Mr Ndleve sir Honarouble One Ghost +27 72 495 171 7

Defining entrepreneurship
The process of: creating something unique and valuable by committing resources
(resources are any input that goes into the business, consisting of land or natural
resources, labour and capital) thus, growing this venture in terms of profit, products and
market share accepting all the risks involved in the process (such as financial risks,
family risks or career risks) to generate rewards (financial gain, status or
self-actualisation)

Differentiate between innovation and entrepreneurship

Innovation and entrepreneurship

Innovation is:
• the act of creating a new idea, method or product
• the specific tool of entrepreneurship by which entrepreneurs exploit change as an
opportunity for a different business or service

1.​ Differentiate between Innovation and entrepreneurship.

1. Nature of Activity:
●​ Innovation involves generating new ideas, products, or processes,
●​ Entrepreneurship involves implementing these innovations into viable
businesses.
2. Focus:
●​ Innovation focuses on creativity, problem-solving, and invention
●​ Entrepreneurship focuses on business development, risk-taking, and resource
management.
3. Outcome:
●​ The outcome of innovation can be a new product, service, or solution,
●​ the outcome of entrepreneurship is the establishment and growth of a
 successful business.
4. Risk:
●​ Innovation may involve intellectual or creative risks
●​ entrepreneurship involves financial, market, and operational risks.
5. Role
●​ Innovators can be individuals, teams, or organizations focused on generating
new concepts
●​ Entrepreneurs are individuals who take on the responsibility of turning those
concepts into profitable ventures.

Origins of entrepreneurship
• Two perspectives: historical and economic
• Historical: the French economist Richard Cantillon first used the word ‘entrepreneur’
in his work in 1755 to identify someone who engages in a risky business venture
• Economic: entrepreneurship is usually connected with land, labour, natural resources,
and capital to generate a profit
• Although colonialism provided opportunities for Western entrepreneurs, colonial
governments in Africa and elsewhere were rarely agents of expatriate enterprise or
metropolitan industries (Hopkins, 1987)
• Colonialism slowed entrepreneurship growth in Latin America, Africa and Asia

Entrepreneurship's Importance in South Africa's Economy

1.​ Job Creation.

2.​ Economic Growth.
3.​ Innovation and Technology.
4.​ Wealth Creation.
5.​ Market Competition
6.​ Community Development:
7.​ Global Impact
8.​ Personal Development
 ●​ Changing ideas into products creates sustainable competitive advantage for
economies, organisations and individuals
●​ Leads to higher quality of life and economic opportunities
●​ Commercialising innovation bridges the gap between market needs and
innovators’ inventions, but is a challenge
●​ SMMEs play a critical role in South Africa’s entrepreneurial activities
●​ It is a struggle to move from nascent entrepreneurship the establishment of a
new businesses

Types of Entrepreneurs
●​ Basic survivalist:operates as an entrepreneur to survive until obtaining a
formal-sector job or entrepreneurial opportunity.
●​ Pre-entrepreneur:involved in welfare-based entrepreneurship where profit
maximisation is less important than the collective.
●​ Subsistence entrepreneur:involved in independent income-generating activities
as a small-scale vendor.
●​ Micro-entrepreneur: A formal-sector entrepreneur with zero to 10 employees.
●​ Small-scale entrepreneur: A formal-sector entrepreneur with 11 to 49
employees.
●​ Necessity entrepreneur :starts a business because they have no other choice.
●​ Lifestyle entrepreneur: Places lifestyle above all else in a choice of business.
●​ Tenderpreneur: Has access to government tenders for business growth.
●​ Social entrepreneur: Motivated by a desire to change socio-economic,
educational, health, or environmental conditions.
●​ Serial entrepreneur: Conceptualizes and executes business models to sell to
shareholders, investors, or other businesses.
●​ Solopreneur: Operates alone in managing and running the business

Entrepreneurship in Africa
 ●​ Social entrepreneurs act as change agents for society, coming up with
solutions to social problems
●​ This is in line with principles of ubuntu
●​ Not only social entrepreneurs should apply ubuntu principles: all
entrepreneurs should do so
●​ Applied to business, ubuntu may establish progressive business
partnerships, and organisational strategies that encourage economic
growth of communities in Africa
●​ This is in line with corporate social responsibility

Recent developments in entrepreneurship

●​ Social entrepreneurship and SDGs
●​ Digitisation
●​ Resilience and responsiveness post Covid-19 pandemic

Explain the entrepreneurial process

Step 1: Idea generation

Step 2: Opportunity evaluation
Step 3: Business plan development (planning the venture)
Step 4: Determine the resources required
Step 5: Formation and management of business enterprise
Step 6: Growth and harvesting

Step 1: Idea generation

• Idea: Concept of a product/service that does not exist or is not available within a
market niche
• Opportunity: Idea for a new product/service with a market that is willing to pay for that
product/service
• Innovation: The process of making changes to something that can add value for
customers
• Best source of new ideas: Consumers
• Other sources: Business associates, channel members, technical people
• Each opportunity must be carefully screened and evaluated

Step 2: Opportunity evaluation

●​ Five basic questions to ask to determine whether an opportunity is worth
investing in:
1. Is there a sufficiently attractive market opportunity?
2. Is your proposed solution feasible?
3. Can we compete (is there sustainable competitive advantage)?
4. Do we have a team that can capitalize on the opportunity ?
5. What is the risk/reward profile, and does it justify investment of time and money?
●​ This is the first step towards convincing others (prospective customers,
employees or investors) of the potential of the venture

Step 3: Developing a business plan

• Planning of the venture takes place in this step
• Starts with the development of the strategy of the venture
• Who are target customers and how you will reach them?
• Vision is an element of strategy: How the venture wants to be known or thought of
• A good business plan is essential for developing and exploiting an opportunity
• This is a time-consuming phase

Step 4: Determine the resources required

• Starts with an appraisal of the entrepreneur’s present resources
• Distinguish between critical and helpful resources
• Do not underestimate the amount or variety of resources the business needs
• Consider the downside risks of insufficient or inappropriate resources
• Focus on acquiring the required resources in time while giving up as little control as
possible – maintain a large ownership position
• Identify alternative suppliers of resources
• Understand resource supplier needs

Step 5: Formation and management of the business enterprise

• Implement the business plan
• Implement management style and structure
• Establish a control system
• Monitor key organisational processes

Step 6. Growth and harvesting

• Ensure that the business is running efficiently
• Do not neglect existing customer base when choosing growth strategy
• Timing is critical to success of growth strategy
• Evaluate the present position of the business to make sure that consolidation efforts
will be effective
• Harvesting strategy: Use profits from mature brands to increase funding for more
promising businesses

Evaluate the impact of the environment on entrepreneurship

Entrepreneurial mindset
The Entrepreneurial Learning Initiative (ELI) states that the entrepreneurial mindset is a
specific set of beliefs, knowledge, and thought processes that drive entrepreneurial
behaviour. Entrepreneurs:
• believe in their ability to succeed
• have compelling goals
• see problems as opportunities
• are life-long knowledge seekers
• are reliable
• surround themselves with a positive community

The five characteristics of entrepreneurial mindset are:

• Engaging the energies of everyone in your domain
• Pursuing the very best opportunities, rather than exhausting yourself and your
organisation by chasing after every option
• Seeking new opportunities
• Focusing on execution and adaptation
• Pursuing opportunities with enormous discipline

Qualities making up an entrepreneurial mindset are:

• A clear and achievable vision, even if the resources may not be in an entrepreneurs’
control
• Self-awareness
• Confidence
• Self-motivation
• A willingness to take calculated risks
• A willingness to listen to others
• A lack of fear of failure
• A willingness to work hard

Entrepreneurial opportunities and challenges Opportunities in the African context

• Technology is expected to change the nature of jobs in the future
• So, children need to be prepared with the attributes and skills of future workers
• The number of jobs with ICT intensity is increasing in Africa
• Smart cities and smart businesses (such as Airbnb and Uber) are becoming more
prevalent
• Entrepreneurs can now do business on a global scale and reach international markets
• The Fourth Industrial Revolution brings vast opportunities
• Globalisation and AI have become a requirement for entrepreneurs to stay competitive

Challenges to the entrepreneurial mindset

• These include the global economy’s current status, unemployment, competition and
education
• The youth faces challenges such as increasing labour costs, youth unemployment and
limited employment for graduates
• Other challenges are rapid technological disruptions, regulatory barriers, infrastructure
challenges and increased financial uncertainty

Characteristics of successful entrepreneurs

●​ Passionate about business
●​ Creative and Innovative
●​ Disciplined
●​ Resourceful
●​ Risk taker
●​ Good communicator
●​ Flexible
●​ Leaders

CHAPTER 2: THE ENTREPRENEURIAL MINDSET 24

Creativity is:
• the ability to see the world in new ways
• find hidden patterns
• make connections between seemingly disparate things, and
• generate new ideas and solutions to problems Kaur (2022)

Creativity defined
• There are many different definitions of creativity as it is difficult to define
Common descriptions all share the following aspects:
●​ Looking at things differently
●​ Implementation of an idea by making it a reality
●​ Addressing a gap such as a problem or an unmet need
• Creativity is the process of developing and implementing ideas that are both novel and
useful and address a gap in the market

Addressing Market Gap Techniques

• Analytical methods for precise identification of needs.
• Transforming problems into opportunities for addressing gaps.
• Breaking down assumptions for new ideas.
• Strategic assessment for predicting future outcomes.
• Utilizing both logic and intuition in entrepreneurship.

Myths and realities surrounding creativity and entrepreneurship

• Myth 1: Creativity is limited to a small number of people
• Myth 2: Only creative people have good ideas
• Myth 3: Creative people are born that way
• Myth 4: Analytical thought and creative thought are fundamentally different
• Myth 5: Money is a creativity motivator
• Myth 6: There is no business without a unique idea
• Myth 7: Entrepreneurs are high-tech wizards
• Myth 8: Entrepreneurs are risk-takers
• Myth 9: Entrepreneurs do not have a boss
• Myth 10: Entrepreneurs need to know everything

Barriers to creativity
• Barrier 1: Fear of failure
• Barrier 2: Negative beliefs and habits
• Barrier 3: Making assumptions
• Barrier 4: Following rules
• Barrier 5: Environment not open to risk
• Barrier 6: Lack of financial support
• Barrier 7: Cultural barriers

The creative process

Theoretical developments in the creative process
• An early model of the creative process is that of Wallas (1926) who proposed
four phases in the creative thinking process:
• Preparation
• Incubation
• Illumination
• Verification

• Rossman (1931) expanded these to seven steps:

• Observation of a need or difficulty
• Analysis of the need
• A survey of all available information
• A formulation of all objective solutions
• A critical analysis of these solutions for their advantages and disadvantages
• The birth of the new idea – the invention
• Experimentation, selection and perfection

• Osborn (1953) put forward a seven-step model of creative thinking:

• Orientation
• Preparation
• Analysis
• Ideation
• Incubation
• Synthesis
• Evaluation
• More recent models include the creative problem-solving (CPS) model:
• Objective finding
• Fact finding
• Problem finding
• Idea finding
• Solution finding
• Acceptance finding

The entrepreneurial creative process

• Preparation
• Information gathering
• Idea generation
• Evaluation of ideas
• Implementation
• Experimentation

entrepreneurial creative process:

​ 1. Preparation:
●​ In this step, entrepreneurs set the stage for creativity by defining the
problem or opportunity they are addressing.
●​ They may conduct background research, define goals, and gather initial
information.
​ 2. Information Gathering:
●​ Entrepreneurs collect relevant data and information related to the problem
or opportunity.
●​ This step involves gathering insights, market research, and understanding
the context in which the entrepreneurial venture will operate.
​ 3. Idea Generation:
 ●​ This is the phase where entrepreneurs brainstorm and generate a variety
of creative ideas to solve the identified problem or capitalize on the
opportunity.
●​ Techniques like mind mapping, brainstorming sessions, and other creative
thinking methods are often used in this step.
​ 4. Evaluation of Ideas:
●​ Once a pool of ideas is generated, entrepreneurs evaluate each idea
based on various criteria such as feasibility, market potential, and
alignment with goals.
●​ This step involves critical analysis and may lead to the selection of the
most promising ideas.
​ 5. Implementation:
●​ After selecting the most viable idea, entrepreneurs develop a detailed plan
for implementation.
●​ This involves creating a business model, designing strategies, and
outlining the steps needed to turn the idea into a tangible product or
service.
​ 6. Experimentation:
●​ Entrepreneurs test their ideas in the real market through
experimentation.
●​ This phase allows for learning, adaptation, and refinement of the business
concept based on real-world feedback.
●​ Iterative cycles of experimentation and adjustment may occur as the
entrepreneur refines the product, service, or business model.

Product/Service Idea Sources

• Exploring ideas and opportunities.
• Personal skills, passions, imagination, talents.
• Hobbies and interests.
• Conversations with family, friends, or shoppers.
• Current or previous experiences.
• Government assistance services for small businesses.
• Mass media.
• Staying updated with current events.
• Trade show visits and exhibitions.
• Internet and online research.
• Identifying market gaps for new products/services.
• Libraries.
• Creative thinking.

Generating New Product or Service Ideas

• Accumulation of Knowledge: Extensive reading, investigation of business

opportunities, and travel to different environments.
• Observation: Observing the environment, events, products, and services to generate
viable business ideas.
• Brainstorming: Involving two or more people in idea generation.
• Nominal Group Technique: Used during decision-making process to generate and
prioritize ideas.
• Delphi Technique: Similar to nominal group technique, but not all members need to
be physically present.
• Incubation of Ideas: Creating an environment where subconscious thoughts develop
into creative ideas.
• Activities unrelated to the subject can potentially develop an idea.

Initial Idea Screening Process

• Follow-up of ideas to identify good and bad features.
• Excludes non-successful ideas, allowing viable and marketable ones.
• Categorizes ideas based on desirability, feasibility, and propensity to act.
• Entrepreneurial ideas with innovation and theoretical proof provide competitive
position.
• Next step: Idea evaluation for real-life implementation.

CHAPTER 3: CREATIVITY AND GENERATING NEW BUSINESS IDEAS

Foundations of Opportunity Recognition and Evaluation

• Viable business opportunity: a new, unexplored means of generating economic value.
• Three central characteristics:
●​ potential economic value,
●​ novelty
●​ perceived desirability.
• Entrepreneurs must use cognitive abilities and objectivity to recognize and manage
risks.

Cognitive Approach to Opportunity Recognition and Evaluation

• Focuses on entrepreneur's preferred method of gathering, processing, and evaluating
information.
• Opportunities arise from changing technology, external environment, and personal
situation.
• Entrepreneurs require cognitive skills to gather, process, evaluate, and use information
to identify viable opportunities.

Role of Cognitive Biases and Heuristics in Opportunity Evaluation

• Entrepreneurs often exhibit cognitive biases, overestimating their chances of success.

• Cognitive biases are mental shortcuts used to make judgements about opportunities
and businesses.
• Entrepreneurs who can predict business success and perceive low failure probability
view new ideas as feasible opportunities.
• Heuristics simplify decision-making conditions, especially in uncertain and complex
situations.
• Entrepreneurs use heuristics more than managers in large organizations.
• Biases like overconfidence, planning fallacy, belief in small numbers, and illusion of
control influence risk perception and business venture decisions.

Risk Perception in Entrepreneurship

• Subjective judgement of inherent risk.
• Differs between entrepreneurs and non-entrepreneurs.
• Explains why some become entrepreneurs.
• Entrepreneurs pursue opportunities non-entrepreneurs would ignore.
• Perception of positive outcomes may drive entrepreneurship.

Overconfidence Overview
• Failure to recognize personal knowledge, skills, experience limits.
• Overestimation of certainty regarding facts.

Planning Fallacy Overview

• Involves underestimating project completion time, resources, or work achievable.
• Strongly operates in unique, uncertain situations requiring focus on the future.
• Entrepreneurs forecast future prices and market potential using intuitive judgement.
• Forecasts often based on success plans and scenarios, potentially being overly
optimistic.

Belief in the Law of Small Numbers

• Entrepreneurs use small sample of information for firm conclusions.
• Small sample lacks predictive validity.
• Entrepreneurs avoid large random samples due to limited resources.
• Strong belief in the law can lead to business failure.

"Dangers of Small Samples in Entrepreneurship"

• Limited informational inputs for firm conclusions.
• Inability to seek positive input from friends or family.
• Potential failure if pitching to wrong target market.

Illusion of Control in Entrepreneurship

• Entrepreneurs overemphasize their skills' ability to boost performance in situations
where chance is significant.
• They believe they can control uncontrollable events and accurately predict outcomes.
• This bias leads to higher personal success expectations.
• Entrepreneurs often believe their skills are superior to others.
• Persistent due to the strong connection between skill and chance.
• Entrepreneurs should guard against heuristic and conceptual biases to identify viable
business opportunities.

Venture Capitalists' Evaluation Criteria

• Entrepreneurs evaluate initial opportunities and fund applications before opportunity
exploitation.
• Venture capitalists evaluate investment opportunities after entrepreneur decides on
exploiting opportunities.

When evaluating business opportunities, first-time entrepreneurs use these

criteria:
• Potential growth in the target market
• Demonstrated market acceptance
• The likelihood of a ten times return on assets in the next five to ten years
• The entrepreneur’s ability to react well to risk

But investors look for the following when considering new venture proposals:
• Experience and a good management team
• Proprietary product or service
• Marketability
• Personal commitment and involvement of the entrepreneur
• Openness and honesty
• Knowledge and experience
• Realistic financials
• Return on investment (ROI)
• Intellectual property

Opportunity assessment and screening

Product/Service Ideas Success

• Right product/service can boost business fortune.
• Wrong product/service can make exhaustive efforts unprofitable.

Product/Service Characteristics…
The new product or service must
• Fulfills a need or want.
• Has niche or mass-market appeal.
• Generates income and profit.
• Requires regular customer replenishment or repurchase.
• Compatibility with existing attitudes and beliefs.
• Simple for easy understanding.
• Communicates results or benefits easily.
• Offers trial period for potential customers.
• Requires immediate availability upon purchase.

Product/Service Feasibility Screening

• Identify and evaluate technical requirements.
• Assess entrepreneur's or venture team's technical skills.
• Evaluate product/service's viability.
Marketability

The test for marketability can be divided into four categories:

• Customers
• Competitors
• Suppliers
• Marketing of the product or service
Mr Ndleve Honarouble One Ghost +27 72 495 1717

Chapter 4

Define and explain why strategic management is important to entrepreneurs.

Strategic management involves setting goals, analyzing the competitive environment,

and implementing plans to achieve long-term objectives. It is crucial for entrepreneurs
as it:

➢​ Helps in setting clear goals and a vision for the business.

➢​ Informs better choices by understanding market trends and competition.
➢​ Ensures optimal use of resources to achieve objectives.
➢​ Identifies potential threats and prepares strategies to address them.
➢​ Facilitates innovation and adaptation, essential for business expansion and
sustainability.

Describe the steps in the process of strategic management.

1.​ Strategy formulation phase
2.​ Strategy evaluation phase
3.​ Strategy implementation phase
4.​ Sustainable competitive advantage phase

Outline the components of a mission statement.

➢​ Customers
➢​ Products or services
➢​ Markets
➢​ Technology
➢​ Survival, growth and profitability
➢​ Philosophy
➢​ Self-concept (distinctive competence)
➢​ Public image
➢​ Employees
Develop a mission statement of a business venture.

Analysis of the external environment

• To respond to or anticipate changes in the environment, the entrepreneur needs sound

knowledge of the business environment
• In the analysis of the external environment, the entrepreneur identifies threats and
opportunities that could be used in the development of their products and/or services

When analysing the external environment, study these factors:

➢​ Social and cultural
➢​ International and national economic
➢​ Physical
➢​ Technological
➢​ Communications and infrastructure
➢​ Administrative and institutional
➢​ Legal and political
➢​ Competitive

Analysis of the internal environment

➢​ Analyse each functional area in the venture, such as research and development,
marketing, sales, management, production and finance
➢​ Other important aspects of the internal environment include the organisation’s
infrastructure, such as information systems to support decision-making and
communication
➢​ Use a checklist of questions to determine strengths and weaknesses

Explain how best strategies could be identified.

Useful criteria:
➢​ Suitability
➢​ Internal consistency
➢​ Realistic
➢​ Focused on strategic problems
➢​ Capable of solving key sub-problems
➢​ Customer benefit
➢​ Stakeholder benefit

Explain how the entrepreneur could ensure the implementation of strategies

Implement an annual review of strategies, goals and objectives to ensure that:
➢​ Customers’ continuously changing needs are addressed
➢​ Changes in technology are implemented
➢​ Changes in legislation are adhered to
➢​ New innovations are implemented
➢​ Potential for growth is seized to the advantage of all stakeholders

Chapter 5
.
Elaborate on the different location factors to be considered when starting a venture.
Location: The premises needed to produce a business’s products or render its services
Important location factors:
❖​ Sources of raw materials
❖​ Availability of labour and other human resources
❖​ Proximity of, and access to, the market
❖​ Availability of transport facilities
❖​ Availability of reasonably priced power and water
❖​ Availability of a site and buildings
❖​ Availability of capital
❖​ Attitude, regulations and tariffs of local authorities
❖​ Existing business environment
❖​ Social environment
❖​ Climate of the region
❖​ Central government policy
❖​ Personal geographical references of the entrepreneur and his or her family

Identify and discuss the resource needs of the entrepreneur and how the size of
the prospective enterprise could influence the entrepreneur.

Resource Needs of the Entrepreneur

❖​ Financial Capital: Essential for startup costs, operations, and growth. This
includes savings, loans, investments, and grants.
❖​ Human Resources: Skilled employees, advisors, and mentors who can provide
expertise and support.
❖​ Physical Resources: Office space, equipment, technology, and materials required
for production or service delivery.
❖​ Intellectual Resources: Patents, trademarks, proprietary knowledge, and brand
reputation.
 ❖​ Social Capital: Networks and relationships that can provide opportunities, advice,
and partnerships.

Influence of Enterprise Size on Entrepreneur

1. Small Enterprises
❖​ Resource Constraints: Limited financial and human resources require careful
management and multitasking by the entrepreneur.
❖​ Flexibility: Easier to adapt to changes and pivot strategies quickly.
❖​ Personal Involvement: Higher personal involvement in daily operations, leading
to direct control but potential burnout.

2. Medium Enterprises
❖​ Scaling Challenges: Need for more structured processes and systems as the
business grows.
❖​ Delegation: Entrepreneurs must develop skills in delegation and management to
handle increased complexity.
❖​ Increased Resources: More access to financial and human resources compared
to small enterprises, enabling broader opportunities.

3. Large Enterprises
❖​ Complex Management: Requires sophisticated management structures and
strategic planning.
❖​ Access to Capital : Easier access to substantial financial resources and
investment.
❖​ Bureaucracy: Potential for increased bureaucracy, slowing down decision-making
and innovation.
❖​ Specialization: Greater ability to hire specialized talent and implement advanced
technologies.

Differentiate between the four broad categories of resources and provide

examples of each

Four broad categories:

❖​ Operating resources
❖​ Human resources
❖​ Financial resources
❖​ Technology resources

1. Operating Resources
 ❖​ Description: These are the physical and material resources necessary for the
day-to-day functioning of a business. They include tangible items and materials
used in the production process and daily operations.
Example
❖​ Machinery and Equipment
❖​ Raw Material
❖​ Supplies
❖​ Facilities

2. Human Resources
-​ Description: This category encompasses all the individuals who work for an
organization. It includes their skills, talents, and abilities, as well as the processes
involved in managing these individuals.
Examples
❖​ Employees: All levels of staff from executives to entry-level workers.
❖​ Consultants: External experts who provide specialized knowledge or services.
❖​ Training Programs: Initiatives to improve employees' skills and competencies.
❖​ HR Policies: Guidelines and practices for recruitment, retention, performance
management, and employee development.

3. Financial Resources
❖​ Description: Financial resources refer to the funds and economic assets that a
business needs to operate and grow. These include both internal funds and
external financial support.
Examples
❖​ Capital: Money invested by owners or shareholders.
❖​ Loans: Funds borrowed from banks or other financial institutions.
❖​ Revenue: Income generated from sales of products or services.
❖​ Investments: Financial investments that generate returns, such as stocks, bonds,
or real estate.

4. Technology Resources
-​ Description: Technology resources include all the technological tools and
systems that support the operations and strategic objectives of a business. This
category covers both hardware and software.
Examples
❖​ Hardware: Physical devices such as computers, servers, and networking
equipment.
 ❖​ Software: Applications and programs used for business operations, such as
accounting software, customer relationship management (CRM) systems, and
enterprise resource planning (ERP) systems.
❖​ Databases: Organized collections of data that support business processes.
❖​ IT Infrastructure: The underlying foundation that supports all technological
operations, including networks, data centers, and cybersecurity systems.

Explain the different sources of finance.

Different types of funding:
❖​ Government grant
❖​ Loan financing
❖​ Bootstrapping
❖​ Family, friends and associates
❖​ Crowdfunding
❖​ Angel investors
❖​ Venture capital

❖​ Government Grant: Non-repayable funds provided by government agencies to

support specific projects.
❖​ Loan Financing: Borrowing money from financial institutions with the obligation to
repay with interest.
❖​ Bootstrapping: Using personal finances or business revenues to fund operations
and growth.
❖​ Family, Friends, and Associates: Financing from personal connections who trust
the business idea.
❖​ Crowdfunding: Raising small amounts of money from many people via online
platforms.
❖​ Angel Investors: Wealthy individuals who invest personal funds in exchange for
equity.
❖​ Venture Capital: Investment from firms or individuals in high-growth potential
businesses in exchange for equity.

Explain the legal aspects that you consider during business start-up.

❖​ Business Structure: Choosing the right legal structure for your business impacts
taxes, liability, and regulatory requirements.
❖​ Registration and Permits: Registering your business name and obtaining
necessary licenses and permits to legally operate.
❖​ Taxation: Understanding and complying with tax obligations.
❖​ Intellectual Property: Protecting your business's intellectual assets.
 ❖​ Contracts and Agreements: Establishing clear legal agreements with partners,
employees, vendors, and customers.
❖​ Employment Law: Complying with laws regulating employee rights and
workplace conditions.
❖​ Insurance: Protecting the business from various risks.
❖​ Compliance with Industry Regulations: Ensuring your business meets all
industry-specific regulations.

Chapter 6

List ethical issues with which a business may be confronted.

➔​ Safety of products and/or services
➔​ Quality and price of products or services
➔​ Advertising
➔​ Social awareness in advertising
➔​ Competitive advertising
➔​ Social media
➔​ Social network marketing
➔​ After-sales service and warranties
➔​ Dealing with employees
➔​ Respecting employees’ culture, religion and values
➔​ Unethical behaviour that is committed by those in positions of power

Discuss the impact of an entrepreneur’s ethics on the venture.

➔​ Reputation and Trust: Ethical behavior builds trust and credibility with customers,
investors, and stakeholders.
➔​ Employee Moral e and Engagement: Ethical leadership creates a positive work
environment, leading to higher employee morale, satisfaction, and engagement.
➔​ Legal Compliance and Risk Mitigation: Adhering to ethical standards reduces the
risk of legal and regulatory issues, fines, and reputational damage. Publicity.
➔​ Customer Loyalty and Satisfaction: Ethical business practices contribute to
customer loyalty and satisfaction.
➔​ Long-Term Sustainability: Ethical decision-making considers the impact on
society, the environment, and future generations.

Understand the importance of managing ethical skills.

➔​ Ethics risks: The beliefs, practices or behaviour in an organisation that go against

standards of desired behaviour and/or stakeholders’ rights
 ➔​ Risk appetite: An organisation’s natural tendency for taking risks
➔​ Risk tolerance: How able or prepared a business is to carry the negative
outcomes that are associated with risks

Identify and discuss ethical dilemmas that arise in the course of operating a
venture.
➔​ Safety of products and/or services
➔​ Quality and price of products or services
➔​ Advertising
➔​ Social awareness in advertising
➔​ Competitive advertising
➔​ Social media
➔​ Social network marketing
➔​ After-sales service and warranties
➔​ Dealing with employees
➔​ Respecting employees’ culture, religion and values
➔​ Unethical behaviour that is committed by those in positions of power

Understand the function and importance of a code of ethics.

➔​ Guidance for Decision-Making: A code of ethics helps individuals understand

what is considered acceptable and unacceptable behavior within the
organization. It provides clarity on ethical standards and helps employees make
decisions that align with the company's values and principles.

➔​ 2. Promotion of Ethical Culture: A well-defined code of ethics promotes an ethical

culture within the organization. It communicates the organization's commitment to
integrity, honesty, fairness, and responsibility, fostering trust and respect among
employees and stakeholders.

➔​ Risk Mitigation: By establishing clear expectations for ethical conduct, a code of

ethics helps mitigate the risk of ethical misconduct, fraud, and unethical behavior.
It sets boundaries and consequences for violations, reducing the likelihood of
legal and reputational damage.

➔​ Enhancement of Reputation: Adhering to a code of ethics enhances the

organization's reputation and credibility. It demonstrates to customers, investors,
and the public that the organization is committed to ethical business practices,
which can lead to increased trust, loyalty, and positive brand perception.
 ➔​ Employee Accountability: A code of ethics holds employees accountable for their
actions and behaviors. It provides a basis for evaluating performance, addressing
ethical breaches, and implementing disciplinary measures when necessary.

➔​ Compliance with Laws and Regulations: A code of ethics ensures that the
organization complies with relevant laws, regulations, and industry standards. It
helps employees understand their legal obligations and ethical responsibilities,
reducing the risk of legal non-compliance.

Discuss the impact of an entrepreneur’s personal ethics on the venture.

Values that are essential to a sustainable business:

➔​ Honesty: Builds trust and a positive reputation.

➔​ Reliability: Establishes dependable stakeholder relationships.
➔​ Fairness: Enhances morale and satisfaction.
➔​ Consistency: Ensures stability and brand strength.
➔​ Loyalty: Fosters long-term commitment and community support.

Discuss the various approaches to social responsibility

Different approaches to social responsibility

➔​ Obstructionist approach: A management approach that views social
responsibility as an unnecessary cost item
➔​ Defensive approach: A non-strategic, ‘management by crisis’ approach to social
or environmental concerns
➔​ Strategic or accommodative approach: A corporate social responsibility plan
is developed with a dedicated budget, but in a highly compartmentalised manner
➔​ Assimilated approach: All the stakeholders are involved in determining the
various social and environmental needs
➔​ Altruistic approach: The primary corporate mission is focused on creating a
better society or environment, and products and services are aligned to fulfil the
corporate social responsibility

Chapter 7

Identify the various business functions that could exist within a venture and
briefly discuss each of these.

Level 1: Primary Functional Areas of Business Management

1. Purchasing/Logistics/Supply Chain Management
●​ Purchasing: This involves acquiring the goods and services that a company
needs to operate. Effective purchasing strategies can reduce costs and improve
quality and efficiency.
●​ Logistics: This entails managing the transportation and storage of goods.
Efficient logistics ensure timely delivery and optimal inventory levels.
●​ Supply Chain Management: This is the oversight of materials, information, and
finances as they move from supplier to manufacturer to wholesaler to retailer to
consumer. It includes coordinating and integrating these flows both within and
among companies.

2. Manufacturing/Production/Operations
●​ Manufacturing: This involves converting raw materials into finished products
through various processes. It focuses on efficiency, quality control, and meeting
production targets.
●​ Production: This covers the entire process of creating goods and services. It
includes planning, scheduling, and controlling the activities that transform inputs
into finished goods.
●​ Operations: This encompasses the day-to-day activities required for running the
business, including managing resources, workflow, and ensuring that production
meets demand.

3. Marketing
●​ This function involves promoting and selling products or services. It includes
market research, advertising, sales strategies, and customer service. The goal is
to understand consumer needs, create value, and foster strong customer
relationships.

4. Finance
●​ Finance is responsible for managing the company's financial resources. This
includes budgeting, forecasting, accounting, and investment activities. Effective
financial management ensures the company can meet its obligations and
achieve its financial goals.

Level 2: Support Functional Areas/Generic Management Functions

1. Human Resources
-​ This function deals with recruiting, hiring, training, and managing employees. HR
ensures that the organization has the right talent and that employees are
 motivated and productive. It also handles employee relations, benefits, and
compliance with labor laws.

2. Administration
●​ Administration involves the day-to-day operations that support the primary
functions of the business. This can include office management, clerical work, and
ensuring that business processes run smoothly. Administrative functions ensure
that the organization operates efficiently and effectively.

3. Information Management
●​ Information management involves collecting, storing, and managing data and
information. It ensures that accurate and timely information is available for
decision-making. This function includes IT services, data analysis, and
maintaining information systems.

Describe the concept of entrepreneurial leadership in a business.

●​ Entrepreneurial leadership is a style of leadership that combines the innovative

and risk-taking spirit of entrepreneurship with the strategic and motivational skills
of effective leadership. This concept is essential in business, especially for
startups and organizations that aim to drive growth and adapt to changing market
conditions.

The management and entrepreneurial teams

●​ Management team: Individuals with supervisory responsibilities and

non-supervisory staff who play key roles in a business make up the management
team
●​ Entrepreneurial team: The most important resource for the entrepreneurial
venture is the people involved in starting up and running the venture
●​ Teams in the workplace: A new venture requires a lead entrepreneur with
personal characteristics

Discuss the entrepreneurial management process.

Explain the seven critical steps in the decision-making process in the management of
managerial tasks.

●​ Define the Problem: Clearly identify the issue.

●​ Decide on the Process to Use: Choose an appropriate methodology.
 ●​ Gather Information: Collect relevant data and insights.
●​ Make the Decision: Analyze options and select the best course of action.
●​ Develop an Action Plan: Outline steps, resources, and timelines.
●​ Audit and Evaluate the Decision and Process: Monitor effectiveness and
compare outcomes to expectations.
●​ Record and Share Learning: Document and disseminate insights for future
improvement

Differentiate between the various types of control that could be used in an

entrepreneurial venture.

Pre-control

●​ This type of control is implemented before the actual activity or process begins. It
focuses on preventing problems by ensuring that the necessary resources,
standards, and policies are in place beforehand.
●​ Purpose: To identify and mitigate potential issues before they occur.
●​ Examples: Quality Standards, Budgeting and Training Programs

Concurrent control

●​ Description: This type of control occurs during the actual process or activity. It
involves monitoring ongoing operations and making adjustments as needed to
ensure that goals are met.
●​ Purpose: To ensure that operations are on track and to make immediate
corrections if deviations occur.
Examples: Real-Time Monitoring, Performance Appraisals and Inventory
Management

post-control

●​ Description: This type of control is applied after the process or activity has been
completed. It involves analyzing outcomes and using the information to improve
future performance.
●​ Purpose: To assess results and implement changes for future improvements.
●​ Examples: Financial Statements ,Customer Feedback and Project Evaluation

Describe the four steps of the control process.

●​ Design and introduction of the control system
●​ Observing and measuring actual performance, and reporting it
 ●​ Evaluation of performance
●​ Taking corrective action

Describe the five Maslow hierarchy of needs

Abraham Maslow's Hierarchy of Needs is a psychological theory that suggests humans

have five hierarchical levels of needs, depicted as a pyramid. Maslow proposed that
individuals must satisfy lower-level needs before progressing to higher-level needs.
Here's a brief description of each level:

●​ Physiological Needs: At the base of the hierarchy are physiological needs,

which are the most basic requirements for human survival.

●​ Safety Needs: Once physiological needs are met, individuals seek safety and
security. This includes physical safety as well as financial and health security.

●​ Love and Belongingness Needs: The third level involves social needs for love,
affection, and belongingness.

●​ Esteem Needs: Once social needs are fulfilled, individuals strive for esteem
needs, which include both self-esteem and the esteem of others.

●​ Self-Actualization: At the peak of the hierarchy is self-actualization, which

represents the realization of one's full potential and personal growth.

Chapter 11

Describe the purpose of accounting.

The purpose of accounting is to provide a systematic process for recording, reporting,

and analyzing financial transactions and information.

★​ Financial Reporting
★​ Decision Making
★​ Performance Measurement
★​ Budgeting and Planning
★​ Cost Control
★​ Internal Control
★​ Stakeholder Communication
Explain the basic accounting cycle.

The basic accounting cycle illustrated in the image involves several key steps, each
integral to the accurate recording and reporting of financial information.

★​ Occurrence of a Transaction: This is the initial event that triggers the

accounting process. It could be a sale, purchase, receipt of cash, or any other
financial activity.

★​ Recording a Transaction in Relevant Journal: Once a transaction occurs, it is

recorded in the appropriate journal.

★​ Summarizing Information from Journal into General Ledger: Transactions

recorded in journals are periodically summarized and posted to the general
ledger.

★​ Preparing Trial Balance: At the end of the accounting period, a trial balance is
prepared. This involves listing all the ledger accounts and their balances to
ensure that total debits equal total credits.

★​ Preparing and Presenting Financial Statements: Finally, the financial

statements are prepared using the information from the trial balance.

Define an entity and explain the concept.

Entity

An entity in accounting refers to any organization or unit for which financial statements
are prepared. This could be a business, a non-profit organization, a government
agency, or an individual engaging in business activities. Essentially, it is a distinct
economic unit that requires separate financial tracking and reporting.

Concept of Entity

The concept of an entity is fundamental in accounting and encompasses the following

key principles:
1. Separate Entity Assumption: This principle states that the business is separate and
distinct from its owners or other entities.

2. Economic Activities: All economic activities related to the entity are tracked
independently. This includes all revenues, expenses, assets, liabilities, and equity
specific to that entity.

3. Legal and Accounting Boundaries: An entity can have legal status (like a corporation
or partnership) or be defined by accounting practices (like a department within a larger
organization).

4. Financial Accountability: By maintaining separate records, entities ensure

accountability and transparency in financial reporting. This aids stakeholders (investors,
creditors, regulatory bodies) in making informed decisions based on the entity’s financial
health and performance.

5. Consistency in Reporting: The entity concept ensures consistency and comparability

in financial reporting. Each entity follows its own set of financial records, making it
easier to analyze and compare its financial data over time and against other entities.

Importance

-​ Clarity and Accuracy: The entity concept provides clarity and ensures accurate
financial reporting by isolating the financial activities of one entity from those of
others.
-​ Regulatory Compliance: It helps in meeting legal and regulatory requirements, as
most regulations require businesses to prepare and present financial statements
separately.
-​ Decision Making: It aids in better decision-making by providing a clear financial
picture of the entity, allowing stakeholders to assess its performance and make
informed choices.

Explain the purpose of financial statements.

The purpose of financial statements is to provide a comprehensive and accurate picture

of an entity's financial performance, position, and cash flows. These statements are
essential tools for stakeholders to make informed decisions. Here are the main
purposes of financial statements:

●​ Assess Financial Performance

 ●​ Evaluate Financial Position
●​ Understand Cash Flows
●​ Ensure Accountability and Transparency
●​ Facilitate Decision Making
●​ Compliance with Regulations
●​ Performance Comparison
●​ Strategic Planning

In summary, financial statements are crucial for providing a clear, accurate, and detailed
understanding of an entity's financial health and performance. They serve as a
foundation for decision-making, regulatory compliance, accountability, and strategic
planning.

Describe the users of financial statements.

External Users

1. Controlling Interests: Shareholders or other entities that have significant control over
the company use financial statements to monitor and influence company decisions.
2. Equity Investors: Current and potential shareholders analyze financial statements to
assess the company’s profitability, financial health, and potential for growth, aiding their
investment decisions.
3. Creditors: Banks and other lenders review financial statements to evaluate the
company’s creditworthiness and ability to repay loans.
4. Clients: Clients may look at a company’s financial health to ensure it can deliver
goods and services reliably and sustainably.
5. Employees: Beyond internal users, employees may have an interest in the financial
stability and performance of their employer, particularly concerning job security and
remuneration.
6. The State: Government agencies use financial statements to ensure compliance with
regulations, for tax assessments, and to monitor the economic contributions of the
company.
7. The Community: Local communities might be interested in the financial health of
companies to gauge their impact on local employment, economic development, and
social responsibility.

Internal Users
1. Management: Company management relies on financial statements to make
informed decisions about planning, controlling, and directing operations. They use this
information for strategic planning, budgeting, and performance evaluation.
2. Employees: Internally, employees, especially those in managerial and supervisory
roles, use financial information to understand the company’s performance and make
decisions related to their departments and roles.

Name and discuss the various sources of finance and the circumstances in which
they can be used.

1.​ Internal Sources

Own Equity
★​ Funds provided by the owner(s) of the business from their personal savings.
★​ Suitable for startups or small businesses where the owners are willing to invest
their own money.

Profits or Earnings
★​ Reinvesting the business’s retained earnings back into the company.
★​ Ideal for established businesses with sufficient profit margins looking to expand
without incurring debt.

Speeding Up Collections from Customers

★​ Accelerating the collection of receivables to improve cash flow.
★​ Useful for businesses that have outstanding invoices and need immediate
liquidity.

4. Credit from Suppliers

★​ Negotiating extended payment terms with suppliers.
★​ Helps manage short-term cash flow issues without needing to secure external
finance.

External Sources

1. Long-term Finance
★​ Includes long-term loans from financial institutions and issuing debentures.
★​ Suitable for major capital investments like purchasing property or significant
equipment that will be used over many years.
2. Intermediate (Mid-term Finance)
★​ Includes leasing, operating leases, and financial leases.
★​ Used for acquiring assets that will be used for a medium period, like machinery
or vehicles, without immediate full payment.

Short-term Finance
★​ Comprises trade credit, bank credit, and bankers’ acceptance.
★​ Ideal for managing day-to-day operations, such as purchasing inventory or
covering temporary cash shortages.

Factoring
★​ Selling accounts receivable to a third party (a factor) at a discount.
★​ Beneficial for businesses needing immediate cash flow and not wanting to wait
for customer payments.

Sources of Start-up Finance for Entrepreneurs

Business Partners Limited

★​ Provides finance and support to small and medium enterprises (SMEs).
★​ Suitable for new businesses that need initial funding and business development
support.

2. Commercial Banks
★​ Offer a variety of loans and credit facilities.
★​ Appropriate for startups and existing businesses needing capital for various
purposes, depending on their creditworthiness.

3. Khula Enterprise Finance Limited

★​ Provides financial support to small businesses, often focusing on underserved
markets.
★​ Targeted at startups and small businesses that might not qualify for traditional
bank loans.

4. The Industrial Development Corporation (IDC)

★​ Offers funding to promote economic growth and industrial development.
★​ Suitable for larger scale projects with significant potential for economic impact.

Circumstances for Use

 ★​ Own Equity & Profits: Best for startups or expansions when owners want to retain
control and avoid debt.
★​ Speeding Up Collections & Credit from Suppliers: Effective for improving cash
flow without external borrowing.
★​ Long-term Finance: Suitable for substantial investments in fixed assets with
long-term benefits.
★​ Intermediate Finance: Ideal for medium-term asset acquisitions without
immediate capital outlay.
★​ Short-term Finance: Useful for managing operational expenses and short-term
liquidity needs.
★​ Factoring: Beneficial for businesses with slow-paying customers needing
immediate cash.
★​ Start-up Finance Sources: Vary depending on the business’s stage, industry, and
specific financial needs.

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