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SBDELearning Unit 3Starting Your Own Business

OBJECTIVES• Explain how to assess your own potential as a small

business owner; • Identify opportunities for small business development; • Evaluate whether the opportunity is likely to be successful; • Understand the concept of a feasibility study; • Prepare a plan for each aspect such as marketing,

production, finance and staffing of the business; • Explain the advantages and disadvantages of starting your

own business; • Identify the managerial skills you will need to start your own

business; • Understand how to obtain start-up cost savings.

PERSONALITY TRAITS• The ability to recognise

and exploit opportunities; • Resourcefulness; • Creativity; • Vision; • Independent thought; • Energy; • Optimism; • Innovativeness; • Calculated risk taking;

• Leadership skills; • A desire to achieve; • hard workers; • Nurturing quality; • Accepting responsibility; • Reward-oriented; • Optimistic; • Excellence-oriented; • Good organisers; • Money-oriented.

CHARACTERISTICS

• Commitment• Energy• Need to Achieve• Tolerance for stress• Decisiveness• Ability to deal with

failure

• Effective time management

• Ability to identify opportunities

• Make informed decisions

• Ability to manage risk

HARD AND SOFT SKILLSA “hard” skill is a technical or administrative skill related to the core business of the operation – not one that is interpersonal.). These skills are specific to a given context and typically produce an immediate visible result.

HARD AND SOFT SKILLS

“Soft” skills are a cluster of personal attributes, which enhance interactions with others, and are learned over time; often referred to as your emotional intelligence (EQ).

EMOTIONAL INTELLIGENCE FOR SMALL BUSINESS OWNERS

• The ability to perceive, recognise, understand and react to the feelings of yourself and those of others (emotional awareness).

• The ability to distinguish between various feelings and to name them (emotional literacy).

• The ability to express and control your feelings appropriately (emotional control).

• The ability to listen to others, to have empathy with them and to communicate effectively in terms of emotions and thoughts.

• To use the information in directing your thoughts and actions so that you live effectively, are motivated and have a goal in mind (relation between thoughts, feelings and behaviour).

SELF AWARENESS• Emotional self awareness• Accurate self assessment• Self confident

SELF - MANAGEMENT• Self control• Transparency• Adaptability• Achievement• Initiative• Optimism

SOCIAL AWARENESS• Empathetic awareness• Organisational awareness• Service awareness

ASSESS OWN POTENTIAL

Need to ask yourself a series of questions about:-• Personal objectives• Personal resources• Clues from the past• Your specialty

Individual Exercise

Self assessment questionaire

IDENTIFYING OPPORTUNITIES

Three aspects:-Attractiveness of the opportunityDurability – inherent ability to continueTimeliness – enter the market at an appropriate or opportunistic time

GENERATION OF IDEAS• From skills, expertise and attitude• From common needs• From existing problems• From everyday problems• From other sources

EVALUATING OPPORTUNITIES• A good opportunity will be:-• Attractive• Durable• Timely • Anchored in a product or serviceUSE INTERNAL & EXTERNAL EVALUATION OF OPPORTUNITIES

INTERNALWill only be successful if owner has internal capabilities to take opportunity from idea to business

Need to assess:-• Resources and capabilities• Core competencies

EXTERNALNeed to evaluate the general and industry environment

GENERAL5 SUB ENVIRONMENTS• Political & legal environment• Social cultural environment• Macroeconomic environment• Global environment• Technological environment

CHALLENGE TO BUSINESS OWNER BUT ARE UNCONTROLLABLE

INDUSTRYDirect effect to the start up businessPorter 5 competitive forces• Threat of new competitors• Threat of substitute products or services• Intensity of rivalry among existing

competitors• Bargaining power of suppliers• Bargaining power of buyers

P52/53 module manual

FEASIBILITY ANALYSISFeasibility:-

.. The extent to which an idea is viable and realistic and the extent to which the small business owner is aware of internal and external forces that could affect his/her business

FEASIBILITY STUDYInvolves meticulous investigation of 5 primary areas:-• The overall business idea• The product/service• The industry and market• Financial projections (profitability)• The plan for future action

FEASIBITY CHECKLISTMust take into consideration the following important factors:-• Size of market• Growth potential of market• Products and services the market needs• Why the market wants these products and services• How often these customers buy these products and

services• What the geographic distribution of the market is• What price the market is willing to pay• What market share can be expected• How to communicate effectively with the market

INDIVIDUAL ACTIVITYICE TASK 3Prepare a feasibility plan as per the template on page 54/55/56/57 for your proposed business. You will need to do some in depth research in order to specifically answer the feasibility checklist questions on p57 of the module manual. This will enable you to prepare a more accurate and detailed study.Plan must be typewritten. Hand in date: 4th September 2012

ASSESSMENT OF OPPORTUNITYGoal of feasibility study is to systematically assess the opportunity to determine if it can be brought to market profitablyKEY POINTS• The idea cannot be economically made into a

product or service• The product and/or service works but does not

appeal to a large enough market to be viable• The product and/or service works, there is a

viable market, but resources are not sufficient or obtainable to make the idea into a business

BUSINESS PLANSARE NECESSARY!!!!!!!• To raise finance as and when necessary (to

start, buy or expand)• To encourage assistance, to get a lease, to

open an account etc.• To improve performance (and likelihood of

success) through increased knowledge and understanding – use to assess performance against plan, evaluate strengths and weaknesses etc.

SCOPE OF BUSINESS PLAN• Contents• Exec Summary• Vision & Mission• Company Overview• Product or Service• Marketing Plan• Management Plan• Operating Plan• Financial Plan

GROUP EXERCISEGet into groups of 2

Take the section headings from previous slide and write bullet points on each section on what should be included in it . DO NOT REFER TO YOUR MODULE MANUAL!

ADVANTAGES OF STARTING YOUR OWN BUSINESS• Opportunity to start fresh• Start with latest technology• Be able to provide products or services

not currently available in the market place

• Owner can determine size of business

DISADVANTAGES OF STARTING YOUR OWN BUSINESS• No known name in market place• Time needed to establish a positive

cashflow• May be difficult to obtain initial funding –

no assets or reputation• Recruitment of experienced staff may be

difficult

MANAGERIAL SKILLSThree key areas:-

• Conceptual• Technical• Interpersonal or human skills

CONCEPTUALAbility to see small business as a whole

• Recognise how functions are interdependent• Visualise relationship of the small business to

the industry and community it is operating in• Understand the effects of political, economic

and social forces of the nation on the small business

TECHNICAL• Implies an understanding and proficiency

in a specific kind of activity• Involves methods, processes,

procedures or techniques• Specialist knowledge, analytical ability

and knowledge of use of specialist tools

INTERPERSONAL SKILLSAbility to manage peopleAbility to networkAbility to communicate at all levels etc.

START UP COST SAVINGS5 AREAS IN THE START UP PROCESS WHERE SAVINGS ARE POSSIBLE:-

• Franchise company fees• Turnkey packages• Construction costs• Equipment signs and fixtures• Lease terms

INDIVIDUAL EXERCISERevision questions p 63 Module Manual

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Geographic Region Q1 Q2 Q3 Q4

United States 1254 1873 1015 2284

Europe and Asia

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Australia 15 18 13 20

Canada 6 3 4 7

Mexico 1 .5 .5 2

TOTALS 1600 2205 1333 2732

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Asia Europe Australia

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Q1 2010 175 44 47 13

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