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 not
dominant in its field of operation
(Amienghomwan, 2004)
What is most important therefore is their
annexation of resources and overall
contribution to the economic well being
of developing nations across the globe.
globe

ROLE OF A SMALL
ENTERPRISE

Small scale enterprises have significant roles in developing
countries.

All available resources in any given situation in the
economic wellwell-being of a nation must be developed for
industrialization and ultimately consumption 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 full
employment, income distribution and the development of
local technology,
technology makes its existence most inevitable.
inevitable.

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 properly
utilized, 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 now
since there is no time like the present. This is
because hesitation in business start up may lead
to losing out

STEPS TO START
A BUSINESS

Personal 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 preparing a business plan 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. Create a business logo, cards and stationery.
stationery. 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
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. Some

industries have specific insurance requirements. Discuss your
needs with your insurance agent to get the right type and
amount of insurance
Evaluating your market
In order to identify how attractive your
prospective MARKET 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

project ideas - Market analysis

1.Idea generation
2.Idea screening
3.Business analysis
4.Product development
5.Test marketing
6.Commercialization

Project ideas are generated through different sources like

customers, competitors, and employees.
employees
Sometimes they are discovered through accident.
accident Project
manager should try to enhance people's creativity,
creativity scan the entire
business environment and appraise the companys strengths and
weaknesses to generate a large number of ideas.
ideas
 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.

 FOCUS GROUPS:
GROUPS a moderator leads a group of people through
an open, in depth discussion rather than simply asking questions to
solicit participant response.
BRAINSTORMING:
BRAINSTORMING the brainstorming method allows people to
be stimulated to greater creativity by meeting with others and
participating in organised group experiences.
BRAINWRITING:
BRAINWRITING written brainstorming. It is a silent, written
generation of ideas by a group of people.
PROBLEM INVENTORY ANALYSIS:
ANALYSIS it uses individuals in a
manner that is analogous to focus groups to generate new product
ideas.
REVERSE BRAINSTORMING:
BRAINSTORMING this is similar to brainstorming,
except that criticism is allowed.

 GORDON METHOD:
METHOD The GORDON method, unlike many
other creative problem-solving techniques, begins with group
members not knowing the exact nature of the problem.
CHECKLIST METHOD:
METHOD in this method, a new idea is
developed through a list of related issues or suggestions.
FREE ASSOCIATION:
ASSOCIATION 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.
FORCED RELATIONSHIPS:
RELATIONSHIPS 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.
COLLECTIVE NOTEBOOK METHOD:
METHOD a small notebook
that easily fits into a pocket-containing a statement or any
pertinent background data is distributed

 ATTRIBUTE LISTING:
LISTING 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.
BIG DREAM APPROACH:
APPROACH 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.
PARAMETER ANALYSIS:
ANALYSIS it involves their relative
importance and through an evaluation of the parameters and
relationships, one or more solutions are developed.
DELPHI/ NOMINAL GROUP TECNIQUE:
TECNIQUE: 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 Development
Only 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 a
market. New opportunities appear from the changes in the
environment.

Idea Generation
Continuous systematic search for new product opportunities.
Marketing oriented sources--identify opportunities based on
consumer needs
Laboratory oriented sources--identify opportunities based on
pure 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 goals
Look 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 testing
Sample 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 Analysis
Analyze 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 Development
Develop 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.