Slide 1: SECTION 3: ESTABLISHING A BUSINESS
Chapter 6, 7 Essential Principles of Business for CSEC 4th Edition By Dr. A
Whitcomb
Slide 2: OBJECTIVES
Define the term ‘entrepreneur.’
Explain the functions of an entrepreneur.
Identify the characteristics of the entrepreneur.
Describe the role of the entrepreneur in the decision-making proc...
Slide 3: Define the term “ entrepreneur.”
An entrepreneur is a person who identifies successful business opportunities, risks
time and money to start and operate a business, bringing together resources with
th...
Slide 4: ROLE & FUNCTIONS OF THE ENTREPRENEUR
Conceptualizing
Planning
Accessing funds or financing
Organizing the business
Operating the business
Evaluating the performance of the business
Risk-bearing
Slide 5: (i) Conceptualizing
Conceptualizing means forming a new idea. This new idea can take different forms.
It may be a new product, service or improvements to an existing one, or ways to
fill a need
Slide 6: (ii) Planning
Planning is where the entrepreneur can identify targets, goals and objectives and
ways of accomplishing them.
Slide 7: (iii) Accessing funds or financing
This is where the entrepreneur will find ways to finance the business such as:
Savings
Loans
Government
Other investors
Slide 8: (iv) Organizing the business
Organizing involves acquiring labour, natural resources, machinery and equipment,
premises and organizing these efficiently as well as making decisions on location
and pri...
Slide 9: (v) Operating the business
This involves ensuring that day-to-day activities are carried out in the different
functional areas of production, marketing and finance.
Slide 10: (vi) Evaluating the performance of a business
This involves ensuring that effective controls are in place such s employees do
their assigned tasks, accounting is accurate and resources are not wasted....
Slide 11: (vii) Risk bearing
A risk is any situation that has more than one possible outcome which is unknown.
The entrepreneurs will make decisions that are risky, in the hope that profits will
be great and ca...
Slide 12: STEPS FOR ESTABLISHING A BUSINESS
STEP 1: CONCEPTUALIZATION
i.e. identifying possible business ideas and goals/ objectives
STEP 2: RESEARCH
i.e. analysis of customer’s wants, th...
Slide 13: ROLE / IMPORTANCE OF THE ENTREPRENEUR IN ECONOMIC DEVELOPMENT
Provides goods and services that satisfy the needs of citizens
Creates jobs / employment
Utilizes raw materials that might have otherwise ...
Slide 14: FEATURES / QUALITIES/CHARACTERISTICS OF THE ENTREPRENEUR
Creative
Innovative
Flexible
Goal-oriented
Persistent
Persevering
Risk-taker
Visionary
Dynamic
Confident
Slide 15: (i) Creative
Creativity is the ability to develop novel ideas or new ways of doing things and
satisfying needs. It also includes being open-minded, versatile, resourceful and
knowledgeable.
Slide 16: (ii) Innovative
This refers to developing a new idea or making changes to an existing one.
Slide 17: (iii) Flexible
This refers to the ability to react quickly to changes such as economic changes or
market changes and adapt to those changes.
Slide 18: (iv) Goal-oriented
The entrepreneur has a high need for achievement or accomplishing a specific task
or goal, if focused and profit-oriented.
Slide 19: (v) Persistent and persevering
The entrepreneur is determined and will not be deterred from the goal or target. He
is confident and optimistic.
Slide 20: (vi) Risk taker
The entrepreneur is a risk-taker, likes challenges and is confident they will be
successful.
Slide 21: (vii) Visionary
Thinking about or planning the future with imagination and wisdom
Slide 22: (viii) Dynamic
Positive in attitude and full of energy and new ideas
Slide 23: (ix) Confident
Has a sense of self-esteem and faith in their ability to greet challenges
Slide 24: REASONS WHY AN ENTREPRENEUR WANTS TO ESTABLISH HIS /HER OWN BUSINESS
An entrepreneur may have the desire for financial independence
The entrepreneur prefers to make his/her own decisions in order to c...
Slide 25: Sources of Information for conducting research into establishing a
business.
Primary research
This refers to the collection of primary data or raw data, that is, information
that does not already exi...
Slide 26: Sources of Information for conducting research into establishing a
business (continued…)
Secondary Research
This refers to the use of secondary data, that is, information that already exists
in some ...
Slide 27: CHALLENGES/ PROBLEMS FACED BY THE ENTREPRENEUR
Financing
New entrepreneurs find difficulty in sourcing financing to start their
business such as obtaining a loan.
Decision-making
New entrepreneur...
Slide 28: PLANNING
Slide 29: Define the term “planning.”
Planning is a decision-making process by which an organization decides what it
wants to achieve, how it intends to achieve it and in what manner.
Slide 30: Importance of planning
Planning gives direction or provides a guideline.
Planning forces managers to look ahead and anticipate possible changes. This helps
them make better decisions.
Planning helps...
Slide 31: Necessity for planning in operating a business.
Managers have to create different levels of plans for different levels of
activities in the business.
These are:
Short-term planning – for day-to-day ...
Slide 32: BUSINESS PLAN
Slide 33: What is a feasibility study?
A feasibility study is an analysis of the viability of a business idea and an
examination of different aspects of operating a business. It will show whether the
business i...
Slide 34: The feasibility study will examine and conduct research:
Market demand
Target market
Profitability
Production methods
Operating expenses
Distribution channels
Competition
Promotional Requirements
Cash...
Slide 35: Define the term “business plan”.
The business plan is a written document that outlines what the entrepreneur hopes
to achieve from being in business, the way and how various resources that the
busine...
Slide 36: Reasons / Purpose for preparing a business plan.
The business plan becomes the written proposal addressed to potential lenders or
investors to source financing.
To ensure that careful research is co...
Slide 37: Benefits / Uses in preparing a business plan.
A business plan is useful in that it:
Ensures that careful research is conducted into the feasibility of the business.
Anticipates needs and problems wh...
Slide 38: Elements of the business plan:
Executive Summary
Operational / Production Plan
Marketing Plan
Financial Plan
The Organization and Management Plan
Slide 39: (i) The Executive Summary
The Executive Summary gives a clear picture of the main points of the business plan
such as:
Identification of the business
The objectives of the business and the owners
Des...
Slide 40: (ii) The Operational / Production Plan
The Operational / Production plan gives details about:
Description of the goods and services
Suitability of location for production /operations
Describe the type...
Slide 41: (iii) The Marketing Plan
The Marketing plan gives details about:
Organization of the marketing department
Market research
Product strategies such as design, branding, packaging
Pricing strategy
Distri...
Slide 42: (iv) The Financial Plan
The Financial Plan gives details about:
Purposes for which finance is needed
Production costs
Other costs
Projected performance
Capital requirements
Collateral
Financing requir...
Slide 43: (v) The Organization and Management Plan
The Organization and Management Plan gives details about:
Organizational Structure
Human resources required and available as well as the duties and responsibi...
Slide 44: LOCAL, REGIONAL & GLOBAL RULES FOR CONDUCTING BUSINESSES
Register with the Office of Registrar of Companies.
Private and Public Limited Companies must prepare Memorandum of Association and
Articles of...
Slide 45: SOURCES OF CAPITAL
An entrepreneur may acquire funds from many sources such as:
Personal savings
Funds from partners or other investors
Loans from commercial banks or financial institutions .e.g. Sco...
Slide 46: What is collateral?
Collateral is money or property that is pledged as security for repayment of a
loan.
In other words, collateral is the security required by a lending institution to act
as a safeg...
Slide 47: Examples of collateral
Property such as land and buildings
Stocks such as shares of a company.
Bonds i.e. a certificate that represents money to be paid at a later date.
Money / cash
Cash surrender in...
Slide 48: Significance/importance of collateral
Collateral is very important because it is often used to access the capital / money
needed to start a business. This is because many entrepreneurs do not have the...
Slide 49: FACTORS THAT AFFECT THE LOCATION OF A BUSINESS
Geographical Factors such as climate and land terrain.
Availability of raw materials and supplies.
Availability of infrastructure such as power, water an...
Slide 50: Geographical factors
Agricultural products may favour a certain type of soil and climatic conditions,
for example, tropical fruits may grow best in tropical climate, hence the climate
of the caribbean...
Slide 51: 2. Availability of raw materials and supplies
Firms may be located close to their supplies if raw materials are bulky and too
expensive to transport. For example, the refinery plants in Trinidad and T...
Slide 52: 3. Availability of infrastructure such as power, water and transport
The availability of power, energy and transport are crucial factors in determining
the best location of a firm since firms require ...
Slide 53: 4. Availability of labour supply
Many firms locate in an area close to the supply of labour. A lot of labour
intensive firms located as close as possible to the supply of labour.
Slide 54: 4. Availability of linkage industries
Backward and forward linkages among local firms are important factors for firms
located in industrial estates.
Industrial Estates are set up by Caribbean governm...
Slide 55: 5. Closeness to market / customer-base
Banks, insurance companies and some garment industries usually site their offices
and plants in the city areas, close to the market, in order to capture quick sa...
Slide 56: 6. Government support
Government encourage firms to locate in certain areas such as rural areas and
industrial estates by giving these firms incentives such as tax holidays, tax
breaks.
Slide 57: ACTIVITY 1: Match the factors that influence the location of industries
with their corresponding indicators in the column on the right.
