Entrepreneurship [consumers chapter 9]

what is an entrepreneur

- someone who can combine knowledge and skills (labour) with raw materials (resources) and inspiration to create something new that has value, then transform his or her ideas into an economic opportunity
- people who are willing to take risks and start businesses
- they create new products and services, and in the process, they create new markets

why do people decide to become entrepreneurs [5]

- they are unemployed and need to create their own employment
- they need to generate an income
- they are passionate about their product or business and are convinced that it will sell
- they have a strong need to be independent and to be their own boss
- they want the freedom to live by their own standards and principles

qualities of a successful entrepreneur [11]

- are willing to take risks
- are enthusiastic and enjoy what they do
- are optimistic
- have a strong sense of responsibility
- are practically inclined
- are innovative and creative
- give attention to detail
- dislike being restricted
- take action instead of waiting for things to happen
- are willing to do more than their share to complete a task
- are patient and learn from their mistakes

some of the reasons why entrepreneurs sometimes do not succeed [10]

- inadequate market research
- entrepreneurs do not always focus on a particular market segment
- lack of experience
- ineffective management planning
- inadequate recording of enterprise's activities
- lack of administrative skills
- inadequate financial management
- financial limitations might exist, such as a shortage of capital and the lack of a credit track record
- inadequate marketing
- unwillingness to admit that the enterprise is not economically viable

explain inadequate market research

many entrepreneurs spend a lot of energy and money developing a product for which there is no demand

explain lack of experience

many entrepreneurs have technical skills but little administrative and managerial experience

explain ineffective management planning

no formal objectives or guidelines for how to achieve them

what are decisions based on

gut feel and not on facts because information about sales, purchases, costs or profits is not available

enterprise

a business project or activity

lack of administrative skills may lead to

a loss of control over profits, credit use, stock, or the daily operating functions of the enterprise

explain inadequate financial management

enterprises are run on a day to day basis without cash flow forecasts and expenditure budgets. problems usually only become apparent when it is too late for solutions

explain inadequate marketing

many entrepreneurs are so involved in manufacturing that there is no time to promote the product

explain unwillingness to admit that the enterprise is not economically viable

- many entrepreneurs keep throwing good money after a bad idea.
- failure often is the first step to ensuring success the second time around
- if things don't work out, close the business and start again, with proper planning

research has proved that new enterprises only have a ____ chance of success

- 40%
- the responsibility of making it work lies with the entrepreneur

according to Henk Kleynhans, what is the importance of entrepreneurship in the south african economy

- entrepreneurship is the only activity that enable enterprising south africans to apply their mind to create new value, new wealth, new money and new jobs.
- without it, we are simply sucking dry the value that was created by entrepreneurs of past

what is the single most important activity in any economy

entrepreneurship

why is entrepreneurship important for the south african economy and society

- it makes a positive contribution to the countries economic and social development
- socially, it empowers citizens, generates innovation and changes mindsets

what does new business invariably lead to

- job creation
- which in turn stimulates the economy

how many small businesses are there in south africa

- 2 million
- making up almost half of the countries job opportunities
- unfortunately, most of these small enterprises operate on a subsistence level

being fully aware of the vital role of entrepreneurs in the economic development of a country, the south african government has what

programmes that allow all entrepreneurs access to support and development services

price =

quantity used x purchase price
---------------------------------
quantity bought

the cost of a product includes

all the ingredients or materials used to produce it, the cost of labour and the overhead costs such as electricity or rent

over pricing

- makes an item too expensive
- no one will want to buy from you

underpricing

might make your profit too small to cover all of your expenses

actual cost

the cost of the materials or ingredients you used to produce the item

quantity used

the actual amount of the ingredient or material that you have used

quantity bought

the amount of ingredients of material that you bought in a shop

purchase price

the price you paid for the quantity you bought

overhead costs

general running costs of a business including, for example, electricity and water

economically viable

a business or idea that may be successful or workable enough to yield a profit

when you develop and cost a shopping list for food products, use the list of ingredients to write up the shopping list

- list all the ingredients of all the products that you will prepare
- check the storeroom for ingredients that you already have in stock
- check the packages and prices in shops to identify the most economical quantity to buy
- store surplus ingredients or materials for later use
- group the items that you find in the same area in the shop together on the shopping list to save time while shopping
- specify the properties of the product, the quantity and brand name if applicable
- add the prices to the items on the list and total the cost