA BUSINESSA BUSINESSA BUSINESS

Personal EvaluationPersonal EvaluationPersonal EvaluationPersonal Evaluation

In order to start a successful business, passion alone

isnt enough. We need to plan, set goals and above

all, know about oneself.

What are your strengths?

What are your weaknesses?

How will these affect day-to-day

operations?

Business Plan

Once you decide on a business that fits your goals

and lifestyle, you need to evaluate your idea.

Who will buy your product or service?

Who would be your competitors?

You also need to figure out at this stage how much

money you will need to get started.

An important first step is preparingpreparingpreparingpreparing aaaa businessbusinessbusinessbusiness planplanplanplan to define

your business, products and services, and outline your goals,

operating procedures and competition. If your company needs

funding from a traditional loan or venture capitalists, a business

plan will be required.

1.Make sure your plan includes a marketing approach, so

people are aware of what you're selling and how to find you.

2. CreateCreateCreateCreate aaaa businessbusinessbusinessbusiness logo,logo,logo,logo, cardscardscardscards andandandand stationerystationerystationerystationery.... These items

establish your companys identity and help potential customers

to find you.

Many small business owners seek advice from accountants and

attorneys. As you search for an accountant and attorney, get

referrals from friends or family, and look for professionals who

have worked with other small business owners or companies in

your specific industry.

Get necessary tax identification numbers, licenses and Get necessary tax identification numbers, licenses and Get necessary tax identification numbers, licenses and Get necessary tax identification numbers, licenses and

permits.permits.permits.permits. A federal taxation number, or employer identification

number (EIN), acts like a social security number and is required

for corporations and LLCs that will have employees. Also keep

in mind that most businesses need licenses and/or permits to

operatein your city, municipality, country.

Insure your business and investigate other requirements.Insure your business and investigate other requirements.Insure your business and investigate other requirements.Insure your business and investigate other requirements. Some

industries have specific insurance requirements. Discuss your

needs with your insurance agent to get the right type and

amount of insurance

Evaluating your marketEvaluating your marketEvaluating your marketEvaluating your market

In order to identify how attractive your

prospective MARKETMARKETMARKETMARKET really is (your own desires aside for the

moment), there are a few things you should consider:

How urgently do people need the thing youre selling/offering

right now?

Generation and screening the Generation and screening the Generation and screening the Generation and screening the

project ideas project ideas project ideas project ideas ---- Market analysisMarket analysisMarket analysisMarket analysis

1.Idea generation

2.Idea screening

3.Business analysis

4.Product development

5.Test marketing

6.Commercialization

Project ideas are generatedgeneratedgeneratedgenerated through different sources like

customers,customers,customers,customers, competitors,competitors,competitors,competitors, andandandand employeesemployeesemployeesemployees.

Sometimes they are discovereddiscovereddiscovereddiscovered throughthroughthroughthrough accidentaccidentaccidentaccident. Project

manager should try to enhanceenhanceenhanceenhance people'speople'speople'speople's creativitycreativitycreativitycreativity, scanscanscanscan thethethethe entireentireentireentire

businessbusinessbusinessbusiness environmentenvironmentenvironmentenvironment and appraiseappraiseappraiseappraise thethethethe companyscompanyscompanyscompanys strengthsstrengthsstrengthsstrengths and

weaknessesweaknessesweaknessesweaknesses totototo generategenerategenerategenerate aaaa largelargelargelarge numbernumbernumbernumber ofofofof ideasideasideasideas.

Techniques like attribute listing, brainstorming, and delphi

technique are useful for improving the creativity at individual and

group level

Methods of generating ideas Focus groups

Brainstorming

Brain writing

Reverse brainstorming

Problem inventory analysis

Gordon method

Checklist method

Free association

Forced relationships

Parameter analysis

Delphi/nominal group technique

Collective notebook method

Attribute listing method

Big dream approach etc.

FOCUSFOCUSFOCUSFOCUS GROUPSGROUPSGROUPSGROUPS: a moderator leads a group of people through

an open, in depth discussion rather than simply asking questions to

solicit participant response.

BRAINSTORMINGBRAINSTORMINGBRAINSTORMINGBRAINSTORMING: the brainstorming method allows people to

be stimulated to greater creativity by meeting with others and

participating in organised group experiences.

BRAINWRITINGBRAINWRITINGBRAINWRITINGBRAINWRITING: written brainstorming. It is a silent, written

generation of ideas by a group of people.

PROBLEMPROBLEMPROBLEMPROBLEM INVENTORYINVENTORYINVENTORYINVENTORY ANALYSISANALYSISANALYSISANALYSIS: it uses individuals in a

manner that is analogous to focus groups to generate new product

ideas.

REVERSEREVERSEREVERSEREVERSE BRAINSTORMINGBRAINSTORMINGBRAINSTORMINGBRAINSTORMING: this is similar to brainstorming,

except that criticism is allowed.

GORDONGORDONGORDONGORDON METHODMETHODMETHODMETHOD: The GORDON method, unlike many

other creative problem-solving techniques, begins with group

members not knowing the exact nature of the problem.

CHECKLISTCHECKLISTCHECKLISTCHECKLIST METHODMETHODMETHODMETHOD: in this method, a new idea is

developed through a list of related issues or suggestions.

FREEFREEFREEFREE ASSOCIATIONASSOCIATIONASSOCIATIONASSOCIATION: one of the simplest but most effective

methods that entrepreneurs use to generate new ideas. This

technique creates a chain of ideas ending with a new product

idea emerging.

FORCEDFORCEDFORCEDFORCED RELATIONSHIPSRELATIONSHIPSRELATIONSHIPSRELATIONSHIPS: it is a process of forcing

relationships among some product combinations. It is a

technique that asks questions about objects or ideas in an effort

to develop a new idea.

COLLECTIVECOLLECTIVECOLLECTIVECOLLECTIVE NOTEBOOKNOTEBOOKNOTEBOOKNOTEBOOK METHODMETHODMETHODMETHOD: a small notebook

that easily fits into a pocket-containing a statement or any

pertinent background data is distributed

ATTRIBUTEATTRIBUTEATTRIBUTEATTRIBUTE LISTINGLISTINGLISTINGLISTING: it is an idea- finding technique that

requires the entrepreneur to list the attributes of an item or

problem and then look at each from a variety of view points.

BIGBIGBIGBIG DREAMDREAMDREAMDREAM APPROACHAPPROACHAPPROACHAPPROACH: this approach to coming up with

a new idea requires that the entrepreneur dream about the

problem and its solution in other words, think big.

PARAMETERPARAMETERPARAMETERPARAMETER ANALYSISANALYSISANALYSISANALYSIS: it involves their relative

importance and through an evaluation of the parameters and

relationships, one or more solutions are developed.

DELPHI/DELPHI/DELPHI/DELPHI/ NOMINALNOMINALNOMINALNOMINAL GROUPGROUPGROUPGROUP TECNIQUETECNIQUETECNIQUETECNIQUE:::: this technique

of generating creative solutions to unstructured problems is an

expert- group based problem solving technique that relies on

the convergence of intuitive ideas from several experts who are

contacted independently with a brief description of the problem

The project managers should analyze the

business environment that consists of the

economic sector, the governmental sector, the

technological sector, the socio-demographic

sector, the competition sector and the supplier

sector. Once a pool of ideas has been

generated, the project manager should carefully

screen them.

MARKETING ANALYSIS

Product Strategy DevelopmentOnly a few ideas are good enough to reach commercialization.Ideas can be generated by chance, or by systematic approach.Need a purposeful, focused effort to identify new ways to serve amarket. New opportunities appear from the changes in theenvironment.

Idea Generation

Continuous systematic search for new product opportunities. MarketingMarketingMarketingMarketing orientedorientedorientedoriented sourcessourcessourcessources--identify opportunities based on

consumer needs

LaboratoryLaboratoryLaboratoryLaboratory orientedorientedorientedoriented sourcessourcessourcessources-----identify opportunities based onpure research or applied research.

Product Screening and Evaluation

New product check list; list new product attributes considered most important and compare each with these attributes. Check list is standardized and allows ideas to be compared.

Ideas with the greatest potential are selected for further research.Do they match organization goalsLook at company's ability to produce and market the product.Need to look at the nature and wants of the buyers and possible environmental changes.

Concept testingSample of potential buyers is presented with the product idea through a written or oral description to determine the attitudes and initial buying intentions.This is done before investing considerable sums of money and resources in Research and Development.Can better understand product attributes and the benefits customers feel are most important.Would you buy the product?Would you replace your current brand with the new product?Would this product meet real meet

Business AnalysisAnalyze potential contribution to sales, costs and profits.Does the product fit into the current product mix?What kind of environmental and competitive changes can be anticipated?How will these changes effect sales etc.?Are the internal resources adequate?Cost and time line of new facilities etc.?Is financing available?Synergies with distribution channel etc.MIS to determine the market potential sales etc.Patentability should be determined, last 17 years, 14 years for a pharmaceutical product.Find out if it is technically feasible to produce the new product.If you can produce the new product at a low enough cost so as to be able to make a profit.

Product DevelopmentDevelop a prototype, working model, lab test etc.Attributes that consumers have identified that they want must be communicated through the design of the product.

Test Marketing

Can observe actual consumer behavior.Limited introduction in geographical areas chosen to represent intended market.Aim is to determine the reaction of probable buyers.It is the sample launch of the marketing mix.Determine to go ahead, modify product, modify marketing plan or drop the product.PROS are:

1.Lessens the risk of product failure.2.Reduces the risk of loss of credibility or undercutting a profitable product.3.Can determine the weaknesses in the MM and make adjustments.4.Can also vary parts of the MM during the test market.5.Need to select the appropriate MM and check the validity.CONS are:1.Test market is expensive.2.Firm's competitors may interfere.3.Competitors may copy the product and rush it out. IE Clorox detergent with bleach P&G. "In a live test you've tipped your hand, and believe me, the competition is going to come after you. Unless you have patented chemistry, they can rip you off and beat you to a national launch" -Director of Marketing at Gillette's Personnel division..

Alternatively can use a simulated test market. Free samples offered in the mall, taken home and interviewed over the telephone later.

Commercialization

Plans for full-scale marketing and manufacturing must be refined and settled.Need to analyze the results of the test market to determine any changes in the marketing mix.Need to make decisions regarding warranties etc (reduces consumers risk). Warranties can offer a competitive advantage.Spend a lot of money on advertising, personnel etc. Combined with capital expenditure makes commercialization very expensive.All stages above are identified in this article except market testing.Need to consider:the speed of acceptance among consumers and channel members;intensity of distribution,production capabilities,promotional capabilities prices,competition,time period to profitability and commercialization costs.