BUSINESS STUDIES
BUSINESS
VENTURES
GRADE 10 CORE NOTES (2020)
1
TERM
DEFINITION
Research
instruments
Measurement tools such as questionnaires, designed to obtain data
from research subjects.
Needs
Something that is necessary to sustain life.
Desires
Wanting something or wishing for something.
Business location
Contract
Is the place from which the business will be operating and conducting its
business.
A contract is a written, spoken or tacit (understood) agreement between
two or more people, which is intended to be enforceable by law.
Promisor
The party who made the promise. Legally obligated to keep a promise.
Promisee
The party to whom the promise is made.
Business report
A written document that provides information.
Verbal presentation
Delivering a speech to a public audience.
Visual aids
Charts, pictures or images that help to make a point or to enhance a
presentation.
Audio-visual aids
Refers to a machine that works with both a sound and a visual component.
Business plan
A document that summarises the operational and financial objectives of a
business.
Patent
A patent is an exclusive right granted for: an invention; a process that provides a
new way of doing something or offers a new technical solution to a problem.
UIF
Unemployment Insurance Fund (UIF) benefits workers when they can’t work
due to maternity, adoption leave or illness.
Target market
A specific group of customers at which a product or service is aimed.
Annual General
Meetings
Founding
procedure
The perceived tendency of markets to move in a specific direction over
time.
The amount of money an individual or business pays for
an insurance policy. Mostly monthly.
A company is required to obtain the approval of its members during AGM
in order to carry out certain actions
The procedure you need to follow when starting a business. The procedure
differs between the forms of ownership.
Limited
Restricted in size or amount
Impact on the
business
The impact that something can have on a business. It can be positive or
negative.
A detailed examination of the elements of something like the PESTLE
analysis OR SWOT analysis
Market trends
Premium
Analysis
CIPC
Companies and Intellectual Property Commission
2
TOPIC 1: ENTREPRENEURIAL QUALITIES
Define the meaning of an ENTREPRENEUR
Entrepreneurs are people who identify an opportunity, calculate the risk and create a
business
Identify/Outline/Explain/Discuss the QUALITIES OF AN ENTREPRENEUR
QUALITIES
DESCRIPTION
Desire for responsibility
Good leadership and
management skills
Clear vision
Willpower to overcome
obstacles
Risk takers:
Self-confident
Exceptional organisational
skills
Innovative
Perseverance
High levels of energy
Highly committed
Strong work ethic
Passion
Flexibility
Independent
Accept the outcome of the decisions that they make.
Able to delegate, inspire and communicate effectively.
Know what they want to achieve.
The drive to achieve no matter what difficulties they face.
Willing to face uncertainty to achieve their goals.
Believe in own abilities.
The ability to efficiently manage their time, workload and
resources.
The ability to identify needs and develop solutions.
The persistence to sticking to a plan.
A lot of energy makes entrepreneurs more successful.
Entrepreneurs are emotionally bound to constantly
chase excellence.
Being trustworthy and honest are qualities that get you
ahead in the world.
Driven to achieve goals.
The ability to adapt and develop alternative solutions
when things do not go according to plan.
Are individuals who prefer to lead rather than follow.
Give EXAMPLES of successful entrepreneurs
NAME
Raymond
Ackerman
BUSINESS
NAME
BUSINESS
Pick ‘n Pay
Cyril Ramaphosa
Mc Donald’s
Richard Branson
Virgin Group
Tokyo Sexwale
Bill Gates
Microsoft
Mark Shuttleworth
Donald Trump
The Trump
Organisation
Mark Zuckerberg
Mvelaphanda
Mining
Shuttleworth
Foundation
Facebook
3
TOPIC 2: FORMS OF OWNERSHIP
Outline/Name the FACTORS THAT MUST BE CONSIDERED when choosing a form of
ownership.
CONCEPTS
1. LEGAL PERSON
2. CONTINUITY
3. LIABILITY
4. OWNERSHIP
5. TAX IMPLICATIONS
6. LEGAL
REQUIREMENTS
7. CAPACITY
DESCRIPTION
• The legal right of a person or business to own property, enter
into contracts and sue or be sued.
• The ability of the business to continue after the death or
retirement of the owner or more than one of the owners.
• Liability refers to the responsibility of the owner for the debts
of the business.
• LIMITED liability: the owner(s)/shareholders/members can
only lose their investment in the business in the event of a
business being declared insolvent/bankrupt. The owners will
not lose their personal assets.
• UNLIMITED liability: the owner(s) may lose their personal
assets if the business is declared insolvent, because they
must accept full responsibility to pay off the company's
debt.
• Ownership impacts on the management functions.
• The level of control that the owner wishes to have.
• Business owners should also consider tax laws, because
some businesses are taxed more than others.
• These fluctuations affect the amount of tax a company
pays to the government.
• Legislation for the establishment/starting a business.
• The establishment costs and time before a business can
legally do business.
• Refers to the ability/potential of management to start and
operate a business as planned.
• The ability to expand by adding owners / partners /
shareholders.
4
Define the meaning of DIFFERENT FORMS OF OWNERSHIP
Forms of ownership refers to the type of business selected by the business owner
Explain the DIFFERENCE between PROFIT & NON-PROFIT organisations/companies
PROFIT
NON-PROFIT
Organisations/Companies
Organisations/Companies
• Objective is to make profit for the
• Objective is to promote a social cause.
owner.
• Capital contributed by the owners.
• Funds from donation and government
grants are the main source of capital.
• Responsible for paying tax.
• Exempted from paying tax.
Classify forms of ownership and into PROFIT & NON-PROFIT organisation
PROFIT
NON-PROFIT
Organisations/Companies
Organisations/Companies
• Sole Proprietor
• A non-profit company / organisation
• Partnership
(NPC / NPO)
• Close corporation
• Private Company
• Public Company
• Personal Liability Company
• Cooperatives
Discuss/Explain/Describe CHARATERISTICS, ADVANTAGES & DISADVANTAGES of forms of ownership.
5
Discuss/Explain/Describe CHARATERISTICS, ADVANTAGES & DISADVANTAGES of forms of ownership.
1. SOLE PROPRIETOR
1.1. CHARACTERISTICS:
CHARACTERISTIC
DESCRIPTION
NAME
No legal requirements regarding the name of the business.
NUMBER OF OWNERS
Only one owner
MANAGEMENT
Can make quick decisions without consulting others.
CAPACITY
Easy to control because it is a small business.
LEGAL REQUIREMENTS
LIABILITY
LEGAL PERSONALITY
CONTINUITY
CAPITAL
PROFIT SHARING
TAXATION
There are no legal and administrative formalities in the form of a sole
proprietorship.
The unlimited liability and the private property of the owner can be used
to pay the business’s debts.
A sole proprietor is not a legal entity and agreements entered into by the
owner in his / her personal capacity.
No continuity as business is dependant of the owner.
Personal debt and business debt is one and therefore capital should be
carefully spent and managed.
The profit of the company belonging to the owner, as there is no
distinction between the owner and the enterprise.
Depending on how much income is earned by the owner, his / her tax
rate will be lower than the corporate tax rate.
1.2. ADVANTAGES AND DISADVANTAGES:
ADVANTAGES
• Easy & cheap to establish.
DISADVANTAGES
• Unlimited liability.
• Quick decision-making.
• Has no legal personality & continuity.
• Owners receive all the profit.
• Owner accepts all risks.
• General experience in all aspects.
• Owners focus on some aspects and neglect
• In contact with customers, suppliers and
employees.
others.
• Owners are overworked.
• Capital is limited.
• No job security.
6
Discuss/Explain/Describe CHARATERISTICS, ADVANTAGES & DISADVANTAGES of forms of ownership.
2. PARTNERSHIP
2.1. CHARACTERISTICS:
CHARACTERISTIC
DESCRIPTION
NAME
No legal requirements regarding the name of the business.
NUMBER OF OWNERS
2 or more
MANAGEMENT
Partners share responsibilities and they are all involved in decision making.
CAPACITY
Expansion is possible because more partners join partnership.
LEGAL REQUIREMENTS
LIABILITY
LEGAL PERSONALITY
CONTINUITY
CAPITAL
No legal formalities to start, only a written partnership agreement is
required.
Partners have unlimited liability and are jointly and seperately liable for the
debts of the company.
Partnership has no legal personality.
There is no continuity because if there are two partners and one dies, the
business can not continue as a partnership.
Partners combine capital and may also borrow capital from financial
institutions.
PROFIT SHARING
Profits are shared according to the partnership agreement.
TAXATION
Partnerships do not pay taxes, partners pay personal income tax.
2.2. ADVANTAGES AND DISADVANTAGES:
ADVANTAGES
• Relatively easy & cheap to establish.
DISADVANTAGES
• Unlimited liability.
• More capital than a sole proprietor
• Has no legal personality & continuity.
business.
• Partners may disagree.
• Easier to get credit.
• Decision making takes time.
• Expenses, responsibilities and tasks are
• Capital is limited to the number of partners
shared.
• All benefit from profit.
allowed.
• A partner's dishonesty affects the rest.
7
Discuss/Explain/Describe CHARATERISTICS, ADVANTAGES & DISADVANTAGES of forms of ownership.
3. CLOSE CORPORATION
3.1. CHARACTERISTICS:
CHARACTERISTIC
DESCRIPTION
NAME
The name must end with the suffix CC.
NUMBER OF OWNERS
1-10 members
MANAGEMENT
CAPACITY
LEGAL REQUIREMENTS
LIABILITY
The word "close" means that all members are involved in the
management.
The transfer of the interest of a member must be approved by all other
members.
There are few legal requirements, e.g. audit of financial statements /
regular annual general meetings.
Members have limited liability, unless the CC has 6 months or longer than
ten members.
LEGAL PERSONALITY
The business has a legal personality ...
CONTINUITY
... as well as unlimited continuity.
CAPITAL
Each member contributes certain assets / services to the corporation.
PROFIT SHARING
Profits are shared in proportion to the interest of the member of the CC.
TAXATION
Pay tax on the profits of the business and declared dividends of members.
/ Subject to double taxation.
3.2. ADVANTAGES AND DISADVANTAGES:
ADVANTAGES
• Limited liability.
DISADVANTAGES
• Capital limited to 10 members.
• Legal personality & continuity.
• If a member acts without expertise and care,
• Easy & cheap to establish.
the member shall be liable for losses.
• None AGM necessary.
• Banks require a financial audit for loans.
• Financial statements need not be audited.
• Decisions take time.
• Could lead to conflict.
NOTE: The Companies Act, 2008 prohibits the registration of any new close corporation after 1
May 2011. Close corporations can be converted to companies, but companies can no longer be
converted to close corporations.
8
Discuss/Explain/Describe CHARATERISTICS, ADVANTAGES & DISADVANTAGES of forms of ownership.
4. PRIVATE COMPANY
4.1. CHARACTERISTICS:
CHARACTERISTIC
DESCRIPTION
NAME
The company's name ends with letters (PTY) Ltd.
NUMBER OF OWNERS
Minimum of one shareholder required and no limit to the number of
shareholders.
MANAGEMENT
Managed at least by one competent highly skilled director.
CAPACITY
There is no limit to the number of shareholders, it can lead to expansion.
LEGAL REQUIREMENTS
LIABILITY
Register with the Registrar of Companies by setting Memorandum of
Incorporation (MOI)
Shareholders have limited liability and only lose their initial capital invested
if the business goes bankrupt.
LEGAL PERSONALITY
The business has a legal personality ...
CONTINUITY
... as well as unlimited continuity.
CAPITAL
PROFIT SHARING
TAXATION
Capital raised by issuing shares to its shareholders. Investors then earn
profits (dividends) from shares.
Profits are shared in the form of dividends in proportion to the number of
shares held.
Pay tax on the profits of the business and declared dividends of
shareholders. / Subject to double taxation.
4.2. ADVANTAGES AND DISADVANTAGES:
ADVANTAGES
• Limited liability.
DISADVANTAGES
• Complex establishment process.
• Legal personality & continuity.
• Can only rely on capital contributed by
• Number of shareholders allows for more
capital.
• No AGM necessary.
members. (Cannot get money from the
general public for capital.).
• Subject to double taxation.
• Annual financial statements must be
reviewed by a qualified person, which is an
extra expense for the company.
9
Discuss/Explain/Describe CHARATERISTICS, ADVANTAGES & DISADVANTAGES of forms of ownership.
5. PERSONAL LIABILITY COMPANY
•
It is very similar to a private company, and the DIRECTORS of a personal liability company are
jointly and seperately liable for all debts and obligations of the company. This means that the
directors have unlimited liability.
5.1. CHARACTERISTICS:
CHARACTERISTIC
DESCRIPTION
NAME
The company's name must end with letters INC.
NUMBER OF OWNERS
Minimum of one shareholder required and no limit to the number of
shareholders.
MANAGEMENT
They must have at least one director to their board.
CAPACITY
There is no limit to the number of shareholders, it can lead to expansion.
LEGAL REQUIREMENTS
In the MOI must be stated that it is a company with personal liability.
LIABILITY
Directors have unlimited liability and are jointly liable for the debt, even if
they are long out of the office.
LEGAL PERSONALITY
The business has a legal personality ...
CONTINUITY
... as well as unlimited continuity.
CAPITAL
PROFIT SHARING
TAXATION
Capital raised by issuing shares to its shareholders. Shareholders then earn
profits (dividends) from shares.
Profits are shared in the form of dividends in proportion to the number of
shares held.
Pay tax on the profits of the business and declared dividends of
shareholders. / Subject to double taxation.
5.2. ADVANTAGES AND DISADVANTAGES:
ADVANTAGES
• Limited liability.
DISADVANTAGES
• Complex establishment process.
• Legal personality & continuity.
• Can only rely on capital contributed by
• Number of shareholders allows for more
capital.
• No AGM necessary.
members. (Cannot get money from the
general public for capital.).
• Subject to double taxation.
• Annual financial statements must be
reviewed by a qualified person, which is an
extra expense for the company.
NOTE: The advantages & disadvantages of a personal liability company is the same as the private
company.
10
Discuss/Explain/Describe CHARATERISTICS, ADVANTAGES & DISADVANTAGES of forms of ownership.
6. PUBLIC / PUBLIC COMPANY
•
A public company is registered to offer its shares to the general public. Designed for largescale businesses that require large capital investments. Shares are traded through the
Johannesburg Securities / Stock Exchange (JSE).
6.1. CHARACTERISTICS:
CHARACTERISTIC
NAME
NUMBER OF OWNERS
MANAGEMENT
DESCRIPTION
The company's name ends with letters Ltd.
Minimum required a shareholder and no limit to the number of
shareholders.
The law forces personal liability on directors who were consciously
reckless / fraudulent.
CAPACITY
Many people can join the company by issuing shares to the public.
LEGAL REQUIREMENTS
Register with the Registrar of Companies by setting up the Memorandum.
A prospectus will be issued to the public to raise capital.
LIABILITY
Shareholders have limited liability.
LEGAL PERSONALITY
The business has a legal personality ...
CONTINUITY
... as well as unlimited continuity.
CAPITAL
Capital raised by issuing shares to the public and borrow capital by
issuing debentures.
PROFIT SHARING
Profits are shared in the form of dividends in proportion to the share held.
TAXATION
Pay tax on the profits of the business and declared dividends of
shareholders. / Subject to double taxation.
6.2. ADVANTAGES AND DISADVANTAGES:
ADVANTAGES
• Limited liability.
DISADVANTAGES
• Complex establishment process.
• Legal personality & continuity.
• Certain information must be published under
• Can obtain large amounts of capital.
• Can attract skilled personnel because
they can pay them well.
• Provides job security.
• Strict regulatory requirements to protect
shareholders.
the law e.g. financial statements.
• AGM must be held.
• Failure could lead to large scale
unemployment.
• Shareholders may have little or no input in
the affairs of the company.
11
Discuss/Explain/Describe CHARATERISTICS, ADVANTAGES & DISADVANTAGES of forms of ownership.
7. COMPANIES IN STATE OWNED
•
•
In a state owned company, the government is the largest shareholder and falls under the
Department of Public Enterprises.
These businesses take on behalf of the government the role of commercial enterprises.
7.1. CHARACTERISTICS:
CHARACTERISTIC
DESCRIPTION
NAME
The name ends with the letters SOC Ltd.
NUMBER OF OWNERS
MANAGEMENT
Requires 3 or more directors and 1 or more shareholders. It is owned by
the government and operates to generate a profit.
Shareholders vote for the most competent directors and they are
appointed to manage the company.
CAPACITY
Many people join the company by issuing shares to the public.
LEGAL REQUIREMENTS
Register with the Registrar of Companies by setting up the
Memorandum of Incorporation.
LIABILITY
Shareholders have limited liability.
LEGAL PERSONALITY
The business has a legal personality ...
CONTINUITY
... as well as unlimited continuity.
CAPITAL
PROFIT SHARING
TAXATION
The company has access to long-term capital and therefore good longterm opportunities for growth.
Profits are shared in the form of dividends. Generate revenue to finance
social programs.
Pay tax on the profits of the business and declared dividends of
shareholders. / Subject to double taxation.
7.2. ADVANTAGES AND DISADVANTAGES:
ADVANTAGES
• Limited liability.
• Legal personality & continuity.
• Supporting of government.
• Greater power in negotiating contracts.
• Profits can be used to finance other
government departments.
• Unnecessary duplication of services is
eliminated.
DISADVANTAGES
• Not a true form of ownership because the
government controls all decisions.
• Difficult to raise capital because stock is
limited.
• May lead to poor management because the
government is not as effective as the private
sector.
• Rely on subsidies from the government.
• Losses must be paid by the taxpayer.
12
Discuss/Explain/Describe CHARATERISTICS, ADVANTAGES & DISADVANTAGES of forms of ownership.
8. NON-PROFIT COMPANIES
•
A non-profit company / enterprise (NPC / NPO) is established with the aim not to make profit,
but it is established to benefit society.
8.1. CHARACTERISTICS:
CHARACTERISTIC
DESCRIPTION
NAME
The name of the company must end with NPC / NPO.
NUMBER OF OWNERS
With or without members.
MANAGEMENT
CAPACITY
The board shall consist of at least 3 directors and can be well managed
as it requires a minimum of 3 (or more) directors.
More shareholders may join the company, as they contribute positively to
society.
LEGAL REQUIREMENTS
It must draw up a Memorandum of Incorporation.
LIABILITY
Members have limited liability. Directors are liable for any loss / damage
/ costs experienced by the company.
LEGAL PERSONALITY
The business has a legal personality ...
CONTINUITY
... as well as unlimited continuity.
CAPITAL
PROFIT SHARING
TAXATION
Funded by donations. Easy to raise funds / capital as donors enjoy tax
relief benefits.
The main purpose is to serve and not to make profit. All profits must be
used for the primary purpose of the company.
Qualifying NPC/NPO is granted tax-exempt status (tax deductions).
8.2. ADVANTAGES AND DISADVANTAGES:
ADVANTAGES
• Members have limited liability, but
directors can be held liable for loss /
damage.
• Legal personality & continuity.
DISADVANTAGES
• They are not allowed to pay bonuses to
members.
• Assets to be transferred to a similar type of
company if company be dissolved.
• Donors receive tax deductions.
• Must keep financial and accounting records.
• Can get funding from national lottery trust
• May make a profit, but may not distribute
and other agencies.
• Exempt from paying tax to SARS.
property or profits to its members.
• Must hold an AGM.
13
Discuss/Explain/Describe CHARATERISTICS, ADVANTAGES & DISADVANTAGES of forms of ownership.
9. CO-OPERATIVES
A co-operative is a traditional way in which a group of interested parties gathered and
resources / infrastructure and cost sharing to achieve a better result.
•
9.1. CHARACTERISTICS:
CHARACTERISTIC
NAME
NUMBER OF OWNERS
MANAGEMENT
CAPACITY
DESCRIPTION
The word 'Cooperative or Co-op” in the name and “Limited’ will appear
at the end of the name.
At least 5 members are required to start a cooperative.
Members own and manage the business together. Decisions are made
democratically. They are managed by at least 3 directors.
The purpose of a cooperative is to create mutual benefit for the members
and allow the members to work together as a team.
LEGAL REQUIREMENTS
Must register with the Registrar of Co-operative societies.
LIABILITY
Members have limited liability.
LEGAL PERSONALITY
The business has a legal personality and are allowed to own land and
open bank accounts.
CONTINUITY
The business has unlimited continuity.
CAPITAL
The amount of capital that can be obtain by a co-operative is limited to
the number of members. Additional capital obtained by asking members
to buy shares.
PROFIT SHARING
Profits are shared equally amongst its members.
Pay taxes on income retained for investment and reserves and surplus
revenues are returned, according to patronage, to individual members
TAXATION
who pay taxes on that income.
9.2. ADVANTAGES AND DISADVANTAGES:
•
ADVANTAGES
Limited liability.
•
DISADVANTAGES
Unable to pay high salaries.
•
Legal personality & continuity.
•
Success depends on loyalty, commitment
•
Facilities of members are combined to
achieve common goals.
•
and support of its members.
•
Better production due to loyal and
dedicated members because they work
main objective is not always to make profit.
•
for themselves.
•
Decision-making by a group which is
Can be difficult to obtain loans, because the
To reach a decision is often difficult and time
consuming.
•
Auditing of financial statements compulsory.
democratic and fair.
14
COMPARISON of all forms of ownership
CHARACTERISTICS
SOLE TRADER
PARTNERSHIP
CLOSE
CORPORATION
Name
No legal requirements
regarding the name of the
business.
No legal requirements
regarding the name of the
business.
The name must end with the
suffix CC.
No. of owners
1 owner
At least 2 partners
1- 10 members
Owners are
known as
Owner
Partners
Members
Formation
No legal requirements
Partnership agreement
Founding statement
(May not register a new
CC)
Liability for debts
Unlimited liability
Jointly and severally
liable
Limited liability
Continuity
No continuity
No continuity
Has continuity
CHARACTERISTICS
NON-PROFIT
COMPANY
PERSONAL LIABILITY
COMPANY
PRIVATE
COMPANY
Name
Ends with NPC
Ends with INC
Ends with Pty. Ltd
No. of owners
At least 1 shareholder
At least 1 shareholder
At least 1 shareholder
Owners are
known as
Shareholders
Shareholders
Shareholders
Formation
MOI with CIPC
MOI with CIPC
MOI with CIPC
Liability for debt
Limited liability
Jointly and severally
liable
Limited liability
Continuity
Has continuity
Has continuity
Has continuity
CHARACTERISTICS
PUBLIC
COMPANY
STATE OWNED
COMPANY
COOPERATIVE
Name
Ends with ltd.
Ends with SOC Ltd
Use of ‘co-op’ in the
name. ends with limited
No. of owners
At least 1
At least 1
At least 5 in primary
cooperative
Owners are
known as
Shareholders
Shareholders
Members
Formation
MOI with CIPC
MOI with CIPC
Document with registrar
of cooperatives
Liability for debts
Limited liability
Limited liability
Limited liability
Continuity
Has continuity
Has continuity
Has continuity
15
TOPIC 3: BUSINESS OPPORTUNITIES
Explain the meaning of a BUSINESS OPPORTUNITY and give practical EXAMPLES
Business opportunities
A business opportunity is an idea for a product or service that will meet needs or desires,
and that can be sold or leased to earn an income.
Practical examples of business opportunities
Successful entrepreneurs are people who recognised the potential of a business
opportunity, for example:
•
Successful companies like Apple were not satisfied with just selling computers.
•
They looked for other opportunities and have made a fortune from selling products
such as iPods, iPhones, iPads and other accessories.
Explain the IMPORTANCE OF ASSESSING NEEDS AND DESIRES in identifying a business
opportunity.
•
•
•
•
•
•
•
It is important to distinguish between the needs and wants of the target market to
take advantage of business opportunities.
Needs and desires are the keys to successful business opportunities.
Every need and every desire are a possible business opportunity.
If you see a need that is not met, you have a guaranteed market.
It is easier to find something that people want and to create a business around that
since desires are unlimited.
Sometimes an entrepreneur will invent a new product for which there is no existing
desire or market.
In such a case the entrepreneur would have to create a desire for the product
through clever advertising and a good marketing campaign, for example, the
products sold by Glomail and Verimark.
MARKET RESEARCH to assess needs and desires
Market research is the systematic gathering, recording and analysing of data about the
marketing of goods and services.
Discuss/Explain the IMPORTANCE OF MARKET RESEARCH for businesses:
•
•
Conduct market research regularly because people's taste, habits, behaviours and
desires change constantly.
Gathers facts and opinions in an objective way to find out what goods and services
people want to buy.
16
DESIGN A RESEARCH INSTRUMENT to assess needs and desires e.g. questionnaires,
interview structure/schedule.
Developing a
research
instrument
•
•
Decide what
information you
need
•
•
•
Ask simple and
clear questions
•
•
Test the questions
•
We use research instruments to find out about people's needs
and desires, for example, a questionnaire could be used, or the
people could be interviewed.
Design a good instrument that will give you complete and
accurate information.
The following steps must be followed:
Be clear about what you want to know about potential
customers.
Use a table to analyse data from the research.
Have a variety of questions.
Include some multiple choice, tick box questions, questions where
things must be ranked according to scale.
Get comment on how clear the questions are.
Explain/Describe PROTOCOL AND ETHICS for conducting research
Ethical issues and protocols to be adhered to when doing research:
•
The research should be conducted with the willing cooperation of participants.
•
If research is taking place within an organisation, it must be approved first.
•
The person conducting the research should not try to influence the opinions of the
participants.
Explain/Discuss ETHICAL business opportunities
When pursuing a business opportunity, ensure that:
•
It does not break any law or infringe on any copyright.
•
It does not harm the environment.
•
The product or service should be safe.
•
The product or service should not be bad for people's health.
Explain the DIFFERENCE between INTERNAL & EXTERNAL MARKET RESEARCH
INTERNAL MARKET RESEARCH
An internal analysis looks at
factors within your business
such as your strengths and
weaknesses.
EXTERNAL MARKET RESEARCH
An external analysis looks at
the broader business
environment that affects your
business.
17
Outline/Mention/List the STEPS FOR DATA COLLECTING
1. Identify your potential MARKET or markets.
2. Identify WHERE the markets are and plan how you will reach them.
3. Decide if you want to mail or EMAIL the questionnaire.
4. Decide whether interview will be FACE TO FACE or via telephone.
5. Decide HOW MANY people you want responses from.
6. TRAIN PEOPLE to interview potential customers without influencing the
answers.
7. Plan a TIME LIMIT for collecting the data.
Compile a SWOT ANALYSIS to determine a viable business venture.
A SWOT analysis is a planning tool that is used to help people make decisions by
setting out information clearly so that you can focus on what is important.
A SWOT analysis is a tool used to identify possible challenges in all three business
environments.
•
•
COMPONENTS
S
Strengths
W
Weaknesses
O
Opportunities
T
Threats
The SWOT analysis follows a certain FORMAT
•
•
•
•
You usually divide a page into four quarters.
Each quarter is given the heading of one of the components of
SWOT.
Strengths and Weaknesses relate to internal factors, which are
under the control of the business (micro environment).
Opportunities and Threats relate to external factors over which
the business has little (market environment) or no control
(macro environment)
18
SWOT ANALYSIS
STRENGTHS
WEAKNESSES
• Strengths refer to anything that the
business and its resources are good at,
and that can be used to its advantage.
• Ask yourself:
What are my advantages?
What do I do well?
• A weakness is something the business
lacks or cannot perform very well. It's an
internal factor that hampers
development.
• Ask yourself:
What do I do badly?
What could I improve?
OPPORTUNITIES
• Opportunities refer to the external
options that can be used to the
advantage of the business.
• Ask yourself:
What are the market trends?
How can I exploit them?
THREATS
•
•
Threats are factors outside of the
business that threaten the existence or
success of the business.
Ask yourself:
Which external factors hamper my
success?
How can I overcome these factors?
Use a SWOT analysis to analyse the viability of a business opportunity
1. Conduct a SWOT
analysis
2. Analyse the impact
of the strengths
3. Analyse the impact
of the weaknesses
4. Analyse the impact
of the opportunities
•
List your strengths, weaknesses, opportunities and threats
•
5. Analyse the impact
of the threats
•
6. Compare the
positive and
negative rankings
•
7. Compare the results
•
Rank the strengths from one to five; five being the most
significant and positive and one being the least significant.
Rank each weakness from one to five; five being the most
significant and negative one being the least significant.
Give each opportunity a ranking from one to five; five being
the most significant and positive one being the least
significant.
Give each threat a ranking from one to five; five being the
most significant and negative and one being the least
significant.
Add up the positive scores, that is, the scores of the strengths
and opportunities.
Add up the negative scores, that is, the scores of the
weaknesses and threats.
Determine which is higher, the positive or negative scores.
8. Make a decision
•
•
•
•
•
If the positive scores are ranked higher than the negative
scores the business venture may be viable.
If the negative scores are ranked higher than the positive
scores, you need to reconsider the business idea.
19
TOPIC 4: BUSINESS LOCATION
Explain the IMPORTANCE of BUSINESS LOCATION.
•
•
•
Location is one of the most important factors for success.
A well-placed location attracts customers and the right employees.
The businesses location must be easily accessible for suppliers so that goods are
delivered on time.
FACTORS THAT INFLUENCE THE LOCATION OF A BUSINESS
•
•
•
Refer to all the laws and restrictions on how to employ,
dismiss and treat workers.
Some regions have lower minimum wages than others.
Some regions have laws about the number of hours that
workers are allowed to work.
LABOUR REGULATIONS
•
•
•
•
Refer to all the restrictions and laws placed on certain
regions in terms of what is allowed in a given environment.
Some regions have strict pollution and dumping laws.
Some regions have certain building restrictions.
Some regions have adequate natural resources, others not.
ENVIRONMENTAL
FACTORS
•
•
•
TRANSPORTATION
•
•
•
•
INFRASTRUCTURE
•
Transport is essentially for the supplier to obtain the raw
materials; for workers to get to and from work; and for the
distribution of the final product.
Transport costs must be reasonable.
The available roads, rail and harbours must be in good
enough condition.
Workers and employees must be able to get to work easily.
Refers to the networks, roads, water, electricity and sewage
services available.
There must be a sufficient supply of water that is it suitable to
be used.
There must be a sufficient electricity supply that is cost
effective.
The access, cost and speed of the telecommunication
networks have to be taken into consideration.
20
•
•
•
POTENTIAL MARKET
•
•
•
•
Refers to those customers to whom you are trying to sell your
products or services.
It is an advantage to be as close as possible to your target
market and potential market.
The location of your customers and potential customers will
influence the growth of your market.
The location of the potential market will affect the marketing
strategy and costs.
The proximity (closeness) of the raw materials for the business
will have an impact on the price, transportation and
availability of the product.
The more raw materials available, the lower the costs.
The closer the raw materials to the business, the lower the
transport costs.
RAW MATERIALS
•
•
•
Includes all those workers and employees who work for the
business.
The location should have the best access to the skilled
labour needed.
The labour rates should be affordable and acceptable for
the location.
LABOUR MARKET
•
•
•
Climate change and patterns of rainfall, drought, snow and
wind can affect certain businesses.
The type of climate required for a particular business must be
considered.
How harsh hot or cold conditions will affect the business must
be considered.
CLIMATE
•
•
•
GOVERNMENT AND
LOCAL REGULATIONS
•
•
Government uses policies and laws to regulate the location
of businesses.
Does the government have certain laws that prohibit the
location of certain businesses?
Will the government regulations have an impact on longterm business decisions because of the location of the
business?
Does the local area have zoning rights or restrictions?
Is the area politically stable?
21
TOPIC 5: CONTRACTS
Define/Discuss/Explain what a CONTRACT is
•
•
•
•
A contract is an agreement between two or more people and is legally binding.
One party makes an offer and another party accepts it.
It can be oral or written.
Some contracts are binding only if they are in writing, as a written contract provides
proof of agreement.
Mention/List/Explain/Discuss the PARTIES to a contract
•
•
•
The parties to a contract are those people who have reached an agreement.
There are at least two parties involved in a contract; the promisor and the promisee.
Sometimes, a third party: a beneficiary may be named.
Outline/Mention/Discuss/Explain the ASPECTS of a contract
1. Offer and
acceptance
There must be an offer from one party and an acceptance by
another party. The terms of the contract must mean the same
to both parties.
2. Consideration
Something of value must be exchanged.
3. Intention
Parties must intend their agreement to be legally binding.
4. Capacity
Both parties must be legally able to enter into a contract.
5. Form
If a legal form is required, it must be completed.
6. Consent
The contract must be entered into voluntarily, without threat or
force from another person.
7. Legality of purpose
The contract must not be for an illegal purpose.
8. Possibility of
performance
It must be possible for the contract to be fulfilled.
Discuss/Explain the LEGAL IMPLICATIONS of contracts
•
•
•
•
•
•
•
•
Once a contract has been made, both parties have certain rights and duties.
Some of the rights and duties are stated in the contract.
Other rights and duties are implied by the nature of the contract.
If a customer buys a product from a business, the customer has the right to expect the
product to be in a working order.
If the product is faulty, the contract has been breached (broken).
The buyer can insist on an exchange or refund.
Some contracts must by law, be written and not verbal.
Example: Written contracts in the sale of property & credit agreements.
22
Discuss/Explain the RIGHTS AND RESPONSIBILITIES of parties to a contract
•
•
•
All parties to a contract have rights and responsibilities.
The rights and responsibilities will differ from contract to contract.
The basic principles of fair practice remain the same.
Discuss/Explain the BASIC PRINCIPLES OF FAIR PRACTICE.
•
•
•
•
•
•
Before signing a contract, the buyer must always take time to read the fine print.
Once an offer has been made and accepted, there is contract.
The contract is binding on both parties and enforceable by law.
Any product must be in working order.
If there is breach of contract by any party, the other parties must be compensated for
any loss incurred.
If a contract is signed at a place other than the place of business of the supplier, the
buyer has a five-day cooling off period in which to cancel the contract.
Explain what the term CONTRACT BREACH refers to
•
•
When one of the parties fails to fulfill their responsibilities.
The contract was broken for one or more of the following reasons:
1.
There are errors in the contract, e.g. the wrong date, misspellings of names, etc.
2.
One of the parties was forced to sign the contract and did not agree to the terms.
3.
The requirements and responsibilities of the parties to the contract are unclear.
4.
It is physically impossible to fulfill or fulfill the requirements and responsibilities of
the parties.
5.
One of the parties lied about information in the contract, or ...
6.
withheld important information.
Outline/Explain/Discuss/Describe different TYPES OF CONTRACTS
RENTAL / LEASE
EMPLOYMENT
TYPES OF
CONTRACTS
INSURANCE
HIRE PURCHASE
23
1.
EMPLOYMENT CONTRACT
Discuss/Explain the EMPLOYMENT CONTRACT
•
•
•
•
•
Is an agreement between the employer and the employee and is legally binding.
A written contract; given to the employee on the first day that the employee starts
work; and signed by both the employer and the employee.
The contract of employment regulates the terms and conditions of employment
between the employer and the employee.
It sets out what the employer will provide according to labour law and in terms of
benefits.
It also regulates the behaviour of the employee in the workplace
Outline/Mention ASPECTS to be included in an EMPLOYMENT CONTRACT
Personal details of the
EMPLOYEE.
REMUNERATION, e.g.
weekly or monthly pay.
Details of the BUSINESS /
employer e.g. name /
address, etc.
Fringe BENEFITS / Perks /
Allowances.
Job title / POSITION
LEAVE, e.g. sick / maternity
/ annual / adoption leave.
Job description e.g. DUTIES
/ working conditions
Employee DEDUCTIONS
(compulsory /noncompulsory).
Job specification e.g.
formal QUALIFICATIONS /
willingness to travel.
PERIOD OF CONTRACT /
Details of termination.
DATE of employment /
commencement of
employment.
PROBATION PERIOD.
PLACE where employee
will spend most of his / her
working time.
SIGNATURES of both the
employer and employee.
HOURS of work, e.g. normal
time/overtime.
List of DOCUMENTS forming
part of the contract, e.g.
letter of appointment /
code of conduct
24
Outline/Explain/Discuss the LEGAL REQUIREMENTS of the EMPLOYMENT CONTRACT
1. Employment contract is an agreement between the employer and
the employee and is LEGALLY BINDING.
2. Employer and employee must agree to any CHANGES to the contract.
3. Aspects of the employment contract can be RE-NEGOTIATED during
the course of employment.
4. NO PARTY may unilaterally change aspects of the employment
contract.
5. The employer and employee must both SIGN the contract.
6. The employment contract should include a CODE OF CONDUCT and
code of ethics.
7. The employer must explain the TERMS AND CONDITIONS of the
employment contract to the employee.
8. It may not contain any requirements that are in CONFLICT with the
BCEA.
LEGISLATION that govern employment
LEGISLATION
Labour Relations Act
Basic Conditions of Employment Act
Employment Equity Act
Skills Development Act
Unemployment Insurance Act
ABBREVIATION
LRA
BCEA
EEA
SDA
UIA
YEAR
1995
1997
1998
1998
2001
NO
66
75
55
97
63
List the REASONS for the TERMINATION of an EMPLOYMENT CONTRACT
•
•
•
•
Resignation
Dismissal
Retirement
Retrenchment
25
2.
INSURANCE CONTRACTS
Discuss/Explain the INSURANCE CONTRACT / (POLICY)
•
•
TYPES OF INSURANCE CONTRACTS
PERSONAL
INSURANCE
•
An insurance policy is a contract taken out by a person or business in order to manage
a risk.
The insured will enter into a legal insurance contract with the insurer, who may be
represented by an insurance broker.
a monthly premium being paid to the insurer; and
If a loss or damage is sustained in the future, the insurer undertaking to pay out the
insured according to the agreement made in the contract.
BUSINESS
INSURANCE
•
1. Life insurance
Long-term insurance to take care of
dependants if you die
2. Home and contents
Short-term insurance in case of fire, theft or
flood
3. Car insurance
In case of a car accident or theft of a car
4. Disability insurance
In case an individual being no longer able
to work and earn a living
5. Medical insurance
In case of illness
6. Travel insurance
In case of death or accident while travelling
abroad
1. Property insurance
In case of fire, theft or accident
2. Workers compensation
In case workers being injured on the job
3. General liability insurance
In case of the business is sued
4. Umbrella insurance
Covers you for more liability after other
policies have paid out.
26
Discuss/Explain the RESPONSIBILITIES of the INSURED and the INSURER
INSURED
2. Make sure he / she understands the
contract.
INSURER
1. Make sure the policy sold is in the best
interest of the insured.
2. Make sure that the insured fully
understands the policy.
3. Adhere to all details in the contract.
3. Process claims quickly and fairly.
4. Act in good faith, be honest in dealings
with the insurance company.
4. Make sure that the value insured is
updated regularly.
1. Read the insurance contract thoroughly.
3.
HIRE PURCHASE, LEASE AGREEMENTS and RENTAL CONTRACTS
HIRE PURCHASE
e.g.
cell phone
LEASE AGREEMENTS
e.g.
photo copier
RENTAL CONTRACTS
e.g.
office space
Discuss/Explain the concept of HIRE PURCHASE
Hire-purchase is a method of buying goods where the purchaser pays a deposit and
immediately takes possession of the goods, but not ownership of the goods
Outline/Discuss/Explain the RIGHTS & RESPONSIBILITIES of HIRER and SELLER in terms of HIRE
PURCHASE AGREEMENT
•
•
•
•
The hirer may pay off the goods early by giving notice to the seller.
The hirer may return the goods to the seller, but a penalty will have to be paid.
The hirer may give the item to someone else who will take over the payments.
The seller may terminate the agreement if the hirer defaults.
Discuss/Explain the concept of LEASE AGREEMENTS
•
•
•
•
•
A lease is a rental contract between a lessee (person leasing the goods or property)
and a lessor (owner) for a specific period and for a specific sum of money.
A lease is drawn up for the hire of property, vehicles, television or construction
equipment.
The lessee obtains the right to use the goods for a specified period.
The lessee pays rent to the lessor on a monthly basis.
The goods never become the property of the lessee.
27
Discuss/Explain the RIGHTS & RESPONSIBILITIES of the LESSEE and the LESSOR
LESSEE
1. Must pay the rent on time.
2. Must take care of the goods or property
while on lease.
3. Must leave the goods or property in the
same condition as when taking
possession of it, allowing for reasonable
wear and tear.
4. May be responsible for the
maintenance of certain aspects of the
goods or property.
LESSOR
1. Must make sure the goods or property
are available on the agreed date.
2. Must see that goods and services are in
the condition agreed to.
3. May not disturb the lessee without good
reason.
4. May be responsible for the
maintenance of certain aspects of the
goods or property.
Discuss/Explain the concept of a RENTAL CONTRACT
•
•
•
•
A rental contract is an agreement between a tenant and a landlord for the renting of
property.
Some Rental agreements are month to month, there is no set period of residence.
Changes can be made to the rental agreement after each month, giving a 30-day
notice period.
Disputes between tenants and landlords are settled by the Rental Housing Tribunals.
Discuss/Explain the RIGHTS & RESPONSIBILITIES of LANDLORDS and TENANTS
LANDLORD
1. Must give the tenant occupation and
control of the property on the agreed
date
2. Must maintain the property by making
reasonable repairs for normal wear and
tear.
3. Must not disturb the tenant
unreasonably.
TENANT
1. Must pay rent on time.
2. Must use the property in a reasonable
manner for the purpose for which it was
let.
3. Must leave the property in the same
condition as when taking possession of
it, allowing for reasonable wear and
tear.
28
TOPIC 6: PRESENTATION OF INFORMATION
Explain the IMPORTANCE of BUSINESS REPORTS
Business reports are key to decision making in a business.
Senior management needs to keep track of what is happening in the business in order
to make decisions.
Senior management relies on business reports to inform them of what each
department is doing.
Business reports must be to the point and effective.
•
•
•
•
Outline/Discuss/Explain the GUIDELINES FOR EFFECTIVE BUSINESS REPORTS
•
Prepare an overview.
Write concisely and to the point.
Use regular language which is understandable.
Use visual summaries, such as tables, graphs, diagrams and drawings.
Edit your report, eliminating spelling mistakes, grammatical errors or factual
inaccuracies.
Get someone to look at the report and make suggestions on how to improve it.
1.
VISUAL SUMMARIES
•
Visual Summaries create visual pictures that summarise what has been read. It shows
the main idea through a visual representation such as graphs and diagrams.
•
•
•
•
•
TABLES
•
•
Tables are usually used to compare
and contrast information.
The table shows the sales of a grocery
store over four months, therefore the
months can be compared with each
other.
THE SALES FIGURES OF GROCERY STORE
Products
JAN
FEB
MAR
APR
Tin food
R34 000
R25 090
R36 580
R22 456
Dry food
R47 890
R36 900
R32 860
R28 500
Frozen food
R22 800
R23 500
R23 890
R24 790
Toiletries
R18 900
R17 800
R16 950
R15 810
BAR GRAPH
•
•
Bar graphs capture quantitative
information and display data in
comparative parallel bars.
Used to compare data over periods
and indicate increases and decreases
in data. Especially the highest and
lowest levels are used to be analised in
reports.
SALE OF GOLD IN RAND (MILLION)
275
300
250
200
150
150
200
175
165
100
50
0
2015
2016
2017
2018
2019
29
LINE GRAPHS
•
•
Line graphs consist of plotted points
over a period of time, joined to make a
line.
Generally used to show how trends has
changed over time (hourly/ daily/
monthly or yearly).
SALE OF GOLD IN RAND (MILLION)
300
275
250
200
150
200
175
150
165
100
50
0
2015
2016
2017
2018
2019
PIE CHARTS
•
•
Pie charts are round with wedges and
groups data in relation to a whole.
Pie charts are generally used to show
percentage.
SALE OF GOLD IN RAND (MILLION)
21%
16%
2015
2016
18%
17%
2017
2018
28%
2019
FLOW CHARTS / DIAGRAMS
•
•
Flow charts are simple diagrams that
map out a process, so that one can
easily communicate it to other people.
Used to show processes or relationships.
Example: the flow of a report system.
Explain THE IMPORTANCE OF VISUAL AIDS
•
•
•
People learn in different ways, utilising their eyes and ears effectively will help to
convey your message.
Visual aids also help maintain the audience's interest during the presentation as it
engages the audience with the presentation, thus making them remember it
afterwards.
Good visual aids are interesting, relevant and support the presentation, but never
dominate it.
Discuss/Explain the ADVANTAGES & DISADVANTAGES of GRAPHS/DIAGRAMS
ADVANTAGES
• A lot of information can be displayed in
an easy to understand format.
• Requires little explanation.
DISADVANTAGES
• Too many diagrams and graphs can be
confusing to the audience.
• Information can be manipulated easily,
causing false interpretations.
30
2.
VERBAL PRESENTATIONS
Outline/Explain/Discuss FACTORS that must be considered when PREPARING FOR A
VERBAL PRESENTATION.
•
•
•
•
•
•
•
Write down the purpose of your presentation and list the objectives.
Consider the people in the audience.
Write you presentation with an introduction, body and conclusion.
Create visual aids that will assist you to get your points across effectively.
Practise the presentation and note how long it takes.
Practise in front of a person who will give you an honest opinion of your presentation.
Visit the venue and ensure that your visual aids are appropriate, and that the
equipment provided is working and suitable.
TYPES of visual aids
• Hand-outs
• Transparencies
• Slides
• Charts
• Models
• Posters
Explain the concept of AUDIO-VISUAL AIDS
The purpose of audio-visual aids is to leave a deeper impact as it appeals most to the
senses. It helps the audience to retain the concepts presented through these aids. AUDIO
(sound) VISUAL (sight) aids include any apparatus that uses sound or sight to convey
ideas.
TYPE
DATA
PROJECTOR
INTERACTIVE
WHITEBOARD
PURPOSE
Projects images from a computer to a big screen.
Allows participants to brainstorm and capture
feedback and ideas.
VIDEO
CONFERENCING
Provides face-to-face contact of participants who
are separated by distance.
VIDEOS
Allows participants to view video clips of the topic
under discussion.
FLIP
CHARTS
Use to record ideas and feedback given from a
smaller group.
31
FACTORS to consider when designing a visual aid
1.
•
•
•
•
•
•
2.
The designing of a POSTER
Start by writing down everything you would like to have on your poster.
Draw your poster on a piece of paper, adding in all the different sections and
headings.
Let someone proofread for grammatical and spelling mistakes.
Eliminate any poster noise (irrelevant or unnecessary information).
Have interesting statements, photographs, graphics, colours and layout.
When you have finished your final design on paper, you can start designing it on the
computer
.
The designing of HAND-OUTS
1. The key to
well-designed
hand-outs is
SIMPLICITY.
• Focus on the key words and concepts of your
presentation.
• Avoid unnecessary details.
• Use illustrations or graphics, if appropriate.
• Leave room for notes.
2. RELATE the
hand-out to
your
presentation.
• Make each point listed in your hand-out
correspond to a point in your presentation.
• Number each point in the hand-out so people
can follow.
3. Make your
hand-out
appealing to
the EYE.
• Leave plenty of white space, break major
points into smaller chunks, and vary the look.
• Avoid using fancy borders or too many fonts or
styles.
4. Don't let the
hand-out
DISTRACT your
audience.
• People concentrate on one line of thought at a
time.
• Design the hand-out to represent the content
and essence of your talk.
5. Know WHEN to
distribute your
hand-out.
• If your material is very complex, give it to your
audience before your talk.
• If your hand-out is primarily a means of
reminding your audience of your key points,
distribute it at the end of your presentation.
32
TOPIC 7: THE BUSINESS PLAN
Explain the IMPORTANCE OF A BUSINESS PLAN
•
•
•
•
•
A business plan is a document that outlines all the important facts, processes and
procedures of the business.
The plan assists in maintaining business focus.
The business plan will be used to secure financing from investors or financial
institutions.
Allows the entrepreneur to evaluate the viability of a business idea;
Can be used to evaluate the success of a business and identify improvements that
need to be made.
Analysis of ENVIRONMENTAL FACTORS IN THE MACRO ENVIRONMENT
•
•
•
•
•
•
Environmental factors influence the success of a business:
It is essential to look at the factors that could possibly influence your business before
you start writing the business plan.
The best way to carry out an environmental analysis is to do a PESTLE analysis.
The PESTLE analysis examines each of the external factors that could impact on the
business.
PESTLE analysis will assess whether the impact will be negative or positive.
PESTLE analysis examines to what extent the impact will affect the business.
Components of PESTLE
P
POLITICAL
E
ECONOMIC
S
SOCIAL AND CULTURAL
T
TECHNOLOGICAL
L
LEGISLATIVE
E
ENVIRONMENTAL
33
Outline the COMPONENTS OF A BUSINESS PLAN
COMPONENT
DESCRIPTION
• Name of the entrepreneur, name and logo of the business
• Address and contact details of the business
• Allows the reader to find information in the document
1. COVER PAGE
2. INDEX PAGE
3. EXECUTIVE
SUMMARY
• Summary of the entire business plan
• Describes the product or service and the unique features of the
business
• Outlines the vision, mission, goals and any legal requirements
• Identifies strengths, weaknesses, opportunities and threats
• Description of the marketing analysis
• Includes the target market, customers and competition
• Explains the marketing mix and provides the marketing strategy
• Includes the location of the business
• Describes the manufacturing process
• Details of the equipment and suppliers
4. DESCRIPTION
5. SWOT ANALYSIS
6. MARKETING
PLAN
7. OPERATIONAL
PLAN
8. MANAGEMENT
PLAN
• Outlines the hierarchy and roles of the employees
• Detailed description of the entrepreneur's financial contribution
• Funding requirements, projected budgets and cash flow
statement
• Annexure contains additional documents
• A contingency plan (when unexpected things happen)
• Time schedule
• Legal registration documents
9. FINANCIAL
PLAN
10. ADDITIONAL
DOCUMENTS
INTRODUCTORY PAGES
The introductory pages of a business plan consist of the following:
SECTION
COVER PAGE
INDEX PAGE
PURPOSE
• Looks professional
• First impression that the person
who reads the plan is going to
get from your business
• Lists all the sections of the
business plan
ELEMENTS TO INCLUDE
•
•
•
•
•
•
Name of the business
Logo and slogan of the
business
Owner's name
Physical address of the
business
Date of the business plan
Page number of each
section
34
SECTION
DESCRIPTION
PURPOSE
• Tells the reader exactly what
the business does
ELEMENTS TO INCLUDE
•
•
•
• Vision
•
•
• Mission
•
• Goals and objectives
•
•
• Structure of the business
•
•
•
•
Includes the vision, mission
and goals & objectives
Structure of the business
Details about the product or
service
Legal requirements
The long-term goal of how
you see your business in the
future and how you want it to
grow
Addresses how you hope to
achieve your vision
Long-term objectives to
provide direction for the
business to achieve its vision
Short-term objectives with
more specific steps to reach
interim goals in order to
achieve the long-term goals
Includes the form of
ownership
Reasons for the specific form
of ownership
Legal requirements of the
business
Detailed description of
product or service
The PURPOSE of the EXECUTIVE SUMMARY
•
An executive summary is an overview of a business plan.
•
Its purpose is to summarise the key points of a document for its readers, saving them
time and preparing them for the rest of the plan.
•
It must capture the reader's attention, if not the plan will be set aside unread.
ASPECTS THAT MUST BE INCLUDED in the executive summary
•
The business’s name, location, and contact information.
•
A brief description of the product or service you offer and why it’s necessary.
•
A description of your target market or the people you think will spend money on your
idea.
•
The reasons for writing a business plan
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The size of the business, sales forecasts and profit margins.
•
Other details such as stakeholders, funding needed and often an exit strategy.
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The VISION/MISSION STATEMENTS AND GOALS of the envisaged business.
VISION STATEMENT
MISSION STATEMENT
LONG TERM
OBJECTIVES
•
•
•
•
•
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Describes what the business wants to achieve.
Where the business sees itself in the future.
States how the business will achieve its vision.
Describes the purpose of the business.
Specific goals, actions and timelines for achieving the vision.
Business will use the SMART objectives.
The STRUCTURE OF THE BUSINESS and forms of ownership
You have learnt about the different forms of ownership. It is important to explain in the
business plan the form of ownership chosen.
1.
Sole proprietorship
2.
Partnership
3.
Private company
4.
Public company
5.
Personal liability company
The choice of ownership depends on:
•
the way CAPITAL will be raised;
•
how PROFIT AND LOSSES will be shared;
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the REGISTRATION formalities;
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and the CONTINUITY of the business.
Different TYPES OF LEGAL REQUIREMENTS of a business
Businesses may need a permit or license to trade legally.
INSTITUTION
DESCRIPTION OF REQUIREMENTS
• All forms of companies must register with the Companies and
Intellectual Property Commission (CIPC)
• New inventions and patents must be registered with CIPC
CIPC
SARS
• Register with the South African Revenue Service (SARS) to fulfill
tax obligations
• Most businesses must also register as VAT vendors
• UIF registration can be done on form UF8 at any SARS office or
online.
• Businesses selling or supplying meals or perishable food to eat
will need a license from the local municipality to do so.
LOCAL
MUNICIPALITY
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SWOT ANALYSIS
The SWOT analysis examines a business in the context of the environment under the
following headings
•
•
INTERNAL
EXTERNAL
: Strengths & Weaknesses,
: Opportunities & Threats.
The IMPORTANCE OF A MARKETING PLAN
•
Explains how the product or service of the business will be marketed.
•
Business must learn as much as possible from their potential customers.
•
The marketing plan will indicate how the goods will be marketed to its target market.
•
The marketing plan will also include the amount of money to be spend on
advertising and promotion.
•
The proposed pricing of the goods and services of the business must be included.
The IMPORTANCE OF MARKET RESEARCH
•
Aims to understand the reasons why consumers will buy a certain product or service.
•
Businesses must gather data on the customers by observing the market, asking clients
to complete questionnaires.
•
Analyse the data and use the information to make informed decisions.
The MEANING OF A MARKETING MIX with specific reference to the 7p’s.
1. PRICE
2. PLACE
•
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•
•
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One of the most difficult aspects to determine.
Charge the most appropriate price.
Needs to be affordable to the customers.
Must allow the business to cover costs and make a profit.
Price charged by competitors must also be taken into
consideration.
•
•
•
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Refers to where the goods and services are sold.
Location is essential for any business.
Good access to the product or service will increase the sales.
Also refers to how the product is distributed.
3. PRODUCT
• Refers to the actual products or services.
• Essential to keep customers happy with your product or service.
• Must be different from those of the competitors.
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4. PROMOTION
5. PEOPLE
6. PHYSICAL
ENVIRONMENT
• Essential to identify how you are going to make your customers
and the target market aware of your products.
• How is the business planning to market and advertise the
product?
• Business must decide which method will best reach the target
market.
• Includes all the people that are in some way involved in or who
have an impact on the business.
• People represent the business and make decisions.
• Staff can affect the success of the business.
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•
•
•
7. PROCESS
Refer to the environment where the business is located
Environmental protection must be taken into account
Cleanliness and health in and around the building consumers need to feel safe
All facilities must be in working condition
• Describes the way in which the marketing and sales processes
are carried out.
• The simpler the process, the better.
• Use technology to make processes easier.
Identify COMPETITORS from doing a market research and explain the STRATEGIES that you
will use to overcome competition in the market.
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•
•
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•
Competitors are all businesses that sell similar products or render similar services and
who have the same target market
Entrepreneurs must have a very good idea of their competitors.
Taking note of your competition can improve your own business and give your
business the competitive edge.
Businesses must use the latest technology and production methods to keep ahead of
the competitors.
Business must also be aware of market trends.
Note the SWOT analysis of competitors and improve on it.
Explain the concept of the FINANCIAL PLAN
The financial plan gives a detailed description of the entrepreneur's financial
contributions, the funding requirements, projected budget and cash flow statements.
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Outline/Discuss/Explain the COMPONENTS OF THE FINANCIAL PLAN
• Requires a detailed explanation of financing needed for
your business
1. SOURCES OF
FINANCING
• Financial contribution of the entrepreneur is stated
• Loans from investors or financial institutions
• The interest rate on the loan, period of repayment and
the due date of the loan should be stated
2. CASH FLOW
STATEMENT
• Indicates how much money was received and spent
within a certain period
• Determines whether the business will make a profit or a
3. PROJECTED
INCOME
STATEMENT
loss
• Formula: Revenue – Expenses = Profit or Loss
• The sales prediction for the first year is given
• Highlights expenses on a monthly basis
• The statement shows the estimated worth of the business
• Assets = Owners’ Equity + Liabilities
4. BALANCE SHEET
• Assets are the possessions of the business
• Owner’s Equity refers to the money provided by the
owner(s) to start the business
• Liabilities refer to the money owned by the business
5. PRODUCT
COSTING
• All the costs involved in the business process
6. PRODUCT
PRICING
• Detailed description of how the price of the product and
service were determined
• Calculating the point at which income from sales is equal
7. BREAKEVEN
ANALYSIS
to the expenses of the business
• After this point the business starts making a profit
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