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KAMPALA INTERNATIONAL UNIVERSITY-WESTERN CAMPUS

FACULTY OF SCIENCE AND TECHNOLOGY
DEPARTMENT OF BASIC SCIENCES

ENTREPRENEURSHIP NOTES

BY

ENTREPRENEURSHIP
​ ​
Course outline ​
Overview of entrepreneurship skills
➢ Definitions and the nature of Entrepreneurship ​ ​
➢ Types and roles of entrepreneurs in society
➢ Classification of an entrepreneurs
➢ Entrepreneurial competences
➢ Entrepreneurship development
➢ Benefits and threats of entrepreneurship
➢ Importance’s of entrepreneurs to the development of the economy
➢ Barriers to entrepreneurship development
Factors that determine emergence of entrepreneurs
➢ Personal factors
 ➢ Upbringing factors
➢ Economic factors
➢ Sociological factors
➢ Migration factors
➢ Employment history factors
➢ Growth of the service sector
➢ Environmental factors
Other important influences in the move to entrepreneurship
➢ social entrepreneurship
➢ gender and entrepreneurship
Creating and developing a business
➢ The business startup process\ steps taken when starting a business
➢ Business ideas
➢ Opportunity identification
Other ways of starting a business ​
➢ Startups
➢ Acquisitions
➢ Joint ventures
➢ Buyouts
Location and layout of the business
➢ Selecting a region of location
➢ Selecting a site of location
➢ Location option for retail and service business
➢ Physical location inside the shop
Promotion (Marketing Communication) ​
Indicators of a viable Business
Sources of Business Ideas ​
Resources available for an Entrepreneur
Capital for a Business
Leadership in Business
• Leadership styles
• Leadership skills in business environment
Risks in Business
Delivery Methods
The course will use the following methods
Straight lectures
Presentations

Course assessment
Course work/Presentations and tests 40%
Final examination --------------------- 60%
Total------------------------------------- 100%
References
Drucker,P.F (1985) Innovation &Entrepreneurship, NewYork; Harper Trade.
Goflon,L.(1997). Business market research.London:Kogan page
Aldrich&Zimmer.(1998). Entrepreneurship. London: Ashgate Publishers.
Hongland,H.and Williamson L (2000).Feasibility studies, Kentucky University
Sexton,D.l. andsmilor,R.w.(2000). Entrepreneur. Chicago: Upsart publishing
Truit,W.(2002). Business Planning: A comprehensive framework and process.London:Quorum
Books.
Wickham, p.(2004). Strategic Entrepreneurship, Essex: Pearson Education.

ENTREPRENEURSHIP
DEFINITIONS
No universal definition for the term entrepreneurship has emerged. However, different
definitions during the history of entrepreneurship development will help us to understand the
term entrepreneurship.
Richard Cotillion (1755) was the first economist to use the word in the context it`s used today.
The word originated from a French word’’ Entrepredre’’ which means to undertake. Cantillion `s
view of an entrepreneur was: An n entrepreneur is someone who undertakes a venture.
Entrepreneurship is a practice of starting new organizations, particularly new businesses in
response to identified opportunities.
It is the process of creating something new with value by devoting the necessary time and effort,
assuming accompanying financial, psychic, and social risks, receiving the resulting rewards of
monetary and personal satisfaction and independence.
The definition stresses four basic aspects of being an entrepreneur;
1. Entrepreneurship involves creating something new of value. That the creation process should
have value to both an entrepreneur and public.(Society and buyers).
2. Entrepreneurship requires devotion of the necessary time and effort. That as an entrepreneur
you must commit or devote the significant amount of time and effort to create something new
and make it operational.
3. The third aspect of the definition of entrepreneurship is assuming the necessary risks .These
risks take a variety of forms depending on the field effort of the entrepreneur, but usually centre
around finance, psychic and social areas.
4. The final part of the definition involves the rewards of being an entrepreneur. The most
important of these rewards is independence, followed by the personal satisfaction for profit
making entrepreneurs, the monetary rewards also comes into play, for some of these
entrepreneurs money becomes the indicator of the degree of success. Entrepreneurship is often a
difficult undertaking, as a majority of new businesses fails due to such thing as poor sales,
intense competition, lack of capital or lack of managerial ability.
Definition of an Entrepreneur
Entrepreneurs are the people who have the ability to spot and evaluate business opportunities,
gather the necessary resources, start a business and take appropriate actions to ensure its success.
He/ She is a person responsible for bringing the factors of production together.
ORIGIN OF ENTREPRENEURS
There are two theories that explain how entrepreneurs developed often called the “demand and
supply theories’’
In the supply theory, entrepreneurs are born, not made .Some people have the personality traits
that make a good entrepreneur.
Several research studies have shown that entrepreneurs are convinced that they can command
their own destinies. The “locus of control” of the entrepreneur lies within himself .It is this self
belief which stimulates the entrepreneurs according to supply side theorists. John G. Burch, 1986
Business Horizons, gave a list of in-born traits that make an entrepreneur. These traits include;
➢ A desire to achieve ; the push to conquer to problems and give birth to a successful
venture
➢ Hard work; It is often suggested that many entrepreneurs are workaholics.
➢ Desire to work for themselves; entrepreneurs like to work for themselves rather than
working for an organization or any other individual.
They may work for others to gain the knowledge of a product or a service that they may want to
produce or offer.
➢ Nurturing quality; willing to take charge of and watch over a venture until it can stand
alone.
 ➢ Acceptance of responsibility:
➢ Reward orientation.
➢ Optimism
➢ Orientation to excellence
➢ Organization
➢ Profit orientation
In academic circles, however “the demand theory ‘’ is now generally more prevalent.
The demand theory holds that entrepreneurs emerge out of the combination of entrepreneur’s
opportunities and people who are well –positional to take advantage of them. Thus anyone who
encounters the right condition might become an entrepreneur, if they find themselves in a
position where they find valuable problems that they alone can solve.
Scholars studying the demand theory try to understand the condition under which entrepreneurs
appear particularly in understanding how differences in entrepreneur opportunities, and how
environmental factors (access to capital, competition etc) change the rate of entrepreneurship.

THE GENERAL CHARACTERISTICS OF AN ENTREPRENEUR

• An entrepreneur should be innovative .They should always introduce new changes and
ideas and should think positively and quick to get over failure.
• Risk taker. A successful entrepreneur should be in position to bear risk .This is because any
new business are likely to pose a number of risk.
• A successful entrepreneur should be flexible. He should be able to change or be changed
easily according to the changing situations and should possess a desire for change and
constant improvement.
• A successful entrepreneur should be a goal setter. He should be able to set realistic goals
that are achievable in the set or specified period of time.
• Hard work is a quality that should be possessed by a successful entrepreneur. He should
put in all his efforts with commitment to ensure the success of the business. He should be
willing to work for longer hours.
• He should be persistent .A successful entrepreneur should continue to operate even in
times of failure and through a lot of difficulty if he is to be a successful person in
business.
• A successful entrepreneur should have self- confidence in himself and his business .He
should be comfortable with having decisions resting upon him or her.
• An entrepreneur should be good at accountability .He should be able to measure the
performance of the business, keep records of possessions and business transactions.
• A successful entrepreneur should be accommodative. He should give the customers what
they need, and should be caring and welcoming. He should both listen and communicate
well
• A successful entrepreneur should be creative .He should produce or use original and
unusual ideas aiming at disapproving others or out competing them.
• A successful entrepreneur should be focused. He should always direct his attention
towards fulfilling the set goals of his business.
• A successful entrepreneur should be ambitious. He should have a great desire to be
successful, powerful and wealthy.
• A successful entrepreneur should be information seeking. He should look for or try to find
information concerning all aspects of his business.
• A Successful entrepreneur should be persuasive. He should be in position to convince
people to do something especially when they have the ability to buy the product but are
not yet willing to consume them or when they are undecided.
TYPES OF ENTREPRENEURS
Innovative entrepreneur .This is a type of entrepreneur who initiates the idea and comes up with
the product or service .These types of entrepreneurs are very rare in developing countries.
Innovative entrepreneurs introduce new goods, inaugurate new methods of production, discover
new markets and reorganize the enterprise. Such entrepreneurs can work only when a certain
level of development is already achieved and people are looking forward to change and
improvement.
Imitative entrepreneurs. These are characterized by readiness to adopt successful innovations by
successful innovating entrepreneurs. They lap up innovations originated by innovative
entrepreneurs. Imitative entrepreneurs don`t innovate to changes themselves, they only imitate
techniques and technology innovated by others.
Fabian entrepreneurs.These are characterized by great caution and skepticism in experimenting
any change in the enterprise. They imitate only when it becomes perfectly clear that failure to do
so would result into a loss of relative position in the enterprise. They are shy and lack the will to
adopt new methods of production.
Drone entrepreneurs. These are characterized by refusal to adopt opportunities to make changes
in production formulae even at the cost of several reduced returns relative to other line
producers. Such entrepreneurs may even suffer losses but they are not willing to make changes in
their existing methods of production. They struggle to exist and not to grow. Thus, they normally
operate in their traditional way and resist changes.

TERMS COMMONLY USED IN ENTREPRENEURSHIP.

1. An entrepreneur.
This refers to a person who has the ability to spot and evaluate business opportunities, gather the
necessary resources, start a business and take appropriate actions to ensure its success. For one to
be called an entrepreneur, he or she must add value to the existing resources to produce goods
and services. One who deals in buying and selling goods without adding more value to them is
therefore simply a trader or a business man but not an entrepreneur.
2. Entrepreneurship.
This refers to the capacity required for identifying and generating innovative business ideas,
mobilizing resources, organizing production of goods and services and marketing them. It
involves interacting with the environment to add value to the goods and services.
3. Business opportunities.
These are prospects of going into successful business brought about identifying gaps in the
market or market`s needs that are not being satisfied. Some indicators of viable business
opportunities include; availability of market, availability of required resources, highly expected
returns of investment, etc
4. Resources.
This refers to endowments that may exist in an area or a locality. Example include human
resources, material resources, financial resources, technological resources inform of machines,
etc
5. A need.
This refers to basic things that an individual must have in order to survive as a human being.
Examples of needs include; basic needs (physiological needs), safety & security needs, social &
belonging needs, self actualization needs, etc .
6. A service.
This is what is performed when one party offers something to another that is especially
intangible and does not result to ownership but results to satisfaction of the party that has been
served .It has value that is measured in monetary terms. Examples of services that can be
provided to meet people`s needs are medical, accommodation, transport, education,
entertainment, etc.
7. A good.
This refers to an item that is tangible or physical, visible and has monetary value. Like a service,
goods also give satisfaction. Examples include, car, furniture, foodstuffs, books and pens, etc
8. Assets.
These are resources owned by the business. They include money, stock of goods, land, buildings,
goods and services paid for in advancement. Assets are divided into fixed and current assets.
a) Current assets. These are resources that are owned by the business for a short period of time
i.e. for less than one year e.g. Stock, cash at hand, cash at bank, debtors, etc.
b) Fixed assets. These are assets which are owned by the business for a long period of time. They
are used to help in running the business and are not intended for resale. They are kept within the
business to create wealth over a long period of time. Examples include machinery, land, vehicles,
equipments, computers, etc.
9. Liabilities.
This refers to the financial obligations of the business. They include bank loans, creditors, bank
overdrafts, services that other people paid for in advance, outstanding expenses, etc. Liabilities
are divided into current and long term liabilities.
a) Current liabilities.These are debts which must be paid quickly, within one year e.g. creditors,
bank overdrafts, electricity bills, outstanding rent, etc.
b) Long term liabilities.These are debts which may be paid after a long period of time e.g. long
term loans for 3 years, 7 years, etc and normally carry an interest.
10. Partnership.
This is a legal form of business that exists when two or more (restricted to a maximum of
twenty) persons pool their resources and abilities in order to carry out a business for profit.
Partners share profits equally unless stated other wise in the partnership agreement (partnership
deed).
11. Sole proprietorship.
This is the type of a business that belongs to one person. The owner is responsible for its
financing, management,etc. The owner receives all the profits and bares all the losses, all risks
and pays all the debts of the business. It is called a one person’s business.
12. A Limited liability Company.
This is formed when one or more people come together and subscribe to its share capital and
there by become its owners. It is a legal entity that can sue or be sued. A limited liability
company has a perpetual life that is separate from that of its owners.
13. A Co- operative society.
This is a legal form of a business set up by many people who share a common interest. Such an
interest may be to supply themselves with goods or services at a reasonable cost than it would be
if they bought them from a retailer or middleman or to sell goods or services in large quantities
to a larger market at higher prices, etc.
14. A Public limited company.
This refers to a business enterprise formed by a minimum of seven Persons who subscribe to its
share capital and therefore becomes its owners.
15. Sales promotion. This refers to the ways that an entrepreneur uses to influence people so that
they can buy more of his or her good or services. These may include advertising, display of
products outside the shops, use of sign boards, use of music and banners to attract customers.
16. Advertising.
This refers to the spreading of information about one`s products to customers. The common
methods of advertising include; door to door advertising, use of media which may include news
papers, magazines, radios, televisions, billboards, posters, leaflets, etc.
18. Money.
The oxford paperback Encyclopedia (1998), defines money as a medium of exchange. It refers to
anything that is generally accepted as a medium of exchange. Examples include US dollars, UG
shillings, etc.
19. A loan.
This is money either in cash or kind that is sourced from outside the business with a view of
repaying it at a later date with or without interest. Loans may be obtained from family friends
and other well-wishers, informal lending groups and associations, saving and credit cooperative
societies, banks and other financial institutions, government e.g. Bonna – bagagawale, etc.
20. Loan size.
This is the amount of loan to be given by the lender to the borrower. Examples are a loan of six
million Ugandan Shillings.
21. Sectarian bias.
This refers to the distribution of loans with a view of promoting a particular sector, area or group
of people. Therefore, borrowers who fall into such categories will be given a priority by the
lenders. An example is the government youth entrepreneurship scheme that was given to the
youth only to help them start and manage their businesses.
22. Loan installments.
This refers to small parts of the loan that will be paid at a time either on weekly, monthly,
quarterly, half yearly, or on an annual basis. These installments make it easier for the borrower to
repay the money borrowed.
23. Debt note.
This is the note sent by the seller to the buyer to correct an undercharge in the original invoice.
24. Dividends.
These are payments to the share holders.
25. Market assessment. This refers to the process of collecting and analyzing market information
in order to identify market opportunities and challenges.
26. Job description. This is a broad statement of the purpose, scope, duties and responsibilities
of a particular job.
27. Job performance standards.
This refers to what is expected to be the output for a given job.
28. A Salary.
This is a fixed periodic payment to non-manual employees usually expressed in annual terms. It
is usually paid on a monthly basis.
29. A Wage.
This refers to payment made to manual workers. It is usually expressed as rate
30. Performance appraisal.
It is the judgment of an employee`s performance.
31. Collateral Security. This is an asset or any other saleable material that the debtor offers so
that in case he or she fails to pay the debt, it can be sold to recover the debt. It may be a house,
Land, animals, household items, shares, etc.
DIFFERENCES BETWEEN AN ENTREPRENEUR AND A MANAGER
An entrepreneur is different from a manager of an enterprise. The distinction between the two is
seen from the following basis;
❖ A business venture. An entrepreneur owns a business where as a manager manages the
operations of the business.
❖ Risk bearing. An entrepreneur bears the risks of the business while a manager doesn`t
bear risks.
❖ Continuity. An entrepreneur is concerned with the going concern of the business. He or
She ensures that the business continues operating forever because it’s a long term
investment of an entrepreneur whereas a manager may not.
❖ Innovation. For purposes of meeting the changing tastes and preferences of customers
and consumers, entrepreneurs bring in new ideas in the business, while a manager may
not.
❖ Status role. An entrepreneur has a high status compared to the manager.
❖ Pre-requisites. An entrepreneur may not require skills to become one but managers
require managerial skills to help him/her perform managerial functions of planning,
organizing, staffing, etc.
FUNCTIONS OF A MANAGER
A Manager carries out a number of activities in an enterprise to ensure that the set targets are
achieved. The following are the functions performed by the managers of small enterprise;
1. Planning. This involves the establishment of goals and objectives of a business and determines
the ways in which they will be achieved.
There is always need for planning so as to reduce on the uncertainties of the future. Therefore
planning gives the manager a direction and a course of action which enables him to allocate a
time frame for activities and make maximum utilization of the available resources.
2. Organizing. This involves the identification of what activities are to be done, grouping those
activities into sections or departments and delegating the activities to particular individuals to
carry them out.
3. Staffing. This involves the process of recruiting, training, developing, compensating and
evaluating employees who actually carry out the identified needs. It also looks at the welfare of
the employees to ensure that they are more committed to their work. It thus look at aspects like
employee motivation with incentives like housing, medical facilities, etc
4. Coordination. On top of organizing, the manager always has a function of coordinating
different activities within the enterprise to ensure that every activity gets the necessary support as
required in the production process.
5. Leading. This involves guiding the employees about the procedures and work methods in an
enterprise. This could be through open communication so that the information is passed to the
subordinates and the necessary feedback received from them.
6. Controlling and monitoring. This deals with monitoring the different business activities
carried out within an enterprise. This could include the transactions that have been carried out,
stock and other properties of the business, etc. This ensures the smooth running of the business
and the achievement of the set goals and objectives.
7. Motivation. A manager has a responsibility of ensuring that the employees are comfortable.
Motivation is a process of encouraging people to give their best towards the achievement of the
desired targets of the business. This can be done by paying them well, offering them
accommodation, showing concern for their problems, etc.
8. Budgeting. A budget is a detailed plan that shows the use of financial and other resources over
a given period of time. It represents a plan for the future expressed in monetary terms. Managers
always prepare budgets so as to control the business activities.
9. Communication. This involves passing of information from one person to another. A manager
has a function of transmitting information to his or her suppliers, workers and customers for
successful performance. There should always be open communication with employees and
customers which should in turn bring in feedback which helps a lot on improving the services
offered.
10. Evaluation. Managers have a responsibility of making analysis on the general performance of
the business. An evaluation is carried out to measure the success of the business in a given period
of time.
BENEFITS OF ENTREPRENEURSHIP
BENEFITS TO AN ENREPRENEUR
➢ Improved standards of living. A Successful business generates a lot of profits which is a
direct income to the entrepreneur. High profits from the business enable the entrepreneur
to meet most of his or her needs and this improves on his standard of living.
➢ Increased income and further investment. The entrepreneur`s income will increase
drastically and part of the profits can be used to make further Investments.
➢ Self –recognition in the community. A successful business and its owners will highly be
respected in the community because of the goods and services they provide. This actually
helps to attract more customers to the business.
➢ Permanent address for the entrepreneur and the workers. A successful business is one
that is well established and permanent. Businesses provide a permanent address for the
owners and the employees.
➢ Self- reliance and independence. When an entrepreneur carries out a successful business,
he or she gets to do things for him or herself and makes independent decisions. The
entrepreneurs will also be in position to meet some his or basic needs.
➢ Self employment. When one begins a succesul business, he or she will become self
employed and as such therefore, will become a boss of him or herself. This helps reduce
on high levels of unemployment in our society today.
➢ Helpful member in the society. When an entrepreneur operates a successful business, he
will employ a number of people in his business either directly or indirectly. In this way he
achieves self-respect for being helpful to the community.
➢ Development of skills. An entrepreneur on beginning a business gets an opportunity to
invest and develop his skills productively and resourcefully. This prepares him for bigger
business investments in future.
➢ Self- confidence. An entrepreneur operating a successful business will easily develop self
confidence since she or he has security of his business.
➢ Easy decision making. Decision making which saves delays become easy since one
person is in control and has authority to decide on the present trends of the business.
➢ Easy access to financial resources. A successful entrepreneur can always use his other
business to back him or her up as security in accessing funds. This opens up one`s
 chances for further investments.
BENEFITS TO THE COMMUNITY
❖ Businesses create employment opportunities in the community in which they operate.
❖ Businesses are sources of government revenue through its taxation policy. These taxes
are used for providing social services to the community.
❖ Some businesses “give back” something to the community or society. They provide
donations to societies. Barclays bank for example facilitates areas to do with education,
HIV- AIDS, etc.
❖ Some businesses provide different products that are consumed by the members of the
public.
❖ Some businesses contribute to the community development programs. For example
supporting sports activities , environmental programs, etc
❖ Some businesses help in disposing off wastage products from the communities in which
they operate e.g. some business recycle wastage products, others use biogas, etc.
❖ Businesses act as case study for others to follow. They are taken as role model which is
used in the development of projects.
❖ Businesses employ a large number of people which leads to increased income that result
into improved standards of living.
❖ People employed by such businesses are able to acquire skills thus contributing to the
development of a big human capital base.
❖ Some businesses create ready market for the products produced by people in the society.

THE ENTREPRENEURIAL PROCESS / STEPS TAKEN WHEN STARTING A

BUSINESS
Starting a new business enterprise is a very challenging but a rewarding task. Business needs
planning right from the beginning. Entrepreneurs normally take the following steps when they
organizing or preparing to start their business.
1. Spotting/ identifying potential business opportunities. This involves scanning the surroundings
or environment to generate as many business ideas as possible.
2. Selecting business opportunities suitable to your back ground and feasible in the market areas.
From the many business opportunities, the entrepreneur ranks them in terms of the ability to
meet his business needs and then select one.
3. Assessing or carrying out a market survey for the selected business opportunity. This involves
checking whether the entrepreneur’s most preferred business idea could be developed into a
profitable business and whether it have a competitive advantage over the others. The survey
enables the entrepreneur to determine how to select the customer needs, determine the target
market, etc.
4. Preparing a business plan. A business plan is a written summary of the proposed business
venture including its operational and financial details. It helps the entrepreneur to think through
the business before starting it. Through preparing a business plan an entrepreneur decides on
how his business will be organized, establish how much money will be reacquired to start and
operate a business, etc.
5. Mobilizing necessary resources. These include funds, raw materials, etc as Cleary laid out in
the business plan. It may involve applying for the loan, sourcing raw materials, the reacquired
human labor, etc.
6. Selecting a legal form of business. There are several legal forms of business ownership from
which an entrepreneur can choose what suits his business. It involves the completion of all legal
formalities necessary for the selected business.
7. Identifying business location and acquiring land, buildings, equipment, raw materials, skilled
and unskilled manpower. In choosing the business location, factors like accessibility to transport
and communication services, availability of raw materials, nearness to the market in case of
bulky products have to be considered.
8. Preparing for and launching the business/ enterprise. While launching, large quantities of the
product should be produced and distributed to potential consumers and customers.
9. Managing the business operations. This involves the carrying out of all the management
functions such as staffing, coordinating, supervising and monitoring of the business operations.
THE BUSINESS PLAN
A business plan is a guiding document used in the implementation of the business idea. It is a
document which guides an entrepreneur on what to do, how to do it, and when to do it. It is a
control device against which management can measure its achievements. It describes all the
relevant external and internal elements involved in starting a new venture such as new
regulations, competition, social changes, changes in consumer needs and technology or internal
factors which an entrepreneur has some control over like manufacturing, marketing and
personnel.
Objectives or purpose of business plan
a. The business plan consists of an action plan which acts as a time table in the implementation
of various business activities in a sequenced manner. This helps the entrepreneur to ensure that
different activities are implemented at the right time and as planned.
b. To clarify the idea. The process involved in creating a business plan means that the
entrepreneur asks a number of questions about their ideas. This should ensure that before starting
up, the business idea has to be considered with care.
c. To gain finance. The plan will be used as a means of showing potential investors or tenders
why the business will succeed. Banks insist on a business plan before any loan or overdraft is
granted. Private shareholders might invest because they believe in the entrepreneur.
d. To monitor progress overtime. The business plan can be used as a working document for the
owner. Regular checks, particularly against the objectives and the financial forecasts included in
the plan, can act as a useful indicator on how well the business is doing. This can be the start of
an ongoing monitoring process to help the owner run an efficient organization in future.
e. To show direction. A business needs a plan so that it has direction to follow. The business
needs to know;
➢ Where it is going
➢ How it is going to get there
➢ What resources it will need
Components (Contents) of a business plan
The major components of a business plan include:
1. Introductory page. This is the title or cover page that provides a brief summary of the business
plan`s contents. The introductory page should contain the following;
• The name and the address of the company
• The name of the entrepreneur(s) and telephone numbers
• A paragraph describing the company and the nature of the business
• The amount of financing needed
• A statement of the confidentiality of the report. This is for security purposes and is
important for the entrepreneur.
The title page sets out the basic concept that the entrepreneur is attempting to develop. Investors
consider it important because they can determine the amount of investment needed without
reading through the entire plan.
2. Executive summary. This is the most concise form of the business plan, covering all of the key
points. It should be about three to four pages in length and should stimulate the interests of the
potential investors. The key points highlighted in the business plan include; the nature of the
venture, financing needed, market potential, and support as to why it will succeed. As the most
important part of your business plan, this section should be prepared last.
3. Industrial analysis. It is important to put the new venture in the proper context. In particular,
the potential investor while assessing the venture on a number of criteria needs to do an industry
analysis in order to know which industry the entrepreneur will be competing in. Discussion of
the industry outlook, including future trends and historical achievements should be included. The
entrepreneur should also provide insight on new product developments in the industry.
Competitive analysis is also an important part of this section whereby each major competitor
should be identified, with appropriate strength and weaknesses described particularly as to how
they might affect the new venture`s potential in the market. The market should be segmented and
the target market for the entrepreneur identified. Most new ventures are likely to compete
effectively in only one or a few of the market segments. Any forecasts made by the industry or
by the government should be noted. A high growth market may be viewed more favorable by the
potential investor.
3. Description of a business venture. Description of a business venture should be detailed in this
section of the business plan. This will enable the investor to ascertain the size and the scope of
the business. The key elements are the product(s) or service(s), the location and the size of the
business, the personnel and office equipments that will be needed, the back ground of the
entrepreneur(s) and the history of the venture. Location of the business may be vital to its
success, particularly if the business is retail or involves a service. Thus the emphasis on location
in business plan is a function of the type of business. In assessing the building or space the
business will occupy, the entrepreneur may need to evaluate such factors as; parking, access from
road ways to facility, access to customers, suppliers, distributors, and town regulations or zoning
laws.
4. Production plan. If the new venture is a manufacturing operation, a production plan is
necessary. This plan should describe the complete manufacturing process (it gives details about
how product(s) will be manufactured. If some or all the manufacturing process is to be
subcontracted, the plan should describe the subcontractor(s), including the location, reasons for
selection costs and any contracts that have been completed. If the manufacturing is to be carried
out in the whole or in the part by the entrepreneur, he or she will need to describe the physical
plant layout, raw materials, and supplier`s names, address and terms, costs of manufacturing,
and any future capital equipment needs. If the venture is not a manufacturing operation but a
retail store or service, this section would be titled “merchandised plan” and the purchasing of
merchandise, inventory control system, and storage needs should be described.
5. Marketing plan. The marketing plan describes how the products or services will be distributed,
priced and promoted. Specific forecasts for products or services are indicated in order to protect
profitability of the venture. Potential investors regard the marketing plan as critical to the success
of the new venture. Therefore, the entrepreneur should make every effort to prepare a
comprehensive and detailed plan as possible so that investors can be clear as to what the goals of
the venture are and what strategies are to be implemented to effectively achieve these goals.
6. Organizational plan. The organizational plan describes the venture`s forms of ownership i.e.
proprietorship, partnership, or corporation. If the venture is a partnership, the terms of the
partnership should be included. If the venture is a corporation, it is important to detail the shares
of stock authorized, share options, names and addresses of the directors and officers of the
corporation. It is also important to provide an organization chart indicating the line of authority
and responsibilities of the members of the organization. This information provides the potential
investor with a clear understanding of who other members will interact in performing their
management functions.
7. Assessment of risk. Every new venture will be faced with some potential hazards, given the
particular industry and competitive environment. It is important that the entrepreneurs make an
assessment of risks and prepare an effective strategy to deal with them Major risks for a new
venture could result from competitor`s reactions, Weaknesses in the marketing, production, or
management team; and the new advances in technology that might render the new product
outdated. Even if these factors present no risks to the new venture, the business plan should
discuss why that is the case. It is also useful for the entrepreneur to provide the alternative
strategies should any of the above risk factors occur. These contingency plans and strategies
illustrate to the potential investor that the entrepreneur is sensitive to important risks and is
prepared should any occur.
8. Financial plan. This is the heart of the business plan. It includes projected profit and loss
account, projected balance sheet for the end of first 6 to 12 months. Also found in this section
should include;
-The total cost of the setting up a business
-Financing and sources of funds
-Profitability of the proposed business
-Returns on the investment expected
-The break even sales of the business
9. Implementation plan. An implementation plan sets out the logical stages you will need to go
through to turn your business ideas into the reality. It converts your plans into action.
10. Appendix. The appendix of the business plan generally contains the back material that is not
necessary in the text of the document . Letters from customers, distributors or subcontractors are
examples of information that should be included. Any document of information i.e. secondary
data or primary research data used to support plan decisions should be included. Leases,
contracts or any other types of agreement that have been initiated may also be included in the
appendix. Lastly, price lists from suppliers and competitors may be included.
Why some business plans fail ​
A business plan by the entrepreneur fails if it is not prepared properly and does not analyze or
address the issues involved in the new venture. The common failure factors are;
a) Goals set by the entrepreneur are unreasonable
b) Goals are not measurable
c) The entrepreneur and his team have not made a total commitment to the business
d) Inexpensive and error methods. i.e. the entrepreneur has no experience in the planned
business
e) The entrepreneur has no sense of potential threats and weaknesses to the business ( no
proper SWOT analysis has been made)
f) No customer need was established for the proposed prouduct or service
g) Poor handling of the financial matters
h) Un reasonable time schedules
i) No proper control for the business plan to ensure effective implementation

ENTREPRENEURSHIP DEVELOPMENT
Entrepreneurship development is the deliberate end ever in human resource development which
is usually under taken by the state or community with the major aim of;
i. Developing competence among participants to start, manage and develop
enterprises.
ii. Develop greater understanding of entrepreneurship as a means of providing and
enabling development for entrepreneurs to thrive.
Entrepreneurship development pre-supposes that, although certain characteristics are in-born, the
bulk of entrepreneur characteristics can be developed.
​
Barriers to entrepreneurship development
Barriers are factors that hinder the development of entrepreneurship. These can arise at
individual level, environmental levels and at firm levels.
Barriers at individual level ​
Individual weaknesses pose the biggest barrier to entrepreneurship in many economies. Such
barriers are normally ignored as focus is normally on the environmental factors. This is because
there can be a solution to this weaknesses. These barriers include;
1. Poor entrepreneur skills. Most entrepreneurs and potential entrepreneurs are short of
entrepreneur skills. They are risk averse; lack self confidence, self drive, creativity,
determination, persistence, etc.
2. Lack of business and technical skills. People require business skills in accounting and
management skills to manage their businesses .Some ventures also require special technical
skills to set up, manage and operate.
3. Low mobility and exposure. This offers the biggest revelation for new innovations and drive
to entrepreneurship. However, many people do not travel a lot, do not read widely enough and do
not explore and investigate. As a result, highly educated people remain largely narrow minded.
This limits the creativeness and innovativeness of potential and practicing entrepreneurs.
4. Lack of role models. Uganda is seriously short of role models in the field of entrepreneurship
which limits a number of people who are willing to aspire for a career in entrepreneurship. Many
people have a low opinion of struggling entrepreneurs while they consider a few successful
entrepreneurs to be super lucky individuals who can only be admired but not emulated.
5. Lack of business ethics. Many ventures have failed or have been compromised because of
unethical behavior such as unpaid loans, unpaid employee, unpaid suppliers, substandard goods,
tax evasion, corruption, smuggling, etc, characterize many businesses in Uganda. While such
tendencies could result in quick profits, many times these ills come back to haunt the
entrepreneur and sometimes ripping him down completely.
6. Career dependency. Ugandans especially the educated have a long dependency on their careers
to provide for their livelihood. Entrepreneurship has for long been regarded as the last resort left
for uneducated. Although this mind set is changing, its effects are still a bigger barrier to
entrepreneurship in Uganda.
7. Complacency (lack of motivation). Because of lack of role models and limited exposure,
entrepreneurs in Uganda tend to be satisfied by small achievement. The tendency to celebrate
success prematurely limits the growth of the business. The majority of entrepreneurs are
motivated to start a business in order to secure sufficient income to the family and complacency
sets in once this is achieved.
8. Lack of continuity. Very few firms tend to survive the demise of their founders while others
diversify and change very faster before gaining the required experience. Lack of continuity
affects the running of the firm and therefore long term compositeness of their firm.

Barriers arising from the environment

1. Political stability. This dogged Uganda since independence. This state of affairs has robbed
Uganda of many entrepreneurs. They have lost life, time, saving, and business assets while some
have been closed due to instability.
2. Business administrative procedures. Difficulties in administrative procedures in establishing a
business is complex and burdensome. As a result, businesses are forced into the informal
economy.
3. Government economic business policy. The formulation and delivery of business policy in
Uganda is still based on the narrow conception of big businesses. While little or no specific
attention is given to the circumstances and needs of the entrepreneurs.
4. Lack of access to finance. Banking system and practices in Uganda impose impossible
demands for the entrepreneurs. Banks have little incentives to extend credits and therefore the
terms of credit are unreasonable requiring difficult to its collateral and guarantees to secure
loans.
5. Low purchasing power. Low incomes and high levels of unemployment limit the purchasing
power of a relatively small population. This makes it hard for businesses in general and
entrepreneurs in particular to acquire the necessary economies of scale.
6. Poor infrastructure. Uganda is still plagued by very poor physical and social infrastructure in
terms of roads, electricity, water, schools, hospitals, etc.
7. Economic instability. Due to over reliance on donor assistance and borrowing the import bills
by far outweighs exports over reliance on imports. The Ugandan economy is easily destabilized
by small changes in the international environment.
8. A stigma attached to failure tends to discourage entrepreneurs
9. Lack of willingness to change
.Some possible solutions to barriers
1 .Adequate market research, to provide immediate information about the market
2. Lack of enough capital can be solved through credit assistance by setting up credit societies,
reducing interest rates and increasing loan repayment periods. The introduction of Bonna-
bagagawale (prosperity for all) scheme by the Ugandan government which has led to the
formation of many SACCOS across the country is the step in the right direction.
3. Capable local advisers should be trained or made available to handle issues like project
viability.
4. Technical education and support should be provided.
5. Referring to successful role models constantly can solve social stigma.
6. Market contacts and updates should be availed so as to enable the entrepreneurs to keep in
touch with the market and be able to know the needs and the tastes or any changes that may arise

7. Local companies may be set to research and come up with viable ventures that entrepreneurs
can undertake.
8. The government should ensure that the nation is politically stable to encourage investment.
9. Improvement of infrastructure should also be given priority to ease the flexibility of flow of
goods and services.

WOMEN ENTREPRENEURS
The traditional perception of women as a helper in the occupation of the husband and a home
maker is gradually vanishing.
Women have started providing themselves in many fields including entrepreneurship. Quite a
large number of women entrepreneurs have set up their enterprises and are managing them very
well.
The realization that women are evaluable human resource has been gaining ground. Recognition
of their services as a necessary sub-system of the centric social- economic system is gradually
becoming part of modern attitudes. Many factors and developments have influenced women to
make up entrepreneurship.
Female entrepreneurship in particular draws a lot of reference from the notion of
entrepreneurship in general .Dee (1998) contends that entrepreneur’s create value, they are
innovators, and change agents in the economy. Covin and Slein (1986) defined entrepreneurship
on the base of behavioral characteristics of innovativeness, torelence for risk, proactive, and the
female entrepreneurs are short of the above characteristics either.
The enhancement of female entrepreneurship leads to consideration i.e. development in the
economy because female entrepreneurs create employment opportunities as well as linkages for
both rural and urban business, and the spillovers have a positive impact on women empowerment
,education , training levels, and acquisition of business.
Problems faced by women entrepreneurs
1. Female entrepreneurs do engage in the operations and management of small enterprises
in various sectors of any economy and this creates a new dimension in a male-dominated
economy However, in their attempt to do business, they face a number of challenges in
all the business under takings. These challenges include;
Personal problems,
-Lack of family and community support
-Male dominated society
-Lack of education and information
-Economic backwardness
-Low risk bearing capacity
-Family responsibility
Managerial problems
• Lack of knowledge of general management and management experience.
• Lack of skilled labour
• Labour absenteeism and labour turnover
 • Lack of clear cut objectives
• Transportation problems as women
Marketing problems
• Lack of knowledge of how to market the products and whom to contact.
• Heavy competition with big enterprises.
• Exploitation by middle men and difficulties in collection of dues.
• Inadequate sales promotion avenues.
• Lack of export marketing support.
Measures in assisting and promoting women entrepreneurs
To widen and strengthen the base of women entrepreneurship, the following remedial measures
may prove meaningful;
1. To solve financial problems, the government and financial institutions should draw and
implement special lending policies like removing of collateral, quick processing of loan and
liberal repayment schedule to women entrepreneurs.
Also financial management training programs should be conducted by government and other
organizations.
2. To solve the marketing problems, governments and voluntary organizations should conduct
and elaborate marketing trainings to women entrepreneurs. Governments should make
arrangements to conduct exhibitions and conferences of women entrepreneurs.
3. Attention of government and voluntary organizations need to be drawn to rectify social-
personal problems. A special program can be conducted against social emits.
4. Attention of government should be drawn in rectifying the production problems by giving
subsidies of materials supply, assistance for up- gradation of technology, research and
development and giving production trainings to women entrepreneurs.

PROMOTION OF GOODS AND SERVICES (Marketing Communication)

Promotion is communication with individuals, groups or organizations in order to facilitate
exchanges by informing and persuading an audience to accept the businesses` products.
The various communication tools used in promotion of goods and services include;
1. SALES PROMOTION
Sales promotion refers to the various methods or activities adopted by a firm to increase its sales
in order to earn more profits or it is a term used to describe a category of techniques which are
used to encourage customers to make a purchase. These activities are effectively short term and
are used for the following purposes;
-To increase sales.
-To stabilize sales.
-To help with personal selling.
-To respond to the actions of competitions.
-As an effective alternative to advertising.
-To expand the market share.
-To inform or remind the public of the existing product.
-To reward loyal customers by giving them free gifts or price reductions.
-To locate the product position in the market by targeting a particular market segment.
Tools of Sales promotion
Among the sales promotion aids often employed by firms are;
 1. Free samples
This involves giving and distributing free samples to potential customers so as to get them
interested and consequently buy a product . Producers expect that those who receive the samples
also encourage others to buy the products.
2. Free gifts
This involves giving out free gift to any customer who buys a firm`s products of a specified
value so as to motivate him/her to come back next time. forexample, a customer may be given 3
packets of omo or soap, free of charge when he/she buys goods worth shs. 10,000.
3. Price reductions.
This is a deliberate attempt by producers to slightly lower the prices so as to boast sales. The
prices are reduced for a specific period and it is hoped that the old and new customers will
continue to buy even if price reductions are removed.
4. Prize awards. This is where the producer announces a competition through a mass media e.g.
on a radio, television or newspapers offering a number of prizes. He normally asks a simple
question to encourage many to participate. Participants may be required to enclose cables of
manufacturers products and in this way every participant will have to buy the manufacturer`s
product. The producer hopes that even after the competition, customers will continue buying the
products of the firm.
5. Display. This is creative treatment of merchandise so attractively arrange as to win the
attention and spark the interest of views.
6. Public relations. This involves keeping the public informed of new products and changes of
existing products. An organization will often deliberately try to ensure that the public is kept
informed about its trading and other activities. It is done in order to create, establish and maintain
mutual understanding between an organization and its public.
7. Credit facilities. In order to boost sales, traders/ firms often offer credit facilities to their trust
worthy customers. Thus customers are asked to pay latter at an agreed date, say after 14 days, 30
days, etc. This method however, requires a lot of paper work and credit rating of customers.
8. Politeness to customers. This method is most suitable for small businesses that have no money
to spend on advertisement. A small -scale business can still promote sales by way of greeting,
smelling and joking with customers.
9. Self service. This is a system where by customers help themselves with the goods they want to
buy. Super markets mostly adopt it where customers are given freedom to choose goods they
want to buy. This freedom encourages them to come back and buy more goods.
10. Rebates.
Are promotional pricing tactics, they offer customers partial refund of the money they spend for
specific items they purchase.
11. MPs (push money).These are modest sums of money paid to salesmen as incentives to
encourage greater selling efforts.
12. Branding
A Brand is the name given by a firm to a product or a range of products. It may also involve
giving particular slogans and trademarks to a product to distinguish it from other similar products
or other manufacturers e.g. for toothpaste we have brands by the names like Colgate, deli dent,
ABCdent, etc.
A product may be liked because of its name and this will boast sales.
An organization business can also promote sales through improvement in the quality of the
products in its color, size, taste, packing, etc.
2 . ADVERTISING
Advertising can be defined as a paid for type of marketing communication that is non-personal,
but aimed at a specific target audience through a mass media channel. Advertising must be a
communication directed at a targeted market and should draw attention to the characteristics of a
product, which will appeal to the buying motives of potential customers.
Advertising Objectives
There are basically two advertising objectives.
1. Promoting goods and services
-To assist with selling
-To increase sales.
-To develop awareness of new products or development of existing products.
-To provide information that may assist will selling decisions.
-To encourage the desire to own a product.
 -To generate inquiries.
2. Developing the image of the organization.
-To provide information for a target audience.
-To soften attitudes.
-To assist with public relations activities
-To provide better external environment
-To develop support from a community
Importance of advertising
Advertising has a lot of importance to an enterprise. This is explained in the following points;
➢ Advertising increases demand for goods and services leading to mass production hence
increased profits.
➢ It creates awareness to the customers of what the business enterprise has for sale and
hence its products become known.
➢ Advertising encourages frequent use of the firms goods or services resulting in increased
sales, mass production and hence more profits.
➢ In some cases advertising reminds the customers about the firm`s goods and boasts sales
in areas where consumption is low or declining.
➢ Through advertising, the business firm can inform its customers the use, price and special
offers of its products. In doing so the business enterprise gains reputation.
➢ Advertising help the business enterprise to keep in touch with its customers.
➢ Advertising enables a business to outcompete its rival companies and thus may gain
monopoly status.
➢ It helps a business firm to become popular and also to acquire good will.
➢ It helps to widen the market of the firms product or goods.
Types of advertising
Advertising is often classified under one of the three headings:
1. Informative advertising
This conveys information and raises consumer`s awareness of the features and benefits of a
product. It is often used in the introductory phase of the product lifecycle or after modification.
2. Persuasive advertising.
This is concerned with creating the desire for the product and stimulating purchase. It is used
with established and more mature products.
3. Reinforcement advertising
This is concerned with the reminding consumers about the product and it is used to reinforce the
knowledge held by the potential consumers about the benefits to be gained from the purchase.
Advertising media
This refers to the means through which advertisements are conveyed to the public. The success
of advertisement depends on the message and the media chosen.
Advertisement medium that can be used to convey message to the public. The common
advertising media include among others; newspapers, magazines, radio, television, billboards,
and sign posts.
Choice of media to use
The choice of media requires consideration of the following factors;
1. Cost of medium. A producer must consider the cost in relation to the value of the product to be
advertised. Expensive products can be advertised in expensive media like television, newspapers,
and magazines. Cheaper products and services should be advertised in cheap media.
2. The coverage. If the advertisement is to be addressed to a wide geographical area, then a
media that can cover such area should be used. In this case, radio, television, and newspapers are
more appropriate. When the advertisement is intended for individuals in small area, such as a
trading centre, then posters and window display are more effective.
3. The social class. The advertiser should consider the social class to which the medium appeals.
If the advertisement is intended for ordinary people, then newspapers, radio, and poster are more
effective, while if it is for a wealthy class, television and magazines are appropriate.
4. Speed and urgency. Urgent information on goods and services should be advertised in media
which is fast like radio, television. Others like magazines and trade fairs take long.
5. The age group. Goods or services which appeal to the youth should be advertised through
magazines, cinema halls, and at times on televisions. Advertisements for the middle-aged and
mature people should be should be advertised through radio and newspapers.
6. The message to be communicated. If the product or service to be advertised requires giving
detailed information then written forms of communication e.g. newspapers are likely to become
more effective. While if the product or service to be advertised requires an image, then a
dynamic and colorful television advert is possibly more effective.

Criteria followed when preparing an advertising message

Any advertising you use for your business should be designed primarily to inform people about
your products/services and to persuade them to buy. Hence whatever the medium you select the
following guidelines should be followed when preparing advertising messages:-
❖ The heading should emphasize benefits to customers and should easily be identified e.g.
faster and efficient services, cheap sales, quality goods.
❖ The contents of advertisement should be easy and simple to understand.
❖ The space provided should be used carefully. One should not fill the whole space with
words or pictures for purposes of clarity.
❖ An advertising message should appeal to people`s wants and needs.
❖ You should be honest in your advertisement and therefore able to deliver as promised.
❖ One should stress the desirable features of the product or service.
❖ The advertisement should inform the customers where they can buy the product or
service and also provide other useful information like telephone contact.
3. PERSONAL SELLING
Personal selling or direct selling involves interaction between individuals or groups of
individuals. It is where teams of sales force are employed to sell the product/services to
customers. It is normally adopted when launching a new product on the market. It may involve
sending sales men to visit customers in their homes and offices and discuss with them about the
new product sold by them.
The key benefit of personal selling is that it offers the potential customer individual attention.
As a method of communication, personal selling is useful to firms in the following ways;
➢ It introduces a product to appropriate audience
➢ It develops awareness and interest in the product.
➢ It explains how the product or service works, and to explain technical details.
➢ It helps to obtain orders for the product, and even to deliver it.
➢ It encourages test marketing.
➢ It helps gain rapid feedback about and suggestions for ongoing improvements
➢ It helps develop good relations with business customers
➢ It helps have wider market coverage by employing agents in various geographical areas.
Disadvantages of personal selling are;
-It is costly
-It is labor intensive.
-Some potential customers are not happy about being visited by a sales representative.
Steps and process of personal selling
The process of personal selling consists of the following steps;
a. Presale preparations. This is the first step and it involves recruiting, training and motivation of
sales person. A good sales person must have knowledge of himself, business, product and their
qualities, target customers and selling techniques.
b. Prospecting. This is the process of locating business customers. It is done through asking the
already existing customers for names and other potential customers who would want to benefit
from the product or services.
c. Pre- approach. This involves doing ‘home work ‘on customers` habits, preferences, income
levels, attitudes and beliefs. The sales force must study and analyze these aspects because they
help in selecting the right sales appeal when meeting the customers.
d. The approach. This is meeting face to face with the customers. The sales person introduces
himself and the product of the firm in a polite and dignified manner. For this matter, in order to
attract the customers` attention, the agent must be smartly dressed, greet the customers with
asmile, look at the customer squarely in the eye during interaction and be confident of yourself
and time properly when meeting the customers.
e. Presentation. This is basically opening up sales. Here the agent presents the product to the
customer mentioning and explaining the unique features that may not be self-evident. He tells the
customer the price, terms and conditions of payment and delivery.
f. Demonstration. To maintain customer`s interest and create desire, the agent demonstrates how
the product works and helps to meet customer`s needs. He should explain its utility and unique
features and qualities. After demonstration the customer should be given a chance to try, touch,
and handle the product to have a taste of it.
g. Handling objections. During demonstration doubts and questions may be created in the mind
of the customer. The sales person should clear these tactfully without losing temper. The best
practice is to listen to the customers` complaints and clear his doubt by giving assurances. The
agent should be patient, should the prospective customer put too many queries and takes time in
arriving at any decision. Even after cleaning all doubts and the customer does not buy, the sales
person should let him go without showing temper.
h. Closing sales. This is regarded as the peak or the climax in the selling process. A successful
close of sales is the main purpose of selling process and the customer must be inclined to visit
the customer again. In closing the sale, the product should be packed properly and handed over
to the customer with speed and accuracy.
r. Post sale follow up. This is the last stage in the process of personal selling. It refers to the
activities undertaken to ensure that the customer is satisfied with the article / service. This
therefore includes such activities as installation of the product, checking and ensuring its smooth
performance, maintenance and offering after sales services. This helps to encourage repeat sales.
RESOURCES NEEDED FOR AN ENTREPRENEUR
The term resources refer to the endowment that exists in an area or locality. Some of these
resources are helpful in entrepreneurship management and they include;
Human Resources
The term human resources simply refers to managers and employees within a business, and
implies that they are viewed as resources in much the same way as finance, land, premises and
equipment.
Material resources
These are physical resources and may include such things as minerals, buildings, water, trees,
etc.
Information
This is the possession of the requisite knowledge on various aspects of life which is necessary for
development by members of the community. A business / firm needs information about what
resources they are, where they are located and in what quantities and quality they are available. It
also needs to know how the supply of a particular resource relates to the demand for it.
Financial resources
Financial/ resources is the expression which describes those funds that are used by a business to
acquire the asset which it needs to trade successfully and to settle the liabilities which accrues
during its trading activity.
These funds may consist of investment or share capital put in by the owners or subscribe by
lenders, such as banks or other financial institutions, shareholders, along with loan capital
provided.
Technology
Technology is the application of scientific knowledge in business or industry. It refers to the
machine, equipment and tools that are used to increase the quality and quantity of goods and
services.
BUSINESS OPPORTUNITIES
A business opportunity is a prospect of going into a successful business brought into by
identified gaps in the market or the market`s needs that are not being satisfied.
Here below is a list of opportunities:
Farming
Carpentry
Stationers
Men`s fashion shop
Timber selling
Charcoal selling
Ladies fashion shop
Children`s cloth shop
Fish processing
Mining
Newspapers
Boat construction
Sports goods store
Furniture store
Baker
Greengrocer
Fishmonger
Butcher
Restaurant
Cafe
Bookseller
Photographer
Hard ware store
Car repairs
Tyre and exhaust centre
Builder
Secretarial bureau
Health centre
School

INDICATORS OF THE A VIABLE BUSINESS

1. Availability of market. That is to say that people or institutions are willing and able to
buy the products or services.
2. Availability of resources. For a business to be viable the necessary resources should be
available e.g labour, capital, raw materials, technology etc.
3. The returns on investment should be high. This implies that the expected profits from the
business should be accepted by the entrepreneur depending on the level of investment
4. Availability of required skills i.e skilled manpower should be available and affordable.
5. Availability of social infrastructure such as schools, roads, hospitals, Banks power are an
indicator for a variable business.
6. Government policy should be favorable to encourage the activities of the business to man
smoothly e.g. taxation.
​
SOURCES OF BUSINESS IDEAS
Business ideas are the starting point when one is starting a business. The following are the
different sources of business ideas.
1. Through the press like newspapers, magazines, radio, television. This is mainly because most
developments, policies, priorities are communicated and published in the press.
2.Through having discussions or interviews with successful entrepreneurs to find out from them
on some business issues, seek their views and suggestions and get their comment on some
situations.
3. Technical skills and experience possessed by individuals is an important source of business
ideas. These have the opportunity to think deeply about given situations including designing
better ways of doing things as well as better products.
4. Business ideas can come out through observation of the developments and changes taking
place in and around the community. One is able to find out the changes coming up and the needs
that are becoming important.
5. Personal contacts with people in the same line of business expose them to different and viable
business opportunities.
6. Business ideas can be got from conducting surveys to find out what is happening and the latest
thinking and preference of customers, entrepreneurs plans,etc
7. Entrepreneurs may go into the market to observe the products that are being sold, those that
are lacking, those that could be improved on, and the gaps that may be there.
8.Entrepreneurs may also check on the trends of changes taking place e.g. in production, peoples
incomes, who are becoming the major players and what are becoming the topics or vital issues
to be addressed in the community or area, etc
9. Entrepreneurs can also source business ideas by visiting other companies, trade shows and
organizations to know the desired goods and services that are required.
SOURCES OF CAPITAL OR MONEY FOR A BUSINESS
Money is anything that is generally accepted for the settlements of debts and obligations. It is a
medium of exchange. In Uganda, money is in form of bank notes and coins that are issued by the
bank of Uganda. The following are the sources of capital (money) for business.
1. Personal savings. One may keep part of his or her income with an aim of starting a business.
People may therefore reduce on their daily expenditures so as to save. This is mainly
applicable to businesses like partnership and sole proprietorship.
2. Family contribution. Members of the family can contribute the business capital in terms of
money (funds), sponsorship for a course to gain skills, providing fixed assets like land,
building, furniture, machinery or even rendering free services to the business.
3. Borrowing money (capital) .Business may raise capital through borrowing from financial
institutions such as banks, micro- finance institutions, money lenders, free and then paid back
with an interest depending on the terms agreed upon during borrowing. However, this source
should only be used as the last resort, since it always attracts interest.
4. Advances from customers. A businessperson can make contracts with major customers like
schools or institutions to supply them with goods. These customers can pay in advance thus
raising capital to operate business.
5. Trade credit. This is where the supplier offers the trader goods on credit and does not demand
cash down payment for them. Payment can be made later after goods have been sold, etc.
The money received through borrowing must be used by the business over an agreed period
of time
This allows a business to accumulate profits on sales each time a trade credit is offered there by
raising capital to start and run the business independently.
6. Friends. An entrepreneur may have good and rich friends who are willing to assist in rising
capital for their friends to start a business. Normally such friends always have a thinking that
it is better to help a friend start a business rather than leaving him or her to beg (bother) you
all the time .
7. Fundraising/ grants/ donors. Some organizations like Uganda women effort to save the
orphans ( UWESO), The Aids Support Organizations( TASO), etc can be a source of capital
to specific individuals such as the orphans, the infected and the affected . Such donations
received in most cases are source of capital for many businesses.
8. Selling shares. A share is a unit of capital. An entrepreneur may sell shares to other people to
help him raise large amount of capital for many businesses.
9. Gambling. Some entrepreneurs first risk their money and by chance they get lots of money
from gambling which works as startup capital. This is however capital and work together.
Sometimes very risky and in some cases may be illegal.
10. Merging. This involves both vertical and horizontal merging of companies. Companies can
pool capital and work together.
11. Inheritance. Some entrepreneurs get money and property from people who die. These could
be relatives or very close friends. Such money and property helps them to start their own
business.
12. Sales of personal property. Some individuals sell off their personal property such as land,
vehicles, and other assets so as to raise money to begin businesses.
13. Retained profits. This refers to the money, which is not given to share holders, but is just re
invested in the business. This can be an important source of capital.
14. Participating in promotions. Different companies carry out promotions to improve on their
sales and sometimes offer cash prices. For example, companies like coca-cola, Newvision,
Zain, MTN, organize promotions source of capital for businesses to some of the lucky
winners. Where the lucky winners move away with cash prizes. This has been a
Advantages and disadvantages of the different sources of money in a business
a. Own sources. This includes money such as personal income, savings, etc.
Advantages
1. It allows an entrepreneur to make his or her own decisions, money any planning and use of
time he or she wishes.
2. The entrepreneur bears no direct extra costs e.g. interest charges, negotiations delays and other
inconveniences.
3. The entrepreneur has complete control over the benefits arising from his or her business
operations.
4. The entrepreneur is not subjected to external control over his business.
5. It promotes financial discipline on the part of the entrepreneur since the savings are hard
earned.
Disadvantages
-The entrepreneur may lose his or her personal resources in the event of failure
-Personal sources of funds may be too small to start a viable business.
-The entrepreneur bears all the business risks alone.
b. Gifts and offers from friends. This is some of the major sources of financing business. These
have both advantages and disadvantages.
Advantages
-There is freedom and may not have direct costs .
-They may top up the limited resources of an entrepreneur
Disadvantages
-May have strings attached to them, which may be expensive and inconveniencing.
-They may not be timely since they come as and when the giver wants.
-They create dependency relationships and unnecessary interference in ones business.
-They are not reliable. This is because the recipient has no control as to when they will come.
how much will come
c. Loan. Many businesses can’t survive without loans. Loans may be obtained from family
members, friends, well-wisher, financial institutions, etc.
Advantages
-It makes extra resources available to an entrepreneur .
-The external monitoring and added interest in the business operations enforce hard work and
discipline on the part of the borrower
Disadvantages
-The payment obligation may be too tight and cause the borrower to have cash flow problems.
-The borrower is subjected to external control over his or her business.
-At times the loan funds may not be available at the time when wanted.
-The borrowing entrepreneur may pay interest and other loan charges and fees on the borrowed
funds which increases his or her operating costs.
d. Trade credit/ supplier’s credit. As already discussed, businessmen can be supplied with
goods on credit and pay the suppliers later after selling goods.
Advantages
1. It enables a business to obtain the needed business suppliers (raw materials and services
for the production process)
2. There may be no interest charged on the raw materials or goods obtained on credit hence
profits of the business may increase.
3. It reduces the costs of looking and ordering for the products. It reduces the operation
costs for the business e.g. reduces costs of looking for the products from various
suppliers.
4. Reduces the storage costs of the suppliers for the product.
5. Enables the supplier to continue in the production due to the available demand.
6. May create a good relationship between the business and the supplier
7. Increases the profit level of the supplier since such products are usually sold at higher
prices than those sold for cash.
8. Saves time that would be spent looking for supplies from far away suppliers.
Disadvantages
1. It may be associated with higher cost prices. This is particularly so where the
entrepreneur has no choice of changing to another supplier.
2. May lead to inferior goods and services being supplied since there is no competition.
 3. It leads to inflexibility in planning the sources of supplies.

PROCEDURES FOLLOWED WHEN BORROWING

1. Identifying a business opportunity
2. Carrying out a market survey on the identified business opportunity
3. Developing a business plan for the prospective business and establishing a total
funding required
4. Developing a plan showing how the business will be financed and the possible
sources of funding to close the gap.
5. Identifying and approaching a possible financier.
6. Obtaining the terms and conditions for the loan to be availed from the preferred
financier.
7. Comparing the terms and conditions with those of other financiers in a similar
business or sector.
8. Checking the business plan to establish the implication of the loan to be acquired (in
view of the cost associated with borrowing e.g. interest, loan fees and charges) to the
business.
9. Carrying out discussions with the chosen or preferred financier.
10. Obtaining and using the loan for the intended purposes and according to the lending
terms and conditions agreed upon.
MAJOR TERMS AND CONDITIONS FOR BORROWING
These are mainly guidelines that have to be agreed upon by the lender and the borrower for
accessing, using and repaying a loan. Lending terms and conditions often cover the following
areas.
1. Loan size. This is the amount of loan (money) to be given by the lender to the
borrower. For example a loan of UG shs. 100,000,000.
2. Interest rate. This is the interest that the borrower has to pay to the lender for taking
and using the loan such as borrowing at an interest rate of 14%.
3. Security. Most lending institutions ask the borrower to provide them with assets or
property, which they could sell to recover the loan in case the borrower fails to
repay the loan. These could include buildings, land, car log book, etc.
4. Loan fees and service charges. This may be required
to be paid by the borrower in
addition to interest charges . These may include loan application fees, loan
processing fees, etc.
5. Pectoralbias . These are loans that may be given with a view of promoting certain
sectors, activities and areas of operation . For that matter there for borrowers who
fall into such categories will be given priority by the lenders.
6. Loan installments. These are the small parts of the loan,which will be paid at a time
either on a weekly, monthly, and half yearly, or annual basis.
Factors influencing terms and conditions for lending
1. The nature and type of the borrower. For example, is the borrower new or an old client,
his level of credit worthiness, etc all do influence the terms and conditions on which one
can access a loan.
2. The nature and the type of the lender. This takes into consideration the type of the lender,
i.e. is it a formal lending institution, individual lenders, etc.
3. The nature of business. Or project to be funded also influences the lending terms and
conditions. Some projects are long term while others are short or medium term; some
businesses are more risky than others . Such facts there for have to be considered and
greatly influence the lending terms and conditions .
4. The sources of funds being lent out also greatly influence the lending terms and
 conditions . For example money could be from the government likebonnabagaggawale (
prosperity for all), private institutions, international agencies, like the International
Monetary Fund ( I M F) and the World bank, etc. Different sources have different
policies in relation to their funding hence influencing the lending terms and conditions.
5. The prevailing government policy that influences the activities of the borrower greatly
influences the lending terms and conditions . For example government sometimes
through the central bank advises the lending institutions on what interest rate to charge
on the borrowers thus indirectly influencing the rates of interest charged.
6. The level of economic activities in the country also does influence the lending terms and
conditions . For example there could be a period of a depression where the level of
economic activity is low, this will lead to low rates of interest and” fairer” lending terms.
On the other hand, when there is a boom, interest rates may raise and conditions of
lending may become “harder.”
7. The time period for which the loan or credit is required and when it will be paid
influences the term and conditions of lending . When the credit is required at a short
notice and the terms could be “tougher” than when the time period when a credit is
required is long. It is also obvious that the longer you use the credit, the higher the
rates of interest
8. The amount of loan or credit also influences the lending terms and conditions . Higher
amounts of money call for stricter terms and conditions for loans while smaller loans
may not. At Barclays bank of Uganda for example, the rate of interest on a Barclays
loan reduces as the loan amount taken increases
9. The number and level of competition from other money lenders influence the lending
terms and conditions .When there are many lenders and the competition is high, the
terms are fairer. On the other hand, when there are few money lenders, the terms and
conditions tend to be a little bit harder.
10. The level of demand. For credit or the estimated number of borrowers expected,
influences the lending terms and conditions . When the number of borrowers is high,
lending terms and conditions tend to be higher than when the number is small.

SAVINGS
Savings refers to part of a person`s income that is not consumed. It involves sacrificing current
consumption in hope of benefiting from increased future consumption . It consists of voluntary
and involuntary savings.
Importances of savings
1. Savings help to meet the future investment plans. For example savings can be used to start a
business, replace equipments, and also for investment purposes.
2.Savings are used as precaution for the future needs. People save income due to the desire to
provide for unforeseen problems that may arise in the future and will require them to suddenly
spend money . For that matter therefore , both individuals and business hold some cash on
bank accounts in reverse to meet unexpected needs . Individuals save income to provide for
illness, accidents, unemployment, etc, . At times some business people keep cash in reserve to
used when unfavourable conditions arise or to invest and gain form un expected deals.
3.Savings are used as a form of collateral security. The saving shows one`s ability to manage a
given loan. People can lend you more money when they look at your savings. In many micro
finance institutions, the amount of loans that a borrower can access will always depend on the
savings on his or her account.
4.The growth in value of savings or level of interest rates. When the rate of interest rate ( value
earned from savings) is high, people will be encouraged to save so as to earn the high rates of
interest are low, it will discourage many people from saving . Instead of saving, people will
spend a lot on consumption and other investments
5.The level of political stability determines the level of savings in a given economy. If a country
is politically stable, people feel confident and safe to save their hard earned earnings which
results into high levels of savings . On the other hand, when a country is not politically stable,
people lack confidence and are uncertain about the future, which discourages them from
saving.
6.The level of people`s incomes determines the level of savings. Individuals who earn high
incomes always have a chance to save more money than individuals with low levels of incomes.
This is because high income earners are left with a lot of income after consumption that can be
saved. Un like the low income earners who spend almost their income on consumption . i.e. for
basic needs . Low income earners who earn hand to mouth incomes will always have nothing to
save.
7.The stability in the value of money (rate of inflation) determines the level of savings . Inflation
refers to a persistent increase in prices of goods and services . It results in the loss in value of
money . If there are high rates of inflation people are discouraged from saving for fear of losing
value . On the other hand, stability in value of money ( low rates of inflation ) encourages
people to save resulting to high levels of savings. People will always have confidence that their
money will not lose value.
8.The level of liquidity preference determines the level of savings. Liquidity preference refers
to the desire by people to have their wealth in cash rather than investing it . Money is desired
in cash form to finance investment, carryout transactions for unforeseen circumstances, etc.
The higher the degree of liquidity preference, the lower the level of savings. On the other hand,
the lower the level or degree of liquidity preference, the high the levels of saving.
9.Themarginal propensity to consume determines the levels of savings. Marginal propensity to
consume refers to the proportion of one`s additional income that is spent on consumption. If the
marginal propensity to consume is high, the level of savings will be low, the level of savings
will be high.
10.The marginal propensity to save determines the level of savings. Marginal propensity to
save refers to the proportion of one`s additional income that is saved . if the marginal
propensity to save is high the level of saving will be high and when the marginal propensity to
save is low, the level of saving will be low.
11.The availability of financial institutions andpeoplesconfidence in banks that facilitates easy
saving determines the level of saving. People always tend to save alot when there are good
financial institutions that would keep their savings safely. On the other hand, levels of savings
are low in cases where there is lack of organized financial institutions tokeep peoples savings.
12.The levels of consumption (people`s consumption habits) determine the level of savings.
Some individuals tend to buy a lot of products that may actually not be required. They
therefore end up spending a lot of money onbuying expensive products thus saving very little.
On the other hand, some individuals have good consumption habits and only spend on what is
necessary, they don`t spend extravagantly and thus save a lot
13.The government policy in regard to income and savings determines the level of savings. The
government through its policies can encourage or discourage savings. This is to do with taxation
ofpeople’s incomes, business activities, savings and the national social security fund
requirements, etc. Such policies will always determine the levels of saving.
14.The level of speculations determines the level of savings. Businessmen will always save a lot
of money in speculation of benefiting from lucrative abruptopportunities that may come up.The
higher the level of speculation, the higher the level of savings. If speculation is low, the rate of
savings may be low.

LEADERSHIP IN BUSINESS
Leadership refers to the ability of a person toinfluence otherpeople to work towards the
achievement of a given set of objectives. This mainly involvesencouraging and guiding of people
to follow a course of action aimed at realizing a given set of actions. Qualities of good leadership
include; innovative, selfstarter, good decision maker, etc
LEADERSHIP STYLES IN BUSINESS
Leadership style refers to the behaviors that a leader exhibits (shows) as perceived by the people
he is leading in the process of influencing them to achieve certain objectives. These are
discussed below;
The task oriented style of leadership
With this style, there is little consultation. The leader with this kind of style has less concern for
other people`s welfare provided the organization or businesses’ objectives are being realized .
The targets are being met by the business, if the products are of the quality demanded by the
customers and deadlines are observed.
The people centered style of leadership
This type of leadership involves the participation of people and consultation. It puts emphasis on
the welfare deelopment of employees.
The contingency style
In this kind of style,organizational performance is possible through balancing the necessity to
get work done while maintaining the morale of the people at a satisfactory level.
Leadership is a function of a leader, the follower and the situations they are faced with as well as
the environment in which they operate. The style is dependent on how favorable the situation is
and the skills of the leader.
Qualities of a good leader
1. Responsibility and readiness to complete work.
2. Enthusiasm and persistence in following up the set goals.
3. Originality (thinking of new ideas) in problem solving.
4. Self confidence and self-esteem.
5. Willingness to accept consequences of his/ her decisions and actions.
6. Readiness to cope with stress.
7. Leading by good example.
8. Flexibility.
9. Dedication.
Leadership skills in business situations
An entrepreneur who is a good leader should always enforce teamwork among his/ her
employees. To be able to do this, he or he should posses certain skills, which will increase his or
her competence. The following are examples of such skills.
• Diagnosis skill. This is the ability to assess and understand the situations being
confronted . It involves an analysis of what the situation is now and a reasonable
prediction of how it will be in in the future. The gap that exists between the two is the
problem that the leader should aim at changing.
• Decision making skill. The success of any business depends on the entrepreneurs’ ability
to make appropriate decisions even if they may appear unpopular as long as they are
made after due consideration of all relevant factors and their effects.
• Communication. Leaders should have the ability to understand and be understood by
others . They should have a good skill and tact of communicating both orally and through
writing. Leaders should relay (pass on) information equally to all the employees. For
people to be influenced, they need to understand and accept what is to affect them.
• Conceptual skills. A leader should be in position to know and understand the missions,
goals, objectives and targets of an enterprise. He/ she should be involved and a hard
worker.
• Technical skills. Technical skills include the knowledge and full understanding of the
business`s production processes and systems including the ability to use machinery and
equipment in order to produce results in line with the objectives of the business. These
skills are normally acquired through education, training, experience and exposure through
on the job work experience. Effective leaders are in most cases more knowledgeable,
skilled and experienced than most of the other employees whom they lead.
• Inter-personal skills. Leaders should be socially magnetic (attractive) in character. As a
result, leaders need the ability toto work with others and make subordinates work
together effectively and harmoniously. A leader therefore, is expected to have good
public relations, respect for subordinates and clients, respect for procedures etc.
• Adapting skill. A leader should be flexible and sensitive to changes. This will enable
him/her to manage the over-changing customer tastes, competition, costs and prices,
technology as well as the business operating environment

RISKS ENCOUNTERED WHEN CARRYING OUT A BUSINESS

Business is all about risk taking. Whenever an entrepreneur enters business, he should always
weigh and assess the kind of risks to be involved in that business. It is therefore advisable to
comprehensively insure business against all the possible risks. The following are the general
risks that may be encountered in any business;
1. Damage or loss of goods in transit. At times, goods are damaged in the process of
transporting, loading, and offloading.
2. Fire out breaks. This can result due to poor workmanship in electrical wiring or
reluctance of leaving candles anywhere which can bring about fire out breaks.
3. Theft or burglary.
4. Loss of money in transit for example when money is being taken to the bank.

5. Machinery breakdown and consequence loss. This happens when one does not service his
machinery regularly or when one overloads or over uses the machines in the production
process.

6. Bad debts. This is where the person borrows money from a business but fails to pay back.
MOTIVATION
The term motivation is derived from the word motive which means a desire or need that must be
satisfied. Motivation represents an unsatisfied need which creates a state of tension that forces an
individual to move directly towards satisfying this need. Therefore unmotivated people are
always under tension until the need is satisfied.
Motivation is defined as a process of stimulating people to give all the best in order to achieve
organizational goals, therefore, motivation requires;
i. To look at questions like what is the driving force behind people`s goals and objectives
ii. What are people`s needs and expectations and how do they influence behavior and
performance at work.
The role/ importance of motivating employees in an enterprise
1. An enterprise that provides motivational incentives like financial and personal
development will always have a good image in the employment market. This helps in
attracting more customers hence more sales.
2. Motivation prevents employees from seeking alternative employment opportunities
elsewhere. If workers are properly motivated, they could have no reason to move to other
enterprises since they could be working comfortably.
3. Motivation is also very important since it is used as a way of avoiding strikes by
employers. This is especially effective if employees are a bit discontented with the firm.
4. It is through motivation that makes it easy to achieve the business set targets such as
increased sales, cost control, increased production, etc. If workers are highly motivated,
they could work very hard towards the achievement of the set goals.
5. Team work that is a very essential aspect in an organization can best be achieved through
motivating members of an enterprise. Teamwork among employees increases
productivity in the long run.
6. If motivation is in terms of money, it helps on improving the employees ` standards of
living. This in turn increases their commitment to the enterprise.
7. Motivation helps in enhancing work to be carried out successfully.
This is because when
an individual is motivated, he will put in more effort to work hence the success
completion of the work.
8. Human relations. Effective motivation creates job satisfaction which results into warm
relations between the employer and the employees. This is partly because, when
employees are encouraged to participate in management, as a way of motivation, it leads
to improved management labor relations.
9. Motivation enhances cooperation, loyalty and commitment in an enterprise. This in turn
leads to improved discipline.
Ways of motivating employees in an enterprise
1. Ensuring job security of the employees is one way of motivating the workers. The employees
must be assured of their job security, where by the employer will not just come and all of a
sudden dismiss them at any time he/she feels so without prior notice.
2.Employees can be motivated by giving them fringe benefits such as pension, sick pay, sick
leave, maternity leave, general welfare, etc,. This could make them more comfortable which
makes them serve the organization better.
3. Timely and adequate remuneration should be paid to workers as a way of motivating them.
When employees get a satisfying and timely payment for a given amount of work done, they
become highly motivated.
4. Promotions of workers objectively without any bias but only on merit are another way of
motivating workers. Employees could work hard in order to gain promotions which increases
the enterprise`s output.
5. Encouraging team work within an enterprise can motivate employees. When employees work
as a team they are greatly motivated which boosts their output.
6. Provision of on job training and sponsoring employees for further studies motivates them and
makes them to work with devotion.
7. Proper management of discipline at the work place motivates the employees. Every employee
could perform better when working in a disciplined environment.
8. Employees could be given special rewards. This should be rewarding for specific good
results on the work well done. This really impresses employees and motivates them to work
harder.
9. Sharing and showing concern for worker`s problems is way of promoting and ensuring
motivation among the workers.
10. Ensuring open communication in an enterprise is a way of motivating employees. Every
employee should have an opportunity to openly communicate in an enterprise without any
special considerations of a particular group.
11. Practicing transparent management is way of motivating employees. The administrators
need to be honest and faithful to the people they are working with. They should properly manage
the funds of the business.
12. Employees should be given a chance to actively participate in decision making as a way of
motivating them. They could get involved in decision making in order for them to have a feeling
that they are part of the enterprise. This greatly motivates them.
13. Employers can motivate employees by ensuring that they are having pleasant working
condition/ environment. This enables them to work effectively with a high level of devotion.
14. Organizing staff parties and giving out gifts at the end of successful periods by management
is another way of motivating employees. It creates a sense of belonging to such an enterprise.
15...Undertaking performance appraisal can motivate employees in an enterprise. This motivates
employees to do better in his or her present job by giving him in his or her knowledge of results,
recommendation of his merits and opportunity to discuss with his or her manager.
16. Special monthly recognition. Employees who have performed exceptionally well should be
given special recognition every month so as to encourage them to always work hard. in many
high performing organizations( HPO) today, they always have( employee of the month) and in
this way, they have managed to motivate such employees to even perform better.
PERFORMANCE APPRAISAL
Performance appraisal is the judgment of employee`s performance in his/her job based on
various considerations other than productivity alone. The following methods are used in
carrying out performance appraisal.
Methods used in carrying out performance appraisal
1.Ranking method. This involves the arranging of employees in order of their performance. this
is usually based on their total ability on their job but sometimes is according to a few
characteristics
2.Grading. This is another method used in carrying out performance appraisal.It involves
categorizing employees in pre-determined grades according to their performance. This can again
be based on quality, quantity, and output.
3.The rating scale method. This is the most common method used in carrying out performance
appraisal. It consists of a list of personal characteristic features against each of which ascale
usually of five points for the manager to mark his assessment of the employees.
4.The open ended method. This is a comparatively recent innovation introduced because of the
dissatisfaction with the rating scale. it emphasizes the way that the job is performed and the
manager is expected to write a few sentences about the subordinate and also hints on the
employee`s performance.
5. The behavior expectation scale. This is sometimes referred to as behaviorallyanchored rating
scale technique (BARS), mainly looks at the behavior of the employee in the aspects relatedto
his or her job.
Importance of performance appraisal
1. Performance appraisal motivates the employees to do better in their present jobs since they are
in position to get knowledge of results of their performance and recognition of their merits and
opportunity to discuss their work with their managers.
2. Performanceappraisal is needed in an enterprise to ensure that the workers areefficient
andeffective. This is because workers will work carefully baring in mind thatthere will be an
appraisal at the end.
3. There is need for performance appraisal in an enterprise since it helps in identifying the
training needs of the employees. This is because after a performance appraisal it becomes easy to
identify areas of performance whereimprovement couldoccur ifappropriate training is
given.Thishelps theenterprise toclearly plan forits training needs.
4.Performance appraisal in an enterprise helps the managers to decide on increments of pay
to be made to each employee. This is particularly true in cases whereincrements on
employee`s salaries are made basing on merits. With performance appraisal, therefore itbecomes
veryeasy for the employers toincrease salary withoutcomplaints fromother members.
5. It becomes very easy to determine the future use of an employee in an enterprise when
performanceappraisal is carried out. From theperformance of each employee it is easy
todetermine who shall remain in his present job, be transferred, promoted, demoted or be
dismissed. The best performers therefore benefit from the appraisal.
6. Performance appraisal is used to determine whether employees have performed according to
the required or set standards.
PERSONAL REQUIREMENTS OF THE BUSINESS
There are four personal requirements of a business. These are explained below.
1. Job descriptions. This is a written statement which outlines the duties
andresponsibilities involved in performing a particular job. It includes information on :
duties and responsibilities i.e. who does what, when, and why, the job title, a brief
summary of the job duty station, reporting relationships, working conditions, pay
benefits,etc.
2. Job specification. These are detailed statements of physical and mental activities
involved in the job and these could include the relevant social and physical
environmentalmatters. This specifies the characteristics of the individual who should
occupy the job and they include both the physical and psychological characteristics e.g.
the general health, height, weight, learning ability, vision, colour,fluency in speaking,
qualification and training, emotional stability, mental steadiness, etc.
3. Job grading. This involves the rating of jobs in order of value.They are then divided
into groups (grades) in order for each to have a basic pay rate or range. This is followed
by the working out of salary grade for each group basing on broad characteristics of
each grade in terms of knowledge and qualifications, skills etc. here, terms of
employment are normally reached at through collective bargaining.
4. Job performance standards .This mainly looks at what is expected
to be the output for
a given job. It involves theevaluation of one`s duties. If one doesn`t perform as
expected then he or she has failed.
Methods of payment of workers
1. Overtime payment. This is paid when someone works over and above his normal
working time. This normally happens when the work is required urgently and therefore
the worker has to be paid an extra amount for the work done. This rate however varies
according to the time or the day on which the overtime has been done i.e. day or night
time or weekend .
2. Piece rate. This is a method of payment where by one is paid fordoing agiven piece of
work. This is normally applicable to manual work or where work done is easy to
measure andquantify. The rate paid is agreed upon before the work is done.
3. Time rate is another method of payment of workers. It is a type of payment arrangement
where the payment is made basing on the time one will take doing the work.
4. Contract based payment. This is the mode of payment where a given person takes on a
piece of work to be done and completed on a given time for an agreed amount of money.
 The details of work to be done are specified and a person who takes on the job does it
according to the specifications.
5. Standard pay. This is the method of payment where workers are given a fixed pay in a
given period of time. This may be on month or weekly basis irrespective of the amount
ofwork done.
6. Bonus payment. These refer to the extra payment (reward) to a worker over and above
his regularly pay, which is normally given to workers who perform especially so well.
7. Special wage additions. This is the method of payment where special additions are paid
to the employees during abnormal working conditions.
8. Cost of living allowance. This is the method of payment used in mainly areas that have
been affected by an increase in the cost of living. It is commonly given as in response to
arise in general price level to employees who work in high cost areas.
9. Shift pay. This is a kind of payment for employees who work during unusual or changing
work hours.It is made to compensate them for the inconvenience and hardship faced. The
amount paid varies from industry to industry.
10. Salary. This is a method of payment that is a fixed periodicalpayment to a non-manual
employee. It is usually expressed in annual terms, whichimplies relative permanent
employment relationships. Payment here is made on monthly basis.
11. Wages. This is another method of payment mainlymade to manualworkers. It is usually
expressed as a rate per hour.
12. Payment in kind. This is a method of payment where employees are paid in terms of
goods or services instead of money.

ENVIRONMENT AND SOCIAL RESPONSIBILITIES OFA BUSINESS

Environment refers to man`s surrounding and what is found in it. It consists of the social,
economic, and geographic factors together with the natural environment which includes; land,
water, animals,etc.
Environmental standards
The following environmental standards always need to be considered byentrepreneurs when
carrying out business operations. The quality of air, water, soil and the control of the other
aspects that may disrupt theenvironment as a result of business operations should strictly be
adhered to.
1. Air quality standards.
2. Water quality standards.
3. Soil quality standards.
4. Noise and vibration standards.
5. Standards of environment beauty.
6. Standards of other matters and activities that may affect the environment e.g. wetlands.
7. Standards for control ofnoxious (toxic) gases.
8. Building and other structures standards e.g. Not building in wet lands.

Environmental protection bodies such as NEMA, Uganda Wild Life Authority have the
responsibility of ensuring that the above standards are followed.
Responsibilities of a business to society and environment
A Business eitherdirectly or indirectly depends on both the society and natural environment
for its survival, growth and sustainability . Therefore, businesses exercise a lot of responsibility
to the society together with the environment.
To the society
1. Business provide market to society`s produce. This is more especially with the businesses
which deal in the produce of the society in which they are located, they provide market and
hence income for the society. This helps toimprove on the society`s standards ofliving.
2. Business makes contribution to development programs. Businesses make voluntary
contribution towards community development program either in kind or in cash. These may
include areas to do with the women empowerment, road construction, education, healthy services
construction of bridges, environment protection, etc. In return to this business enjoys good
relations with the society, which becomes their loyal customer that assures them all security in
the business.
3. Provision of employment . Business provides employment opportunities to the members of the
society. In which they are located. People are employed on the different projects that are
involved in business e.g. managers, drivers, planners, etc.
4.Provision of social services. Some businesses provide or make it possible for society to access
social services e.g. education, electricity, water, healthy care services , etc. This is because some
businesses are established along with suchsocial facilities. This helps on improving on the
people`s standards of living.
5.Proper disposal of waste products. Some businesses use waste products and rubbish as their
raw materials . The emission of poisonous or obnoxious gases, loud noise or explosions should
be done in a way that do not endanger people`s health and lives.
6.Payment of taxes. Business pay taxes and in doing this , they make a good contribution to a
society . This is because government uses such revenue to provide social services to society
such as education, security, medicine, etc
7.Preserving the culture and norms of the society. A business should have strict conditions for
the norms and culture of society where it is located. An entrepreneur should do business in
what is acceptable to the culture and religious beliefs of society . For example he or she
should not be selling offending goods such as pork or beer in Moslem community, selling
alcohol drinks near schools, etc.
To the environment
1.Educating customers on usage and proper disposal of their products helps in conserving the
environment.
2.Businesses have the responsibility of developing new techniques which demands for less use
of the natural resources . This helps in protecting the environment from a high rate of
destruction.
3.Businesses have the responsibility of encouraging re-use and recycling of products and bi-
products . This helps in conserving the environment since dangerous objects are re-used thus
leaving the environment free of their effects.
4.Businesses have the responsibility of ensuring effective use of materials and to the extent of
possibly creating replacement for example planting trees. This will help in maintaining natural
environment.
5.Businesses have the responsibility of incorporating the principles of sustainable use and
development of naturalenvironment during their process of production.
6.Businesses have the responsibility of checking harmful effluents and ensuring proper usage and
disposal of the waste products .This greatly protects the environment from destruction.
Requirements of business that affects the natural environment
The requirements of a business that affect the environment vary depending on the nature type
and size of the business The most common requirement of business that affects the natural
environment and need to be planned for, include the following;
1. Packaging materials. These range from simple polythene papers, paper bags, wooden boxes,
plastic containers to metal containers. These packaging materials, negatively affect the natural
environment in areas to do with the soil texture, air,water,drainage system,
2. Agro chemical usage. Agric-businesses usually apply chemical and artificial fertilizers. These
affect human life, they are dissolved by rain and penetrate the soil to the water table, or the
chemicals are carried by erosion to the open water bodies where people fetch water for home
use.
3. Land. This is required for construction of business premises for its operations and storage of
the extracted raw materials. For that matter there for, manufacturingbusinesses requirelarge
pieces of land and this may lead toclearing of natural resources like forests and other forms of
natural vegetation.
4. Machinery andequipment used in productive operations. Some machinery is purposely used to
destroy the natural physical environment forinstance the graders, machines used in mining and
extraction of minerals etc.
5. Energy. The major sources of energy required by business and society in Uganda include bio
gas 96.5%, petroleum 1.5% and hydro-electric 2%. Bio gas primarily wood fuel is the main
source of energy in Uganda. Its consumption is expected to remain high because it is the
cheapest as compared to the modern energy. Large institutions such as hotels, schools, hospitals,
prisons together with large factories such as tea factories, tobacco industries, sugar, and fish and
brick industries use mostly biogas. This results in the destruction of the environment.