Principles Of Business

• An entrepreneur is a person who establishes a business at his/her own financial risk
• Functions of an Entrepreneur:

  * Planning

  * Accessing Funds

  * Organizing

  * Operating a business

  * Evaluating the businesses performance
• A typical Entrepreneur is creative, innovative, goal oriented, persistent, preserving and has the propensity to take calculated risks
• An Entrepreneur has 5 roles in economic development:

  * Collaborating

  * Providing goods and services to satisfy citizens

  * Creating jobs

  * Contributing to nation building

  * Earning foreign exchange
• Some reasons why an individual may want to establish a business includes:

  * Self-fulfilment

  * Self-actualization

  * Increased income

  * Increased control
• Essential steps in establishing a business:

  * Conceptualizing

  * Research (market probe)

  * Identification of resources

  * Creation of business plan

  * Acquisition of funds

  * Operation of business
• A business plan has 4 elements:

  * Executive Summary

  * Operational Plan

  * Marketing Plan

  * Financial Forecast
• The marketing plan outlines strategies that will be used to promote products or services.
• The operational plan describes how the business will be run on a day-to-day basis.
• The executive summary provides a brief overview of the entire document.
• Price refers to how much it costs to buy something from the business.
• Product refers to what is being sold by the business.
• The financial forecast provides information about expected revenues, expenses, profits, cash flow, and break even analysis.
• Businesses can be classified into three categories based on their ownership structure: sole proprietorship, partnership, corporation.
• Financial forecast is a projection of future financial performance based on assumptions about sales, expenses, and other factors.
• Sole Proprietorship is owned by one person who bears all risks and reaps all rewards from the business.
• Businesses can operate as sole proprietorships, partnerships, corporations, cooperatives, franchises, or nonprofit organizations.
• Promotion involves advertising and other ways to get people interested in buying the product.
• Promotion refers to advertising, sales promotions, public relations, personal selling, direct mail, sponsorship, guerrilla marketing, etc.
• Partnership - Two or more people own and operate the business with shared responsibility and liabilities.
• Corporation - The business has its own legal identity separate from its owners, limited liability, and shares are owned by shareholders who have voting rights.
• Sole Proprietorship - A type of business owned and operated by one person who has unlimited liability for all debts and obligations of the business.
• Sources of information for conducting research into the establishment of a business include books, brochures, research, past experiences, approaching financial institutions and other businesses.