Teh Copy. ag (tC yi ET on - | = pee ee = Pare eee ff /- SUMMARY oF \ ; : EE? \ —s CREATION AND GROWTH) f ye ' z wu A | LA. PREPARED i i BY ~ BELLOBYAI © \ Sy ( (CAPTAIN) \- | q : : Ne \AVAILABLE @ KAMSUSI BIZ CAFE , “LY apy co | _ sla |eep.4201 | . ae ' | MODULE ONE ‘A business is an activity or entity, normally engaged in the provision of products and or services, for commercial gain, extending to-‘sdn- “commercial ongenizations that may or may not be profit oniented. This i iespective of the size and autonomy. Meanwhile, a bina ib aitatomest of aloulated i intention to organize eon and resource to achieve an outbome. This may gr may not be in written form, but essentially comprising explanations, Hstcations and felevant numerical and financial statistical data, Bus Plan | : ‘ Business plan Hare could be referred t 38 the activities and aims of any entity, individual, group or organization swith the purpose of converting efforts to results,! ‘ ‘When the existing busitiess is to assume a major change or when planing anew venture, 23105 year business plan is required, sine investors will look for their retums within that timeframe. the business plan simply serves as the detailed map of the venture that will guarantee a steady start up, a steatly but gradual growth and vitality of the business, Business plan serves asa blueprint to guide the organization’s policiesiand strategies which are continually modified as conditions change and new opportunities or threats appear. If this is prepared for external audience like lenders and prospective investors; it has to include details of the past, the present, and-a forecasted performance of the business, | - 1 ‘This characteristically has two key aspects, one focused on making profits and the other focused on dealing with risks that might negatively irhpact the business. Business Planning Process: The process of determining all the goals, strategies and projected actions that you intend taking to promote and ensure as budiness planning process. there are five requzed steps to create a new business plan. Its & detailed provess here referred to as business olin process."These steps are: \ i ‘ \ Ifuare good. rk oh. 4s don't need to bring someone down for.uto be sieat| | Byot(easygoing). | | | ‘ , | \ | ij || EP 4201 2 ii, iii, oi. vy _ Revisitation and Proof-reading to finalize: + Typical Structure For A Business Plan For A Start Up Ventur ‘ i ‘business plans are decision-making tools. There is no fixed content for a business plan. Rather the content'and format of the business plan is determined by the goals and audience of that * enterprise. Some entrepreneurs simply see a business plan representing all aspects of business * planning process that include only the vision and strategy with sub-plans to cover marketing, finance, operations, human resources as well-as a legal plan when required. To some others, it has to be more detailed then that. ‘ However, this discussion uses a typical structure for a business plan for a start up venture. + Executive Summary: This is the general overview of the entire business. Questions that have to be answered here include: a, What is the businyss? b. What is the market? ©. What is the potential for the business? 4. What are the forecast profit figures? e. What are the Funding requirements? f, What are the prospects for investors and lender? : ‘Business Description: This is a detailed description of the business, with an in-depth ~ explanation of the product or service being planned for the market and its benefits to those who will buy or use it «Business Environment Analysis: This should explain she detailed strategy and tactics to be employed for bringing the product or service to the market \ a) Determines how to get to the market? b) Summarizes how to fulfill the entreprerieur's objectives. «@) The detail wil be contained in programmes and budgets. i 4) the pricing structure to be established, . .ed to bring someone down for u tobe great , Byazeasygoing). ‘Fu-arz good enough, w don’t ne I \ep 4201 6), the estimated saies projections. \ Market Analysis: This should thoroughly describe the customers, your competitors, the need for your product or'seryice, and the health and vitality of the market place. ‘What isthe size and growth rate of the market? How is the market segmented? What is special about the prodiict or service? . ‘What are the competitive advantages? What is the marketing strategy? Marketing Plan: The marketing has to be adequately planned for and must include the: Market research Segmentation and targeting Detailed outline of the product or service Unigue selling points Chosen pricing strategy Promotional plans Distribution strategy Customer service strate Operations Plan: Operations plan include the production process which must be explicitly explained, The process of bringing your product or service to the market, office space, production schedules, inventories, suppliers, supplies, official licenses, and insurance, meeting and existing business regulations must all be thoroughly discussed. ‘Management and Organization: This explains the organizational structure of the enterprise whether it will be sole proprietorship, partnership, Limited Liability Corporation, or other status and those to be involved. Financial Plan: This offers the idea about the finances to be involved. The available amount, the required amount and how and where you will secure the difference, Reasons For A Business Plan: Planning about your business is a necessary process to undertake before, during and after start up. A business plan serves 'fuare good enough, u don’t need to bring someone down for u to be great Byal/easygoing).cep 4201 Road Map/Guide For The Business: Assurance of potentiality: Define a Business: d Seives as Résumé for the Business: Regular Business Review and Course Corrections: Review Current Progress Against The Initial Forecast: Support For A Loan Application Or Raise Equity:Funding: Defines Agreements Between Partners: 9 Proper Allocation of Resources: 10, Sets a Value on a Business For Sale or Other Legal Purposes: SNAP RY De ‘Topic 3: Start Up Decision - What Motivates People To Begin New Businesses Factors That Motivate People to Begin New Businesses #» Joblessness: + Financial Ambition: Desire to Control the Economy: © Desire to pursue a business idea: «Advantage of an opportunity in the market: +. Inherited Family Business: + Desire to be their own boss: * Replicating a Business Idea found in Another Environment: +” Frustration with low Pay: * Life After Retirement: Topic 4: Opportunity Search and Identification +: Haare goo! '/40re good enough, u don't need to bring someone down for u to be great yad(easygoing): ,e€p 4201 af : \ Opportunity refers to-the extent to which Possibilities for new ventures exist ang the extent to which entrepreneurs have the Jeeway to influence their odds for success through thet own actions. Simply put, opportunity is q Perceived means of generating incomes that Previously have not been exploited and are not. currently being exploited by others, Opportunity identification : can, in turn, be defined as the cognitive process or processes through Which individuals conclude that they have identified an opportunity. Business Opportudity Identification Process "is pertinent o know how entrepreneurs identify and decide a new business opportunity with the best chance to succeed. The most important part of all business attempts common to most Successful startups is answering an tinmet need in the market, Customers are always interested in Produets that add value, They buy products needed only to satisfy, ome problems, Most entrepreneurs searching for new business ideas fundamentally consider tree central issues, ‘The main one isthe potential economic value He first consider ifthe venture has the cdpacityto Senerate profit. The second is the newness of such a venture, He/ She will prefer products, Services or technology that does not previously exist in that environment. The third is the Perceived desirability whether their product has the moral or legal acceptability in that environment. He then considers if: : * his final business decision idea corrects a deficiency in the market: the resources and capability to carry out this business idea are available to him/her. * the market for it are readily available and at profit sales. the new business idea can compete favourably with existing related competitors and their market. this business market is growing or not and how one should prepare to join that business. The Stages of Opportunity Identification process Opportunity identification is the collection of three main factors, © The entrépreneur’s background, + Bosiness influence ‘Tu.are good enough, u don’t need to bring someone down for u to be great Byatleasygoing). =,cep 4201 «Business environment, Opportunity identification has five stages that lead to “¥ecognitign» n. The five stages are discus, in relationship with the process of opportunity identification, Th es 8° stages are: preparation incubation insight evaluation Se wp elaboration ‘Types of Opportunity The main purpose of any type of opportunity is to strategize to achieve appropriate search. © secognized type + discovered type © created/enacted ‘ype Bach of these type of opportunity is associated with a certain level of certainty. Factors that Influence Business Opportunity Identification There ere five factors that influence identification of opportunities. These are: a. Entrepreneurial Alertness », Prior Knowledge ©. Discovery versus Purposeful Search 4. Networkifig versus Solo Entrepreneur ©. Creativity « Opportunities from SWOT Analysis. : Some opportunities are sometimes identified while the entrepreneur is having hs or her self ‘ssessment in terms of strength, weakness, opportunities and threats universally referred to.as swor, Ifuay i easy "* cod enough, w dont need to bring someone down for u té be great yetEP 4201 ~ Template of SWOT for a Business Venture: _” Strengths ‘Your strengths are the intemal factors like - Weaknesses the advantages of Your organization, what you do better than others, the unique or ‘Your weaknesses are the other intemal factors that need your improvement, those that you need to avoid, those things that may make you lose salts and others that people in'your market may see ‘a8 your weaknesses. Jowest-cost esoureés you can draw upon that others can't, your organization's unique sales strategy, the factors that make you get the sale and what the people in your market _ They generally involve your product see as your Strengths ‘These are mainly the presentation capabilities and baggage of core operational capabilities you have and _ existing investments, a the reach of your distribution network. Opportunities ‘Threats ‘Your opportunities are usually external Your threats are mostly external factors like ~ factors like the good chances you can obstacles you encounter, your competitors * recognize or the interesting drifts in the activities, the changes in quality standards of market you know. Changes in government: your jab, products or services, changing of Policy, technology and markets, social technology may threaten some positions, : pattems, population profiles, lifestyle “bad debt or cash-flow problems. One also changes, and other Iocal issues relating to __ needs to check if: any of the weaknesses, : the business should interest you as competitors under-cutting that can cause : opportunities. The customer division as well _uprofitable operating ground and as cheaper and cost effective supplier of Governments’ unpiedictable policies are choice for other markets should be Serious threats to the success of the business. considered as opportunities. 4 Legal Issues at Start Up Legal issues at startup involves dealing with setting up the business entity, business name and * trademark registrations, labor and employment issues, intellectual property and vender couitracts ‘mong others, Its advisable to run your plans along with an experienced lawyer that can handle {Yar good enough u don’t need to bring someone down forutobegreat | ——_Byateasygoing). A \ :EP 4291 as setary wi e the unique startup requirement of your business. Its paramount to set up proprietary rights in th business and avoid infringing on the rights of others. | i The summary is that all start up business owners need the legal lowdown on the little-known legal issues that often collapse new enterprises. You need a good attorney, Whether you are Boing alone or joint your company is structured so that it protects your interests and fits your goals. é ‘ Your Prospective Attorney : tis essential to note that not all lawyers can be an attorney. As important as business law is the Nigeria Bar Associaton has two section: the Section on Business Law (SBL) and the Section ° on Legal Practice (SLP) to ulidertake its professional business. The Sections were inaugurated by the then President of the NBA, Chief Bayo Ojo on the 9th of December 2004, The Section through its Committees is already making valuablé input into various init bringing about reforms in Business Law Practice in Nigeria. ‘You don't want to take that legal jump alone, ives aimed at and good counsel can really help you navigate the early phase'of your business. The following concem. every startup entrepreneur should ask their prospective counsel are: - + their experience in working with startups. * their expertise with various startup legal issues, such as entity selection, securities law, intellectual property and labor and employment. ©” sheir contacts or a working relationship with other professionals who coilld be of assistance--accountants, investment bankers and venture capitalists * Who will be handling your file * How he can distinguish your firm from others * - . Four major legal issues that should be attended to are: > Address legal restrictions/Limits: > Choose a Business Entity Type - > Protect Intellectual property. ‘Bya1{easygoing). If u are good enough, uidon't need to bring someone down for u to'be great 3ya4 (easygoing)Te ing : name at hand while choosin& Ttis essential to keep these characteristics of @ business ' i % \ EEP 4201. . : : any name: : > Generating and Registering « Business? ae Tt should be easily and proudly expressible. it should be easy to comprehend aid spell Tehas to beereative and imaginative. (sound well) avoid common or generie names. eid so that your it must clearly advertise your business ideas and represent all you do Production‘line will not be limited. it should be distinctive and concise and without ambiguous words. 7 ‘consider the generated name in an alphabetical list such as the yellow pages. Feasibility Analysis of New Ventures and New Venture Financing . ent Feasibility analysis is a comprehensive research study required by the entrepreneur or his ag : ‘o determine the practicability, profitability and viability of the business idea. the main task o feasibility analysis is to express the model of the business and its marketability; check its Prospect for financial profitability and success; and convey the managing group's capability to implement and accomplish the business objectives Feasibility analysis therefore an overview of the business and a preliminary appraisal of the business idea to consider i it merits pursuing, Itreasonably reveals without prejudice the Strengths and weakmesses ofthe busines, its opportunities and threats through the background and the assets required to carry through as well as the eventual diagnosis for achievement. Reasons for Feasibility Analysis : : Feasibility analysis mainly assists to: * Appraise the business marketplace for the new business idea; {1¥ are good enough, u don’t need to bring “omeone down for u to be great f 0 be gre Byal (easygoing), é Pea. EEP 4201. : e é As6CSS if the Managing team have the personality generally known with eat business Persons. It is Advisable to have self assesstv ent first. One must hav’ sic LU Personality suited, skitted and knowledgeable 1 Tun.a business and lead a 8" success, pet ‘he challenges of start ups and how one can overcome those challenges, Consider the financial feasibility of the business vie-aviz its expected. ee incomes, Sxedand variable costs as well as bleak-even calculations; Aecide to continue wi ith the business plan due to its viability and other attractions or not. Sometime it takes aéking oneself some bitter but pertinent questions whether to scrap the idea if itis no longer as originally envisaged or needs to be amended, redirected or altered immensely, ©. How to Write a Feasibility Analysis Report A feasibility analysis report for a start up business can be a simple or complex exercise, depending on the type of busines 8. ‘The template set out below is therefore a general model that Could satisfy most businesses. Proposing Entreprencurs’ Profile: 2.) Team Members Names: »,) e-mail addresses: ©.) GSM Telephone Members: 6.) Positions of Team members in the Businéss: ©.) Postal and Residential Addresses: £) Educational Qualifications: Business Name: This indicates the type of registration, whether a sole proprietorship, partnership, corporation or limited liability venture, Business Location Headquarters and Branches: A good description of te possible headquarters location of the company, manufacturing plant, its branches and facilities including offices and Background History of the Business: This refers to the business overview and should briefly . describe the proposed business. Ifu are good enough, u don’t need to bring someone down for ute be great Byal (easygoing).EP 4201 Business Objective: This is always as conceived by the business team, It describes the main concept and the essence ofthe business, i i i f the + Required Technical skis: ‘This section assesses the technical and professional readiness 2 business. P é ~ Proposed financial Contributions (Capitalization): A start up business requires a lot of fun to provide sufficient access to resources, - ‘ Management and its Strategy: This section shiould spell out Be organizational structure” ‘appropriate for the business and decide whether management would run the business by direct labour, contract, consultancy, ; te. There is the need to specify the management team’s needed experience to.identify the required staff positions that must be filled, Sources of finance at Start up: The report is supposed to give details of capital fund required {and to enumerate the various sources of raising capital to sustain the business for the first one year. Production and operational requirements: Operations must define the production and other operational processes necessary to deliver the products and services from Pre-production level to the market environment. A vital aspect of operations hich the report must emphasize is the production line. The required technological equipment and human resources for the business, its Purchase set up and running costs for profitability rhust be determined, sufficient market demand. Financial Assessments and Projections: The main essence of the financial ass, Them sessment and projections js to determine whether the business is financially feasible or not :EEP 4201 the * duct an ae \e pro" growth stages especially the brake even peak period in the ife cycle of th Tevenve dropping period, f the nt status O7 Re-investment Policy: The feasibility report would need to et ae be able to predict ‘business, examine the up to date developmental programme of the er hhow the business should be in the future. : ‘pusiness. Risk analysis; Risks especially the financial one is a major consideration for any siness entity ‘Conclusions and Recommendations: ‘When it has been decided to establish a a . the business feasibility analysis must afterall consideration conclude whether the viable, promising and gainfil. Other Feasibility Considerations © Economic feasibility © Legal feasibility © Operational feasibility * Schedule feasibility * Resource feasibility + Financial feasibility Thé Relationship between a Feasibility Astalysis and a Business Plan A feasibility analysis and a business plan are similar in process and both are employed in most business enterprise being proposed by an entrepreneur, However, there are some basic differences between a feasibility analysis and a business plan. Feasibility analysis is carried out with the intention to discover the workability and prosperity of a business. A feasibility analysis is required before investing in a new business to know its Potentiality and whether it worth the time, efforts and resources being proposed for it. A business plan is done only after establishing the business and feasibility report has indicated that business Opportunities exist. Invariably, business plan comes after a feasibility analysis whose positive.” result gives birth to the next step of developing a business plan. {Ywore good enough, u don’t need to bring someone down for u to be great Byal(easygoing).FEP 4203; fy j . ve While a feasibility Analysis involves a Jot of calculations, analysis, projected forecasts, business Plan consists of mostly strategies and tates forthe development ofthe business, f ‘Where a feasibility analysis entails nvenignton ad 82 crite esearch work 0 determine “if business is viable, a business plan concerns itself with the development and sustenance of the business. A business plan draws on every information gathered in a feasibility analysis report to further prepare the ‘ysiness for operation and decides how strategies will be carried out. Feasibility analysis considers the strengths and weakmesses, the competitors, the pricing » landscape and marketing Strategies for the products or services to'succeed in the market Snvironment. A feasibility analysis foresees such and other obstacles, which the busitiess plan has to resolve ‘feasibility analysis is extremely indispensable ina fresh start up business while not very” necessary in an existing one. Business plan is essentially needed for both, A feasibility analysis polishes the entrepreneur's initial concept ofthe business while the entrepreneur's response to the cri details festeton stage to maturity. See the diagram on page, These funding sources are arranged below in progressively required. ’ * Founders, Friends & Family or Bootstrapping Phase 7 * Business Angels : © Venture Capital (VC) | Initial Public Offering (iPO) * iu are good enough, u don't need to bring ~ down for u to be great Byat le 'Yat(easygoing), ceEeP 4201 MODULE 2: ISSUES oF BUSINESS GROWTH: AN OVERVIEW Introduction : Entrepreneurship is recognized as the engine of evonomic growth and worldwide. This is becauséthe social and economic value addc (ed through innovation productiveness of the © employment generation is critical to the increase in the-overall and also cerve the interest f the owners contribute positively to the economic development of regions and nations (Acs, 2006 and 2007). Thus, it is essential for businesses to grow in order to S Autio, Topic 1: Concept of Business Growth Business growth means expanding firm’s products and services or expanding its target markets, or some combination of each. Any increase in the volume of activities of enterprises is a clear indication of growth. Reason for Business growth Researchers have shown that more than half of all businesses fail in ess than two years of commencement. Also, a large number of those businesses that survive the first two years hardly grow. Conventionally, people ascribe businesses success or failures to fate/chance or certain environmental conditions including family background. ‘The question often asked is what motivates people commit to starting and growing their businesses, Usually, entrepreneurs tend to make critical investments, take acceptable risks and i sks an learn consistently because of their desire to make mone: ‘ 'y and enjoy all the rights and privil that come along with wealth. ights and privileges To improved social status and well being, greater opportunity for philanthropy and community services, If a Gre goodenough, u\don't need to bring 9 someone down foru to be great "syat(easyga art feasygoing).EEP 4201 a } = Saining control over their own destiny : and social Govemment tends to favor business ow bees? it sens wnemployimen - tension in addition to Taising more revenue from taXes- ~ ‘© create social and economic value for al i | reation in a As employments are generated, the increase productivity rises the level of wealth c e Biven economic envitonment, Types of Business Growth ‘There are two main types of business growth: 1. Internal Growth and ; 2. Extemal Growth : Topic 2: Strategies for Growth Business organizations must grow int order fo remain relevant and competitive. Businesses tend to grow in order to deliver their products or services better than competitors. ~ Therefore, entrepreneurs are expected to create an environment that will fit the growth agenda of » the firm. i ‘When a firm is better organized, there are a number of alternative path for growth, They include: i 1. Expanding Product Line or Service Offerings: 2 Opening new branches/division: 3, Exporting: 4, Innovation: Ifuare good enough, don't need to bring someone down for u to be great Syat(easygoing),EEP 4202 5. Creating and Maintaining Online Preseoe® 6. Franchising and Licensing: 7, Merger and Acquisition: 8. Competition: Topic 3: Challenges of Business Growth in Nigeria It is pertinent to recognize that, like many African countries, Nigeria’s economy is mono- cultural, relying overwhelmingly on oil resources. Over the years, the country has failed to diversify its economy away from the extractive sectors which increasingly limits its ability to grow and develop. This probl further prevented Nigerian entrepreneurs from moving towards higher productivity in value added sectors, The years of inaction in this regard resulted in the low productivity and non-competitiveness of Nigerian industries. C.OMovie and music O Intemet cafes G Phone cards and call stands’ O Business centres Other business activities that experienced significant growth in the last few years include: © Furniture making O Printing press O Steel works O Bread and confectioneries ; \ ; 11(easygoing). 'f.uare good enough, u don’t need to bring someoné down for u tobe great feEP 4201 o Photo studious and video coverage The problems of many of ventutes'listed above remains lack of expansion, low technology and skills; and limited capital in fact, significant numbers of youth that have low skis ae either unemployed or are engaged in street hawking and road side petty trades because the ventures that are expected to absorb them do not frequently grow. Thus, there is the need to carefully address the binding constraints to growth of businesses in order to regenerate the economy. Some of the key challenges are as follows: i 1. Lack of coherént economic empowerment policy: 2. Technical constraints 3. Deteriorating economic condition: 4. Lack of productive culture: 5. Weak Investment climate and Doing Business Indicators: * Low Access to finance: * Access to Business Development Services: + Low Access to infrastructure: f © Low Access to Investments: . : : Topic 4: Critical Success Factors for Growing Businesses 1, Clarity: An entrepreneur is required to be clear of her vision in life, This will help her to set challenging goals for the business, If-u are good enough, u don’t need to bring someone down for u to be great Byat (easygoing).+ ERP 4201 5 entrepreneur Competence: Even when goals ar clearly defined, there is the need for - ing inform ‘© Constantly lam ney skills and acquire experiences to permit making inf decisions, | : E a i Re tation is Reputation. The most valuable aset frm can develop is its reputation. REP hhow the business is known by its customers. ae 4. Resilience: There are numerous challenges confronting businesses especia)!¥ * ; is itical. Stage. The ability to Mentify and remove obstacles with focus and speed is a ae ys 5. Creativity: Successful businesses are, innovative. The ability to think differen caer services are at the initial and to figure out new and easier ways to produce and deliver products and very crucial to’ growth. 6. Concentration: Entrepreneur's ability to avoid distractions and focus on what she does- best is one of secret for success, a ; 7. Courage: Many people tend to avoid risks and difficult endeavors. Many studies have shown that the courage to take the "first step” makes all the difference. 8. Learning from failure and moving on: As entreprenebrs target growth they sometimes fail. 9. Financial Discipline: There are instances where entrepreneurs get carried away by short term financial successes. 10. Investment in people: Businesses that grow consistently develop the capacity of managers and employees. MODULE 3: SOURCES OF FUNDS HANDOUT 1 3 SOURCES OF FUNDS FOR NEW AND ENTREPRENEURIAL VENTURES (@ Personal Savings et Personal savings is the most common source of financing for small business enterprises. It has to do with the personal money which the entrepreneur has been-able to set aside for an intended business venture. if'u ore good enough, u don’t need to bring someone down for u tu be great Bya (easygoing). vEEP 4201, ions. (@ Borrowing from Friends ang pelqtion® borrowing from friends and ee Funds can be raised for entrepreneurial ventures throug and retionship dat exit between The amount depend on the financial capacity of the : to ii) Trade Credit nko‘ itrdngi'i pve: «Trade credit asa source of fang occurs when a buyer buy goods on credit and pay later. : : Gy) Accrual Accounts a : tinually ocourring Accrual acéounts can also be called account payable. It eprssents the coatimvally ee tees it and of Current liability of a particular business, These include wages, interest, taxes that are payable in arrears, . (¥) Retained Earnings : Funds can also be obtained through undistributed profits. A business owner may decide to reinvest part of his or her profit back to business fo! efficient operations of the business. (vi) Equity Financing lender a part owner of the business venture, risk and profit are shared together, \ (Vii) Bank Loan an. This is a common'practice among ion doing business with a Particular {fu are good enough, u don’t need to bring Someone down for u to be great Sy01 (easygoing .EEP 4201 (viii) Project Financing tution. This can be ay the capital sum e execution of the ‘ial insti Project financing is the funding of a particulat project bya financi a re source of funds only when the proceeds from the project are suffici $e i for usually known as the principal which is the amount of money borrows project with interest accrued. : (ix) Venture Capital f ae i it all and high Venture capital is the money invested by individuals or venture capital firms in sm oe ee 5 busi risk business enterprises, Venture capitalists are investors that invest in other people’s businesst for the sole aim of profit ‘The venture capital industry may consist of: © wealthy individuals © foreign investors © private investment funds © pension funds or : © major corporations. (x) Debt Financing These are funds that the business owner borrows and shust repay with interest. Borrowed capital maintains ownership of the business (unlike equity financing, which dilutes ownership) but is carried as a liability on Balance Sheet, (xii) Banker’s Acceptance This is credit facility that involves a bank and its customer, It is a time draft payable at a stipulated date. (xiv) Bank Overdraft Another financial facility is an overdraft facility, which bainks give to its business clients. Bank overdraft is an overdrawn bank current account and a short-term financial facility which is {Yuare good enough, u don’t need to bring someone down for u to be great ‘Byat(easygoing). x 7 ,Gi) The chardeter of the conte (iii) The management and financial position of the business; GW) The capacity ofthe business and (©) Collateral security (this depends on the amount of money involved) (xv) Inventory Financing (xvi) Borrowing from Cooperative Societies , (xvii) Hire Purchase h . 4 (xviii) Leasing (xx) Microfinance Banks (xxi) Public Offerings HANDOUT 2 : INTERNAL AND EXTERNAL SOURCES OF FUNDS to the government. ‘Advantages of internal souges of finance inte the followi . 4 following: {ware good enough, u don't need to bring so, meone down for Uto be great 8ya1(easygoing).EEP 4201, i capital i immediately availabe; i there is no interest payable on suc fund ii. there isno. control procedures regarding the credit worthiness of the owners and iv there is ho third party's Z influence. Disadvantages of internally sourced funds {. Itis somehow expensive," cy i _Ttis not tax- Gediuotible, v .Itis limited in volume because it is subject to the capability of the owner(s) t0 raise fund intemally. i ? ’ ii, tdoes not easily increase capital. ii, Itis not as flexible as external financing. FORMAL AND INFORMAL SOURCES OF FUNDS Formal sources of funds represent those institutions that are registered with appropriate : authorities to transact the business of finance with entrepreneurs. Examples of formal sources of funds include loans from commercial banks, insurance company etc. On the other hand, informal sources of funds are provided outside the structure of government seguiations and supervision. Examples of informal sources of funds include those groups or individuals that are involved in loan disbursement with litle or no formal regulations Advantages of formal sources of finance (i Provides proper guidelines and documentation for loans. (Gi) Business advisory support from the banks that is lending. (iii) Helps the entrepreneur to stay focused ou the business because of interest rates. Advantages of informal sources of finance (i) Ithelps entrepreneurs to have easy access to funding. (ii) Less documentation is involved in loan process. ’ (iii) Entrepreneurs do not stand the risk of loss of assets or business to the institution. HANDOUT 3 . : CONCEPT, METHOD AND TYPE OF FINANCES PROVIDED BY VENTURE CAPITAL ‘The Concept of Venture Capital ' ae ‘Venture capital funds may be described as pools of capital constituted for investing in relatively high-risk opportunities. It provides long-term, committed share capital, to help'unquoted Pexicdacional © don’t peed to bring someone down orto be great *_ Byat(easypoina)EP 4201 i ro ag ; jst makes motley by owning equity in the ~ Companies grow and succeed, The venture capitalist me ley y Companies they invest in, F ; Venture Capital Fun, i : ding Et Tn capital venture, lenders have a legal right to'interest on 9,oan and repayment of the capi o ; : és italist's “BeSpective OF the suecess of otherwise ofthe businss. AS a shareholder, the venture capita Tetum is dependent on the growth and profitability ofthe business, Venture capitalists are typically very selective in deciding where to invest in; Financing Stages in Venture Capital Six stages are involved in Venture capital financing and they are as listed below: © Seed Money: This isa iow level financing needed to prove a new idea, often provided by angel investors, -Gi) Start-up: This Stage deals with firms that are in their early stage that need funding for SxPenses associated with marceting and product development, GiDFirst-Round: This stage covers early sales and manufacturing funds of firms. (iv) Second-Round: Ttincludes funds that are used for financing of the working capital for early ‘98° Companies that are selling products or services but make little or no profit from the : Profitable company, (vd) Fourth-Round: Also called bridge financing, This is used in financing companies that want ‘Types of Venture Capital * Venture Capital firms differ in their ‘approaches, certain factors influence the venture capital decisions and these include: * some venture capital fms tend to invest in new ideas or fledgling companies. Others 7 + some may want a quicker publie sale of the company or expect of help a venture capital provides can vary from one firm to the next « if ware good enough, u don’t need to bring someone down, for u to be great+ o# Associate . Entrepreneur-in-residence (EIR): 5 Businesses that are Attractive to Venture Capitalists sini ‘Venture capitalist prefers to invest in "entreprenetiial businesses". This does not neces i yotential ‘mean small or new businesses rather, itis more about the investments aspirations and p for growth, rather than the size of the business. e Sources of Finance for Venture Capital Firms ‘Most venture capital firms raise their funds for investment from extemal sources such as; pension funds scheme, insurance companies, mutual funds, public offerings from interested investors and private placements, To obtain these funds, venturé capital firms have to demonstrate a good track record and the prospect of producing returns more than what is achievable through fixed interest or quoted eity investments, «Before a venture capital fit can invest in any business, information on the following are important: - i, Good business plan/feasibility report: ii, Technical know-how of the promoters of the business. iii, Product or service commercially viability, iv. Potential sustainability of growth for the business, ¥. Whether management have the ability o exploit this potential and control the company through the growth phases. vi. Forecasting techniques and accuracy of past forecasting Vii? Assumptions on which financial assumptions are based, ‘ viii The Iotest available management accounts, inckuding the company's cher ie Bank facilities and leasing agreements ; & : ‘Fu are good enough, u don’t need to bring someone down for u to be great Bya1 (easygoing).EP 4201 c ix Pensions funding, te ‘ X Employee contracts, : : xi, Does the Possible reward | justify the risk? . ‘ Xii, Does the potential financial on the investment meet their investient criteria? Methods of Yalustion Used By Venture Capital coe The following Steps are mostly used as methods of valuation by venture capital firms: Teentification ofthe amount of capital tobe invested by the investor. Tdentification of the target rate of return expected by the investor, Estimation of the multiple of the original investment that will fetch the required rate of Tetum oVer the anticipated holding period. : Projection of the market value of the firms based on performance projected during the Proposed year of existence. ° : : Estimate thepercentage of the projected Value that the investor needs to claim in order to achieve his return objective, Investment Process of a Venture Capitalist 4 * How is Venture Capital (VC) different from banks? "Banks provide term loans and Working capital limits to companies. The company has to make . ; * GOVERNMENT INITIATIVES DY FUND We: scars: AND MEDIUM ENTERPRiIspg (SMEs) IN NIGERIA Ifyore good enough, u don't need to bring Someone down for u to be great joEEP 4201 Several efforts from both government and itemational agencies have Dee? enhancing the operation of SMEs especially in the area of fnancing ‘These schemes aré making ‘much impact to eisure that tie objectives of a terms of job creation, poverty alleviation, skill supply, infrastructure provi nt B ok of Nigeria the Cent ‘Nigerian economy. In order to make the SMEs sector more vibrant, the availability of evolved new initiatives, which are geared towards improving accessibility an credit to the SMEs through the following schemes: = i 1S) (The Small and Medium Industries Equity Investment Scheme ene et (i) Nigerian Agricultural, Cooperative and Rural Development Bank (N/ CRD) (k) The Bank of Industry () Refinancing and Rediscounting Facility (RF) Other Government Financing Incentives which had one time fanctioned include: (m)Small Scale Industries Credit Scheme (SSICS) (a) Nigerian Bank for Commerce and Industry (NBCI) (0) National Economic Reconstruction Fund (NERFUND) (p) World Bank Facility, for Small and Medium Scale Enterprises (SMEX) Loan (@) Nigerian Export and Import Bank (NEXIM)- MODULE 4; ENTREPRENEURIAL MARKETING (DRAFT COPY) HANDOUT 1: MARKETING FOR BOTH SMALL AND LARGE BUSINESSES ‘The every growing in number coupled with increasing number of customer that the organization need to serve. With this, organization face challenges in knowing there customer; what they wan how they want to be serve. Thus the teeming customer as a lot of option to choose from there for each ORG to try to get the attention of this customer in Oder to have their mind on them. Marketing: Very often when people think of marketing, what comes to mind will include the billboards (see appendix 1 4) that abound in various Tposticn of the city where they reside; the radio jingles tht they heard over the radio the previous day: I ore good enough, u don’t need to bring some, : ‘one down for u to be > great Byal(easygoing).EEP 4201 c : misunderstood business disci 3 twill be right to say that marketing is one of the most . marketing is ' iplines, Too : tion. In reality, often it is assumed to be just one aspect of what it involves — promotion. In cain ee © 4 specialist activity that inftuenses the success of any organization whether s 1s very pedésvian language, maneting’canbe conceptualized as a process thab enables sae Ptain their needs or wants from organization that have developed products or services tha . help satisfy these needs or ‘wants of people, These products or services are offered to people wl Se at liberty to exchange them for something of value, ‘The implication ofthis definition is tat succesful marketing reta on tha premise that proper Need assessment has to be carried out to determine what the market desires or is lacking. ‘The language in marketing is deliberately general. For instance, purchasers are referred to as Customers, a service organization will call them clients; telecommunication company will call them subscribers; # school will call them students; a hospital will call them patients and a hotel will call them guests, Similarly, a product ay well be a service but the word product is often Used to refer to both, : Small Business Marketing: Marketing forms the comerstone for the initiation, growth and subsequent profitability of a small busin. strategy, a a) Budget Constraints: b) Staffing: ©) Differences in Creativity: 4) Differences on Strategy: -e) Customer Interaction: HANDOUT 2~ MARKETING MEXIN'NEW VENTURES Marketing isa process that encompasses a number of Activities that are interrelated and interdependent. ite simply the niatkcting mi i the ‘mique blend of the elements of if ware good enough, u don't need to brin if are good eno 18 S0M¢On€ down foru to be great Byal (easygoing).EEP 4201 ae : , ' itself; the 1 ting thet wil apply ote busines, These elements a product or #08 1° at which thie oration of the business; the dstbution methods adopted by the business Products will be sold: a : ves availabte to ehe BUSIICSS Sold; the advertising and promotion alternatives ave vided. THESE he é , ‘ow the product will be sold as well as the level of cusfomer service fo be pro bdoo elements are often summarized and commonly referred to as the 4Ps - product, price, ee and place, : icular need or want. It is Produet: This is anythin; is capable of satisfying a 1g offered that is capa : 1s but buy benefits. This part important for entrepreneurs to understand people never buy produc of marketing concentrates on the product/service the business is going to sell. Product decisions require looking at the following areas: product mix; product features and product support. for sale by the + To determine the product mix (his covers the range of products offered ting research it is‘important that small business owners engage in mark organization. ), ently not being by way of need assessment to determine what people lack or what is curr delivered. It also entails knowing what kind of stock to have, what kind of customers you will want to serve, what do they like to buy and.how they want to buy. [tis important for the entrepreneur to remember that customer * Product features: perception will determine success rather than what he sees in his product. Product features include colour, packaging, labels, quality, options, style design, brand names, frestiness, consistency, sizes, durability, ingredients and product image among others. For services issues that bother on promptness, efficiency, expertise, reliability, guarantees, : house-call, specialization, and pick up delivery among others are very fundamental. «Product support: For a business, a sale may be an end result but for the customer it is just the beginning because he may have challenges with the product front time to timé or the service he is seeking may be too complicated for him to understand. Place: In marketing, a business must have the right’product, at the appropriate time and price, and in the right place. In this context, place refers to two aspects; location end distribution. . v e ‘fu are god enough, u don’t need to bring someone down for u to be great Byad (easygoing).EEP 4201 : ae unicates Promotion: This coteree everything to do with the way an organization comm! i . Marketers use many persuasively with peopl to infience them towards making a purchase. M a “different tools to promote their products and services, Promotion is sometimes seen important part of marketing: The combination of promotional tools an organization uses is called its promotional mix. : xv i e © Advertising: + Personal selling: Public relations: In essenice, a good public relations (PR) programme has three steps. (1) : Listen to the public through marketing research, (2) Change policies and procedures to accommodate the concems and aspirations of the public: (3) Inform being responsive to their needs, © Publicity people that you are * Sales promotion: Price: The phrase that goes mostly with cheap is poor quality, sa bargain is essentially something worth more thaia it costs really want is value for money. ” yet everyone wants a bargain. But (and therefore'rare) what they It should be noted that the term price could be used differently depending on the sector and the context. For example, all these refer to the amount you pay in exchange for the value received, © Guest Lecturer - Hohorarium : - + Apartment - Rent * Doctor - Consultation Fee © Highway - Toll . © Import / Export - Duty « PHCN/GSM - Tariff Insurance - Premium * Association - Dues © Bank - In‘erest : © School - Tuition ‘ a Factors Affecting Price Yurare good engunh, «don't teed to beng “omeone down forutobe great Byat(easygoing).cep 4201 ' Competition in the market ard marketing strategies: In free market economies, the level of competition in thé market place has a great influence on prices charged, For example, to be a cost leader, low prices will be the marketing tool to use to gain market share, Altematively, if the strategy is differentiation then the business owner must develop an “exclusive” image and be able to charge more for the product or service. Ifthe marketing strategy is penetration then the business will consider a drop in price to induce new customers to purchase the product offered Introducing a new product: The launching of a product that is novel in the market can be an opportunity for a business to charge a premium without a backlash from the market. If there is need for a small business owner to increase prices, then he needs to consider some of the following: ‘+ Justify the reasons for the price increases. It cannot be'simiply on the grounds that it is time prices were raised because there has not been an increase for some time. Research what the competitors are currently doing. Is there any indication that they intend to incfease their prices? | : Never allow guess work to form part of the pricing strategies. Ifthe pricing is too high to start with and signs of slowing salts cause a reduction in prices it may be too late to redeem the mistake, . The majority of the customers will have a range of prices they consider to be acceptable _ and this need to be known. Are prices beyond that range? There is a price point that becomes a barrier to the customer, and beyond it they will no longer consider the product or service. Understand clearly the minimum Gross Profit that is acceptable to the business. There may be times when the price is determined by the competitors. If their prices are very competitive then the business isnot ina position to charg a price that causes Toss of market share, ‘ HANDOUT 3: UNIQUE SELLING PROPOSITION (usP) This simply refers to creating some differentiation which in marketing discourse means “Unique. Selling Proposition”, The single best Bey for a small business to get exposure isto discover and showcase its unique focus. If u are good enough, u don’t need to bring someone down for u io be great Bya(easygoing).EEP 4201 ‘ Differentiation: This Strategy concentrates on creating something which is perceived industry * wide as being unjgue, It can be achieved by: creating an image; using new or different technology; being distinct through product features; being distinct through customer service; or adopting a different distribution network. : , es * HANDOUT 4: INTERNATIONAL MARKETING Heese Ttemational marketing i the process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and o Questions ; Tganizations, 1. Why won’ organizations remain in domestic markets if large enough? 2. Why not save themselves the trouble of learning new languages, culture and exposure to hhazards as well as the challenge of product redesign? ~ 3. Why face the risk of possible expropriation? Answers ; 1. Some global firms with better products and lesser prices attack local market base thereby eroding market share of domestic companies, 2. Some foreign iharkets present higher profit potentials, 3. Some firms go intemational in order to reduce dependence on a single market ‘4 The foreign market may presént higher customer base thereby helping to achieve the much sought economies of scale, 5. Some countries do not have enough skilled workers, hence the need to shop for them abroad. Such skilled labour must be sought for and brought through International marketing. Standardization Vs. Adaptation ‘This addresses the concem of whether companies should have identical products in all countries or develop products to satisfy local tastes and desires, In the discourse of International marketing, standardization is sometimes used interchangeably with globalization i.e. treating entire market as a single one for both production and marketing reasons, 7 Modes of Market Entry . e 1 'y Ifuate good enough, u don'tieed td bring somegne down for utobe great“. By (easygoing).EEF 4201 The St st tres broad strates for foreign market entry and each one involves itsown level of commitment, tisk and de, *Bree of profit. These are Exporting, Joint Venturing and Direct : Investment, i JOINT VENTURING i : Foint venturing isthe second mathod of entering foreign maket by teaming up with — nationals to set up production and. marketing facilities. A joint venture can be formed in four ways: + Licensing: * Contract Manufacturing: * Management Contracting: ct "© Joint Ownership Ventures: DIRECT INVESTMENT ‘The third strategy that could be employed in order to operate in a forcign market is through direct investment. In this the firm may invest in foreign-based assembly or manufacturing 2 facilities by cither building‘a new plant or buying substantial shares in an already existing plant, or completely buying over an existing plant. he following benefits are derivable to the foreiga investor: 7 - 1. The firm may secure cost economies in the form of cheaper labour or raw materials, . government investment incentives, freight savings, and tax concession, etc. 2. The firm will also gain a better image inthe host country because it creates job opportunities to the local nationals, 3. The firm can develop a deeper relationship with the government, customers, local suppliers, and distributors, enabling it to adapt its Products to the local market. 4. The firm retains fall control over the investment and therefore, can develop manufacturing and marketing policies that serve its long-ter’ international objectives, However, it exposes a firm’s large investment to tisk, such risks as devaluation of currency, ‘worsening markets or expropriation. . MODULE 5: NEW, OPPORTUNITIES FOR EXPANSION (e-business) INTRODUCTION * ‘fu.are good enough, u don’t need to bring someone down for u to be great Bya(easygoing).= EEP 4201 ices and pio . ydes, practices + Science and Technology have always influenced 0" cedures of business jon as part of ingly widely used to function ‘nd trade. Computers and the Intemet are now inoreasinslY doing business, WHAT IS E-BUSINESg? ene iN sarily t the digitally enabled transaétiois an Originally, the tenn e-Business refers primarily t the oe Under the contol of ihe ore information s x Processes within an organization, involving informa 7 ise of technologies, “reanization. Electronic Business or e-Business refers broadly to the use aduct business or PitHculary the Information and Communication Teshnologies (ICT), to conduc facilitate improved busine 88 Aetivities and processes. E-Business could be Senerally described as any ICT enabled system that suppliers, distributors, Or customers use, as the basis for conducting their business operations, such as: * Communicate with clients or suppliers via email; * Send email to othe; * Sell or promote products or services via a web site and/or email; T organizations to order supplies; * Publish a web site to provide public information about the business; * Use the Intemet for online banking and paying bills; * Research information about customers and competitors using web sites; * Provide technical or customer service by email or web sites and * Manage and distribute intemal organization documents vig an intranet, WHAT IS COMMERCE? 2 WHAT IS E-COMMERCE? ~ among organizations and individuals, “DIFFERENCE BETWEEN E-BUSINEss ‘The terms ‘e-Business’ and really mean? ¢ AND E-COMMERCE “Commerce ar ten use 2 interchangeably, but what do these WordsEP 4201 ' é aces over the e-Commerce refers to online transactions - ‘buying and selling of ‘goods and/or services electronic medium especially the Intemet, Electronic business transactions) vawotwing money are" Commerce actives. Whil e-Business moe tan sling produ and sie Wt om research, development, marketing, procurement and customer relations? ‘The term "e-Business" highlights the fact tat definition of e-Commerce was 190 D8FTOW* — successful, we need to think more broadly. f E-business is the powerful business environment that is created when critical business systems are connected directly to customers, employees, vendors, and business partners, usin Intranets, Extranets, e-Commerce technologies, collaborative applications, and the Web. ‘We nay therefore say that e-Commerce - which-describes the buying and selling of products, . services, is a subset of e-Business. : while e-Busitiess covers a broader range of activities that could take place electronically, as well as via e-mail or the web. WHY STUDY E-COMMERCE TOPIC TWO 7, TYPES OF E-COMMERCE Business-to-Consumer (B2C) : it is an exchange and transaction of information, products or services between a business and a consumer(s) “Many types of business models within this category include: © Online Retailers/Storefronts + Content Providers 7 © Portals + Transaction Brokers + Service Providers + “Market Creators ii, Business-to-Business (B2B) i z iti, Consumer-to-Consumer (C20) iv. Business-to-Government (B2G) y. Business to Employee (B2E) iyuare good enough, u don't need to bring someone down for uo be great syat(easygsing)-EEP 4201, 2. Business Models based on Technology Used + Peer-to-Peer (P2p} ii, Mobite commercé, (ecommerce) _ Microsoft, RedHat Linux, Sun, Apache Software Foundation Cisco, JDS Uniphase, Lucent 4; VeriSign, Check Point, PGP Corporation | | BM Microsoft, CommerceOng, Ariba, BroadVision Real Networks, Microsoft, Apple Peoplesoft, Siebel, sap "Verisign, Paypal, Cybercash Akamai, Cache Flow, Inktomi, Cidera 2, Oracle, IBM, Microsoft, Sybase 1] Interland, 18M, Webintellects i Networking: Routers | Securine Encrotion Software Ecommerce Software Systems (@2G, 828) Streaming Media Solutions 4 Customer Relationship Management Software Payment Systems oy ~ Performence Enhancement Databases Hosting Services If uare good enough, u don’t need to bring someoné down for u to be great Byal(easygoing). NEP 4201 DIMENSIONS OF E-BUSINESS business can be classified as pure or partial e-Business/e-Comuieroe, [ADVANTAGES AND DISADVANTAGES OF E-COMMERCE A. Advantages i. Cost Reduction Benefits: One ofthe is simply the most cost effective way to open and run a business. © Reduced cost of establishment wt, Reduced Running Cost: © Reduced travel costs: * Reduced cost of materials: + Reduced marketing and distribution costs: + Reduced sales costs: ii, Market Benefits: greatest benefits of e-Commerce is cost ‘+ Greater reach: > . , ‘Improved customer service and brand awareness: *° Increased market awareness: iii. Increased Efficiency + More efficient supply chain management: + Improved internal fuunctions: iv. Better Service Delivery v, Competitive Advantage: vi. Continuous Trading vii. Human Capital Development B. Disadvantages 1 Extra Cos LU. Riskof Failure, I. Risk of Losing Focus IV. Opportunity Cost, ‘ : V. Risks of Ignoring e-Commerce: : VL. Sustainability ‘ , ‘THE STATE OF E-COMMERCE IN NIGERIA ifu-ore good enough, u don't need to bring someone down. for u to be great reduction benefits. It ‘The cost benefits include:EP 4201 Nigeria is yet to hamess the opportunities for ‘and e-Commerce adoption between the developed thus creating a digital divide, «ex, of which Nigeria is part, from leveraging the ‘The main obstacles that prevent developing countries, internet are: Cc , (1) leck of adequate infrastructure; fa (2)lack of technical know-how; (3) information processing about the economy; (4) Lack of legal and regulatory framework and " (S)The lack of adequate Danking infrastructure is also considered as one of the problems ieee BY developing countries in building e-Commerce solutions (Khalfan & Akbar, 2006). Other factors affecting the adoption of e-Commerce in Nigeria could be classified under: 1. data security, : 2. network reliability, 3. credit card threat, 4. authenticity, 5. citizen's income and education, to mention few. We ill summarize the state of e-Commerce in Nigeria by presenting the SWOT Analysis ‘Strengths: these indicate areas where drivers or enablers are strong in the country and/or where constraints are being overcome: = * Growing competition plus other diffusion-friendly strategies ‘and government policies to develop ICT infrastructure, + High ICT infrastructure investment and growth rates, including growth of mobile telephony, + High growth of intermediated access to ICTs ~e.g. via Internet cafés and telecentres plus sharing of ICTs ~ so there can bemany users per Internet-linked PC, : * Falling costs of many aspects of e-Commerce components including hardware and Weaknesses: these indicate areas where constraints are stil strong inthe country and/or where drivers and enablers are weak: + Lack of nationally coordinated ICT infrastructure, knowledge and skills compared to industrialized countries, ’ + Very uneven distribution of infrastructure in rural-urban terms, {Y ware good enough, u don't need to brig someone down for u tobe great Byo1 (easygoing).