ENTREPRENEURSHIP

ENTREPRENEURSHIP

HTA School of Culinary Art

INTRODUCTION

  • Definition of Entrepreneurship:

    • Entrepreneurship is defined as the process in which an individual identifies a business opportunity and launches a business based on it.
    • The business is typically categorized as either a small business or start-up business.
    • Businesses may offer a product or a service for sale or hire.

  • Key Characteristics of an Entrepreneur:

    • An entrepreneur is characterized by capacity and willingness to develop, organize, and manage a business venture along with its associated risks to earn a profit.
    • The entrepreneur is in control of costs, risks, rewards, resources, and finances related to the business.
    • They manage and oversee the launch and growth of the enterprise.

  • Initial Steps:

    1. Conceptualizing and refining the business model.
    2. Developing a comprehensive business plan outlining goals, costs, and future projections.
    3. Presenting the business plan to potential investors for funding if personal capital is insufficient.

  • Entrepreneur's Responsibility:

    • The entrepreneur bears the sole responsibility and liability for the success or failure of the business.
    • Entrepreneurs may own small, medium, or large businesses, either as a new venture or through new ownership, in both for-profit or non-profit sectors.

LEARNING OUTCOME

  • Primary Objective for Learners:

    • Understand the process of opening a small business.

  • Assessment Criteria:

    • Ability to understand and apply the necessary processes involved in opening a small business.

SECTION 1: FOR-PROFIT AND NON-PROFIT BUSINESSES

FOR-PROFIT BUSINESS

  • Definition:

    • A for-profit business is an organization with the primary goal of making a profit, which is defined as the financial gain realized as the difference between the amount earned and the amount spent in buying, operating, or producing products or services.

  • Examples of For-Profit Businesses:

    • Coca Cola
    • McDonald's
    • Facebook
    • IBM
    • Apple
    • Unilever
    • Microsoft

NON-PROFIT BUSINESS

  • Definition:

    • A non-profit business is focused on assisting the community.
    • Funds received from investments, donations, or earnings are used solely to cover operational costs, resulting in no profit being generated.

  • Examples of Non-Profit Organizations:

    • Churches
    • Charities
    • Government facilities (e.g., hospitals, schools)

SECTION 2: HOW TO START A SMALL BUSINESS

1. CONCEPTUALIZE AND REFINE AN IDEA

  • Before launching a small business, it is crucial to conceptualize and refine the business idea, product, or service.
  • Ensuring that the product or service is fully developed and ready for public launch is paramount.

2. MARKET RESEARCH

  • It is vital to determine public interest in the product or service to ensure potential success.
  • Identifying the target market segment that is most likely to purchase the product or service is necessary.

3. WRITE A BUSINESS PLAN

  • Creating a comprehensive business plan is essential, serving multiple purposes:

    • Establishing a professional image for potential investors or banks.
    • Providing guidelines for the future of the business.

  • Contents of a Business Plan:

    • Target market identification and evaluation.
    • Capital required for launching.
    • Necessary equipment.
    • Identification of competitive markets.
    • Marketing strategy.
    • Requirements for premises.

  • A detailed and extensive business plan increases chances of attracting investor interest.

  • Having sufficient working capital and steady cash flow is crucial for growth and seizing new opportunities.

4. DETERMINE COSTS

  • Awareness of all financial costs involved in creating and launching the business is essential.
  • All financial projections must be outlined for the consideration of potential investors or banks.
  • Establishing a budget is a critical step in this process.

5. FIND THE RIGHT INVESTORS

  • If personal capital is not sufficient, securing an investor is necessary to fund the business.
  • Types of possible investors might include private investors, business partners, or banks providing loans.
  • Presentation of a detailed business plan with budgets and financial projections is imperative when seeking investment.

6. DETERMINE LEGAL STRUCTURE

  • Identifying the appropriate type of ownership and registration for the business is necessary.
  • Types of Business Entities:
    • Sole Proprietorship:
    • Owned and run by one individual; no legal separation between owner and business; the owner is responsible for all income, taxes, and liabilities; not a legal entity.
    • Partnership:
    • Involves 2-20 individuals; each partner financially contributes; profits shared as per contractual agreement; not a legal entity.
    • Private Companies (Pty) Limited:
    • Managed by one or more directors; separate legal entity, must register for tax; owned by shareholders.
    • Public Companies:
    • Minimum of one shareholder and three directors; sell shares to the public to raise capital; known as "Ltd" companies; possess their own legal identity.
    • Personal Liability Companies (Inc.):
    • Can have both former and current directors who are responsible for liabilities incurred; frequently used by professionals like doctors or lawyers.
    • Non-Profit Companies (NPC):
    • Created for public benefit; income cannot be distributed to founders or members, utilized solely for the organization's principal goals.

7. SELECT A BUSINESS NAME

  • Considerations for naming the business include:
    • Type of business
    • Target Market
    • Brand
    • Location
    • Impact
  • Steps for Naming Process:
    1. Understand what constitutes a good name.
    2. Brainstorm a descriptive list of names.
    3. Keep names concise.
    4. Narrow down to the best names.
    5. Select the top three names.
    6. Check availability for registration and internet domains.
    7. Design or seek assistance in creating an easily recognizable logo.

8. REGISTER THE BUSINESS NAME

  • Once the business name is finalized and available, register it as either a for-profit or non-profit entity with the Companies and Intellectual Property Commission (CIPC).
  • Companies Act (2008):
    • Indicates a company can be registered with or without a name, leading to automatic registration under their company number if done without a name.
  • Steps following name selection:
    • The business retains its registered name while trading under the decided name.
    • Companies must apply for name changes if the initial name is denied.
    • Up to four name options can be submitted during the registration process.

9. REGISTER YOUR BUSINESS WITH SARS

  • Mandatory tax registration with the South African Revenue Services (SARS) based on the business type.
  • Registration for VAT is required, and enables various tax-deductible benefits.
  • This registration not only fulfills legal obligations but is advantageous for business financial management.

10. SECURE PERMITS OR LICENSES

  • Depending on the nature of the business, additional licenses or permits may be required for operation.

11. PAYMENT METHODS AND ACCOUNTS

  • Establishing payment methods is necessary for receiving payments.
  • Set up a records management system to track business expenses and income.

12. SELECT A BUSINESS LOCATION

  • Predetermined in the detailed business plan, selecting a location is critical for success, with considerations differing based on business type.

13. MARKETING AND ADVERTISING

  • Essential for public awareness of the business; budgeting for marketing and advertising in the business plan is crucial for launching effectively.

14. CUSTOMER SERVICE

  • The customer experience plays a key role in sustaining and growing the business; positive interactions can lead to client recommendations, while negative experiences may harm business reputation.
  • Key components include professionalism, product quality, and timely service delivery.

NOTES

  • Quote:
    "Whenever you see a successful business, someone once made a courageous decision."
  • Attribution:
  • Peter F. Drucker